By Thornton May
Futurist, Senior Advisor with GP, Executive Director & Dean - IT Leadership Academy

In next generation flight simulators, while you watch the simulator, the simulator watches you back. While this has proven to be a fantastic tool for quickly and affordably creating pilots with superior judgment and impressive flying skills, in other use cases the role of machine “eyes” observing human behavior is surfacing questions. There is a treacherous precipice separating the ability of delighting customers and totally “creeping them out.” While this may not bother Google's executive chairman, Eric Schmidt, who has been quoted as saying, "Google policy is to get right up to the creepy line and not cross it,"+ most other organizations are less certain with how they should be wrestling with the issue of privacy. How can organizations optimize the opportunity for deepened customer relationships without crossing the line to consumer push-back?

WHAT HAS CHANGED?

Organizations now have the capability of knowing just about EVERYTHING about their customers. It is now possible to track every customer wherever they might be - in the store, in the car, on the street, on the web, and on the phone. License plate scanners, CCTV, domestically deployed drones, rapidly improving facial and voice recognition are just the tip of the iceberg with regards to surveillance technologies which appear to be on the cusp of rendering anonymity obsolete. Any of us can be tracked via our footprints on the Web. Technology changes what can be known.

The major driver, however, is a fundamental change in who wants to know and why they want to know. In a more Manichean world, surveillance was the purview of three letter agencies. In today’s world, everyone has access to and appears intent on maximizing their capacity to know as much as possible about customers and competitors. Customer data is increasingly being labeled as THE key ingredient of wealth and prosperity in the era we are about to enter. Just as iron ore was for Andrew Carnegie and oil was for John D. Rockefeller, customer data is thought to be the secret ingredient essential to catapulting mere businessman to mogul status.

The Wild Cards of Customer Intimacy

Technology gives us the possibility of collecting the data. The tone-at-the-top of many organizations has made data collection a top priority and a key element of enterprise strategy. Metaphorically analyzing the death of privacy we have means and we have motive. What provides or removes opportunity are two related wild cards: consumer attitude and government regulation.

And this is where things get very confusing. No one really knows what the consumer really thinks about digital privacy. There currently exists no science of customer intimacy. Some of the best work and deepest thinking to help us emerge from the privacy dark ages is being done by Carnegie-Mellon behavioral economist, Alessandro Acquisti.

Professor Acquisti has synthesized research to conclude that:

• Less than 3% of consumers read privacy policies.
• 75% of consumers think that the existence of a privacy policy implies privacy protection.
• 54% of privacy policies are beyond the grasp of 57% of the internet population[requiring the equivalent of more than fourteen years of education].
• In 2010, unbeknownst to users, three of the top 10 Facebook apps, including Farmville, had been transmitting personal and identified information about the user to outside companies.++

Acquisti has conducted a series of brilliant “experiments” which seriously question previously strongly held assumptions about how consumers think about privacy:

• Individuals have stable “privacy” preferences
• Based on those preferences, they mentally trade-off costs and benefits of sharing and protecting data
• Based on those trade-offs, they decide rationally what personal information to reveal and what to protect

It is perhaps not a total surprise that someone teaching in the shadow of Nobel laureate Herb Simon would come to the conclusion that assuming rational behavior in the privacy arena may not be consistent with reality.

The current dog’s breakfast of privacy protections are not working. Research suggests that “individual responsibility” is not sufficient and that the “choice and notification” approach is inadequate for privacy protection.

Privacy matters, is currently misunderstood and is still waiting for Sir Isaac Newton or Benjamin Franklin to help us make sense of it all.


+ A class action suit filed May 2013 claims Google "unlawfully opens up, reads, and acquires the content of people's private email messages".  See: Dominic Rushe, “Google: don't expect privacy when sending to Gmail,” The Guardian [14 August 2013].
++ Alessandro Acquisti, “Awareness, Understanding and Decision Making,” OECD Conference [26 October2010].