As we enter the third decade of the 21st century, more and more enterprises are transforming themselves, creating a business built on data.
The “smart” companies of the future – the Cognitive Enterprises – recognise that the data generated from customers, employees and day-to-day operations will fundamentally transform the way business is conducted. Successful companies will become experts at identifying important and potentially transformational data, applying the correct analytics, and using the resulting insights to pursue significant new growth opportunities.
Data, simply put, is becoming an organisation’s most valuable asset. And yet, as with anything of value, data must be handled with extreme care.
News headlines about cyberattacks and data thefts, or egregious examples of corporate misuse of personal data, provide almost daily examples of the risks and vulnerabilities of the data economy. Governments around the world are taking legislative and regulatory action to restrict the gathering of data and to curb its misuse. That’s why, if the 21st-century economy is to continue growing and creating prosperity, it’s crucial for enterprises to build a social contract of trust around data-gathering and sharing.
The best way to build and demonstrate that trust is to make it in all parties’ mutual interest to share data. Companies can profit from the knowledge and insights the data yield, while business partners, clients and customers who share their data can enjoy the benefits of better products and services tailored to their individual needs.
A new study, ‘’Build Your Trust Advantage,’’ from the IBM Institute for Business Value, is filled with examples of companies in a broad range of industries around the world that have achieved market leadership by emphasising trust and reciprocity in their use of data. The study, based on inputs from 13,484 respondents across six C-suite roles, 20 industries and 98 countries, shows how executive perceptions and approach to data sharing and transparency divides the leaders against the losers in today’s data economy.
The research identified a very small pool of executives (only 9% of the total A/NZ respondents dubbed as “Torchbearers”) who are seeing the highest returns from their data, and also outperform their peers in revenue growth and profitability.
Enterprises that have adopted data safeguards and have earned reputations for trustworthy behavior will have a major competitive advantage in the era of data-driven commerce. The study indicates that Torchbearers outperform their industry peers in revenue growth and profitability by 165%.
Trust takes a long time to build, but can quickly be lost. Recent research from the IBV on data privacy recently found that Torchbearers prioritise data privacy as one of their top competitive advantages, defying data fears to enhance the trust from customers (82% of ANZ respondents). How do Torchbearers establish and maintain trust? Our study found they share three basic business practices:
- Emphasise Accountability. Torchbearers identify how their customers expect them to use their data. They then doggedly ensure that those expectations are met or exceeded.
- Offer Reciprocity. Customers must be able to see significant value in sharing their data. Torchbearers make that value proposition clear.
- Ensure Transparency. Torchbearers make a policy of communicating problems promptly and fully. And they make it easy for customers to view detailed product information, including data about how products are manufactured and under what conditions.
The advantages of a reciprocal approach to data sharing become even more apparent as newer technologies like AI enable enterprises to take a more personal approach to the business-customer relationship. Blockchain, meanwhile, is helping make trust verifiable.
Trust your own data, and be ready to share
Building a foundation of data trust involves more than a reciprocal relationship between a business and its customers. It begins within the organisation. An enterprise must strive to ensure that its data is accurate, up to date and appropriately contextualised. In other words, enterprises need to be sure they can trust their own data.
Torchbearers also develop a culture that is comfortable distributing data widely within the enterprise, even to the lower reaches of the organisation, as a way to empower employees to make decisions. It’s an approach that might understandably make many executives uncomfortable. But Torchbearers demonstrate that democratising data can drive innovation.
Enterprise must also ensure that data trust extends into their wider business ecosystems. It may seem counterintuitive. But being a reliable steward of data doesn’t necessarily mean keeping it locked away within the enterprise. They know data that stays in the organisation is likely to become stale, while circulating it outside the company improves its value.
And so, Torchbearers are liberating their data, allowing it to circulate within the ecosystem. But they also scrupulously safeguard it by enforcing strict rules about who receives to access which sets of data.
Trusted data is the new gold in the emerging global economy. By building a culture of trust in your organisation and with your partners and customers, you will have access to more of this precious resource, and learn how to use data to create greater business value.