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Big Data's Bad Manners Spell Trouble

Companies need to stop drooling over consumer data and start acting like responsible data stewards -- or face serious backlash.
5 Big Wishes For Big Data Deployments
5 Big Wishes For Big Data Deployments
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Consumers are fed up with how companies use their data, according to a 12-country survey by Boston Consulting Group. And consumer ire is starting to cost companies market share, says John Rose, the BCG senior partner and managing director who led the survey, "The Trust Advantage: How to Win with Big Data."

"The dialogue used to be somebody blows it (on data misuse) and so what?" Rose tells us. "Now it's changing. The economic harm and benefit is more serious than it was four or five years ago." He says using customer data in ways that customers don't approve could cost a company as much as 10 points of market share.

Rose says that if something like the TJX wireless hacking incident were to happen now, it would cost the company significant consumer trust and sales. He pointed to class-action suits that have been filed against retailers who asked for ZIP code data, then used it for marketing purposes. One recent example involves Urban Outfitters and its Anthropologie unit, but scores of such suits have been filed over the last few years, many in California.

[ Big questions about big data? Read: Big Data FAQ: Separating Signal From Noise. ]

The survey was conducted before the NSA Prism spying program was exposed.

The data shows that people worry about what companies do with their data.

Don't bait and switch. BCG found that 93 percent of consumers are unhappy at the idea of companies using data they collected in one context for another purpose.

Don't assume young people don't care. So-called Millennials, the youngest generation of workers, are almost as concerned about privacy as older people. Only among 18- to 24-year-olds did fewer than 80 percent agree with the statement, "You have to be cautious about sharing your personal information online." Even among these youngsters, 71 percent of respondents agreed.

Geography doesn't matter. The survey covered consumers in five European countries (France, Germany, Italy, Spain, and the UK), four other developed nations (Australia, Canada, Japan, and the US) and three developing countries (Brazil, China, and India).

Only in China did fewer than 75 percent of respondents express concern about what companies did with their data.

Your business does matter. Consumers make distinctions both about what data they consider private (age, not so much; bank account, very private), and about how particular kinds of companies can use their data. Banks, for instance, have a far higher bar to meet than other kinds of companies.

Ask, please. A majority of consumers say that if they could prevent harmful use of data, they would be willing to let companies use their data in ways it was not gathered for.

Companies should feel no surprise that consumers want more control over their data. After all, it's the consumer's data. What Rose says surprised him is how strongly people feel.

For companies, Rose says it's a sign that they need to start acting like data stewards, not data owners. That means a few things. Wrest data and privacy issues away from the legal and policy departments, the warrens of the Chief Privacy Officers. Keep the legalese in privacy statements, but use them as appendices to something written in plain English, telling consumers what you will and will not do with their data.

Next, the CIO should run what Rose calls an internal health check. Note all the kinds of data the company has gathered. Then, with a group of other top executives, go through the data and figure out whether consumers know what you have on them, and what you are going to do with it (and remember, your consumers are mostly not lawyers).

Companies also need to put in place tools, processes, controls, and metrics to help take the codes of conduct and make them how the business does things.

The CIO should lead that effort, Rose says, because it involves technology and process, but it needs to be a collaborative effort. What companies do with consumer data affects the brand, it affects communications, and it can affect sales. So the CIO needs to work with other C-level executives.

The bottom line, according to Rose, is five to 10 points of market share, simply by asking permission to do things with data.

Every CIO knows big data offers an opportunity for technology to bring big value to a business. The challenge is getting the business to think of itself as a steward, not a salivating shark.

Emerging software tools now make analytics feasible -- and cost-effective -- for most companies. Also in the Brave The Big Data Wave issue of InformationWeek: Have doubts about NoSQL consistency? Meet Kyle Kingsbury's Call Me Maybe project. (Free registration required.)