There’s no denying the commercial benefits of leveraging the untapped potential of data. It has been ringing in the ears of executives since data was first hailed as the fuel of the future.
But with both consumers and regulators putting companies under increasing pressure to prove that they are powering their data use in responsible ways, a privacy airlock is now preventing that data from flowing efficiently, if even at all, through their commercial pipes.
How much data are you actually wasting?
Addressing the inherent complexities of data-driven transformation – harnessing the right tech, tools and people who can extrapolate valuable insights from data – requires expensive investment. But in addition, the fear of stepping out of line with regulators, or tarnishing brand value with consumers, is also causing costly repercussions for companies – some of which are obvious, while others are more pernicious.
In particular, the new wave of analysis paralysis enveloping organisations in our increasingly privacy-centric world is leading to vast amounts of data waste, thereby stifling growth in an economy where the ability to leverage advanced analytics will be a key differentiator between the businesses that struggle to survive versus those that thrive in industry 4.0.
From too liberal to too conservative
Data waste is not a new phenomenon. Initially, the volumes of data that companies were accumulating were not being put to work. Why? Because data was a new asset that required new knowledge and new tools.
However, as organisations began to understand how data could be leveraged to improve organisational efficiency and consumer experience, we entered the era of vast data exploitation which, unfortunately, also gave rise to increasing data misuse.
And that’s when the pendulum started to swing. Consumers became more aware of their digital selves, ‘data for gain’ became a bone of societal contention, and demands for regulatory intervention were eventually met.
However, the crack of the compliance whip through enhanced regulations and enforcement, while effectively introducing much-needed discipline to data handlers, has resulted in collateral damage as well. It has led many organisations to feel forced into over-rotating towards treating their data as a potential liability rather than a potential asset to drive growth.
The data advancements that propelled so many businesses forward now, ironically, hold them back. Only this time it is the fear of how to mitigate a tangible risk, rather than ignorance as to how to exploit an intangible asset, that is leading to mass data waste.
Rules alone will not work
Data analytics is at an inflection point and companies are at a crossroads as they assess several competing factors, none of which can be ignored: commercial value, consumer trust, regulatory compliance and business strategy. The seeming irreconcilability of these factors leads to paralysis, where no decisions are made due to fear of a misstep.
In order to break this logjam and drive data-based innovation forward, there needs to be a systematic rethink around the way we position data privacy. The conversation can no longer be focused solely on following the rules and regulations that governments have imposed.
Of course, satisfying regulatory obligations needs to be done, but that cannot become the alpha and the omega of the analysis. It’s too restrictive of a narrative. We need to instead be honest and embrace the fact that rules alone won’t help businesses to overcome the everyday obstacles that stand in their immediate way.
To break free from the data waste causing analysis paralysis that many organisations currently find themselves locked in, they need to learn from the most sophisticated companies when it comes to data analytics. These data innovation-led companies are embracing privacy-enhancing technologies (PETs) to address their two-pronged problem: how to get the value they need from their data and address data privacy concerns at the same time.
This tech-led approach also requires that governments, knowing that the necessary tools are now emerging to facilitate change, support a positive positioning and drive marketplace incentives that guide a conversation around responsible data practices that foster innovation, rather than limiting it.
It’s time for technology to be leaned on as the solution to the problem rather than being cast aside as the enabler of the trust crisis that now exists.
Encouraging responsible innovation with PETs
Rather than incessantly pushing the regulatory rules of play when it comes to data, we can collectively encourage responsible innovation through the use of PETs.
Shifting the negative narrative to one of empowerment will assist with triggering a movement of change that offers organisations a way out of the privacy prison in which they have unwittingly confined themselves. This offers a practical approach to unlocking data and supports a solution that will enable us to both overcome the trust crisis and fuel the trust economy.
By embracing privacy-enhancing technologies that can measure and mitigate privacy risk, businesses can confidently conduct analytics on their data without having to worry about consumer or regulatory backlash.
In addition to this, since PETs are intentionally designed to unlock value and protect privacy, they offer businesses both a safety blanket and a door to new opportunities. And because PETs are becoming more sophisticated and attuned to different use cases, they enable companies to understand the return-on-investment on the early adoption of a privacy-centric business strategy.
Permissionless innovation can still exist
The success of the modern tech economy was powered by the principle of permissionless innovation, which asserts that innovation thrives in a lawless space – cyberspace – where there are no regulatory constraints.
But the idea that innovation and data responsibility are mutually exclusive is a canard, as PETs increasingly and convincingly demonstrate that lawful innovation doesn’t need to be heckled as oxymoronic.
Today, the power imbalance that once favoured the corporations tilts towards the consumers, which means that Mark Zuckerburg’s “move fast and break things” era is over – especially if the thing being broken is consumer trust. Companies that are seeking lucrative, long-term success built around loyalty need to evolve with a privacy mindset.
Now that we have reached an era where we understand how technology can impact people, we can adapt, as humans always have, to new ways of thinking and working. By placing people at the heart of strategy and harnessing technology that protects their privacy, businesses can continue to drive innovation without compromising on consumer trust – and that is a business philosophy that is “sustainable for the long-term”.
Ultimately, harnessing the power of PETs will not only help companies to relieve the regulatory and consumer pressures that are restricting their data flow, but it will also ensure that the full potential of their data can be leveraged in a responsible way to fuel tomorrow’s growth strategy.
Michael Ingrassia is president and general counsel at Dublin-based data anonymisation and analytics company Truata.
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