Wednesday, July 30, 2014

Old, New, Newer and New Newer: The Past, Present and Future of the Collaborative Economy

Tools like Facebook, Twitter, Yelp and Flickr have taught people the power of sharing more widely and have begun to alter attitudes about privacy. Today, you live more transparently and share more information than you ever would have been able (or willing) to in the past.

Opinions, experiences, likes and dislikes that we used to share verbally to a handful of trusted friends and family today are captured, indexed and aggregated for all to see. The places you visit, the jobs you have held, the people you know, the food you eat, the teams you cheer, the hobbies you enjoy and the entertainment you love have become data points in a great pool of public information, permitting new ways to connect, commune, play, work, discover, complain, praise, influence and learn.

Too often, people think of social media only as the immediate and ephemeral information Twitter or Facebook presents in their news feeds. These real-time social feeds demand attention and can be at once enjoyable, distracting and annoying, but there is another way to think of social media, and that is as a persistent data layer. Social networks do not simply share your data in the moment but retain it so that tools and applications (and marketers) can later access, recall, combine, process and convert that data into useful information.

Foursquare's new Swarm app,
alerts you to nearby friends.
Here is an example of how the social data layer works: No one wants to be informed of every place that every friend visits, but when you are deciding where to eat, you may find it valuable to know where your friends are dining at the moment or which restaurants they frequent most often. What is noisy data in your news feed can be transformed into useful, relevant information when aggregated and presented at just the right time and right situation.

Photos are another example of how the information we share becomes part of the social data layer and enhances our lives. Images that we used to mount into forgotten photo albums are today posted online and tagged with dates, locations and people’s names for easy access and retrieval. This meta-data transforms the half a billion photos uploaded each day to Flickr, Instagram and Facebook from mere pictures to vital pieces of information that can be recalled at just the right instant. (Because I tag my Flickr photos and upload them with an Attribution-NonCommercial Creative Commons license, my photos can be found and used by others, such as the Indiana Public Media website.)

Facebook’s vision for the future is that you will check into a beach and discover that your parents visited that same spot two decades earlier—and look, they posted a picture! The social data layer can take something that seems meaningless at one time (old family photos) and make it available at another when that information will be pertinent and valuable (your parents sharing the same moment you are, separated by decades).

Photo: Roadsidepictures
Of course, social media is not just about sharing pictures and status updates; it is also increasingly about the way consumers make purchase decisions. Take for example information you use to make choices about travel. When is the last time you purchased a Mobil Travel Guide? Once the indispensable travel bible for selecting hotels and attractions, the Mobil book series has been replaced by ratings and reviews collected by online travel agencies (such as Orbitz and Expedia) and ratings sites (like TripAdvisor and Yelp). In 2011, Forbes Travel Guide, which licenses the Mobile Guide, published its last set of guidebooks and launched its own Yelp-like site, Startle.com (which has since been retired and replaced with ForbesTravelGuide.com.)

It is one thing for social data to inform and influence your purchase decisions, but increasingly social is furnishing new ways to procure goods and services. The next wave of change is not just peer-to-peer (P2P) information but P2P commerce. A new collaborative economy is growing with a shift away from traditional ownership and toward “peering,” offering new methods of sharing or renting goods and services that permit consumers to gain economic power, increase income, and save money.

Why purchase an expensive item when you can more economically rent or borrow it, instead? Why let the things you own sit unused when they can easily be converted into cash flow? Why drive anywhere with empty seats in your car when someone nearby is willing to pay you for a lift near your destination? Why rent a car overnight when you really only need it for an hour? Why spend your time doing chores you do not enjoy when you can easily find and pay someone to do those tasks? And now that you have more free time, why not offer your own talents and skills to neighbors willing to pay for what you have to offer?

Thanks to new technologies and new consumer attitudes, there today are different answers to these questions than in the past. This is the collaborative economy—new methods for people to collectively consume resources for mutual economic benefit.

We can illustrate the difference between the traditional ownership economy and the sharing economy by examining the old, new and newer way of procuring an automobile.

The Old Way is Selling, Buying and Owning

We are all well acquainted with the old way in the automotive business. One party (and its supply chain partners) manufactures, transports, inventories and sells the cars, while consumers buy, maintain, insure and own them.

The old way: Lots of
underutilized cars
The problem with this business model is that it is wasteful and expensive. The average car owner in the United States, Canada and Western Europe uses his or her car just 8% of the time, which means that an expensive and depreciating household asset goes underutilized the vast majority of time.

Buying, financing, maintaining and insuring cars devours a substantial portion of people’s  income—transportation is the second highest category of household expenditure, according to the US Bureau of Labor Statistics. Automobile ownership also ties up large portions of our available assets; Pew Research Center found that equity in motor vehicles is the third largest non-retirement category of net worth for households worth $499,000 or less. In addition, the old ownership model in the auto business is also hard on the environment, as enormous amounts of energy go into producing, distributing and disposing of cars that mostly sit idle.

The old way will not die, at least not quickly. Just as ecommerce has not replaced physical malls, neither will the traditional auto dealership disappear as the sharing economy grows. Of course, while malls still exist, many struggle to survive and stay relevant, and their trials are hardly over; analysts estimate that one in seven malls will fail in the next decade as retail continues to transition online. Auto dealerships will face the same squeeze. The soft economy has meant difficult times for auto dealerships in recent years—over 4,500 disappeared (almost 20% of the industry) between 2005 and 2012—and consumers’ changing social consumption habits spell more trouble for the future.

The New Way is Business-to-Consumer Real-Time Rental

Zipcar represents the new way of conducting business. In this business model, Zipcar owns, maintains and distributes vehicles over a wide geographic area, and consumers rent only the car they need when they need it. Cars are utilized a greater percentage of the time, so waste is lessened and the impact on the environment is reduced. At the same time, Zipcar customers increase their liquidity and decrease expenses.

The New Way: Zipcar owns cars;
fewer cars are needed or used
I can use my household as a perfect example. When we sold our car and embraced a car-free lifestyle, my wife and I expected we would need to rent a Zipcar on at least a weekly basis; instead, we found we need one less than once every month or two. This experience is not unusual; research has found that consumers who carshare have 27% fewer vehicle miles traveled and make fewer trips.

For my household, the cost of Zipcar rentals, mass transit and grocery deliveries is far less than the expense of owning a devaluing car, interest payments, insurance, parking, gas and maintenance. We estimate we are saving approximately $800 a month by engaging in the sharing economy, thanks to Zipcar. (My wife and I live in the New York metro area, which is somewhat more expensive than most other locales, so the average savings per month enjoyed by ZipCar members is a bit less--Zipcar reports that members save an average of $600 per month compared to owning a car.)

Of course, Zipcar is not available in every neighborhood, nor is it feasible for Zipcar to scale into every suburban or rural nook and cranny. If Zipcar spreads itself too wide and thin, it may have automobile assets that do not get appropriately utilized. This is why a newer form of sharing economy model shows promise.

The Newer Way is Person-to-Person Rental

There is an even newer way of transacting business—a more peer-to-peer way—as represented by companies like RelayRides, Getaround, Hubber and JustShareIt. Unlike Zipcar, RelayRides does not own and maintain vehicles; it merely connects people who own cars with those who need transportation and wish to rent cars.

In this “newer” P2P commerce method, renters enjoy the same benefits as they would with Zipcar—access to nearby cars for short periods at a modest cost. This much is the same as the “new” form of social business, but this “newer” form also offers benefits to car owners. Automobile owners no longer need to let their expensive asset sit unused in the driveway but can, with little effort, increase the use of that asset and enhance their income.

According to RelayRides, the average car owner renting his or her vehicle is making $250 a month using the RelayRides platform. Some make less and others make more; one recent Yahoo article profiled a woman who has made $12,000 since 2012 renting out her Prius on RelayRides.

While Zipcar would lose money if a car it owned were only rented for $100 in a month, the same is not true for RelayRides' car owners; for them, that $100 is a terrific benefit that increases income and puts an otherwise underused asset to work. This is why the newer P2P business model can scale in ways Zipcar cannot. Zipcar needs to place cars in limited areas with sufficient population density, while RelayRide owners are happy to rent their car a day or two a month to people in their less-populated rural or suburban neighborhood.

The Newer New Way--On Demand and Automated

While the "new" way--a company owning and renting out cars--does not easily scale today, the future may be quite different as self-driving cars and carsharing converge to offer a "newer new" way. Ten or 15 years from now, services like Zipcar will not need to spread cars every few blocks in order to place them within walking distance of customers; instead, the car you want will arrive wherever you are and whenever you need it, delivering itself to your front door--the transportation you need on demand.

Want a private drive? Of course! Want to split trip costs but make an extra stop? The service is aware of someone nearby who needs a lift to a destination close to yours. Care to pick up a friend? The service can access your friend list and alert him or her that you are on the way. Late to your dinner reservation? No worries, the restaurant has been automatically informed of your delay and new ETA. Technology, transportation, peering behaviors and the social data layer will combine to offer services that were previously (and are presently) impossible.

The impact of this Newer New way will be profound, bringing substantial and difficult changes to the entire automotive value chain. No part of the auto business will be left untouched, from automaker (fewer and different cars to produce) to dealer (fewer customers to sell to) to consumer (less ownership, more real-time rental, lower cost and risk) to maintenance (larger and more efficient facilities where driverless cars deliver themselves rather than neighborhood service centers scattered every flew blocks for the convenience of car owners.)

Today, it is estimated that each shared car under the "new" approach takes between nine and thirteen cars off the road. The "newer new" way will have an even greater impact, taking more cars off the road and bringing the advantages of carsharing to much wider areas. The benefits to consumers and the environment will be substantial, but the difficulties faced by the auto industry will only mount in the next decade or two. Much like the the rail business of the early 20th Century (that did not adjust for trucks, cars, planes and highways) or the retail business of the last decade (that struggled to adjust to online commerce), the collaborative economy will leave the car industry a much, much different business. And the auto industry is not alone.

How Will the Collaborative Economy Change Your Business?

There has been an explosion of creative energy and venture capital in both the “new” and “newer” business models, and not just in the auto industry. Today you can:
  • Offer your services or find someone to complete a chore on TaskRabbit
  • Rent a night on your sofa or secure a place to sleep on Couchsurfing
  • Rent a designer dress on Rent the Runway
  • Be a guest at someone's home for dinner or share your culinary talents with like-minded people on EatWith
  • Rent a bike for an hour or a day using B Cycle
  • Buy or sell used kids' clothes on Swap.com
  • Host a strangers’ dog in your home through DogVacay
  • Borrow or lend money to others using Lending Club
  • Rent Lego playsets on Pley
  • Find a space to work or rent out unused office space on PivotDesk
Each of these could further develop into their own "newer new" business model. Might a hotel chain, that today owns one property in a city with 300 identical rooms tomorrow offer 300 different rooms scattered across dozens of small locations, matching you to exactly the room you would most prefer? (You love shaker style furniture, a shower, a large desk, a small bed, healthy snacks and tea service downtown while your traveling peer prefers retro 50s decor with a tub, no TV, a king-sized bed, junk food and a coffee percolator uptown? No problem--everyone gets exactly what they want!) Might your money account automatically loan cash to trusted friends and collect interest without bothering you for approval, since your financial institution knows whom you trust and acts to maximize your return? Might drones deliver your hot and delicious meal at the moment you arrive home from work, created by a famed chef a continent away who beamed his creation to a culinary 3D printer near you?

Comparing the old, new, newer and future ways of commerce not only illustrates how the sharing economy works, it also demonstrates the changes that are coming to business. Just as the adoption of the Internet brought about a significant wave of disintermediation and reintermediation (with Amazon replacing Borders, Apple iTunes replacing Tower Records and Netflix replacing Blockbuster), the sharing economy will bring another such wave. Companies that offer the new products and services in the ways that consumers desire can acquire and retain customers, while the companies that fail to satisfy new consumer demand risk losing customers.

RelayRides will not replace Chrysler or Hertz, but it can have a significant impact on the marketplace without supplanting traditional competitors. As noted in my blog post, even a small shift in consumer behaviors can bring about a significant change in margins and profitability for businesses. As noted by Umair Haque, author of The New Capitalist Manifesto, “If the people formerly known as consumers begin consuming 10% less and peering 10% more, the effect on margins of traditional corporations is going to be disproportionately greater, which means certain industries have to rewire themselves, or prepare to sink into the quicksand of the past.”

There is no corner of the economy that e-business has not meaningfully affected, and now the burgeoning sharing economy is bringing still more change to the business environment. In future blog posts, we will explore the collaborative or sharing economy in more detail and study how traditional firms can explore, adjust and flourish in this new, emerging economy.


Monday, July 28, 2014

Four Mistakes Made By Borders And How To Apply The Lessons To The Collaborative Economy

Everyone knows the sad tale of Borders Group. It failed to see the world changing and did not adapt to the Internet age, so the successful company quickly failed.

But while the story of Borders Group is well know, I do not believe the lessons of the company's history are understood. It may be a well-known tale, but it is worth revisiting 2001 with fresh eyes, because it can teach us something important about 2014. The company's mistakes occurred in the early part of the Internet era, and as we are now in the early days of the collaborative economy era, it is the perfect time to reconsider Borders' story and learn from it.

Borders' leaders lacked the foresight of their peers at Amazon and even Barnes and Noble, but that isn't terribly unusual. Many of us fail to see important revolutions until it is too late. We humans are good at recognizing evolutions (no one questioned if the iPhone was an obvious improvement on the  Blackberry), but we are less successful at seeing revolutions until they are upon us.

In 1995 (if you are of a certain age), you heard about the “Information Superhighway” and thought, “I’ll never waste my time on the Internet.” In 2000, when some acquaintance raved about his or her first online purchase, your reaction was, “I will never trust a website with my credit card.” And in 2005, as the first “Crackberry” addicts were distractedly walking into lampposts, you promised, “I will never be that tethered to a cell phone!” It is important we recognize our recurrent inability to see revolutions in their infancy, or else we cannot explore today's prevalent (and frequently dubious) attitudes towards the fledgling collaborative revolution.

Failing To Foresee Revolutions Hurts People But Can Be Fatal to Organizations


When individuals fail to see the world changing before their eyes, it can have ramifications--they may disregard the effect on their careers and fail to keep their skills current. In many ways, however, people can adjust quickly once they see the benefits of innovative technologies and approaches. Many mocked the first folks with their Commodore 64s and Atari STs, but a couple years later everyone was clearing a space for a PC in their home.

Courtesy of Crowd Companies
For business, however, the implications of failing to see the future are far more profound. A company that does not anticipate or prepare for impending threats and opportunities cannot simply retool overnight once it discovers the oversight. While we humans can overcome our inability to recognize technology revolutions with a single trip to Best Buy, companies that miss out can spend years trying to catch up. Today, there are successful companies that will become the future Borders, Kodaks and Blockbusters of the collaborative economy era, but they can no more see it than could Borders, Kodak and Blockbuster could at the dawn of the digital era.

Certainly, Borders failed to see the future, but what did they miss that others did not? And why did they fail where others succeeded? The answers to these questions are essential to prepare your company as it enters yet another revolutionary business era. Sharing is no longer just for memes and selfies; increasingly, it is also for the way people acquire and use products and services. Is your company setting itself up to be the Borders or Amazon of the collaborative economy era?

What Borders Did Wrong


They key is to explore the conditions that led to Border's fatal decisions. For example, many assume that the error made by Borders was that it failed to launch ecommerce, but the company had an ecommerce operation and chose to shutter it. In May 1998, Borders launched its first online book store. Few consumers were buying online at that time, and three years later, the bookseller decided its unprofitable ecommerce operation was unnecessary to its core business of selling books in retail stores. In April 2001, the company announced an ecommerce agreement with Amazon, shuttered its own online sales function and dismissed seventy digital employees.

It is easy to judge the decision in retrospect, but this deal made logical sense to many. Morningstar analyst David Kathman told E-Commerce Times, "Both companies need this" and Scott Smallman with U.S. Bancorp Piper Jaffray said, "We think it is good stuff." The reason was that Amazon (although it was losing money) was flourishing online, while Borders (although it was profitable) was failing in the digital realm. In 2001, Amazon sold $1.7 billion worth of books, music, and videos online while Borders.com sold just $27 million.

Today, many seem to feel Borders' execs were merely stupid, but the company's leaders made what they thought were smart decisions that many analysts applauded. The error of their ways became evident a few short years later, but by the time Borders realized that digital business was not a sidelight but a vital revolution in the way people shop for, purchase and consume media, the opportunity had passed. Borders dissolved the partnership with Amazon in 2007 and attempted to resurrect its own online business. It was too little too late; just four years later, the company applied for Chapter 11 bankruptcy protection and began liquidating its final stores.

Why Borders Did Wrong


That Borders' leadership made epic mistakes is certainly obvious, but hindsight is 20/20. Why did they make those decisions, and how can your company avoid the same mistakes today? Here is how Borders came to this decision and what it may mean today as your company considers (or ignores) the emerging collaborative economy:

  • Borders failed to see how digital wasn't just a change in marketing and communications but a change in business and consumer models: Marketers are quick to adapt to changes in consumer behavior, while product and customer service folks always lag. Marketers launched web sites and started online advertising years before their customer care peers thought of offering web-based service. And while some brands were happy to offer their traditional products for sale online in their "web store," few companies considered how digital distribution would fundamentally alter the products themselves. Borders saw the web as a marketing and sales channel; Amazon saw it a new way to distribute and consume media.

    In social media, marketers were able to find money to invest in social media while their peers in customer care acted like it was an insurmountable challenge to find the budget for customer care in the same channel. (Even now, companies like Spirit Airlines are opting for auto-bots in social media because "a social media team costs money." Damn those needy customers, expecting us to pay salaries for people to answer their annoying questions!)  Today's collaborative companies don't see social as just a communications channel or an expense but a significant shift in consumer behavior.

    Collaborative Economy Lesson: Social will change business itself, not just marketing. Is your company like Borders, seeing social primarily as a channel for acquisition and reputation? Or is your company Amazon, thinking of social for new ways to collaborate with consumers on product development, encourage peer-to-peer consumption to otherwise empower your customers? If you aren't thinking of new P2P and collaborative business models, rest assured someone else is!
      
  • Borders failed to understand that digital benefits would be embraced by the mainstream.  In 2001, it was easy for Borders to see the web as something not well aligned to its audience. A year before, Pew found that 61% of 18- to 29-year-olds were using the Internet compared to just 12% of those over 65.  Since book buying typically skews a bit older, it seemed the Internet was a weak opportunity for Borders. Making it even more difficult to see the digital future was that the dot-com bubble had burst in 2000 and was still deflating in 2001, giving momentary encouragement to those who still claimed the Internet was a fad, not a serious trend.

    How times have changed. Digital businesses are now at the top of the Fortune 500 (with Apple, Microsoft, Hewlett-Packard, Google and Amazon among the 50 largest firms in the nation.) Generational gaps still exist but are nowhere near as pronounced as they once were; in 2013, Pew reported that 59% of seniors go online. In the course of 13 years, the percentage of seniors online skyrocketed nearly 400%.

    Collaborative Economy Lesson: (Almost) everyone will adopt collaborative business concepts in the years to come.  It is by now a familiar trend that has been repeated with online adoption, ecommerce, mobile adoption and social networking: New behaviors are introduced, tested and adopted by younger consumers, and once the benefits are clear and risks are minimized, older folks follow. Today, is your company looking at Lyft, TaskRabbit and Uber as something better aligned to younger people, or are you thinking like Amazon and foreseeing the demographics for collaborative behaviors broadening rapidly?
       
  • Borders underestimated the importance of small changes: There is a sad tendency to think that business models are stable and can be undermined only with profound changes in the market. Perhaps that was once the case, but the pace and hyper-competitiveness of today's business world means that even small changes in the environment matter.

    In 2001, online retail was a mere one percent of total retail sales in the US, so it was easy for Borders to dismiss ecommerce as a distraction. But even today--after ecommerce has upended several well-known retailers and is challenging the survival of malls--the percentage of US retail that occurs online is just 6.2%.  That's it--just one of every 16 retail dollars are spent online, and that has been enough to create a painful metamorphosis in retail, not just for Border's but the entire industry. In the last ten years, the stock prices of Barnes and Noble, Sears and JCPenney are down 35% to 75% while the Dow has risen 67%.

    Collaborative Economy Lesson: A small shift away from traditional ownership and towards collaborative models can have a significant impact on your company's financial outcomes. Look at the profit margin for your firm. What would a change of three or four points in your revenue mean to your bottom line? For many industries, that is the difference between profitability and failure. Borders saw ecommerce as a small and minor trend that could be farmed out to a third party rather than a significant business revolution that should affect business decisions across the enterprise. Is your firm considering the collaborative economy in one tiny corner of the enterprise, or do your leaders see it as a major trend that will impact the development and delivery of your products and services?
      
  • Borders focused on short-term profitability rather than investing for the future: Who can blame a company for jettisoning an unprofitable venture? After all, every publicly held company must furnish quarterly financial improvements or suffer the wrath of investors and analysts.

    Certainly, that was what Borders thought. It was losing money on ecommerce, and at the time, so was everyone else. Even Amazon was hemorrhaging cash--close to $3 billion of losses in the first five years after its 1997 IPO. By ignoring the cash-draining money pit of ecommerce, Borders kept their income statement looking good for another five years, with consistent profitability through 2006. The Street wasn't rewarding Borders with better stock prices, but neither did the company's shares suffer like that of so many dot-com firms.

    Everyone was reasonably happy--until 2007 when the wheels came off. Borders could no longer deliver revenue and margin due to its reliance on an increasingly threatened distribution model, and the company and its stock price never recovered. Meanwhile, Amazon thrived--it's stock is up an incredible 3,067% since it signed the deal with Borders. Today, Amazon is repeating its history, making decisions that diminish current performance in the hope of strong financial rewards in the future; the company is warning the market to expect deep losses this year as it attempts to launch the Fire Phone against mobile leaders Apple and Google.

    Are today's collaborative startups subject to the same financial challenges as the dot-com startups of fifteen years ago? Some say no--the buzz is that many of the collaborative startups are turning early profits, but we ought to be cautious with such claims. Thus far, many collaborative startups have ignored such niggling details as tax collection and regulation. In the last two years, Airbnb, Lyft, Uber and others have begun to work through the maze of regulations, legal requirements and tax issues, and it may take many years to work out a set of stable and legal business models that can be applied in every state and locale.

    Collaborative Economy Lesson: Gaining an understanding of the new forms of collaborative commerce will not be easy or provide an immediate return, but the time is now to begin making smart investments.  Companies cannot build a future simply by focusing on efficiency, productivity and cost containment; they also must invest in the future. The unwillingness to cannibalize one's own business model is a serious problem in today's fast-paced quarter-to-quarter world, because if companies won't challenge their own business, someone else will. Significant changes are coming, and firms unwilling to explore alternative business models will suffer consequences. Now is a time to make strategic investments and experiment with innovative collaborative business models. 
For a host of reasons, Borders’ leaders made decisions that set in motion the problems that would swamp the company just ten years later. These leaders were not dumb, but they were mistaken.

There are lessons for today’s organizations in Borders’ journey from profitable $4 billion, 1,200-store business to extinction. The company made mistakes in the early days of the Internet revolution, and it was unprepared for the growth in online behaviors, the evolution of new digital business models and the maturing of a generation of digital natives. Today, we are in the early stages of a collaborative revolution, where consumers’ expanding sharing habits, the adoption of social and mobile business models and the coming of age of a generation of “social natives” converge to change the rules of business once again.

Your organization does not need to transform overnight, but it must begin to experiment and evolve. Many organizations are led by executives who remain convinced in the durability of today’s revenue streams, deny that the sharing economy will alter their market and are not inclined to invest a share of today’s profitability to test and gain experience in new business models. This means that today there are confident, stable and profitable companies that will become the Borders of the next two decades—they just will not recognize it until it is too late.

Wednesday, July 16, 2014

Three Steps to Protect Your Privacy As You Use Facebook and Surf the Web

There's been a bunch of attention given to the topic of Facebook and trust as of late. Some folks got worked up when it was revealed that Facebook would leverage users' browsing history and app data to better target ads. Then there was the infamous study that demonstrated your news feed was not really personalized to you but could be manipulated as Facebook sees fit.

What I find ironic is that people will vent a great deal at Facebook while doing little to protect their own privacy. Whether they are ignoring Facebook settings that can better secure their information, approving unnecessary and untrustworthy apps or even giving up personal information without thinking, consumers are generally their own worst enemy.

I thought I would share a few suggestions that you might consider if you are concerned about the collection and use of your personal information and surfing habits.

Check the Facebook Applications Accessing Your Personal Data

You probably think that you have been careful and only given permission to access your Facebook data to familiar and trusted applications. You are probably wrong, and it only takes a couple minutes to find out.

While some express concern about what Facebook may do with their personal data, it is shocking how many people will simply open up their data stream--including their posts, likes, locations, political views, friendships and other data--to complete strangers. This can happen when you give permission to Facebook applications.

It is easy to check if you have unnecessary apps sucking your data:
  • While visiting Facebook in a browser, click the little down arrow in the upper right corner and select "Settings."
     
  • In the left column, select "Apps."
     
  • At the bottom of the "Apps You Use" section, click "Show All Apps."
     
  • Each of the listed applications may be accessing and using your personal data. If you see apps you  no longer use (or may not recognize), click the little "X" on the right and select "Remove" from the pop-up box.
     
  • If you care to, you can see the permissions you have granted to each application and learn when it last accessed your data.  Simply click on the name of application to view this information:


     

Use Incognito Windows when completing those silly quizzes 

Everyone loves those online quizzes, don't they? (Well, I don't, but I'm a grumpy old man.) Who doesn't want to know what Tarot card they are, or animal, or Disney princess, or composer, or superhero, or constellation, or deadly sin, or dipping sauce, or punctuation mark... God, I really hate these dumb quizzes. 

If you simply must know what classic rock band you are, then here is a tip:  Go incognito in Google Chrome. To do so, right click on the link to the quiz and select "Open link in incognito window." You can now complete the quiz without having your answers captured and used for ad (or spam) targeting. 

If you simply click the links to these quizzes, the sites can use third-party cookies to associate your answers with your identity or your surfing habits. Think of the kind of personal information these quizzes ask (and most people willingly give up without a second's thought). A question such as "What is your greatest concern?" or "Which question would you most like answered?" can reveal if you have money, health or your love life on your mind. You wouldn't tell your bank or a person on the street that you have concerns about your relationship with your spouse, your finances or your health, so why tell the complete stranger who created the quiz? 

Of course, the safest course of action is to forego those quizzes altogether. And remember, if you share your quiz results on Facebook, you are simply encouraging other people to disclose their personal information to whomever created the quiz. 

Consider Opting Out From Behavioral Advertising (Including Facebook's) 

The Digital Advertising Alliance permits consumers to opt out of behavioral targeting. This tool allows you to see the participating companies that are customizing ads within your browser based on your surfing habits. You can select one or all of them (including Facebook) and choose to opt out. Doing so stores an opt out cookie in your browser, which means you have to repeat the process on every PC and browser you use.

Keep in mind, if you opt out, advertisers cannot target ads that may suit your interests based on your online behaviors. It also means that some free sites and services that rely on advertising revenue may get less of it because of your actions. So, before you hack away at those behavioral ads, consider the ramifications.

For more information or to opt out from this type of online advertising, visit AboutAds.info.

There are many more ways to protect your privacy when using Facebook or surfing the web, such as tightening your Facebook privacy settings, installing apps to prevent tracking requests in your browser, deleting browser cookies, using anonymous surfing VPN software, and removing your data from marketing databases such as Acxiom.

Of course, if you simply keep giving up your personal data to Facebook applications and sharing your preferences, concerns and activities on quiz sites, no amount of privacy settings or special software will protect you. You are your own best first line of defense.

Musical Bonus

For many years, I have been a big fan of Vienna Teng. Her latest remarkable release, AIMS, is a departure for Teng and takes a more digital direction. Included on the album is a haunting tune that, if you listen carefully, is about the sorts of tracking done by database companies such as Acxiom. Should we object to this tracking, or is it really what we want? Enjoy the tune and ponder the answer.





The Hymn of Acxiom
Lyrics courtesy of Vienna Teng's Website

somebody hears you. you know that. you know that.
somebody hears you. you know that inside.
someone is learning the colors of all your moods, to
(say just the right thing and) show that you’re understood.
here you’re known.

leave your life open. you don’t have. you don’t have.
leave your life open. you don’t have to hide.
someone is gathering every crumb you drop, these
(mindless decisions and) moments you long forgot.
keep them all.

let our formulas find your soul.
we’ll divine your artesian source (in your mind),
marshal feed and force (our machines will)
to design you a perfect love—
or (better still) a perfect lust.
o how glorious, glorious: a brand new need is born.

now we possess you. you’ll own that. you’ll own that.
now we possess you. you’ll own that in time.
now we will build you an endlessly upward world,
(reach in your pocket) embrace you for all you’re worth.

is that wrong?
isn’t this what you want?
amen.


Saturday, July 5, 2014

Is It Time For a Mobile Mind Shift Or a Customer Mind Shift?

I just finished the book "The Mobile Mind Shift" by several of my Forrester friends, Ted Schadler, Josh Bernoff and Julie Ask. (If you use that link, you can download the first two chapters for free!) It is a good and timely book about how brands must monitor consumers' changing mobile habits, identify "Mobile Moments," empower employees and transform business processes.

While I recommend this informative book, it left me thinking less about the need for companies to embrace mobile technology and more about how vital it is for them to empower people regardless of channel or technology. The book may have focused on mobile, but I think it says more about the customer mind shift than the mobile mind shift. Brands don't win by being great at mobile but by better serving the customer in every channel! [Tweet that]

This point is underscored by the new 2014 UPS Pulse of the Online Shopper study conducted by comScore. You may be surprised to learn that a whopping 61% of consumers still prefer a PC for researching products, and the next most common research channel, preferred by 13% of consumers, is physical stores. Only 1 in 5 consumers prefer smartphones or tablets for research at the current time. The preferences are no different for purchasing products--in fact, consumers are even more oriented to PCs and physical stores for purchase. Just one in nine people prefer to buy on tablets or smartphones.

Of course, consumers will continue to shift to tablets and smartphones for research and shopping, but a substantial portion of your customer base will not be giving up their PCs any time soon. Even when consumers do shift research and shopping preferences to mobile, brands must be careful with their assumptions about what this means. For instance, the same study found that when shopping on mobile devices, more people prefer a retailer’s full website (41%) than mobile websites (34%) or mobile apps (25%).

The mind shift your brand must make is not to be mobile but to be responsive to customers in every channel. [Tweet that] If your brand is shifting to mobile but ignoring users of PCs and those who prefer full websites, you are making a terrible mistake.
Which of these data points is more vital to your brand?
That consumers use apps more than the mobile web or
that consumer do not use many apps?

As you adopt more mobile practices, be careful not to misread the data; for example, too many brands today are racing to launch their own apps. This seems reasonable based on the data that shows apps dominate the mobile web. That's an interesting data point, but here is a better one to help mobile planning at your organization: While Nielsen has documented a substantial 65% increase in time spent with mobile apps over the past two years, the number of apps consumer use has changed very little. Nielsen reports that the average number of apps used per month grew from 23.2 to 26.8 in those same two years. In other words, consumers may be ever more addicted to their Facebook, Twitter, WhatsApp, Candy Crush and Instagram, but they are just not that interested in your app. Unless your customers have a compelling need to interact with your brand regularly while out and about (such as banking or paying with the Starbucks app), a mobile app may not be the best strategy.

The message seems clear: Yes, you need to "get" mobile, but you first need to "get" the customer. Embracing mobile at the expense of other channels is no less a mistake than ignoring mobile. Brands that succeed in the future won't be "mobile first;" they will be "customer first." [Tweet That] This means furnishing value in whatever channel customers wish (mobile web, mobile apps, traditional web, physical, social, email, wearable) and in whatever way consumers wish (meaning both the traditional ownership economy and, increasingly, the new collaborative economy, as well.)

There is a pervasive attitude in business nowadays that companies are not adjusting quickly enough to the adoption of smartphones. I agree that is a risk, but I don't think that is the biggest risk companies face today. After all, companies scrambled 15 years ago to adopt to consumers' Web mind shift, but many did so in the most vapid of ways, launching static websites and banner ad campaigns rather than changing how they conducted business in a digital world. While Borders used the web to market its physical stores and books, Amazon made buying and downloading books easier--Borders made a web mind shift, but Amazon made a customer mind shift.

If companies launch mobile mobile apps that merely cut and paste today's web functionality into an app, they should not be surprised when they fail. Sure, Sears can launch a mobile app so people can shop on their phone, but how many people are going to boot up a Sears app regularly? Compare that to Amazon's new Firefly feature on the Fire phone, which uses the phone's camera to identify products in the real world and instantaneously provide links to that product in the Amazon Marketplace. Retailers that simply offer traditional web shopping in an app are making a mobile mind shift, but that will do little to combat Amazon as it continues to lead the customer mind shift in retail.

The mobile mind shift demands that brands use mobile technology, but a customer mind shift may suggest other ways to win the customer. For example, Sears has spent the past decade cutting in-store staff to a bare minimum (or below) to try to keep costs in line with shrinking margins in bricks-and-mortar retail. (Sears head count per store is now less than half the industry average.) But think about the brands that are succeeding in physical retail--Restoration Hardware, HomeGoods, Kate Spade and Lane Bryant lead the market in sales per square foot growth, and they didn't achieve that by offering a poor customer experience.


A new mobile app may help physical retailers a bit, but it will take more than an iPhone and Android offering to stem Sear's bleeding. (Sears Holdings' market cap is down more than 80% in the last six years.) The only way for Sears to respond to a mobile mind shift of smartphones with showrooming apps is to provide a unique, differentiated, value-added experience in the physical space. Having the proper staff and offering digital in-store assistance is the way to keep people shopping and buying in the real world (where 94% of all retail still happens in the US!), which means Sears' most pressing need is not to make a mobile mind shift but a customer mind shift!


Explore more SHLD Data at Wikinvest

I am not arguing against the mobile mind shift, but hasn't the time come to stop worrying so much about channels and instead focus more on the customer? Tomorrow's customers will be more mobile, of course, but they will also be more social, more digital, more inclined to rent and share than to buy and own, more demanding that brands earn their trust and have higher expectations that brands will act proactively and in real-time to resolve problems.

Go ahead and launch your mobile app, but if you are counting on that to keep your brand relevant, I respectfully submit you will be deeply disappointed.