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What does it take to win in a data-rich world?

New Zealand and Australian businesses have some way to go in earning their customers’ trust around data-gathering and sharing.

Article from Ian Hulme, New Zealand Management

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Data is king in today’s global economy; it informs decisions made at every level of business.

We’ve seen companies rise and fall based on how they leverage and store it and how much their customers trust them with their personal information. And, at the same time, regulators are increasingly placing limits on how that data is gathered, stored and used.

In the 21st Century economy it’s crucial for businesses to build a social contract of trust around data-gathering and sharing. However, a new IBM study shows that New Zealand and Australian businesses have some way to go in earning that trust with customers.

IBM’s Global C-suite Study, an extensive bi-annual survey of business leaders, interviewed more than 13,000 C-suite executives around the world, including 430 in Australia and New Zealand.

The study examined companies across a broad range of industries that are achieving market leadership by emphasising trust in their use and sharing of data.

The results points to some key trends occurring globally and particularly relevant for medium and large companies in New Zealand.

Respondents were classified into one of four stages of data-leadership, from ‘aspiring’ to the most sophisticated – described as ‘torchbearers’.

This latter cohort comprise just nine percent of the total respondents and even fewer in Australia and New Zealand (six percent), and are at the forefront of data and trust, having fused their data strategy to business strategy.

I’m interested in the insights offered by this handful of companies who outperform their peers in revenue growth and profitability – delivering 165 percent higher results – as well as in innovation and managing change.

These leaders understand that transparency and reciprocity are critical ingredients for earning trust, that building trust begins with accurate business data, and that they need to extend the value of data by creating trustworthy ecosystems.

Establishing a reputation for trust is critically important at a time when consumers report more concerns than ever in sharing information, but a greater willingness to share information with companies who are transparent in how their data is used.

Organisations which earn customer trust are more likely to keep the data they have – their customers won’t ask them to purge it because they find value in sharing – and collect more of it in the future to deliver new kinds of value to customers.

Reinforcing this point is an earlier IBM study on data privacy which found that 81 percent of global consumers say that in the past year they have become more concerned with how companies are using their data.

Fortunately, the same number also said that they actively support companies who are transparent about how they use their data, and avoid doing business with companies that don’t.

 

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The actionable advice from the torchbearers is, in a word, to trust your own data, and be ready to share.

Building a foundation of data trust begins within the organisation. Putting this in perspective, 80 percent of leaders globally reported that they, and their C-suite colleagues, have deep trust in data to perfect the quality and speed of their decisions.

To achieve similar levels of confidence, managers must strive to ensure that the data you are responsible for is accurate, up-to-date and appropriately contextualised.

In other words, organisations must be sure they can trust their own data.

Leaders in data trust develop a culture that is comfortable distributing data widely internally, knowing that democratising data can drive innovation and empower employees to make decisions.

Of concern then is the finding that even among Australian and New Zealand torchbearers, just 68 percent are providing employees with data-related analytical skills and tools, compared to
73 percent globally.

Torchbearers also ensure that data trust extends into their wider business ecosystems, liberating data while scrupulously safeguarding it by enforcing strict rules about who receives access to which sets of data.

These leaders understand that data remaining in the organisation is likely to become stale, while circulating it outside the company improves its value. This is highly relevant to New Zealand as we have few truly vertically integrated businesses and rely heavily on partnering to achieve scale.  Over half (56 percent) of leaders are already acquiring and sharing data extensively with network partners, and 85 percent expect their partner networks will expand in the next few years.

Our study found torchbearers share three common business practices to establish and maintain trust:

• Emphasise accountability: Identify how customers expect a business to use their data and then doggedly ensure that those expectations are met or exceeded.

• Ensure transparency: Make a virtue out of communicating problems promptly and fully. Help customers to easily view detailed product information, including data about how products are manufactured and under what conditions.

• Offer reciprocity: Customers must be able to see significant value in sharing their data. Make that value proposition clear.

It’s worth noting that the advantages of a reciprocal approach to data sharing become even more apparent as newer technologies like AI enable companies to take a more personal approach to the business-customer relationship. Blockchain, meanwhile, is helping make trust verifiable.

Overall, local torchbearers do better than their global counterparts to generate trust and transparency with their customers. Where these companies are less strong is actually harnessing the value of that data at a strategic level to drive opportunity.

Now is the time to look hard at creating a data-driven culture, applying three principles – transparency, reciprocity, and authenticity – to guide how data is handled and how organisations engage your customers and business partners.

 

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