Data might be like oil, but reputation is still the real black gold
For those firms harbouring inordinate reserves of our personal information, despite the endless profit-churning opportunities, an unblemished corporate reputation remains priceless.
But today, data is a democracy. Businesses in all sectors are harvesting it and leveraging it. And it’s becoming painfully clear that data mishandling can have cataclysmic consequences. One slip up can kill your corporate reputation stone dead.
Commercially, data is the new oil, with the profits to prove it. So it’s no surprise that data collection is now at the heart of sectors from finance to insurance, retail to hospitality. But this new focus on data means that we’re starting to ask what digital best practice should look like.
How is our data being handled, and by whom? What are companies using it for? What kind of protective measures are in place to keep it safe? And it’s not just consumers asking – regulators’ questions remain unanswered too.
The picture is not a pretty one, as more data was lost or stolen in the first half of 2017 than the whole of last year.
Second-hand electronic goods retailer CeX, telecommunications conglomerate Verizon, and consumer credit reporting agency Equifax are all recent examples of firms who have been digitally exposed.
In the case of Equifax, the post-mortem of its mammoth breach revealed that the data of up to 143m Americans had been stolen, as well as that of nearly 700,000 UK consumers.
The ensuing media onslaught and breakdown of consumer trust proved too much for chief executive and chairman Richard Smith, who resigned just weeks later.
To make matters worse, Equifax’s brand reputation was dented further still when the chair of the Treasury Committee, Nicky Morgan, wrote to the firm’s European chief demanding answers over the length of time it took to notify customers of the breach.
The scandal highlighted just how catastrophic data breaches can be. One day you’re a respected industry player. The next, you’re a screaming global headline, and your business is toast.
According to a Ponemon Institute study assessing the reputational impact of data breaches, conducted with 843 senior-level business people globally, 81 per cent of respondents said a breach would affect their organisation’s economic value. The average diminished value of a brand as a direct result of a breach was recorded at 21 per cent, and it took an average of just under one year (11.8 months) to restore their organisation’s reputation.
When a crisis takes hold, communications, operational and legal teams must work together to get into gear – fast. Scenario planning must be practised and watertight to have a chance of protecting the brand. But for some reason, even when companies recognise the danger, many still ignore it.
In a now abandoned WordPress blog, Travis Kalanick, the founder and former chief executive of Uber, published a post in 2010 on how reputation would “become more important than ever” in the years to come – particularly as access to data increased.
One of this century’s foremost tech visionaries could spot the risks a mile off, having envisioned reputation’s inherent value in the digital age. How ironic then that even Kalanick couldn’t save himself, as he failed to prevent his tarnished public image from being his downfall.
Data insights have created great new companies that have transformed our lives, spawning innovative, previously unseen business models.
But one thing has not changed, and never will: you still need a sound corporate reputation to survive and thrive in this – the fourth industrial revolution.