Essay by Hossein Rahnama and Alex “Sandy” Pentland: “The data harvested from our personal devices, along with our trail of electronic transactions and data from other sources, now provides the foundation for some of the world’s largest companies. Personal data also the wellspring for millions of small businesses and countless startups, which turn it into customer insights, market predictions, and personalized digital services. For the past two decades, the commercial use of personal data has grown in wild-west fashion. But now, because of consumer mistrust, government action, and competition for customers, those days are quickly coming to an end.
For most of its existence, the data economy was structured around a “digital curtain” designed to obscure the industry’s practices from lawmakers and the public. Data was considered company property and a proprietary secret, even though the data originated from customers’ private behavior. That curtain has since been lifted and a convergence of consumer, government, and market forces are now giving users more control over the data they generate. Instead of serving as a resource that can be freely harvested, countries in every region of the world have begun to treat personal data as an asset owned by individuals and held in trust by firms.
This will be a far better organizing principle for the data economy. Giving individuals more control has the potential to curtail the sector’s worst excesses while generating a new wave of customer-driven innovation, as customers begin to express what sort of personalization and opportunity they want their data to enable. And while Adtech firms in particular will be hardest hit, any firm with substantial troves of customer data will have to make sweeping changes to its practices, particularly large firms such as financial institutions, healthcare firms, utilities, and major manufacturers and retailers.
Leading firms are already adapting to the new reality as it unfolds. The key to this transition — based upon our research on data and trust, and our experience working on this issue with a wide variety of firms — is for companies to reorganize their data operations around the new fundamental rules of consent, insight, and flow…(More)”.