Data Ethics — The New Competitive Advantage

Editor’s note: The following is an abstract from Data Ethics — The New Competitive Advantage.

We are living in an era defined and shaped by data. Data makes the world go round. It is politics, it is culture, it is everyday life and it is business. Our data-flooded era is one of technological progress, with tides rising at a never seen before pace. Roles, rights and responsibilities are reorganized and new ethical questions posed. Data ethics must and will be a new compass to guide us.

Two decades ago, environmental reporting was something quite new, and many companies did not take being “green” very seriously. There was growing concern among good-intentioned citizens, but many didn’t know how to act on it. Today, those same worried individuals can sort their garbage, eat organic foods, take warm, solar-powered showers and drive electric cars.

Companies also take the environment seriously. Not only because those with a direct effect on the environment are required to report to the authorities, but because green business practices are sound business practices. Being eco-friendly has become an investor demand, a legal requirement, a thriving market and a clear competitive advantage. Data ethics will develop similarly — just much faster.

Data leaks, hacks, surveillance scandals and, especially, social media users’ “digital hangovers” have kick-started a movement. Individuals and consumers aren’t simply concerned about a lack of control over their personal data (their privacy), they’re starting to take action on it and react with protests, ad blockers and encrypted services. In Europe, a new data protection regulatory framework which encourages the development of a privacy by default infrastructure has been implemented. Across the globe, we’re seeing a data ethics paradigm shift take the shape of a social movement, a cultural shift and a technological and legal development that increasingly places humans at the center.

Businesses are starting to feel this shift. Not as an “either/or;” either we use data or we don’t, but rather they’re gaining awareness about data from an ethical perspective, gradually moving away from an overbearing focus on big data and embracing sustainable data use. Visionary companies are already positioning themselves within this movement and investments in companies with data ethics are on the rise. We’re seeing an increasing number of businesses take the development of privacy technology as a direct point of departure, along with the value of individual data control.

What is data ethics?

Ethical companies in today’s big data era are doing more than just complying with data protection legislation. They also follow the spirit and vision of the legislation by listening closely to their customers. They’re implementing credible and clear transparency policies for data management. They’re only processing necessary data and developing privacy-aware corporate cultures and organizational structures. Some are developing products and services using Privacy by Design.

We’re in an age of experimentation where laws, technology and, perhaps most importantly, our limits as individuals are tested and negotiated on a daily basis.

A data-ethical company sustains ethical values relating to data, asking: Is this something I myself would accept as a consumer? Is this something I want my children to grow up with? A company’s degree of “data ethics awareness” is not only crucial for survival in a market where consumers progressively set the bar, it’s also necessary for society as a whole. It plays a similar role as a company’s environmental conscience — essential for company survival, but also for the planet’s welfare. Yet there isn’t a one-size-fits-all solution, perfect for every ethical dilemma. We’re in an age of experimentation where laws, technology and, perhaps most importantly, our limits as individuals are tested and negotiated on a daily basis.

The Fourth Industrial Revolution

In the wake of today’s rapid technological development, human and ethical dilemmas emerge. Data is transforming society — some call it the Fourth Industrial Revolution. The first industrial revolution was based on water and steam, the next on electricity and the third on information and digitalization. In the fourth, the boundaries between the physical-biological and digital worlds are being eliminated — fueled by data.

Data, personal data included, can have many positive uses and outcomes, but there are also many risks in a data-driven business process. Gartner, Inc. has predicted that by 2018, 50 percent of business ethics violations will occur because of improper use of big data.

Global standards for data ethics

Data is an asset, but it’s also a risk. Today, the most prominent perils are data exhaust and unsustainable data practices, and a process to negotiate global standards, roles, rights and responsibilities to handle such risks has been initiated. This also means that tensions and clashes between laws and cultural values are amplified.

Throughout history, societies have always somehow managed to mitigate man-made risks produced by different periods of industrialization (e.g. pollution, atomic weapons and health hazards in food production) through new regulations, global standards, formal verification systems which consumers trust and slow but steady cultural adaptation — including new levels of awareness, education, literacy and ethics. Industry has had to adapt to these requirements not only with targeted risk assessment and management, but by innovating and evolving in new ways. It will have to do the same in a data-saturated environment, with data ethics as a guide.

50 cases with data ethical companies

Data Ethics — The New Competitive Advantage is an analysis of trends through which we map a new field by looking at a few constructive solutions. This also means we address the forces at play in general, that is: the societal power structures, interests and relationships underpinning the field. It’s fundamentally important to us to make the invisible visible and, as such, provide the right tools to build something new: data-ethical services, businesses and products based on a paradigm shift in the way we approach digital data.

The book combines broad trend analyses with more than 50 cases of companies that use data ethics to varying degrees, such as German toy maker Vai Kai, Australian personal data store Meeco, French insurance group AXA, the new Swiss privacy-focused ‘skype’ Wire, and the U.S. search engine DuckDuckGo. Most of the companies mentioned are still in a beta phase in the data ethics field, and not one has yet found the optimal solution. Every beginning takes time, just as it did with the products and companies that arose from the first inkling of environmental awareness.