The Next Digital Evolution: Building Trust in a Digital-First World
Posted by Ben Nowikowski • Nov 9, 2022 4:04:45 PM
Digital Evolution: A Brief History
There have been three industrial revolutions: the invention of the steam engine, the age of science and mass production, and the rise of digital technology. Here’s how the rise of digital technology began:
- Semiconductors were invented in 1959 by the “mayor of Silicon Valley” Robert Noyce who later founded Intel
- ARPANET was invented by the U.S. Department of Defense in 1970 and later became the backbone of the public internet or World Wide Web, that would later become widely available in 1993. You may remember subscribing to AOL, dialing into the internet via your landline at speeds topping out at 46 kilobytes per second and hearing “you’ve got mail,” which in 1998 became the title of a movie starring Meg Ryan and Tom Hanks
- The cellular mobile phone was invented in 1973 by John F. Mitchell and Martin Cooper at Motorola, which would become the commercially available Motorola DynaTac in 1983. You may remember Zack Morris promoting it on the TV show “Saved by the Bell”
- In 1976, the personal computer was created by Steve Jobs and Steve Wozniak. It wouldn’t become a commercial success until 1984 when Apple sold 70,000 Macintosh computers
The rise of digital technology and the period of Web 1.0 that followed in the 1990s was, at least in part, the results of these four foundational digital innovations converging and starting to transform the world. Amazon, Google, and Apple were founded in the ‘90s; in the 2000s came Facebook; and 2005 was the transformational turning point of the third industrial revolution: Web 2.0 began with 1 billion on the internet, 3 billion with mobile phones, and the advent of the cloud which created new businesses like Netflix’s streaming platform that still runs on Amazon Web Services (AWS).
- In 2000, about 25 percent of data was digital
- By 2005, 75 percent of data was digital. AOL email addresses and dial-up were disrupted by high-speed internet and superior offerings such as Gmail. And by 2010 we were living in a digital world where over 99 percent of data was digitized: 1.8 billion people on the internet, 4 billion mobile phones with access to 4G speeds, and 32 percent of advertising spend became digital
- By 2020, more than 51 percent of advertising spend became digital. Data quickly became extremely valuable, establishing a new frontier and birthing new institutions and entire industries that were harvesting digital data to unlock value
Digital data was powerful – it could be used to make better decisions, it could be used to create new business models, and it could be used to exploit consumers and companies.
For a more in-depth look at how the rise of digital began and evolved, check out this graphic.
Power, Responsibility, and Trust
As Stan Lee wrote and illustrated in his 1962 Spiderman comic, “With great power comes great responsibility.” A brave new digital world began in the ‘90s, the bubble burst in 2000, and by 2005 the third industrial revolution changed the world forever. Multiple trillion-dollar market cap companies were created: Amazon and Apple in 2018, Microsoft in 2019, and Google in 2020. But with all that digital data and all that power were brands heeding the advice of Spiderman’s Uncle Ben Parker? Were they taking responsibility, and acting responsibly and in the best interest of the users from whom they were taking data?
- Yahoo suffered a data breach in 2013 and 3 billion user accounts were stolen
- In 2017 the Equifax digital platform was breached, which had an impact on 148 million Americans whose credit history was tarnished unbeknownst to them creating profound financial harm
- The breach of trust continued in 2018 when Cambridge Analytica stole and sold 90 million user accounts on Facebook. That data was used in the 2016 presidential campaign to target voters
- In 2021, Facebook suffered a breach where more than 500 million records were compromised
Data breaches were just a part of the growing privacy concerns that were fueling distrust and concern. Consumers started to learn that they were being watched, they were being tracked, and they were being exploited for profit.
In some cases, users’ physical location was being tracked and sold without their knowledge. In other cases, their digital footprint was being tracked and sold as they searched and browsed the internet. In December 2018, The New York Times published an article exposing how consumers were being tracked and their data sold for profit – including how a reported 200 million mobile devices in the U.S. were being tracked, and that data sold to advertisers, retailers, and hedge funds to name a few. The article stoked already prevalent privacy concerns and further exasperated the already-eroded trust consumers were feeling about how their data was being used.
“Love all, trust a few, do wrong to none.” – William Shakespeare, All’s Well That Ends Well
Five years after the start of Web 2.0, trust in brands that misused digital data started to erode and, in many respects, has yet to be restored. Governments stepped in. New privacy laws quickly followed, with the promise of more to come. The European Union (EU) General Data Protection Regulation (GDPR) was adopted in 2016 and become enforceable in 2018. The California Consumer Privacy Act (CCPA) was signed into law in 2019 and become effective in 2020. Following these regulatory actions, consumers quickly saw updated and extremely complicated, technical privacy policies – legal jargon they had to comply with to transact digitally with brands. Confusing pop-ups emerged on websites asking consumers to accept or deny different types of cookies. In April 2021, Apple announced App Tracking Transparency (ATT) enabling users to decide if they wanted apps to track their activity across other companies’ apps. Finally, in June 2021, Google announced that they would stop tracking consumers using cookies in their Chrome browser – first setting a deadline of early 2022 and later pushing out that deadline to 2024.
The Next Era of Digital Evolution
Brands that can both harness the power of digital – and prove they are among the few trusted stewards of digital data – will become the brands that thrive in the next digital evolution era where trust and transparency is the new battleground.
It is no longer enough to take a risk-based approach to data privacy; brands must openly take responsibility using a value-driven approach to building trust and transparency. In 2018, Apple said “Privacy is a fundamental human right” on its Q2 earnings call, later elaborating that “it is also one of our core values. Which is why we design our products and service to protect it.” Apple’s privacy product innovations that followed would be a significant disruption to the industry and have since ignited new urgency for more brands to take on more responsibility.
There is an opportunity to join the few that have earned the trust of consumers, the few that have embraced privacy as a core value, and the few that embrace both the power and the responsibility that digital data requires.
Here are some ways to start that process:
- Use a brand safety, risk-based approach to build the business case for change within your organization
- What is the risk to your employees, partners, regulators, and customers?
- Use risk to energize your brand and begin the hard work to build shared interest and ignite change from within
- How does your brand’s mission, vision, purpose, and values build trust, transparency, and protect the privacy of your consumers?
- How are you cultivating a culture of trust and transparency and how important is that to your brand?
- What should you start, stop, or continue today to ensure you protect your brand and your consumers tomorrow?
The Future: Privacy Productization
What if you thought of privacy as a product you provided to your customers. What products would you offer and what value would you provide? Each product may have its own agreement with consumers that highlight the value exchange, in simple layman’s terms, between the brand and the consumer. Each product would have a product manager and team. Products could be a personalized browsing experience, product recommendations, premium customer service, loyalty/rewards program, etc. How would you design and merchandise these privacy products? How would your brand’s new mission, vision, purpose, values, and culture influence the product design, execution, and governance?
If history is the best guide to the future, the third industrial revolution – the rise of digital technology – has shown that brands that use data in a trusted, transparent, privacy-first way to continuously adapt their products and services to meet the unmet needs of their consumers will be the brands that survive and thrive in what is likely soon to become a fourth industrial revolution.
Post-pandemic turbulence will continue to challenge organizational resilience and adaptivity effectiveness. The pace of change is not slowing down. The brands that start small, continuously experiment, learn, and evolve will be the ones that shape the next digital evolution.
Ben Nowikowski is a founding partner and CEO of Digital Evolution Partners Inc.