The E-Business Software Weekly is a series profiling trends and developments in software and applications that support e-business, the Internet, and other electronic communication channels. Look for a new story each week in this space.
The Freedom Train
The Fourth of July holiday just passed is always a good time to reflect on the state of freedom in our world. And in general, for the allies of freedom, the past quarter century has been a good one. With the fall of Communism and the democratization of once totalitarian countries beginning in the 1980s, freedom seems to have been experiencing an upward trajectory, frayed only at the edges, that one can reasonably claim reflects a more or less permanent change in the dynamics of global politics.
Indeed, freedom has become so ingrained in Western (and particularly American) civilization since the U.S. Civil War that heinous lapses, like the interment of Japanese citizens during World War II and the deprivation of African Americans' civil rights in the 1960s, are now almost universally disavowed across the American political spectrum, and temporary assaults on freedom, like the CIA's domestic spying activities in the 1970s, stand out in such stark relief against the grain of American society precisely because they are so rare.
In light of this history, one can be forgiven for thinking that, in our enlightened Western polity, the ride on the glorious freedom train will never end. Yet now comes a set of sobering developments, little noted in the general news media, that suggests that freedom's upward climb may be as susceptible to faltering as the long economic rise of recent years proved to be. For these warning signs, one does not need to look to China nor to the Philippines nor to the Middle East, but to the very birthplace of American democracy: Mother England.
One precaution: what follows may sound more like an extract from George Orwell's "1984" than it does from the newspapers of 2001. But it is well to remember that Orwell's dark dystopia was set primarily, not in some wayward Communist state, but in Orwell's homeland of Great Britain itself.
George Orwell Redux
The Fourth of July newspapers across the country contained the standard paeans to freedom and democracy, but one was more eye-opening than usual. Dan Gillmor, the technology columnist for the San Jose Mercury News, wrote from London that "it's always a bit weird to celebrate Independence Day in the nation from which my country rebelled." But he went on to wonder how many people in Britain "think at all about the degree to which they are giving up fundamental rights... At the dawn of the Information Age, the nation that gave us the Magna Carta--one of the seminal documents of liberty--seems poised to become a surveillance state."
Sound a bit overstated? Consider:
"Walk down a street [in London] and cameras follow your moves," says Gillmor. "At last count, more than 300,000 video cameras were keeping tabs on public places, including streets, housing developments, shopping districts, and parking lots... all in the name of curbing crime."
The new Regulation of Investigatory Powers Act, or RIP, was approved by the British Parliament last year, "to the dismay of an array of civil libertarians." The Act gives the British government "unprecedented power to tap people's communications. Among its worst features," writes Gillmor, "the law threatens the security of encrypted information, with jail time for anyone who refuses to turn over an encryption 'key' when authorities demand it."
Recently, Britain's Labor government "has been leading the charge for a European Union proposal that would allow individual governments to order telecommunications providers to store seven years worth of customer voice and data communications--and give police access to those records."
The British government is also planning a "massive expansion of a national database of DNA samples. It would include not only DNA from criminals, but also DNA from people who volunteer to give genetic information during police investigations. One legislator has suggested taking DNA samples from all newborn babies."
Data and Privacy
Interesting political news, one might concede, but what does all of this have to do with e-business? Quite a lot, as it happens. The momentary outcries during the past couple of years at the data-capture schemes of companies ranging from DoubleClick to TiVo are vivid reminders of people's lingering suspicion of the effect of technology on their personal privacy. So is the fact that a significant minority of Internet users are still reluctant to reveal their credit card number or other personal information over the Internet--qualms that have little dissipated in the last two or three years, despite companies' repeated reassurances and unequivocally stated privacy policies.
These persistent privacy concerns have some very practical effects on companies seeking to do business over the Internet. As Louis V. Gerstner, chairman of IBM, has remarked, when customers go to a Web site and "are asked to fill in their name, address, age, income levels, and all that, they say they're Albert Einstein with an income of $5 and an email address of E=MC squared. Worthless data." What are customers really saying when they do that? he asks. "They're saying they don't trust the security of the site, and they don't trust that the owner of the site is going to respect their privacy and not abuse or sell their personal data." It's a confidence issue, not a technical issue, and, says Gerstner, it "is not going away."
For companies basking in billions of dollars of online sales, such concerns might not be worthy of note. But for firms still struggling to break even on their Internet operations (a group that includes virtually all online merchants), such issues cut to the heart of their financial future. Think about it: if a land-based retail store owner discovered that large proportions of her customers were refusing to hand over their credit card once they reached the checkout counter with their selected merchandise--and that a nontrivial percentage of patrons were refusing even to enter the store for fear of being robbed--the outcry would not end until the problem was resolved.
Should management respond any differently when the company conducts its business over the Internet?
Alleviating Privacy Concerns
Of course, no communications or marketing strategy is likely to eliminate deeply held fears, and the most tenaciously suspicious of potential e-business customers are apt to remain so even in the face of the most stringent privacy policies. In fact, privacy policies have become so ubiquitous (and are so seldom read) that, while clearly necessary, they probably do little to allay most e-business customers' privacy fears--becoming, in effect, the moral equivalent of the dentist's calming injunction that "this won't hurt a bit."
What, then, can companies do to alleviate privacy concerns that interfere with achievement of their e-business objectives? A good deal, actually. While some of the suggestions that follow may run counter to conventional wisdom (or even to basic bottom-line business practices), earning long-term allegiance often requires some short-term sacrifice. With this patriotic disposition in mind, therefore, we offer a few simple rules for companies seeking to overcome the privacy problems that may undermine their e-business success:
Rule No. 1. Unless absolutely necessary (such as for completing a credit card transaction), don't ask customers for their personal data. While this practice may not eliminate fears of subtle surveillance, like the secret preference monitoring that landed TiVo in hot water, it will keep from raising any unnecessary red flags--and show customers that you respect their privacy.
Rule No. 2. When data must be obtained, keep data-collection to the essentials. In other words, don't collect customer data just to make your marketers' lives easier. To be sure, the Internet has fostered a proliferation of data collection in part because it makes the process so easy. But such marketing-inspired data capture can do more harm than good, interfering with an e-business site's most important mission: sales. Imagine how resistant land-based retail customers would be to buying if, every time they tried to make a purchase, the sales clerk asked a litany of intrusive personal questions while he was ringing up the Fritos and paper towels. Just because a site has the power to capture personal information doesn't make it the right (or even the best) thing to do.
Rule No. 3. Never sell customers' personal data. As in the direct mail and telemarketing fields, the sale of customers' data can increase a company's short-term revenue, but the marginal financial gain often pales in comparison to the damage done to a company's--even the industry's--reputation. Avoiding this seduction not only protects against embarrassing news stories and angry customer complaints, but it greatly strengthens a company's privacy promise to its customers. There is simply no more clear nor powerful privacy policy than this: "We don't collect your personal information. We don't store it. And we don't sell it. Period."
Rule No. 4. Question personalization. Personalization has long been touted as a key ingredient in successful e-business enterprises, and sometimes it can help. But, as we will explore in a later column, personalization is often poorly understood and even more poorly implemented, factors that can lead to disenchantment among site owners and dissatisfaction among customers. Indeed, one of the comforting aspects of large, land-based retail stores to many customers is the anonymity of shopping in a place where "nobody knows your name." E-business providers should carefully evaluate the trade-offs between anonymity and personalization, and should not reflexively assume that personalization, especially as it is traditionally implemented, is the superior value.
Rule No. 5. Offer clear alternatives. The mail-order catalog industry was spectacularly successful even before the advent of the Internet, despite the fact that the only way for customers to order was usually by mail or telephone. E-business sites should take a cue from their catalog counterparts and not only offer a phone-in alternative onsite, but make the option clear and prominent. For instance, on the order summary page, two equally acceptable choices might be proffered: "finish online" or "phone your order in." While phone-in orders obviously cost more to process, a higher-cost order is better than no order at all--and the mere presentation of multiple ordering options (even when customers proceed to order online) can go a long way toward alleviating privacy concerns.
Climbing Ever Upward
Fifty years before the arrival of the commercial Internet, George Orwell envisioned a surveillance-centered society that the Internet--and a growing number of British legislators--have now made eminently possible. While no serious commentator expects a neo-Luddite abandonment of the Internet in the face of online privacy fears or the emerging British abuses of technology, commerce (electronic and otherwise) survives primarily at the margins. And those margins can be sharply undercut, if not obliterated entirely, by a customer base suspicious of an e-business site's means or motives.
In the aftermath of last week's loud and boisterous fireworks, it is well to remember that consumers' most critical business decisions are typically made, not in some showy public light, but in the quiet contemplations of their minds. It's not hard to guess what those thoughts might be. At the moment that customers' computer cursors are hovering over the "Submit Order" button, while merchants may be listening for the ka-ching of virtual cash registers, customers for some time to come are likely to be straining to hear a different sound: the whistle of the freedom train, climbing slowly, surely, ever upward.
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