Companies have been harvesting data without having to consider whether society has conferred on them a licence to operate. Smartpipe’s CMO Chad Wollen explores the lessons from another industry that had to prove its social credentials.
We’ve all heard the cliché that data is the new oil. But the most interesting parallel between the oil and the data industries are their impacts on the wider society. Just as the oil industry had to seek a ‘social licence to operate’, businesses dealing in data must make their practices socially acceptable too.
Clearly, there has been urgent need for legislation ensuring responsible data usage — which will be attempted by the General Data Protection Regulation (GDPR). But what lessons can oil actually teach us?
The social licence: a brief introduction
The concept of a social licence to operate is built around the idea that companies must gain acceptance and approval from those affected by their activities to function.
To best illustrate this, we can look at the model developed by Robert Boutilier and Ian Thomson, which describes how a social licence is gained by splitting the process into four stages: withdrawal, acceptance, approval, and identification.
It begins with frosty relations between a company and its key audience. The firm may have a legal right to operate, but because those who object to it could cause disruption, doing so is risky and using the law to force compliance is only likely to fuel negative sentiment. For example, GDPR digital rights advocacy and civil society groups have already made their voices heard ahead of the new laws.
For many consumers engaging with brands at this level, withdrawal is too active a description, they will just ‘walk on by’. There is a large quantity of research showing the cost of privacy/trust concerns are the hard-to-measure ‘non behaviours’ of apps not downloaded, websites not used, or transactions not made. This makes it crucial to quickly reach the second stage.
Individuals see what the company can do for them and accept the nature of a value exchange, an offer which the consumer perceives to be of tangible benefit. This participation in a transactional relationship secures the brand legitimacy.
Yet getting further isn’t simple. Companies must make the leap from legitimacy to credibility, founded on agreeing a social contract and generating social capital. Delivering messages that set and meet high expectations and trigger engagement is the first step in creating a social contract. At each touchpoint, companies must commit to engaging, listening, respecting, and responding to their audience. Focusing on operations, the relationship is about agreeing fair ‘terms’ for business conduct.
A business should look at investment, adoption, and use of new technologies or processes to substantiate its intent and vision. A brand narrative must be developed and harnessed to establish the firm as an institution that shares audience values – it must have a recognisable and relevant reason for operating to create social acceptance and accrue social capital.
Approval is achieved when individuals are confident the company is fulfilling these transitional requirements and ready to give their stamp of approval.
The final stage, identification, sees the social licence granted by individuals who have a personal connection with the company and a deep level of trust. Not only do they believe the organisation understands and takes their opinion into account, they also see its ethics as aligned with their own, and business as intrinsically linked to their lifestyle and wellbeing. In short, the bond between company and audience is transparent and balanced.
This requires sustained effort — if companies want to obtain and keep a social licence to operate, sustaining credibility, legitimacy, and trust is key. While there will be some brands that achieve this identification from consumers, it is more likely that most of their hard work will be to gain and maintain approval.
Why it matters to advertisers
A business may have a legal basis for its actions but if it fails to win public support it might find proceeding impossible.
Most consumers know companies collect data about them when they use the web and over half (57%) are worried about how much information they make available online. So, with the GDPR set to give individuals the power to grant or deny access to their personal data, there is a chance those who haven’t won their social licence could lose a very precious resource.
Consumers need guarantees of security — nine in 10 want to know how firms ensure data is protected — and that their details won’t be deliberately or unwittingly misused, as with the Cambridge Analytica case. Companies must convince digital audiences that their data capture, storage, and usage processes deserve approval.
In addition, the GDPR makes the data industries closer to oil and gas by giving the advocacy and civil society groups a formal and recognised seat at the table. These passionate and focused stakeholders are also a significant part of the social licence to operate equation.
Earning trust and the ‘so what’ box
GDPR stipulates building trust, meaning that with compliance, a transparent data policy should become a hygiene factor. Earning social approval isn’t a one-and-done process; both the Boutilier-Thomson model and GDPR demand continual dedication.
As well as frequently checking that the social contract and capital they have established is still feasible and reasonable, brands must also ensure that the ‘value exchange’ is still perceived to be valuable by consumers. Last but not least, businesses also need to tick the ‘so what’ box. This entails proving to individuals that the business not only cares about their interests, but also shares them.
From the data perspective, this means speaking to the priorities of today’s consumers and utilising information for public good. Unilever, for instance, sources 48% of its agricultural supplies sustainably and aims to “help a billion people […] improve their health and well-being” by 2020.
Of course, not all companies can afford to invest in altruistic initiatives on a global scale. But most can and should seek to harness data in a way that justifies their activities by integrating their brand with consumer’s everyday lives. It sounds like a high price to pay; yet it’s worth acknowledging that when industries deliver big rewards, they often bring sizeable costs. Like oil, brands have to accept their responsibility to comply with regulation, consider their impact on the world, and focus on winning that social licence to use data.