Sustaining
competitiveness
in a digital age
How trust can make
or break the deal
Peter Lacy and Tim Cooper
In a digital world where identities can be stolen,
terrorism incited and secure bank accounts raided,
trust has become the new currency. Trust can make
or break relationships, dictate consumer opinion
and influence how society operates. And for
organizations looking to redefine competitiveness
in a digitally disrupted world, underestimating the
role of trust is like playing Russian roulette with your
business—the reputational risks can be devastating.
Why are the trust stakes so high today? First, digital
transformation demands responsible business
conduct, especially around the use of personal data.
Second, digital disruption unsettles society, raising
deep concerns about its negative impact on jobs,
wages and security. And third, a rise in collaborative
business models puts trust at the heart of customer
interactions. Failure to address these trends not only
limits the potential benefits of digital transformation
for both industry and society, but also could
eliminate businesses altogether.
2 | Sustaining competitiveness in a digital age
Putting a price on trust
Critically, business leaders need to assess, quantify and even communicate
the bottom-line impact of their trust-building activities in new ways.
Value data ethics
Just because an automotive company can access data to “fix”
emission standards, it does not mean that it should—as Volkswagen
found when it saw a 40 percent decline in its share price in the
three weeks following the scandal.1
Increasingly, as companies compete on managing the customer
experience, collecting huge volumes of personal data along the way,
failure to adapt to customer concerns around the ethical use of data can
increase costs and limit access to new revenue streams. When utilities
across the world installed smart meters in homes and businesses to
better manage energy usage, customers were unable to appreciate
the benefits of increased efficiency, lower costs, and reduced pollution.
Many customers felt vulnerable about utilities companies being able
to track their personal energy data and lacked confidence that it would
not be sold to advertisers or other companies. Indeed, a number of
United States regions adopted regulations to help customers opt out
of the program in response to health, privacy, and security concerns.2
However, customer trust runs both ways. Companies must now realize
that trust-building approaches to personal data can drive business value
(see Figure 1). A personal data survey found that 86 percent of business
leaders from products companies believe that addressing concerns over
the collection and use of data is an opportunity to fuel new growth and
enhance long-term customer loyalty.3 The app Shopkick is a case in point:
shoppers can choose to share their location data and, in return, receive
tailored offers and discounts in real time. Not only does this transparent
approach to collecting personal data highlight value for customers, but
also it can drive business value—Shopkick realized more than US$500
million in revenue for its retail partners in 2013.4
3 | Sustaining competitiveness in a digital age
Companies must
now realize that
trust-building
approaches to
personal data can
drive business
value.
Figure 1. Driving sustainable value creation by addressing concerns about the use of personal data
PROFITABLE
GROWTH
Revenue
John Deere analyzes data on
farmers’ activities collected
from sensors in its products
and uses that data to advise
farmers on how to improve crop
yield. By giving greater insight
to farmers in return for their
data, the company is entering
the precision-farming market,
which is expected to grow 12
percent annually and exceed
US$4.5 billion by 2020.5
Brand and Reputation
Nectar, a customer loyalty
program in the United Kingdom,
offers its 18 million customers
full visibility of data collection
and use. Nectar was singled
out by the United Kingdom’s
Information Commissioner as
an exemplar of best practice.6
LONG-TERM
FOCUS
Cost
Ensuring regulatory compliance
can help avoid significant direct
costs, which in the European
Union could amount to as much
as US$22 million (EUR€20 million)
or 4 percent of annual worldwide
turnover, whichever is greater.7
FUEL FOR
GROWTH
Risk
Microsoft is opening data
centers in Germany that will
be managed and operated by
a third party. This will enable
German customers to use
Microsoft technology but have
all their data controlled by
a German company, without
a “back door” that could be
accessed by United States’
intelligence agencies.8
Source: Accenture Strategy
4 | Sustaining competitiveness in a digital age
Show-and-tell societal benefits
As digital transformation disrupts society as well as industry,
uncertainties grow around its precise impact. Many commentators
argue that digital will help overcome societal inequalities—others that
it will compound them. In this backdrop of ambivalence and mistrust,
there is a huge opportunity for businesses to quantify and articulate
more clearly the impact of digital technologies’ use on society. Doing
so can help protect their future license to operate, while also offering
new ways to align societal objectives with market forces.
The World Economic Forum is currently working on an industry-level
analysis that seeks to expose some of the common myths surrounding
digital transformation. Rather than job loss, this analysis suggests that, in
the four industries analyzed, the overall impact will be net job creation by
2025. And in economic terms, the potential gains to society (in terms of
jobs created, productivity enhancements and carbon emission reductions)
outweigh the returns to industry (in terms operating profits)—US$12.7
trillion versus US$8.4 trillion by 2025, on a cumulative basis.9
Businesses that focus only on realizing value for themselves rather
than society will be ripe for regulation, and also undermine customer
sentiment. In the automotive sector, the value to society of automotive
partners agreeing on usage-based insurance to help reduce road deaths,
insurance premiums and crash costs is worth approximately 200 times
the value to industry—a strong case for new incentives which have not
been well quantified or communicated to date.10
Protect trust-based business models
Trust is an essential component of many trends in the digital
marketplace: Ubiquitous data use and transfer between people
and organizations. The sharing economy, where businesses provide
marketplaces for individuals to rent items or labor. And the platform
economy, where bringing together end users and producers to transact
with each other is essential for success. The potential value at stake
is significant—Accenture Strategy analysis shows that in the United
Kingdom, digital transformation of consumer industries (specifically
eCommerce and the shift from products to experiences, such as
car sharing) could realize the equivalent of around US$247 billion
(GBP£185 billion) by 2025.11
5 | Sustaining competitiveness in a digital age
82% agree a
lack of security
and ethical
controls on data
could exclude
them from
participating in
digital platforms
or ecosystems.
In the United Kingdom Financial Services sector, a recent report by
the Competition and Markets Authority (CMA) recommends more
transparency for its banking consumers, open application program
interfaces and easier account switching.12 But while the initiative
aims to promote competition, more transparent practices clearly
have the potential to build trust across the whole industry.
Addressing concerns around trust and data sharing are critical to
realizing value. In a recent Accenture survey, 82 percent of respondents
agree a lack of security and ethical controls on data could exclude them
from participating in digital platforms or ecosystems.13 Many platform
businesses are shoring up their unbridled trust with more traditional
centralized systems. Since a host’s apartment was badly damaged,
Airbnb now has stringent security measures in place, including a
24/7 customer-service hotline, a US$1 million host guarantee and
the establishment of a new trust and safety division. Aided by analytics,
Airbnb also assigns each reservation with a “trust score” which is
flagged for investigation if it is too low.14
Trust or bust
For many companies, the issues that dictate trust in digital
transformation are highly complex or multi-faceted. But with the risks
and opportunities of digital trust carrying such significant financial
weight, no competitive company can afford to ignore it. Businesses
can begin to secure the benefits of digital transformation, both for
themselves and for society, if they:
1. Activate the trust detector: Quantify the potential value of digital
initiatives to society as well as industry, identifying where incentives
are misaligned and where stakeholders need to be proactively engaged.
If companies understand those areas where trust is critical, and any
potential financial fall-out through a loss of trust, they can invest the
right management time and resources accordingly. Initiatives such as
usage-based insurance or telematics and the use of drones involve
technologies that offer enormous value to society, but also raise
significant ethical questions.16
6 | Sustaining competitiveness in a digital age
2. Bake in trust transparency: Trust-building should be the bedrock
for how companies use digital technologies across people, products and
processes, with better training and support helping to navigate some of
the ethical questions raised by digital technologies. Airbnb “designs for
trust” in its dedicated design studio, Samara, establishing a customer
experience at the outset that is built around core values.17 And tracking
the financial value of trust-building products and services and integrating
this insight into existing financial planning and decision-making processes
is essential. Companies must not only make progress in understanding
how more sustainable products and services can deliver better financial
returns, but also take action to achieve transparent digital innovation.
3. Champion trust accountability: By tackling the disruptive elements
of digital technologies head-on, business leaders can help restore trust
and engage a wide range of stakeholders in that process. In an effort
to address concerns over how customer data was being used, Facebook
has set up an “ethics council” to advise on the potential implications of
its research activities.18
What is measured is managed
Building trust has perhaps been seen by many in business as more art
than science—but now that must change. Historically, trust may not
have had the quantitative rigor of financial investment planning and
cycles, so it must now develop its own exactitude. By introducing trustbuilding initiatives that realign competitiveness, business leaders can
help gain value, for their organizations and society at large.
"Privacy, safety, trust are all core to our service. We’re
not going to be successful unless people trust our
service and trust our community."
Erin Egan, Vice President & Chief Privacy Officer, Facebook.15
7 | Sustaining competitiveness in a digital age
Join the conversation
@AccentureStrat on Twitter
TechWeek Europe, November 2015
8
World Economic Forum Digital Transformation of Industries:
Societal Implications, in collaboration with Accenture, 2016
9
Ibid
10
Accenture Strategy on LinkedIn
Accenture analysis
11
What you need know about cmas open banking report
12
Contact the authors
Accenture Technology Vision 2016
13
Wired, April 2014
14
Peter Lacy
15
London, UK
[email protected]
16
The Daily Dot, July 2016
World Economic Forum Digital Transformation of Industries:
Societal Implications, in collaboration with Accenture, 2016
Airbnb website
Tim Cooper
17
London, UK
[email protected]
18
Other contributors
About Accenture
Mark Curtis
Accenture is a leading global professional services
company, providing a broad range of services and solutions
in strategy, consulting, digital, technology and operations.
Combining unmatched experience and specialized skills
across more than 40 industries and all business functions—
underpinned by the world’s largest delivery network—
Accenture works at the intersection of business and
technology to help clients improve their performance and
create sustainable value for their stakeholders. With more
than 375,000 people serving clients in more than 120
countries, Accenture drives innovation to improve the way
the world works and lives. Visit us at www.accenture.com.
London, UK
[email protected]
Paul Daugherty
New York, USA
[email protected]
Notes
Schroders Talking Point
1
Facebook’s rules for experimenting on you,
MIT Technology Review, June 15, 2016
2 Boston Globe, June 2013
3 Accenture Guarding & Growing Personal Data
Grant, R., Shopkick Users Have Earned $25M in
Rewards, Scanned 70M Products, and Viewed 4B
Offers,” VentureBeat, February 13, 2014
4
Precision Farming Market Insights on Equipment
and Applications to 2014 and 2020,” PR Newswire,
October 28, 2014
5
“Big Data and Data Protection,” Information
Commissioner’s Office, 2014
6
7 Data Protection Report, May 2016
About Accenture Strategy
Accenture Strategy operates at the intersection of business
and technology. We bring together our capabilities in
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both efficiencies and growth. For more information, follow
@AccentureStrat or visit www.accenture.com/strategy
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