Data is the currency in the digital marketplace. The pandemic has accelerated the adoption of online business, and companies are consequently collecting more data than ever. Advances in technology have enabled companies to harvest vast amounts of personal data from consumers without their full awareness.
Big Data sets can be used to track and predict consumer behaviour and analyse group psyche to influencing and nudging political and social views as well as buying habits.
At the other end of the spectrum, data breaches and compromised data security have continued to hit news headlines. According to a report by Risk Based Security (RSB), cited by TechRepublic, the number of breached records jumped 141 per cent in 2020 to 37 billion.
Regulators are doing their part. But regulatory pressure alone has not prevented violations because in most cases, it appears that companies are trying to satisfy the minimum regulatory requirements. Some may even risk ignoring the rules because of cost.
The plethora of corporate data breaches has human consequences, with ordinary people falling victim to scams and online fraud. No consumer wants their private data falling into the wrong hands.
According to a PwC Consumer Intelligence Series survey, 76 per cent of global consumers think that “sharing my personal information with companies is a necessary evil”, but 60 per cent expect the companies with whom they do business to suffer a data breach someday.
Also read: Blockchain is the future of data privacy
Business leaders seem oblivious of such perceptions. In the same survey, 55 per cent of businesses feel that consumer trust in their technology is growing. However, only 21 per cent of consumers report such growing trust.
There is clearly a trust gap. Now more than ever, consumers are demanding the right to privacy, and they want to work with and for companies they trust.
How can organisations bridge that trust gap? For starters, take proactive steps to avoid becoming a victim of cyber-attacks. If they are collecting customer data, they need to manage and safeguard it responsibly. In other words, they need to practice Data Stewardship.
In recent years a new industry of privacy-tech has emerged, with purpose-led startups such as OneTrust and BigID responding to the complex cybersecurity needs. These two startups gained unicorn status in 2020.
The dilemma for business leaders is that data security costs money but is largely invisible to the consumer. However, a data breach is potentially catastrophic.
Stewardship is the mindset and practice of creating long-term economic value by addressing the needs of a wide range of stakeholders, not just shareholders.
Business leaders who adopt this mindset and practice are Steward Leaders. They do make money for their shareholders, they do have commercial and financial ambitions, but they further challenge themselves to achieve superior returns by doing good and doing right for society at large.
So how does one become a steward leader? Three steps:
- Adopt four stewardship values: Ownership Mentality, Interdependence, Long-term View, and Creative Resilience
- Articulate a purpose that is larger than just generating shareholder returns at any cost.
- Consistently use the stewardship values as a purpose to guide all actions and decisions.
Steward leadership and data (Cyber) security
Ownership mentality: Operating with an ownership mentality requires business leaders to be transparent about their data collection, usage and management practices. Leaders need to acknowledge the trust gap, understand what counter-parties expect and implement it. Training, insurance, server redundancy, and many other items, unseen but important, need to be acquired.
Also Read: Data breaches are inevitable. This is how you can protect your startup
Interdependence: Steward leaders see the world as an integrated and interconnected web in which the success of each constituent is coupled with that of other constituents. They understand that any data breach will not only lead to potential harm for consumers but also the loss of credibility and reputation for the company.
So they take it upon themselves to address the needs of all related stakeholders and do what is needed to protect data. The duty of care extends beyond that of box-ticking efforts.
Long-term thinking: Consumers’ attitudes are changing. Countries and governments around the world are also responding with stronger laws that emphasise data privacy and protection. Steward leaders go beyond short-term gains and superficial adherence to regulations, to delivering durable and safe products and services that provide value over the long term.
They also proactively build trust with their customers to ensure the long-term viability of their business models.
Creative resilience: Steward leaders understand that they need to have a blueprint for data security that matches today’s challenges. The status quo may not be good enough. If this means re-engineering the entire existing IT infrastructure at great cost to shareholders to meaningfully improve customer data security, so be it.
Steward leaders manage the tough decisions. A steward leader would not think of doing the regulatory minimum. Instead, he or she would ask, “Have I protected customers to a degree that is adequate?”
The four values and purpose together form a company’s Stewardship Core Compass. But simply developing the Compass and printing colourful posters will not do the job. Steward leaders must make the Compass a way of life (step 3) within their organisations. This is hard work, but in today’s transparent world, it is perhaps the only way to safeguard long-term success.
As we rebuild from the pandemic, there is a window of opportunity to create a strong win-win-win culture of stewardship, because it is good for the employee, the company, and the consumer.
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