A 2001 perspective on personalization

Author’s note: I wrote these words in 2001, in the closing chapter of my book, Making It Personal – Bruce Kasanoff

It’s easy – and titillating – to focus on the dark side that could spread as corporations gain access to increasing amounts of personal information, but it is difficult to recognize in its full spectrum the potential of technology to accommodate the needs of people. Throughout this book, I’ve tried to balance the benefits of personalization with valid concerns about privacy, as well as lofty new strategies with basic practicality. But now it’s time to be a little less evenhanded and to explore the remarkable possibilities of personalization done right. The trends and forces at work are in their infancy, and their benefits could be much more far- reaching than simply stronger relationships between a company and its key stakeholders.

If any one of these four visions becomes reality, our world will be dramatically better:

• Personalization begins not with companies, but with individuals themselves
• Companies that add value via personalization tread lighter on this planet and in the communities they impact
• Personalization increases diversity, which makes companies, and communities, less vulnerable to economic disasters
• Corporations become more accountable for their actions, especially with regard to indirect stakeholders

Attend a personalization conference today, and you’ll probably hear about marketing, and not much else. But marketing is 10 percent or less of the story. Personalization is about people, and the things that matter most to them, which, as we’ve already discussed, progresses from basic to higher order needs. The ultimate payoff of personalization has to be that it enables us to help each other, because that’s the behavior that emerges at the top of the ladder.

When you consider the changes that personalization will bring to companies and to our economies, you first need to recognize that a company has at least two kinds of stakeholders: direct ones with whom it conducts direct financial transactions, and indirect ones with whom it does not. The first group includes customers, employees, partners, and suppliers. The second includes citizens of the communities in which a business is located, people who may live one hundred miles downstream from a manufacturing plant but whose water quality is impacted by the plant’s operation, and school officials of a town just over the county line from a large business who have to cope with rising enrollments thanks to the firm’s expansion but who don’t collect tax revenues from the business itself. The main difference between these two groups is that a firm can more easily quantify the value of its relationships with the first group, and so can those stakeholders. With the second group, the relationships are indirect and often involuntary. Profit motive alone can be enough to justify stronger relationships with the first group; it takes social responsibility to recognize the needs of the second.

Ultimately, personalization will make it easier for firms to exhibit what indirect stakeholders view as socially responsible behavior. The practices and capabilities that underlie it will also make it easier for these stakeholders to quantify a company’s impact on their interests.

Author’s note: the following is a fictionalized account I used to predict future trends.

Personalization Begins with Individuals
P2P Community Newswire Highest Popularity Message
(98 percent approval rating)
Keywords: trust, sincerity, reliability, proven, dependable

FROM: Paul Marion
DATE: May 30, 2004
RE: Message for new participants

In 2002, I started this P2P node to rate companies specifically with regard to a single question: do they do exactly what they say? In my mind, this is a fairer standard that any absolute measure of product quality or delivery time. Sometimes you don’t need–or want to pay for–the highest level of quality. Also, there can be good reasons why it takes a long time to deliver a product; I’d gladly wait fourteen weeks to get a handmade bookcase rather than one produced on an assembly line.

We now have 14 million consumers worldwide contributing ratings, and we’ve managed to keep this node entirely volunteer and noncommercial. No one, including me, spends more than ten hours a week here. I know, because we enforce this limit to prevent abuse.

Over the months, our system evolved into its current, simple format. Participants have only two choices when rating a company: yes (they do what they say) or no (the company does not do what they say.) We consider a negative or positive rating statistically significant when 90 percent or more of our participants agree and when a sufficient number of ratings have been received (this level changes by company size; click here for details.) At present, 532,190 companies have been rated. Of these, 43,117 have negative ratings and 14,320 have positive ratings. The balance are either inconclusive or too early to report.

The trend, however, is positive. Since we hit the 5 million participant level last November, companies have begun to react to negative ratings, as well as to publicize positive ones. Participants have reported increased efforts on the part of many companies to honor their word, and 412 products have been pulled off the market or had their claims restated as a direct result of our collective activities.

Your rating makes a big difference, so please consider your submissions carefully. Our goal is not to slam companies, nor is it to falsely inflate the reputations of those in whom we have a vested interest. If in doubt, don’t vote. Of course, rules of this node prohibit anyone from rating a company in which he or she has a vested interest (employee, partner, supplier, investor); those who violate this rule will be banned from all P2P nodes (click here for the ten principles of P2P fairness adopted January 2, 2003.)

Until now, individuals haven’t had any real economic power without a company to bind them together. But the advent of peer-to-peer networks and the advancement of technology in general make it likely that individuals will group together to personalize the way they treat companies. These groups will be fluid and probably fiercely independent, since they will lack any sort of corporate interest at their center and thus lack the sort of vested interests and basic stability that typifies companies.

On many levels, Napster’s battles with the music industry and the courts remind us how important it is for business executives to broaden their thinking when considering the potential importance of personalization. The popular music sharing service brought “peer to peer”–which means that each user’s PC becomes a server in a decentralized network–into the popular vernacular. Napster’s software helps users find files they want on the machines of other users, but Napster doesn’t store any files itself. It rattles the common notion of a company as a hub of a wheel. To overcome the music industry’s successful challenges to Napster, other services have emerged that are even more decentralized, eliminating any sort of central server at all. From a technology perspective, little prevents people from communicating directly with each other, in vast numbers, without the assistance of any corporation. All that’s needed are freely distributed software and rallying points around which communities will gather.

I’m not talking about the sort of communities that exist today online, which already demonstrate the breadth of topics about which people feel strong enough to band together with others they do not yet know: guns, environmental protection, bargain hunting, porcelain dolls, education, skiing, reading, Dilbert, Harley Davidson, purebred German shepherds, farming, sailing, astronomy, heart disease, stamp collecting, or the music group Phish. Most of today’s Web communities lack the capabilities that will empower individuals to automate their likes and dislikes, to swap files and opinions directly with other users that they have never met, or to search for and analyze data in large quantities. But eventually, perhaps soon, people will have these capabilities and will be able to interact with millions of others without the assistance of a corporation. This will mean that each person can pursue his own agenda, free from the influence of a company with its own agenda.

No matter how noble an organization’s stated goals, groups change once they acquire significant operating budgets and fulltime staffs. “Customer-driven” companies become less so when they hit a rough financial quarter and investors push them to cut costs. Even the leadership of charities can become entrenched and lose sight of the populations they are there to serve. New York City has had similar problems with overly entrenched leaders of schools, with claims and counterclaims flying about the use of schools to deliver favors (that is, jobs) to political supporters instead of good educations to children.

But true peer-to-peer networks of individuals, completely independent of any static organization, could escape many of these problems. Such networks are driven by standards and protocols, not boards of directors and executives. There are plenty of programmers with the talent and inclination to develop software that lets individuals find each other and communicate, without any corporation footing the bill or influencing the outcome. This doesn’t mean that plenty of corporations won’t attempt to profit by building and nurturing such networks; it just means they won’t be the only ones, and such networks may want to be free of corporate influence. Truly independent networks may be more unruly and chaotic than corporate alternatives, but that means they’ll adapt faster to changing conditions. Nodes will spring to life – or die – in minutes or seconds, instead of the months and years it takes to create companies.

Depending on the needs or interests of each group, individuals could instruct their computers to always–or never–do business with companies that meet their standards. These standards could be based on the collective opinions or experiences of other members of the group. In Paul Marion’s trust-based network, I would expect that participants would never do business with a company rated as untrustworthy. But soon technology will allow individuals to create business rules with just as much sophistication as companies. A practical person might tell her shopping software to never do business with an “untrustworthy” company unless both of the following are true:
• No merchant with better trustworthy ratings have the product, and
• “85 percent or more” of consumers reported that they eventually received satisfaction from the untrustworthy merchant.

The ability to set these kinds of conditions–to make computers work for you, instead of the other way around–is what’s still missing from the Web and other interfaces that most people can access today. But it’s coming. When that happens, the balance of power will shift and individuals will have the option of putting themselves at the center of personalization.

Tread Lightly

Personalization makes improving service more profitable than adding products. Driven by data and intelligence, rather than just physical goods, personalization lessens our drive to consume natural resources. We are early in a shift from manufacturing to services and eventually to robust personalization.