InsightaaS: To be really honest, I was actually planning to highlight a different article from November’s HBR magazine: the IoT treatise “How Smart, Connected Products Are Transforming Competition” by Michael Porter (with James Heppelmann). The problem was…well, it was the article itself, which might be described as a stew in which some good ideas and observations are mired in well over 10.000 words of debate that exhausts all sides of many issues, numbing the reader by combining extreme parts of lack of focus (we are lectured on three waves of IT competition, Porter’s famous five forces of competition, smart connected products and competitive advantage, three types of connectivity, “the new technology stack,” four levels of smart, connected product functionality, the reshaping of competition, the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, new industry boundaries, design, service, security, strategy, functionality, automation, location, open vs. closed systems, the importance of making clear choices, and “the larger opportunity”) and repetition (the phrase “smart, connected” appears approximately 120 different times in the text). It must be difficult to apply meaningful editing to a piece authored by someone with Porter’s iconic status, but this feature badly needed a strong editor capable of red-lining at least two-thirds of the words in the text.
Fortunately, the same issue includes an interview with MIT’s Sandy Pentland talking about the New Deal on Data. The concept, which deliberately evokes the scope and importance of FDR’s Depression-era jobs and investment program, looks to define data as a an asset class controlled by the individuals at the centre of the information. Pentland points out that the extensive personal data that can be assembled through the Internet of Things, that it is “very valuable when it’s together in one place. Seeing all the patterns of your life allows you to personalize medicine, personalize insurance, personalize finances. The question is, Who’s going to hold the complete picture? Some credit-rating service? I hope not. Google? No. Is it going to be the individual? I hope that’s the way we end up going.” This may, as HBR’s staff points out, be threatening to businesses that are predicating offerings on data ownership. Pentland doesn’t disagree, but also doesn’t see this as necessarily a negative: “A lot of companies are afraid that this kind of regulation will kill their business models, and in some cases they may be right…but that’s probably good–the economy will be healthier if the relationship between companies and consumers is more respectful, more balanced.” Pentland believes that we’ve reached a point where respect and balance are sorely needed; “people are fed up,” he says, “they’re cynical. If you ask what they worry about, identity theft comes in ahead of nuclear war. They don’t do much about it because they don’t see that they can do much, but the New Deal is a good, plausible thing we can do today.”
Big data and the “internet of things”–in which everyday objects can send and receive data–promise revolutionary change to management and society. But their success rests on an assumption: that all the data being generated by internet companies and devices scattered across the planet belongs to the organizations collecting it. What if it doesn’t?
Alex “Sandy” Pentland, the Toshiba Professor of Media Arts and Sciences at MIT, suggests that companies don’t own the data, and that without rules defining who does, consumers will revolt, regulators will swoop down, and the internet of things will fail to reach its potential. To avoid this, Pentland has proposed a set of principles and practices to define the ownership of data and control its flow. He calls it the New Deal on Data. It’s no less ambitious than it sounds. In this edited conversation with HBR senior editor Scott Berinato, Pentland talks about how the New Deal is being received and how it’s already working–in a little town in the Italian Alps.
HBR: How did you come to be concerned about data collection and privacy?
Pentland: In my research at the Media Lab, I use wearable sensor technology that measures tone of voice, movement, gesticulation–innate behaviors–to collect very personal data about how people communicate with one another. When I started that work, I was impressed by the power of the data being generated, but I also saw very quickly how it could be abused.
Collectively, we now have data that could help green the environment, create transparent government, deal with pandemics, and, of course, lead to better workers and better service for customers. But obviously someone or some company can abuse that.
And the internet of things exacerbates this concern?
I think so. Data is data, regardless of how it’s generated. If anything, the internet of things helps people see what they’re actually doing. When you pick up the kids, how fast do you drive? How much food do you eat in a week? How much time do you spend in your kitchen? In your bedroom? Data points like these make people feel invaded. As sensors are built into more and more products, there’s a sense of being increasingly spied on…