Collapse of Trust

(Chapter 6 from Transform: A Rebel’s Guide for Digital Transformation)

Distrusting the establishment

Trust matters. Trust in traditional organizations and institutions is collapsing, but trust in ourselves and in our peers is growing.

“If people who have to work together in an enterprise trust one another because they are all operating according to a common set of ethical norms, doing business costs less,” Francis Fukuyama writes in his book, Trust. “Such a society will be better able to innovate organizationally, since the high degree of trust will permit a wide variety of social relationships to emerge.

“By contrast, people who do not trust one and other will end up cooperating only under a system of formal rules and regulations, which have to be negotiated, agreed to, litigated, and enforced, sometimes by coercive means. This legal apparatus, serving as a substitute for trust, entails what economists call ‘transaction costs.’ Widespread distrust in a society, in other words, imposes a kind of tax on all forms of economic activity, a tax that high-trust societies do not have to pay.”

The collapse of trust in organizations and figureheads is not a new trend, but it has been accelerated by the digital revolution. We are now reaching a point where traditional organizational structures are more distrusted than trusted and the implications for the future of our societies and economies are substantial. The classical organizational structure for humans for thousands of years has involved a leader / king / ceo / god who is revered and unquestioned. Around the king is a bureaucracy / establishment and outside all this are the citizens / customers / faithful. There is a clear hierarchy, a clear power structure. This model is failing. It will be replaced by a much flatter, collaborative, “collective intelligence” model.

In the old model, laws and orders came from above. Communication was one-way. Information was strictly controlled. Secrecy and mystery were promoted. Leaders were mythologized. They had “supernatural” powers. They were special, chosen. They were not like us. It was important that the employee / customer not really know how things actually worked. They were made to believe in the all-powerful god / brand / institution and in the almost magical powers of the great leader. It was classical blind trust.

For this sort of organizational culture to thrive you need three conditions to be in place:

1. A general population that has limited education and access to information.

2. The tools of organization and information sources to be tightly controlled by those in power.

3. A promise to the general population that their basic needs are being met, and that they can look forward to the future. That they are not alone. That they are part of the organizational tribe and family. That while they must know their place, they indeed have a place.

In the digital world, people have never been better educated and never more insecure. With the Web, they have never had better access to information. The Internet is the greatest organizational structure ever invented. It is overflowing with cheap — often free — tools that allow anyone to organize.

Now, the Millennial generation are here and they are very skeptical and demanding. (Those born from the early 1980s to early 2000s.) They are better educated but poorer than their parents. Millennial is an attitude. The middle class is shrinking, becoming poorer and more cynical. Distrust in the establishment is growing across all generations.

· Confidence in societal institutions went up and down over time but hit its lowest point in the early 2000’s. (Gallup, 2010)

· In 1958, more than 70% of US citizens said they trusted government always or most of the time. By 2010, that had dropped to just over 20%. (Pew)

· In 1975, 68% of US citizens said that they had a great deal or quite a lot of confidence in organized religion. By 2011, that had dropped to 44%. (Gallup)

· 77% of UK citizens said that they believed in God in 1968. By 2004, it was 44%. (News Batch)

· In 1997, 53% of US citizens said they had a great deal or a fair amount of trust in the media. By 2013, it had dropped to 40%, its lowest level on record. (Gallup)

· Between 2010 and 2015, US financial-services firms got the lowest possible score from consumers. (Reputation Institute)

Why we trust brands less: the BP story

In modern societies, the only group that is still heavily brand loyal are children. “My 9-year-old son just had to have Converse hi-tops,” Geoffrey James wrote for INC in 2014. “However, that kind of brand loyalty is an artifact of immaturity. Children and child-like minds are easily impressed by celebrity endorsements. In any case, there’s no loyalty there; next year I have no doubt my son will want some other brand just as avidly. As he matures, my son will probably (hopefully) reach the conclusion shared by the majority of educated adults: that brand is meaningless as a predictor of quality because, aside from the logo, it’s all the same junk made in the same factories.”

According to McKinsey, traditional TV advertising was one-third as effective in 2010 as it was 1990. In 1986, almost 80% of US car buyers bought the same car as their household had historically owned, according CNW Research. By 2009, that figure had dropped to just over 20%.

“Your customers have fewer reasons to be loyal than ever before and are really less loyal than they’ve ever been before,” said Emily Collins, analyst at Forrester Research in 2014. “This is because empowered customers are now in control. They want control over the interactions they have with brands.”

The 2010 BP oil spill in the Gulf of Mexico “is considered the largest accidental marine oil spill in the history of the petroleum industry,” according to Wikipedia. It was not what the branding experts envisioned when ten years previously when they rebranded BP as a “Beyond Petroleum” company.

“BP has unveiled a new ‘green’ brand image, in an attempt to win over environmentally aware consumers,” the BBC reported in 2000. “The new green, white and yellow logo replaces the BP shield and is designed to show the company’s commitment to the environment and solar power.” The BP branding approach was described as “a prescient model of credible corporate social responsibility,” and won lots of advertising awards.

The green BP branding approach worked very well initially. Customers believed the persuasive advertising and began to rate BP as a new age, environmentally friendly green company. A 2007 Landor survey found that BP performed better than any of its peers. In 2007, BP won a gold Effie from the American Marketing Association. Its campaign was described as “a landmark platform for a company trying to change the way the world uses, and thinks about, the fuels that are vital to human progress.”

The problem was that none of this was true. While in the 1980s and 1990s, BP had indeed invested heavily in alternative energy, by the time it was launching its new “Beyond Petroleum” branding campaign, it was aggressively divesting in such technologies and focusing almost exclusively on oil. It shut down its solar division, scrapped its alternative energy business, and put all its wind farms up for sale.

During this “Beyond Petroleum” period, BP was racking up one of the worst safety records possible. “BP has been fined by US Occupational Safety and Health Administration 760 times,” Business Insider wrote in 2010. “By contrast, oil giant ExxonMobil has been fined only once.” The article goes on to state that:

· In 2007, a BP pipeline spilled 200,000 gallons of crude into the Alaskan wilderness.

· The US Justice Department required the company to pay approximately $353 million as part of an agreement to defer prosecution on charges that the company conspired to manipulate the propane gas market.

· In two separate disasters prior to Deepwater Horizon, 30 BP workers were killed and more than 200 were seriously injured.

· According to the Center for Public Integrity, between 2007 and 2010, BP refineries in Ohio and Texas accounted for 97% of the “egregious, willful” violations handed out by authorities.

“To many, the ‘Beyond Petroleum’ campaign has always been ludicrous,” PR Watch stated in 2010. “Despite, or maybe because of its history of fatal accidents, environmental disasters, fines and public deceit, BP is still trying to greenwash its image. Its Web pages are filled with bogus statements, like ‘We try to work in ways that will benefit the communities and habitats where we do business — and earn the world’s respect.’”

BP knew that it could use marketing, PR and advertising to tell the world that black was green. And for years it got away with it. However, in the digital world it is much more difficult to get away with spin and deception. The old model is broken. The new model requires transparency and an honest conversation with the customer.

Financial industry puts customers last

Financial institutions in the US are totally opposed to having to adhere to a “fiduciary standard,” according to Jon Picoult of Watermark Consulting. A fiduciary standard basically expects that you should put the interests of your customers first. Financial institutions are flabbergasted that they should be expected to do such a ridiculous thing.

For years, financial institutions have depended on customer ignorance, apathy and loyalty in order to maximize their profits. Customers are waking up. A 2015 worldwide survey of banking customers by Capgemini and Efma found major increases in the number of customers who intend to leave their banks. Globally, more than 50% of Millennials intend to change banks.

In 2014, an Ernst & Young global survey found that customers have very low trust in insurance companies. “Further, the survey results reveal that far more insurance consumers actually switch insurers than express an intention to switch — an almost unprecedented finding in market research,” the survey stated. 67% of insurance customers would consider purchasing insurance products from organizations other than insurers, according to a survey published by Accenture in 2014.

Customer attitudes towards insurance companies

Ripping off loyal customers was the old model of doing business for the insurance industry. “The curious, but obviously profitable business model, in which new customers get wooed with discounts and special deals, while the oldest, most loyal, best customers are ‘thanked’ with bills that escalate over time,” is how TIME described it in 2012.

According to Anna Tims, writing in the UK Guardian in 2014, “Insurance companies are notorious for penalising loyal customers.” In a modern, educated, search-driven, social media society, this classic old model approach results in disloyalty, distrust, switching and churn. “Companies are adept at chasing new customers while watching the churn,” Keith Pearce, Vice President, Solutions Marketing at Genesys states. “Why else would they spend around $500B on advertising and acquiring new customers, $50B on CRM spend, and just $9B on the call centre (Ovum)?” If you don’t regularly shop around for your home and auto insurance, you’re going to get ripped off by your current insurer, the Consumer Federation of America warned in 2014.

Media in the pocket of special interests

93% of 18–29 year olds in the USA think the media is biased, according to a 2015 USA State of the First Amendment survey.

2015 study of attitudes towards media bias

So, why have people lost trust in the media? Let me give you a small example from Ireland. During the 2000s, Ireland had an irrational housing bubble and then a ruinous bust.

“It is not too difficult to identify a housing bubble in the making, based on simple indicators such as the P/E (price/earnings) ratio and the price-to-income ratio,” University College Dublin academic, Dr Julien Mercille, wrote in his report on the Irish housing bubble. “This is what a few analysts did, such as The Economist magazine, which stated in 2002 that Ireland’s real estate market had been ‘displaying bubble-like’ symptoms”. However, the Irish media were almost without exception cheerleaders for the booming property market.”

Why might that be? Could it be that the Irish Times, the Irish newspaper of “record,” owned MyHome.ie, a major property website? Or that Independent News & Media, the largest newspaper group in Ireland, owned PropertyNews.com? Could it possibly be that the Irish media gorged on property advertising as its journalists sang: “Buy! Buy! Buy!”?

The 1% trust deficit

There is a growing disconnect and distrust between the top 1% of society and everyone else. If this breach of trust keeps growing, it will not end well for any party involved.

During the 1990s, CEO pay in the United States grew by 535%. (Business Week) Average worker pay grew by 32%, just slightly higher than inflation at 27%. (Bureau of Labor Statistics, Consumer Price Index) The stock market grew at an average of 297% and corporate profits grew by 116%. (Standard & Poor, Bureau of Economic Analysis). Something doesn’t compute. CEO pay grew by 535% while profits grew by 116%, while worker pay stagnated.

If you think that’s bad, it got worse in the new decade. Incomes actually fell for the bottom 90%. In fact, it was the top 1% who saw the vast majority of income growth during 2000–2010. (Pavlina R. Tcherneva, Thomas Piketty, Emmanuel Saez, N.B.E.R.) According to the UK Telegraph, “CEOs of Standard & Poor 500 companies made 354 times the average wages of US workers in 2012.”

Growth of CEO pay versus ordinary worker pay: 1990–1999

Even if you believe the fairytale that superhero CEOs create all the profits, they still have for years been getting pay rises that are four times greater than the value they have “supernaturally” been creating. Are CEOs really 354 times more valuable and brilliant than average workers? Well, no. “It’s safe to say that CEOs are, overall, a talented bunch, but that’s not what separates them from other professionals, nor is it the main reason their firms succeed or fail,” Walter Frick wrote for Harvard Business Review in 2015. “Certainly it doesn’t come close to explaining why they’re so well paid. Put another way, CEOs matter, just less than many people think. Instead, luck, and yes, bias, play a far larger role in determining who ends up leading companies, and whether they are fired or end up industry leaders.”

Then how have CEOs and other senior managers ended up getting these stratospheric sums of money every year? Because they can. Because they’ve spun a really good story. There is absolutely no logical, scientific, business or other reason. It’s runaway greed, a tsunami of grand delusion. The boards who allocate these salaries and bonuses belong to a virtuous circle of other CEOs and senior executives. They are a Big Boy Santa Claus Club: “Who votes for more presents this year!? We do! We do! Bigger and better!!”

“Simply put, those at the top feel entitled to the lion’s share of the money ‘their’ companies earn, and managerial egos are threatened when subordinates speak their minds in the workplace and when they don’t just do what managers tell them to do.” So states James O’Toole, senior fellow in business ethics at Santa Clara University. The Volkswagen diesel emissions scandal, for example, looks like a classic example of senior management setting unattainable targets that forced employees to cheat to attain these targets because everyone was afraid to question the infallible senior managers.

The bubble of elite delusion and sense of entitlement has never as bad as it is now, except perhaps back in Medieval Times. “In the 1950s, the ratio between chief executive remuneration and that of a typical worker in the company was about 20 to 1. Today, the ratio between the pay of Fortune 500 chief executives and that of the average employee in these organizations exceeds 200 to 1,” Nancy Koehn wrote for The Washington Post in 2014.

At the same time, the vast majority of workers and families are seeing their financial world contract. Their incomes are barely rising. It’s becoming harder and harder just to get by. That’s not fair, of course, but fairness is not the issue. It’s not sustainable either. Trust is collapsing and society will grind to a halt as more and more people get disillusioned and disengage. Why do you think so many people are voting for anti-establishment candidates in elections?

“Workers around the globe have been finding it harder to juggle the demands of work and the rest of life in the past five years,” Brigid Schulte, wrote for the Washington Post in 2015, quoting a report from Ernst & Young. “Many are working longer hours, deciding to delay or forgo having children, discontinuing education, or struggling to pay tuition for their children. Professional workers in companies that shed employees in the Great Recession are still doing the work of two or more people and working longer hours. Salaries have stagnated, and costs continue to rise.”

The result? A trust deficit that is becoming a chasm. According to the Edelman Trust Barometer, in 2015 just 31% of people in developed countries trusted CEOs, whereas 61% of people in developing countries trusted them. No surprise that the better educated and more informed people are the less they trust such figureheads. Much of the old model of management has been based on the ignorance and acquiescence of employees, customers and societies in general, and the use of marketing and advertising to spin the “story.”

“If our civilization is to survive, we must break with the habit of deference to great men,” philosopher Karl Popper wrote in 1945, though he could have been writing it in 2015. The Great Man Syndrome (and they are invariably men) is a disease whereby a very intelligent, hardworking, visionary man — once he gets promoted to senior management — begins to think he is superhuman and God-like, all-powerful, all-seeing, and thus requires a gargantuan remuneration package and unquestioned loyalty. Without great men, the Great Man Syndrome posits, society would collapse, value would be destroyed and life wouldn’t be worth living.

There is no question that great men have a contribution to make. But their contributions are nearly always exaggerated and mythologized, because we love stories about individuals, not about groups or committees or networks. Humans live in groups but mythologize individuals. Groups are just not sexy or heroic or inspiring. The media and Hollywood feed our desire for superstars. We want them to be exotic, to be superrich, to be so above us that we can look up and up to them. Until now, that is. Society is changing. The age of the Great Man is approaching its twilight and the age of collaboration, of the team, of the group, is emerging.

The Great Man myth is a fabrication, a lie. Sure, there are always exceptions, but the cold, hard, immutable facts shine a harsh and unforgiving light on our superhero executives:

· “The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance,” Michael Cooper, co-author of a study at the University of Utah’s David Eccles School of Business, states. The worst performance was found in the 150 firms with the highest-paid CEOs. High-pay CEOs, with high overconfidence and high tenure, return 22% worse in shareholder value over three years as compared to their peers.

· For large, established companies, “it’s very hard to show that picking one well-qualified CEO over another has a major impact on corporate performance,” Michael Dorff, author of the book, Indispensable and Other Myths, writes.

· If the company with the two-hundred-and-fiftieth-most-talented CEO suddenly managed to hire the most talented CEO its value would increase by a mere 0.016 per cent, a study by Xavier Gabaix and Augustin Landier found.

· Higher pay fails to promote better performance, a study by Philippe Jacquart and J. Scott Armstrong found.

· Variations in company performance account for only about 5 percent of the variation between how much companies pay their top executives, a Journal of Management study found.

“There is a connection between the biggest CEO checks and companies that have been making deals, such as going public, doing big mergers or divestitures and reorganizations,” Tim Mullaney wrote. “A KPMG study indicates that 83% of merger deals did not boost shareholder returns,” George Bradt wrote for Forbes in 2015. According to Peter Clark, writing for Quartz in 2013, more than 20 articles and papers show “that two-thirds or more of all deals ‘fail’.” So why do mergers happen? Because of the ego and greed of great men and their desire for a supernatural bonus for doing such great deals.

Decline of experts

As Big Data rolls out and the evidence of what actually happened and is happening comes in, one thing is becoming starkly clear. The “experts” — who contain many of the Great Men, who we are getting these supernatural remunerations and those “advising” them — are being proved wrong time and time again. That is not surprising. In an ever increasingly complex world, only a fool would predict the future and only an idiot would listen to them. Big Data is shining a harsh beam of cold light on the expertise of Great Men.

“Increasingly, expertise is losing the respect that for years had earned it premiums in any market where uncertainty was present and complex knowledge valued”, Bill Fischer wrote for Harvard Business Review in 2015. “Along with it, we are shedding our reverence for ‘expert evaluation,’ losing our regard for our Michelin guides and casting our lot in with the peer-generated Yelps of the world.”

What’s the implication for you? Stop trying to become the expert. Facilitate the customer to become expert, to do things, to learn, to control as much as possible. Create designs that make them the expert. Give them the digital tools and controls that make them the expert, and then learn from them in order to make these tools more powerful, simpler, faster.

“Have you ever thought economists were far more confident in their statements about the world than they had any right to be? Well, now there’s proof.” So writes Justin Fox in an article for the Harvard Business Review. Fox was writing about a study by Emre Soyer and Robin Hogarth who had asked 257 economists a range of questions about probabilities of various outcomes and found that, “The economists did a really bad job of answering the questions. They paid too much attention to the averages, and too little to the uncertainties inherent in them, thereby displaying too much confidence.”

In the new model, you must learn to love uncertainty. You must accept that very often you will not know the answer, and that’s okay once you know how to find out the answer. You must learn to be highly skeptical and always looking for evidence.

Rating agencies such as Moody’s, S&P, and Fitch Ratings were the cheerleaders of the sub-prime mortgage orgy, which was a key cause of the 2007 financial crisis and global recession. These agencies have huge power in the world. Many governments and investment institutions follow their advice in an almost unquestioning manner. These oracle-like rating agencies gave their highest ratings to “over three trillion dollars of loans to homebuyers with bad credit and undocumented incomes,” according to Wikipedia. In other words, these rating agencies gave their highest ratings to the worst possible type of loans that any self-respecting loan shark would avoid. Now, why would they do that?

After the financial crash, these agencies switched from irrational exuberance to deathly pessimism. In June 2012, for example, Moody’s predicted that Irish house prices were set to decline by a further 20%. As you can see from the following chart by the Irish Central Statistics Office, things didn’t quite work out that way. Prices hit their bottom in 2012 and have risen steady since then. So, these rating agencies are pretty clueless and yet they get paid huge quantities of money for their terrible advice.

Irish house price growth: 2006–2013

“To a certain extent, investors have ignored Moody’s and other ratings agencies,” Bloomberg stated in 2015. “In almost half the instances, yields on government bonds fall when a rating action by S&P and Moody’s suggests they should climb, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back as far as the 1970s.”

Big Data and the Internet are lifting the carpet and there’s a mountain of dirt underneath it. Big Data is shining a floodlight. Social media is asking the questions. Digital’s natural color is transparent. It’s hard to hide in a digital world.

Complexity creates distrust

Old model organizations thrive on complexity. It was part of the advantage they had over their customers. Thirty years ago, a typical customer looked at something complex and said: “I must be stupid.” Today, people look at complexity coming from organizations and say: “They must be stupid.” The customer has transformed. The organization has not. Today, complexity feeds distrust. We trust in use. Simplicity feeds trust.

This change is not good for a whole range of industries whose basic business model is to confuse and distract the customer. Scott Adams, creator of Dilbert, called these companies “confusopolies” in his 1997 book Dilbert Future. “The word is a portmanteau of confusion and monopoly (or rather oligopoly), defining it as ‘a group of companies with similar products who intentionally confuse customers instead of competing on price’,” Wikipedia states. “Examples of industries in which confusopolies exist (according to Adams) include telephone service, insurance, mortgage loans, banking, and financial services.”

Every time you do something that makes things simpler and easier for your customers, you build trust. Thus, your job is critical to customer trust building. However, you walk a tightrope because complexity and customer-exploitation practices that may be woven into your organization’s business model and culture. There will be a lot of powerful interests keen to keep the status quo. You deal with this by flooding your organization with the poor experience customers are getting. You must show, again and again, the core causes of disloyalty and switching.

In the old model, life was made easiest for the most powerful, and it was made deliberately complex for the least powerful. You can hide lots of things behind complexity. You can rip people off with complex pricing. You can strip them of their rights with complex language. You can exclude them with complex knowledge. You can force loyalty on them by making it very complex to switch brands. In the mystery lies the margin, as they say. (Or, as some have said, “in the margin lies the mystery.” Or as Jeff Bezos said: “In the margin lies my opportunity.”) In the complexity lay much of the profit that fed the bonuses in the old model world. But this complexity is exactly what new competitors will attack.

The Mystery of Capital by Hernando De Soto is one of the most impressive books I have ever read. In it, De Soto develops a theory of why some countries succeed while others fail. He found that there is a direct link between corruption and complexity. Governments and other organizations within corrupt societies force you to go through a whole host of unnecessary and complex steps if you want to do anything with them. They use these unnecessary steps as a toll booth to either charge you an unnecessary fee or bribe.

Dimitris is a small business owner in Greece. According to a TIME article, he estimates he has paid “about a fifth of his revenue in bribes — to tax collectors, health inspectors, police and other officials”. Small firms “are essentially obligated to conduct business this way,” he says. “There are so many legal barriers to conducting business that they’ll shut you down otherwise.” This is a core reason why Greece has been in such a crisis: a crisis of complexity, a crisis of trust.

UK citizens distrust the European Union more than any other member country. According to a YouGov survey the number one reason for this distrust it not — as might be expected — loss of national power, but rather too much EU bureaucracy. Bureaucracy is just another word for complexity.

From an old model perspective, there are compelling reasons to promote complexity. For starters, complexity “protects” the jobs of those who have designed the complex systems. Their expertise and experience is essential to its running. Complexity is a lock-in for customers. The more complex an organization’s systems, products and services are, and the more they can intertwine and embed them into the customer’s world, the higher the switching costs become: complexity creates addiction, dependency. But as digital simplifies the landscape and as services move to the Cloud, the switching costs drop precipitously and before you know it there’s a stampede of customers to the exits.

I never knew I was so popular. When I went through the process of switching my pension, everyone wanted to meet me. When I asked about basic prices (that should have been on the websites), I was told that I would be given those prices in the meeting. They just wanted to meet little old me, but little old me didn’t want to meet them. Because I have been through these “face-to-face” shakedown meetings once too often. They think that if they give you tea and biscuits and look you in the eye, you’ll fall under the magic of their sales spin, and they’ll be able to charge you a higher rate. That firm handshake and that cup of tea will cost you a lot.

The old model of complexity is dying on its feet. “Business-to-business (B2B) buyers now favor do-it-yourself online options for researching and buying products and services, and they are demanding that B2B sellers fully enable those digital paths to purchase,” Andy Hoar from Forrester Research has stated. “Yet too many of today’s B2B companies still insist that B2B buyers interact with sales reps in order to complete a purchase.” However, Forrester estimates that by 2020 there will be a million less B2B salespeople in the U.S. as more and more customers demand digital self-service.

People trust their friends

While there is a collapse in trust in institutions and in Great Men, people are much more likely to trust their friends and family and people like them. (Although the evidence is showing that they are becoming less likely to trust strangers.) According to the Edelman Trust Barometer, in 2015 people trusted people like themselves twice as much as they trusted CEOs.

Trust in friends versus trust in organizations: 2000–2015

In 2000, around 70% of people still put their trust in brands and organizations, with only about 20% looking to their peers. By 2015, it had pretty much reversed. Social media is me and my friends, not me and my brands. It’s the customer economy, it’s the peer economy.

Customers today trust action. They trust what they can do quickly and easily. Trust is based on use. Mistrust is immediate when the thing to be used is hidden behind such fake language as: “It’s now even easier to use; We’re delighted to announce the launch of this fantastic new feature; Because we care about our customers so much …” Customers couldn’t care less about what you have to say. They want to see results. They’ll try to use it and then they’ll judge. Blind, long-term trust is a thing of the past. It’s dead and won’t come back. You earn or lose trust every time a customer uses your product or service. Customers trust those who give them control — who put them in control — of their lives. They distrust those who try to control them.

Digital design is about putting the customer in control, as Timothy Morey, Theo Forbath and Allison Schoop wrote for Harvard Business Review in 2015. They gave an example of a cardiac monitoring system where, “Participating cardiac patients wear an e-monitor, which collects ECG data and transmits it via smartphone to medical professionals and other caregivers. The patients see all their own data and control how much data goes to whom, using a browser and an app. They can set up networks of health care providers, of family and friends, or of fellow users and patients, and send each different information. This patient-directed approach is a radical departure from the tradition of paternalistic medicine that carries over to many medical devices even today, with which the patient doesn’t own his data or even have access to it.”

“Why should we care about the fact that patients, families and primary health care providers want information about what happens before, during and after treatment?” Eirik Hafver Rønjum of the Norwegian Department of Health asks. “Altruism? Yes, maybe. But I think the key to gaining acceptance for focusing on patient needs, is building a business case around those needs. In our case we can point to the studies showing that well-informed patients are less costly to treat than patients without this knowledge. Voila! We now have the business case, and the Web is no longer a nice-to-have add on to the core activity at the hospitals, it has become part of the core business, namely a part of the treatment.”

The better informed customer is a better customer. Build up the evidence that shows this. Target a senior executive who you believe can be won over and feed them with customer experience data. Show them videos of customers failing. And show them how, when the customer succeeds, the organization succeeds. Because in this new model of transparency, doing right by the customer is not just the right thing to do — it’s the clever thing to do.

Read the next chapter: Marketing: from Getting to Giving attention

Read the previous chapter: Dictatorship of the Customer

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