#HBRLive: The Internet of Things, Privacy, and The New Arrangement on Data

0:00Hey Chicago, class it up with Crocs. You know back to school is coming in fast. So why wait to find your new fave footwear? Step into a local Crocs store and step into your new look. Try it. Style it. Make it yours. Because the right pair doesn't just show up. It shows off. First day fits, handled. Walk out ready for whatever's next. Visit your nearest Crocs store today. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes.

0:47Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

1:02Hello.

1:03Scott Berinato:I think we're on the air. Hi and welcome to this Google Hangout with HBR. I'm Scott Bernardo. I'm a senior editor here at HBR. I'm joined by Sandy Patlin, a friend of HBR, Toshiba professor of Media Arts and Sciences at MIT. He's also the author of this book that I recommend to everyone called Social Physics, How Good Ideas Spread. And he's featured in the November issue of HBR in this cover feature called The Internet of Everything. We're spending quite a bit of time talking about the Internet of Things these days, and we're going to be spending a lot of time over the next month on HBR.org talking about the Internet of Things.

1:46Everybody's excited about the Internet of Things, but Sandy wants to

1:51Scott Berinato:pump the brakes a little bit on the hype, and we're here to talk about privacy and security and data sharing. So welcome and thanks for joining us, Sandy. Thank you. Glad to be here. All right, so let's just start and talk about how real the Internet of Things is. I mean, this is a real thing now, right? There's real applications and people are really using this thing. Yeah, well, you know, certainly people are doing a lot of Internet of Things internally to companies to monitor things, but I'm reminded of an award we got We started a company about five years ago that was tracking taxis so that you could get better rides.

2:32You would know where to pick up a taxi. And that won a New York Times 10 best Internet of Things application. The things were people, of course, right? So you need to count cell phones and Fitbits and things like that as part of the Internet of Things. And when you do, you realize the Internet of Things already includes almost all of humanity and all of the traffic lights and increasingly all of the cars and credit cards. And all of that data now is out there and beginning to be used.

3:07Scott Berinato:The spotlight in the November issue starts with two really foundational articles about how this thing, this network of sensors and devices that talk to each other, is already having a profound effect in manufacturing, in healthcare. There's some consumer applications already. And then the third piece is my Q &A with you where we pump the brakes a little bit on this. And you're concerned that some of the privacy and security applications of this network could sort of have a really deleterious effect if we don't take them head on. So you want to talk a little bit about that? Well, you know, our culture, the culture is worldwide.

3:46It's grown up with a certain idea about privacy. And privacy is important because you don't want the government spying on you. You don't want companies, you know, knowing exactly when you go to the bathroom sort of thing. You know, there's a lot of sort of stuff that is not only inconvenient, but frankly, a little scary. And so we need a little space just to be by ourselves and be with our families and not subjected to scrutiny. And so that's what privacy is about. And with the new Internet of Things, you're potentially under the spotlight constantly. way. And that means that bad guys or people who are a little overzealous can get in there and know precisely when you went to breakfast, watch you moving around in your house.

4:35Like I remember at Davos, the founder of Nest, which Google bought, gave a talk about smart thermostats that know what room you're in. And the audience was aghast and just about lynched him because they said, Google is going to know when I'm in the bathroom. And the answer was yes. And he tried to say, well, but you know, we'll protect it. Hey, Chicago, class it up with Crocs. You know, back to school is coming in fast. So why wait to find your new fave footwear? Step into a local Crocs store and step into your new look. Try it, style it, make it yours. because the right pair doesn't just show up, it shows off.

5:21First day fits, handled. Walk out ready for whatever's next. Visit your nearest Croc store today. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

5:59And they were just going to have none of that. The whole idea that, you know, you're not free to do what you want in your house was just absolutely against their value system. And so those sort of things we're up against. We have to come up with a society where we have independent people still. You're not constantly on stage. And yet we want the efficiency and new capabilities that the Internet of Things brings.

6:28Scott Berinato:And your concern would be, you know, if enough bad things happen or these sort of nest examples crop up, in practice, then people are going to say, well, just shut this Internet of Things down or let's regulate it into the ground. and then all of those good things sort of aren't available to us, all the good things that that network can produce. Right, and that's beginning to happen. I mean, you see reactions, court decisions in Europe particularly, that are really, really expensive in terms of shutting down this sort of stuff. You see countries requiring that the Internet stop at their borders, that data not leave the country.

7:07And those are all things that are breaking up the glorious thing that has happened with the Internet, with data, and a lot of the positive things will go away with that too. of persons. Recently the UN Secretary General put me on a council about the data revolution. Because if you think about developing countries, about poor communities, data that lets you know about health and transportation and medical things will save millions of lives and untold and so on. So we don't want all of that stuff to go away. And as a consequence we have to think about how are we going to deal with this right now.

7:50We have to set the template so that people in Germany calm down, so that people in Liberia can track Ebola, so that we can have the sort of respectful society that we want, while at the same time having the new services and better productivity.

8:12Scott Berinato:And so you've actually made a proposal, I think you started it at Davos, to deal with all of these hard questions and you call it the New Deal on Data. Do you want to talk a little bit about what that New Deal on Data is? Yeah, so I was concerned about this enough that about six years ago I started a discussion at Davos between the CEOs of major multinational companies, the chief regulators, the head of the Federal Trade Commission, Justice Commissioner of the EU, people like that, about what are we going to do. First, of course, is to get them to appreciate the problem and the dangers, and then to be able to think about what would be a win-win-win solution, win for companies, win for governments, win for the citizens that could do that.

9:00And out of that came this new deal on data. The new deal on data, the core of it is very simple. It's really giving people more rights to control data that's about themselves. So that if somebody's collecting data about you, you can turn it off, but also you can say what they can and can't do with it. And the legal phrase of it is you give people the rights of ownership in data. Not actual ownership, but the right to say where the data's going to go, the right to retract it back when you're not happy, the right to cut a deal so that if some company is making money off of it, maybe you could get part of that too.

9:44So it's basically bringing people to the table in this Internet of Things world where people aren't just little automatons or ants or surfs. They're actually equal partners. And when people are equal partners... Hey, Chicago. Class it up with Crocs. You know back to school is coming in fast. So why wait to find your new Fave footwear? Step into a local croc store and step into your new look. Try it. Style it. Make it yours. Because the right pair doesn't just show up. It shows off. First day fits, handled. Walk out ready for whatever's next. Visit your nearest croc store today. When you need to build up your team to handle the growing chaos at work, Use Indeed Sponsored Jobs.

10:35It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Then we can begin to find something, a solution that is satisfactory for companies, for governments, and for people. But unless the people are at the table, it's just going to be violent politics.

11:15Scott Berinato:As you're talking, I'm imagining people at companies like Google, you know, Jones Nest and others doing Internet of Things applications blanching because a lot of these businesses there's rest on the concept that they need to collect that data to make those businesses go. And so how do you respond to those people who say, you know, by controlling the data, you're actually tamping down innovation. You're not letting us develop these applications the way we need to. We need all that data. Well, so Google's a good example because Google actually doesn't resell data to other people. So they have a fairly straightforward value proposition.

11:54You know, look at my data and give me services in return based on what you see that I would like. And most people buy into that. It seems like a reasonable proposition for them. So having the new deal on data doesn't really change Google's life all that much. On the other hand, there's a lot of companies that collect data and then resell it without you even knowing. And those companies are going to have a real hard time. And as a consequence of these Davos discussions and other things, you know the regulators are now gunning for those companies, so you know they had better find a new way to exist anyhow.

12:35And the thing they need to do is be respectful of the customers, involve them in the dialogue. In many ways that's great because then what you get is you get customers who have greater loyalty. That's really what we're talking about is having them much more involved in what's going on.

12:55Scott Berinato:Creating that symmetry though, and we've talked about this before, where people now know what you're doing with the data, what you're collecting. Sometimes people say, whoa, you know, put the brakes on. I don't want you knowing that about me. Do you think there's any fear on companies' parts that by engaging in a new deal on data type of agreement with their customers, they're actually going to lose their business because suddenly customers realize actually I didn't know you were tracking the position of my car, I didn't know you knew which road of the house I'm in, at least from a consumer's perspective.

13:27Well there's a lot of paranoia about that, but I think a lot of traditional companies and a lot of the big companies really aren't doing much that people would be objecting to. So they don't have that much to hear. what they have to do is change their mindset. Instead of them unilaterally deciding what to do with the data, customer be them, what they need to do is they need to have much more of an engagement with the customer. And what's interesting is when you engage the customer, you can get lots more data, very valuable data. For instance, people are more than willing to contribute all of their purchase data at supermarkets markets, because they know the supermarkets are doing something with that that benefits them.

14:15Customers are not by and large crazy people, they're willing to trade data for service. You just have to have a good value proposition.

14:24Scott Berinato:So one of my favorite things about working with you is always that you have these big ideas but then you go out and test them and then you have data and you actually have been testing the new deal on data. Can you talk a little bit about that test and what it's fielded? Sure. So working with Telecom Italia and Telefonica, what we did is we set up a test bed in Trento with the university there. And in that area, what you can do is you can sign up to be able to see and control all the data that the telephone company. Hey Chicago, class it up with Crocs. You know back to school is coming in fast.

15:06So why wait to find your new fave footwear? Step into a local Crocs store and step into your new look. Try it, style it, make it yours. Because the right pair doesn't just show up, it shows off. First day fits, handled. Walk out ready for whatever's next. Visit your nearest Crocs store today. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes.

15:46Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. And the local co-op and the city knows about you. So you really have this new deal on data. Not only is there transparency, but there's much more opt-in, much more control. And what you find is people are much more willing to share data because it's not some spooky thing that they don't understand. They can see it. And because the offers actually offer them some value. So if you can share data anonymously and you know it only goes so far, then you would be willing to share things like your financial records so that you could compare yourself to other people.

16:37Or folks, so people do that. They're actually really, really happy to do that. Or share where your children are so that your children can meet up with other families with young children. You'd never do that on the internet. But if you feel that the data sharing is under your control and is relatively safe, it turns out people are just really happy to do that because they're getting value and they feel the trust.

17:04Scott Berinato:Do you think that can scale? That's sort of one village in Italy. Do you think the idea can scale to a massive level? Well, we know that the software that implements this is something that we've had real experts that, people who have built systems that serve hundreds of millions of people constantly. And their judgment is that yes, this can scale without any real problem. In terms of the actual system, what needs to happen of course is that some of the big players, the telcos, the banks, maybe the Googles of the world, need to begin engaging their customers and offering them the same sort of things that we're doing in Trento.

17:47And incidentally, we're doing the same sorts of things now at Mass General Hospital, so around health records here at MIT, around how does the organization run or have an agreement with Luxembourg to look at banking things and can we actually do more there. So, you know, it's beginning to take off. We've seen nothing that says it isn't scalable. And so I'm relatively hopeful.

18:18Scott Berinato:The difference between the Google value proposition, which is you share data about your search habits and we target ads and something like that, and when you get into the Internet of Things, which oftentimes gets sort of more personal and more close to the self, is pretty profound. So I'm assuming that the value proposition of collecting data about me, maybe those fitness tracking apps and things like that, collecting data about me, myself, my vitals, where I am at my house, all of that, you're going to have to have a more compelling value proposition than targeted ads or something like that. Do you get that sense?

18:54Oh, absolutely. What I think is that people are going to ask, well why do you need this data and not – like Like when do you know, why do you need to know when I go in the bathroom or the kitchen? Can't you just have some energy efficiency thing that you send back? Right? And you have to have a good answer for that. But what people do also want to do is compare themselves to other people. So one of the things we do in Italy is we provide a more trusted platform so that I can, for instance, ask, do I spend as much time in the kitchen as my neighbors do? and what will happen is data about my kitchen work is anonymized and compared and shared with other people who want to share and now I can get answers to that.

19:43That may not be the most compelling thing, but you can also do it with credit card records. People love that. Do your neighbors spend as much on cars as I do? Do they spend as much on shoes as I do? Those are questions that people really care about. Hey Chicago, class it up with Crocs. You know back to school is coming in fast. So why wait to find your new fave footwear? Step into a local Crocs store and step into your new look. Try it, style it, make it yours. Because the right pair doesn't just show up, it shows off. First day fits, handled. Walk out ready for whatever's next. Visit your nearest Crocs store today.

20:29When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. Right.

21:01Scott Berinato:We have some questions coming in. I'd love to get some audience participation going so I'm going to read off some of these questions that are coming in over on the side of my screen here. Why don't more companies offer a value proposition for the customer to incentivize them to allow using their data for marketing? We actually just sort of addressed that didn't we? I picked the wrong one. Go ahead. I mean, there is an answer, and the answer is data is very new to most companies. They don't know how to do it in terms of accounting. There's a big thing in the newspaper just recently about that. They don't know how to deal with it in terms of management, and they don't know how to deal with it in terms of customers.

21:46And what I'm saying is data is a point at which you can engage the customer where they'll be interested because it's often data about them.

21:53Scott Berinato:Should they treat it more like an asset or currency than they do? It's an asset, I think. It's something that's valuable to the company. It's valuable to the person. So in that sense, it's a little bit like money. Of course, it's different in many other ways, too. But one of the important things is that, you know, you don't put your money someplace where it just goes off by itself and you don't know what happened to it. You shouldn't do the same thing with data. Data, you should know what's happening to your data, and you should be able to audit it, just like with your money, so that you can cut deals, so that you can get value from data that you generate.

22:35Scott Berinato:Here's another good one asking, with regulation with regards to the Internet of Things, what would you consider a priority? If you had to prioritize some of the regulation that we need to govern the Internet of Things, what would you prioritize? Well, I'm particularly interested in having people have informed consent, in other words, transparency about what's happening and that they're able to agree to it and then retract that agreement later easily, not some terms and conditions that you can't understand and you can't use the facility if you don't agree to it. I mean, there's a lot of stuff that's really bogus now.

23:17And so I think that's probably the biggest priority. And then the second thing is auditing. I mean, are they doing what they say they're going to do? You don't really know now, do you?