Consumers today are deeply interested in controlling how their data is collected and used by brands, and lack trust in how companies protect their information. While companies typically adhere to the necessary data privacy laws and regulations in their regions (think GDPR in Europe or the California Consumer Privacy Act, for example), it’s rare for them to go beyond simple compliance to consider data ethics as a holistic practice as well.
This is a missed opportunity. Considering data ethics isn’t just the right thing to do, but it can be a competitive differentiator for your brand. The brands that lead with transparent data practices will build trust with consumers, and when a consumer trusts your brand, they’re much more likely to become a customer in the future.
While every brand should consider their data ethics stance, early stage startups are in the optimal position to ingrain data ethics into their organization from day one. As newly forming companies, startups have the opportunity to develop their mission, values, culture, policies, practices, and more all with a data ethics mindset. This will make it easier to ensure that ethical data practices are adhered to by all employees and partners at all times.
Start in the C-Suite
As a startup begins to take shape, its founder(s) must determine what the leadership team will look like. A chief executive officer, chief human resources officer, and chief marketing officer are some of the common roles you are likely to find in the c-suite. But a chief data ethics officer (CDEO) is a role you must consider as well if your startup is deeply invested in data ethics.
What Is a Chief Data Ethics Officer?
One of the first things a CDEO should do is to create an ethical data-use framework that ensures all aspects of data collection, use, destruction, and disposal are done legally, morally, and fairly. These data ethics principles (for example, like ours at Acoustic) should be distributed to all employees, included in onboarding materials, and be easily accessible to consumers should they choose to search for them. By ensuring these principles are disseminated appropriately, they’ll help ensure that those standards apply across the data ecosystem that the company operates within.
Some companies will have a chief data officer whose job is to manage data and draw business value from it. Ethical data practices are often wrapped into this role, but it’s not the main focus or function. By employing a CDEO, though, ethics are quite literally in the job description — it’s what they will be measured on and evaluated against. This role signals to consumers that your company places a high value on ethical data practices, dedicating an entire c-suite role to the task.
Self-Regulate to Earn and Keep Consumer Trust
Once a startup has a CDEO and its data ethics principles are established, it’s ready to begin implementing ethical practices. However, as the company and the products or services it provides mature, the CDEO will need to constantly evaluate its processes to ensure its data ethics principles are upheld.
Some well-established companies like Apple and Google have moved beyond compliance to self-regulation. This means they’ve taken additional steps outside of those required by law to change how they operate. While startups operate much differently than big tech giants, they can still learn a thing or two from them about establishing consumer trust through self-regulation efforts.
For Apple, this is in the form of its iOS 15 update that’s expected to be released this fall. With this update, Apple is prioritizing consumer privacy by making it more difficult for marketers to track user activity via email. Google, on the other hand, has decided to discontinue its support for third-party cookies as of 2023, forcing many brands to switch to a first-party and zero-party data strategy. These policies have significantly affected marketers, but they’ve also helped improve the reputation of both companies. In fact, Google is among the most trusted brands by consumers, and Apple’s reputation for truly caring about consumers has strengthened, even before the announcement of iOS 15.
Investing in Data Ethics Means Future-Proofing the Firm
By building a startup on a foundation of data ethics, it creates a brand that commits to transparency and trust. In our post-pandemic world where misinformation runs rampant and societal tensions are high, this transparency and trust is even more powerful because it shows that the company’s brand isn’t being deceitful or deliberately blind to unethical practices behind the scenes.
So, startup founders: Start your company on the right foot by establishing data ethics early. You’ll build an organization with employees who value ethical practices and customers who have confidence in your brand. By holding yourself accountable, you’ll set yourself up for success as the privacy landscape continues to evolve.