An ethical bargain

Transparency, relationships and other things corporations could learn from a small bookstore.

bookstore by loranger, on FlickrThe Readers’ Forum is a small independent bookstore in Wayne, Pa. and I’ve been buying books from Al, the proprietor, since the mid ’90s. It’s ironic to me that while the one-two punch of Barnes & Noble and Amazon have been killing his business (and impoverishing him in the process) Al does with ease what every analytically-minded well-funded retailer has been trying to do: He gives me great recommendations that result in a very high marginal sales rate. I probably buy at least half of the books that he recommends.

I wander in, usually on my way up the street to grab a bite to eat, and we chat for a bit. Then he says “oh, I have something for you” and he makes his way to the counter and digs into a pile. “I remember you went to Mumbai after the attacks. You might find this interesting.” And I did find it interesting, if not more than a little bit painful to read.

It looks so simple. He remembers what I buy, engages me in conversation, and sometimes in the process finds out more about me. Then he suggests things that he thinks I’ll like. Or maybe he just suggests things he likes. I don’t know, but it works. His recommendations aren’t “like” the other things I’ve read in the typical clustering algorithm sense, and maybe that’s exactly why they work. Anyone can suggest the next volume of Harry Potter, but his suggestions regularly stretch my notion of “the kinds of books I like.”

I should clarify something. He doesn’t engage me in conversation with the express purpose of feeding his algorithms, or at least I don’t think he does. Over the years we have become friends. Maybe not hang out on the weekend friends, but friends in context. I look forward to stopping in for our chats and he enjoys the break. As a side benefit his algorithms get what they need and I get good reads. And that’s the thing that retailers everywhere could learn from him. He isn’t just trying to build a machine-embedded model of my behaviors and profit off it, he is engaging in a two-way interaction that is a pleasure in its own right. And as a result it’s not the least bit creepy when he hits me with an uncannily good recommendation.

It’s not like I was buying books there for years and then one day some guy pops out of the basement where I realize he’s been watching me through the skylights and says “I think you’ll like this book!”

“Uh, why do you think that?”

“Well, I have compiled a detailed dossier on your buying habits, including the things you picked up but didn’t buy. You shouldn’t put as many back down by the way. I imagine you think you have interesting taste but really, you can be a bit pedestrian in your picks. Also, sometimes my friends in other basements will let me know where you travel, how much money you make, and who you date in exchange for me telling them what you read. Anyway, based on all that I think you’ll like this book, you should buy it!”

Nope, Al and I are engaging in an ethical bargain. For starters, it is completely obvious and transparent. I never imagine that I’m buying anonymously there. And I get more out of the bargain than I give up because his algorithm is incredibly data efficient. Also because I know the nature of the deal, if I happen to need another copy of “The Anarchist’s Cookbook,” I can just buy it somewhere else.

Al is a sole proprietor, so when I buy from Readers’ Forum I’m buying from a person. Despite the root meaning of “corporate,” a corporation will never be able to be the simple embodiment of a single actor. However, I think they can still learn from Al.

The way corporate retailers do this stuff is often quite different. Too often their approach gives weight to the argument that corporations are fundamentally sociopathic. Here’s one simple example: I went into a Meijer’s near South Bend, Ind. to buy a six pack of beer a few months ago. At the self check out lane I scanned my Guinness and the machine asked me for my birthday. I was like “screw that, I’m not entering my birth date.” So I canceled the transaction and got in line at a register that had a real live human cashier. She asked for ID to prove my age and when I handed it to her she started to key in my birthday. I stopped her and asked what she was doing. “I need your birthday to prove you are 21.”

“Well, just look at it. You don’t need to key it into the machine to know that I’m over 21.”

“Sir, I’m required to.” That’s the point where I muttered “bull” under my breath, asked for my ID back, and walked out.

That’s a sociopath at work. “Let’s use the age limit for beer as an excuse to harvest customer birth dates. We can use that data to correlate them with data we are buying from marketing services providers and then when we fill our customers’ mailboxes with pulped Brazilian forests we will have a 0.3% better chance of drawing them back into the store where our HFCS-loaded end caps will grab them. If a customer complains we’ll just hide behind ‘the process’ and let our cashier deal with the awkward moment.”

Perhaps that sounds a bit harsh, but that was my reaction and I haven’t returned to one of their stores since. It’s not just the sanctity of a bit of my PII that was a big deal, it was the dishonesty of an opaque and misrepresented bargain that got me so irritated. That is not the kind of thing Al would do.

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As an aside, while people have been fascinated and disturbed by the news that Columbian drug cartels are building submarines, I’m wondering when they’ll start building Hadoop clusters. Just wait till your corner dealer is entering profile data into his smart phone at the point of sale. “Sir, can I get your zip code and the last four of your social? Ah, I see you are a loyal customer. You should really join our loyalty program. I can offer you a free bag of orange kush if you sign up today.”

By the way, if it seems like I might be drawing a comparison between a 100,000 square-foot HFCS pusher and a Columbian drug cartel …

Okay … Let me just ask this: If you are involved in data capture, analytics, or customer marketing in your company, would you be embarrassed to admit to your neighbor what about them you capture, store and analyze? Would you be willing to send them a zip file with all of it to let them see it? If the answer is “no,” why not? If I might hazard a guess at the answer, it would be because real relationships aren’t built on asymmetry, and you know that. But rather than eliminate that awkward source of asymmetry, you hide it.

The reason I’ve been thinking about all of this is because of my new job. From 2003 until January I was a defense contractor. I worked for a company that built large-scale training simulations and did command-and-control system integration. I also worked on a lot of systems strategy and planning. I know for some people that makes me suspect, but while the bureaucracy, waste, and general inanity of the federal government sometimes drove me nuts, I never felt wrong about what I was doing. But in January I took on the challenge of building a data management practice focused on Hadoop and while it has been fascinating work, it has given me the creeps more than a few times.

I think what’s interesting is that you can’t help but get caught up in the moment. “If we could just join this stuff with that stuff, and then get this additional attribute, we could build a really sweet model. I’m sure that would get you some prospecting lift.” And then we all look at each other for a moment and go “wow, and that would be kinda creepy, too.” Thankfully I’m not the only one reflecting on the ethics of all this.

Ft. Meade in Maryland is that state’s single biggest consumer of electricity, and no small amount of it is being consumed by Hadoop (or similar) clusters that, as it turns out, are probably surveilling you. That is a troublesome thought, but only about half as troublesome to me as the the even more thorough, broad, and pervasive corporate surveillance we are unleashing on ourselves. The only thing that keeps me sleeping is that the competitive dimension will slow the rate that these pools of data coalesce.

Jeff Hammerbacher is concerned that the best minds of our generation are wasting their talents on advertising. I agree with him, vigorously, but to me the even bigger issue is that the kind of advertising we are doing now depends on pervasive surveillance and the reduction of who we are to mere behavioral models. In fact, I find it the height of sad irony that Jeff, and many good meaning people like him, have become the de facto arms dealers of the surveillance state. Of course that isn’t their intent, and they may not work inside the beltway, but they are no less arms dealers than Boeing is. “Would you like a Dreamliner Hadoop cluster, or the F/A-18 kind? Never mind, they are exactly the same.”

When Apple got pie on its face with that location data hubbabaloo the only real surprise as far as I was concerned was that it was a surprise at all. But that’s the point, really. The fact that people were surprised speaks to the asymmetry of the bargains they are party to. The Jeff Jonases of the world certainly understand what data is being collected on all of us, but the average consumer doesn’t. And why don’t they? Are they stupid? Nope. Do they not care? Apparently at least some of them do care.

No, I think it’s because our online relationships aren’t at all like my real-world relationship with Al. The full nature of the transaction isn’t obvious, visible, and transparent and there is little chance a corporation will think like my friend. Most of the relationships you build with corporations are like icebergs and essentially hidden from view, and corporations like it that way. We don’t really want people asking questions about stuff we think they won’t understand. As corporations we may be sociopathic, but even a sociopath knows that awkward questions aren’t just uncomfortable, they’re bad for business.

So, assuming there could be a more human corporation, that could build symmetric ethically-grounded relationships with you, what would that relationship look like? Would transparency and choice be enough to make it symmetric? Could a relationship with a corporation feel at all like the one I have with Al? Could it be obvious, transparent, and a pleasure in its own right? Or, what if instead of asking ourselves “what data do we need and how could we get lift from it?” we asked “what is the value to our customer when we store and use this data and how do we make both the value and our stewardship of the data obvious and transparent?”

Photo: bookstore by loranger, on Flickr

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  • http://www.lowerpriceusa.com/ Diana

    I don’t think it’s over the top to call corporations a sociopath, it’s an entity whose primary motive is self-gain.

  • Arlen

    I have an easy way to deal with computers that want info they don’t need. I lie. In your specific example, when the checkout machine asked for my birthdate, I would have entered a random date over the legal age limit. It only needs to know I’m old enough, it doesn’t matter if it thinks I’m 26 or 66.

  • http://www.hablantia.com Peter Bennett

    Thanks for a great article :-)

    Interesting you floating the question of whether relationships with companies could be like human ones….

    I’ve been conned face-to-face by some pretty charming people in the past. I know that a lot of human society feeds on gossip and information back-channels. Long-held grudges help ensure that unpleasantness continues.

    However, in the human world people are limited to managing about 100-150 friends. People get old and die. People forget.

    Computer clusters don’t have any of those ‘limitations’. I think that’s part of what makes them a bit spooky.

    Plus, your relationship with Al grew over the years at a ‘human’ pace, whereas the data connections are made coldly and instantaneously.

    I wonder whether we should try to make computer systems perfect, or whether there might be certain types of errors in them that would actually make people enjoy engaging with them a bit more?

    At the end of the day though, it still feels to me that all these computer systems are just magnifying human behaviour, in some nightmare reductio ad absurdam.

    You’ve got to laugh, though.

    Peter

    p.s. I like that fact that the font on this site makes it very hard to spot the difference between Al and AI….

  • David Smith

    Thanks for such a thought-provoking article, Jim. In general, I’m at the other end of the spectrum from you — I see great value in providing data to corporations, because the recommendations benefit ME. The ethical issues only arise then the data leaves the realm of machines and gets passed to and seen by humans, and for me at least the benefits outweigh the potential risk. I’ve written up my reactions to your post in detail at the Revolutions blog.

  • Jim Stogdill

    Peter, that AI / Al bit was kinda funny. Not really intentional though, as it is his name. Still, made me laugh when you pointed it out.

    David, I don’t think we are “on opposite sides of the spectrum.” I’m not against companies using data or holding some of mine. I guess in all of my meandering I failed to get to the point effectively. My real concern is with the asymmetry of the relationship. My relationship with Al is just a metaphor for a retail relationship that is symmetric and transparent. I know that he remembers what I buy, and that he uses it to make suggestions. I also know that he doesn’t write that down and sell it to other people.

    It doesn’t bother me at all that Amazon remembers my purchase history and uses it to make recommendations to me. I know they do it, and because I know it’s ok (though I think they could be even more explicit about it).

    What I don’t like are companies amassing dossiers on me and working hard to keep it a secret. Or selling my data as a bigger part of their business than the thing I think we are engaged in.

    I’d just like to see companies 1) be explicit and obvious (not just in their privacy policies, but actively in the UX) in what they are collecting on me and 2) use it for the purpose of bringing greater value to my experience with them.

  • David Smith

    Thanks for the clarification, Jim — I was focused on the issue of data mining, and you’re absolutely right that there are definitely issues around data *sharing* to be discussed. “Selling my data”, especially. Is there some kind of ethics guide to data sharing that corporations, as a whole, are expected to follow? I think we all know what should be there — no sharing without consent, etc. — but a 10-page privacy statement gives me no clue as to whether a company will be ethical in this regard or not. I think that’s a big part of the problem.

  • http://www.kritikal.com Andrew Herron

    When you quantify anything, you lose fidelity. Relationships in life are no different.

  • George Orwell

    Every time I check out at BevMo, the cashier politely says “Thank You Mr. Orwell”. At Safeway they say thank you to Washington Irving. At ACE its Irving Washington.

    Everybody else just calls me “El Brazo Onofre”.

  • Jim Stogdill

    @Mr. Orwell Awesome. :)

  • http://cocreatr.typepad.com CoCreatr

    Seething, that is how I felt when a cashier at a home center asked for my address. What for? Mumble-stumble… Does your company want to send me anything? Her eyes spoke uncertainty, almost fear. This being in Japan, the care-for-the-customer habit won and I paid without leaving an address. I was ready to leave the goods right there and steam out of the shop, never to return. Alas, I returned, and they seem to have stopped the practice.

    Thank you for this post. You may like Why the Online Identity & Data Ownership Debate Matters by Venessa Miemis.

  • AP

    Jim, spying on people gives you the creeps whereas developing systems to kill more effectively (defense) doesn’t? A corporation stealing birth dates to make money vs., say, half a million civilians dead in Iraq? Congrats on leaving the killing business.

  • Jim Stogdill

    Just an update. I stopped by the Reader’s Forum on Friday on my way back from dinner and Al suggested A Diary of the Century, Tales from America’s Greatest Diarist, 1927-1995. He had an old galley proof in his used section. Naturally I bought it.

  • Richard Ordowich

    We’ve seen what Wall Street has done with algorithms and numbers and now this same approach is being applied to personal data. To these organizations we are not customers but “data commodities”. Our data is the raw material to feed their analytics, data mining and profiling algorithms so that they can target us. I enjoy when these organization say they are using this data to determine customer sentiment. They use online surveys with questions such as: “was your customer experience excellent, exemplary, outstanding or superior”? If you want to determine customer sentiment, why not just ask them? You don’t need to text mine their Tweets, twitters and Facebook. Just read the e-mails they send you when complaining about the poor service they received.

    I think we should expect to see some egregious examples of misuse of data in the near future. Examples may include profiling people by religion, race, ethnicity etc. My question is will this misuse be perpetuated by business or government? How will we react to this?

  • SusanE (commoncents)

    Jim….Great Minds Think Alike! Way back when, my kid used the name Fred Mertz at the local radio shack store. Always give wrong birthdates cause no one really needs to know. Misspell your name to see how much advertising comes in the mail from an internet buy. Been thinking just what you wrote for years. Thanks for a great read! Chris Columbian birthdate 4/1/1492

  • http://noemission.com Nate Boyd

    Jim, spot on. I like to tell people that when you shop at a big brand, it’s as if as soon as you walk out they create 10,000 copies of your ID and receipt and sell each copy for a few cents or few bucks (depending on how valuable they think you are). I’m all for shining light on the “gray market” that’s formed around consumer data.

  • Bupkus

    Great post Jim, however I’d have to disagree with you on one point. The reason the clerk needed to key in your birth date wasn’t some sinister ploy to farm personal data from you. She utilizes her computer in order to confirm that 2011 minus 1965 makes you 21 or better. Lots of gray haired Guinness swilling teens out there I suppose. Like you said, the greatest minds are in advertising, not in retail point of sale.