Cory is the Chief Executive Officer at BlueConic, a leading customer data platform.
I recently finished William D. Cohan’s epic history of General Electric called Power Failure: The Rise and Fall of an American Icon. It spans the company’s full 125-plus-year history with the bulk of the narrative focused on the Jack Welch and Jeff Immelt years. For those less familiar, Jack Welch, who for 20 years oversaw GE’s most successful run, is often considered the greatest CEO in American history. The reign of his successor, Immelt, was less successful, to put it mildly.
Immelt’s tenure did not go smoothly from the jump. In many ways, he was dealt a tough hand. The 9/11 attacks happened on his second day. The Great Recession happened six years in. Both were major disruptors to GE’s business. Yet, despite significant warnings, Immelt ignored a number of red flags about the most important—and risky—part of GE’s business: GE Capital, the financial services division. For years, he didn’t do anything about the problems that GE Capital’s structure represented.
There were a lot of signs. But because everyone at GE had received a dividend every year for more than a century with only one exception, the risks were ignored. Until the road ran out. As Cohan writes, “Jeff was focused on transforming GE and putting his own imprimatur on the company. He desperately wanted to reduce GE’s reliance on GE Capital, but he never could sever the Gordian knot.” Later in the book, Cohan concludes that the 2008 crisis should have been a wake-up call for GE’s board of directors. It was not.
In this story is a lesson for the majority of companies operating today, but perhaps not an obvious one. Many companies are facing a modern precipice of their own. Third-party data deprecation and the new consumer privacy landscape is upending how data can be collected and used to target audiences and orchestrate customer experiences. Yet, like GE was about the flaws in their business model, many are in denial. Consider:
- GE faced scrutiny about its business model for years, much like data providers and other players in the consumer data ecosystem are staring down bigger fines for violating data privacy laws. It’s affected major brands across industries, including everyone from Instagram and Meta to Sephora and British Airways.
- Over-reliance on GE Capital to stabilize quarterly performance blew up when people finally figured out the creative accounting. Marketers using third-party data and black box advertising platforms be warned.
- When asked how GE failed, an executive said, “Two ways—slowly and then all at once.” Has ever a better description of consumer/brand experience dynamics existed?
The warning is clear: Companies cannot rely on sketchy data practices, black-boxed third-party data vendors and “walled gardens” such as Facebook and Google to reach consumers. Here’s what leaders should be doing instead:
1. Get your finance and marketing leaders together.
The deprecation of third-party cookies, the increasingly restrictive Apple policies (paywall), and the rising enforcement around regulations—like the European Union’s General Data Protection Regulation (GDPR)—represent a profound reckoning for marketing and other customer experience leaders in terms of how they collect and use data to understand and interact with consumers. This likely comes at a cost to the business and should be tackled transparently and collaboratively between your marketing and finance departments to ensure the company can continue to reach and engage consumers in a privacy-safe way. For marketing, that means adopting a more transparent and consent-driven approach to data collection and usage. For finance, that means allocating budgets to marketing efforts and technology investments that prioritize first-party data.
2. Prepare a consumer data audit for your entire technology stack.
Insisting that you know what data you have about consumers, including lineage and consent, is not enough. A full audit of data sources, opt-in status and relevant objectives is critical to being ready for this next chapter of consumer engagement. Start by identifying all the places where consumer data is collected, including websites, apps and third-party tools, and confirm this data has been provided willingly. Then, document the purpose of this data and make sure it aligns with your business objectives. Ensuring your data collection doesn’t become a liability means determining if having that data is really necessary and, if so, why.
3. Plan a future-proofing business operations workshop for all consumer-facing teams.
Based on the findings of your audit, work on a vision for the future of your operations and the requisite technology, governance and change management necessary to thrive in a world where privacy is the new digital. For example, would replacing a CRM system with a customer data platform (CDP) achieve the desired result? How will having a new technology in place change your daily, weekly and monthly workflows? Do you have resources with technical proficiency who can be evangelists and power users for the organization at the outset? By going through this exercise, your teams can level-set on where they are today and make more deliberate choices about what will work best for the organization going forward.
I had a conversation with a customer recently who said that they are still proving the value of a first-party data strategy, never mind proving the return on the investment. I applaud their courage and conviction because it’s extraordinarily hard to face an uncertain future, never mind put dollars against such a bet. But whether you see all this change as an opportunity or a threat, the time to act is now.
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