Asymmetry of Information

• By David Snead on September 05, 2008

•   Digg
    Delicious
    Reddit
    Newsvine
    Stumbleupon
    Twitter
  Facebook

  (close)

  From:

  To:

  (close)
  Share | Send | Print | (0) Comments

Andreas Weigend the former Amazon.com Chief Scientist gave a very compelling presentation on transparency today at Office 2.0.  He talked extensively about how companies have a “one way” view of data.  What this means is that a company looks at data given to them by their customers as owned by them, and gives customers no insight into the data itself.

An example would be when you sign up for a discount card at a grocery store, they know how many cans of tuna you buy, but you aren’t given access to that data.  The company believing that you are exchanging some of your anonymity for discounts.  Anyone who knows me would not be surprised to learn that when I check out from my local grocery store, I give them my ex’s phone number, and still get the discount.  Why do I do this?  Two reasons:  I don’t trust Safeway to handle my personal information, I also don’t want irrelevant coupons (and junk mail).

How much more effective would Safeway’s program be if I could log in, look at my user profile, and make choices about which offers I’d like.  How about no junk mail?  Also, how much sticker would Safeway be if I could look at my grocery purchases and see that I’m not buying enough nutritionally beneficial foods.

The issue of transparency often comes up in discussions with my clients.  There is a profound fear among businesses that providing information to customers may lead to litigation problems.  For example, when a host has a cable cut, clients often ask how much information they should give their customers.  Should they tell people how much of their network is affected, who might be at fault, and projected time to fix?  If they do so, are they giving their customers information they can use in litigation?  In general, I feel that more transparency is better.

From a litigation perspective, I don’t think providing that information will damage you.  The information exists regardless of whether you disclose it.  What does hiding it accomplish from a legal perspective?  Practically nothing.  A determined litigant is going to find it.  Indeed, it may be better from a risk mitigation to disclose the information.  For example, one of the best ways to mitigate your risk from downtime, is an effective SLA.  An effective SLA provides your customers with a remedy for problems with your network.  That helps reinforce your limitation of liability clause, by providing a remedy.

Providing information about an outage may do the same.  Think about it from a judge, or jury, perspective.  If you could show that you provided information to customers to allow them to mitigate their damages, and tools to contact you, you’ve provided a remedy for your customers.  Because no one expects businesses to operate perfectly, providing information to customers about problems helps them cope with problems, and mitigates your potential liability.  Hiding problems rarely works.

Two anecdotes reinforce this.  I have two clients who approached major outages in completely different ways.  One immediately established an outside of network blog, on which information about the outage, and even included pictures of the backhoe digging a trench to repair the cable cut.  The client feared a huge number of claims since their entire network was out.  While they had some SLA claims, there were no lawsuits, and even more amazingly, no nasty grams from lawyers.

Contrast this with another client who hid their outage.  When customers called in, they were informed that there was a problem, and that it was being worked on.  With almost the same facts as the client above, this client was sued by a customer, and received over 10 nasty grams, each of which required several different responses from me.

I believe more transparency is better, at least from a business standpoint.  Indeed, giving your customers insight into how you use their information may mitigate liability.

• (0) Comments
• View Post

• Print | (0) Comments

OLDER: HostingCon 2008 - Video Feedback

|

NEWER: Are online contracts binding?