How Trust Is The Key To Disruption
Running any kind of online business relies on a “stack” of solutions that provide services that are beyond your core expertise. This is especially true if you are aiming to disrupt an old-line business: you need to focus on your points of differentiation and outsource everything else to subject-matter experts.
Need to collect credit card payments but don’t yet have the volume to pay for a merchant account? No problem, PayPal and Square are there to help. Want to set up an online store? There’s no need to hire programmers when Shopify and Amazon give you a turnkey solution with all the technology and integrations you need.
PayPal and Square are neither banks nor credit card brands, and yet you trust them with your money. When you sell via the Amazon Marketplace you’re actually trusting another retailer to collect your customer information.
But conventional wisdom tells you to guard your financial and customer data at all costs. So why are we handing off all our precious data to third parties?
One simple word: Trust
Three types of trust are necessary to realize true value for your business from these new online platforms:
- Security: This goes without saying. There’s a reason you don’t trust your payment processing to a brand-new startup run by teenagers out of a garage. Stripe may be a relatively young company, but they have developed state-of-the-art methods to integrate e-commerce and data protection. And in the unlikely event that something does get hacked, you need to trust that your supplier has solutions ready at hand. This literally allows you to hand over the keys to the register so that you can focus on other high value parts of your product and service offerings.
- Confidentiality: Assuming your data is secure from traditional breaches, you also need to trust that your provider is going to protect your data from market players who might use it to hurt your business. For example, you need to know that Amazon Marketplace isn’t sharing your pricing data with your competitors, even if unintentionally. Or if you participate in a two-sided marketplace that depends on anonymity, you need to trust that the platform is not sharing protected information about buyers or sellers. Underestimate confidentiality and you could be trading your entire business for one sale or short term discount.
- Transparency: This may seem like the flip side of confidentiality, but they’re related concepts. Just as your partner must protect your information from others, they also must make it easy for you to see, understand, and analyze your own data. Your business must be in a “locked box” — but you need a key to the box! More and more, companies like Stripe and Amazon are enhancing their analytics features so you can make smart business decisions. This is an easily overlooked, but highly valuable feature of today’s platform businesses. If you can’t always get a new sale, or pocket a bigger discount, having access to your data can create incredible outcomes out of age old business processes.
Once you’ve satisfied the three components of trust, you can enjoy many benefits including lower cost of transaction processing, lower buying costs, reduced marketing costs, better analytics, and many more.
In the old days, doing business safely and profitably came down to a handshake or a simple contract. Nowadays, there are many more opportunities, but also many more risks. There is a long chain of service and product suppliers that go into a successful — and hopefully, disruptive — digital business…but trust is the link that binds them all.
By: CoLoadX on May 4, 2017, 12:26 p.m.