Thursday, May 26, 2011

Tim Horton's Drive-Thru Coffee Brought to You by Coca-Cola©

Last year I found myself sitting in a Tim Horton’s drive-thru in Gravenhurst Ontario; a town of about 11,000 people located 100 miles north of Toronto, Canada. Not one who is privy to these sorts of experiences, I was somewhat in awe by two very interesting characteristics of this drive-thru. First, as I’m figuring out where the line of a dozen or so vehicles ends, I notice a second adjacent lane that is meant to absorb over-flow traffic so that the lineup doesn’t extend into the main street. Similar to the ending of a passing lane, vehicles are expected to merge into one lane as they approach the intercom. Drivers knew to take turns: left lane, right lane, left lane, right lane….it worked seamlessly. Customers either were frequent users of this drive-thru or, unlike me, were smart enough to figure it out.

Second, as you make your way around the corner to place your order, drivers are exposed to a string of advertisements posted on a long cement wall adjacent to the outlet. Printing companies, insurance companies, financial institutions, auto mechanics, you name it, a whole host of companies taking advantage of this apparently lucrative advertising space. As the driver behind me crudely leaned on his horn for me to close my jaw and move forward, I couldn't help but reflect on the absurdity of what I was observing and how this symbolized a number of very disturbing trends in our Western society.

First and perhaps more obviously, the popularity of the drive-thru illuminates our very sedentary lifestyle. If there are any doubters out there that our consumer-oriented society is linked to obesity, one only has to take a look at this fascinating phenomenon. The fact that there is now a market for advertising in what was once an unpopular or at least peripheral means of getting served shows that we live in a society where walking on our own two feet is a nuisance. Shopping complexes are built with stores separated by massive parking lots encouraging consumers to move their vehicle from one store to another. This reminds me of the creative Disney film Wall-E where an envisioned future shows human civilization restricted to a hovering chair that has all the amenities available at the touch of a button. In the same way that we hover to make our orders in the drive-thru would we hover into our houses if the technology were available?

Second, the drive-thru has become so commonplace that the line-ups in the store that originally motivated the drive-thru are all but gone. This means that the time actually saved is marginal. In fact, substantial time is lost when you are vehicle number 15 when no one is in the store. It’s no wonder that when one actually goes in the store, they are neglected because staff are catering to the onslaught of customers making their way through the drive-thru.

Third, and more striking to me, is the fact that there is an apparently lucrative market to offer advertising space along the drive-thru route. There is so much traffic that marketers consider this platform to be an effective means of spending their advertising dollars. This either means that we’ve come to a point where we slice and dice every possible combination of opportunities to bombard people with messages or it means that a majority of Gravenhurst citizens go through this drive-thru. Perhaps it’s a combination of these. Whatever the case, I can’t help but consider this to be a sad state of affairs that very likely extends beyond this sleepy town.

The documentary “The Greatest Movie Every Sold” by Morgan Spurlock (see his Ted talk) nicely illuminated the extreme nature of corporate involvement in society by symbolically funding the entire film with product placements. The film was likely trying to illustrate the potential dangers of living in a society that is wholly owned and funded by corporations. Recent public services such as education and health care, in light of tightening budget constraints, have explored corporate product placements as a means of generating revenue.

Is there anything wrong with the bombardment of advertising in our lives? Is the above Tim Horton's example merely the evolutionary nature of advertising doing its work? Or is this a warning of a potentially perverse future that derides our sense of reality and objectivity at a time when many of us are searching for truth and meaning?

Photos taken by the author

Friday, May 13, 2011

Apple and Google's Passive Approach to Privacy Issues

Privacy concerns associated with Google and Apple’s smartphone locational services made headlines for a brief couple of days last week as the U.S. Judiciary Subcommittee on Privacy subpoenaed the two companies for questioning. Research by O’Reilly Radar found that Apple is collecting location data that is unencrypted and unprotected and storing it in a hidden file on the iPhone. In response, Apple's spokesperson said, “Apple does not track users’ locations…Apple has never done so and has no plans to ever do so”. Later though, the Apple spokesperson said that Apple “may collect, use and share precise location data”. When asked by subcommittee chair Senator Franken whether Apple’s and Google’s locational data are traceable and thus not anonymous, an independent researcher said that both were possible. Both Apple and Google scrambled to respond to a scolding by the US government.

Locational services have been a recent and highly instrumental service for customers using GPS and looking for nearby businesses. They have also been useful for companies aiming to conduct target advertising based on locational information of customers. It is this latter service that has sparked some debate on whether locational services may have some important drawbacks when we consider how much companies would be willing to pay for data breach disclosure. According to ABI Research, the market for location-based services is expected to increase to $4.7 billion by 2015 from $1.6 billion in 2010. Advertisers would be particularly interested in using locational data to develop consumer profiles to which they can target specific advertising. Those companies developing “apps” for the smartphones are motivated to give the apps away for very little so that they can collect and sell personal information on users to advertisers.

Is there anything wrong with this? On the one hand, some may argue that this targeted advertising allows consumers to avoid those messages that don’t appeal to them. Single people wouldn’t be exposed to baby and children advertisements and teenagers wouldn’t be bothered by advertisements targeted to their parents. But another argument is that consumers may slowly detach from reality as they become locked into their own bubbles in an ever-increasing digital world exposed to specific information that is based on their individual behaviour. Some may recall the film Minority Report where advertisements are automatically allocated to particular consumers through the reading of their eye-balls, the content of which is likely based on years of individual activity, behaviours, and routines. On the one hand, the fear is that we would be stuck in a perceptual loop, unable to challenge ourselves to think differently. On the other hand, consumers would be exposed to certain messages that benefit corporate interests rather than their own. Given that society is highly influenced by advertising, wouldn’t it be in the best interests of these advertisers to use the captive audience to tell them what to buy and what to do? Conspiracy theory? I don’t think so. This is merely a systemic outcome of a technology used by an actor (i.e. business) whose primary and often exclusive accountability is to shareholders. If you were in their position with data that allowed you to very effectively influence the purchase decisions of consumers, wouldn’t you be interested in doing so considering that you’re being evaluated on the amount of shareholder wealth you’re creating?

During the supposed “scolding”, Apple and Google were asked whether they felt it was their responsibility to control or at least influence the actions of app developers. Using an analogy, Apple spokesperson said, "We don't go after trucking companies because they happen to handle damaged goods…we go after the manufacturers." This is no different than Nike in the 1990s denying responsibility for the horrific labour conditions of their suppliers in Asia. These manufacturers of Nike products are independent companies outside the control and supposed responsibility of Nike, explained Phil Knight and several other Nike VPs. Given that app developers are not under Apple and Google’s control, they appear to be saying the same thing, this time for the digital supply chain. We all know the lessons Nike learned.

A major difference between what is happening now and what is happening to Nike is that the affected stakeholder is the Western consumer not the developing country worker. Because of that, government is eager to get involved. But as it stands now, there is no comprehensive federal regulation that enforces data breach disclosure." Consider this gap in regulation against the philosophy among tech companies that "all data is good". Jason Weinstein, deputy assistant attorney general at the Department of Justice is bang on when he said that the proliferation of handheld devices is a breeding ground for data theft.

Whose responsibility is it then to deal with this? Is it the market to demand privacy protection? Jessica Rich, deputy director of the Bureau of Consumer Protection at the Federal Trade Commission, said the FTC believes "consumers have no idea about the layers of sharing [data] that goes on behind the scenes." Relying on government to build regulation as a response is time consuming and is highly dependent on the identification of the issue, which, in this case, happened somewhat by chance. What happens for those issues that are left unidentified or for those issues that are identified but take months, sometimes years, to be addressed? What happens until then?

As I regularly explain to my business students, managers need to make a decision about whether they will act passively in response to consumer demands and government regulation, or whether they will incorporate ethical criteria in their decisions proactively. Clearly, Google and Apple are blinded by the economic opportunities associated with locational services and do not have the mental models to consider non-economic factors such as breach of privacy until they demonstrate a direct and observable impact on their bottom line, which is essentially what happened last week. Will companies ever learn by being proactive or will they consistently go through the very reactive exercise of figuring out through negative media exposure what other social and ecological issues are inextricably tied to financial performance?

Photo taken from reproduced under Creative Commons