TechZine – Alcatel-Lucent

Business

New Currency for the Identity Economy

Highlights

  • Consumers’ sense of identity is changing as they live more of life online.
  • Consumers want more control over how their identity is manifested in the virtual world.
  • Service providers can build trust by understanding the ‘3-P model’ of online identity and using it as a means to empower consumers.

The battle for consumer hearts, minds and wallets is evolving as more people join the networked communities of the virtual world. Service providers want to capitalize on consumers’ willingness to share identity information in exchange for compelling offers and experiences. To create stronger bonds with connected consumers, service providers need a better understanding of how consumers define identity and decide whom to trust when they go online.

From physical to virtual: Tracking the identity shift

Our sense of identity is shifting as we live more of life online. In the physical world, elements like time, space and physical senses govern how we evaluate our environment, assess risk, make choices and present ourselves. In the virtual world, these parameters are missing or are very different. We may even operate numerous virtual representations of ourselves.

In the networked-community age, identity is shaped by the data we leave behind when we go online. We add data each time we use a search engine, update our Facebook status, carry a GPS device or buy something with a credit card. Each new bit of data refines the image of who we are and who we are becoming, both in our own eyes and those of others.

Most of us aren’t shy about sharing our personal data online. Sharing brings us new opportunities to engage with people, communities, organizations and businesses. But sharing also brings risk. Whether we recognize it or not, sensitive personal information — our real-time location, contacts, credit history and purchases — is constantly being revealed through our online activities. People are becoming hyperaware of their image and how it’s affected by things they can and can’t control.

Taking care of data

Service providers have a key role to play in this emerging age. They have built a decades-long legacy as trusted suppliers of reliable, efficient and affordable networks. They are known for never compromising the information that passes across their networks. But consumers’ needs are changing, and service providers know they have to respond.

Consumers already use online identity to shop, manage bank accounts, pay taxes and interact through Web sites and social media. Connected device evolution will bring more options for engaging and sharing identity data. Service providers own the networks that carry this data. To strengthen their role in the virtual marketplace, service providers have to show that they can support compelling new experiences while continuing to safeguard consumers’ personal information.

The challenge for service providers is to work out how to recognize and address each consumer’s unique concerns about identity. Some want to guard their personal information above all else. Others readily offer personal information in exchange for easy access to content, offers and services. They want the network to know who and where they are. Each consumer balances these concerns in a different way; the balance can change from day to day. Service providers have to account for these variations as they determine how to use identity data.

Searching for guidelines and strategies

Service providers are asking the right questions: How can we do this? How can we do it responsibly? Unfortunately, there’s no one-size-fits-all approach that works for every consumer who shares personal data with service providers or their partners. There’s also no guidebook on how to mine identity data to access better business opportunities.

What’s clear is that consumers want more control over how their data is used and how their identity is manifested. They want to know that service providers are using their data in a way that doesn’t exploit them and that ultimately empowers them. They want service providers to be forthright and transparent about mistakes and security breaches, and about risks and problems that can arise from sharing personal information. In short, they want to know that they can trust service providers implicitly.

Service providers want to secure the trust of consumers. To succeed, they need to keep building their understanding of how identity is constructed — and reconstructed — in the online world.

A new model for identity

A recent study by Alcatel-Lucent  sought to uncover insights about how identity is formed and why people behave the way they do in the physical and virtual worlds. The foundation for the study, which combined extensive ethnographic and quantitative primary research and reached 5300 U.S. consumers, is a model that explores how identity is constructed. This model, called the ‘3-P model of identity,’ is made up of three key building blocks:

  • Protection, which is the desire for privacy and security, and for control over which parts of our digital trail we reveal to others.
  • Preference, which is the search for frictionless experiences and serendipitous access to services, goods and connections. The virtual world extends our reach, but we need help to determine which people and organizations we trust, prefer and want to have relationships with.
  • Presentation, which is the image we present of ourselves online and offline. It includes how we create and tailor our image for different audiences. It also includes control of our image and the knowledge that we can lose control when others post information about us.

Protection, preference and presentation are coexistent aspects of identity, but how an individual balances them may change, depending on their contextual situation. For example, a typical preference seeker may shift to protection-oriented behavior when encountered with an unknown source.  Or a presentation seeker may shift toward preference-oriented behavior to meet others with similar ideals.

Identity shifts across generations and life stages

The study also revealed that while the 3-Ps act within all of us simultaneously, the driving force shifts over time based on how we identify ourselves and see our lives changing.

For example, different generations intersect with technology in different ways. Boomers see technology as a new source of empowerment in exchange for offering a piece of their identity to a service provider. Gen Xers see technology as a means to adapt to changing environments or get more value. Millennials, having grown up with always-on connections, see services as technologies that facilitate unification and reinvention.

Life stages add nuance to these generational differences:

  • Teens focus almost entirely on presentation, and treat devices and Facebook friends as status symbols.
  • Emerging adults focus on preference, building identities that might help them find an ideal career or soul mate.
  • Parents focus on protecting their families — a losing battle when kids have smartphones that offer 24/7 connections.
  • Mid-lifers focus on using technology to reinvent themselves. They will give up personal information if they can control who sees it and when.

Trust is the new currency

A greater understanding of how identity and technology intersect will help service providers respond to the desires and concerns of consumers across all generations and life stages. To turn understanding into success, service providers will need to build on the trust that consumers place in them. Trust is the new currency in the identity economy. By offering greater transparency, control and empowerment around online identity, service providers will have more currency to earn from — and spend with — consumers.

For more on this topic, listen to our podcast Is Trust the New Currency?

To contact the author or request additional information, please send an email to techzine.editor@alcatel-lucent.com.