Category: + Fairness

A Marketing-Ethics Professor Grades Facebook’s Data Policy

4/21/2018

by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

You’ve heard about Cambridge Analytica, data-sharing, the 2016 election, and Mark Zuckerberg’s two trips to Capitol Hill. Rather than add one more opinion of what went wrong and why, I’d like to share something a few of Facebook’s two billion users might find even more helpful: an evaluation of the social media giant’s current data policy.

As an educator, I wasn’t eager to tackle another big ‘grading’ project (I have plenty of others right now), but after pouring over the firm’s privacy-related webpages, I’m glad I did. I learned much in the process, and I believe there are several useful takeaways for others who have an interest in how Facebook manages our data.

Most of my analysis stems from Facebook’s Data Policy page, which describes at length the company’s approach to user privacy. This page also contains links to a variety of other pages that unpack specific components of the policy.

Here’s my evaluation:

Readability: "A"
We’ve all experienced contracts and terms of service that we can tell at a glance will be a ‘bear’ to get through, perhaps because of all capital letters or marathon paragraphs. Facebook’s formatting is much more user-friendly, which may seem like a small thing, but if people avoid reading the policy, what good is it?

The policy features short paragraphs, many with three sentences or less, prefaced by bolded headings, which help readers locate specific information. Likewise, the overall organization of material is clear and logical. For instance, several main headings, set in a larger blue font, delineate sections for answering: “What kinds of information do we collect?” “How do we use this information?” and “How is this information shared?”

Clarity: "A"
Organization and formatting are helpful, but they’re meaningless if we can’t interpret what’s said. Most of us have experienced the mind-numbing legalese that seems as if it were written to confuse and confound. Fortunately, Facebook uses language that’s much more accessible, and if technical terms that some users may not recognize are needed, the company explains the concepts. For example, here’s how the firm describes cookies:

“Cookies are small pieces of text used to store information on web browsers. Cookies are used to store and receive identifiers and other information on computers, phones, and other devices. Other technologies, including data we store on your web browser or device, identifiers associated with your device, and other software, are used for similar purposes. In this policy, we refer to all of these technologies as ‘cookies.’”

Sometimes, however, even a clear explanation is not enough. In those instances, Facebook goes a step further by providing specific examples like the following one to describe how it shares data with third parties:

“We may tell an advertiser how its ads performed, or how many people viewed their ads or installed an app after seeing an ad, or provide non-personally identifying demographic information (such as 25 year old female, in Madrid, who likes software engineering) [emphasis added] to these partners to help them understand their audience or customers, but only after the advertiser has agreed to abide by our advertiser guidelines.”

Ease of Use: "A-"
Given that Facebook’s business model is based almost entirely on managing user-provided information, it’s data policy is inherently complex, which makes it all-the-more important that users can easily find the information they want and make changes to fit their personal preferences.

The company facilitates those objectives by making ample use of hyperlinks to other pages, like this one for advertising preferences, which allows users to better understand and manage the ads they see. Facebook also has programmed a decent amount of flexibility into data-related settings. Similar to the previous example, users also can determine the specific information they’d like to keep private vs. make public through means such as managing their Public Profile and using the Activity Log tool.

In addition, Facebook allows users to delete their accounts whenever they wish, or deactivate them temporarily. With those options, however, comes an important caveat from the company: “Keep in mind that information that others have shared about you is not part of your account and will not be deleted when you delete your account.”

Facebook’s ease of use slips somewhat when it comes to reporting others’ objectionable content. On its webpage “Details on Social Reporting,” the company says, “We encourage people on Facebook to use the report buttons located across our site [emphasis added] to let us know if they find content that violates our terms of use so we can take it down.” However, no such buttons are readily visible. Instead, the intended option for such censure appears to lie under each post’s three-dot drop-down menu under the somewhat ambiguous selection “Give feedback about this post.”

Transparency and Thoroughness: "B+"
Brevity is a virtue, but that benefit is lost if there’s not enough information to adequately communicate a message. In many ways, Facebook does a good job detailing its multifaceted data policy. For instance, it identifies each type of third party with which it shares information about its users: advertising, measurement and analytics services, vendors, service providers, and other partners. Facebook also broadly describes the kinds of information these third parties receive and how they use it.

Along the way, the company provides links to other pages that contain more detailed information, such as advertiser guidelines, the kinds of information it collects, and how users can control the types of ads they receive. In addition, Facebook offers in its Help Center a “Security Checkup” and a series of security tips with links to additional resources such as password protection and antivirus software for Mac and Windows operating systems. Unfortunately, the Microsoft link is broken.

How could Facebook be more thorough and transparent? The company states:

“We do not share information that personally identifies you (personally identifiable information is information like name or email address that can by itself be used to contact you or identifies who you are) with advertising, measurement or analytics partners unless you give us permission [emphasis added].”

As a researcher, the notion that Facebook aggregates data and maintains individual users’ anonymity is reassuring. As a Facebook user, however, I’d like more explanation for the final part of the above statement: “unless you give us permission.” How exactly do we give Facebook permission to share “personally identifiable information,” where is it possible to view the permissions we have granted, and how can we rescind such permissions, if we want to do so? Similarly, Facebook’s data policy states:

“We transfer information [emphasis added] to vendors, service providers, and other partners who globally support our business, such as providing technical infrastructure services, analyzing how our Services are used, measuring the effectiveness of ads and services, providing customer service, facilitating payments, or conducting academic research and surveys. These partners must adhere to strict confidentiality obligations [emphasis added] in a way that is consistent with this Data Policy and the agreements we enter into with them.”

“Transfer information” seems like another way of saying ‘share data,’ which is reminiscent of the Cambridge Analytica debacle. Of course, Facebook adds that “these partners must adhere to strict confidentiality obligations,” but how exactly is that third-party confidentiality monitored and enforced? Perhaps the answer is ‘above our pay grade’ as consumers; yet, it would be comforting to know that new and more effective standards for accountability are in place that will help to avoid a similar Cambridge Analytica breakdown.

Conclusion
Along with the preceding assessment, it’s important to note three things:

1. We use Facebook for free. Since users don’t pay for Facebook, the social media platform needs to cover its costs somehow. Like most other media, it does so through advertising revenue. Advertisers aren’t going to foot the bill, however, unless they know who they’re reaching, hence the need to share at least some user data.

2. The purpose of Facebook is to share information. If we posted things on Facebook and no one ever saw them, we’d be upset. The very reason we use the platform is to share information. Granted, we may only want to share things with our friends or certain others, but in keeping with the prior point, ‘beggars can’t be choosers.’

3. Users enjoy a better experience when Facebook utilizes their data. Granted, we don’t want to be taken advantage of, but seeing ads for products we want or content related to topics we like are usually preferable to exposure to things that are of no interest to us. Such customization is possible because of the data we provide.

As the preceding analysis has suggested, Facebook’s data policy isn’t perfect. However, given the information-intensive nature of the company’s operations and the many different stakeholder groups who rely on that data, the company is doing a commendable job—one that warrants recognition as “Mindful Marketing.”

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Should Cars Drive Themselves?

4/6/2018

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

It was around 10 pm on a Sunday evening in March. Elaine Herzberg was walking her bike across N. Mill Avenue in Tempe, AZ, when a Volvo XC90 SUV traveling 40 mph struck and killed her. Tragically, about 6,000 pedestrians a year become traffic fatalities. Herzberg’s death, however, was different. She was the first pedestrian killed by a self-driving car.

While driverless vehicles have been the subjects of dreams and experiments for almost a century, truly autonomous vehicles have been reality for only about a decade. Google began its Waymo self-driving car program in 2009. By 2012, its driverless vehicles had logged over 300,000 miles. In 2015 came the “world’s first fully self-driving ride on public roads,” which truly opened the door for autonomous vehicle accidents.

The first death due to an autonomous car occurred in 2017 when a 40-year-old Tesla driver, who was using the car’s “Autopilot” driver-assist system, crashed into a large truck that turned in front of it. Investigators found that the system failed to distinguish the white truck from the bright sky.

More recently, in March 2018, a 38-year-old man died near Mountain View, CA when his Tesla Model X hit a concrete barrier. The driver was also using the car’s Autopilot system, which “allows drivers to take their hands off the wheel for extended periods under certain conditions.” Similar to the other Tesla crash, the system apparently failed to identify the divider. Two other vehicles also were involved in the accident.

Such tragedies may make us ask: Should cars operate on their own? Driving is a complicated activity that requires sharp mental and physical skills, as well as strong intuition, i.e., a clear sense of how to react, often in an instant. Artificial intelligence and other ‘smart’ technology have gotten very good, but can we really trust computer code and CPUs to protect people from a complex collection of fast-moving metal? Is it safe to hand over our keys to the cars themselves?

According to Business Insider, by the year 2020 there will be more than 10 million self-driving cars on U.S. roads. That’s a significant number of vehicles making their own way, and a good guess is that number will continue to grow. In fact, some predict that by 2030, one out of every four vehicles will be self-driving.

What’s driving the success of self-driving vehicles? Compared to conventional cars, autonomous ones have several advantages, for instance:

More efficient operation, including optimized braking and accelerating
Lower emissions due to better driving and possibly fewer vehicles
More self-time: people can potentially do other things while they ride

There also are millions of people who can’t drive cars for various reasons including physical and cognitive limitations. For such individuals, a self-driving car may be more than a simple convenience; it can be a life-changing tool.

But what about safety? Surely none of these benefits is worth putting more lives at risk of auto accidents. That would be true, except that greater safety is actually an advantage of autonomous cars. According to BI Intelligence: “The biggest benefits of self-driving cars are that they will help to make roads safer and people's lives easier.”

Business Insider cites a KPMG estimate that in the United Kingdom alone, self-driving cars will save 2,500 lives over a period of about 16 years. In the United States, autonomous vehicles could prevent 300,000 traffic fatalities per decade.

Such statistics may be hard to believe in light of the recent tragic headlines that prefaced this piece. There are, however, two important points to consider when assessing autonomous vehicle safety:

1. Self-driving cars are still in their infancy. They’ve only been tested on real roads for a few years. The technology that powers them will keep getting better and as improvements are made, the vehicles will become even safer.

2. In most cases, technology does things much more efficiently and effectively than humans do. Take, for instance, automated food production. Machines make every Oreo, can of Coke, and Reese’s Cup virtually identical to the last one. If we had to produce such items by hand, most of us would be lucky to make any two look similar. Of course, driving occurs in a more open and unpredictable environment, but similar accuracy and reliability have already been applied to autonomous cars, with more advancements to come.

It’s heartbreaking when lives are lost, especially due to accidents. As such, it’s wise to be cautious with new and potentially dangerous technology that’s still being refined. Although a few very unfortunate accidents have understandably garnered media attention, self-driving cars still promise to make our highways safer. Those developing these vehicles responsibly are on the right side of the road, driving forward with “Mindful Marketing.”

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L.L. Bean's Still Happy Returns

2/23/2018

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

There were three certain things in life: death, taxes, and L.L. Bean’s return policy. We’re now back to two. The iconic outdoor retailer’s decision to rescind its legendary product guarantee has ignited a social media firestorm, but who’s really responsible for the return policy retraction?

Leon Leonwood Bean founded L.L. Bean in Freeport, ME in 1912 to provide a single product: a duck boot called the Maine Hunting Shoe. Over the next 100+ years, the company expanded considerably, both in scale and scope. Despite the great growth, the firm maintained an unwavering focus on quality, backed by a virtually unequaled product return policy.

For more than a century, L.L Bean made a practice of “accepting any return, at any time, in any condition, regardless of the origin of the item.” However, that very liberal largesse came to an end just a few weeks ago when the company announced it would rein in its return policy. L.L. Bean now guarantees its products as follows:

“We stand behind all our products and are confident that they will perform as designed. If you are not 100% satisfied with one of our products, you may return it within one year of purchase for a refund. After one year, we will consider any items for return that are defective due to materials or craftsmanship.”

The company adds that it requires proof of purchase for any refund or exchange, but if customers provide their information at checkout, L.L. Bean will usually have record of the purchase. If not, a physical receipt is needed. In the case of gifts or other returns without receipts, the firm will offer merchandise credit in the amount of the last known selling price, provided that the product is “unused and unworn with the original packaging.”

So, why the change of heart after so many years? According to Forbes, abuse of L.L. Bean’s very generous return policy has been happening for decades; however, the exploitation reached a tipping point in recent years thanks to some particularly obnoxious behavior.

Some people, for instance, found that they could pick-up well-used L.L. Bean items at yard sales and second-hand stores and return them to the retailer for a full-price refund. With the expansion of ecommerce, such unscrupulous behavior has only increased as returns now can be made from anywhere without having to “look a company representative in the eye” when making an appeal.

It’s likely that L.L. Bean’s decision also has something to do with the pressure that so many retailers are now under, especially from Amazon, which has led to many Chapter 11 bankruptcy filings and the promise of even more store closings. Regardless of the specific reasons, L.L. Bean finally decided enough was enough.

Not surprising, many consumers have had a hard time swallowing L.L. Bean’s policy change and no problem voicing their displeasure. For example, one disgruntled customer complained, “Your return policy was the only reason I shopped at #LLBean! I shared your amazing service with friends, colleagues, and more. Now, I'll be sure to suggest they avoid like the plague!”

Others are even more adamant in their claim of personal harm, so much so that they’ve decided to pursue legal action. Victor Bondi recently filed a complaint in Chicago federal court seeking class-action status for a lawsuit against L.L. Bean. The suit alleges that the company is now depriving customers of benefits they had been promised by virtue of the long-standing and heavily-promoted warranty, which had ‘no conditions’ and ‘no end date.’

L.L. Bean likely anticipated that revising its return policy would not be popular, but did it anticipate this kind of backlash? Perhaps it should have, and maybe it could have taken a different tact and/or timeline in communicating and implementing the change. However, was the change itself wrong? As with every Mindful Marketing analysis, there are two filters for answering that question: economics and ethics.

According to Bloomberg, L.L. Bean has seen its rate of “abusive” returns double in the past five so that they now account for a full 15% of all returns. Over that timeframe, those abusive returns cost the company about $250 million.

Against annual revenue of around $1.6 billion, $250 million may not seem like much, but successful companies don’t concede hundreds of millions of dollars unnecessarily, especially when their sales have been “flat for a second straight year” and the retail landscape is increasingly competitive. Furthermore, L.L. Bean had to do something to stem the rapid increase of illegitimate returns, lest even more dishonest consumers try to defraud the company.

But doesn’t the new policy penalize honest customers who bought products with a certain understanding, only to have those terms of purchase changed without their consent or compensation? That’s a fair concern; however, two key factors diminish the argument:

First, L.L. Bean’s original guarantee was not a promise of lifetime replenishment. In other words, there was no reasonable way to interpret that the policy meant customers could buy a product, use it for years and years, then ask for a new one.

Every product wears out eventually. No clothing retailer is responsible for keeping its customers outfitted in pants, hiking shoes, or whatever, just because they once bought a pair from them. If people are looking for an “All you can . . .” option, they should go to a buffet. Interestingly, even such restaurants have restrictions, e.g., you can’t stay in the building indefinitely, and you can’t take food with you when you leave.

Secondly, even with the change, L.L. Bean’s policy is still far better than industry standards. Most retailers allow a couple of weeks or maybe a month to make a return. A few graciously give three months. I can’t think of another retailer that allows a full refund for a full year for no more reason than “I’m not completely satisfied.”

Furthermore, even after a year, L.L. Bean will still allow returns of products that “are defective due to materials or craftsmanship.” So, the company continues to have its customers’ back. Of course, this caveat means that consumers also must show good faith and make a compelling case for the return, not just “I wore it out over 15 years, now I want a new one.”

To use an analogy, many consumers have acted like horrible house guests who have taken advantage of their host’s generosity. L.L. Bean gave some special privileges to those guests, but in return they ransacked the refrigerator, beat up the furniture, and long overstayed their welcome. That bad behavior has forced L.L. Bean to enact some more restrictive but still very reasonable boundaries.

Individuals often react negatively to change, especially when it doesn’t seem to be in their favor. Rationale people, however, can understand why L.L. Bean’s policy change was warranted and how it’s still far better than industry standards. As a result, there should be very little loss in long-term business for the retailer.

In this instance, those guilty of single-mindedness are consumers. L.L. Bean’s new approach to returns checks out as “Mindful Marketing.”

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Does 'Amazon Go' Mean Goodbye to Jobs?

1/27/2018

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Imagine walking into a store, taking whatever you want, and walking out. What sounds like a shoplifter’s fantasy, Amazon has made a reality, of sorts, in its one-of-a-kind Seattle store. Customers still need to pay, but the entire process is automated electronically, which may lead some to ask, ‘Is Amazon’s cashier-less concept endangering employment?’

It may seem strange that the king of ecommerce is bothering at all with old-school, brick-and-mortar retail, let alone a self-checkout store. Many online retailers, however, have found that the secret to long-term success involves a combination of “bricks and clicks,” i.e., both a traditional and a virtual market presence.

Of course, this is not Amazon’s first foray into physical retail. The company already has a handful of retail stores. A main reason for these tangible outlets is that, as convenient as ecommerce may be, there are certain things that people want NOW, and they’re not willing to wait overnight or even a few hours, if same-day delivery happens to be possible. In sum, Amazon doesn’t want to miss out on the market for immediacy.

With its new “Amazon Go” store the company has taken ‘fast’ a big step further by eliminating the checkout line. Here’s how the “Just Walk Out Technology” works. Amazon account holders download the free Amazon Go app and scan their smartphones when entering the store. Every item they choose from store shelves, then, is automatically placed in their virtual shopping cart by means of “the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning.” When customers exit the store, the system charges their Amazon accounts and sends them receipts for their purchases, all without them ever entering a checkout line.

What can people buy at this one-of-a-kind store that claims “The world’s most advanced shopping technology”? At this point, the options are mainly grocery items, including Amazon Meal Kits. It makes sense for Amazon Go to focus on food because edibles are what people most often want to get quickly; they certainly don’t want to wait the days or weeks it takes to receive some goods from Amazon.com.

But, a cashier-less store is a potential cause for concern, for at least a few reasons. First and foremost, it seems like the technology could be taking workers’ jobs. People get paid to run cash registers and otherwise help check others out of stores. Granted, Amazon isn’t a big brick-and-mortar retailer now, but that seems to be changing. After opening its first Amazon Books store in Seattle in November 2015, the company now operates in a dozen more locations scattered throughout the U.S., with plans to open several more soon.

Even if Amazon doesn’t implement cashier-less checkout in its Books stores, or it fails to make its Go stores as ubiquitous as McDonald’s restaurants, the employment impact of the technology will still spread. It’s likely that other retailers and technology companies are already working on their own versions of Just Walk Out Technology that one or more of them will pilot in the near future. Then, after fixing the flaws, the technology will likely penetrate more and more retail sectors, just like self-checkout spread from grocery stores to big box retailers and beyond.

So, there’s potential that not just a few dozen, but thousands, tens of thousands, or more cashiers could be displaced. For instance, there are over 154,000 convenience stores in the United States. If just 10% of those stores adopted something akin to Amazon’s Just Walk Out Technology, and each store employed four cashiers, there would be over 61,000 people out of work.

Such projections make cashier-less shopping or any technology that replaces human labor sound bad, but is it really? Just a century or so ago, many people were employed in basic manual tasks, like digging holes, ditches, etc. If you’ve ever dug a hole of a significant size in solid ground, you know it’s a very strenuous task.

Thankfully, ingenious individuals invented machines like the bulldozer and backhoe that dig far more effectively than even a hoard of humans with shovels. Did that technology take jobs away from people who could dig? Yes. But that displacement was ultimately for their own good, as well as the good of society. Few people want to make a living digging holes by hand. It’s much less strenuous and more stimulating to operate the machinery that does the digging, or to plan where the digging should be done, or to build the homes, highways, etc. that use the holes and help drive the economy.

Of course, being a cashier demands a broader range of skills than digging a hole; yet, most cashiers probably would welcome the opportunity to do work with more variety or challenge, maybe after receiving some additional training or education. Regardless, we all must recognize that technological advancements have changed the way people have worked for millennia, and they will continue to do so. What’s more, that rate of change may be increasing when one considers recent innovations in areas such as robotics, virtual reality, and artificial intelligence.

Someone who knows something about technology and job creation is Microsoft founder and philanthropist, Bill Gates. The software that Gates developed decades ago and the advancements it supported, inevitably led to the displacement of workers whose job skills were passé.

However, that technology also created thousands upon thousands of new and more engaging employment opportunities for individuals who learned to leverage that technology. In an interview with Fox Business, Gates suggested that the same cycle of economic growth and job reassignment will continue in the wake of the latest applications of new tech.

Amazon Go is a ‘prime’ example of technological advance sparking job skill evolution and likely economic growth. Although the store doesn’t have cashiers, it employs a variety of other individuals in meaningful work that includes making the retailer’s ready-to-eat food and offering customers product recommendations. What's more, people are needed to build, install, and maintain the Just Walk Out systems.

Amazon isn’t guilty of eliminating jobs; rather it’s created new and more interesting opportunities for individuals, particularly for ones who embrace technology and invest in their own professional development. In sum, Amazon Go checks out as “Mindful Marketing.”

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Apple Slows iPhones

12/29/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

This fast-paced world leaves many of us longing for a simpler life with a more relaxed pace. Slower does seem better, until we realize it’s our smartphone that’s slowing. When that reality hits of millions of consumers at the same time, there’s bound to be a backlash, which is what Apple recently experienced after stating that some of its iPhones may not be as speedy as they could be.

You probably noticed the recent rash of news stories, all with a similar headline: Apple intentionally slows iPhones! Such pieces resonated with you personally if you own an older iPhone and experienced the frustration of waiting for apps to activate or data to download.

What sparked the media firestorm? Two specific posts on the social media site Reddit were the main impetus. Through a set of before-and-after Geekbench tests to measure his iPhone 6’s processor speed, a user named “TeckFire” found that his phone became much faster after replacing the phone’s battery. His conclusion from the experience was that “Apple slows down phones when their battery gets too low, so you can still have a full days charge.”

He followed up his original post by later sharing what he said was “Apple’s official statement on the matter”:

“Our goal is to deliver the best experience for customers, which includes overall performance and prolonging the life of their devices. Lithium-ion batteries become less capable of supplying peak current demands when in cold conditions, have a low battery charge or as they age over time, which can result in the device unexpectedly shutting down to protect its electronic components.”

Apple continued its explanation:

“Last year we released a feature for iPhone 6, iPhone 6s and iPhone SE to smooth out the instantaneous peaks only when needed to prevent the device from unexpectedly shutting down during these conditions. We’ve now extended that feature to iPhone 7 with iOS 11.2, and plan to add support for other products in the future.”

So, that sounds like Apple admitting it sometimes slows its smartphones. Such a controversial confession from the world’s most valuable company doesn’t happen every day, which is why news media like CNN, Forbes, and The New York Times, quickly picked up the story.

Not surprising, Apple’s revelation has upset many consumers frustrated by the notion that their phones are not as fast as they could be. One such customer who apparently has decided to turn his irritation into legal action is Stefan Bogdanovich of Los Angeles. According to TMZ, he is suing Apple, claiming that the slowdown diminishes the phone’s value, as well as encourages users to needlessly abandon their older iPhones in favor of the latest models. Others have filed similar complaints.

Bogdanovich’s lawsuit certainly doesn’t represent the first time a firm has been accused of planned obsolescence. Indeed, some companies have resorted to the unethical approach, believing that the best way to build business was to impair their own products so customers would be more inclined to buy newer models, even though the ones they already owned were still very useable.

Besides being morally unacceptable, planned obsolescence is also a very risky business strategy. Disappointing one’s own customers can easily drive them to competitors while causing serious self-inflicted damage to one’s own brand. Why, then, would a market leader like Apple risk such a desperate scheme?

The most likely answer is it wouldn’t try planned obsolescence, which means something else probably explains Apple’s decision to slow its iPhone. Brian X. Chen, the lead consumer technology writer for The New York Times, provides an excellent analysis of the company’s approach:

“What Apple is acknowledging is a power management technique in which the iPhone scales back processing power to keep the device running for longer when its battery health is low. Lithium ion batteries have a limited number of charge “cycles” before they can no longer be recharged properly. Apple’s website says the battery loses about 20 percent of its original capacity after 500 charge cycles.”

Chen summarizes: “if your iPhone is beginning to run out of battery capacity, these slowdowns might kick in to keep it running for longer or prevent it from shutting down unexpectedly.” His expert opinion supports Apple’s assertion to TeckFire that slowdowns are ultimately in customers’ best interests: “Our goal is to deliver the best experience for customers, which includes overall performance and prolonging the life of their devices.”

If people have a choice between their smartphones running faster or slower, of course they’ll choose ‘faster.’ But, if the options are ‘going a little slower’ or ‘shutting down,’ most people will admit they can wait. The trade-off is analogous to other experiences in life, like when driving. While we almost always want to get to our destinations faster, most of us would rather slow down a little than have an accident.

So, it seems like the adage, “speed kills” also rings true for iPhones, which means Apple did its customers a favor by slowing their devices in order to avoid crashes. Yes, in an ideal world battery life wouldn’t diminish over time and hardware would be completely stable, but even the world’s most valuable company must operate within current technology constraints.

Apple has since apologized for not informing consumers about its actions, and it has lowered the price of battery replacement on the affected iPhones from $79 to $29. Perhaps more transparency sooner would have helped, but Apple really didn’t need to tell others what it was doing because its actions were in consumers’ best interests. Although not an ideal example, Apple’s iPhone slowdown ultimately was “Mindful Marketing.”

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The Gift of Work

12/14/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

What’s the nicest gift anyone has ever given you? Maybe it was a special toy when you were a child, or a critical gift of cash when you were in great need. There’s another very important gift that many of us take for granted—work. Thankfully, one caring company gives that opportunity to a special group of people who otherwise may never enjoy it.

“Really? How is work a gift?” you may be wondering. That claim understandably draws skepticism. After all, work can be unpleasant, difficult, and even dangerous. Some people spend the better part of their day, and their lives, trying to avoid work. So, why call work a gift?

First, work is a source of livelihood for most of us. We’re able to put food on the table and pay bills because we work. Even more, however, meaningful work provides a sense of accomplishment and fulfillment. When we’re fortunate enough to do work that we’re good at and enjoy, work isn’t a curse, it’s a blessing.

Unfortunately, however, some people, don’t get the opportunity to work, through no fault of their own. Because they have a disability, others assume they can’t do certain jobs and, therefore, regard them as unemployable. Such is the situation for many people with intellectual and developmental disabilities (IDDs).

In 2016, Amy and Ben Wright opened Bitty & Beau's Coffee Shop in Wilmington, NC because they wanted to make the world a more welcoming place for those living with IDDs. Some organizations might advance such a mission by donating a portion of their profits to a worthy cause. The Wrights, however, act out their convictions in an even more direct way—they employ about 40 wonderful people who happen to have IDDs.

Why would the Wrights want to take on such a unique and likely challenging task? For one thing, the owners have a direct connection to their special employee base. Bitty and Beau, the shop’s namesakes and the Wright’s two youngest children, both have Down syndrome. So, parental compassion is understandable at play.

What’s more, the Wrights are moved by the fact that “70 percent of adults with intellectual and physical disabilities do not have jobs.” But, do people with IDDs need to work? Certainly, someone will provide for them if they can’t do so for themselves. Amy Wright reiterates this blog post’s opening as she explains why the value of work is much more than earning an income:

“Having a workplace that makes you feel proud of yourself and gives you a sense of community is something we all want. For our employees, I feel like it's the first time they've had that. We figured out what their skill set was and we plugged them in. They're proud to be employed by Bitty and Beau's Coffee, and they will shout it from the rooftops. It's given them purpose and a sense of being valued in ways that we take for granted.”

One of those employees, Jesse, shares why she values her work:
“My job gives me confidence and helps me grow as a person. My job brings me joy and happiness.”

Bitty & Beau’s clearly makes a big difference in the lives of the people it employs; however, that’s not the end of the impact. There’s another group of people who are also very positively influenced: the coffee shop’s customers.

A key part of Bitty & Beau’s mission is also to “bring the community together and to help people with and without disabilities spend time together.” That interaction is an overwhelmingly positive and often eye-opening experience for customers. Amy Wright again explains:

“Creating (Bitty & Beau’s) has given people a way to interact with people with disabilities that (they) never had before. This is a safe place where people can test the waters and realize how much more alike we are than different.”

Of course, not everyone welcomes the opportunity to interact with individuals who are different than they are, but plenty of other people do, and it’s that latter group that has helped make Bitty and Beau’s a success. Yes, the customers like the products, but “they really come in for the unique customer service experience,” which transforms individuals and can “forever change the way communities view those with IDD.” As testament to that success, the Wrights plan to open a second location of Bitty & Beau’s soon in Charleston, SC.

By providing meaningful work for individuals with IDDs, Bitty & Beau’s gives an invaluable gift to an often-marginalized group of people. Those passionate employees, in turn, bless the many customers who frequent the coffee shop, attracted by a truly unique value proposition. In short, Bitty & Beau’s is an excellent example of “Mindful Marketing.”

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Unclear Communication

10/21/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

If a friend says her “head is spinning” or a coworker claims he could “eat a horse,” we don’t worry about a broken neck or a slaughtered stallion. Language is full of figures of speech. What’s more, we don’t need to be told every detail; a conversation’s context carries much of the meaning. That’s the way communication is supposed to work; although, it notably didn't during a recent college business class.

Professor Reb Beatty teaches financial accounting at Anne Arundel Community College in Maryland. To aid his students on the first exam, he told them several times to bring a “3 x 5 note card,” on which they could write any information they might find useful during the text. Allowing students a small ‘cheat sheet,’ is not unusual for college courses, especially ones involving quantitative topics.

On the day of the exam, students filed into the classroom with their usual books and bags and the note cards. One student, however, carried something much more conspicuous. Ten minutes before the test, Elijah Bowen entered toting a 3 ft. x 5 ft. poster, packed with information for the exam.

When he first saw it, Professor Beatty disregarded the jumbo card, thinking it was just a study aid that Bowen was using to cram before the test. However, when it became apparent that he planned to use the poster during the exam, the teacher confronted the student. Bowen explained that all of the information Beatty had sent about the card just said 3 x 5. Nowhere was there any mention of inches.

After hearing the explanation, Beatty relented and allowed Bowen to use the card, but in the back of the classroom where other students couldn’t read it. Of course, Bowen was delighted that he got to use the super-sized exam aid, which he had spent over an hour creating the night before. He also was very surprised his professor allowed him to do so: "It was fabulous. I was shocked." "I gave it about a 5 percent chance he'd let me use it."

But what were his professor’s feelings about the liberal interpretation of his instructions? Beatty said he was impressed by the ingenuity: "I was actually very happy for him.” "You have to have a student with the intelligence to recognize the loophole and then have the audacity to put it together and come in and try it." Beatty even took a picture of Bowen with the card and posted it to Facebook, where over 28,000 people shared it. The professor also appended his syllabus, adding the note card’s true size.

So, the story had a happy ending, right? Well, if you’re familiar with this blog, you know there must be more to the analysis. Plus, what does an exam in a financial accounting class have to do with marketing? Let’s see.

There are at least two examples of branding that happened here, the first of which was personal branding. Bowen branded himself as someone who’s not averse to bending the rules, or gaming the system. Although he knew his professor meant inches, not feet, he still tried the ploy, even acknowledging afterward that he doubted it would work.

As mentioned above, reasonable people interpret information rationally based on the context. They don’t argue with a lumberyard that its two-by-four boards should be 2 ft. x 4 ft. thick, and they don’t pretend that note cards are of a similar large size. Perhaps Bowen meant to be funny, but ultimately he showed a lack of integrity: He plotted to gain an advantage over his peers and feigned an unrealistic interpretation of the note card size, which even he didn’t believe. Such behavior does not reflect the kind of individual with whom most people want to work or otherwise interact.

The second instance of poor branding involved the portrayal of accounting—a very important field and a noble profession. Accounting abhors creative manipulation and exploiting loopholes, for which Beatty praised Bowen. Good accountants want their firm’s books to accurately and honestly reflect their firm’s financial realities, as Investopedia suggests:

“Creative accounting capitalizes on loopholes in the accounting standards to falsely portray a better image of the company. Although creative accounting practices are legal, the loopholes they exploit are often reformed to prevent such behaviors. A primary benefit of public accounting statements is that they allow investors to compare the financial health of competing companies. However, when firms indulge in creative accounting they often distort the value of the information that their financials provide.”

By allowing and even exalting Bowen’s gigantic note card, Beatty encouraged behavior that is antithetical accounting. Over time, endorsing such illicit activity will taint the field’s image, i.e., people will think of accountants more as dishonest schemers and less as trustworthy advisors.

College campuses cultivate some crazy behavior, much of which is a fun and harmless part of the undergraduate experience. College is also a place, however, where students develop work habits and reputations that go with them for much of their lives. For these reasons, devious behavior that disparages individual and collective branding must be called “Mindless Marketing.”

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Employee Upgrade

9/22/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Many employees have to take work home with them: It’s reality for a great many jobs. One company, however, is eroding the personal/professional boundary even more. Wisconsin-based Three Square Market, also called 32M, is asking its employees to take work home “in” them.

32M is the first U.S. company to “chip” its employees. Workers who agree to the anatomical upgrade, have a grain-sized microchip implanted under the skin on the back on their hand, between the index finger and thumb. A CNBC video gives a great visual of the chip and how it’s injected.

Not long after the company had made the chip available, 50 of 80 employees had volunteered for the insertion. Software engineer Sam Bengtson explained his reason for accepting the chip:

“It was pretty much 100 percent yes right from the get-go for me. In the next five to 10 years, this is going to be something that isn’t scoffed at so much, or is more normal. So I like to jump on the bandwagon with these kind of things early, just to say that I have it.”

For employees, the value of the implant is mainly convenience. The RFID-enabled chip allows workers to swipe into buildings, pay for food in cafeterias, and log onto computers, all with the wave of a hand—no need to pull-out ID cards or type in passcodes.

So, what are the benefits of this technology to 32M? The main advantage would seem to be that the technology relates directly to the company’s product. The B2B firm sells self-service micro-markets to other organizations: miniature convenience stores where employees can purchase food and drink without anyone helping them. Although there are other ways for shoppers to “check-out,” an implanted chip may be the way people buy potato chips in the future.

Another reason for 32M chipping its own employees could be that it’s trying to better meet their wants and needs, which is sometimes called “internal marketing.” The basic premise is that a firm needs satisfied employees in order to have satisfied customers because the former serve the latter.

Perhaps there are also some cost savings that will accrue to 32M, either because the technology will prove cheaper over time than existing security systems or because employees will save time, which means money. Beyond these possible reasons, 32M’s motivation becomes even more speculative. CEO Todd Westby claims that the RFID technology will become the standard for using all manner of security-driven devices, but those are the same employee convenience reasons mentioned above.

It’s interesting that of the many news articles written about this story, none that I’ve read talk about specific benefits for 32M. That curious omission makes it even more tempting to imagine unscrupulous reasons why a company might want to chip its employees.

Along those lines, one of the most compelling concerns the chips present is privacy. For instance, will companies be able to track their chip-toting workers wherever they go? The simple answer is “no” because the chips do not have GPS technology.

That fact, however, doesn’t preclude firms from installing RFID readers throughout their own facilities to see how much time people are spending in the breakroom or how often they’re using the bathroom. Dr. Alessandro Acquisti, a professor of information technology and public policy at Carnegie Mellon University echoes this concern: “Once [the chips] are implanted, it’s very hard to predict or stop a future widening of their usage.” Just like marijuana can be a gateway drug to heroin, companies’ use of embedded RFID chips to track employees’ snack purchases could easily lead to all kinds of other monitoring.

Related to privacy is the issue of security. 32M claims that the chip’s data is "encrypted," but that term has a wide range of meaning, similar to “biodegradable.” Dr. Acquisti explains that encrypted is "a pretty vague term . . . which could include anything from a truly secure product to something that is easily hackable." No information is safe if hackers can crack the encryption key, and shorter encryption keys are easier to decipher than longer ones.

Another concern surrounding the chips is safety. Fortunately, implantation is relatively painless—“Just a little prick” and a “brief sting.” Also, the FDA approved the technology about 13 years ago, which is somewhat reassuring. It’s hard, however, to know the long-term impact of a foreign object placed in the body. Thirteen years is not that long a track-record, especially given limited trials.

Furthermore, what happens when a chip goes bad or becomes obsolete and needs to be replaced? Or, what if an employee leaves to work somewhere else that uses its own RFID chip? There’s also the possibility of other organizations, like airlines and athletic clubs, asking us to insert their own chips into us so they too can track our consumption. Pretty soon people become human pin cushions.

For those and other reasons, it’s good that 32M has made the chips optional: “For employees not prepared to implant a chip in their bodies, the company is offering two other options – the same technology, placed in a wristband or a ring.” One has to wonder, though, how much freedom of choice 32M employees actually have.

How would you feel to be one of only a few people in your office wearing a special wristband or ring? What do those very visible accessories say about you in terms of how much you embrace technology, support your company’s new initiatives, and trust your employer? A strong argument can be made that 32M employees don’t truly have informed consent. In other words, although they may have a fairly good idea of how the chips will be used, their desire to stay gainfully employed can compel them to choose something they don’t really want.

Organizations have to be especially careful when marketing to their own employees. Unlike external customers who can freely tell companies what they like and don’t like, employees usually can’t afford to be so frank. Although the RFID chips may produce some benefits for 32M and its people, asking them to put the tracking devices under their skin is not a fair request; rather, it’s “Single-Minded Marketing.”

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Hurricane Heist?

9/15/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

As Hurricane Irma turned toward Florida, an angry consumer shared a screen shot of a 24-pack of 16.9 ounce bottled water that Best Source Office Supplies was selling on Amazon for $99.99. Inflating the prices of necessities ahead of an impending natural disaster is a tactic that most people find deplorable, but not everyone. Of course, companies taking that tack rationalize their actions, but certain others also make a compelling case for such price hikes.

Price gouging is "the practice of raising prices on certain types of goods and services to an unfair level, especially during a state of emergency." Although it’s not uncommon for companies to increase prices on goods and services to levels that consumers think are too high, price gouging is different.

Consumers are price gouged when the item in question is something they must have (e.g., food, water), but the product’s supply is severely restricted, often to a single seller, so consumers have no choice but to pay the exorbitant price. In contrast, although the new iPhone X starts at a staggering $999, Apple is not guilty of price gouging because it’s possible to survive without the newest iPhone.

In the case of Hurricane Irma, certain sellers reportedly gouged consumers for water, ice, food, and fuel. One Orlando Shell station supposedly sold regular grade gas for $5.99/gallon and premium for $6.99. Even Disney got into the act: A Twitter user posted pictures from Disney’s Art of Animation Resort, which offered small bottles of water for $2 and juice boxes for $2.69 each. A Disney spokesperson later said that the situation was an isolated incident that had been rectified.

To document such abuse, Florida’s attorney general Pam Bondi set up a hotline that received over 8,000 calls about price gouging, which violates Florida law and is subject to “civil penalties of $1,000 for each violation, and up to $25,000 for several violations within a 24-hour period.” Beyond the legal penalties, Bondi promised violators personal retribution: “I will be saying your name all over national television and telling people not to go to your business ever again if you’re stealing from Floridians and taking advantage of Floridians in a time of need.”

Despite the fact that certain states have made price gouging illegal and most people consider it immoral, some claim that capping prices actually makes situations, like those surrounding hurricanes, worse. Writing for Forbes, Adam Millsap argues that pricing gouging laws are what empty store shelves, not natural disasters. The best thing, Millsap contends, is to let supply and demand determine prices like they normally do.

Similarly, in a New York Times article, Andrew Ross Sorkin states that “several respected economists from the Milton Friedman school of free-market theory” support the argument against price gouging laws because artificially low prices “remove the incentive for consumers to conserve essential supplies,” and they discourage sellers from increasing stock.

So, maybe Adam Smith’s “invisible hand” is the best way to determine supply when natural disasters strike. That belief aligns well with an increasingly popular pricing strategy, dynamic pricing, in which firms like airlines use algorithms to quickly increase prices to whatever level the market will bear. Unfortunately, such approaches also tend to have some very undesirable side effects.

For one thing, higher prices naturally favor the wealthy. That advantage is understandable under normal circumstances: People with more money should be able to buy higher-priced items. In the case of natural disasters, however, it doesn’t seem right to price anyone out of the market for food, water, or other basic survival needs.

Also, there’s no reason retailers can’t impose limits on how much or how many of an item customers can buy. Stores successfully ration items all the time. For instance, a grocery store runs a sale on granola and dictates: “Limit, two boxes per customer.” Likewise, arguments against price gouging laws don’t give people much credit. When asked to conserve, most individuals will limit their consumption for the sake of others.

In addition, the notion that businesses should maximize profits at their customers’ expense is both antiquated and short-sighted. Sure, people may have no choice but to pay ridiculously high prices when they’re put between a rock and a hard place, but they won’t soon forget what it felt like to be treated as a means to an end. Firms that price gouge run a great risk of alienating consumers and ruining their reputations.

On the other hand, companies that show restraint and price “to create shared value,” generate considerable goodwill, especially in the face of a natural disaster. A few firms that bolstered their brands by taking this more enlightened and socially responsible approach when Irma struck were JetBlue, Airbnb, AT&T Wireless, and Martin’s Famous Pastry Shoppe.

It’s hard for most people to know how they will react in the face of life-threatening natural disasters like hurricanes Harvey and Irma. Businesses, however, should know not to take advantage of people in such vulnerable states. Companies that do are guilty of various offenses, and one of them is “Mindless Marketing.”

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Fixing iPhones

8/10/2017

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

One rainy morning many years ago, I was driving to work (my first career position after college) when a car hit me from behind and pushed me into another vehicle. It was a relatively slow-speed collision so the damage to my car wasn’t extensive, but the insurance adjuster called it “totaled” since the repair estimate exceeded the car’s low value. My car wasn’t worth fixing; I needed to get a new one.

That experience reminds me of the many products we use each day but seldom repair when they break. For instance, most of us don’t think of fixing a broken toaster; we look for a new one. This tendency to replace instead of repair places significant strain on our environment, but the practice becomes even more troubling when talking about expensive and easily ‘injured’ items like our ever-present smartphones.

If you own a smartphone and haven’t dropped it or had some other mishap, you’re either extremely careful or very lucky because, “Each year millions of cell phone owner’s drop, sit on, flush, swim with and even throw their phone, which normally results in some sort of damage.” After such an unfortunate occurrence, the question becomes whether to repair or replace the indispensable device, which probably cost at least a couple of hundred dollars, or several hundred-plus if you’re packing a newer iPhone or the latest Samsung Galaxy.

Fortunately, a variety of online outlets will repair broken phones, for example:

However, using an online organization for repairs requires a major sacrifice of time. Many people can’t be without their smartphone for a few hours, let alone several days or more. And, there’s the issue of trust: We don’t know these companies well and can’t watch them make the repair. How can we be sure they’re respecting our privacy when so much of our lives literally rests in their hands?

Also, again, there’s the issue of cost. Is it worth $100 or more to repair even a relatively new device when technology is changing so quickly? As a result, it’s easy to rationalize spending a few hundred more to have a new one.

You may be wondering, "Where are the smartphone manufacturers? Why don’t the cellphone companies have our backs when their products so easily and often get broken?" In the U.S., that criticism has hit especially hard at Apple, which has a whopping 44.6% share of the smartphone market.

For years, the only place iPhone users could get their cracked screens ‘officially’ replaced was at an Apple store. Unauthorized repair centers, like the three listed above, might be able to fix the phones, but if Apple later detected their work on the device, the warranty would be voided.

Apple would suggest that the reason it has kept a tight rein on screen repairs is that it wants them done right, especially “to ensure that the new screen is properly calibrated – and in particular to allow the Touch ID sensor to be replaced without bricking the phone or losing use of the sensor.” Those more cynical about the tech leader’s motives might suggest that Apple wants to drive business to its own stores in order to capture the repair revenue or, even better, to sell users new iPhones and other items, i.e, to replace, not repair.

In any case, there are currently about 270 Apple stores in the U.S. That number may seem high, but it’s not when you consider, for instance, that Illinois and Pennsylvania, the fifth and sixth most populous states in the nation have 12.8 million and 12.7 million residents, respectively, but only nine Apple stores each. Such ratios can mean a loooong time waiting at a Genius Bar.

The good news is that Apple has recently eased its repair site exclusivity. The firm has finally authorized a few select retailers to fix broken iPhone screens. How can Apple guarantee the quality of those third-party repairs? Well, the company has not conceded control completely.

Apple is giving each authorized repair center a highly-specialized and proprietary machine that not only replaces the screens but also tells “the iPhone’s processor, its silicon brain, to recognize a replacement sensor. Without it, the iPhone won’t unlock with the touch of a finger. Banking apps that require a fingerprint won’t work either, including the Apple Pay digital wallet.” Pictures of the closely guarded apparatus can be found on 9 to 5 Mac website.

Currently only a couple of Best Buy stores in California and Florida have these machines that are capable of making same-day screen repairs. However, by the end of this year it’s expected that the equipment will be present in “about 400 authorized third-party repair centers in 25 countries.”

So, the future is looking brighter for all of us clumsy iPhone users, but won’t the delegation of this service take a bite out of Apple’s business? What about its revenue from repairs, the loss of traffic in Apple stores, and the sale of new iPhones? All of the above are real considerations but they pale in comparison to one meta-goal for Apple: maintaining its strong brand.

Apple has become the most valuable brand in the world for a variety of reasons, but the overarching one is strong customer satisfaction. People who use Apple products are almost always delighted because of their look, their performance, and the aura around them. Apple smartly wants to avoid tainting that stellar reputation, which could occur if people become disenfranchised from inconvenient and lengthy repairs.

However, averting a negative product experience is probably only part of Apple’s plan. The company also needs to increasingly position itself as a good steward of resources and as an organization that cares about the natural environment. Allowing smartphones that still have significant useful life to prematurely become paper weights or other waste does not accomplish those objectives.

Likewise, as the market for smartphones becomes more and more saturated and competitors’ product features converge, factors like repair service and social responsibility will likely gain weight as decision-making criteria. Every point of difference matters in a mature market.

Apple’s decision to outsource and broaden its repair network will be very helpful for consumers. The strategy also will prove very beneficial for the firm. As it’s done many times before, Apple has made an adept move that can be called “Mindful Marketing.”