Your reputation (always) precedes you

So you want to buy a second hand television. If you’re buying it from a store, it’s a familiar, tangible experience. We’re conditioned to employ certain heuristics – the location of the store, the behaviour of the salesman, the condition of the product – in order to make informed decisions about the quality of the transaction.

What happens when you remove many of the visual cues? This is the nature of buying, selling, and sharing on the Internet. There is some comfort to be gained from the reputation of established sellers; you know with a high degree of certainty that if you buy something from Amazon or ASOS, you’re going to get what you paid for (and you can return it if you don’t). However, in the rapidly growing field of collaborative consumption (see previous post ), substantial transactions are taking place between complete strangers, which propels to the fore the most critical form of social currency – reputation.

Consumers have long been able to check the trustworthiness of merchants through reviews and ratings by users and professional critics. Similarly, credit scores have allowed businesses to perform financial background checks on potential customers. Yet in the world of peer-to-peer (p2p) transactions, there is a need for a standardised method of assessing personal risk that can be transferred across multiple sites and even into the real world. It’s all part of what Rachel Botsman calls the “new reputation economy”.

Since the beginning of the Internet age, people have been firmly in control of their online image. From inventing a fictional representation in online games to curating a social media persona, there has been nothing forcing people into creating accurate depictions, because little of consequence has been at stake.

But now that we are requesting access into peoples cars, homes, and lives, we are automatically leaving behind a trail of data that builds an image of what we are really like.

Startups like Repify and Connect.me have already created offerings in the “portable reputation” realm. To an extent, you are able to share or hide as much information about your online behaviour as you like, but much like your offline reputation, a more complete picture is only going to enhance your standing.

There are also offline consequences in this new era of credentialing. Reputation is not only related to trustworthiness, but also to factors like intelligence and emotional capacity.

Ratemyprofessors.com does exactly what it says in the title, and is driving students in America towards classes with teachers that demonstrate particular passion, clarity, or “hotness”. 

Lulu, a new app for women, rates ex-boyfriends on a range of emotional and sexual factors.

It may also impact the future of hiring.

Stack Overflow is a website for programming enthusiasts seeking answers to complex questions. Those offering correct answers are awarded reputation points, and are ranked on a global leaderboard. While these points are seemingly worthless, programmers have been known to put their reputation scores on their CVs, as it creates a more complete picture of their skills than a list of education and work experience alone.

The implications for this are intriguing. A poor reputation is going to be hard to escape, as it is linked directly to your offline identity. Is it possible then, that we will see a decrease in dishonest behaviour? No longer will it be an option to skip town in order to start a new life, because your dodgy trust score will be following right behind you in the cloud.

Reputation portability will be a double-edged sword. While it will reduce transaction costs by allowing buyers and sellers to interact across multiple platforms without having to create a new presence with each new service, a poor reputation could deny you access to many markets, jobs, or relationships (much in the same way that a bad credit rating can haunt you forever).

The more of our lives we put online, the less we will be able to control them.

‘Collaborative Consumption’

In an earlier post, we alluded to a concept that was further crystalised for us yesterday at the Optus Vision 2013 event at the Sydney Convention Centre. Rachel Botsman is a British author who is at the forefront of some emerging consumer trends and has recently published a book, and presented to TED, discussing  ‘Collaborative Consumption’. This trend is transforming business and consumerism by shifting power from organisations into the hands of consumers via fluidity of information and the ability to effortlessly pair up wants with haves in an increasingly connected world.

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This relationship is facilitated by innovative start-ups which create a platform for individuals to share goods and services with minimal friction. In addition to some of the sharing concepts we discussed a few weeks ago some notable examples include airbnb and taskrabbit. The haves mentioned above may take the form of a spare room, vacant car seat or simply some energy or free time. We all had a little chuckle in discovering that the number one task posted on taskrabbit is assembling a piece of Ikea furniture!

These start-ups have resulted in an unprecedented number of C2C transactional flows. And while using the power of technology to build trust and facilitate sharing between individuals results in an incredibly efficient allocation of finite resources, this is destabilizing the traditional dominance of large organisations in providing consumers with goods and services. So according to Rachel, these “disruptive” consumer trends leave businesses with three options:

1. Stick their head in the sand and hope it all goes away

2. Fight the trend using legal action

3. Embrace the change and incorporate these innovations into their business models.

We’re all in favour of number three!

This is also a perfect opportunity to point out that the Optus Vision 2013 event was the official unveiling of the third Future of Business Report, an exciting piece of research conducted by our team of experts.