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Why data privacy will become a competitive differentiator


If your company doesn’t have a formal, simple policy covering how it safeguards personal information, it could soon find itself at a competitive disadvantage.

The record number of massive security breaches insinuating themselves into headlines (this week’s victim, the U.S. State Department) is making average Americans feel far more vulnerable. They have a right to be paranoid: information-hungry sensors live in everything from automobiles to streetlights to cornfields. More data than ever is collected worldwide—2.5 billion gigabytes (or the equivalent of 100 million Facebook photos). That means more data than ever is at risk. They wonder: will mine be next?

How businesses deal with this dilemma will go a long way toward earning trust. Little wonder that the Alliance of Automobile Manufacturers—representing automobile manufacturers including Chrysler Group, Ford Motors, General Motors and Toyota (among others)—last week pledged more transparency about how they’ll share and safeguard data generated by autonomous vehicle technologies.

Here’s an abbreviated version of its plan:

Automakers will employ a variety of methods to provide consumers with clear notices of their privacy practices, including through owners’ manuals and company websites. Second, the most sensitive types of consumer information receive heightened protections. For many, information about where and how they drive is private. … Third, automakers clearly state the limited circumstances where they may share information with government authorities.

Separately, a consortium representing farmers and data service providers last week published a set of “data principles” intended to assuage concerns about how information collected with precision agriculture technology—such as sensors that test soil moisture—can be used.

“The privacy and security principles that underpin these emerging technologies, whether related to how data is gathered, protected and shared, must be transparent and secure,” said American Farm Bureau President Bob Stallman, in a statement. “On this matter, we all agree. Farmers are excited about the new technology front, which is why Farm Bureau asked these groups to come together and begin this collaborative dialogue.”

Both developments are a step in the right direction, but businesses need to treat privacy as far more than a compliance issue. Approximately one-third of the executives in charge of defining security strategy view this as a potential competitive differentiator—a number that will grow next year, according to a new report by Forrester Research.

Notes Forrester analyst Heidi Shey:

Smart organizations that are in tune with their customers’ needs will move to earn and retain customer trust by ensuring that privacy is a competitive differentiator for their business and part of their business technology agenda—not just giving privacy lip service, but following through with appropriate privacy policies, means of enforcement, and building privacy considerations in to business operations and the products or services offered to customers.

This item first appeared in the Nov. 18 edition of Data Sheet, Fortune’s daily newsletter on the business of technology. Sign up here.