Samsung Chief Design Officer Mauro Porcini: Human-centric design ignites user experiences

Joe Kornik: Welcome to the VISION by Protiviti interview. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource examining big themes that will impact the C-Suite and executive boardrooms worldwide. Today, we’re exploring the future of customer experience, and we’re thrilled to be joined by Mauro Porcini, President and Chief Design Officer at Samsung, where he oversees a global team of 1,500 designers. Mauro hosts the “In Your Shoes with Mauro Porcini” podcast and has been a presenter and judge on the TV show “New York by Design” and “America by Design” airing on CBS and Amazon Prime. His most recent book is “The Human side of Innovation: The Power of People in Love with People,” published in 2022. Prior to joining Samsung, Mauro was Chief Design Officer at PepsiCo and 3M. Today, Mauro will be speaking with my Protiviti colleague, Managing Director Alex Weishaupl. Alex, I’ll turn it over to you to begin.

Alex Weishaupl: Thanks, Joe and hi, Mauro. Thank you so much for being here today.

Mauro Porcini: It’s really a pleasure. Thanks for having me.

Weishaupl: Absolutely. So, one of the things that digital, in particular, I think, has done over the last decade or two has really, absolutely proliferated the number of touchpoints and surfaces people interact with regularly. So, I’m going to start with a softball question. As people interact with brands across an increasing number of touchpoints, how are you seeing the role of brand identity, user experience, and ultimately, product innovation evolving or maybe more specifically, what is the role that you’re seeing that design plays in that emerging future?

Porcini: Well, very interesting question in this specific moment in time. It’s more important than ever. The role of design today is more important than ever for a variety of different reasons. First of all, the way we build brands today is so different than just 10, 20 years ago. You mentioned it earlier. We’re moving from a world where brands were communicating top down, one direction, with specific messages to people that were passively receiving this information, to a world where instead there is a dialogue. So, these brands are moving from being actors of the conversation most of the time to becoming just topic of the conversation happening amongst people. Because of this, they’re also moving from the ability to buy the right to talk to people, to the need of earning the right to be talked about. So, from buying, the more money you have the more presence you can buy in the media, to earning. Eventually, you don’t even need huge amounts of money, big budgets to be relevant in the conversation amongst people. You need meaningful content.

So, this is changing the way you interact with people and therefore, first of all, the way you build experiences — and design has a very, very important role in this — needs to change. It’s becoming more and more relevant. For instance, you go to a store. In the past, you were just going there for a financial transaction, to acquire, to buy a product, a brand, a service. Today, you can build those brands in those stores. People, if they are excited about what happened, their experience, their living, they can take out their cell phones, take a picture, take a video, share it with the rest of the world, become your ambassadors. It’s user-generated content. In a world where communication moves at the speed of light in social media, you need to be very impactful in delivering the message, and we study in semantic that the message itself is not enough to define the meaning of your communication or what you’re trying to say with your products and your brand. There is another element that is called “the code” in semantic that is the visual element that is super important. So, you’re scrolling your images and the different brands and products and services in your digital platforms. If you have the right aesthetic, if you have the right identity, the right visual language, you’re going to grab the attention of these people, you’re going to be impactful, you’re going to be meaningful. If you don’t, even if you have the right message, the right proposition, the right service, you’re going to be neglected by people. 

Then last but not least, you need to keep innovating. The world is moving at the speed of light, so you need to keep creating something meaningful for these people. And so the only, the strongest competitive advantage you can build for your company — I say the only because it should be the primary competitive advantage — is human centricity: care, love for people. I call these innovators the real innovators, people in love with people. That’s the driver. Everything else follows that kind drive and is not something you create through a project. It’s something you need to drive through the entire culture of the organization. 

Design is a community that embodies that idea of caring for people, love for people. This is what they teach in school, to care for people. In business school they teach you to grow a business, a brand. You can be an amazing business leader if you are able to grow the business and the brand. In design school, they teach you to care, and then they tell you, “By the way, you also need to make money for your company.” So, you need to understand other variables, the three lenses of design thinking, the business world, the technology manufacturing world on top of the first world that is the world of people. Today, we need that kind of culture in these companies. It’s design culture, but it’s a culture of human centricity that needs to be spread to every single function, vertically from the CEO to the entry-level employee, and transversely, across every capability of the company.

Weishaupl: It’s funny, I recently returned to your book, “The Human Side of Innovation,” and that notion of people in love with people or that — I’d say my read of the theme was almost impactful innovation really comes from people who care deeply, who design with human needs at the forefront. How do you get or help an organization’s culture and values align better with a brand’s external customer promise, and as part of that, maybe specifically, what kind of challenges have you seen where there’s a disconnect between the two, where that obsession just isn’t fully there?

Porcini: Look, I think it depends on the industry. In some industries, this is pretty obvious. This alignment is there to see. As an example, in the fashion industry, you see the employees of fashion, luxury brands embodying exactly what the consumers, the customers are looking for. You see that also in sport. If you work in Nike, in Adidas, even in products that are not related, belonging to the apparel world, like in PepsiCo, the Gatorade brand, that is brand really focus on the world of sport and that kind of customer. In those worlds, the people who work in those companies reflect the values, the behaviors, even the look and feel of those customers and consumers.

In many other industries, they don’t, and they don’t need to, but they need something very important, and this is true for both industries: they need to care. They need to care for real. Once again, we call it “human centricity,” “people in love with people.” What does it mean? Look at the customers in front of you as you will look at your daughter or son, your children, your parents, your friends, people you care about. If you do that, the first thing you try to do is to put yourself in their shoes. We call it “empathy,” right? I mean, from the Greek “empathos,” you put yourself inside the pathos, the soul of these people. So, it starts with this care and that ability to really understand deeply what drives these individuals. So, you need to build that kind of culture inside the organization. 

Now, what are the biggest challenges? Often, companies talk about human centricity. Sometimes they use the word “consumer centricity” as an example, and they confuse these two approaches with what consumer insights function does. So, they start to collect a lot of data. Now we live in the world of data. We have really the ability to dissect the customer base with the capillarity, with the precision, with the focus that we never had before. That’s great. That’s great. But a lot of people think that consumer centricity, human centricity is just knowledge, insights, data about the people we serve, and that’s the problem. It’s not. It’s the beginning. You need that, but then you need to care. You may have a lot of information about your customers, but you’re like, “You know what? I don’t care. Our brand is so strong. It’s very profitable. We are the leader in the market,” and this is the biggest mistake you do often. When you are successful, you are paralyzed by the success, and you stop caring, observing and caring. And that observation and care push you to innovate even when you are successful, especially when you are successful because you have eventually more resources to do it with and you have less pressure. So, you need to care. 

Now, even that is not enough. You may understand what you need to do. You may care about this, but then as a leader in the organization, you may eventually not have the courage to act on it because innovating, changing, especially if things are working well, is risky. So, you need also that. This is what you must be intuitive about. Then finally, well, let’s say you have it all. You have the courage, you act, and then you screw up. You need two things. First, try not to screw up, so you need knowledge, skills. You need leaders with specific kind of skills that make the difference. Then the third thing is, if you do screw up — and you will screw up sooner or later — I mean, this is statistically certain, we will make mistakes in the future. I learned that in design school, in the study of ergonomics where when you design the cockpit of a plane, of a train, they take into account that there will be a human mistake for sure. There is no doubt. It’s going to happen sooner or later, so you have a series of backup systems to manage all of this. So, companies should understand that if you invest in change, transformation, innovation, you’re going to screw it up in multiple instances, and therefore you need a culture that protects the ability to make mistakes, that doesn’t crucify the people making these mistakes. They learn out of those mistakes. So, all of these create the right culture that is really human centric and is really in sync with the values of the customers and the consumers that we serve every day.

Weishaupl: I love this idea of failing of really figuring out how to fail gracefully, both at the organization and at the individual level because you’re absolutely right, that risk is going to have failure. It’s almost a given after a certain point in time, but how you recover, again, both as an organization and as a set of individuals who work together is absolutely massive.

Porcini: Now you learn out of it. I mean, failure has been celebrated by many platforms. I remember multiple articles in our business review just to mention one of many. Everybody understands by now that you need to fail here and there to succeed. I come from a science company. Many years ago, I used to work at 3M. Scientists know very well that to arrive to one innovation, one patent, they need to do thousands of experiments. What scientists call “experiments,” the business world calls “failures.” You need a company with the right culture, the right financial algorithm, the right organization to embrace experimentation. By the way, if we start to call them “experiments” instead of “failures” and we manage them in the right way internally, but also externally, when we face customers, shareholders, the media, then we’ll be able to build the culture that foster innovation in a much more powerful and effective way.

Weishaupl: That’s fantastic advice. I do want to shift to one area that you started to bring up around data. I guess one thing I’m curious about is, as data, and AI, and automation, and personalization and ever more kind of data-driven capabilities become more embedded, both in business operations and in customer interactions, how do you balance efficiency and scale that those technologies can provide with, to your point, that ongoing need for empathy and for human connection? How do you get those working together and not in tension? 

Porcini: Well, first of all, you used the keyword that is the most important one is “balance,” right? Let’s start remembering that these are just tools, so the key priority is that these tools are designed to serve us as humans, and they need to be used by humans. Whoever designs those tools, is in charge of those tools, needs to keep that in mind all the time — human centricity, how to frame those tools that are becoming more powerful than ever today, true purpose, true high-tech, true care for the people that they serve, how we design everything, to make sure that they stay at the service of the humans. 

I will divide, especially talking about AI and new technologies, the world in front of us in the coming decades in two phases. One is the transition phase, and the other one is where we land really, these technologies in full maturity. In transition, the role of humans in managing them is huge, is huge because you need critical thinking, you need the ability to interpret information, to build a prompt, to manage all these technologies in ways that are meaningful and relevant to all of us, to companies, to the customers, to the people out there in general. So, this balance is key. What we need to understand, though, in any profession that we have is that our roles will evolve. The way I’m designing today is going to be different than in 10 years. I remember, I studied in the ‘90s design and computers, softwares were arriving. A lot of people were like, “Oh, my God. I’m going to lose my job.” Well, you do lose your job if you don’t upgrade your skills. Typographers that were using the ink or people that were making mockups in a certain way, yes, that job is gone, but you doing that job, you can learn the new tools, and you can be as relevant as ever. 

So, the first thing is, embrace new technologies. As soon as AI started to show up or new technologies in general, instead of rejecting them, I pushed my entire organization to be the pioneers of the use of AI. Now, it’s not easy. We love to stay in our comfort zone. Newness, innovation, different things scare us, so a lot of people won’t do it. So, if you’re the CEO of a company, make sure that you build that kind of culture, make sure you find the right leaders that embody that idea of experimenting with new things so that the entire organization can follow. 

Now, this is true until AI will reach a level — AI robotics, a series of technologies — where they will be able to replace completely humans in their jobs. If they’re able to replace humans in society, that’s another issue that we don’t want to talk about today probably. Now, we shouldn’t be scared about this. It’s a dream. I mean, we invented tools in the prehistoric times because we needed them to be more efficient, more effective to protect ourselves and serve our needs in the best possible way. Imagine a future where we have machines that do our jobs. That’s amazing. Now, the innovation project, though, becomes a different one. We need to start today thinking, what is going to be the society of the future? If we’re going to lose many, many, many jobs around the world and people will be free to invest their time in something even more meaningful to them, something that drives their happiness — at the end of my book, I talked about three dimensions that drive happiness. One is investing in yourself, who you are, your identity. For sure, your job is important. What can you do beyond your job to define yourself so if you lose your job, you don’t lose yourself? Second is, investing in people close to you, your family, your loved ones, your close community, including, by the way, work, your close colleagues. Freeing up time, you will have more time for your family, for your friends, for all of this. Then the third dimension is doing something bigger than you, something that you can use to defeat death, to become immortal. Again, if you don’t have to work from morning to night every day, you will free up time for that. So, for our society, that’s great. We’re going to see the indexes of happiness in society rising. Actually, where countries where the highest level of business effectiveness, countries with that high level of business effectiveness, with index of happiness very, very low. So, AI can do the most human thing of all, giving us back part of the happiness that we lost over time. But to do that, the innovation project is to understand what is going to be the society of the future when there will be less jobs. And this is an innovation project for governments, also for companies, and then for any individual that wants to have a voice, a perspective, a point of view and share it with the world. We talk about social media a lot today. We have a platform. Anybody has a platform. So let’s start to think collectively how to redesign a society where machines will be at our service, and they will drive happiness.

Weishaupl: I look forward very much to that future. I guess to bring this full circle, one last question for you. If you could give one piece of advice to a business leader, what would you tell them to prioritize or cultivate in their teams to have the best chance of staying relevant and successful and ultimately innovative in the marketplace of 2025 and beyond?

Porcini: Well, first of all would be, focus on your teams. I mean, you mentioned it. That’s the frame of your question, but many business leaders don’t. I mean, yes, people, they have HR, they have values, they have leadership attributes, but they focus on other things. I think that the most important thing to focus on is people. Now, people are — not just the technical and their skills, but the soft skills today are more important than ever. In a world where it’s so difficult to be competitive, where you need extreme efficiency and effectiveness, you need to really understand in-depth what are the characteristics of these individuals so that you can nurture them in the best possible way. 

In my book, I talked about 24 different characteristics. We don’t have the time today to go through all of them, but I will mention a few. Some are more obvious in the world of entrepreneurship and innovation. For instance, the ability to dream. We’re all born with that ability. As kids, we dream, we fantasize, and then society tells us at a certain point that dreaming is not okay, it’s childish actually, but you keep dreaming. You go to school, you get out of school, you go to these companies, and you think that you can change the company, you can change the brand, you can change the industry until sooner or later a manager or multiple managers come to you and tell you, “Stop, stop. That’s so naïve. Actually, it’s even arrogant. Why do you think you can change anything? Nobody was able to do it before?” So, we start to think that dreaming is wrong, that is childish and naïve. Very few people maintain and preserve that ability to dream. They are the real innovators. 

Now, dreaming is not enough. You need to dream, but you need in parallel to be able to execute, to make things happen, and you need to do it fast. So, these three dimensions, dreaming, acting and doing it fast by prototyping, failing, learning, prototyping again is not common in organizations for a variety of different reasons that I’m sure the people listening to us today are very familiar with. Again, when you talk about innovation, entrepreneurship, these are values that are pretty much obvious. 

There are others that people don’t talk too much about — kindness, optimism, curiosity. These three in particular are being really, really important in my professional journey, the curiosity that pushes to learn, to see any interaction as a potential opportunity to grow. Curious people love to read, to travel, to interact with people, to interact especially with strangers, actually, to interact especially with people that are different from them. Curious people love diversity by definition because they know that in diverse people, in people different from them, because they have different political views, different colors of skin, different religious view, in that difference, there is the precious gift of knowledge. There is a perspective that is different than yours. My perspective, combined with your perspective is going to generate a third, original, innovative, new perspective that didn’t exist before, and that’s the real value. 

Curiosity, optimism. If you try to change a company, a brand, society, the world, you’re going to face roadblocks, difficulties all the time. You need people that have the kind of optimism inside, but then you can also amplify that. When you are in a very difficult moment, look back, and enjoy, and celebrate, and appreciate the progress, everything you came from, even the mistakes because you learn so much out of that. That will give you also the awareness that that difficult moment you are in actually a month is going to be a moment of growth. You’re going to learn out of it, and you’re going to project yourself towards the future. 

Now, the second thing you need to do, you need to have the dream because that dream will give you the excitement to go on and the resilience to overcome all kinds of roadblocks. Finally, kindness. We are told often the opposite. Kindness is a weakness, and you need to be tough and mean, a little bit of a jerk to succeed. That’s so wrong. Eventually, it worked better 10, 20 years ago, but in today’s society where you need to be hyper efficient, where competition is extreme, you need every part of the organization to really work in total sync, in full effectiveness, to build the company of the future and the solution for your customers of the future. Kind people drive trust. Often, we talk about trust in companies, but trust comes from people who really care. They are nice to each other. They are kind to each other. They love each other. So, kindness is the foundation of trust and is, at the end of the day, foundation of a new form of productivity. 

When we talk about productivity in these companies, we talk about laying off people, cutting resources, A&M and variety of different investments. We rarely talk about investing in productivity by amplifying the level of kindness and trust in the organization. For me and our design organization over the years across multiple companies, this has been really, really an incredible driver of growth and efficiency.

Weishaupl: Mauro, thank you so much. I could talk for hours but thank you so much for your time today. This has been really, really enlightening for me, and I hope our viewers enjoyed this conversation as well. I’m going to hand it back to you, Joe.

Kornik: Thanks, Alex and Mauro, and thank you for watching the VISION by Protiviti interview. On behalf of Alex and Mauro, I’m Joe Kornik. We’ll see you next time.

Global market trends and consumer expectations with the Economist’s Barsali Bhattacharyya

Joe Kornik: Welcome to the VISION by Protiviti Interview. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource examining big themes that will impact the C-suite and executive boardrooms worldwide. Today, we’re exploring the customer experience. I’m thrilled to be joined by Barsali Bhattacharyya, Deputy Director for The Economist Intelligence Unit and Global Lead for the Consumer and Retail Sectors. Barsali is one of the Economist’s leading voices on geopolitical and macroeconomic trends, and how they will impact consumers and businesses. Today, she’ll be speaking with my colleagued Bryan Comite, Managing Director and Leader of Customer Experience Strategy for Protiviti Digital. Bryan, I’ll turn it over to you to begin.

Bryan Comite: Thanks very much, Joe. Barsali, thank you so much for joining us today.

Barsali Bhattacharyya: Thank you very much for having me. I’m glad to be here.

Comite: I’m very much looking forward to the conversation. Maybe we’ll start with a first question about, based on the current economic situation, how are things looking for consumers in 2025?

Bhattacharyya: Thank you. That’s a really good question. I’m going to answer that by taking a step back and going back to 2024. At The Economist Intelligence Unit, at The EIU, we have a practice where every year, in the second half of the year, we analyze the outlook for the coming year for countries and industries that we cover. So last year, in 2024, when we conducted this exercise, our 2025 forecast for retail sales and consumer spending appeared broadly positive. The US had experienced quite a strong growth in 2024 and we anticipated some of that momentum to continue into 2025. 

On the other hand, in Europe, we expected a recovery after a slow 2024. In fact, China was the only region where the outlook for 2025 seems somewhat sluggish. Now, we did, however, at the time identify a potential change of administration in the US as a key risk for this outlook. About six–seven months later, I think those risks have materialized with US President Trump announcing some sweeping policy changes, which primarily marked by tariffs against key US trading partners, and that has led to create a certain level of uncertainty while we wait and watch about how things are going to unfold.

Comite: So, if you think about that then, looking beyond the US, how will other markets be affected by these events?

Bhattacharyya: Given the state of uncertainties, one way of thinking about which other economies are going to be affected and to what extent, is looking at which other countries that are quite export-dependent and, in particular, which have high level of trade dependency with the US, so who export a lot to the US, because they will obviously be quite affected by the tariffs. Again, I think Asia stands out in that regard. It’s been, over the past couple of years with some slowdown in the western market, Asia has broadly, for many global consumer companies, been a standout market which has offered a lot of opportunities. There’s a whole bunch of reasons there, emerging middle class, and most notably a lot of economic growth over the past few years in Asia, which has, interestingly, mostly been driven by growth in the manufacturing sector. So, if you look at countries like China, Vietnam, even actually Japan, which are quite sizable manufacturing sectors, so these are some of the countries that are going to be affected. 

Looking across the rest of Asia, India, of course, stands out as another economy where there’s already been a lot of momentum about increasing consumer base, a lot of middle-income consumers who are looking to spend, looking to have a better lifestyle, looking to travel. Lots of opportunities there. Again, so far in comparison to many of its Asian peers, India is slightly better positioned with the trade war. It’s one of the countries that might benefit from the China Plus One strategy that a lot of businesses already have in place. Those would be some of the markets to look forward to.

The Middle East as a region is also — you know, countries like Saudi Arabia and the UAE which are big and rapidly developing consumer markets — I think those also offer a lot of opportunities. With Europe, again, the picture is going to be quite mixed, where a lot of tourism-dependent economies might be doing better than export-dependent economies like Germany.

Comite: Thank you so much for that detail and perspective. It’s very interesting to see how the regions are responding and reacting and what some of those outlooks look like. I’d love to shift gears a little bit with you. With that in context, what are the kinds of experiences that consumers are most valuing right now?

Bhattacharyya: There’s going to be a lot of caution among consumers, but we think there will be people looking to treat themselves. The consumers are going to look for opportunities to treat themselves from time to time. I think those are the kinds of opportunities businesses probably need to look for and make the most of. Again, the basics — if you think at what consumers are going to be spending on — the basics are probably going to be fine. They have to spend on essentials, but they are going to be looking for more value. I think that’s probably something for businesses to keep in mind that, sure, prices are probably going to go up for some products, but how do they stand apart from other competitors? There’s going to be probably price wars among businesses as they try to retain their consumer bases. How can they position themselves differently from their competitors and make sure that consumers see value in them?

Comite: Barsali, do you also see, based on the connection back to the conversation around the macroeconomic drivers, that there will be regional differences or trends in the behaviors of the consumers that you’re seeing based on your research?

Bhattacharyya: Yes. I think that’s right. Again, looking at what’s happening around the world, we are probably heading towards a situation where goods might be priced very differently across markets. Companies are probably going to adopt different pricing strategies. That means that the economic impacts to consumers are going to different. The price raises, inflation trends that they see are going to be quite different. I think there’s also going to be factors to watch around tourism where we are going to see a lot of spending. Again, there would be variations in regional trends that we see. For example, we have already seen a slowdown — we are starting to see a slowdown in incoming — in tourist arrivals to the US in response to geopolitical events. Since the pandemic, we have seen an increase in tourist arrivals in the Middle East, in countries like UAE. Again, those kinds of trends are going to continue.

Comite: Absolutely, Barsali. Super helpful to think about all of these interconnected drivers that are impacting the customer experiences. I’d love to get your perspective on the role of emerging technologies. Artificial intelligence or AI in these emerging technologies and the pace of change. How do you see that impacting the customer experience over the next two to three years?

Bhattacharyya: Right. That’s a very important question, and I think especially relevant for the consumer and retail sector, because these companies have been quite at the forefront of using new technologies. For quite a while, we have seen consumer and retail businesses using AI and ML technologies at the backend, in their supply chains, and ensuring that they have more efficient supply chains. They have been using it to manage the inventories, for generating consumer analytics and insights. There’s a lot of use in the back office. So for consumer analysis, for predictive analytics. Online shopping, obviously, has been using it for predictive analysis for quite some time. 

I think what’s really interesting is that, with the rise of generative AI technologies over the past few years, a lot of the use cases probably shifted away from the back office towards more consumer=facing experiences and more consumer-facing use cases. So, I think that probably the biggest use case of generative AI is in marketing and advertising. So, very much what consumers are seeing, what they are reading and viewing to make their purchasing decisions. 

One other use case that really stands out is personalization. Again, lots of opportunities there for businesses, especially digital retail businesses, when they are trying to offer more curated, a more personalized, a better, more convenient customer experience. I think there are a couple of really emerging use cases that we are seeing where companies are, if you look across industry surveys, companies say that they are beginning to invest a lot in customer analysis and segmentation and in digital assistance and profilers. I think those are two areas where there’s a lot of trial, a lot of initial implementation that’s happening across retail and consumer businesses.

Comite: Let’s look out a little further. Let’s think about 2030. Any bold predictions about where the evolution of expectations around customer experience are going? Any ideas about where this is headed?

Bhattacharyya: I think given the uncertainties we are living amidst, it’s quite difficult to be thinking even one year ahead. If you think about what consumers would expect, there are probably two things. One is probably a little less surprising than the other. So, the less surprising thing is that if businesses are using so many new technologies, and we know one of the concerns around AI technologies has been around data privacy and accuracy and hallucinations, I think consumers would expect a lot more progress at those ends. They would expect businesses to be really transparent about what’s happening with their data, how they’re using their data. They would also expect a certain level of accuracy in how businesses are using these technologies. So, if I have a shopping assistant suggesting me what kind of TV I should be buying, I would expect that to be absolutely accurate data. I would expect that to be something I can trust and I don’t have to double check that. Again, transparency and accuracy would be something that consumers are going to be expecting. 

I think one surprising thing might be the human element, right? While we are using a lot — businesses might be using a lot of technologies, it’s probably going to be important to make sure that there is a level of human overview on things. So, if a lot of my shopping experience is done by – through automated processes, through bots and virtual assistants, if something goes wrong as a consumer, I might be expecting a quick redress. It might be that businesses that manage to correctly use a merged human overview with the use of new — adoption of new technologies are standout as the winners. If something goes wrong, the ability — the ease with, and the speed at which, a consumer is able to find a solution, or maybe speak to a human at the company end might become quite important.

Comite: Barsali, thank you so much for taking the time to share your experience, your expertise looking at the markets, both in the US, globally, and thinking about the future of customer experience. I just want to say thank you again for all of those insights.

Bhattacharyya: Thanks, Bryan. It has been a pleasure talking to you.

Comite: Joe, I’m going to turn it back to you.

Kornik: Thanks, Bryan. Thanks, Barsali. Thank you for watching the VISION by Protiviti interview. On behalf of Bryan and Barsali, I’m Joe Kornik. We’ll see you next time.

Joe Kornik: Welcome to the VISION by Protiviti interview. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource examining big themes that will impact the C-suite and executive boardrooms worldwide. Today, we’re exploring the customer experience, and I’m happy to be joined by Jim Stengel, former Global Marketing Officer at Procter & Gamble where he spent 25 years leading the effort to reinvigorate the consumer giant. He is a globally recognized speaker and author, host of the CMO Podcast with Jim Stengel, and president and CEO of the Jim Stengel Group. Today, he’ll be speaking with my Protiviti colleague, Managing Director Jen Friese, Global Digital Marketing Solutions Lead for Protiviti. Jen, I’ll turn it over to you to begin.

Jen Friese: Thanks, Joe. Hello, Jim. It’s great to be here today.

Jim Stengel: Hi, Jen. We’re talking about brands and marketing and competition and customers. My favorite topics. I’m so happy to be here.

Friese: I love it. Jim, you’ve been at this for a long time, more than 40 years.

Stengel: Yes.

Friese: I’m sure you would agree that this is one of the most disruptive times for marketers. With the rapid growth of AI, technology and innovation we are seeing changing expectations from consumers and unpredictable consumer behavior. What is your perspective on the state of the industry?

Stengel: Yes, it’s a big question. We can probably speak the entire show about that. I want to reflect on a little bit of a personal story before we start, Jen. Last week, I was in Chicago. I was teaching in the Kellogg School Executive Education CMO Program, which is a residential program for CMOs, about 22 people. So, an intense immersion into what’s going on with them. Later that week we had an annual Kellogg School Marketing Summit where we invite all sorts of thought leaders, academics, practitioners for a day and a half. So, a good immersion into sort of what’s on people’s mind. I mean, I talk to a CMO every week on my show but I have to say the mood was — with all the stuff going on in the world — the mood was very positive. I reflected on that before our conversation, thinking, “Why would that be?” I think it is related to the chaotic world we’re in right now. So, what happens with people when things are changing a lot, when trust is eroding in big institutions, when prices are going up, when there’s unpredictability at large? I think what happens is you look for something that you can trust, that might be familiar. That’s a huge role for brands today. 

So, I think this era of building brands, building organizations that people admire, want to be a part of, feel like they share their values, is actually more important now than ever because of the macroeconomic world we’re in. What happens when prices go up and people start to get a little bit nervous? They go to a brand they can trust because they don’t want to take the chance. What makes for a great brand? Part of it is pricing flexibility, which is really, really important. Anyway, the mood at least from my immersion last week very, very positive. 

One theme with everyone was the importance of relationships with each other as employees with our customers and with everyone who is a stakeholder for your brand. It’s interesting when there is deep trust creativity can happen, innovation can happen, and brand loyalty can happen. That’s for the environment. 

In terms of beyond that, what successful brands could do in this situation we are in? The number one principle — I spent 25 years in Procter & Gamble. Procter & Gamble is very good at being consumer-centric. You’ve got to be in touch with customers today because things are changing so freaking fast. So, the organizations that are in touch and agile to respond to changing needs, desires, wants, are the ones that will win. There is one story told at this conference last week, it’s of the Chili’s brand, the casual dining. Their stock price in the last year is up 2 ½ times. In the last three years it’s up five X. What’s the key to it? They’re listening to customers and acting on it. 

One simple thing — I won’t talk all day about this but one simple thing is —they noticed on social media a lot of people are driving through fast food chains and holding the receipt up. So, Chili’s says, “Aha!” They’re saying, “Well, we’re going to make them our competitive foil. We’re going to change our marketing message to say, ‘We’re about the same price as fast food but when you come to Chili’s you get a friendly server. You get chips. You get a $6.00 margarita and you get a great burger and fries for about $12.00 or $13.00.’” Their business is going like that. In touch with customers, what are they saying, acting on it, and the business results follow. So, that’s a big win. 

Beyond that, of course, it’s all about building trust, building advocacy, focus on the customer experience, which brings everyone together in a company, and the last one is, never lose sight that we’re in the trust and attention game. If you’re building trust and getting attention you have a higher likelihood of building a great brand.

Friese: You mentioned many things that are impacting the industry. We know that marketing spend has dropped 7.7% from overall company revenue. It’s the lowest in three years. Knowing that marketing budgets are tight and customer experience is so important, how do you think marketers can better plan to hit their performance KPIs while also building their brand? What’s your advice for how marketers can thrive in this austerity mode?

Stengel: Yes. Let me take the first one on brand and performance marketing. That’s maybe the hottest debate we have in the industry. I teach a program at the Cannes Festival every year. We always survey the people coming into the program about the hot issue on their mind. For the last years it has been — one of the top three has been brand and performance marketing. So, it’s a really, really big issue. I ask that a lot of guests on my show about how they’re thinking about it. There’s one really fundamental thing that we should’t just breeze by. If you do have two separate organizations internally, one that runs brand and one that runs performance — put them together. Physically maybe or metaphorically but they should be helping each other. They should be working off the same song sheet in terms of the kind of brand we’re trying to build. They should be held accountable for both. They should have the same KPIs. If you do that you will get — the sum of the parts will be a lot of greater than the whole — or the whole will be a lot of greater than the sum of the parts. 

That’s a really powerful one. We can act on that. It’s not something we have to invent. It’s proven in companies that are doing it. I had the CMO of Autodesk on my show. They put those departments together and they’re crushing it. That’s the first one. 

The second one is we have to, all of us, whether we’re B2B or B2C, challenge the assumption that great brand campaigns can’t build performance. Great performance campaigns can’t build the brand. If you challenge those two assumptions and hold those, whoever is running those elements of your marketing in-house, to those standards great things happen. 

One brand that I admire a lot these days is Duolingo, the language learning brand, the education brand. It’s super hot. It’s in culture. It’s growing like crazy, great team. They simply believed that their brand communication can build demand and they have the data to prove it. So, when they do all the snarky things they do with the owl, which is building their brand, it’s also bringing new users and having lapsed users come back to the brand. So, it’s about putting them together. It’s about changing expectations. That’s why I like to think about performance marketing. If we’re siloed in thinking about those things then I don’t think your odds of building a great brand that has great metrics and performance and brand, they are less optimal. 

In terms of how to think about marketing today and the environment we’re in with signs of recessions, certainly signs of inflation, I’ve been through a lot of these. Maybe not as extreme as we’re going through now with the tariffs and so on, but I’ve been through lots of ups and downs on many brands in my career. The one very empowering thing we can all do is we can pull our organizations together and say value, which is always important, is going to be more important than ever. So, what are some ideas that we can come to market with that really hit value with our consumers? 

I can tell you this is a bit of dated story but still a very relevant one. When I was — I was the Global Head of Pampers when I was back in P&G before I became a Global Marketing Officer, and before that I was the West and European Head of Pampers, it’s P&G’s biggest brand. We had trouble cracking Pampers in developing markets. A lot of parents didn’t use any diapers. It was a cultural thing. We did some pretty serious research to show that when you wore a diaper at night you slept more deeply and you slept better, and sleep is very important for developing babies. The cost of one diaper in developing markets was about 30 cents. So, we had a brand campaign which said, “If your baby sleeps better they will develop better. We have research on that. If they wear Pampers they sleep better. It costs about 30 cents.” What happened is, the brand exploded because we reframed the value. So, it’s all about reframing value. 

In fact, the Chili’s story, I told a minute ago, they reframed their value, “We’re about the same price as fast food and you can have a great experience.” When you tap into an organization’s imagination to come together on some new ideas or some ideas you might have had in your past that you want to bring forward again to reinforce the value you have. By the way, if you don’t have a strong value then work on that.

Friese: Right, there’s a problem. [Laughter]

Stengel: I think this is a great time for marketers, honestly.

Friese: Yes.

Stengel: It really is.

Friese: No, I couldn’t agree more. We know it has been a while since you published your “Unleashing the Innovators” where you explored how legacy companies can renew themselves by acquiring new technologies and creating new business lines, sparking innovation, and learning from failures. How have these lessons changed?

Stengel: Yes. That book — it was a great project to work on, that book it came out within 2018-ish. So, it’s several years ago. The reason I wrote it, which is interesting, Jen, was there were at that time lots of big companies experimenting with startups. It was in the press a lot. My book agent said to me, “What are people using as guidelines? Is there a playbook for these collaborations?” There wasn’t. I thought it was a really interesting topic so I started interviewing. I did a big quantitative study about what’s working in partnerships. I worked with a data group within the Ogilvy group, the Ogilvy Red. We interviewed lots of people on site, startups and big companies. 

That mindset of going outside your company, talking to others who may have ideas that compliment your core skills is always powerful. Certainly, in this era of AI we should be amped up on that because we don’t have all the answers. There are lots of different companies doing interesting things with AI. We can talk about that in a minute. There are lots of companies who bring interesting capabilities with new platforms. 

So, the first step, and this is certainly a lesson in my book, the data showed us in my book that companies that had a mindset of building successful external partnerships were three times more likely to win versus their competition. Part of that, of course, is your whole mindset, that you collaborate. You’re looking for new ideas. You don’t get stuck in a silo. That you have expansive growth-oriented thinking. So, that one is evergreen. 

It’s funny the title was inspired, “Unleashing the Innovators,” by a quote from someone at Toyota who said, “We let the outsiders in and it unleashed our innovators inside.” To me that’s a timeless thought and I think a danger in many, many companies are that we do get too closed off, too siloed, too much internal thinking, too much internal politics. Those that keep their heads up and keep outside looking for who are the right partners they have a much higher likelihood of sharing and growing their business.

Friese: Finally, to close out, if I could ask you to look out a few years and think about the end of the decade, what will be different than today? Where do you see the state of marketing and consumer expectations in 2030?

Stengel: Yes, it’s a good one and a tough one. The way I like to think about the future, at least in this kind of horizon, like five years or so — and I used to practice this at P&G and I certainly have done this with other clients I work with, if you just look at things we know there’s going to be lapsed ones, all sorts of things happening. You just never know when something is going to fly in but if you just double down on things that maybe emerging, that are not theoretical but are actually happening, I think we have enough to work on. You think about number one here, we have a generational thing happening. We have Gen Z coming into the consumer space, to the workforce. We have Gen Alpha not far behind them. What are they like? What are they valuing? How are they behaving? That’s going to change a bit but the fundamentals probably won’t. 

Here’s one interesting stat, 53% of Gen Z self-identify as neurodiverse. Think about that. What does that mean in terms of retail, in terms of digital communication, in terms of product and service innovation? So, that’s what I mean. If you’re customer-centric and you’re looking at emerging customers you better understand them and that’s going to impact marketing and impact them. So, that’s the number one. That’s right on our doorsteps. So, I think the pivoting a bit more to the next generation of employees and customers is really, really powerful. 

AI is here. This isn’t theoretical. We’re all working with it. It’s changing our lives already. Are you within your organization taking your strategies and thinking about AI to help super charge those? I can tell you the ones I talk to are doing stuff — I don’t think they’re thinking deeply enough about it. AI in five years is going to be — we all know it, everyone says it — is here and it is revolutionary — even more revolutionary in five years and we’ll still be learning about it. So, strategy first and how AI can help you achieve that strategy faster, more creatively, more inexpensively. At this meeting I was at last week in Chicago, a Senior Executive from Coca-Cola talked about how AI is helping them totally reframe their global agency strategy, how they work together, their collaboration, how they do creative work, how they do media planning in a totally unprecedented way. That's an example of a company really thinking about deeply how can this technology, which is nascent but here, help us with our business goals. So, that’s the second one I would do. 

The other thing that’s here is more nationalism. We are looking at — I don’t think tariffs are going to — maybe some of them will go away, but we have already started a conversation about being less interdependent, more self-sufficient, what are the implications of that in marketing. Certainly, big ones on supply chain but also in how we think about brands, how we work together globally, how we build global brands. I think we’ll have a bit of different model for that in the next five years. This is maybe related to all of these things, I do feel the number of people that we will need to work on our businesses is going to be less because of AI, because of more focus, simplification. That’s another one we have to deal with with care, with planning, with strategy. There aren’t many people I talk to who feel like AI is going to help them increase staffing.

Friese: Right. [Laughter] Yes.

Stengel: It’s going to change a bit staffing but it’s going to be different, which we have to approach carefully because it has a lot to do with morale and creativity and productivity. The last one, I think, marketing will be even more measurable in five years. We’ve made a lot of progress but I think we are going to understand the brand and performance and interconnectedness between the two even better in five years, which will help us be sharper. 

The last one, which is fun, is I’m even thinking now versus five years ago — think of the role of sports in our lives, in our communication, and culture. That’s not slowing down. If you’re not — obviously, the larger point is how do I make my company and my brand be in the culture so that people care and we gain attention — sports is a big way to do that and will be a bigger way to do that.

I don’t have a crystal ball. I do know that there will be a brand in 2030 that we don’t know about now that is making a difference in our lives so just be ready for that. Agility, obviously, is important. Just looking at the stuff that’s here and doubling down on that because all these things that are here are going to change things in two, three, four, or five years. Some of them very profoundly. Just to be sure that you have strategies to deal with the stuff that is already rising. The stuff that we don’t know is there, we can’t do anything about that. Just be ready to think about it when it comes along the scene but think deeply about the stuff that’s here.

Friese: That’s great. Thank you so much, Jim, for all of your insights and taking the time with us today.

Stengel: Thank you, Jen.

Friese: Joe, I’ll go ahead and hand it back to you.

Kornik: Thanks, Jen, and thanks, Jim, for that great conversation. Thank you for watching the VISION by Protiviti interview. On behalf of Jen and Jim, I’m Joe Kornik. We’ll see you next time.

BYU professor on keys to sustainability success: Get beyond the eighth-quarter mentality

Joe Kornik: Welcome to the VISION by Protiviti interview. I’m Joe Kornik, Editor-in-Chief of VISION by Protiviti, our global content resource examining big themes that will impact the C-suite and executive boardrooms worldwide. Today, we’re joined by Paul Godfrey, the William and Roceil Low Professor of Business Strategy at the BYU Marriot School of Business. His latest book is “Clean: Lessons from Ecolab's Century of Positive Impact” and it lays out a path for companies to improve their social, environmental, and business performance. Today, Paul will be speaking with my Protiviti colleague, Managing Director Steve Wang. Steve, I’ll turn over to you to begin.

Steve Wang: Thanks, Joe, and thanks, Paul, for joining us today.

Paul Godfrey: Happy to be here, Steve. Wonderful. Thanks.

Wang: So, Paul, with that, we live in an incredibly fast-moving world, specifically for our topic today, the world of sustainability continues to change each day. We read about severe weather, climate change, the change in landscape of social issues, emerging regulations, and the list just goes on. Let’s talk about the present first. What is the current state of sustainability both here in the United States and then in the rest of the world?

Godfrey: I think I’ll make two comments. One is, reports of the demise of sustainability are vastly overstated. If you look at, something like 95% or 90% of the Fortune 500 companies are solidly producing sustainability reports, they’re engaged in sustainability reporting. So, at least at that level where we’re keeping track of what we’re doing, it’s deeply embedded in a lot of organizations. In terms of the uncertainty that we’re seeing in the world, if you look at the popular media, we’re seeing this retreat from DE&I. We’re seeing what might be a retreat from sustainability. Current administration sort of wanting to pursue some policies that have worked very well in the past, and what I recall is a great quote by Warren Buffet who said, “When the tide goes out you’ll find out who’s swimming with no pants.” So, whenever there’s a reversal in the stock market, you’ll find out who are just the looky-loos, who are just the pretenders, and who are real players, and I think what we’re finding out now is who’s swimming with no pants. Who are the companies where their commitment to sustainability was popular, it was skin deep, it wasn’t very concerted. Those are the companies with no pants. They’re retreating for the beaches right now. I think there are a number of organizations out there that are deeply committed to sustainability, not just for its social value but for its business value, and those folks are going to continue to push forward the agenda, will learn more best practices and will continue to evolve in a very, very uncertain world.

Wang: Thanks for that. How about the future, let’s look out maybe 10 years or so?

Godfrey: Where we’re going to be in 2035? Well, let’s look at some long-term trends that you noted in your introduction. I have a client in Arkansas. I did some research for him about tornadoes and if you look over the 40-year time horizon, the number of tornadoes in the state of Arkansas continues to increase. The severity of tornadoes on average tends to go down but that doesn’t mean there aren’t awful tornadoes. It just means there are lots of little ones. So, in terms of climate, weather uncertainty, hurricanes, gale-force winds, these types of destructive events, we’re seeing more and more of those. That’s a secular trend. If you go back to 1980, you can see that climate. 

If we look at some of the social issues that we’re facing, changes in our education system, introduction of new technology such as AI, the social scene is going to continue to be uncertain. We’ve still got human trafficking problems going on all around the world. We’re now reconfiguring supply chains. So, thinking about sustainability and how to build those for the long term, it’s just not going to go away. I think the trend—and I think, again, these are the folks who are swimming with pants the whole time—they tie sustainability to business outcomes. So, they’re looking at supply chain resilience not only from “Hey, let’s really help our partners in the Philippines,” but “Let’s be ready and aware when there are floods and mass storms in the Philippines that our supply chain doesn’t get disrupted,” that we’ve actually reduced operating risk. 

So, why do we use sustainability issues that are customer-focused? Why do we create products that are sustainable revenue? Because it reduces customer churn risk. Because it not only grows revenue but it allows us to carve out an island of stability amongst the sea of uncertainty. So, I think in 2035, companies that are committed to all three prongs, people, planet and profit, are going to continue to thrive. If you have no pants on, you’re just doing it because there’s something popular about people and profit.

Wang: Thanks for sharing that. How about culture, how important is fostering a culture of sustainability within a modern organization? You have a bunch of different internal and external stakeholders that might have different expectations, so managing a culture can be extremely challenging. What strategies can leaders use to embed sustainability into their organizational culture?

Godfrey: Well, I think that the first thing is to realize sustainability is a journey, like almost anything else. Traditional risk management is a journey. Risks are constantly changing. The world is updating, best practices are updating. So, if you realize it’s a journey and realizing it’s got to be deeply embedded in your culture just as a natural realization, because if it’s a one-off commitment, if it’s a speech by the CEO but no follow-up, the journey isn’t going very far. However, when it’s gets embedded—so when I think about culture, I'm thinking about two things. One are the formal rewards that a culture reinforces, so, what do we pay people to do. One of the best-practice companies that I know of actually ties sustainability outcomes with the business unit level to managerial compensation. Part of their bonus is tied to hitting emissions goals, water use goals, the supply chain goals around sustainability. So, you got these formal things. 

Then you got these informal things. Who are the heroes, what are the stories we really tell about our organization? Do we tell stories about just wasting, being profligate in the pursuit of customer value or do we reward stories about, “Hey, we were kind towards stakeholders. We actually took our customers and gave them a price break because our cost went down.” It’s what we reward, both formally and informally, that embeds sustainability in a culture, and again, it’s not going to happen tomorrow but it won’t happen unless you start tomorrow with some of these longer-term initiatives.

Wang: That’s a really good advice for the business leaders that are out there. Right now within our organizations, our sustainability leaders are also dealing with very complex issues and changing but increasing expectations. In some of your publications, you reference a tool called the Sustainability Canvas. Can you tell us a little bit about what that is and how can the Sustainability Canvas be adapted to fit the unique needs of modern organizations, especially with some of these leaders that are in rapidly changings industries?

Godfrey: The Sustainability Canvas basically builds from the premise that your company, or any company, competes in private economic markets. On the supply side, we have to buy materials, we have to hire employees. On the demand side, we have to create and sell products and services for our customers. We also compete in the public square. We all have, on one hand, regulatory, formal requirements that we have to meet, SEC regulations, EPA regulations, OSHA regulations. These are sort of formal regulatory bodies we have to comply with, but then we’ve also got our communities where we live, where our employees live, where our customers live, the schools, the music scene, the art scene, all kinds of how we build communities around. So, we got these four areas, costs, customers, compliance, and communities and the Sustainability Canvas is a way that companies can think about, one, how are we active in each one of those four areas, and number two, how are we creating value for our multiple stakeholders. 

So, for example, how do shareholders win when we are focused on supply chain efficiency? Well, look, every gallon of fuel wasted is cost that went out the door that didn’t have to go out the door. Every gallon of water that we needlessly waste without recycling costs us money. So, in the sort of cost and efficiency focus, shareholders win because costs go down, operating risks tend to go down. How do employees win? Hey, look, we all like to work for winning companies. We all like to work for companies that show that they care about more than just the bottom line. If reducing energy use actually improves the bottom line, employees want to be involved in that kind of stuff. Think about customers, again, when we develop products, shareholders love new revenue. Customers love their needs are actually met by a product that we produce. Same goes for compliance where you’ve got activist risk, people who are looking to take potshots at your company because they don’t understand the full picture. The more transparently that you comply and report what you’re doing, the less ammunition those folks have to make your life miserable.

Wang: Let’s talk about everyone’s favorite topic and one that you just specifically referenced, the legal side of things. How should modern organizations navigate the evolving regulatory landscape related to sustainability?

Godfrey: So, in my field, strategy, there’s a guru, a guy with guru status named Michael Porter and he wrote a book about competing internationally, and his recommendation for companies there was counterintuitive. He said, “You want to find and compete in the toughest regulatory market that you can find because if you can compete in the hardest regulatory market, it’s easy to dial back your requirements for other markets that have less regulatory risk.” So, for example, now the EU is sort of at a moment of truth around sustainability where they’re figuring out that a lot of the stuff that they’re asking companies to do might be needlessly asking, adding costs to the company and its operations. But the EU has the strictest sustainability standards and so look at your operations and say, “Hey, if we move to Frankfurt, what would we have to change to be able to comply with EU regulations?” and if it’s nothing, then you’re in a great position. But then start to make those changes so that you’re prepared to compete in the toughest markets in the world because then when you get regulatory relief that’s a blessing. It’s not just saving you investments that you needed to make. Does that make sense?

Wang: Yes. It does make a lot of sense. This is where transparency from the business leaders to their employees is vital for organizations.

Godfrey: Absolutely. If folks in the C-suite are playing whack-a-mole on sustainability, people on the frontline figure that out pretty quickly, in spite of whatever get said or whatever emails get sent out, so that cultural consistency from top to bottom is absolutely vital.

Wang: Do you have any suggestions, advice or last second thoughts for our audience? What can we do as an individual or even as a society to help our organizations and community do what’s right?

Godfrey: I think there are two things. Number one, you got to get beyond an eighth-quarter mentality. You’ve got to be able to think about, “Okay. When I retire, what’s the world going to look like? What’s weather in Florida going to look like? What’s fire risk in California going to look like 10 or 20 years from now? How do you need to think about responding today to prepare ourselves for that world?” So, one is, you got to think much longer than eight quarters and the other one, this comes back to the culture. You have to be who you are. Don’t try to be somebody you’re not. Don’t try to be a company that buys into sustainability when it’s popular and then abandons when it’s not because then you’ll find you swim with no pants and that’s not a fun place to be.

Wang: Well, thanks, Paul, for all your insights, your inspiration, and as you mentioned today, just your overall mission to help others thrive.

Godfrey: Thank you and it is a great conversation. A really great conversation.

Wang: Thanks for that. So, with that, Joe, I turn it back over to you.

Kornik: Thanks, Steve and Paul, and thank you for watching the VISION by Protiviti interview. On behalf of Steve and Paul, I’m Joe Kornik. We’ll see you next time.

Australian Privacy Commissioner Carly Kind breaks down new rules in Australia’s Privacy Act

Joe Kornik: Welcome to the VISION by Protiviti podcast. Joe Kornik, Editor-in-Chief of VISION by Protiviti, a global content resource examining big themes that will impact the C-suite and executive boardrooms worldwide. Today, we’re exploring the future of privacy, and I’m thrilled to welcome in Carly Kind, Privacy Commissioner for the Office of the Australian Information Commissioner, an independent national regulator for privacy and freedom of information and government information policy. The OAIC’s responsibilities include conducting investigations, reviewing decisions, handling complaints, and providing guidance and advice. I’m happy to turn over the interviewing duties today to my colleague, Protiviti Director, Hanneke Catts. Hanneke, I’ll turn it over to you to begin.       

Hanneke Catts: Thanks, Joe. Carly, thank you so much for joining us today. It’s an absolute pleasure to be speaking with you.

Carly Kind: Thank you, Hanneke, and thank you so much for having me. 

Catts: To begin the interview, I wanted to start with the Australia Privacy Act that’s now been in place since 1988, with several updates focused on the increased protection of personal information. It includes the most recent tranche of changes to the act, including the protection of children’s information online and improved regulator powers, the information sharing following a data breach. Carly, can you please provide some context to the nature of the changes and how they came about as well as their importance to Australian businesses?     

Kind: Absolutely. Reform of the Privacy Act has been an ongoing agenda for this government and previous governments for some time. In fact, it was instituted by the Australian Law Reform Commission more than a decade ago. There’s a pretty widespread understanding that the act does need some updates. Those updates have been articulated in a very long report called the Privacy Act Review and the government has accepted in principle many of the recommendations from that review and they’re now bringing forth those changes in tranches. What we saw last year with the privacy and other legislation amendment act was Tranche 1 of a range of Privacy Act reforms. The key components of Tranche 1 were, as you said, Hanneke, first and foremost, the introduction of the mandate for our first to develop a Children’s Online Privacy Code, which will essentially particularize the requirements of the Privacy Act for services likely to be accessed by children and that code development process will take about two years. By the time we consult with children, parents, teachers, industry actors, those services who will be regulated under the code and then put the code out for consultation.

The other key elements of Tranche 1 included a statutory tort of privacy and that is a pretty novel approach to developing privacy law in the common law jurisdiction. It also included criminal offences around doxing, that is the malicious disclosure of personal information, and then, as you also intruded, Hanneke, it also includes some new enforcement powers and regulatory powers for the OAIC as well. 

Then, the final small change but really important for businesses is a requirement that they articulate in their privacy policy when they’re using automated decision-making systems. That requirement won’t come into effect for two years and it will be a small, on paper a small change, but it is an important one for regulated entities to think about. Probably, the most substantial change in terms of obligations on entities at this stage, the other changes from Tranche 1 are more about the powers and responsibilities of my office. 

Tranche 2, should it proceed, and government are now beginning thinking about how to take Tranche 2 forward, will contain more of these substantive changes to the legislation, potentially, new thresholds for data collection and processing, specific changes around how to do advertising, for example, and a range of other different tweaks to the existing law.              

Catts: That’s really great background and context. Building on that, and you alluded to Tranche 2 upcoming changes, what do you see as the next big opportunities to enhance privacy guidance for organizations to give Australians more confidence that their information is protected?    

Kind: I would say there being two parts to that, Hanneke. On the one hand, overhaul of the Privacy Act, should the government proceed with it in 2025, would definitely be a big moment of uplift for Australian regulated entities. That may look like a range of different things depending on how government choose to take forward that project, but for example, the inclusion of small businesses is something that is on the table currently. Small businesses are exempted from the application of the Privacy Act. 

Other big changes might include an interaction of a fair and reasonable test for processing personal information. As I said, potentially, restrictions on targeted advertising, updated definitions around things like consent and personal information. 

If the government proceeds with that project and it passes through Parliament, then that will require really a pretty broad update of compliance work, although, I would say that most entities are already on that journey given that Privacy Act reform has been anticipated for some years. We’ve seen quite high levels of engagement across the regulated sector at this stage, that is, those entities already regulated by the Privacy Act, to really get ahead of the legislation and put in place updated good governance practices, particularly in response to some of the major data breaches in Australia in the last few years and just generally the expectations of the Australian public, which are very consistent with stronger privacy protection. But there is another part, as I said, that really is contingent on Privacy Act reform going ahead. We don’t know at this stage whether that will be the case or what that would look like. 

In parallel, our office is working really hard to put some more meat on the bone on some of the requirements of the Privacy Act as it is. It’s a principles-based framework. It really rests heavily on some concepts that haven’t benefitted from very much judicial interpretation. Things like raise in the bonus, things like fairness, lawfulness are already built into the Privacy Act as it is. Equally definitions of consent, personal information, et cetera. These haven’t really been tested, stress tested in the courts at this stage, and so our office is really focused at the moment on how we can use enforcement actions to advance jurisprudence in the courts around Privacy Act interpretation, and therefore, give more specific guidance back to entities about exactly what the law requires. 

That’s something that we can take into our hands because obviously we’re not legislators, we’re regulators. So stronger, more robust enforcement of the Privacy Act with the view to advance in judicial interpretation, and therefore ultimately, being able to provide more guidance in education back to entities is really the priority for the OAIC in 2025.         

Catts: Are there any key take-outs which should be adopting from other jurisdictions for our Australia obligations? What’s your advice to Australian businesses as they consider their privacy obligations? 

Kind: Most Australian companies or many, at least, are engaged in the global economy and so many of them will already be complying with other jurisdictions, privacy requirements. On the one hand, Australia’s privacy framework is a little outdated compared to some other jurisdictions, and therefore, those Australian companies that are already trying to meet the level of the GDPR, which is the European framework, will really be in a good position to ensure privacy compliance no matter what happens in the Privacy Act reform, as the GDPR is quite a robust, and at least, a more recent legal framework than the Privacy Act. 

Having said that, the Privacy Act does involve some unique approaches that aren’t really evident in other privacy, in other jurisdictions. It’s not, for example, heavily contingent on consent the way GDPR is. That may be cast as a weakness of the Australian regime. I see it actually as a positive because many of us know that consent isn’t really a very effective means for protecting individuals anymore. People just could click “Yes” to terms and conditions that have 40, 50 pages long without really reading them. Actually, the Australian framework requires concepts like necessity and fairness to be built in right from the start and that means that you can’t just consent to waive your rights, and equally, that entities can’t just get consent to cover up a range of other uses. I do think that the Australian framework is quite unique. It requires particular analysis and thought to ensure compliance, but I equally think that where entities are broadly displaying interest in good governance practices, they’re going to be in a really good position to comply with the Privacy Act, generally.               

Catts: Great. Some really great insights and food for thought there too, Carly. The new privacy penalties that were introduced a couple of years ago, they significantly increased penalties for repeated or serious privacy breaches, along with the OAIC’s new powers and the penalty fees from the recent changes that you were mentioning before. Has there been any notable impacts from the penalty increase?      

Kind: The litigation we have in court on foot currently against both Medivac and ACL is under the old regime, not the new enforcement regime, or the enforcement penalty regime that came into effect in 2022. We’re still at the tail end of the previous approach in our enforcement matters, but likely any new enforcement matters and particularly civil penalties proceedings will be under that new regime. 

I think the more notable changes you allude to, Hanneke, is the introduction of different tiers of penalties in 2024. Basically, it preserves the serious privacy interference tier and it adds just interference with privacy, so it removes serious from the second tier, and then it also gives us the lowest tier, which gives us the ability to issue infringement notices for technical contraventions of the Privacy Act. These are things that relate to the privacy policy of an entity, for example. That’s a really interesting and exciting development because it enables us to take a more robust approach to enforcement of technical infringement. It’s lower cost and a simpler procedure by which, after issuing a notice, we can issue an infringement fine up to about $60,000. That should act as a really good incentive for entities to tighten up their compliance around those technical requirements, including on privacy policies, and it also will allow us to really take action whether it’s persistent or quite egregious non-compliance in that space. We wouldn’t be using these powers arbitrarily to go after entities that have made good faith efforts to comply with the law, but we would be using it where we see really consistent or egregious harms or where vulnerable people are implicated.   

Catts: Yes. In regards to the different tiering, and I know you said that it’s still being worked through, but can you give us some insights into what type of breach would constitute a mid-tier penalty versus a low-level administration breach?  

Kind: Mid-tier penalties are applicable to things like the collection principle, APP 3. Whether it’s necessary for an entity to collect personal information in the first place, whether they do that with fair and lawful means. We’ve issued a range of determinations recently that look at scraping of personal information, which we say may not reach the threshold of fair and lawful depending on all the circumstances. That could be a space in which we potentially think about this matter. Another APP to which it clearly applies is APP 6, which is around use and secondary use and disclosure of personal information. When an entity has collected it for one reason and then they decide to use it for another, or they pass it on to a third-party in a way that wasn’t anticipated when they first collected that data. That is another space in which a contravention of that provision may give rise to enforcement proceeding under the new provisions.       

Catts: Thank you for those clarifications. Turning our attention now to artificial intelligence, what do you see as the privacy implications of the dramatic rise of artificial intelligence broadly, and generative AI more specifically? 

Kind: Yes, and it’s hard to disaggregate the two sometimes, isn’t it? Obviously, we’re very preoccupied by generative AI at this current moment in the last year or so, but of course, artificial intelligence in various forms, particularly machine learning, has been around for a long time and much of it doesn’t have privacy implications, for example, where it’s not using personal information at all. That kind of AI, as I said, is well-established in some sectors, for example, in supply chain logistics, and wouldn’t fall within the category of AI that does raise privacy concerns. 

Generative AI does raise particularly novel and challenging concerns, and I would group those issues in, maybe crudely, in an input and an output bucket. The input bucket relates to the scraping of personal information, or the use of personal information collected for one purpose, to train an AI model. I think that this does raise potential concerns when it comes to the Privacy Act, which does have a range of thresholds that have to be met. One is, of course, the collection is fair and lawful, and another that if you’re using data that you’re already holding for one purpose for a secondary purpose, you either need to have consent for that or be able to establish that it was within the reasonable expectations of the individual. I think there are some challenges there when it comes to the use of personal information to train generative AI models, not something my office is looking at, at the moment. 

There’s a big question about whether or not an individual’s data may be misused or being out of their control by being used to train AI. 

Then, at the output end, we see a range of privacy issues as well. We see, potentially, inaccurate data being disclosed through models. We see privacy. security risks that may implicate privacy. through AI models, generative AI models, so potential risks around technical vulnerabilities. It could be occasioned through AI models. We’ve issued guidance on both of those issues, one on the input question, on how you can develop and train an AI model consistently with the Privacy Act, and then on the output question we focused on the use of commercially available AI products and how entities are using those. One thing to really draw out from that guidance is that there is a big difference when a business is using a commercially available model, whether or not they’re doing that with the tool on premises or whether they’re using cloud-based infrastructure. If it’s the latter, then there’s a separate range of concerns, which relate to the disclosure of personal information to entities, particularly those overseas. 

We are urging caution when it comes to the use of commercially available AI models within the context of personal information. Again, that’s the line in the sand for me, if you’re not using personal information, for example, customer information, then it’s a different set of considerations. You might want to think about other things like accuracy or hallucinations, et cetera, but if you’re using personal information in the context of models, particularly cloud-based models, then you do need to think about things like their disclosure requirements.            

Catts: Carly, finally, looking forward to the end of the decade, what’s your vision for the future of privacy in Australia?  

Kind: What a fun question. [Laughter] I’ve got big hopes. Look, I think the Privacy Act reform would be great. There are some wonderful proposals in the Privacy Act review. It would be really great to level up the Privacy Act. But I also think that notwithstanding those reforms, I think there’s a lot we could be doing. Our office has really only shifted towards the more enforcement posture in the last couple of years, I see a lot of scope for building that up. Again, not with a view to being punitive to entities, but with a view to really establishing how the Privacy Act applies in achieving general and specific deterrents. I think we could continue to build the privacy community in Australia, I think there’s a really strong privacy professional’s community and I’d love to see that continue to grow. 

One of the upsides of data breaches in the last few years, and there are very few upsides given that there are harmful impacts, is that privacy is starting to be on the agenda, at board meetings and with the C-suite, and that we could continue to enhance that, particularly, through this more robust enforcement posture. So that CEOs and others, the general counsels and others have to really say that this is the issue of risk that we need to manage proactively. 

AI is going to, obviously, be a big game changer in the next few years and we need to look in Australia about how to approach that. I would like to see some effort in the regulatory space to articulate particular rules around AI. But I’d also like to us to think about how to use innovative methods to regulate. We haven’t really, in Australia, dipped our toe in the water of regulatory sandboxes, for example, whereas this is something that other jurisdictions are doing. I’d love that to be something that the OAIC can take onboard. Likewise, being able to provide innovation advice to entities who are starting to think about how to use personal information in the development of products and services and might be able to come to the regulator before they do that to get advice on how the law applies. Again, this is something that I’d be stealing from other jurisdictions, perhaps better resource regulators who have that ability to provide innovation hotlines et cetera, but again, that would be a great space for us to live into the way I see.  

Catts: Carly, that’s fantastic. Thank you very much for speaking with us today. We really appreciate all of your time and your insights.  

Kind: Thank you for having me, Hanneke. I appreciate it.

Catts: Thanks, Carly. With that, we’ll hand back over to Joe.  

Kornik: Thanks, Carly. Thank you for watching to the VISION by Protiviti interview. On behalf of Hanneke and Carly, I’m Joe Kornik. We’ll see you next time.