reputation-as-currencyThere are few of us who would disagree that the online engagements have profoundly changed the way we conduct business. Perhaps one of the biggest changes is the rise of collaborative consumption, the way in which technology is being used to match ‘haves’ with ‘wants’. Of course this has been happening for years, and you only have to think of bartering systems to understand that, but technology means it’s happening on a scale never seen before. A TED Global talk on the subject discussed the central currency that’s common to all collaborative consumption: trust.

Trust and connection

Like the Cluetrain Manifesto’s David Weinburger, Rachel Botsman believes the key to collaborative consumption is that it allows us to make connections. People are consuming in order to get to know other people. These connections are made meaningful by trust and reputation. Trust has always been important in business: handshakes used to seal a deal, or ‘My word is my bond’. But in an online world, where anyone can say anything about themselves, what others say about someone becomes increasingly important in deciding whether to engage with them. And this doesn’t depend on marketplace: there are very few among us who won’t look at an ebay seller’s score before bidding, an Amazon marketplace rating before buying, or reviews on TripAdvisor before booking. Reputation might not be the only factor in the decision, but it’s certainly part of it.

In other words, reputation is key to winning business.

And it’s not just in buying goods that this has become important. We have seen a rise in what might be described as service networking. It’s akin to social networking, but used to get things done. Examples include the explosion in freelance websites such as eLance and oDesk, or task sites like taskrabbit. These match people who want jobs done and are prepared to pay with those who are willing to do them. Reviews give other potential buyers information about the ‘doers’. Good reviews give ‘doers’ more chances of winning work. It’s not unlike old fashioned references, but quicker.

Difficult questions persist

There are many questions that need to be answered. We need to know how we ensure that online reputations reflect ‘real’ ones, and how we stop people behaving badly, especially if they’ve already done so in one forum. Companies use information such as credit ratings to decide whether to engage with consumers. And if you consider reputation as how much a community trusts you, or you can be trusted, then a credit rating is only a form of reputation assessment. As your reputation goes up, so your physical value goes up.

The more systems use this kind of review process, the more ‘reputations’ we each have. Each transaction and connection leaves a trace somewhere. There are millions of pieces of reputational data out there, if only they could be captured. And that’s the million dollar question: could and should they be captured, and if so, who should own them? If you build a reputation on one forum, could it and should it travel with you to another? After all, just because you are a reliable seller on ebay does not mean you would be a good host on airbnb. In other words, reputation is context-specific.

It’s only a matter of time before you can see a record of trustworthiness drawing on all your online identities: a reputation dashboard. This is already starting to happen, although there are enormous data control and management issues to solve first. The first, and perhaps most crucial, is who would control the information? If we can control our own reputations, then we can shape them.

Sustainable credibility

TripAdvisor’s reviews are useful, but not, perhaps, as valuable as they were once considered, since we all know that hotels can post anonymous self-reviews or poor reviews of competitors. And where ratings are two-way, as on ebay or the freelance sites, who is brave enough to post a mediocre review and risk the reciprocal damage to their own reputation?

Reputation and trust are currently the essential currency of collaborative consumption. However, there are huge questions about them, with companies cashing in on the requirement to have good reviews. It will be interesting to see whether the online world figures out a better way to manage reputation, or whether the ‘trust economy’ will go the same way as the handshake in business: nice, but not enough.

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