The Reputation Economy - Book Summary

Dive into the Digital Footprint: Understand the Pervasive Impact of Your Online Actions

Have you ever wondered about the aftermath of those online shopping sprees? All those targeted ads cluttering your online experience aren't just a coincidence — they're trails of digital breadcrumbs that you leave behind. You see, every click, every purchase, and every scroll you make online is trackable, creating a clear picture of your online behavior.

But here's the thing — your online footprint goes beyond influencing the kind of ads you see. As we usher in a new era of digital reliance, we're going to see your online habits and interactions play an integral role in shaping your reputation. They may even impact your career prospects. So, let's gear up for this looming reality and understand the significance of every digital step we take.

Over the course of this summary, you'll learn:

— How traditional college education could soon become obsolete; and

— Why your next job offer might hinge on your ability to charm not a human, but an algorithm.

Your digital life is an open book: Understanding the impact of data recording and analysis

In the pre-internet era, people could carefully curate their public persona. But, the digital revolution has changed all that — and it has a lot to do with the exponential growth of our data storage capabilities. Previously, organizations like the CIA, NSA, and IBM had a monopoly over large-scale data storage. With the rise of the internet, however, storing enormous volumes of data is now inexpensive and accessible to virtually anyone.

For us, the average internet users, this translates into a persistent digital footprint. This trail of data — from photos we upload on Facebook to our credit card transactions and ATM withdrawals — is logged, stored, and scrutinized by a plethora of companies.

But the plot thickens. Today's technology makes it simpler and more affordable to sift through this data, quantify it, and derive meaningful insights from it. Businesses are increasingly leaning on data analysis tools to identify customer behavior patterns.

Take Amazon, for instance. It employs a system named Hadoop to detect patterns among countless purchases, thus enabling tailored product recommendations. LinkedIn utilizes a comparable system for its "People You May Know" suggestions.

This technology streamlines massive volumes of data into numerical scores. Every online activity — each mouse click — gets translated into a number. These numbers feed into algorithms that compute a 'reputation score' for each individual.

And it's not just an idle score — it's a metric that's poised to become omnipresent. As we move forward, whether you want to land a job or buy a house, this reputation score — the aggregate of your online behavior — will play a decisive role.

Living in a digital echo: How your online presence predicts your real-world actions

As technological advances surge ahead, your digital footprint and corresponding reputation score will gain paramount importance. In this fast-paced world, everything you say or do online will instantly reflect on your reputation.

Let's say, your boss posts an unexpected compliment about you on social media — this will instantly boost your reputation score. On the flip side, an irate comment on Facebook will immediately tarnish your score.

And it doesn't stop at personal interactions. Businesses that you've never even engaged with may be drawn to your digital profile. For instance, if your online data indicates that you're a loyal customer — consistently visiting the same coffee shop, or buying cars from the same dealer — your high reputation score will send a beacon to other companies, vying for your business.

But it's not just businesses that will be analyzing your digital breadcrumbs. Your online reputation will influence various facets of your life, including your professional trajectory. The work you do today for a company will be used as a benchmark to anticipate your future performance in related areas. If you've made a name as a successful advertiser, this reputation will predict your proficiency in, say, social media marketing. In other words, your reputation becomes "portable."

In the reputation economy, decisions will often be based on data, even if it's limited or secondhand. Let's say you're looking to hire a babysitter. Naturally, you haven't observed them in action, and each child presents unique challenges. Directly assessing the babysitter's capability to cater to your child's needs seems impossible. But armed with their reputation score, you'll have a wealth of relevant, albeit secondhand, information at your disposal — making your decision-making process significantly easier.

The dark side of the digital mirror: Navigating the pitfalls of false information online

Imagine an individual harboring a grudge against you and your small business — and unleashing a torrent of fabricated stories about you on the internet. Regrettably, no computer algorithm, however advanced, can sieve out these falsehoods. The harsh reality is that computers lack the discernment to separate truth from fiction.

False or misleading information can be a death knell for a company's reputation. Picture a rival firm leaving bogus negative reviews about your enterprise on Yelp, or paying individuals to generate fake accounts for broadcasting negative remarks. This relentless stream of fictitious critiques slowly erodes your company's reputation, sabotaging your business, one sham comment at a time.

Similarly, spurious or inaccurate information can profoundly tarnish an individual's professional standing. For instance, if someone is excessively infatuated or resentful towards you, they might resort to impersonating you online. This impersonator could indulge in activities or make statements under your name that you'd never approve of, causing irreparable damage to your reputation.

So, what should be your course of action if you or your business falls prey to such a ploy? How do you mitigate the harm?

Interestingly, an indirect rebuttal often proves more effective than a direct public refutation. A direct response might end up drawing more eyeballs to the controversy and project you as aggressive or defensive.

An indirect response, on the other hand, lets you proceed with caution and rationale. Suppose someone posts a blog alleging that you were fired — whereas, in reality, you resigned voluntarily. You could debunk this claim subtly by sharing pictures of your farewell party or a heartfelt goodbye note from your boss.

Retaining the reins of your reputation: Being proactive is the name of the game

A hit to your reputation can seem like a fatal blow, leaving you tempted to abandon all hope. However, there's a way to turn the tide — proactive engagement.

While you can't control the type of information being compiled about you, you do have a say in what people focus on. There are a few strategies to accomplish this.

One tactic to counter a negative reputation is to stir up the conversation by doing something unexpected. Rather than investing your energy in defending yourself, redirect people's attention to something else entirely.

Suppose you're being unfairly tagged as a lazy person with unhealthy eating habits. Instead of attempting to justify your lifestyle choices, join a gym and flood your colleagues' inboxes with snaps of your weekly fitness regime.

Another approach to change the narrative is to preemptively reshape the discourse. This is precisely what Facebook did while setting up its massive, energy-guzzling data center in the Oregon desert. With Oregon being an epicenter of environmental activism, Facebook's PR unit skilfully dodged a PR catastrophe by highlighting the project's energy-efficient practices.

This brings us to an important insight: both corporations and individuals stand to gain by showcasing their strengths.

If you and a colleague are vying for the same promotion, and they're focusing on their division's revenue growth, you can bet there's a reason for that choice. The most effective strategy here would be to shift the comparison grounds to an area where you excel.

By the same token, when Yahoo! faced a brand identity crisis in the early 2000s, it diverted attention by hiring a high-profile CEO and spending billions to acquire the popular microblogging platform, Tumblr.

The digital handshake: How your online reputation impacts your career

In our Reputation Economy, machines are increasingly stepping into critical roles — for instance, decision-making in hiring or firing scenarios. This wave is coined as "Decisions Almost Made by Machine," or DAMM.

As the term implies, these decisions largely bypass human scrutiny. Take the hiring process: Many firms now rely on computer algorithms for the initial screening of job applications. Human recruiters are often slow and costly; machines, however, can churn through thousands of decisions per second, sans lunch breaks or salaries.

Here's a case in point: When the Mars One Organization received a staggering 200,000 applications from aspiring astronauts for a Mars mission, it was clearly impractical for a human reviewer. If a person had to dedicate five minutes per application, they'd need nine full-time working years to process them all!

Astute job applicants can anticipate these computerized screening procedures and craft their applications in a manner compatible with these systems. By simplifying the task for a machine to identify and categorize your achievements, you up your chances of passing through the screening phase.

Most of these mechanized systems scout for specific keywords matching the employer's criteria. So, if the job listing requires a CPA, there's a high probability that the screening software has been programmed to scan for terms like 'accounting.'

Interestingly, DAMM can also turbocharge your career progression.

Consider the case of Arnel Pineda, a relatively unknown singer from the Philippines, who uploaded his renditions of Journey's hits on YouTube. As his performances garnered thousands of likes, they started ranking higher in search results for terms like "Journey cover." This automated system eventually catapulted him into the limelight — Pineda was chosen as Journey's new lead singer for their global tour.

The power of reputation in shaping your career trajectory shouldn't be underestimated — in essence, don't stop believing.

Hiring in hindsight: The rising importance of past performance and reputation in recruitment

Identifying the right talent is a conundrum for employers. Traditional hiring methods, which bank on intuition, resume assessment, and personality-driven interviews, often fall short in predicting on-the-job performance.

This inadequacy was spotlighted in a study involving a group of MBA students. Asked to choose between two candidates based on conventional face-to-face interviews, these future managers picked the stronger candidate only 56 percent of the time — hardly a promising statistic.

In an effort to bridge the divide between apparent competence and actual job performance, recruiters are turning to real-world tests that replicate job conditions. Prospective employees are asked to tackle tasks designed to filter out underperformers.

For instance, in the publishing world, budding editorial assistants might be asked to demonstrate their skills by editing a manuscript.

Another strategy employed by companies to bypass this hiring challenge is acqui-hiring: a company acquires a thriving startup and, in the process, hires its founders and team. This approach is favored by tech giants like Google or Facebook who are on the hunt for top-notch engineers and software designers.

Soon, advanced computer reputation screening could offer companies a way to better gauge a prospective hire's potential based on their track record.

This resembles the approach taken by football scouts when recruiting NFL players: A candidate's resume or employment history is dissected and scrutinized in much the same way that NFL scouts evaluate college football careers based on yards covered, tackles made, receptions, and other statistics.

In other words, using this data, machines will sift through applicant lists to identify the ones with standout performance metrics. Consequently, the top performers will become the most sought-after talents in the job market.

Reputation Economy's shakeup: The imminent destabilization of traditional education

While more individuals are pursuing a college degree, businesses struggle to discover applicants with the skills and training pertinent to their industry.

What accounts for this discrepancy? One reason is that the decision to attend college is often driven by the desire to portray oneself as a potential high achiever to prospective employers.

However, mounting data suggests that the conventional, blanket four-year, on-campus model doesn't fit the learning styles of all students. Learning paces vary: some students grasp concepts swiftly; others require more time to master the same content.

Furthermore, a college degree is no longer a reliable gauge of one's skills. Therefore, the Reputation Economy is poised to supplant conventional indicators with new ones that more accurately communicate actual learning.

This shift will fundamentally reshape the way students and job applicants are evaluated. Companies will base decisions on criteria that truly matter, and the central question will be whether the candidate will be a good fit for a specific role in a particular organization.

So what could this alternative system look like? Take the example of mathematician Sal Khan, who started posting math tutorials on YouTube in 2006. His audience rapidly expanded, prompting him to quit his job as a hedge fund analyst and establish his own company. His bold mission? To render obsolete the elite institutions he attended, supplanting a Harvard diploma with an education accessible to anyone, anywhere.

Today, Khan Academy stands as one of the largest non-profit online educational platforms, offering a broad spectrum of content — from biology and economics to art. This model sharply contrasts traditional education: there are no mandatory curriculums or semesters; students can progress at their own pace; and the content is delivered in digestible, fifteen-minute segments instead of lengthy lectures.

As more similar methods gain traction, the learning environment — whether online, in a classroom, or via an apprenticeship — will matter less. As long as the learning is quantifiable and evidences the student's potential to excel in a specific role, they'll be well-equipped to thrive in the emerging Reputation Economy.

A summative snapshot

The fundamental takeaway:

Every digital interaction you partake in today is diligently logged, archived, and dissected to determine your reputation score — a real-time measure used to forecast your behavior. This stands to monumentally impact your professional journey, your entrepreneurial ventures, and every other facet of your life.