Bethany Larsen is a former Director of Development for a Rwandan public health non-profit organization. She signed up for HBX CORe to aid her transition from the non-profit field to social entrepreneurship and to help prepare her for an MBA program.

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Why did you decide to sign up for HBX CORe?

Before HBX CORe, I had no business experience. I graduated in 2013 from a liberal arts school with a BA in Anthropology. I then moved to Kigali, Rwanda to work with a local public health non-profit organization where I spent the next two years. I have always had a passion for international development, but during my time in Rwanda, I felt limited in what I could offer within the foreign aid system.

I began to shift my sights to social entrepreneurship in the hopes of finding the best way to use my skills to create change. I am currently in transition from non-profits to business, so I signed up for CORe because I was looking for a program that would give me the vocabulary and the tools I needed to get started.

What was your favorite part of the program?

The platform was engaging, innovative, and it allowed me to interact with the material in a way that I never expected from an online course. The professors were incredible, and the way they used cases to support their lessons allowed studnets to connect the material to real-world examples that not only aided understanding and retention, but also application.

My favorite part of the program, though, was the peer discussions. I learned so much from asking and answering peer help questions and engaging in debates with other students both on and off the platform. The students in CORe supported me as I learned new concepts and challenged me to question my assumptions about issues like drug pricing and minimum wage. I am truly grateful for their insight and support.

How are you applying what you've learned in CORe?

On a very basic level, I went from having zero accounting knowledge to understanding the language of business, which has been incredibly empowering. I now understand financial statements and can read the Wall Street Journal without using Investopedia every two seconds.

I have also been able to apply CORe directly in the workplace. For example, I do a lot of e-mail marketing in my current position, so I started with A/B marketing after Module 3 in Business Analytics.

"Those skills are all very useful, but I think my biggest takeaway from CORe is a new perspective on complex business challenges. This lens has given me a more balanced perspective on sensitive topics like LIFO reserves, minimum wage, and drug pricing that will make me a more informed citizen and wiser leader."

Any advice for people who will be taking CORe?

First, be prepared for a time commitment. I think there's an assumption with online courses that the material will be less demanding than if it were taught in a regular classroom, and with CORe this is simply not true. The material is challenging, especially for students like me who had no prior business experience. It takes time not only passing through the modules, but also participating in peer discussions, both of which are extremely important for mastering the material.

That said, it is definitely possible to complete the course and participate while juggling a hectic schedule. There were rockstars in my cohort who were running their own businesses and had newborn infants at home yet still managed to complete the course while being active participants. You just need to be honest with yourself about whether or not you are ready to make CORe a priority.

Second, connect! CORe brings together a diverse group of students from a range of countries, ages, and backgrounds that have deeply rich experiences in fields ranging from engineering to non-profits. Take advantage of the opportunity to meet so many great peers! Attend (or organize!) a meetup near you, join the Facebook group, and reach out to as many people as you can. I have met so many people who have challenged and inspired me through CORe, and the experience would not have been the same without them.

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The CORe community consists of a rich and diverse group of learners. Want to learn more about other students who've participated in the program?

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One of the benefits of the HBX online learning platform is the fact that you can complete the coursework from anywhere, as long as you have access to a computer and a steady internet connection. We asked students in the September 2015 HBX CORe cohort to share their favorite study spots.

Participants opened up their laptops to connect with their peers and learn the fundamentals of business in all sorts of interesting places around the globe - in airplanes at 30,000 feet, at local coffee shops, and with their furry friends at home.

HBX brings together a diverse group of students from a range of countries, ages, and backgrounds to learn about business on our interactive online platform. Much to our delight, students have developed a strong sense of community throughout the program, and some have taken it upon themselves to organize in-person meetups in cities like Boston, London, New York, Tokyo, and Kuala Lumpur! 

We asked one of our past participants, Bethany Larsen, to share some tips and advice for anyone planning an in-person meetup:

1) Use Facebook

Create meetups as events on your cohort's Facebook group. It's the easiest place to access the majority of those in your cohort. Even if you aren't "friends" with everyone, anyone who sees the event posted on the HBX group page can opt-in to attend.

2) Send out invitations early

Make sure to tell others in your cohort about the event as soon as possible! Everyone is busy and schedules fill up quickly. Sending out invitations at least three weeks in advance is a good rule of thumb.

3) Choose a central location

Big cities are best, as are places near public transportation. Otherwise, it isn't very likely that enough people will be in the same area and able to meet at a given time.

4) Choose a fun activity

5) Timing is important

Depending on who is in your area, you'll need to be conscious of the time of the meetup. Weekends tend to work better than weekdays with work schedules. Weekend afternoons are also better for anyone traveling for the meetup as attendees have the time to get home not too late.

6) Just do it!

If you want to attend a meetup and don't see one in your area, host one! There really isn't a formula for planning meetups. It seems like all of the meetups in my cohort were thrown together by people who saw there were other students in their area and just wanted to get together.

It's a bit intimidating, but everyone is nice and is probably eager to meet you too. They're just waiting for someone to take the initiative, so be that person!

To see more examples of past meetups, check out our post here!

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I confess - I thought I knew a lot about business. As a commercial lawyer with experience in transactions like M&As and project financing, as well as disputes involving vast sums of money, I felt I understood the "binary code" of business - the contractual mechanism and rules-of-play that seal or sever any commercial relationship.

Surely law was the key component in business, the gateway through which all activity needed to be funnelled if any outcome was to be achieved?

This is why I am grateful I signed up for the HBX CORe program in July 2015, which quickly put me right. The coursework filled in knowledge gaps in areas where I knew I was weak, but also greatly enhanced my understanding of concepts and topics I'd previously felt confident in.

While my legal education put an emphasis on the "how" of business, like how a company takes over another, how a regulator applies a rule or how a plaintiff enforces a right, etc., CORe taught me the "why;" the intuitions that underly any commercial decision before legal ink even hits paper.

And CORe did this by doing exactly what it says, by focusing on the fundamentals. In doing so, it not only gave me new understandings of business but new perspectives on law itself.

The fundamentals of business

I confess, I first expected Economics for Managers to involve bone dry theories and memorization of abstract curves. CORe quickly put those worries to rest. Harvard Business School’s signature case method brought real-world fidelity to each concept, putting us in the shoes of actual managers who struggle with them. One memorable case study demonstrated how a little device called the Kindle could transform an entire industry because of its impact on incumbents’ fixed and variable costs. This overturned my preconceptions on how companies think about and respond to competition, and showed to my surprise that disruptions could be opportunities as much as threats.

Then the revelations crept closer to home. I learned how regulation, that lawyerly domain, is what economists call a market “friction” that companies can exploit in maintaining a competitive advantage over competitors. I also discovered how the spirit of a law like anti-gouging, designed to ensure greater fairness, could produce opposite and sometimes worse outcomes in reality if it ignored basic economics. Law was not necessarily the determinant factor in a company’s considerations, but one of many.

Assets, Liabilities, Equity, Revenue and Expenses. I encounter these fundamental terms daily and, because I advised on legal “liabilities”, or “equity” financings, felt I understood them. Financial Accounting taught me their precise meanings and how they relate to and interact with each other. In the end I saw how financial accounting truly is the “language of business”, fluency in which enables you to gain insights into the present and future performance of any company, regardless of the seeming complexity of its accounts. This is empowerment in the truest sense as accounting principles apply everywhere, whether to your neighborhood corner store or Apple, Inc.

Finally, Business Analytics demystified “big data” and the tools companies use to contextualize information, challenge shibboleths and execute learnings for maximum results. Case again provided its vivid tapestry in demonstrating how everything from Amazon adding a single word on its homepage to Disney deciding a major home entertainment release is driven by data analysis. Most surprisingly, the daunting names of these analytic tools like “hypothesis testing” and “multiple regression” belie remarkably simple fundamentals which trace back to high school mathematics.

As an ex public prosecutor, I discovered that a trial is essentially a hypothesis test. The burden of proof (“reasonable doubt” in criminal cases) is the confidence interval of this test, which if decreased makes a false positive (a mistaken guilty verdict) more likely but if increased makes a false negative (mistaken not-guilty verdict) more likely. The same logic used in a court of law applies equally in the decision making of the world’s most successful companies.

Each time I sat down with CORe I encountered “Aha!” moments like these which showed me how much I had yet to learn about the world of business. Simultaneously, I was humbled by new insights into the role law plays within this world.  

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Want to hone your business skills to help you advance in your career and feel more confident contributing to conversations about finance, economics, and business analytics?

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Holden Gibbons is a veteran of the war in Afghanistan who returned home with a commitment to social change. He enrolled in the June 2015 HBX CORe cohort to realize his entrepreneurial ambitions and gain a strong business skillset. 

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What prompted you to sign up for CORe?

I am the quintessential entrepreneur whose creativity and ambition is boundless. Yet I lacked some of the (no pun intended) core competencies to be able to bring my ideas to fruition. My first tech start-up failed in 2008 due to lack of financial and managerial discipline, and I joined the Army to be able to afford to go back to school and realign myself.

I told myself that before I would try to start another non-traditional business, I would do myself a favor and seek an educational foundation to allow me to understand, and converse, with the more corporate/fundamental side of the business world, on their terms. When I heard about CORe, I knew I had found the right program.

What was your favorite part of the program?

My favorite aspect, by far, was the truly astounding variety of students that HBX drew together for our cohort. I have met several of them in person, often resulting in significant gains for me intellectually and personally. I really cannot underscore the ability of HBX to use the power of the Harvard brand to bring together a truly impressive mix of individuals, who are motivated to impact the world around them, in a myriad of ways. Even though our cohort is all wrapped up, I am still meeting people, or deepening my connection with them, via social media and personal interactions.

How are you applying the skills you learned in CORe?

As a recent Honorably Discharged Veteran of the war in Afghanistan, I am working feverishly to use my life experience, and intellect, to create a more empathetic and sustainable world. To that end, I am currently completing my undergraduate education on the Post 9/11 GI Bill.

I am working with my University at the highest levels to increase Veteran enrollment, as well as catalyzing the Veteran community to better understand progressive issues that could use authentic Veteran support such as gender equality, civil rights (on many dimensions), financial reform, and access to quality education and employment.

CORe has helped me make the business case for one of my main initiatives, Veterans Combating Child Hunger, which utilizes volunteer labor to sustainably farm vacant and delinquent land in Cuyahoga County (Cleveland, OH) for the purpose of engaging more stakeholders in the community, reducing government budget waste, reducing society's carbon footprint as it relates to food supply, and reducing government food subsidy reliance by replacing it, slowly, with locally scaled/owned/operated/sourced food.

I have utilized all three courses taught in CORe to make the case, from Opportunity Cost (Economics for Managers), Ethics/concept of a “going concern” (Financial Accounting), to being able to identify and quantify hidden/significant variables via regression analysis (Business Analytics). We are now one week from our inaugural harvest, which will go to benefit the Ronald McDonald House of Cleveland!

Recently, I have begun work on my first post-Army tech startup. My ability to not only have an amazing concept, but make the business case for it to potential Venture Capital/early stage investors, would not be holistic were it not for my newfound knowledge base, thanks to CORe.

I won’t pretend to be a perfect student, but since our cohort has finished, I have found myself continuously referencing my notes and ‘take away bundle’ to reaffirm my understanding of a concept, such that I can properly utilize it for my real world activities.

"CORe has been my Rosetta Stone in helping me to translate my ideas and visions for the world around me into empirical reality.“

KarmaBoard.com, a jobs board/social media platform that connects businesses/employees/customers that share the same values, (and mobile app versions) will be launching in Spring/Summer of 2016, and CORe helped me communicate effectively with stakeholders necessary to make that happen. In the Army, as a member of the Infantry we had a saying, “jack of all trades, master of none.” With the help of CORe, you can be a “jack-of-all-trades,” and the master of your own trajectory.

Any advice for people who will be taking CORe?

I have two suggestions: First, try to look at the course syllabus beforehand and try (your best) to set aside appropriate time to be able to digest material, and be able to interact with others in the discussion tabs, complete the modules/weekly assignments thoughtfully. It is important to offer help to those who might not be as quick as you, for you may be in the same boat down the line! This will also help save you undue stress as technical issues and last minute time crunches will inevitably crop up.

Second, reach out to as many people, from as many different backgrounds, as possible. Often times, “birds of a feather flock together,” holds true, but that would strip CORe of one of its primary features: the diversity of your fellow cohort members. I shamelessly ‘added’ everyone in my cohort on social media, and don’t regret it, at all. I have been challenged, supported, and enriched by all of them, and I know this will only continue as I maintain and grow these personal relationships.

 

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The CORe community consists of a rich and diverse group of learners. Want to learn more about other students who've participated in the program?

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When you tell your friends that you’ve signed up for an accounting class, you’ll likely get a reaction that sounds something like this: "Ugh, why?" Or, perhaps they will be slightly more sympathetic and say, "Oh, sorry to hear that."

Accounting gets a bad rap, but it's an incredibly useful subject to learn. Plus, it's not as complicated as you might think! Hear me out - here are four reasons why everyone can benefit from understanding basic accounting.

1) So you don’t get ripped off!

Buying a car is a big investment. It can be overwhelming to try to negotiate a better price, so why not walk in with confidence, knowing you understand how a business like a car dealership is run and the ways you can get a better deal? If you’ve had an introduction to accounting, you’ll know that the car you’re about to buy is on the car dealer’s balance sheet as inventory. You’ll also know that in order to keep the car dealership operating, they must make a profit on the car (you can still talk ’em down; they don’t need that much profit).

Once you drive away, the car is taken out of the dealer’s inventory and payment received (cash or loan), as well as profit are recorded. You also know that most dealerships work on a monthly sales cycle and have quotas for the amount of inventory they need to turn over in the given time period. With this understanding, you can walk in at the end of the month, explain what you’re looking for, provide comps on similar cars at other dealerships, and walk out with a better price on your dream car (and probably the respect of the salesperson).  

2) So you aren't intimidated by your own finances.

Be honest, can you explain where all of your money goes after your paycheck gets deposited? Even if you’ve managed to find a job that pays the bills (collective sigh of relief from all of the parents out there), it can seem impossible to set aside money for savings each month. With some accounting knowledge under your belt, you will gain a much deeper understanding of what goes on with your own finances and learn important skills like how to effectively track expenses and work within a budget. 

Many people use the excuse that they are "no good at math" to explain their reluctance to study accounting, but the math actually involved is quite basic. If you can add and subtract, multiply and divide, you are set! With your new savings savvy, maybe you can save up enough to send your parents on a cruise as a thank you for the many years they supplemented your meager earnings!

3) So you can make better sense of current events.

There is no shortage of scandal in the accounting world. You’d be hard-pressed to turn on the news and not hear about a recent manipulation of numbers that has caused thousands of people to lose their shirts. Just like any industry, there will always be people who play by the rules and people who don’t. Why trust the media to fully explain what happened in an unbiased way? With a basic understanding of accounting, you can understand what these companies have done wrong and why it matters. You can even explain it to your friends and sound really smart at cocktail parties!

4) So you can impress your boss.

Picture this: You’re in a staff meeting and the CFO wants to discuss the past quarter’s financials. If you’ve had an introduction to accounting, you’ll not only be able to understand what the CFO is talking about, but you’ll also be able to chime in with your own financial wisdom and impress not only the CFO, but also your supervisor and all of your coworkers who are nodding their heads blindly and hoping no one calls on them.

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Want to learn the language of business and develop an essential understanding of financial accounting, business analytics, and economics for managers? You may be interested in HBX CORe, an interactive online program from Harvard Business School! 

 

Who’s the most hated man in America? Well, if you’ve glanced at social media over the past day or two, the resounding answer seems to be Martin Shkreli.

Shkreli is CEO of Turing Pharmaceuticals, a US firm that acquired rights to Daraprim—a drug that treats toxoplasmosis, a parasitic affliction of many AIDS patients—back in August. Since then, the company has decided to raise the price of Daraprim from $13.50 per dose to $750.00 per dose—a price increase of over 5,000 percent! The pill costs about $1.00 to produce.

This 62-year-old drug just got 5,000% more expensive http://t.co/YVlHDRNAlu pic.twitter.com/pxbF1zWqHt

— Fortune (@FortuneMagazine) September 22, 2015

A former hedge fund manager, Shkreli originally defended his firm’s decision on the basis of profit considerations. So, is Martin Shkreli an evil guy, attempting to make a profit off of sick people that need his product? Maybe. But it’s more likely he just let monopoly power go to his head…

The backlash against the firm brings the idea of monopoly pricing out into the open. The decision of where to price a product is one of the toughest that a firm has to make. For a pharmaceutical company with complete pricing power over its product, it’s usually even more challenging. Aside from the production cost of pills, a drug company must also think about numerous other factors, such as pricing to recover the costs of research and development (R&D), patient willingness to pay, whether government insurance will pay a higher price, and others.

However, one factor that all companies must consider when deciding on a price is equity—is this a fair price to charge for a product that people need? Where Shkreli got it wrong is in severely underestimating fairness considerations when deciding where to price. And because he only focused on profits, he’s paying for it.

Here's why Turing Pharmaceuticals says 5,000% price bump is necessary http://t.co/RAhefQlvKH

— Fortune (@FortuneMagazine) September 23, 2015

Read more about the controversy:

• US pharmaceutical company defends 5,000% price increase via the BBC
• CEO: 5,000-percent drug price hike "not excessive at all" via CBS News
• A pharma CEO tried to defend his decision to jack up the price of a critical drug by 5,000% - and it backfired via Business Insider
• Jump in Price for an Old Drug Will Be Rolled Back, C.E.O. Shkreli Says via the New York Times
• US drug company to cut 5,000% price rise after backlash via The BBC

There’s an old, near-funny joke about economists that goes something like this:

A physicist, a chemist and an economist are stranded on a desert island, with no food to eat. A can of soup washes ashore, but it’s sealed. So each professional ponders how to get it open…

“I’ve got it. Let’s smash the can open with a rock,” exclaims the physicist.

“No, no. The soup will splatter that way,” says the chemist. “Let’s build a fire and heat the can first.”

“You’re both wrong,” retorts the economist. “Let’s assume we have a can opener….”

The joke is corny at best. It may have even gone over your head. My apologies.

But the stereotypes in the joke are spot on, especially for the economist. One of the biggest gripes that people have with economists (and economics as a whole) is that the models that they build to represent the world often require unrealistic or even impossible assumptions in order to get results. What’s the point of building models that do not accurately represent reality?

One of the most cited examples of wishful thinking in economics is the model of perfect competition. Those of you that took Econ 101 in undergrad are (or at some point were) probably familiar with this idealist representation of how economic markets distribute goods and services. In short, perfect competition is a market condition in which no market participants (buyers, sellers, etc.) are powerful enough to set the price of a homogenous good or service.

Economists expect markets to be perfectly competitive when the following conditions hold:

1. Products are identical: sellers offer the exact same product and buyers are equally willing to buy from any seller.
2. Many small price-taking participants: there are numerous buyers and sellers, none of which has the ability to influence the market price substantially, and no single firm or consumer accounts for a large portion of production or purchases.
3. Perfect information: Buyers and sellers are fully informed about the quality of products and prices available in the market.
4. Identical sellers: suppliers have full access to the same inputs and production technologies as one another.
5. Free entry and exit: many new firms can enter the market on the very same terms as existing ones if the market is profitable and, similarly, firms can exit the industry without incurring extra costs.

Can you think of a market that satisfies these conditions? I certainly can’t… I myself used to be baffled at how strict its assumptions were. Models are supposed to be an accurate representation of reality, and this one certainly is not.

Conditions 1-3 above generate the equilibrium of a theoretical market. Firms will earn a profit at the market equilibrium if the market-clearing price is greater than the firms’ average total cost. But the presence of profits will entice more firms to enter, driving up production and pushing down prices until such competition and entry completely destroy profits. Products, prices, firms and consumers are all the same, so no one company can do anything about it. Perfect competition prevails leaving no profit.

Conditions 4-5 eliminate many of the market frictions experienced by real-world companies trying to enter or exit an industry. With all firms equally efficient and free to come and go as they please, competition is as intense as one can imagine. Since firms can leave, so no businesses make losses but none make money either. They simply break even. In this environment, one starts to question what’s so “perfect” about this form of competition. From a manager’s point of view, it’s hard to think of anything so far from ideal…

But when you look at it that way, I hope a lightbulb goes off for you. True, perfect competition is not a very useful model with which to classify modern industries today. But it’s a darn good one for a strategist to measure his or her firm against to see why and how their profit-making enterprises differ. To be clear, perfect competition is significant not because it is common (there are few to none of such markets in real life). Its real importance lies in the observation that departures from perfect competition are what underlie high profits and firms’ competitive advantages.

And for each departure from one of the model’s condition, firms have a chance to exploit attractive profit opportunities:

1. Differentiated Products: in actuality, not all products are exactly the same, and thus some firms have the power to charge premiums for better quality or target different customer segments. A firm’s ability to create value for a customer through a differentiated product or service yields profits for the firm by being able to charge a higher price.
2. Few, Price-Making Participants: actual markets are often dominated by a handful of powerful buyers or sellers that have substantial market power to move prices (the most extreme case being a monopoly who is the sole seller to a large number of buyers).
3. Imperfect Information: in the real world, market information is far from readily available and buyers must spend time searching out reliable information. Buyers are often short on time and make decisions using cognitive shortcuts, not taking all information into account. So firms that can create customer loyalty will benefit greatly.
4. Unique Sellers: some firms will ultimately have unequal access to production technologies and different input costs, making their overall costs structures very different. Firms with superior access to technology and cheap supplies can generate high profits even when the marginal firm earns no profits.
5. Barriers to Entry and Exit: in reality, incumbent firms have certain advantages, such as prior experience, lower production costs, and others, that entrants cannot easily mimic, which discourages free entry into the industry. Similarly, exit costs may be substantially high, forcing loss-making firms to stay in the industry.

The sources of advantage above are by no means the only ones available to a firm, but encapsulate useful forces to think about when planning your firm’s strategy. Use them wisely and your firm will profit.

As I’ve argued before, economics is far from perfect and at times a bit idealistic. Models, like the theory of perfect competition, do not depict the state of affairs particularly well. Nonetheless, it’s sometimes the holes in economists’ models that provide the food for thought that can lead to a lasting business strategy or new innovation that changes an industry.

In the digital age, businesses have access to extensive information about their customers. This information can help businesses personalize offerings and reach consumers in a way that reflects their individuality. Advances in analytics make it easier to combine information about things like preferences, shopping patterns, and sensitivity to price into useful templates for suggesting products. This seems like a win-win for both marketers, who can identify those who are most likely to want their products, and end users, who receive communications tailored specifically to them.

However, privacy is a major issue when it comes to using customer data. As more and more people share information online and breaches become more common, the importance of protecting individuals’ identity has grown. Despite trying to preserve the privacy of their customers, companies sometimes run into problems when using customer data in their marketing and advertising.

Protecting Customer Privacy is Paramount

In October 2006, Netflix offered $1,000,000 dollars to any individual or group who could figure out a way to improve its DVD recommendations to subscribers by 10% or more. It released historical data from hundreds of thousands of users (with identifying information removed) about the grades they’d given to various movies.

Although they stripped names and ID numbers from the data, many Netflix customers also used other ratings sites, such as IMDB. Comparing ratings on IMDB with those in the shared Netflix database allowed researchers to accurately determine the user’s identity. This ultimately led to an expensive legal settlement, and Netflix never implemented the winning algorithm.

It was later found that Netflix could have invested in data masking technology to avoid the issues with anonomizing the customer data. This would've cost about $50,000, a tiny amount compared to their expensive legal settlement.

Want to read more?

• Wired: Netflix Spilled Your Brokeback Mountain Secret, Lawsuit Claims
• Forbes: Netflix Settles Privacy Lawsuit, Cancels Prize Sequel

Content That's Too Targeted Can Miss the Mark

In 2010, Target implemented a new algorithm looking at changes in customers’ buying habits to identify women who were newly pregnant. Target was able to reach out to these women and offer them products that would be useful to them. Because pregnancy and its associated changes happen quickly, a rapid algorithm was valuable.

However, the company found itself in the middle of a scandal when it sent ads for baby products to a teenage girl living with her parents, whom she had not yet told about her condition. This story exploded over the news and social media.

How Target figured out that a teenage girl was pregnant before her father did: http://t.co/bcGYQ0CHfi #forbesgreatesthits

— Forbes (@Forbes) May 26, 2013

Target has since eased up on its direct marketing and now includes products of interest to a wider audience along with any targeted promotions to avoid similar situations in the future.

Allow Users to Opt In

On Black Friday in 2011, two malls used a new mobile technology to track shoppers as they moved through the mall, allowing them to send location-specific alerts to customer’s phones. In addition to helping marketers target the right people, monitoring the flow of shoppers through the mall would help stores determine how to staff during the busy holiday season. Unfortunately, this was done without the knowledge or consent of shoppers.

Not only were mall visitors upset about marketers’ use of their phone, but Senator Chuck Schumer (D-NY) denounced the practice at a press conference. Both malls cancelled the program, which was intended to run though New Year, within a week.

Get ready to get stalked: Malls track shoppers' cell phones on Black Friday http://t.co/vkgmk7GH

— CNNTech Gadgets (@CNNTechGadgets) November 22, 2011

This example highlights the importance of allowing customers to opt-in and voluntarily provide their data to preserve their right to privacy. Rather than technology that collects data from any mall visitor who hasn’t turned off their phone, some stores are now using a similar technology, but only with customers who choose to install an app on their phone.

Key Takeaways

Customer data is a powerful tool that companies can harness to inform every facet of their business. But as the saying goes, with great knowledge comes great responsibility.

Companies must do everything they can to preserve customers' privacy, keep them informed of how their data is being used, provide consumers with options to opt in or out, and walk the fine line between serving up relevant, targeted content and turning into Big Brother.

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How long are you willing to wait in line for a meal at your favorite restaurant? Would you be willing to pay $30 to skip the line? How about $10?

Most people wouldn’t feel comfortable slipping money to a maître d’ at a restaurant to jump the queue, but a new app is testing whether patrons would be willing to donate the same amount of money to charity in order to be seated faster.

CharityWait is a feature from the restaurant hosting service app SmartLine that sets aside a few tables each night at restaurants that are designated “CharityWait tables”, making them available to parties who donate on a first-come, first-served basis. This way, not only can patrons avoid the wait, but there is also a reduced social stigma against paying to jump the line since the money goes to charity.

This strategy of allocating tables based on price, instead of the more typical restaurant seating model where tables are allocated through a queue system, is an interesting concept. In this scenario, all customers who are willing to wait in line will eventually get a table. However, customers who are willing to pay the fee will get seated faster.

This new app lets you skip to the front of the line at your favorite restaurant: http://t.co/08uCKw2gbc pic.twitter.com/7uXl7rKSkr

— Eater (@Eater) August 1, 2015

It may be too early to say if this two-pronged approach will be a success in the restaurant industry, but other businesses have used it with good results. Take, for instance, Disneyland. You can pay the standard admission price and get access to all the park’s attractions. However, in order to experience everything, you’d have to stand in lines - lots of lines. But, by paying extra for Disney FASTPASS Service, you can bypass the queue and greatly reduce your wait time between rides.

Pricing allocation isn’t always popular, though. A good example is Uber, the car service app that connects users and drivers with the touch of a button. It is often praised by its users as a cheaper, more convenient alternative to taxis, but frequently draws criticism for its use of surge pricing. This practice incentivizes more drivers to come online and pick up fares when demand for rides is at its highest, like during rush hour, a blizzard, or after a sporting event gets out, by raising ride prices exponentially.  

Uber introduced surge pricing during the Sydney hostage siege, then quickly backtracked http://t.co/NcaBxgSbzm

— Mashable (@mashable) December 16, 2014

Despite its clear purpose and seemingly sound economic model, this form of price allocation tends to leave a bad taste in peoples’ mouths. But what if Uber didn’t gouge prices and supply was kept constant in the face of increased demand? The users willing to pay for faster service would still be left waiting in the queue.

What do you think – will CharityWait do for the restaurant industry what the FASTPASS did for Disneyland? Or will it be like Uber and face allegations of price gouging?

 

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