Last week, Professor Shoshana Zuboff, and Jim Maxmin were in London for the UK launch of their book, The Support Economy. As you’ll know from our review, Why corporations are failing individuals, we think the book has something important to say. An equally significant book, by English author Alan Mitchell, Right Side Up: Building Brands in the Age of the Organised Consumer is on a closely-related topic, so we thought it would be interesting to put all three authors together over a breakfast of scrambled eggs, smoked salmon, tea and toast, to try and develop a vision of the future that they could all subscribe to, and that’s the subject of this week’s editorial.
Before elaborating that vision, can I make some disclaimers? Firstly, although the authors stimulated the thoughts that led to this article, they have not reviewed or agreed to it. In other words, I take no credit for the ideas in this article, but all responsibility for it. Secondly, everyone around the table agreed, that whilst the analysis of the issues may be clear, the future is uncertain. There are pointers to the direction we are headed, but the future is bound to be different from what we expect. My final disclaimer – it is not possible in the space of articles such as these to go into the detail of the argument. Where possible, I’ve provided reference to relevant articles on the CRM-Forum and elsewhere, and you can also get a much more detailed understanding from the books. Read them.
Both books suggest that we are headed for a discontinuous change in the way organisations interact with individuals, moving to what Zuboff and Maxmin call ‘distributed capitalism’ and what Mitchell calls ‘buyer-centricity’ – in my view, two perspectives of the same phenomenon.
Zuboff and Maxmin believe that such discontinuous changes have occurred in the past – for example, the invention of ‘proprietorial capitalism’ by Josiah Wedgwood and the introduction of ‘managerial capitalism’ by Henry Ford and General Motors in the early twentieth century. Such changes happen, they believe, only when three factors are present: when new markets emerge; when technology enables new approaches; and when a new ‘enterprise logic’ is invented which enables organisations to take advantage of the new technology to address the new markets. I have used those three headings as the structure for the rest of this article.
• The emergence of new markets
For some time now, there has been increasing evidence that individuals’ behaviour is changing. The Centre for Customer Strategy in Australia has pointed to the emergence of the ‘Individual Consumer or I-con’ (see slides 9-11 of Incorporating the customer’s needs into your CRM programme). Prism Services’ Buyer-Centric Markets Survey 2002 Summary and Recommendations outlines how UK companies think buyer behaviour is changing, and how they are responding to those changes. The British Life and Internet Project, with their surveys of UK use of the internet, have shown how the Internet is reducing the effectiveness of conventional marketing channels (see Internet reduces marketing effectiveness), and changing trust in, and usage of, conventional news channels (see Which channels were trusted for news of the Iraq war). However, The Support Economy provides the most detailed analysis of the sociological changes in Western individual behaviour, with the first 140 pages being devoted to a detailed analysis of the topic, significantly enriching our understanding.
Zuboff and Maxmin summarise these changes in behaviour as three key individual aspirations: sanctuary (where I can own my choices, control my time, and shape the quality of my experience); voice (with which I can express my uniqueness and self-worth); and connection (seeking out trusted others who can provide the support necessary to fulfil the needs associated with sanctuary and voice). We have highlighted, in a recent editorial ‘Why Marketing isn’t working any more’, the frustrations that current marketing practices can generate for us all. The authors contend that we are shifting the structure of consumption towards ‘the individuation of consumption’, with requirements for deep support from our suppliers.
One further point about these new individuals. We tend to think of markets as being about consumption. But most individuals are both consumers and producers. They consume, and they have jobs. Their discontent, their search for new approaches, applies equally to their roles as producers, in their jobs, as to their role as consumer.
• The emergence of new technology
The new technologies that impact this marketplace are numerous: the maturation of the telephony and other communications industries and the maturation of the travel industry, particularly airlines, has led us to be in constant contact with each other in a shrinking world. However, three technologies stand out as having a significant impact on individuals and their relationships with organisations.
Firstly, the Internet, which provides the standard protocols to allow any computer to connect to any other with relative ease. Secondly, the bundle of technologies that go under the label of CRM: from contact center technologies, to contact management software; data warehousing and data mining; and new marketing systems. The function of all these technologies in CRM is to support the automation of the processes that cross the organisational boundaries from organisation to individual. Thirdly, as busy as those working on CRM, a number of other professionals have been equally busy implementing supply chain management systems that automate the processes between organisations and their suppliers.
The focus of CRM and supply chain management implementations has been to deliver benefit from the existing ways of interacting between customers, organisations, and their suppliers. However, that infrastructure will also support new types of interaction, and so to support new business models, or even a new form of capitalism.
• The emerging enterprise logic:
The enterprise logic we are familiar with, that invented by Henry Ford and General Motors and refined by generations of managers, and labeled ‘managerial capitalism’, can be summarised as ‘How do we produce goods for customers at lowest cost?’. This approach has been extraordinarily effective in the twentieth century at producing a cornucopia of physical goods for nearly all in Western societies. To achieve that, it has had to focus inwardly on the organisation’s internal processes, rather than outwardly at its customers. Whilst highly successful at replicating the same goods at low cost, it has been highly unsuccessful at dealing with customers, or providing high-quality customer service, areas which are not high-volume repetitive tasks performed efficiently, but dealing with individual situations effectively.
Internally, the focus on repetitive, efficient tasks, has reduced, for many people, the satisfaction of their work. From highly-trained doctors as front-office clerks directing people to the appropriate part of the health system, to a call center operator taking a non-stop series of telephone calls, the deskilling of work removes satisfaction.
Maxmin, Mitchell, and Zuboff propose that a radically different enterprise model can be supported by the new technologies, and is being demanded by the new individuals. The only issue is how existing corporations can adapt to that new enterprise model.
That new enterprise logic might be summed up as, ‘How can we most help the individual, the buyer, the customer?’. If we take that objective seriously, it may lead to a complete re-evaluation of how we do business. Alan Mitchell provides three examples of how companies are moving in this direction:
• A recent study (of which we hope to publish details shortly) estimates that, if we examine what most corporations do, and look for those processes that add value to the individual/buyer/customer, we will find that 95% or more of the efforts of the corporation do not. How, for example, does the accounts department, or a warehouse add value to the customer? If they don’t, then aren’t there ways of getting rid of that cost? Couldn’t many organisations, for example, share accounts processes across the internet, and by sharing, reduce significantly the costs of accounting? Can’t just-in-time delivery systems reduce the need for warehousing, with similar cost-savings? Lean systems are also green systems, though there is the risk that removing slack removes resilience.
• In South Korea, a retailer is incorporating community facilities into their retail outlets. For example, a crèche is provided for mothers whilst visiting the store; the cancer support group also has a presence at the store. The rationale is still ‘How can we best help the customer?’, but this time not cutting out cost, but providing added-value services to the customer. It is interesting that this is happening in an emerging economy, rather than in a fully-developed Western economy. An leap-frog opportunity, perhaps? Again, we hope to publish a case study on this.
• The solutions individuals want for many of their problems (for example Internet access) now require components from multiple suppliers. Isn’t there a need for these suppliers to federate in order to provide a complete, seamless solution to the individual, and don’t we need a new kind of customer service person, on the side of the individual, supporting them with these types of problem?
In this brave new world, all processes (manufacturing and administrative) that can be automated have been automated. People are left to provide the human services to each other that only human beings can provide. Information processes which don’t add value to the individual (accounting, M.I., etc), can be shared across the Internet, fitted no doubt, with communications pipes with much broader bandwidth. Physical distribution of goods cannot be shared so efficiently, because of the physical costs of distributing stuff. Major retailers are already driving moves towards regionalised manufacture and distribution.
With the growing trend of individuals, in search of sanctuary, to leave the large cities and move to the country, could we see the emergence of local small-scale communities, in the main supporting themselves for physical goods and services, but inter-connected by the internet for informational services? Could this lead to the emergence of a host of new forms of supplier-networks (transaction networks; community networks; and integrated solutions networks, etc), helping the individual to achieve their life ambitions? Access to those services is likely to be provided through local agents, knowing and understanding the individuals’ needs well, and helping them meet them.
Maxmin, Mitchell, and Zuboff all agree that the key to realising this sort of scenario is for organisations to recognise that the source of all value is the individual. This will lead to the replacement of the narcissistic inward approach of existing organisations by an outward focus on their customers.
This vision is a fairly radical transformation of the existing economic system, and if you’re interested in getting a detailed understanding of it, you need to read the two books, The Support Economy and Right Side Up: Building Brands in the Age of the Organised Consumer.
All three authors are insistent on the provisional view of their vision. For me, their vision, raises three key issues that need to be thought through:
One can see the potential attraction of the vision for what one might call the developed Western economies. However, those economies are increasingly dependent on other parts of the world, who still have needs further down Maslov’s hierarchy of needs. China is becoming the workshop of the world. India is providing a similar role in IT and contact centers. If we add the problems of poverty elsewhere, including Africa and parts of South America, don’t the large majority of human beings still need to have their primary needs addressed, and won’t that make it harder to adopt this new vision?
• Environmental Concerns:
These needs are also likely to raise environmental concerns. There seems to be increasing consensus that, for example, the use of cars by the .5 billion people in Europe and North America over the last 50 years, has caused serious environmental strain on the planet. Do we seriously think it can cope with 4 billion cars, and washing machines, and refrigerators, etc., etc.? Mitchell points out that there is huge waste in the existing economic environment, and that a lean economic environment releases significant energy for developing economies, and one can see some potential, but one cannot help but feel that we all need to consume less.
Those concerns lead on to a yet broader issue. Do material goods help to make us happy, or better, provide meaning in our life? Do we consume to live, or live to consume?
These are important issues, and no doubt there are many more. They need to be debated. Here in the UK, the Buyer-centric commerce forum has already opened up a debate. In the US, Zuboff and Maxmin already have their own web-site The Support Economy, and are astonished by the number of discussion groups which are springing up all over the place to discuss the issues.
As a result of our breakfast meeting, we have agreed to collaborate on pushing forward the debate. Here on the CRM-Forum, we hope to find room for a number of features to stimulate that debate, including: a directory of people and organisations working on various aspects of the problem; regular publication of documents and articles on these issues; and of course, discussion groups to encourage interactive debate. We hope you’ll join in.
As always we’d like to hear your comments now. Make them below or email me at [email protected]