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An Interview with Shoshana Zuboff and James Maxmin

Written By: Ann Grackin
Published On: November 2 2004

Introduction

I recently talked to Shoshana Zuboff[1] of the Harvard Business School and James Maxmin[2] of Mast Global, co-authors of The Support Economy: Why Corporations are Failing Individuals and The Next Episode of Capitalism and who also happen to be married to each other. I can imagine their dinner conversations!

Shoshana Zuboff James Maxmin

This book aroused my ire and also inspired me. Ire, not very latent, as a consumer who has been forced into a very broken and dissatisfying self-service model. (Really! Am I a travel agent? Do I want to be a travel agent?). Also, inspiration and a light opening to the many firms out there that seem to be psychologically crushed by the Wal-Mart effect—a sense of being devalued as a supplier.

OK, that is a bit of a stream of consciousness, but bear with us in this interview and all will be revealed. Also, get the book—it's worth reading!


[1] Dr. Shoshana Zuboff is the Charles Edward Wilson Professor of Business Administration and Chair Professor of the ODYSSEY program

[2] Mr. Maxmin is with the Monitor Group and was CEO of Volvo UK and previously Laura Ashley PLC (for you fashion mavens!)

Interview

Ann: First, can you tell us a bit about yourselves? Why did you decide to write this book—what was the germination/catalyst?

Shoshana: Going back a few years to the early 90s, when I wrote In the Age of the Smart Machine[3], people thought it was so radical.

The first talk I gave, people tried to shout me down and called it subversive; but it did not take long, with good reviews. The book went from radical to classic. This gave me a wider opportunity to work inside companies[4]. After several years of these consulting experiences, as well as teaching at Harvard, I confronted the fact that what I had believed about the enterprise was not true—that it was rational and adaptive and could fix itself. I stopped my public work to revisit the fundamentals of our field.

Jim: In my career I was a turn-around specialist, taking companies from the bottom and making them average. I felt we were missing things—failing customers and employees. Though I had very successful work at Laura Ashley (Volvo, etc.)[5] ; we did make many innovative changes. But I still felt—why did we fall short? What did we do wrong?

I left the corporate world and reflected; I saw all those books preaching their ten steps programs'; there are more and more books being published with this approach—the ten steppers—but things are getting worse.

Ann: As a consumer, I am over the top frustrated by how devalued' I feel—not only I have to wade through poorly constructed web sites to buy things, I feel I should have some friendly serviceable person helping me, and all the while they are actually obstructing their own goals, for the customer to do the buying' with pop-up ads and notices we are uninterested in. For example: Orbitz or Expedia. There are many examples—not real customer support! These firms are failing their customers.

S/J: Because people's needs are more complex than a transaction! Those needs come from individual space not corporate space. The corporate business model was created over one hundred years ago and it was very successful at what it was designed to do— (create a vehicle to create and deliver the goods). That worked when people had no access to goods. But people have changed.

Ann: Briefly, what was the key overriding idea you were trying to advocate in the book?

S/J: First, we have to talk about the concept of inversion. People's needs are not defined by a predefined product or service. People want help to live their lives the way they want to. But for companies to understand this, they have to get out of organizational space and get into individual space.

Ann: Now, that is an irony, since the concept of multi-channel services was to provide customer intimacy, it has actually done the opposite. Instead of more hands to help' or a have it your way' (web, catalogue, store, etc.), there is less care for customers in many industries. Absent is what you call in the book deep support.

S/J: Deep support has to be based on a new definition of the enterprise—an (organization) that can ask: Who are you? What do you need? How can I help? Thinking about this creates a new way to do business—outside the corporate predefined, canned definition of how the enterprise defines itself—a fixed model of what it wants to sell and distribute. In order to do this, several principles need to be understood

  • The Distributed imperative: value is distributed in individual space—value is in the hands of the customer.

  • The Support imperative: from what the service provider has, to what the customer wants.

  • The Collaborative imperative: who the constellation of partners and allies are who share my values (trust, etc.) that allow the federation to support the individual's needs.

Since we are talking about individual needs, a different configuration may exist for another individual or customer. There is a limitation of capacity and effectiveness within an individual company, so the collaborative or federated model needs to be applied to meet these individual needs. Through collaboration we create new institutions supporting distributed unions.

Ann: This means IT has to change too—static models cannot reconfigure the value chain or structure to gain the information or knowledge needed to service each customer as you define.

Jim: That's right. Of course, the technology infrastructure that is being deployed across the world supports this concept. Technologies like broadband or wireless are instrumental. They integrate the federations. Along with that, what is critical—essential—is that this infrastructure is based on standards that allow the federations to come together dynamically.

Ann: In the outsource model, supply chains are being designed with similar rigidity as the central enterprise. Do you think in the zeal to outsource, firms have focused too much on the economic models, versus the revenue realizing capabilities of the process? I try to encourage my customers to focus on growth through differentiation and innovation and they always say things like: "Oh, that is too hard to measure." So we want to work on this part (closing a plant, outsourcing, cutting inventory, etc.), instead of enriching their differentiation and value in the market. It can't all be about price!

S/J: We call this commodity hell. There is a bottom. There is only so far you can go in cutting costs. This model does not work for companies. When there is no margin left, they sometimes create dubious revenue recognition models (insurance firms, Enron, etc.) to pump up the old model. In commodity hell, you have essentially backed again into an organization space—organizational narcissism.

Support is more about the relationship—it's not just the toaster. That's not enough for the customer. And it's not enough for the firms either. They no longer generate enough margins. If it doesn't work for me (the customer), then ultimately it won't work for you (the service/product provider), because I won't pay. Fractured relationships mean no pay.

Another point is that we are not talking about taking costs out—it's not about benchmarks. Benchmarking is not the answer. It's not about me versus other companies—it's about you and me (provider and customer).

Ann: OK, I want to make a shift here. The New Enterprise Logic section of the book Can you briefly explain the premises here?

S/J: When we were writing this book, we said to each other, you know, what we are talking about is capitalism! The new enterprise logic is about collaboration. It is also about a distributed digital economy where things are done once. Today you pay (the supply chain) to do the same task over and over. The new logic creates the digital structure so that the federation does the task once. When the customer pays, then everyone in the federation is paid.

You see, we are also talking about the concept of cash here. The eco system does not get paid until the customer is satisfied—no contracts—and value is distributed to the customer. This aligns the supply chain and the customer and advocacy versus adversarial relationships.

Ann: Advocacy—I like the concepts in Relationship Economics'—this gets to the very heart (and pain) of many businesses in the Wal-Martization economy. I think Wal-Mart is not just about price' but the very concept of value. If firms don't create an environment of what you call mutually beneficial reciprocities' in which value is defined not only in end-customer terms, but a mutually thriving eco system—well it looks pretty bleak.

Your model is very forward looking. Since a great deal of our audience are supply chain people, can you talk about the relationship economics?

S/J: Here, too, we are talking about the concept of cash. Think about this. With transparency (we get paid once to do things once, etc.), today's customer is still paying for the same action being done over and over by many enterprises.

Here, too, the customer pays when satisfied—pays the network; everyone is paid at the same time.

And how this works is that enterprises are federated. Provider services are bundled. The supply chain is the entry point; products and services are in the larger context of relationships.

For example. We can bring broadband to the home and learn about the customer's needs, and service those needs through technologies that serve the individual. Seniors, for example, can have on-line paying systems, systems that remind them to take their medications, or sensing systems that make sure that they are still OK.

Other models include banking and financial services. The point is to begin to think about these ideas. And we are working with some pioneering leaders who will pilot these ideas to create new business concepts. There are no ten step programs—no contracts. It is up to firms to align their efforts to serve the customer and know that the value is with the individual.

Ann: Now that's subversive!


[3] In the Age of the Smart Machine, The Future of Work and Power

[4] Also, teaching at Harvard Business School

[5] See Harvard Case study: http://www.courseworkbank.co.uk/coursework/laura_ashley_2206/


This article is from Parallax View, ChainLink Research's on-line magazine, read by over 150,000 supply chain and IT professionals each month. Thought-provoking and actionable articles from ChainLink's analysts, top industry executives, researchers, and fellow practitioners. To view the entire magazine, click here.

About the Author

For more than two decades, Ann Grackin, Chief Executive Officer, has been on the frontlines of the Supply Chain Management technology and e-commerce frontier, leading global strategy and technology implementations in the high technology, semiconductor, automotive, textile, and apparel industries.

ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.

 
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