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.
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