I recently talked to Shoshana Zuboff of
Business School and James Maxmin 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
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!
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,
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.
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.) ;
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.
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
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.
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, vs. 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
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 vs. 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
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 vs. adversarial
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
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
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 online 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!
Shoshana Zuboff is the Charles Edward Wilson Professor of Business
Administration and Chair Professor of the ODYSSEY
Maxmin is with the Monitor Group and was CEO of Volvo UK and
previously Laura Ashley PLC (for you fashion mavens!)
the Age of the Smart Machine, The Future of Work and Power
teaching at Harvard Business School
Harvard Case study: http://www.courseworkbank.co.uk/coursework/laura_ashley_2206/
ChainLink Research, Inc.