ANOTHER VIEW OF THE FUTURE OF BUSINESS & THE NEXT ECONOMY

Posted on July 22, 2003 by Dave Pollard
collaborationI finished wading through Shoshana Zuboff’s The Support Economy last night. It basically espouses, as I have in my articles on New Collaborative Enterprises, a post-capitalist economy. They describe the change as a ‘radical evolution’, and the initial problem diagnosis is quite astute:

A person is an employee at work and a consumer on her own time. As an employee, one is expected to demonstrate attitudes and behaviours that are usually quite different from what one might hope to encounter in one’s own experiences as a consumer. Employees’ allegiance must be first of all to the authority of the firm, its efficiency norms, products and procedures. The relationship of employees to consumers is largely adversarial.

The book goes on to attack the ‘organizational narcissism’ and ‘legacy of contempt for consumers’ that plague modern corporations. The problem is that, until the final few pages, the book looks entirely at the producer-consumer side of the equation, and doesn’t deal well with the employer-employee relationship. Zuboff argues that what is needed is a new economic layer, what I would call a ‘re-intermediation’, between the producer and consumer, which in the author’s model consists of ‘federations’ of businesses and ‘advocates’ who look after the busy consumer’s needs cradle-to-grave and deal with the multiple suppliers in the product/service delivery process. For example, when the consumer plans a business trip, these federations and concierge-type advocates would look after all the details: baby-sitters, house-sitters, travel, hotel, business attire, limos, laundry etc.

I have two problems with this model. The first is that it will never be affordable to the majority, because the fundamental causes of today’s massive and growing economic disparity between rich and poor (which are all about power, and which no degree of coordinated consumer muscle-flexing will be sufficient in itself to overcome) are unresolved in Zuboff’s new economic model. The second is that, while Zuboff sees existing businesses broadening and integrating and networking to incorporate these federations and advocates, I think it is far more likely that new enterprises, made up largely of those entrepreneurs displaced by or fed up with traditional businesses, will fill this role, leaving the producers of ‘products’ and unintegrated services largely unreformed.

But judge for yourself. Here are the 11 operating ‘metaprinciples’ of the Support Economy that Zuboff sees evolving. They’re a bit complex without reading the whole book, but you can get a good idea of the thesis:

  1. All value resides in individuals: Individuals are recognized as the source of all value and all cash flow. Distributed capitalism thus entails a shift in commercial logic from consumer to individual as momentous as the 18th-century shift in political logic from subject to citizen.
  2. Distributed value necessitates distributed structures among all aspects of the enterprise: As value moves to the individual via the federations and advocates, production, ownership and control also become distributed, devolving power.
  3. Relationship economics is the framework for wealth creation:  Enterprises and federations invest in commitment and trust to maximize realized relationship value. Wealth is created in the realization of relationship value and depends on the quality of ‘deep support’ (see principle #5).
  4. Markets are self-authoring. Markets for ‘deep support’ are formed as individuals opt into fluid constituencies that hold the possibility of community.
  5. Deep support is the new metaproduct: Relationship value is realized as the enterprise assumes total accountability and responsibility for every aspect of the consumption experience.
  6. Federated support networks are the new competitors: They achieve economies and differentiation through their configuration, quality and deep support, providing unique aggregations of products and services.
  7. All commercial practices are aligned with the individual: No cash is released into the federation (and the underlying enterprises) until the individual pays. Cash flow is thus the essential measurement of value realization.
  8. Infrastructure convergence redefines costs and frees resources: By eliminating the replication of administrative activities that exist in today’s organizations, convergence dramatically lowers operating costs and working capital, putting ‘deep support’ within the reach of individuals at all income levels.
  9. Federations are infinitely configurable: Each individual or constituency determines the right configuration for ‘deep support’ he needs, and each configuration is an endlessly renewable resource for competitive advantage.
  10. New valuation methods reflect the primacy of the individual: Competitiveness depends on ability to nurture and leverage new intellectual, emotional, behavioural and digital assets defined by individual needs.
  11. New consumption means new employment: A new employment relationship including new career rights, and a managerial canon of collaborative coordination are necessary consequences of relationship economics.

Well, maybe. My particular skepticism is with principles #5 and #11. While Zuboff thinks federations will be an intrinsic part of the restructuring of existing enterprises, I believe ‘deep support’ will be, at best, an add-on offering provided to those that can afford it by new intermediary enterprises, bridging between traditional product-and-service suppliers and individual consumers. I think this presents an intriguing opportunity for the New Collaborative Enterprises I have written about (see link above), since it is a service that traditional businesses are both ill-equipped and substantially uninterested in providing (the margins are too small), and a service that NCE’s, with an individual orientation to begin with, are ideally suited to provide. And eventually those NCE’s could birth additional NCE’s specialized in the production of the commodities of traditional businesses, which would, by their very nature and independence of hierarchical excess and high shareholder demands, quickly outcompete and obsolesce these traditional businesses. This is another way of getting to the new post-capitalist, collaborative-well-being economy I have espoused. But it would be a lot more painful and devastating to the power elites that control today’s economy and read books like The Support Economy.

My other concern is with principle #11, that somehow if business re-orients itself to the individual consumer (Zuboff doesn’t address the many, many business-to-business corporations that dominate the Fortune 500 and don’t, and won’t ever, give a damn about the consumer), that is somehow going to redefine the employer-employee relationship. I think that is naive in the extreme. The balance of power between employers and employees is rigged in favour of employers, and there is no way employers will cede power voluntarily. Nor will it be wrenched from them. It will simply disintegrate, as these traditional businesses go the way of buggy-whip manufacturers and steamship lines, slow, quiet casualties to a new economy that will not reform them, but simply replace them.

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13 Responses to ANOTHER VIEW OF THE FUTURE OF BUSINESS & THE NEXT ECONOMY

  1. Rayne says:
    July 22, 2003 at 14:10

    Something about Zuboff’s work doesn’t sound quite fresh; in fact, the idea of adding a layer of “reintermediation” is rather value depleting by adding costs without actually curing the underlying problem. There’s something intrinsically wrong with a product or business model if the people who design-make-sell a product don’t genuinely advocate customers’ needs from the get-go; in fact, I’d go so far as to say the business’ and product’s ethics are iffy if customers’ needs are not consistently served.As for third-party “re-intermediation”, isn’t that what Malcolm Baldrige Awards and industry quality groups already try to do, assure a level of quality to the customer while increasing sales? They cost a lot to engage, don’t guarantee financial success to the business, and customers could give a rat’s whisker about awards and industry membership hoo-haw if they don’t get what they need. Another layer of bells and whistles still won’t ensure a business is customer-centric; it has to be there, in the bone of the organization. Fie on federations.I agree that #11 is pretty weak, very pie-in-the-sky thinking. What changes the relationship between employers and employees are 1) employers who are aware that contented and actualized employees are more productive than those who are neglected and/or abused, and 2) businesses that are substantially employee-owned with rewards tied to business performance. Sorry, but it doesn’t really sound like Zuboff found anything new — it’s even rather Tom Peters-y.

  2. Jon Husband says:
    July 22, 2003 at 15:01

    I agree with your point:” think that is naive in the extreme. The balance of power between employers and employees is rigged in favour of employers, and there is no way employers will cede power voluntarily. Nor will it be wrenched from them. It will simply disintegrate, as these traditional businesses go the way of buggy-whip manufacturers and steamship lines, slow, quiet casualties to a new economy that will not reform them, but simply replace them.”I have been an organizational consultant for too many years, and am too dismayed at the strength of the stranglehold the hierarchical, patriarchal paradigm has on the business and organizational world to believe that anything will happen other than a very long, slow gradual withering away of many enterprises. Or, as we know from addictions AND change theory, a major crisis might be an effective catalyst. And I mean major, as in maybe there would be a re-thinking of capitalism if California slid into the Pacific Ocean as a directly attributable result of environmental pollution or some such.Otherwise…Stan Davis in the book Future Perfect suggested that a new organizing principle that encompasses both hierarchy and network dynamics is emerging, will emerge, but that it will take 50 years to become apparent.But, have we been so seduced by money, selfishness and, it must be said, the need to protect ourselves from a harsh system, that we ain’t gonna give support to anyone, unless you are so inclined on the individual level. I think plumbers or doctors that respond quickly to being on-call is about as far as deep support will ever go. There are some examples of advocacy services for the consumer, but I think (as a generalization) that there is too much cynicism in the western world about commerce to ever let something else emerge and dominate. While this reasoning will seem perverse, I believe that the arena of commerce allows a rewarding place for many people to be “who they are”, and they, often being wealthier, better employed, less concerned about altruism, will not go gently into the night. At least not until something major (see crisis above) gives them a might shove.With respect to employer-employee specifically, I believe it was Lou Gerstner in his recent best-seller who noted that the hardest part of effecting real change at IBM was the automatic response of the overwhelming majority of employees to use hierarchy as a crutch, absolving them of real accountability for change – “it’s the guys up there who get the big bucks, let them sweat the change”, or something like that. Warren Bennis weighed in on this topic a few years ago, noting that “hierarchy is a prosthesis for trust”. I think there are too many people who just want to be reasonably paid for showing up, and don’t want to have or accept all that much responsibility.While intellectually I admire and enjoyed Zuboff/Maxmin’s treatise, I am cynical…and sad, to have lost much of my optimism, or belief in doing something truly worthwhile. It’s now mostly my goal to go to the “warm spot” organizations where people want to experiment and use dignity and common sense as organizing principles, and I want to write, travel and live simply – free as much as possible from the need to participate in a pretty-much corrup and unsalvageable system.I won’t hold my breath waiting for The Support Economy, or a new form of employment, or a new social contract. I think history is a long time in the making, and while the web and networks have a subversive influence on power and control, they (P and C) have been in use for as long as anyone can remember. The Support Economy concept demands care and respect, not Power and Control, and so while a relater-sharer culture and a collaborative well-being economy may be called for, they will be a long time in the making.Erich Fromm foresaw much of this,if I remember correctly, in his books “Man For Himself”, and “Escape From Freedom”.

  3. Dave Pollard says:
    July 22, 2003 at 15:02

    You’re right, Rayne. Even down to some of the jargon. In fairness to Zuboff, she does believe that traditional businesses are going to ‘federate’ and fully integrate all this customer-centric value-add stuff. I’m the one that sees it as an add-on layer provided by out-of-work entrepreneurs. At least they’d be legitimately customer-centric then. I’ve given up on the traditional businesses. To them customer-centric is usually just a con game to know enough about customers to come up with a one-size-fits-all product, that inevitably doesn’t fit anyone.

  4. Dave Pollard says:
    July 22, 2003 at 15:07

    Jon: Very impressive analysis. I look forward to hearing more about your search for the ‘warm spot’. I’m not quite as cynical as you about employees reticence to stretch — I think it’s more likely they’ve been discouraged from it for so long, and taught so little about it, that the concept of empowerment is not so much ‘too much work’ as it is downright terrifying. You can’t teach sheep to climb trees.

  5. Jon Husband says:
    July 22, 2003 at 16:56

    Thanks, Dave. I think your level-headedness and optimism is admirable – and I’m often there. Actually, I think most people are smarter than their education has made them, and they, as individual workers, want to “do good” – whether that’s sell more, reduce costs, improve service, etc. As David Weinberger once said in reply to one of my comments, we care because we’re humans, or we’re humans because we care (can’t remember which).Which is why I still get sad….because I agree with your “discouraged from it for so long, and taught so little about it…as it is downright terrifying.”I think most of us are eager and proud…to work, of our employers or profession when we’re 25 – 30 or so, and by the time we’re 45, unless we’re one of those whose work life has been charmed or we’ve been lucky or we’re pre-disposed to gritting our teeth and getting on with it, the less-attractive aspects of hierarchy have helped us learn how to doubt ourselves and our brilliance, or not want to risk being shut down once again, by a scared or insensitive or otherwise ill-adapted boss.I think a lot of the issue is structure (traditional hierarchy). Notwithstanding flattened organizations and a decade of team-building, most orgs still operate with core assumptions about decision-making and knowledge-building that is based on fundamental hierarchical assumptions (found in job evaluation plans) about knowledge, decision-making and responsibility that were invented/derived during the 50’s to suit industrial, division-of-labour and functionally organized entities. The conditions for interacting with customers and with colleagues inside an organization were fundamentally different than brains-keyboards-screens-chips-data all connected to each other. Ever see the movie Pleasantville ? Te story’s there.Sheep will learn to climb trees, 1) when they realize they don’t have to own all the sheep-ish characteristics, 2) when they perceive it’s useful or in their interest to stop being sheep-ish, and 3) when a smart sheep (what’s the singular of sheep ?), or a team of smart sheep, shows all the rest of the sheep how to use their teeth and and lips to fasten the crampons.When the farmer can’t keep her or his sheep out of the trees, then, and only then, will the economic model based on razing (is this a double entendre, or what) the sheep be looked at, by the farmer, to see how it might be changed by or for him or her).By ‘warm spots’ I mean people and organizations who are receptive, questioning, sense that something “more” is needed, or is possible, or know that the typical programmatic responses are MOTS, enabling the same behaviours to continue. I think, for example, that the practicioners who practice Open Space are brave pioneers who are holding up conventional wisdom to the light of scrutiny.

  6. Dave Pollard says:
    July 22, 2003 at 17:58

    Lots to think about, there, Jon. I’m surprised you haven’t used your blog to expound on them more. I think the tenacity of hierarchy has much to do with the (lack of) trust by managers of employees, exemplified by the unwillingness of large organizations to allow telecommuting, the rigidity of performance evaluation processes etc. And that says it all — if there’s no trust, no mutual respect, how can the environment be healthy, productive, even functional in today’s specialized workplace?I’d be interested in your view on how often the ‘warm spots’ are run by modern (i.e. non male-emulating) women, or at least by a female or feminist mindset. One thing I agree with Zuboff on is that the male, paternalistic mindset is a key part of the problem, and the source of distrust.As for the sheep analogy, I think we’ve fractured that one beyond repair.

  7. Jon Husband says:
    July 22, 2003 at 18:59

    Ah, blogging. First, I blogged a lot on some of this area of interest some months ago – the content is now semi-buried on my previous version of a blog (I keep meaning to dig it out, expand on it, re-post) Second, I am less than fully able to expound on some of this without going into some semi-academic discussions of the mind-bogglingly dull but very important aspects of the structural “rules” of organizations – which I’m not sure that more than two or three people would read, and then so what…Third, I have had to go back to full-time employment because I have not been focused or disiplined enough to do the work to ensure that pronouncing my views and thoughts produces income – so I am limited to maybe an hour a day. Fourth, I’m a sensitive scaredy-cat. I feel despairing that much positive action can come from plaintively bleating about the effects of structure on workplace and societal dynamics, and i’m often (but not always) NOT up to doing it all alone (even tho’ I know there are other like-mineded souls out there).On the other hand, I don’t seem to be able to keep from expressing thoughts, beliefs, opinions, research I have done…so the responsibility rests with me to get more focused, more disiplined, more brave.I AM in early discussions with some other bloggers out here in Vancouver, in San Francisco, in England, etc, about creating a conference/summit on the subject of how blogs and wikis are mirroring or creating a parallel example of the dynamics of interaction and dialogue found in OD principles and processes. Might you be interested in knowing more?Ultimately, I think it’s gonna be all about social software. People sit behind screens, keyboards, and they are connecting and communicating – until recently, I think organizations thought only semi-consciously that integrated systems and interconnected e-mail, etc. was all about shipping data and information back and forth. I think history will show us that eventuallythe bigger game willbe about creating and constructing knowledge and social/economic value in an extremely complex system of systems.For example, I think that there is a generic “strategic business process” I call knowledge construction, that people are doing every day on an ad-hoc basis in almost all organizations – some oral, some using software and e-mail and the ‘Net. If I were a chief knowledge officer, I’d look closely into teaching people about “connecting dots”, packaging unstructured data and information into useful chunks of knowledge which can be/could be injectable into existing business processes. The current large integrated ERP systems too often pour “electronic concrete” over and into recently-reengineered business processes. What happens when the markets change, or the business process needs fundamental changing – when it has to accommodate value streams or value networks, not value chains?I think you’re spot-on with respect to (some) non male-emulating women. I’ve had the good fortune to work with a couple. The problem I see here is that most smart, caring, differently-valued people, both men and women, who grok much of the current miasma have decided to get out of big corporations, and set themselves up to get by on the periphery, or focus on helping individuals or small enterprises. But I believe you’re right – the paternalistic, stern father model is dominant and counter-productive. There’slots of good stuff on this, as you probably know,, in the writings of George Lakoff, often cited by Doc Searls, David Weinberger andothers.

  8. Rayne says:
    July 23, 2003 at 09:15

    Took me a while, but I finally found an article I’d read some time ago that made more sense in re: customer-centrism; to me it clearly shows that it begins at the top of the organization and it’s not something that a bunch of businesses sit around in conferences and pull out of their hats as a packaged answer. It’s an ethic, a way of life.Zuboff loses me because the concepts prescribed are pretty nebulous, look more like economic theory — too nebulous to pull businesses together. What does make more sense is that the silos within existing organization are pulled apart by function while allowing technology to improve the white space between them. For instance, a manufacturer might do a fabulous job at making a product faster, cheaper, at greater quality; they should be freed to concentrate on that to make their customers’ happy, by giving up distribution to those who do distribution better, faster, cheaper. There’s nothing to compel a manufacturer to federate with other manufacturers, but there is a compelling basis for consolidation of like-manufacturers and similar logisticians. It’s specialization that will benefit the customer, as long as there is sufficient competition in the marketplace. (It’s intimidating because it’s nearly Marxist – from each as they can, to each as they need kind of stuff — but it’s essentially returning to Adam Smith.)I’ll use FedEx and a certain specialty product manufacturing company. The company has great research and engineering, can make widgets damned cheap. But they have a so-so shipping and distribution network. A company like FedEx can already offer a wide variety of shipping solutions, along with flexible IT solutions for shipping status and billing purposes. FedEx has constantly tweaked its services to meet customers’ needs, along with widening its service offering through acquisitions (Ground and LTL now offered, not just air). The specialty manufacturer comes out smelling like a rose when high quality products get there faster and more cheaply and the customer’s gotten emails from FedEx advising shipping status all the way to the door. (Damn, maybe I should get a job with FedEx…)It’s pretty much Rummler-Brache revisited, but the unproductive white spaces and functional outsourced to other firms and then eliminated.As for hierarchical paternalism — funny, every time I’ve ever suggested that a maternalistic model should be embraced, I get slapped up. Business shouldn’t treat its people condescendingly, I’m told. But I don’t see what’s wrong with helping every employee find their niche, nurturing their personal growth while serving customers needs. Further, I don’t see what’s wrong with flat, decentralized empowered-team organizations that can turn on a dime and don’t waste time floating stuff up and down a multi-layered centralized top-heavy organization. But then, I’m a woman; that kind of skews my vision.

  9. Rayne says:
    July 23, 2003 at 09:18

    Sorry, “functional outsourced” = functional silos outsourced. Oops!

  10. Dave Pollard says:
    July 25, 2003 at 17:00

    Jon: Love to learn more about your project, especially if it gives me an excuse to travel to Vancouver ;-) I’ve blogged about Lakoff, and didn’t realize Doc and David had — I’ve mentally pigeonholed them as tech-heads, which is probably unfair, and will give them another look (just what I needed — something else to read!)

  11. Dave Pollard says:
    July 25, 2003 at 17:12

    Rayne: Can’t get into the Bus2.0 article because I’m not a subscriber. Could you blog about it ’cause it sounds interesting? The FedEx example is interesting because it involves a very large organization providing the ‘service layer’. I know of a smaller company that does the same thing but just for pharmaceutical shipments, and they knock the socks off FedEx, and work with other small intermediaries to achieve global reach. Zuboff sees these ‘service layers’ being provided by the manufacturers themselves ‘in federation’, which is where I have a problem with it.Now reading ‘People before Profit’ (praised by Kennedy, Nader, Klein and Chomsky on the back cover, which is a feat) which bears on this and I’ll blog on it when I get done.As for maternal, matriarchical, feminist systems, who’s ‘slapping you up’? My only problem with the inherent logic and preferability of women running most businesses (and most governments for that matter) is that too many of the (few) women in senior positions today seem to have got there by emulating male businesses ethics and styles.

  12. Seb says:
    July 25, 2003 at 18:42

    What a great discussion. Does anyone think that the next generation of sheep has any chance of behaving differently from the current one? And would that be for better or for worse?

  13. Graham Douglas says:
    May 19, 2004 at 20:21

    Great discussion! Although I share and have expressed many of the same doubts on TheSupportEconomy@yahoogroups.com I maintain hope for some significant progress assisted by better information technology and the NEW IT. The Support Economy idea is being advanced in the context of improved network IT at http://www.ondemand-network.com and the complementary improved integrative thinking of NEW IT. We can change the world but first we must change our world in our minds. An article about the NEW IT is available at http://www.integrative-thinking.com.Graham Douglas

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