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	July 22, 2003

ANOTHER VIEW OF THE FUTURE OF BUSINESS & THE NEXT ECONOMY I 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: 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. 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. 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). Markets are self-authoring. Markets for 'deep support' are formed as individuals opt into fluid constituencies that hold the possibility of community. 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. 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. 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. 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. 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. 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. 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. 3:39:59 PM  trackback []  comment []

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