Whenever marketers use the word ‘customer’ or ‘consumer’ they bury themselves deep within an organisation-centric view of the world: these terms are seller-centric inventions.

The only entities that see ‘customers’ or ‘consumers’ when they look at the world are organisations trying to sell stuff. When marketers talk about customers and consumers, they are not talking about the world ‘out there’ as it really exists, they are looking into a mirror reflecting their own internal obsessions back to them.

A customer is someone who buys what we sell. When the organisation looks at ‘the customer’ it is just looking at ‘what we sell’ from a slightly different perspective, a perspective designed to help it sell better. There is nothing wrong with this per se. There is lots to be said for it. But it is a seller-centric projection. You can spend an entire lifetime peering into this mirror without ever seeing what lies beyond.

One way of looking beyond this mirror is to recognise that every product or service that meets a need – i.e. that’s sold – also generates a new need: the need to make a decision.

In the industrial age, meeting this meta-need – the need to make better decisions (and to implement them better) – wasn’t the seller/marketer’s job. There was a division of labour. The job of the organisation was to make a good product. The job of the ‘consumer’ was to make a decision – a choice. And the job of the marketer was to influence these decisions.

This was probably inevitable at the time. Decision-making is an information intensive task and gathering and using information in an organised way was prohibitively expensive.

A tectonic shift

But today that’s changing and we can look at the world through a different lens – that of the decision-maker (the person) rather than that of the decision-influencer (the seller). Once you do this it quickly becomes apparent that this meta-need – to make (and implement) better decisions – is bigger than all other needs (for chocolates, for cars, for current accounts etc) because it embraces them all, subsuming them into the bigger task of achieving what the person (not the seller) wants to achieve.

Person- or buyer-centric services then, sit on the side of the individual, helping the individual achieve what the individual wants to achieve, including managing relationships with many different suppliers more efficiently and more effectively (VRM, or Vendor Relationship Management). The central questions here are, What challenges does the person face when doing this? How to do it better?

The difference between now and say, twenty years ago, is that twenty years ago this person-centric perspective was operationally irrelevant. You couldn’t do anything practical to help people address these challenges. When marketers said ‘the customer is king’, it was just a disguised way of saying ‘the organisation is king’.

Now, however, as information becomes a tool in the hands of the individual, that’s changing. The organisational king is being deposed. This is not about superficial changes in ‘how to achieve the same old marketing goals better’. For example, it’s got nothing to do with arguments about whether it’s easier, cheaper or better to get marketing messages across via social media or mass advertising. It’s a deep, structural, tectonic, remorseless and comprehensive transformation in the relationship between individuals and organisations.

And if you keep on looking in the customer mirror, you simply won’t see it coming.

Alan Mitchell

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AlanMitchell 'The Information Age', Buyer centric services, Project VRM

This week the UK’s main political parties published their manifestos for the current general election.

The Tories, who are currently tipped to win, have included this sentence in their manifesto:

“Wherever possible we believe that personal data should be controlled by individual citizens themselves”.

The ruling Labour Party has included this promise in their manifesto:

“We will explore how to give citizens direct access to the data held on them by public agencies, so that people can use and control their own personal data in their interaction with service providers and the wider community.”

Of course we all know about politicians and election promises, but policy-wise this is a momentous breakthrough. It shows that in some pivotally important circles, the arguments for the old organisation-centric ways of dealing with personal/customer data have been lost and that a new, much more person-centric approach has been recognised as the way forward.

There are many ways this could go horribly wrong and we will have to work hard to make sure they don’t. But either way, this a momentous breakthrough – a decisive departure from the direction we have been travelling for the past 40-50 years.

It’s evidence that the person-centric paradigm is truly taking hold.

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AlanMitchell 'The Information Age', Data, Project VRM, vpi

I’ve written an article on Volunteered Personal Information. You can read it at http://www.marketingmagazine.co.uk/news/926139/Reinventing-marketing-Alan-Mitchell-asks-marketers-prepared-era-volunteered-personal-information/

Alan Mitchell

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AlanMitchell 'The Information Age', Project VRM, vpi

One of the things that falls out our analysis of personal data ecosystems is the power of ‘volunteered personal information’ (VPI).  This is information that only the individual knows or can see because of his or her unique vantage point, and which (therefore) only that individual can share.

This creates many knock-on questions.

One of them is ‘how valuable/important is this information?’. Answer: unthinkably valuable, because potentially this volunteered information tells us (i.e. suppliers, governments, public services, other individuals) who somebody is, what they want and need, and when they need it. The ‘holy grail’ of information about the nature, shape, location and timing of demand, in other words. The new report from Ctrl-Shift on this subject estimates that within ten years, the market value of VPI ‘feeds’ from individuals to organisations will be worth £20bn in the UK alone.

Other questions follow, such as:

• ‘what are the mechanisms by which individuals are going to capture, gather, store and share this information?’
• ‘under what conditions will they do so? e.g. what are the incentives encouraging people to participate and what are the obstacles discouraging them?’
• ‘what are the rules surrounding such information sharing? This includes technical standards, enabling information to flow easily, but also terms and conditions as to who has access to this VPI, for what purposes, under what terms?’

These are all huge questions, which many people are working on right now (see, Project VRM, Mydex and the Kantara Initiative for example).  I’ve blogged about some of the issues surrounding VPI here.

Alan Mitchell

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AlanMitchell Buyer centric services, Data, Project VRM, vpi

Cross-post from my CRM..meet VRM blog.

This post is a short(ish) summary of a working session led by Drummond Reed and me at the recent West Coast VRM Workshop, and also an introduction to the Kantara workgroup in which we are going to move this debate forward. It is also part of the thinking that will short emerge in a Mydex white paper.

At the VRM workshop, we discussed the need for the concept of the Personal Data Store, what it would do in practice, and what that will ultimately enable.

Why we need such things – because individuals have a complex need to manage personal information over a lifetime, and the tools they have at their disposal today to do so are inadequate. Existing tools include the brain (which is good but does not have enough RAM, onboard storage, or an ethernet socket……thankfully), stand alone data stores (paper, spreadsheets, phones, which are good but not connected in secure ways that enable user-driven data aggregation and sharing), and supplier based data stores (which can be tactically good but are run under the supplier provided terms and conditions). NB Our current perception of ‘personal data stores’ is shaped by the good ones that are out their (e.g. my online bank, my online health vault); what we need is all of that functionality, and more – but working FOR ME.

What they will do/ enable – the term Personal Data Store is not an ideal term to describe a complex set of functions, but it is what it is until we get a better one (the analogy I’d use in more ways than one is the term ‘data warehouse’ – again a simplistic term that masks a lot of complex activity). A Personal Data Store can take two basic forms:

Operational Data Stores – that get things done, and only need store sufficient breadth and depth of data to fulfill the operation they are built for (e.g. pay a credit card bill, book a doctor’s appointment, order my groceries).

Analytical Data Stores – that underpin and enable decision making, and which typically need a more tightly defined, but much deeper data-set that includes data from a range of aspects of life rather than just that from one specific operation (e.g. plan a home move, buy a car, organise an overseas trip).

A sub-set of the individual’s overall data requirement will lie in both of the above, this being the data that then integrates decision-making and doing.

In both cases, the functionality required is to source, gather, manage, enhance and selectively disclose data (to presentation layers, interfaces or applications).

We also discussed ‘who has what data on you’ and introduced the following diagrams to explain current state and target state (post deployment of Volunteered Personal Information (VPI) tech and standards).

The key terms that require explanation are:

My Data – is the data that is undeniably within, and only within, the  domain of an individual. It’s defining characteristic is that it has demonstrably not been made available to any other party under a signed, binding agreement. This space has been increasingly encroached upon by technology and organisations in recent history (e.g. behavioural tracking tools like Phorm) and this encroachment will continue. Indeed a general comment can be made that ‘my data’ equates to privacy in the context of personal data; so the rise of the surveillance society and state is a direct assault on ‘My Data’. Management of ‘My Data’ can be run by the individual themselves, or outsourced to a ‘fourth party service’.

Your Data – is the data that is undeniably within the domain of an organisation; either private, public or third sector. Proxy views of this data may exist elsewhere but are only that. This data would include, for example, the organisations own master records of their product/ service range, their pricing, their costs, their sales outlets and channels. Customer-facing views of much of Your Data is made available for reproduction in the ‘Our Data’ intersect.

Our Data – is the data that is jointly accessible to both buyer and seller/ service provider, and also potentially to any other parties to an interaction, transaction or relationship. It is the data that is generated through engaging in interactions and transactions in and around a customer/ supplier relationship. Despite being ‘our’ data, it is probably technically owned, or at least provided under terms of service designed by the seller/ service provider; in practical terms this also means that the seller/ service provider dictates the formats in which this data exists/ is made available.

Their Data – is the data built/ owned/ sold by third party data aggregators, e.g. credit bureaux, marketing data providers in all their forms. It’s defining characteristic is that it is only available/ accessible by buying/ licensing it from the owner.

Everybody’s Data – is the public domain data, typically developed/ run by large, public sector(ish) entities including local government (electoral roll), Post Offices (postal address files), mapping bureau (GIS). Typically this data is accessible under contract, but the barriers to accessing these contracts are set low – although often not low enough that an individual can engage with them easily.

The Basic Identifier Set/ Bit in the Middle – this is the core personal identity data which, like it or not, exists largely in the public domain – most typically (but not exclusively) as a result of electoral rolls being made available publicly, and specifically to service providers who wish to build things from them. This characteristic is that which enables the whole personal eco-system and its impact on data privacy to exist, with the individual as the un-knowing ‘point of integration’ for data about them.

The ovals in the venn diagram represent the static state, i.e. where does data live at a point in time. The flow arrows show where data flows to and from in this eco-system; I use red to signify data flowing under terms and conditions NOT controlled by the individual data subject.

Flow 1 (My Data to Your Data, and My Data to Our Data) – Individuals provide data to organisations under terms and conditions set by the organisation, the individual being offered a ‘take it or leave it’ set of options. Some granularity is often offered around choices for onward data sharing and use, i.e. the ‘tick boxes’ we all know and which are one of the main bitsof legacy CRM that VRM will fix.

Flow 2 (Your Data to Your Data, including Our Data) – Organisations share data with other organisations, usually through a back-channel, i.e. the details of the sharing relationship are typically not known to the data subject.

Flow 3 (Your Data, including Our Data to Their Data) – Organisations share data with a specific type of other organisation, data aggregators, under terms and conditions that enable onward sale. Typically the sharer is paid for this data/ has a stake in the re-sale value.

Flow 4 (Everybody’s Data to Their Data) – Data Aggregators use public domain data sources to initiate and extend their commercial data assets.

The target state is shown below, a different scenario altogether – and one which I believe will unfold incrementally over the next ten years or so…..data attribute by data attribute, customer/ supplier management process by customer/ supplier management process, industry sector by industry sector. In this scenario, the individual and ‘My Data’ becomes the dominant source of many valuable data types (e.g. buying intentions, verified changes of circumstance), and in doing so eliminates vast amounts of guesswork and waste from existing customer/ citizen managment processes.

The key new capabilities required to enable this to happen are those being worked on in the User Driven and Volunteered Personal Information work groups at Kantara (one tech group, one policy/ commerce one), and elsewhere within and around Project VRM. The new capabilities will consist of:

- personal data store(s), both operational and analytical

- data and technical standards around the sharing of volunteered personal information

- volunteered personal information sharing agreements (i.e. contracts driven by the individual perspective, creative commons-like icons for VPI sharing scenarios)

- audit and compliance mechanics

Around those capabilities, we will need to build a compelling story that clearly articulates, in a shared lexicon (thanks to Craig Burton for reminding us of the importance of this – watch this space), the benefits of the approach – for both individuals and organisations.

The target state that will emerge once these capabilities begin to impact will include the 4 additional individual-driven information flows over and above the current ones. The defining characteristic of these new flows is that the can only be initiated by the data subject themselves, and most will only occur when the receiving entity has ‘signed’ the terms and conditions asserted by the individual/ data subject. The new flows are:

Flow 5 (My Data to Your Data (inc Our Data) – Individuals will share more high value, volunteered information with their existing and potential suppliers, eliminating guesswork and waste from many customer management processes. In turn, organisations will share their own expertise/ data with individuals, adding value to the relationship.

Flow 6 (Everybody’s Data to My Data) – With their new, more sophisticated personal information management tools, individuals will be able to take direct feeds from public domain sources for use on their own mashups and applications (e.g. crime maps covering where I live/ travel)

Flow 7 (My Data to (someone else’s) My Data) – An enhanced version of ‘peer to peer’ information sharing.

Flow 8 (My Data to Their Data) – The (currently) unlikely concept of the individual making their volunteered information available to/ through the data aggregators. Indeed we are already starting to see the plumbing for this new flow being put in place with the launch of the Acxiom Identity Card.

The implications of the above are enormous, my projection being that over time some 80% of customer management processes will be driven from ‘My Data’. I’m pretty confident about that, a) because we are already see-ing the beginning of the change in the current rush for ‘user generated content’ (VPI without the contract), and b) because the economics will stack up. Organisation need data to run their operations – they don’t really mind where it comes from. So, if a new source emerges that is richer, deeper, more accurate, less toxic – and all at lower cost than existing sources; then organisations will use this source.

It won’t happen overnight obviously; as mentioned above specific tools, processes and commercial approaches need to emerge before this information begins to flow – and even then the shift will be slow but steady, probably beginning with Buying Intention data as it is the most obvious entry point with enough impact to trigger the change. That said, the Mydex social enterprise already has a working proof of concept up and running showing much of the above working. A technical write up of the proof of concept build can be found here. And the market implications of this are explored in more detail in new research on the market value of VPI shortly to be published by Alan Mitchell at Ctrl-Shift.

The two hour session at the VRM workshop was barely enough to scratch the surface of the above issues, so the plan is to continue the dialogue and begin specifying the capabilities required in detail in the User Driven and Volunteered Personal Information (technology) workgroup at The Kantara Initiative. The workgroup charter can be found here. A parallel workgroup focused on business and policy aspects will also be launched in the next few weeks. Anyone wishing to get involved in the workgroup can sign up to the mailing list here and we’ll get started with the work in the next couple of weeks.

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Iain Henderson Data, Privacy, Project VRM, vpi

One of the sessions at the VRM workshop in San Francisco last week focused on Requests for Proposals or RFPs.

The idea is pretty straightforward. A buyer creates an RFP for something she wants to buy, sends it out to the market, gathers up sellers’ responses and makes a choice.

Sellers, knowing they are competing against each other for a ‘hot’ lead, may be incentivised to offer an extra special deal. Buyers also benefit from the fact that it is a hassle-free process – the offers coming streaming in straight to your digital ‘front door’ when you ask for them. This is especially so if the RFP process creates an anonymity shield which stops sellers from scraping the buyer’s contact details and spamming her.

One way of doing this is, for example, is to ask sellers to upload their responses to a temporary URL which only the buyer knows about. Once the buyer has made her choice, or after a certain time span, the URL can be closed down.

It sounds a like a neat idea and for a time I thought it would be one of the vanguards of buyer-centric commerce. The more I look at it however, the more I think it is still a good idea – but something that will only really work well once lots of other supporting bits of infrastructure and service are in place. (For more details on this see our White Paper on Added Value Buying Services) In other words, aside from a few ‘pure’ applications it is a ‘later’ rather than ‘sooner’ development.

Here’s why. The immediate technical challenges of creating anonymous links between buyers and sellers are relatively solvable. At the moment, open source software expert Don Marti is leading the charge on this (http://zgp.org/~dmarti/business/upside-down-bg/).

Trouble is, even if we crack the technical messaging bits, there’s still a lot more we have to do to make RFPs really work. For example, we have to address the potential obstacles that exist at both ends of the process. Specifically:

- helping would-be buyers build a specification that’s clear and detailed enough for vendors to respond to
- a means of translating buyers’ expressions of desire into language that sellers can understand and respond to
- seller response processes that ‘understand’ RFP feeds well enough, and efficiently enough, to generate meaningful, useful responses.

These are not easy problems. They are very hard problems relating to language (the two sides understanding each other well enough to communicate), and value (the two sides getting enough value from the new process to think it worthwhile).

On language, the RFP problem is easy if the buyer can name an exact product title (e.g. down to bar code/electronic product code detail) – a ‘language’ that fits directly into the seller’s systems. But this probably accounts for 0.01% of real buyer requests, most of which include an element of search, discovery and uncertainty.

The other 99.99% of buyer requests will be much vaguer, along a spectrum e.g. I want to buy:

- a digital camera
- a digital camera in this price bracket
- a digital camera with these sorts of features in this price bracket (but I’m not really sure what these features are, or how important they are to me)
- a digital camera of this brand with these features in this price bracket (though I haven’t thought about which of these features are ‘must haves’, ‘nice to haves’, and so on
- a digital camera of this brand and model with these features in this price bracket.
- only this brand with a choice from these particular model variants, with these clearly specficied features.

Under an RFP system, sellers not only have to understand and respond relevantly to this spectrum in a way that generates easy-to-understand and easy-to-compare information that is useful to the buyer, they first of all have to understand what the buyer is ‘getting at’. For example:

- is the buyer describing features using exactly the same language as those described by seller in his product catalogue? [e.g. What if the buyer says he wants a 'fast' computer, or 'an easy to use' camera?] As soon as the seller needs a human being to read and understand the buyer’s description the RFP process may become far more expensive, not cheaper, than existing systems. On the other hand, if we rely simply on machine recognition of key words we will generate more spam than value, even if unwittingly.
- what if the buyer’s specifications don’t fit the market? (i.e. she can’t get all her desired features within her stated price bracket?) How does the seller respond to this? By simply spamming her with all available options? How does the seller help the buyer understand what these trade offs mean, and their pros and cons? As soon as the process goes beyond ‘a single shot’ of buyer RFP/seller offer (as soon as it requires ‘a conversation’) RFP style messaging processes don’t work very well.

This raises many issues of cost and value for both sides: ‘am I convinced that using an RFP is really the most cost-effective way for me to go to market?’

These are not just finicky details. Without a lot of surrounding services and processes to help buyers and sellers at both ends, pure RFPs which focus only on better Internet-based messaging between buyers and sellers are only likely to create a workable win-win with a vanishingly small proportion of transactions.

On top of this, as Bart Stevens (www.ichoosr.com) points out, there’s another barrier of user trust to overcome. Many consumers are so jaded be clever ‘bait and switch’ marketing ploys that seem honest and good value in the beginning only to have a sting in their tail, that they are wary of taking up genuinely new buyer-centric opportunities even when they do emerge.

It’s not only seller-centric marketers who are interested in behaviour change!

Anyway, my conclusion is that:
- the real ‘value add’ here probably does not lie in the messaging/contact aspects of the RFP process but in the specification building process – helping buyers articulate demand in such a way that it fully and accurately fits what they want, in a way that streamlines rather than complicates seller processes.
- while at first sight RFPs look like an easy ‘low hanging fruit’ for VRM, I suspect they will end up being one of the hardest – and last – nuts to crack; the ‘artificial intelligence’ of VRM if you like, where, only after thirty years of failing to solve this ‘simple’ problem do we actually realise how complex it really is. (We tend to underestimate just how complex buying processes are because, currently, most of the complexity is handled inside buyers’ heads. The complexity only becomes apparent when we try to automate it.)

But that’s not to say cracking the communication protocols is a bad idea.

Alan Mitchell

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AlanMitchell Buyer centric services, Project VRM

Fascinating discussion over dinner last night with Drummond Reed, Bill Washburn and my colleagues Iain Henderson and William Heath from our personal data venture Mydex (www.Mydex.org).

We had just flown in to San Francisco for the VRM meeting, so were jet lagged and hardly sparkling. But Bill made the comment that the real potential of the internet was not being realised because of a pervading lack of trust. This is interesting because previously, trust-issues have not created barriers to our ability to realise the full potential of new technologies.

Metallurgy, steam power and electricity transformed the world in many ways, but the general rule of thumb was, in good old entrepeneurial capitalist style, ‘do anything you like with it, so long as you don’t break the law.

Computing technologies started out much the same, transferring that ‘do what you can!’ motto from matter and energy to information. So, in the industrial age we did lots of fantastic new stuff with matter and energy, and then we had an information age where we started doing lots of fantastic new stuff with information. With the internet however, this no holds-barred approach to information creates problems – because I don’t necessarily want you to start doing fantastic new stuff with my information if it’s fantastic for you and awful for me.

The power of trust

When the key issue is no longer just the technology, but the relationships surrounding that technology, you have a different type of problem. You need a parallel set of innovations in ‘social technologies’ – new ways of bringing people together to create new and better outcomes.

Perhaps the last time we had a problem of a similar scale was with the growth of trade. The more trade you do, the clumsier and more constraining barter becomes. You need something to oil the wheels. The ‘obvious’ answer is money, but for many years it was not an obvious answer at all.

Money requires a huge leap of faith. You give somebody something of real value, and in return, they give you a worthless token. The only way you can then retrieve the value you have given away is by persuading someone else to part with something of real value in exchange for your worthless token.

It’s absolutely crazy, once you stop to think about it. But as long as people fail to make this gesture of trust, the prevailing lack of trust acted as a brake on the economic potential of the trading system. And to build the trust that was necessary, a whole set of new rules, institutions, practices, safeguards, social rituals and relationships, norms and expectations, divisions of labour and so on had to be developed.

As Drummond pointed out, one of these institutions is banking, which is an entire global industry built on ‘meta-trust’. First, you make a leap of trust in accepting money in exchange for real value. T hen you make a second leap of trust by giving it to somebody else to look after! With no real recourse if they decide not to give it back! Craziness piled on top of craziness. So, once again, we had to develop a whole new set of rules, regulations, practices, institutions etc to deal with this trust problem – and we’re still struggling with how to do it, as the credit crunch shows.

Bill’s point was that we’re now facing the same sort of problem with the sharing of personal information on the Net.

The old assumptions about ‘if you can, do anything you like with it within the law’ may work brilliantly with new inventions like electrical machinery. But it creates a nightmare of mistrust and lost economic potential when it comes to personal information. And that’s basically what’s happened with the last 50 years of centralised corporate data gathering: the underlying assumption in the corporate world was ‘if we can gather information about you, the customer, it’s ours to what we like with’. Just imagine if banks said that to us in relation to our money!

The next leap

That’s what Mydex in particular, and VRM more generally is about. It’s about creating the new ‘social technologies’ of trust to allow personal information to be shared the way we share money. If all the right conditions are there – if it’s a mutually acceptable exchange in conditions of mutual trust – we hand over money to somebody else without a thought – and by doing so we contribute our little bit to the larger public good of economic activity. We help unleash its potential. But if those conditions are not present, then our immediate attitude is ‘No Way!’. And the economy’s potential is constrained.

So what are the right conditions – the rules, institutions, practices, safeguards, social rituals and relationships, norms and expectations, divisions of labour – necessary to unleash the potential of personal information sharing in a networked world?

That’s a huge question which we need to tackle as a society. But our bet is that one necessary building block is to create the distinction with personal information that banks did with money.

You hand your money over to a bank for safekeeping. But that does not mean the bank can do anything it likes with it. You may give the bank permission to do some things with it, such as lend it out to other people. But if so, they have to pay you interest for it. You share in the benefit of sharing its value.

Personal data banks like Mydex create the same distinction. You use the personal data store to keep your information in a safe place that’s also easy to access. Mydex also allows this information to be shared, but only in ways that you choose, agree to, and get some benefit from.

Personal data stores are certainly not the whole solution to the dilemma Bill raised. But I’m pretty sure they’re a part of it.

Alan Mitchell

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AlanMitchell 'The Information Age', Project VRM

Interesting discussions on the VRM steering group prompted by Doc Searls’ blogs about ‘fourth party services’ (http://blogs.law.harvard.edu/vrm/2009/04/12/vrm-and-the-four-party-system/).

The bottom line is that I think the concept of ‘user-driven’ services as espoused by Joe Andrieu (e.g. (http://blog.joeandrieu.com/2008/07/12/towards-user-driven-search/) is risky for two reasons.

First, it muddies the waters around VRM’s unique and special contribution:  its focus on creating services that work on the side of the individual.

Second, it narrows the VRM agenda, to focus too much on mechanisms of user control, and not enough on even bigger challenges such as the design of new business models.

More detail, for those who are interested…

As far as I can see, ‘fourth party services’ are pretty much the same as the Personal Information Management Services we’ve talked about on this blog for some time (http://www.rightsideup.net/?page_id=58)

The debate itself stems from a growing a realisation that there are at least two ‘levels’ of VRM.

The first level simply gives individuals software based tools, like mobile phone apps, that the individual can use how and when they want.

The second level is when a specialist service or business provides extra infrastructure, functionality or services that help individuals do things they couldn’t do if they were left to themselves with their ‘apps’.

Doc Searls has termed this second layer of services which are acting for or on behalf of the individual as  ‘fourth party’ services. There are others however, such as Joe Andrieu, who have started talking about ‘user driven services’ (http://blog.joeandrieu.com/ )

As I understand ‘user driven’ it means a service which is shaped – or ‘driven’ – to a greater or lesser extent by the user’s direct input. As Joe explains in one of his emails:

“User driven services are a category that, for me, is as much a direction of innovation  as anything else.  YouTube is more user driven than Cable TV. Blogs are more  user  driven than newspapers.

Every major Internet breakthrough has been by companies being more user    driven in some way. Amazon. Google. eBay. Facebook. Twitter. The web  and the net itself.”

On the other hand, as Joe stresses in the same email, ‘fourth party’ services are much more focused:

“Fourth Party services, in contrast, have a very tightly focused meaning:
fourth parties operate on behalf of you, the individual.  2nd parties
and third parties, e.g., Apple and various iPhone developers, have no
expectation or obligation of acting in your best interest.  However,
your personal datastore does. Your lawyer does.  That’s the distinction:
a fiduciary responsibility to the individual user.”

If we are interested in developing buyer-centric or ‘VRM’ services, which route should we follow: ‘user-driven’ or ‘fourth party’?

The agency concept

The fourth party or buyer-centric service anchors itself on the side of the individual. That’s what defines it and distinguishes it from all other business models and services –  it works for and on behalf of the individual. It is on the individual’s side, acting as the individual’s agent (as I first talked about in my book Right Side Up many years ago).

For me, this is the fundamental intellectual – and practical – departure point. If you don’t get to this starting point you can never ‘get’ VRM or buyer-centricity. And if you don’t keep it as your anchor, you will get lost and confused in no time at all.

For many people however, this starting point is also their sticking point. They just can’t see it. They think we are talking about some sort of altruistic pressure group or charity – not a proper business.

This is odd because none of us have any trouble with big companies paying agents to work for them. In fact, there are so many agencies, consultants, advisors, contractors and so on working for big companies that sometimes it seems they’re the biggest business sector of all. Everyone knows what these agents do. They are employed by BigCo if and in so far as they are successful in furthering BigCo’s interests, as specified by BigCo of course.

The buyer-centric or fourth party service is no different: it earns its keep as long as, and in so far as, it acts for and on behalf of the individual in his or her dealings with other parties – such as all those BigCos with all their agents.

Perhaps one of the reasons people find it so hard to ‘get’ this is because it is so new. To work, it requires innovation on many fronts: technology, service and user-experience, business model, definitions of value, metrics of success, legal, contractual and regulatory issues, and so on.

In my view, the only way we can keep all these innovation projects working hand-in-hand and in sync is if they keep the starting point of ‘for and on behalf of the individual’– this litmus test of purpose – absolutely clear.

Unfortunately, that’s precisely what the ‘user-driven’ concept loses. By shifting the focus from relationship and purpose (e.g. services that work for the individual) to mechanisms (does it happen to be ‘driven’ by the user or not?), the user-driven concept weighs anchor and (to mix metaphors horribly) lets the balloon float free – to be taken in whatever direction the wind of ‘user control’ might take it.

Now. You could argue – as Joe might – that if it is user-driven then it must, by definition, be acting for and on behalf of the individual. I’m not sure. A bank ATM is a ‘user-driven’ service, to some degree. It’s ‘more user-driven’ than the bank counter and the teller – and it’s this spectrum of ‘user-drivenness’ that Joe seems interested in.

But the ATM is there mainly to outsource costs from the bank to the customer. User self-service is a big thing for companies wanting to offload costs on to customers. These companies could embrace the concept of ‘user-drivenness’ quite happily. And without our moorings relating to ‘for and on behalf of the individual’ we can’t distinguish between the two.

It’s also true, however, that the concept of an agent acting for and on behalf of the individual also has its blurry edges. There are, for example, many ways of acting for and on behalf of individuals: political and social campaigning, legal representation, and so on. You could say your lawyer is your ‘agent’. You could say somebody you pay to clean your house or your shoes is your agent too, because they are acting on your instructions.

Marginal or central?

The interesting thing about all these forms of agency is that they lie outside the commercial mainstream. They are either ‘non-commercial’ (e.g. political and social campaigning), or if they are commercial they exist only on the margins.

Lawyers for example, flourish on the back of information asymmetries. They are experts and you depend on this expertise. And they charge you accordingly, so you only employ a lawyer when you are desperate.

The maid cleaning your house lies at the opposite extreme of information processing. Here, it’s mainly manual labour which no one has ever been able to automate. This is the economic equivalent of balloon squeezing. You might push the work from one person to another but the volume of work – the air inside the balloon – remains unchanged. No new efficiencies have been created.

The interesting thing about this is that the lawyer and the maid exist at the extremes of information processing cost/difficulty.

The real breakthrough of buyer-centric or fourth party services is not just the agency concept but how and where this concept is applied – in the heartlands of the economy: commercial activity.

For them to do this, they need to create new types of business which use information in new ways. These are businesses that make their money out of ‘consumer empowerment’ or, in the case of public services, citizen empowerment; services that put the power of information in the hands of individuals to help them do what they want to do more effectively and more efficiently.

To make this happen, most buyer-centric or fourth party services will indeed need to be ‘user driven’. For example, it goes without saying that an agency relationship cannot work if the client (in our case, the individual) cannot specify what he wants to achieve, monitor the work of the agent, and so on. We need clever information technologies to make it possible to do this in ways that are easy to use, on a mass scale. This is a massive innovation challenge in its own right, but it’s just one consequence of the core agent concept.

So, to sum up:

Joe advocates the ‘user-driven’ concept on the grounds that it is ‘a direction of innovation’.

Yes, it is one possible direction of innovation. But actually, the scope of innovation it envisages is quite narrow – basically, the mechanisms/services that enable the user to drive the service.

The buyer-centric/fourth party vision on the other hand requires at least three different levels of innovation. For it to work, we need:
•    Clever new tools, software and so on that help individuals gather, store, slice and dice, analyse, share and deploy the information they need to do the things they want to do. (This, in itself, is effectively a whole new industry)
•    Innovative new business models to make these new technologies happen. (What are the revenue streams for the service, what are the economic incentives for the business and the people it deals with?)
•    Innovative ‘social technologies’: i.e. the rules, practices, relationships and safeguards that generate the trust these businesses must have if they are to prosper.

For VRM to flourish, we need all three ‘dimensions’ of innovation.

VRM’s defining contribution is the notion of using information – and developing information services – that work on the side of the individual. The potential scope and benefits of this idea, for both individuals and organisations, is unthinkably huge.

We blur this focus at our peril!

Alan Mitchell

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AlanMitchell Buyer centric services, Project VRM

Here’s my theory on what happens when the subject of VRM/ buyer-centricity is raised in a CRM context.

Hopefully we can work on improving our VRM sales pitch at the VRM workshop in Mountain View later this week.

Anyone with suggestions as to how we can better tell the story and who won’t be at the meeting this week then please chip in with comments and we’ll make sure they get taken onboard.

Iain

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Iain Henderson Project VRM

Here’s the invite. Interesting venue – SAP HQ in silicon valley.

You can register at EventBrite, here:

http://vrmwestcoast2009.eventbrite.com/

It’s free.

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Iain Henderson Project VRM