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I see several interwoven agendas caused by the interface between marketing and
technology that all move us towards ‘user-accountability’.

1. The advent of decision-based web-dialogue enabling users to sense needs and
co-ordinate responses.  Companies no longer have to predict or pre-build product on the basis of guesswork; they can build what you say you want…and infer what you might need next.

2. The ability to share the rich information currently within value-chains in
user-defined value-specifications creates the possibility of genuine brand
accountability to end users.

3. The ability to physically track and trace product, or people (though RFID) offers
huge value opportunities – if shared with individual users.

Just as media convergence enables you to bring videos, music, pictures and books into a
single storage ‘pot’, so RFID will enable the same possibilities with physical
assets.

4. Finally, the advent of social software – enables people not just to connect their
social networks (cf. Linked-in), but to generate incremental value through
those networks (cf. del.icio.us, flickr, technorati).

This newfound ability to undertake personal asset management will greatly
simplify people’s lives and create new opportunities for value ‘origination’ – unleashing
the so-called DIY era, typified by personal publishing and the iPod generation.

Once individuals are ‘in charge’ of their total asset portfolio:  physical, information, relationship, and
reputational assets, they can begin connect their own ‘internalities’ of their
values, to the ‘externalities’ of global production systems…

This ability
to connect the user’s richly-informed demand-chain to corporates’ flexible supply-chain
suddenly makes woolly notions of win:win economics and corporate social
responsibility, not just practical, but actually profitable.

“I want blue,
nike-brand T-shirts made from organic cotton, produced in china at labour rates
above national average…and it want them by next Tuesday…overprinted with images
of my new pet rabbit…and shared with my three best friends – in different locations.”

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Person-centric services are set to change the way individuals interact with organisations (including large corporations, governments and public services). In doing so they will trigger far-reaching economic and, perhaps, political change.

But why should person-centricity be happening now?

The first answer is, because they are only now becoming possible. Person-centric services depend on individuals’ ability to gather up and pass on rich information about themselves, their needs and their preferences, to organisations – and to ‘slice and dice’ services in response to this information, which in turn requires very low transaction and coordination costs. These three core elements – rich personal information, ‘bottom up’ flows of information and low transaction costs – are only becoming a mainstream reality with the rise of broadband internet and related technologies.

Quite simply, until now, our economy lacked the infrastructure necessary for person-centric services (many more specific building blocks still need to be put in place).

The second answer is that the opportunity is rendered invisible by the seller-centric mindset. Person-centric services are designed to improve the economics of individuals and earn their keep by doing so. That is, their role is to help individuals achieve personal goals (big and small) more effectively at lower cost. This is how their business models are constructed and where their economic incentives lie. In contrast, our current seller-centric commercial environment revolves around improving the economics of the firms.

The prevailing seller-centric mindset divides the world of economic opportunity into two: those things that improve the economics of the firm (which it takes a big interest in); and those things which don’t (which it ignores).

Producing products and services which consumers want to buy improves the economics of the firm, and so therefore becomes a focus of intense interest in the seller-centric firm. This is the source of rich and powerful win-wins between buyers and sellers in a seller-centric economy.

But things which don’t improve the economics of the firm either get left to the individual to do for himself, or don’t get done. And there are more of these than might appear at first sight: things which seller-centric firms cannot or do not want to do. Providing the individual with the information he needs to make the best possible purchasing decisions is one example: if this information influences the individual to buy a rival’s wares instead, the firm has no incentive to provide it. Saving the individual time is another huge area: the time individuals spend going to market or trying to make products and services work (or work together) rarely figures in a seller’s P&L. If it did, queues would not exist.

Person-centric services have their roots in this no man’s land by-product of seller-centricity. That does not mean they cannot generate win-wins between buyers and sellers. In fact, as other articles on this web site demonstrate, they can and will generate huge benefits for both buyers and sellers. But from their current vantage point, sellers can’t ‘see’ these win-wins because they are counter-intuitive to the current mind-set. They can only see those markets which reflect their current obsession and priorities.

A good example of this counter-intuitivity is the ideology of ‘customer focus’. This seems like a 100% watertight answer to any criticisms of seller-centricity. What could be possibly wrong with identifying and meeting the needs of customers better than your competitors?

Answer: Nothing. Except for the seller-centric assumptions it carries with it. The reality is, ‘the consumer’ or customer is an invention of the seller-centric mindset. ‘A consumer’ is an entity which buys and consumes what the firm happens to make. When an ice-cream maker ‘focuses’ on the consumer, it sees a different entity to a financial services seller focusing on the same consumer. That is because they are not focusing on the person. They are focusing on those attributes of the person that relate to their ability to sell ice-creams or financial services. When they ‘focus’ on ‘the consumer’ seller-centric firms do not see a person at all; they see a mirror image reflection of their own needs and preoccupations. That is why we need a different type of service that starts with the person, rather than with a product or service to sell.

We have already discussed the other assumption: that improving the economics of the firm comes first. ‘Customer focus’ is not the purpose of the seller-centric firm: it is a means to end – of selling more stuff, more profitably. ‘Customer focus’ is invisibly and inherently constrained by this caveat. What the customer focus slogan really means is ‘focus on those needs that we can turn into profitable markets for our particular organisation’.

Within the parameters of seller-centricity there is nothing wrong with this: it makes precious little sense to meet customer needs unprofitably. All this will produce is a firm that goes bust, and then no one’s interests are served. It is simply ‘common sense’ that this caveat applies … just as it is common sense that the earth is flat and lies at the centre of the universe.

Changing the way individuals interact with organisations and reconfiguring the provision of private and public services around the economics of individuals has the potential to unleash a new – and very long – economic boom. Home, health, money, travel, knowledge, communication: these are just a few of the economic arenas potentially transformed by person-centric services.

Time and time again, common sense renders the truth invisible. Right now, common sense is exactly is doing exactly that to our biggest economic opportunity.

Alan Mitchell

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The Financial Times kicked the new year off with a long editorial about ‘the media industry in an internet age’. The editorial discussed the spreading ripple effects of digital downloading on the music industry, and then turned its attention to newspapers, to note that people will always want information that is “researched, scripted and edited in the traditional way”.

“There will be more competition and uncertainty in the new world,” it concluded, “but some things will be the same”.

Sameness and difference. We humans seem to have incredible difficulty dealing with these concepts. We can’t seem to stop ourselves trying to pigeon-hole things into neat boxes. One thing is ‘revolutionary’, we say. But another thing is merely evolutionary; more of the same. We then argue endlessly about what should go into which category.

But the real world around us doesn’t recognise these distinctions. Every revolution has its elements of continuity. And most evolutionary change has increasingly ‘revolutionary’ effects as it accumulates over time.

The Bolshevik Revolution in Russia was a real revolution, for example. An entire social class and system of governance and administration was overthrown. A new way of running things came into being, with new people in power. For most of the ensuing century we were all in thrall to its knock-on effects. Yet, looking back, we can also see strong elements of continuity. The Soviet system revolved around more of the same. More industrialisation, more electrification, more wealth creation via the mass production of standardised units – just as Fordism did across the ideological divide. It was the sameness, not difference, that triumphed in the end.

Meanwhile the falling cost of computing power and our increasing ability to distribute digital information at low cost has been an evolutionary affair, starting over fifty years and trundling on ever since. There are some significant milestones, but it’s difficult to pinpoint any defining turning points; only symbolic markers such as Apple’s launch of the personal computer. The same trend towards ‘democratised information’ has simply continued, with accumulating effect.

The FT was forthcoming about these accumulating effects in its comments about the music industry. What bundles of value are made available (e.g. single songs or complete CDs), how much we pay for them, how we pay for them, how we access them, using what tools, and how we use the resulting value bundle – all of these things have changed.

Like the FT, the music industry can claim that things are still the same. We are still listening to music. Likewise, there will always be demand for well-researched, edited information. But if I was the FT’s owner, Pearson, I would still be quaking.

Real value-creating businesses do not revolve around abstractions like ‘music’ or ‘researched, edited information’. They revolve around the nitty-gritties: the exact bundle of value, how it is distributed, purchased and used, at what cost and for what revenues: all the things that are increasingly not the same. The market for quality information may well grow. Whether it grows within the framework of an institution like the FT is a very different matter indeed.

So why go on about this silly editorial? Because it sums up much of the debate surrounding buyer- or person-centric commerce. It’s often said that the printing press was one of the most revolutionary (there we go again) of all inventions because it democratised knowledge and learning. Well, ‘the information age’ is extending that democratisation to other forms and uses of information too: to the information that is used for planning, organisation, administration, coordination, communicating, transacting and so on. To the information that lies at the heart of every business, in other words.

The falling costs and increase ease of all these different aspects of information processing mean that increasingly, they are becoming tools in the hands of individuals instead of remaining a monopoly preserve of big institutions, as they once were.

Thanks to this accelerating, accumulating ‘evolution’ we are increasingly able to reconfigure the bundles of value, the means of distribution and access (and associated costs, revenues, payment mechanisms and other forms of value exchange such as information and attention trading) around the specific circumstances and needs of individuals.

Instead of starting with ‘a supply chain’ and then going looking for ‘a market’, we can start with an individual and his needs and wants, and then go looking for ways to address them. Because we have the information infrastructure to do so, at a viable cost.

Like the FT, you could insist that even so, “things will be the same”. Individuals will still want to eat, find shelter, stay healthy, move from place to place, and so on, just as they have always done. Just as they have always liked music, and valued quality information. Absolutely. But exactly how they do all these things is becoming increasingly person-centric.

Is this evolutionary or revolutionary? Is it more of the same? Or different? It doesn’t really matter which pigeon-hole you choose. What does matter is that the opportunity is real.

Alan Mitchell

6 January, 2006

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