Here’s one simple way to encapsulate today’s trend towards buyer-centricity. Our modern commercial set-up is organised around a persuasion paradigm, where the driving force in commerce is companies and their attempts to persuade individuals – so-called ‘consumers’ – to buy their products or services (and not those of their rivals).
We are, however, groping our way towards a personal decision-making paradigm, whose centre of gravity is helping individuals make and implement better decisions at lower cost (where ‘cost’ includes time and hassle cost, as well as money cost). This is being made possible by an information age: our increasing ability to search for, gather, store, filter, edit, slice and dice, analyse, share the information we need to for our decision-making.
Better personal decision making (and implementation) is an era-defining shift for two simple reasons: it shifts the focus of value creation from companies and their goals to individuals and their goals; and it encompasses all aspects of production, distribution and exchange (and a whole lot more) – because living our lives as best we can boils down to making and implementing the right decisions at every step of the way, across everything we do.
Practically speaking, this shift from a persuasion to a personal decision-making paradigm is a catalyst for wholesale, accelerating and deepening change. Here are some top line commercial implications.
- It changes the purposes to which information is put. Under the persuasion paradigm, the information that’s made available to individuals is produced primarily by sellers to help these sellers achieve their selling goals: to influence buyer decisions. Better decision making, however, is about using information to help buyers – individuals – achieve what’s best for the individual. This also means a change in information content. For example: the information that is presented in a typical advertisement is different to the information that is presented in a peer-to-peer product review or price comparison service.
- To make better decisions, individuals often need to volunteer further information about themselves: desired outcomes, priorities, constraints, questions, concerns. We looked at one such service ‘module’ – the Problem Solving Community – on the BCCF web site recently (http://www.rightsideup.net/ProblemSolvingCommunities.htm). As a result of this voluntary input of information, the information flows that define relationships and interactions in society are beginning to change fundamentally. The persuasion paradigm revolves around top down messaging by sellers to influence buyers’ purchasing decisions. Better decision-making is informed by bottom-up personal voice: ‘Here I am. This is me. This is what I want to do right now’. This requires far reaching innovation in the mechanisms and processes which connect buyers to sellers.
- Better decision-making is a different type of activity to consuming news or media entertainment. When making decisions we are paying attention to different things, using our minds in different ways, using different types of tools, which are provided by different channels and sources of information. As a result, we are seeing the beginnings of a slow and painful separation of ‘marketing and advertising’ from ‘news and entertainment’.
But there is little benefit in being able to make a better decision if you can’t implement it better. The personal decision-making paradigm therefore opens up two further areas of innovation.
- First, it takes us beyond today’s norm of ‘customer relationship management’, where companies gather information about their customers in order to maximise the value of those customers to the company and to manage the company’s dealings with them. Instead, it leads us towards supplier or vendor relationship management (see Project VRM. http://www.rightsideup.net/ProblemSolvingCommunities.htm). Under supplier relationship management, individuals (or services working for individuals) gather information about organisations in order to maximise the value of those organisations to the individual, and to manage the individual’s dealings with these organisations.
So, while customer relationship management looks at many different customers through the eyes of just one company, supplier relationship management looks at many different organisations through the eyes of just one individual. We are talking about significant changes to the structure of commercial relationships.
This has an important knock-on effect. Our current commercial set-up is organised around producer silos: organisations with the dedicated and focused knowledge, expertise, resources and infrastructure to undertake a particular, specialist production task: make a motor car, make a computer, make a bar of chocolate, fly people from A to B, and so on. The economics of these organisations is organised around doing more of the same, better: the car maker wants to sell more cars, the computer maker wants to sell more computers, and so on.
But most desired outcomes or ‘solutions’ require the integration of many different ingredients. To make that trip, we need our computer to book the flights, our car to get us to the airport, the plane to take us from A to B, and the bar of chocolate to sustain us along the way. To implement better decisions in other words, we need to cut across and somehow integrate the many separate outputs of today’s silo infrastructure.
This leads us to the second critical point about decision implementation. To better implement decisions we need better coordination, integration and administration – of all the different inputs we need to achieve our desired outcomes. This shifts the focus from the inputs themselves to how to bring them together. It shifts the focus from the details of products and services themselves (which will always remain important) to the processes we use to access and use them. Companies recognised the critical importance of process design and management many years ago, but when it comes to personal processes, this is virtually virgin territory.
If we put all these things together, we can see how big thr shift from the persuasion paradigm to the personal decision-making paradigm is. It embraces the purposes to which information is put (and therefore its content); the mechanisms and processes via which this information is generated, elicited and distributed; the channels through which it flows; the structure of the resulting commercial relationships; and the processes we use to generate value through these relationships.
The persuasion paradigm may have had some merit in the early days of the industrial age. But today, it is inefficient, sclerotic and toxic and well passed its sell-by date. The simple concept of better personal decision-making takes us to the brink of an explosion in innovation.
16 August, 2007