Thursday, January 13, 2005

Support Economy

Review of The Support Economy, by Shoshana Zuboff and James Maxmin
Viking Penguin, 2002.

This book is a detailed and persuasive account of the distributed service economy, which the authors call Distributed Capitalism. The background is familiar. An ever-greater share of Western economy is occupied with services rather than products. And yet our experience of service is generally bad - and getting worse. Service providers are trying to achieve economies of scale and cost-savings, while maintaining or increasing revenues. Service staff are under increasing pressure and scrutiny, and "empowerment" is eroded by targets and other narrow initiatives. Consumers are subjected to the indignities of call centres, the persistent nuisance of "courtesy calls", and the inflexibility of business processes that have been tailored to fit an internal corporate agenda.
The promise of eCommerce was that it would offer a genuine alternative for business and consumer relationships. With some honourable exceptions, this promise has failed. Many early eCommerce efforts were coloured by naivety and amateurism ("if we can get a small cut from every purchase made by every large manufacturer, we'll be rich, rich, rich"), or by cynicism ("if we can persuade our customers to do their own admin online, we can get rid of half our staff"). General consumer experience of eCommerce is poor - often because the service details (good logistics, prompt and effective troubleshooting, and so on) have been neglected. And what has happened to all those B2B portals?

What Internet shopping encourages is something the authors call ninja shopping. If a consumer can easily compare prices for flights or car insurance (but cannot so easily compare other characteristics, including service quality), then selection will be based on price, and prices will be driven downwards. Initially this seems to work to the consumer's advantage. But the providers retaliate with an increasingly impenetrable array of extras, excesses and surcharges, which aim to recoup profit margins while making accurate price comparison near-impossible. (I call this Complexity-Based Pricing.)

Consuming services becomes an incredibly time-wasting activity. You have to wait in line to hire a car, because the clerk is obliged to try and sell an array of options to every customer. You have to check-in hours before a flight, and you still may miss the connection. You have to review all service bills carefully for unexpected charges and other errors. You have to wait for everything. (This waiting is an almost inevitable consequence of traditional process thinking: if a customer ever gets immediate attention for anything, this rings alarm bells in the process office, indicating that the relevant function is over-resourced.)

The authors argue that there is a huge potential wasted value locked up in these dysfunctional service relationships. They advocate a form of deep support, that will release/realise what they call relationship value, and they paint an attractive and detailed picture of the way it might work. They go on to argue that the realization of relationship value calls for a new enterprise logic: distributed, federated, dynamic, infinitely configurable; technologically supported by digital media and infrastructure convergence. From an SOA perspective, this sounds very familiar.

The book is not just an eloquent argument for the service-based business, but also a powerful vision of how it can and must be done properly. Recommended reading for everyone interested in the service economy.

Review first published in the CBDI Journal, July/August 2004.

The Support Economy Website

See also Shoshana Zuboff, Creating value in the age of distributed capitalism (McKinsey Quarterly, September 2010)

Related Post: Heartbeat Economy (January 2005)

Updated 14 May 2014

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