The Hindu Business Line : No one gets paid until the consumer releases cash

AS PEOPLE we have grown to accept things that our institutions are yet grappling with. For instance, it is all right if our PM addresses us on the TV rather than on the floor of the House, or if his predecessor frets over a party betting on a wild horse.

We are also used to a flat market and Parliamentary pandemonium, waterless taps and near-empty fuel tanks, unreliable numbers and failing boards. "People have undergone a discontinuity in mentality, but organisations have not," write Shoshana Zuboff and James Maxmin in The Support Economy, published by Penguin (www.penguin.com) .

And the chasm between new individuals and old organisations contains the seeds of the next economic revolution, aver the authors. The back cover calls for action: "Business is broken and can't be fixed because today's managerial capitalism has grown hopelessly out of touch with the people it should be serving."

Companies spend billions to `rediscover' their customers, thinking of them as "wallets, eyeballs, anonymous marks on a ledger, cognitive real estate, personalised relationship targets, or individually addressable data pockets," but the new individuals "continue to be invisible" to corporate radars.

Neither the industrial economy, nor its service counterpart, has been able to satisfy the new demands, and this is the `transaction crisis'. So, you have to look at consumption not narrowly, as "people running through shopping malls like rats in a maze."

What you have now is `individuation of consumption', and it is `largely adversarial'. "People no longer want to bend to antiquated rules of business. They do not want to be the objects of commerce, treated like anonymous pawns in the exploitative games of market segmentation, penetration, and manipulative pseudo-intimacy." But what do they want, instead?

"They want to `opt in' and make their own choices, controlling their destinies and their cash. They want their voices to be heard and they want them to matter."

Leverage that new consumers bargain with is `relationship value' — something that "cannot be created or destroyed by managers in organisations linked in value chains". This value, authors explain, gets created not in organisational, but individual space.

Don't expect your traditional models to help, because this needs "a new economic framework called relationship economics," which put simply, "recognises the individual as the origin of all value and source of all cash." More bluntly, "no one gets paid until the individual releases cash."

Wait, we have heard that `relationship' word many times already. They are only `tactics', notes the book, though `important insights' because `they are ultimately doomed', constrained by standard enterprise logic.

Essential to support economy will be `deep support', where enterprises are accountable for every aspect of consumption experience.

Material capitalism had its pluses too — it created `a world of unprecedented abundance' in `education, health, opportunity, information and experiences'. Only, it gave rise to `new individuals'. The authors point out, with examples, that these people seek meaning, not just material security and comfort; they value quality of life; they insist on self-expression, participation and influence.

In what the book describes as `a fundamental challenge to commerce' more than `a mere failure of marketing', what the new market demands most cannot be bought or sold in today's commercial world.

On political governance, there is a growing demand for `direct democracy' because the new age is tired of mediated influence, write Zuboff and Maxmin. We don't seem to have that, because our democracy can at best be called a dangling one. "Representative democracy reflects earlier historical conditions when most citizens were not literate," so we need symbols such as lotus and hand even now.

Look at a proposed alternative: "New electronic networking technologies mean that the idea of continuous electronic voting is no longer political science fiction." A sure way to make our netas sleepless. Are you aware that a new sector is growing fast, allowing people to moderate their stress "by trading discretionary money for discretionary time in the form of a diverse range of home and personal services"? How big is that market? Estimates vary: "A study conducted for the National Home Centre Institute identified a market of $17 billion for common recurring home maintenance services and another $23 billion for non-recurring services like air-conditioner installation and sewer cleaning."

Another from Sears pegs the size at $160 billion. And for all you know, these numbers may not be looking beyond the US, so the global total should be larger.

Part Two of the book has more on the transaction crisis, things that your accountants will never tell you. There are those `little murders' that are committed in the process of so-called value creation by subjecting consumers to `daily indignities' — in various forms such as transaction starvation, inflation, tyranny and mimicry. "

All too frequently, the frontlines of the organisation are starved of resources, when these are the very places where organisations confront end consumers' pent-up demand for deep support." An outsourced or impersonal answering system is enough to put off most customers, even as the company would be counting its savings through modern communications.

The book views distributed capitalism as the solution, because "today's individuals lead `open source' lives." However, Zuboff and Maxmin concede that a new episode of capitalism does not arise by fiat. It would have to take hold like a `social movement,' they declare too hopefully, but they seem to be aware of the Utopian dimensions of their suggestion when conceding that many of the manifestations they've imagined "may never come to life."

Evangelical economics can conflict greatly with tradition so check your enlightenment level before discarding organisations as being narcissists.

Economics@TheHindu.co.in