There is a really important catch 22 in there Doc that I have been struggling with. But first, Graham is right, customer first is not enough. My observations from inside companies, from McDonald’s to Procter & Gamble, is that many companies' success is the result of a perfect virtuous cycle where everyone benefits. But success breeds “bugs" which reverse the virtuous cycle to a vicious cycle. As the market matures, competition for both consumers by price and quality employees at scale squeezes margins to single digits. The natural reaction is to squeeze consumers (imperceptibly shrinking the package size), vendors (paying late to manage cashflow) and employees (laying off to create the perception of improved productivity to financial partners) to deliver targets to banks or shareholders. (And you can’t run a mega sized company without banks or shareholders.) Voila there’s nothing left to invest back into the business. Consumers shop on price. Vendors are also pressured to squeeze employees to manage their own cash-flow. Employees aren’t proud of their job anymore, it is just a paycheck. No one in the value chain is even thinking about the customer. Most internet start-ups start with scale as the criteria for success. In my opinion, this is inherently flawed because it is replicating a successful business during the vicious stage in its life cycle. When a company starts out with single digit margins, by paying employees zippo, playing a bait and switch game with customers, and paying vendors late, what happens when the competition comes in and margins are squeezed further? Doc, you have introduced one reason scale is considered a success criteria on the internet – universal operating system. If it doesn't work on every device and every operating system, then it can not scale. And it is expensive to do this at the start. To succeed a start up needs to promise to scale quickly to pay for the investment. Most fail. One way around this is to use 3rd party platforms which manage the backend so we can put our resources into the front end. The problem is that we have no idea what the 3rd party is doing (or not doing in terms adequate security) with our customers' data. One investment a quality company can make is to invest in an independent “policeman” to validate and monitor a 3rd party’s claim. I’ve yet to hear this kind of service exists. It seems to me that one VRM related company which could scale rather quickly is an independent 3rd party to “police” third parties to be assured they aren’t hijacking consumer data or vulnerable to others who will. Isn’t this a fundamental requirement for any VRM company offering to help consumers control their own data? From: Doc Searls <
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> Date: Monday, February 17, 2014 at 6:57 AM To: Graham Hill < "> > Cc: Mary Hodder < "> >, ProjectVRM list < "> >, Johannes Ernst < "> > Subject: Re: [projectvrm] Internet companies that put the customer first?… Is that Enough? Good question. I remember a conversation I had, back in the '80s, with a guy I know who worked with Jack Tremeil <http://en.wikipedia.org/wiki/Jack_Tramiel>, best known for running Commodore and Atari, when those companies mattered. "Jack will screw everybody but his customers," this guy said. I don't know if that was true. It was at least an exaggeration. But it stuck with me, because it represented a mentality I had seen elsewhere and didn't like. (Some would say Walmart does the same thing.) There is no doubt that Amazon is good to its customers. Everybody I know who works for the company, from Jeff Bezos on down, talks about how the company puts customers first. They do that, I think, mostly with low prices and efficient delivery. (Dell used to do the same thing, when they mattered.) But one does wonder about other costs, such as the ones cited below. I think one of the challenges we have, as a society, and within our own efforts here, is to give better weight to costs other than price. How do we value a company that puts customers first and low-level employees last? And do we want to encourage that? I also think the difficulty we have in answering Johannes' original question is that "Internet companies," even "decent-sized" ones, are all relatively new. eBay and Amazon are elders at 19 years old apiece. Apple is ancient at almost 40, but came late to the Internet. (While the Internet took off, Apple built its own lame alternative to AOL, "eWorld": <http://en.wikipedia.org/wiki/EWorld>.) I would rather look for companies that might welcome VRM tools on the customers' side. I know a number of companies here are working with companies like that — although none are "Internet companies." Instead they are in old-fashioned industrial categories such as utilities, airlines and finance. The key challenge for those companies will be the same one that faced Apple and Microsoft in 1995: Do you welcome more empowered customers using the same tools to relate to every vendor (which the Internet provided with email and browsing on the Web), or do you provide systems that "deliver a better experience" by trapping customers inside a walled garden? If vendors control VRM for customers, and the VRM experience requires using exclusive tools to deal with every different vendor, it will only be better CRM. Doc On Feb 17, 2014, at 2:35 AM, Graham Hill <
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