Scaling business in parallel

Companies and customers need to be able to deal with each other in two ways: as individuals and as groups.

As of today companies can deal with customers both ways. They can get personal with customers, and they can deal with customers en masse. Without the latter capability, mass marketing would not be possible.

Customers, on the other hand, can only deal with companies as individuals, one at a time. Dealing with companies as groups is still a challenge. Consider the way you engage companies in the marketplace, both online and off. Your dealings with companies, on the whole, are separate and sequential. Nothing wrong with that, but it lacks scale. Hence: opportunity.

We can arrive at that opportunity space by looking at company and personal dealings, each with two kinds of engagement circuits: serial and parallel.

Start with a small company, say a store with customers who line up at the counter. That store  deals with customers in a serial way:

The customers come to the counter, one after another, in a series. Energy in the form of goods goes out, and money comes back.

As companies scale up in size, however, they’d rather deal with many customers in parallel rather than in series. A parallel circuit looks like this:

Here customers are dealt with as a group: many at once, and in the same way. This, in an extremely simplified form, is a diagram of mass marketing. While it is still possible for a company to deal with customers individually, the idea is to deal with as many customers as possible at once and in the same ways.

I use electronic symbols in those circuits because resistance (the zig-zag symbol) adds up in series, while it goes down in parallel. This too is a virtue of mass marketing. Thus one-to-many works very well, and has proven so ever since Industry won the Industrial Revolution.

Over on the customers’ side, the marketplace on the whole looks like this:

The customer goes from one company to the next. This is not a problem on the vendors’ side, except to the degree that vendors would rather customers not shop elsewhere. This is why vendors come up with loyalty programs and other schemes to increase “switching costs” and to otherwise extract as much money and commitment as possible out of the customer.

But, from the customer’s side, it would also be cool if they could enjoy scale in parallel across many companies, like this:

In the physical world this is all but unthinkable. But the Internet makes it very thinkable, because the Net reduces nearly to zero the functional distance between any two entities, and presents an open space across which many connections can be made, at once if necessary, with few limits on the number or scope of possibilities. There is also no limit to the new forms of interaction that can happen here.

For example, a customer could scale in parallel by expressing demand to multiple vendors at the same time, or could change her contact information at once with many companies. In fact this is basically what VRM projects are about: scaling in parallel across many other entites. (Not just vendors, but also elected officials, government agencies, churches, clubs, and so on.)

It is easy to see how companies can feel threatened by this. For a century and a half we in business have made a virtue of “targeting,” “acquiring,” “capturing,” “managing,” “locking in” and “owning” customers. But think about the free market for a minute. Shouldn’t free customers be more valuable than captive ones? Wouldn’t it be better if customers and prospects could send many more, and better, signals to the marketplace, and to vendors as well, if they were capable of having their own native ways of dealing, consistently, across multiple vendors?

We have that now with email and other forms of messaging. But why stop there?

Naturally, it’s easy to ask, Could social media such as Facebook, Google+ and Twitter provide some of what we need here? Maybe, but the problem is that they are not ours, and they don’t work for us — in the sense that they are accountable to us. They work for advertisers. Email, IM and browsing aren’t owned by anybody. They are also substitutable. For example, you can move your mail from Gmail to your own server or elsewhere if you like. Google doesn’t own email’s protocols. No browser company owns HTTP, HTML or any of the Web’s protocols.

The other problem with social solutions is that they’re not personal. And that’s the scale we’re talking about here: adding parallel capabilities to individuals. Sure, aggregation is possible, and a good thing. (And a number of VRM projects are of the aggregating-demand sort.) But the fallow ground is under our own feet. That’s where the biggest market opportunity is located. Also where, still, it is most ignored. Except, of course, here.

[Continued in VRM/CX + CRM/CX.]