We are all customers of capitalism, an economic system that promotes material well-being. Historically, capitalism has cared for the customer. Not only has it lifted billions of people around the world out of poverty, it has also improved the quality of life in many aspects, from infant mortality to longevity, access to quality education, and economic opportunity for all. has been improved.
Some of our most important customers are young people. They should have confidence in the capitalist system and feel motivated to strive for a better future that it offers, but they are not able to do so. A recent Pew survey found that only 40% of 18- to 29-year-olds expressed a positive attitude toward capitalism, and a majority said they were positive about socialism.
What went wrong?
The golden age of American capitalism can be described as customer capitalism. Great companies are built on the drive to improve the lives of their customers. Companies have introduced affordable lighting to extend installation life and brighten homes. They have innovated safely packaged nutritious food. They made dramatic advances in transportation, medicine, and sanitation. They introduced tools and machines to increase productivity in factories and jobs. Customer capitalism is an externally oriented system that looks at markets and end users and their needs and seeks to meet those needs using mass production, mass distribution, and mass marketing to serve as many users as possible. It was a system.
This external orientation gradually changed as new practices of business and corporate management began to look inward to emphasize efficiency through organization, hierarchy, and bureaucracy. Customers remained a source of revenue, but they lost their primary influence in determining a company's success. Eventually, shareholder value came to take precedence over customer value as a measure of capitalism's performance. Financial markets expanded at the expense of customer markets, and capitalism became largely a trade in stocks, bonds, and derivatives rather than goods and services.
Young people are observing the world and questioning whether capitalism serves them. They do not always feel seen, heard, and valued by the economic system. To re-establish their support, companies need to re-establish market-oriented customer capitalism as the norm.
Return to customer value
Customer value is the only effective and appropriate guideline. The term “value creation” has been standardized as if value were an objective quantity produced within a company. Value is subjective, perceived through different lenses of individual customers, and influenced by personal needs, preferences, and evaluation processes, all of which are constantly changing. Value is about understanding the customer's desired state compared to the current state and moving the customer toward that state. Value is driven, not created, by companies. Successful efforts result in revenue (the customer's willingness to pay for a valuable experience) and, subsequently, profits. Revenue, profit, and shareholder wealth are not the objectives. The purpose is to promote value.
Throughout its history, Nike has been one of the great proponents of subjective value. In designing and marketing its shoes, apparel and equipment, the company values the aspirational value for its customers of access to the tools used by elite athletes and the high value of a sense of accomplishment at all levels of sport.
lead with empathy
The key business skill for driving value is empathy. This is a skill not typically taught in business schools and not typically cultivated in companies. Empathetic companies are more likely to sense the desired state of their customers and see their current state through the lens of their customers, thereby mapping and charting the path between them. . The mental models that empathetic companies use are those of their customers, not their own. Listening is not data collection, but an act of engaging the heart and mind. There was less arrogance and more emphasis on values.
In addition to emphasizing empathy in our communication and treatment approaches, Cleveland Clinic embodies empathetic listening by addressing patients' emotional and psychological needs as well as their clinical needs, ensuring patient-centered care. We understand the value of working on
enable customers
Many companies are devoting resources to improving customer service and helping customers better navigate their interactions with the company and its processes. But the best business models go further by giving new power to customers. Customer enablement is becoming the norm in the digital age and could pave the way for a new phase of customer capitalism. The mechanism is directly connected. In business models like Netflix and Amazon, customer choices and customer actions are fed directly and seamlessly into an internal data layer that guides internal functions toward future features and value propositions. Customer behavior becomes functional information without filtering or transformation.
Companies with more traditional business models and structures can mimic this mechanism by assigning maximum importance to information collected by front-line employees and operations. This information must flow freely to all parts of the enterprise without filtering, and all functions within the enterprise must be able to adaptively respond to the information without permission.
Some insurance companies are increasingly enabling customers in insurance claims. Liberty Mutual partners with Homee, a startup platform that matches homes and businesses in need of repairs with approved service providers via a mobile app, without requiring extensive claim validation by insurance companies. Established. The result is both improved customer sentiment and reduced costs.
dismantling bureaucracy
One of the seemingly irresistible and unstoppable developments in corporate history is the growth of bureaucracies and the anchoring of rules-based constraints on the free movement of both employees and customers. was. Bureaucracy has been described as a disease, a cancer, and a tax on human accomplishments. Bureaucracy knows numbers, systems, and ways to cut costs, but it doesn't always know value. In a survey reported in the Harvard Business Review, respondents attributed seven categories of business “shackles” to bureaucracy. Companies know the problem, but they can't solve it. Young people's anxiety about capitalism is actually anxiety about the companies that are the main players of capitalism, and a large part of their anxiety is the bureaucratic rules that require them to work within a company as an employee and interact with the company as a customer. .
The only solution to bureaucracy is to dismantle it. we know how to do it. Make teams into organizational units. Eliminate “departmental” organizations (particularly HR and accounting) and replace them with value-driving functions such as engagement, operations, technology, and marketing.
At SpaceX, for example, Elon Musk demonstrated what is possible with this kind of approach, effectively eliminating middle management and leveraging real-time data wherever possible to allocate resources and improve team performance. Improved. The company has set new standards for manufacturing effectiveness and efficiency in the industry.
Marketing as love
Traditionally, marketing has been a business function that builds relationships with customers. A golden age of brand building, whether it's building trust between her IBM and its business customers for reliable computing or the trust mothers place in her Tide to keep their clothes clean and bright. But it was relationship-driven. Modern marketing has lost love and therefore trust. It is mechanical and mathematical. That means guiding customers through eyeballs, clicks, and “funnels” to the point of purchase, motivating salespeople by achieving goals and closing deals.
We need to go back to building customer relationships based on emotion rather than numbers. A brand is a valuable asset with substantial economic value based on positive customer sentiment. Brand building is an art of relationships, not an exercise in marketing mathematics. Companies can be proud of their brand internally, and the brand can be culturally binding. Externally, customers can love your brand, and your brand can promote positive feelings towards your business. The resurgence of brand-building skills will go a long way toward reviving customer capitalism.
Jersey Mike's demonstrated what's possible when love is at the heart of simple, straightforward food marketing. The company's relationships with customers and franchisees alike are illuminated by noble intentions, which are further expressed in a charitable giving program that engages all levels of the company and the communities it serves.