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Today?s ?managerial? capitalism has grown hopelessly out of touch with the people it should be serving. The Support Economy explores the chasm between people and corporations and reveals a new society of individuals who seek relationships of advocacy and trust that provide support for their complex lives.
Unlocking the wealth of these new markets can unleash the next great wave of wealth creation, but it requires a radically new approach??distributed? capitalism. The ...
Today’s “managerial” capitalism has grown hopelessly out of touch with the people it should be serving. The Support Economy explores the chasm between people and corporations and reveals a new society of individuals who seek relationships of advocacy and trust that provide support for their complex lives.
Unlocking the wealth of these new markets can unleash the next great wave of wealth creation, but it requires a radically new approach—“distributed” capitalism. The Support Economy is a call to action for every citizen who cares about the future.
Instead of offering quick fixes for the symptoms of the crisis, the authors critically examine its cause. They write that managerial capitalism has outlived the society it was originally designed to serve. Although it has effectively achieved the mass production of goods and services, individuals still crave more. The authors explain that the next great step in wealth creation depends on the creation of a new form of capitalism, a "distributed capitalism" that is capable of fulfilling the needs of individuals, while exploiting the full revolutionary capacities of digital technology.
The authors have divided The Support Economy into three parts. The first addresses the challenges that face our current economy. In it, they explore the structures of the economic revolutions that have taken place over the last century and the rise of standard enterprise logic. The authors investigate the rise of the new society of individuals, individuated consumption, and the new markets for deep support. These new developments present numerous challenges to the status quo of managerial capitalism and the opportunities for wealth creation they represent.
The second part of The Support Economy focuses on the crisis that faces the current economy and what happens when individuals in their roles as consumers confront old organizations. The authors explain how this confrontation creates a transaction crisis, and investigate why standard logic has been unable to tackle the problems that have developed. Along the way, they explore the social psychology of the modern organization, particularly as it helps explain the adversarial relationships that have developed between the world's consumers and producers. The authors also look closely at the range of recent innovations that are supposed to transform organizations and their relationships with customers, and their pitfalls.
The New Enterprise Logic
The third part of The Support Economy is called "Emergence: The New Enterprise Logic." Here, the authors address the opportunities for economic revolution that can be found in the commercial inventions that are intended to help individuals satisfy their need for support. They look into the recent history of electronic commerce for clues about how new technologies can improve the connection between companies and individuals and help to build a support economy. Several "metaprinciples" are offered that redefine the purpose of commercial activity. These include, "All value resides in individuals," and "Relationship economics is the framework for wealth creation." The authors describe the structure and benefits of a new distributed capitalism and the kinds of commercial inventions that could meet the demands of new markets and offer new possibilities for wealth creation.
Why Soundview Likes This Book
Looking closely at consumer complaints and examining their deep-seated origins, the authors seriously consider the problems we all face when dealing with technological problems, and offer better ways for companies to help consumers get what they want in work and life. Their historical perspective makes this a well-conceived, thought-provoking book that digs deep into the problems of our current economy and offers a new social movement that could make all of our lives easier and more productive. Copyright © 2003 Soundview Executive Book Summaries
Bridging the Chasm
People have changed more than the business organizations upon which they depend. The last fifty years have seen the rise of a new breed of individuals, yet corporations continue to operate according to a logic invented at the time of their origin, a century ago. The chasm that now separates individuals and organizations is marked by frustration, mistrust, disappointment, and even rage. It also harbors the possibility of a new capitalism and a new era of wealth creation.
In the second half of the twentieth century a new society of individuals emerged-a breed of people unlike any the world has ever seen. Educated, informed, traveled, they work with their brains, not their bodies. They do not assume that their lives can be patterned after their parents' or grandparents'. Throughout human history the problem of identity was settled in one way-I am my mother's daughter; I am my father's son. But in a discontinuous and irreversible break with the past, today's individuals seek the experiences and insights that enable them to find the elusive pattern in the stone, the singular pattern that is "me." Their sense of self is more intricate, acute, detailed, vast, and rich than at any other time in human history. They have learned to make sense of their lives in unique and private ways, to forge the delicate tissue of meaning that marks their lives as their own.
In all other times and all other places, psychological individuation was unimaginable. It was, at best, the emotional precinct of an elite group of artists and spiritual seekers-rare, elusive, precious. But today that unique human capacity for individuation has been put within the reach of millions of people. Their individualism, long regarded as the basis for political self-determination, has also become the foundation for the one sure thing they have in common: a deep and abiding yearning for psychological self-determination.
The new individuals are remaking their societies as they demand the right to psychological sovereignty, but they continue to be invisible to the commercial organizations upon which they must routinely rely. Long distant from the land and far removed from age-old traditions of household production, the new individuals protect, sustain, and nurture themselves and their families in the only way that is available-through the modern processes known as "consumption." But corporations continue to be dominated by a commercial logic based on assumptions about human beings and their approach to consumption that is more than one hundred years old. That commercial logic, known as managerial capitalism, was invented for the production and distribution of things. It has been uneasily adapted to the delivery of services. But neither goods nor services adequately fulfill the needs of today's markets.
In search of psychological self-determination, the new individuals want something that modern organizations cannot give them: tangible support in leading the lives they choose. They want to be freed from the time-consuming stress, rage, injustice, and personal defeat that accompany so many commercial exchanges. As a result, a chasm has opened up between the new individuals and the world of business organizations. Too many people, consumers and employees alike, feel that businesses are failing those whom they should be serving-capitalism's past is in bold confrontation with the realities of human life today.
Companies invest billions in endless cycles of quick fixes to "rediscover" their end consumers. But the chasm that separates the new individuals from their commercial organizations cannot be bridged within the terms of today's business models. Instead, we will argue, that chasm reflects an enterprise logic that has outlived the society it was once designed to serve. It matters little whether companies think of their end consumers as wallets, eyeballs, anonymous marks on a ledger, "cognitive real estate," "personalized relationship targets," or "individually addressable data packets." In every case, what is most important about today's individual end consumers cannot be perceived by the modern enterprise as we know it. Corporate indifference has resulted in a weary mistrust-frequently shading into disgust-among end consumers, as well as a new determination to find alternatives to the status quo of today's marketplace.
We will explore these propositions in depth in the coming chapters. For now, consider but a few points:
u Fifty-seven percent of Americans say they do not trust corporate executives or brokerage houses to give them honest information. "The public feels pretty good about themselves," says the architect of the poll, "but they're disappointed [that]...our institutions are failing us." A majority of Americans believes that companies should put the interests of employees (31 percent), their customers (27 percent), and their communities (19 percent) first. Many fewer identify stockholders (14 percent) or executives (3 percent) as the appropriate focus of corporate decision-making. Evaluations of actual corporate behavior show just the opposite. A plurality of 43 percent believes that top executives are the primary beneficiaries of corporate decisions, with 37 percent saying that shareholder interests come first.1 Sixty percent of investors believe that well-known corporations are using questionable accounting practices, while 28 percent believe there is an "epidemic of deceptive accounting practices" among well-known corporations.2
u Trends in British public opinion show a dramatic decline in people's faith in corporations. In 1970 the public agreed by a majority of two-to-one that "the profits of large companies help make things better for everyone who buys their products and services." By 1999, the situation was reversed. Surveys showed an equally decisive rejection of that statement by the same two-to-one majority. That year, four-fifths of the British public agreed that "As they grow bigger, companies usually get cold and impersonal in their relations with people."3
u The April 2002 Eurobarometer Survey (a semiannual public opinion survey of the fifteen EU member states) queried the public's trust in institutions. Trust in "big companies" was least widespread. Only 33 percent of the sample indicated a tendency to trust corporations. They ranked last behind the army (70 percent), the police (67 percent), the United Nations (59 percent), charitable or voluntary organizations (56 percent), the national legal system (51 percent), religious institutions (44 percent), nongovernmental organizations (42 percent), and trade unions (39 percent).4
u In order to divert the U.S. Congress from a debate over a passenger bill of rights, the airline industry executed the Airline Customer Service Commitment in June 1999. The plan detailed numerous customer service improvements to be undertaken immediately. Despite the commitment, the U.S. Department of Transportation (DOT) found that customer complaints more than doubled in 1999 over the prior year, and complaints for the first four months of 2000 were up by 74 percent over 1999. They also estimated that the airlines themselves received as many as 400 complaints for every one complaint received by the DOT.5
u More than half of all Americans are not satisfied with the availability of their doctors and the amount of information they receive in an office visit, which now averages seven to ten minutes. As a result, they are breaking new ground in the $1 trillion health-care industry. Fifty-two million adults now use the Internet as their primary source of health-care information.6 Between 1990 and 1997 the number of visits to alternative medicine practitioners increased 47 percent. By 1997, visits to alternative practitioners exceeded the number of visits to all U.S. primary care physicians by 243 million, and the total out-of-pocket expenditures for these services was about $27 billion, comparable to the out-of-pocket payments to all U.S. physician services that year.7
u A U.S. Department of Education report concludes that the number of children being home-schooled increased by 100 percent to 200 percent between 1990 and 1996. By 2000, the number of children in home-schooling was estimated to be between 1 million and 1.7 million. Given the turnover in home-schooling, as much as 6 percent to 12 percent of the school-age population is now likely to have had some home-schooling by the age of eighteen.8 Home-schooling families can now avail themselves of thousands of new consumption options, including textbooks, videos, software, seminars, camps, and distance-learning programs, all aimed at enabling them to design a unique approach to their child's education.
u Demographers have concluded that the hallmark of population movements in the United States in the late twentieth century was a pattern known as "deconcentration," in which people left the regimentation of city and suburb to forge a new kind of life, infused with a greater sense of well-being and personal control, in rural America. In a demographic turnaround without historical precedent, rural net migration gain was 3.6 percent during the 1990s, compared to 1.8 percent in the cities.9
Today's individuals have a hard time believing in the corporate institutions of managerial capitalism, even the best among them. As end consumers and as employees, they find it increasingly difficult to trust that their interests are being served. The evidence we will present suggests that not only are the new individuals forced to absorb the consequences of corporate indifference, they are also ready to blaze new trails. As their needs go unheeded, they are pioneering wholly new kinds of consumption experiences, hoping to find what they are after. The industrial economy is no longer adequate to their demands. The service economy cannot fulfill their needs. But as we will argue in the coming chapters, this depressing scenario harbors an electrifying possibility: Everything about the new individuals that is ignored today is waiting to become the focus of a new "support economy," based on a new "distributed capitalism."
The chasm between today's individuals and today's commercial organizations is what we call the transaction crisis. On the surface, this appears to be merely a source of irritation. Indeed, consumption itself is belittled by conservatives and progressives alike. Both tend to conceive of consumption narrowly, as if it were only about people running through shopping malls like rats in a maze. In consumption they see moral vacuity and self-indulgence. Progressives blame this on manipulation by corporations and their advertisers. Conservatives blame the loss of values and communal purpose. In fact, consumption these days is only incidentally about tossing away discretionary income at the mall.
In an advanced industrial society, consumption is a necessity, not a luxury. It is what people must do to survive. It is the way that individuals take care of themselves and their families, much as hunting and gathering or growing crops were for people of earlier societies. For today's women and men, consumption decisions encompass everything from education to health care, insurance, transportation, and communication, as well as food, shelter, clothing, and luxuries. Through the consumption of experience-travel, culture, college-people both achieve and express individual self-determination. No one can escape the centrality of consumption. There is no distinct class of consumers. Everyone is a consumer, no matter what their status or income level. Corporate executives and their employees, entrepreneurs and their investors, students and their teachers, artists and their agents, retail magnates and their clerks, telecommuters, factory workers, farmers, small business owners, public officials, professionals, civil servants, and stay-at-home moms are consumers all. Far from being a trivial irritant or a complaint of the spoiled rich, the transaction crisis has far-reaching consequences for a majority of individuals, families, firms, and economies.
Small wonder that at the first signs of recession, political leaders exhort people to spend money. Consumption has come to define economic well-being in an advanced economy. By 1993, nearly two-thirds of all jobs in the U.S. economy were directly or indirectly dependent upon consumer expenditures, making consumers responsible for more than 79 million jobs that year, a number that is expected to increase to 92 million jobs by 2005. Consumer spending generates employment in all but ten of the 195 industries that are tracked by the Bureau of Labor Statistics (BLS) (the ten are either government related or special industry categories designed for input-output accounting conventions). Every one of the 278 occupations used in the BLS industry-occupation matrix has become more dependent upon consumer spending since the mid-twentieth century.
The fastest-growing industries have also been those with the highest dependency (100 percent) upon consumer spending, such as health care and educational services. Consumption-related employment growth in computer and data-processing services increased by nearly 500 percent between 1977 and 1997. In management and public relations, that growth was about 250 percent. Indeed, U.S. Labor Department figures indicate that nearly two-thirds of all managerial and executive positions are directly consumer related.10 In 1998 consumption accounted for nearly 67 percent of the U.S. Gross Domestic Product. Trends in Europe were similar, if not everywhere quite as dramatic. For example, in 1998 consumption as a percentage of Gross Domestic Product ranged from a high of 71.7 percent in Greece to a low of 49.8 percent in Norway, with the United Kingdom slightly above the mean at 65 percent.11
So here is today's new problem with no name: People have changed more than the commercial organizations upon which they depend. And here is the new opportunity: In the chasm that now separates individuals and organizations lie the keys to a new economic order with vast potential for wealth creation and individual fulfillment. The marketplace of a support economy and the associated possibilities of a new distributed capitalism are emerging from the disappointments, frustrations, and all-too-frequent humiliations to which today's new individuals are routinely subjected at the hands of the old organizations. Fortunes will be made, as a new kind of commercial enterprise learns how to make money by authentically supporting the new individuals in their quest for psychological self-determination.
—from The Support Economy by Shoshana Zuboff and James Maxmin, Copyright © October 2002, Viking Press, a member of Penguin Putnam, Inc., used by permission.
One: Building the Chasm
Part One. Challenge: New People, New Markets
Two: Dreaming Economic Revolution
Three: How Managerial Capitalism Made New People
Four: The New Society of Individuals
Five: The Individual as History's Shock Absorber
Six: The Individuation of Consumption
Part Two. Crisis: Old Organizations Meet New People
Seven: The Transaction Crisis
Eight: Organizational Narcissism: Products, Pyramids, and the Legacy of Contempt
Nine: Rediscovering the End Consumer, Over and Over Again
Part Three. Emergence: The New Enterprise Logic
Ten: The Digital Bridge
Eleven: Conceptualizing the New Enterprise Logic: The Metaprinciples of Distributed Capitalism I
Twelve: The Inner Workings of the New Enterprise Logic: The metaprinciples of Distributed Capitalism II
Posted February 11, 2003
The Support Economy challenges all of us to think and rethink what we know about business. It chalkenges us as consumers-- why should we put up the rotten service, indifference and playing by ' their rules"Itchallenges us as employees- why do they own my careers, makes me do things that I know are wrong from the customer and work to rules invented 100 years ago. It challenges us a investors- do we have the right information and transparency. It challenges what we think about markets-- we are no longer a mass market we are a market of individuals and we should be proud of it. I could go on but this book will stimulate you,make you mad and then glad. It is just what we all needWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted November 25, 2002
A friend recommended The Support Economy but I found it hard to get into. Once I really grasped what they were saying I could not put it down, I saw myself, my family and my company in it. .I live the problems of mamagerial capitalism everyday and I want out and something different. I also want something new for my customers, my employees and my family, The book made me feel good about myself because I could finally make sense of the world and go a framework for thinking about things.,I run a family business that has grown to over 300 employees and I read alot of the business books. THis is the first one in years that made me think and made me realise that it was possible to do things in a different way.It is easier for me to change because I am the owner;- what The Support Economy has given me is a new way to think about change and what is possible. It made me realise that I can do things and that there is new wealth sitting there for the taking. I do not agree with everything Zuboff and Maxmin talk about for the future but this is not what they intended. They wanted to get me to think and they have suceeded beyond their imagination. Thank you for writing this. It will be a classicWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 13, 2002
The Support Economy argues that one phase or capitalism is reaching its natural and historical end and that a new phase is emerging. This can happen because there are changes in the nature of the marketplace and new technologies ( digital) What is needed to fire off new activity is what the authors call a' new enterprise logic" to replace managerial capitalism. After reading the book you cannot doubt the changes in the markets and the technology. And the logical consequences of this seems to be that value goes from inside the corporation to inside you and me ( individuals) This makes sense at both the intellectual and emotional levels. The implications of this for existing strutures, control tools, and financial metrics is profound. Zuboff and Maxmim suggests that we are " histories shock absorbers" After reading this I agree and now understand why my work and personal life is so bumpy. It is depressing to think that change will take decades and not months but in my more rational moments I know this is the truth. I have worked in finance for the past 18 years and this is the first time I have a read a book that challenged all my assumptions. It is not a confortable feeling but it is a healthy one. I recommend this book to the new head of the SEC for this reason. Business as ususal is over!!!!Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted October 29, 2002
After reading The Support Economy, I really understand the current wave of scandals in corporate America. The first part of this book presents the most brilliant analysis of why companies like Enron and WorldCom are failing. Zuboff and Maxmin get to the heart of the culture of corporate narcissism that underlies all these collapses. Every CEO should read this book. In addition, the authors paint a revolutionary vision of a totally new way to do business - where companies stop ripping off their customers and instead, are based on providing "deep support." This book is so timely. Highly recommended.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted October 29, 2002
The Support Economy is a serious book that makes you rethink all your assumptions about the way business works. It takes big business head on . It defines and explores new markets made up of new people. It points to the shortcomings of managerial capitalism and how these have effected all our lives. It contains a whole new vocabulary ( organizational narcissim etc) and a whole new way of looking at consumer, It is an optimistic book as it shows the new sources of wealth available to us by offering deep suppory> It also provides a brief look at what this might be like . This is a must readWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted October 17, 2002
The appearance of this book could not be more timely. This outstanding work will, in my opinion, have an enormous impact on the business and political scene; probably a far bigger impact than books such as ¿Reengineering the Corporation¿. The inevitable imbalances and excesses of the current business and political model have accelerated its inevitable demise. The brilliant insights coupled with impeccable scholarly analysis of the book explain the reasons for the demise and show the emerging alternative. This book is a must for owners, managers, consultants and students alike. Stefan Inzelstein President ISM Consulting, Inc.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted October 16, 2002
This is a book that everyone will benefit from., It outlines the move from a service to support economy and shows that managerical capitalism is not only dead but is the cause of many of our problems. The research and inter disciplinary apprach is amazing and mnakes you think. The meta-prociniples of distributed capitalism makes you rethink economics and the whole mamagement task ./Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 3, 2002
I am a PhD student and was given this book by my professor. I am writing about new company structures in the 21C. I have completed the first part of my thesis and after reading the Support Economy I have decided to start again. Prof, Zuboff notes she has not written anything for the past 10 years because she could not believe in what she was saying. Now that she has finally spoken we all better listen. There is nothing else like this in the literature, This is revolutionary. Like all books of this type it is not 100% correct ( this is admitted by the authors who see it as the start of a larger converstaion ) but it is visionary and enables you to understand and explain so many things that have happened and are happening now that it has to be write. I hope my rewrites are as powerful as thisWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 3, 2002
The Support Economy is the most important book I have read in years. It challenges all my preconceptions and finally ' I got out from under the lamp post" This is a book about the new individual- as consumer, employee and family member. It is a call to action based on indepth research and pure vision. Unlike other business books it is not about quick fixes but rather about major trends that effect how we will do business over the next twenty years. It should be in every Boardroom ( it is now in mine) and should be required reading for anyone interested in strategy or goveranceWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted November 21, 2002
I have spent 20 years in organisational consulting and I have never read anything like this. It is a scholarly work with real practical everyday application. It explains why customer facing/centric business models do not work and why almost all ateempts at ' change ' have failed. Zuboff and Maxmin make a truly convining case that value no longer rests inside the company but it is now distributed in the new market of individuals. This means that the old enterprsie logic will not work and some new logic is required. They call this distributed capitalism;0- it is a logic that will link the new markets to the new digital logic. They set out the ' metaprinciples of this new logic and try to give some examples of what it might feel like to live in a ' support economy" My view is that they may not have been radical enough in this vision but they have gone much further than anyone else in looking at a total vision and not just bits and pieces. It is frustrating that they do not tell us how all of this is going to work but at least they have the courage to say they do not know and that this is complex multi-dimensional issue. I think everyone should read this- you will never be the same .Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted November 1, 2002
This is the most amazing collection of ideas that I have seen in the last 10 years. Zuboff has gone far beyond Smart Machine in identifying the causes of poor perfomance, poor service and poor behavior.I did not believe her analysis that it is marekts and not technology which causes revolutions-but having read the argument carefully she is right. She is also right that there is a new market out there that offers new profit opportunities ( I would like to know more about how to get to it) The idea that value has moved from organizational space to individual space is profound and will effect thinking over the next decade. Distributed capitalism makes sense , there is a new techology and hopefully the revolution is underway. I urge everyone to read this as its effects everyone's life.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted October 30, 2002
The Support Economy breaks new ground. It makes you think and you have to take time to read and understand it. What they are saying explains many of the problems we all face everyday in our business lives. But the book lays out new ground for the future wealth creation. It destroys old myths and suggests a future which will benefit all of us in our business and personal lives. It is about time someone showed us ' how to get our lives back" The idea if distributed capitalism is unique and compelling . I think it is also correctWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.