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ONE

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.

THE CHASM

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.