Why (Real) Relationships Matter

Umair Haque Edge Economy RSS Feed

9:20 AM Thursday December 18, 2008

Tags:Customers, Economy, Financial crisis

Here's the Economist rocking some hardcore 20th century thinking.

So what happens when every credit card company is exploiting every cognitive bias across markets? Simple: another credit meltdown, as nonpayment correlations spike.

Sound familiar? It should: it's the same systemic flaw in organization that is causing today's crisis.

The point is this. We cannot organize tomorrow's businesses - or economy - like yesterday's. What do I mean? Simple. How should we organize and manage how firms interact with consumers? The Economist thinks it's "creepy" but cool to trick consumers, because it's profitable.

Is it?

Not a chance - as our research at the Lab notes, the fact is: companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, antagonistically, and manipulatively.

True power isn't the power to manipulate. It's the power to create. There is a world of difference between the two - that orthodox economics has yet to understand.

Here's a final irony: it's telling that the blog is called Free Exchange - yet what the authors (mistakenly) conclude is going to be profitable is, in fact, subverting free exchange.

Lol - like I said: that's hardcore 20th century thinking, replete with its inherent contradictions, at its finest.

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Conexión entre la satisfacción del cliente y la rentabilidad from El Blog de José Manuel Castro:
En el último post: relación entre la satisfacción del cliente y la gestión de personas se analizaban diferentes opiniones sobre las conexiones entre estas dos variables. Continuando con el análisis de la satisfacción del cliente, existen diverso... More

Tracked on January 2, 2009 02:12

Lol - like I said: that's hardcore 20th century thinking, replete with its inherent contradictions, at its finest from digforleadership.com:
As our research at the Lab notes, the fact is: companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, an... More

Tracked on January 12, 2009 09:37

Comments

But it really WAS profitable, as long as they could get away with it. Why would rational economic agents not use such subversion if they were being rewarded so handsomely doing so? I don't see why such an unsustainable system would last so long if it weren't paying out to such short-term thinking agents.

Umair, may you please post a link to the research showing that open and honest companies are more profitable. I can see how they will be from now on as we move in that direction, but in the past I find it hard to believe.

- Posted by haig
December 18, 2008 2:56 PM

I totally agree, from 30 years personal experience in enterprise-focused selling, with your statement below:

"...companies who can build authentic, honest, open, collaborative relationships with consumers are significantly more profitable (and sustainably profitable) than companies who treat consumers deceptively, antagonistically..."

I would also add "personalized" to the list in your statement:-).

However, I'm not sure I've seen hard statistical evidence for this jointly held view and would appreciate hearing your reasons for stating (what I think is) the obvious).

Thanks
A

- Posted by Andrew
December 18, 2008 9:47 PM

Isn't the new definition of profit simply how much a company gives (to others)?

Pete

- Posted by Pete Burden
December 20, 2008 5:01 AM

I would be interested in seeing the research as well. Numerous consumer brands have sub-brands to hide the fact that a large company is making the product. Think of all of the micro-brew beers that are really just another product from a larger brewery. This has proved very profitable to date.

- Posted by Jared Brandt
December 28, 2008 3:21 PM

Your statement is on the dot. But why have you only included one set of beneficieries "consumers". I would like to suggest the usage of term "stakeholders - which would comprise of employees, partners and consumers" enjoying equality.

- Posted by Prakash Dogra
December 31, 2008 1:31 AM

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Umair Haque

Umair Haque is Director of the Havas Media Lab, a new kind of strategic advisor that helps investors, entrepreneurs, and firms experiment with, craft, and drive radical management, business model, and strategic innovation.

Prior to Havas, Umair founded Bubblegeneration, an agenda-setting advisory boutique that helped shape the strategies of investors, entrepreneurs, and blue chip companies across media and consumer industries. Bubblegeneration’s work has been recognized by publications like Wired, The Red Herring, Business 2.0, and BusinessWeek, and in Chris Anderson’s Long Tail, to which Umair was a contributor.

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