Nov 12, 2013

The Limits of Decency

Ongoing Fulfillment

On the quest for your prince, you have to kiss a lot of frogs. It had been a many-frogged quest, but this one tasted royal. Ted had been dubious about getting involved with someone from Byelorussia; but step-by-step as he and Randi became involved he'd become convinced that the relationship was going to last. It wasn't a traditional arrangement but now Ted and Randi were making plans to formalize their commitment under the new state laws.
This is the sixth and last in a series of posts for product managers seeking relationships. They start here.

Business is about Relationships.

Relationships have changed since your dad made his bones. People are experimenting with new forms of relationship, including some involving multiple parties. Traditional long-term-committed relationships are giving way to newer, service-based arrangements, including pay-as-you-gofreemium, and subscription. Free markets fill every hole.

Traditionally, a substantial initial investment is required to formalize a relationship. The investment may take the form of a dowry, a wedding feast, a diamond, cash, or some other form. A service-based relationship typically requires less initial commitment; the relationship is structured to sustain itself transaction-by-transaction. On the whole, this is a healthier approach to relationships, but a purely transaction-based relationship risks becoming impersonal. The best providers add a level of personalization, which can be as simple as remembering your customer's name.

Formal contractual relationships, such as marriage, create lock-in – an assurance that your partner plans to stay around. This gives the level of confidence needed to invest further in a relationship. In modern relationships, a shared mortgage often serves this same purpose. Children can also create lock-in, but many consider such practice unethical.

Lock-in can be established by letting your partner leave their clothes at your apartment. Google also provides storage for its partner’s personal effects including email, photos, blog posts, etc. Google organizes and filters these stored belongings – the digital equivalent of doing their laundry and ironing. Countless mothers of university students will testify to the power of the laundry-based lock-in.

A further advantage of storing your partner's personal effects is they provide insight into your partners’ tastes. This gives you a chance to delight your partner with an unexpected scarf that goes well with their new jacket, or to recommend a shop that has exactly what they like based on their purchase history. This is the sort of experience your rivals with less intimate knowledge of your partner cannot hope to match.

Many service providers check their partners’ pockets to see where they've been, and where they might plan to go next. You may, for example, deduce from ticket stubs, business cards and other crumbs of evidence in your partners’ pockets, that your partner has been visiting jazz sites. You could offer to make a reservation at a nearby club.

In more progressive relationships, intimate knowledge of multiple partners may allow you to combine all your interests. For example, the owner of the nearby jazz club might want to buy you lunch for slipping his menu into your other partner's mail. Google, Apple, and Amazon are leaders in this multi-sided business model approach.

Checking pockets follows naturally from doing laundry, but many partners find checking pockets creepy. Healthy relationships require openness, so use discretion; but don’t cross the line between discretion and deceit. The best approach is to focus on providing benefit to your partner. The greater the benefit, the less your partner is likely to object.

progressive relationships

Traditionally, partners enter into a relationship taking responsibility for the financial maintenance of the relationship indefinitely, "for better or for worse". Newer, commitment-light forms of relationship come with new financial arrangements. The most common forms include freemiumpay-as-you-gosubscription, and multilateral, as well as hybrid models.

In a freemium-style relationship, the basic proposition is free, but extras cost. Examples include Pandora (pay for ad-free music service), Skype (pay for calls outside the network), and exotic dancers (pay for lap dances). The principle is the premium relationships subsidise the free.

Pay-as-you-go relationships require less commitment than traditional arrangements, but the cost per exchange is typically higher. Examples include iTunes, prepaid phone plans, and on-line dating site SWIRL. These relationships are attractive to partners for whom the advantage of low initial financial outlay outweighs the higher total expense over time.

In a subscription-based relationship, one partner agrees to be available for the gratification of the other in exchange for a guarantee of return. The arrangement is renewed periodically, and usually automatically. Examples include Spotify, subscription phone plans, and many famous mistresses. Subscription relationships provide some of the stability and convenience of traditional arrangements, only with less commitment.

Multilateral relationships are the most complex and interesting type of relationship. Examples include SoundCloud (users generate content, and some users pay for premium access to other users), Google Search (ads subsidise free users), and Big Sister Brothel) (customers use services for free, subsidised by paying internet-viewers). The dynamic of this type of relationship is like an ecosystem: one partner sustains another who sustains another in turn, in a symbiotic loop. A well-designed multilateral arrangement motivates all partners to contribute to its sustained success – and grows stronger as it scales up.

Apple-y ever after

The traditional, long-term, committed relationship is not dead. It's just harder. You may know someone in a successful marriage. Apple’s relationship with its customers is probably the best business example of a traditional arrangement. In return for a substantial up-front commitment, Apple will look after all your needs (within the limits of what Apple thinks is decent). Like happily married pipe-smoking patriarchs from a 1950’s TV sitcom, there's something smug and self-contented about Apple lovers. Or are they just hipsters?

homo malum
(latin: "apple man")
Ideally, all relationships will proceed to the state of ongoing fulfillment. Regardless of the type of arrangement you make with your partners, all relationships finally depend on the continuing ability to provide mutual gratification, which in practice is specific to each individual relationship and cannot be generalized. This is your business.

Conclusion

It's all about passion.

In this era of Big Data, Search Engine Optimization, and real-time targeting, business people can lose sight of the basic truths of commerce. My purpose in this series of posts has been to show how, at its core, business is about relationships, and marketing is the oldest profession.




These posts are an extended version of a presentation I made for Philips Design. Thanks to my ex-colleagues there, experts in bottom lines, digital penetration, and male grooming.

Sincere thanks to my friends who commented on the draft version: A'na, Charlotte, Frank, June.


Please share this post. If you comment, I'll reply. Thanks for reading!

If your interests extend to theory and philosophy, please check out my other blog.

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