For a number of years some colleagues and I have been toying with the idea of reinventing the 21st Century co-operative by leveraging the network effect of the Internet and social networks.
Our starting point was a very simple proposition: create a web-based platform to enable the creation of consumer cooperatives that would enable like-minded people to pool their collective value and use this power to negotiate and enter into financial exchanges or service contracts that represent longer-term value for money. The value for the consumer would be better market value and a more informed retail experience, leveraged through grouped buying power. Instead of disparate individuals, we would effectively become large corporations with the power to negotiate better deals. And unlike previous attempts to create buying clubs, we recognised that this would serve the interests of suppliers or retails. By providing an online interface between suppliers and a segmented group of ‘likeminded’ and ‘ready to purchase’ consumers, suppliers would acquire multiple customers in a single hit and at a fraction of the typical customer acquisition costs.
To begin to realise this idea we created an alpha website branded vlume.com (which stands for ‘Value Me’…please remember this was an alpha site!). This was founded on the belief that consumers acting collectively can develop the power to influence markets and thus gain real value for the money they spend. Individual consumers, on the other hand, have little power, only the ‘freedom’ to act within the constraints set by the market.
ME TO THE POWER OF US
The idea is very simple but enormously powerful: if you spend £35.00 a month on mobile telephony, this represents an annual payment of £420. Over five years you will be spending £2,100. Now just add 10 people in the same position to your total and collectively you represent £21,000; add 100 and you are now collectively worth £210,000, a thousand members and you’re worth £2,100.000 to a mobile company over five years. No operator anywhere in the world treats any of us like we’re potentially part of a netwrok that represents such long-term value to them. Why not use that leverage to negotiate a better plan or better handsets or both?
By pooling our collective consumer power, our objective was to ensure people could take control of their value – from gaining value for financial exchanges or contracts they enter into for services – to the future syndication of their data and meta-data. In this respect, and in relation to working through the business benefits for the retailer or supplier, vlume.com was more than just another ‘buying club’.
Our motivation for doing this stemmed from two sources, one technological in origin and the other socio-political.
THE NETWORK EFFECT
The technological origin of vlume.com was provided by the observation of David Reed about how human communication added another dimension to computer networks such that the value of the network grew proportionally not to the square of the users, but exponentially. Reed’s key insight is that jointly constructed value is the net outcome of the laws that govern technical networking and social networking. The value and usages of services that scaled by newly emerging and then dominant-scaling laws grew faster than the previously dominant functions like its role as a terminal network in the early days of the ARPANET. This allowed the Internet to absorb many kinds of transactions and collaborations that had been conducted outside of it. The remarkable outcome: a technically derived network transformed into a social platform for the joint construction of value. The Internet thus becomes nothing more than a platform of, and for, human connection and experimentation. And this is historically unique because the Internet combines two extraordinary properties: it is both a vehicle for individual autonomy and expression and social interaction and cooperation.
This is the real potential of the Internet. Society now has the opportunity of a new lived experience where the potential for independence and for social cooperation exist within the same framework. In short, individual interests and discrete needs can be realised through collaboration potentially reinventing collective action and power. It is this potential that vlume.com sought to realise.
The second source for this idea was based upon our lived experience and social observation.
PRESENTISM AND CUSTOMER VALUE
We recognised that we were living in an increasingly risk-averse society where short-term expediency had gained ascendancy over the idea of the long-term future. Presentism now invades all aspects of contemporary culture. Nowhere is this more prevalent than in business where a preoccupation with predictability and short-term results has replaced old notions of long term planning, investment or research for innovation; jobs for life and, indeed, customers for life. This quick-return, low-risk culture has entrenched a culture of banal expediency. Increasingly customers are being flattered that they are the most important asset in business, but are, in reality, merely the vehicles of short-term commercial expediency. We all know that despite the fabulous package deals we are offered on mobile telephone contracts, we are still being ripped off by our operators.
We observed that this expediency has very negative consequences:
- First, it presents lowered horizons and limited choice as the best and only choices available to the consumer. Limited choices force consumers to restrict their behaviours and aspirations. This appears to confirm the pragmatism of the enterprise and reinforces their self-flattery, which falsely suggests they are actually providing ‘what customers need’. The net result is a dumbed-down commercial culture that feeds on and nurtures an ever-decreasing pool of innovation – a scenario in which everyone loses;
- Second, it institutionalises the bifurcation between value and price. Customer needs and experiences are increasingly measured in crude prices. The logic of such a spiral only increases the pressure to become even more pragmatic. As value increasingly equates with lowered prices, consumer choice is even more severely strained while the enterprise can see no alternative but to continue in the same way;
- Third and perhaps most importantly, the potential of new innovation is squandered at a time when new digital technologies are opening up enormous opportunities for the future. New areas of value – particularly the richness of personal data and meta-data – which have the potential to transform the world as we know it, will not be able to be realised. Instead, such potential will only feed the existing culture of short-termism and expediency.
Vlume.com was an attempt to challenge the contemporary passive consumption by mobilising the power of people through web-based platforms for collective action. Although we had to drop vlume.com temporarily – yes, we all had to succumb to the same short-termism and expediency of getting jobs – the power of the idea remains compelling. Yochai Benkler in his very interesting book The Wealth of Networks: How Social Production Transforms Markets and Freedom gives an insight of what this potential represents with respect to the existing media:
‘A billion people in advanced economies may have between them between two billion and six billions spare hours among them, every day. In order to harness these billions of hours, it would take the whole workforce of almost 340,000 workers employed by the entire motion picture and recording industries in the United States put together, assuming each worker worked forty-hour weeks without taking a single vacation, for between three and eight and a half years! Beyond the sheer potential quantitative capacity, however one wishes to discount it to account for different levels of talent, knowledge, and motivation, a billion volunteers have qualities that make them more likely to produce what others want to read, see, listen to, or experience’.
When you begin to think of the power we could muster, as Benkler notes above, it is frustrating to see how trivial social networks like MySpace or Facebook, remain today. If anyone thinks vlume.com is a compelling proposition, please get in touch. There is a lot more developed thinking and structure behind this, which I would be happy to share.
Perhaps we could put the power of networks to work in realising this as a collective endeavour? Any takers?