Posted on: Monday 7th of July 2014
Our recent research shows that Personal Information Management Services (PIMS) represent a significant growth and innovation opportunity, opening up new markets potentially worth £16.5bn in the UK.
Not everybody sees PIMS as an opportunity however. In some of our discussions with companies about PIMS we encounter a negative reaction: PIMS are seen as a potential threat, undermining the company’s business model and revenue streams, interfering in its relationships with customers, and so on.
This raises a question: is the ‘consumer empowerment’ that PIMS bring the sort of empowerment that brings extra ammunition to one side in a zero-sum adversarial battle? Or is it empowerment in the sense of being able to do more; to bring more to the party?
We think there are elements of both. But the balance very much lies with the second connotation of empowerment – of being empowered to do more and to bring more to the party.
It’s worth digging into that balance in a little more detail.
Win-win or win-lose?
Every commercial relationship has an adversarial element to it. Buyers want to buy cheaper. Sellers want to sell dearer.
Every now and again, a new development comes along that transcends this conflict, for a while, to generate new win-wins. Henry Ford’s system of mass production gave buyers better, cheaper products while improving profits (through volume sales). It unleashed an explosion of wealth creation.
The personal information economy and PIMS are offering a similar breakthrough opportunity driven by Volunteered Personal Information (VPI) – trusted sharing of data between individuals and the organisations they deal with, to reduce mutual costs and waste and (like Ford) to bring new, never-seen-before services to market. These new information services can add tremendous value both in their own right and in terms of what they enable (as our research shows).
In normal times, the conflicting – ‘adversarial’ – interests of buyers and sellers are handled through negotiation and choice in a market context. In well-functioning markets buyers and sellers generally arrive at a mutually understood and accepted accommodation. But not all markets function well.
In some circumstances, sellers find they can take advantage of weaknesses on the consumer side – weaknesses such as Inertia, Information asymmetries and Imbalances in bargaining power. When it is easier to make money by taking advantage of these ‘three I’s’ than it is by adding value, capitalist firms will be tempted to do so. They get sucked into adversarial go-to-market strategies and practices.
For the last decade or so banks and energy companies have shown many examples of adversarial marketing strategies and practices designed to take advantage of consumer inertia, information asymmetries and imbalances in bargaining power. This has resulted in fine after fine after fine for mis-selling, raising broader concerns about ‘market failures’.
In contrast, other companies have focused much more on added value. For example, P&G has always been guided by its original motto of ‘demonstrable product superiority’.
As a service to individuals, PIMS help consumers alleviate and avoid the detriments causes by inertia, information asymmetries and imbalances of bargaining power. In doing so, PIMS threaten the revenue streams of companies taking advantage of the three Is. To the degree that PIMS are a threat to these strategies and revenue streams they are being ‘adversarial’ – and, in their quest to attract customers who feel aggrieved by companies’ adversarial marketing practices, PIMS might well adopt adversarial rhetoric.
But these ‘adversarial’ stances should not be allowed to detract from the much bigger underlying win-win driven by VPI. Also, while PIMS are a threat to companies which have adopted adversarial marketing strategies, they are a positive opportunity to companies focused on delivering superior value. For example, P&G actively seeks out positive relationships with consumer lobbyist groups like Which? because a positive endorsement of a P&G product from Which? is far more powerful than any advertising claim.
Adapting to a new environment
Of course, companies that have profited from taking advantage of the three I’s will, at first, be hostile to PIMS. The natural response of these companies is to defend the status quo. But in the long term, it’s probably wiser for them to adapt to fit a changing environment.
PIMS create a market environment where companies have fewer incentives to adopt or keep to adversarial marketing strategies and practices. In the personal information economy, there’s much greater value to be had – for both sides – via new brand strategies that see every consumer interaction, including marketing, as a form of information service.
Fundamentally, PIMS are a value innovation opportunity – one that flourishes by enabling new win-wins, not by shifting the balance of zero-sum adversarial power battles. Brands as information services are suppliers’ positive response to this opportunity.