The Reformation of Market Capitalism in The Age of the Customer — Profiting From “Social Responsibility as a Service” [Working Draft]

  • Concern — and confusion — about whether and how market capitalism can have social responsibility is reaching a crisis point.
  • An exhorted responsibility of shareholders to be beneficent to other stakeholders (customers, employees, suppliers, community,…) can have only limited and uncertain effectiveness — even if CEOs truly wish to be more beneficent.
  • Customers have the prime authority, since the funding comes from the customers. Social responsibility is ultimately a “tax” on the customer. To be “represented,” each customer should be able to vote with their wallet on how much tax they pay, for what.
  • Businesses now have new powers to involve each customer in mass-customizing the service value propositions that they pay for — including payments for Social Responsibility as a Service (SRaaS).
  • That will apply the genius of the market — enabling businesses to profit from being socially responsible as each customer supports. Think of it as a social responsibility tax that each customer agrees to pay — at an individualized level that both parties agree is fair for that customer.
  • If the customer will not pay a “tax” to support whatever level of “social responsibility” to other stakeholders they see as desirable and fair, no tax is received.
  • If the customer willingly allocates part of the price they pay to such a tax, shareholders will be fine with that.
  • If the customers refuse to allocate any payment for social responsibility, shareholders will not be able to sustain paying to share that value with other stakeholders.
  • If customers will pay for it, it can generate profit.
  • If customers value it, they will pay for it.
  • If customers value win-win behavior that benefits not only themselves, but their broader desire to be good citizens, they pay for it, it generates profit, and so businesses profit from that.
  • To the extent that happens, there is less need for exhortations to consider secondary bottom lines that are hard to manage without direct market incentives.
  • The genius of the invisible hand will, itself, drive managers to maximize profit by being socially responsible.
  • In the case of customer service, business used to sell naked products, at the buyer’s risk. Gradually they added guarantees and support call-centers and white glove service — all for a fee (more or less explicit) and often with a choice of options as to service levels.
  • Social responsibility service (to other stakeholders) can be similarly customized and funded at different levels by customers, in tiers and sectors. Then it becomes just another service the business can offer to customers who will pay for it. Plenty of behavioral economics assures that customers can be enticed to voluntarily pay for services they value.
  • A digital newspaper lets readers subscribe and decide what to pay after each month of use. It reminds them what they read, what writing those stories cost per reader, and what share of its revenue goes to the reporters and investigative expenses. It reminds them of how its recent reporting benefited the community and the prizes earned. It lets readers pay bonuses specifically to reporters they wish to support. (A non-profit Guardian might accept any level of fairness, but a for-profit New York Times might warn a reader who it thinks is being repeatedly unfair that it will shunt them back to a conventional set-price subscription unless they meet higher standards of fairness.)
  • An online retailer of furniture lets established customers pay for items in two stages, first, at-sale, to cover the marginal costs of the items (and perhaps a small profit margin), then, after it has been experienced for a month, with an added bonus that reflects the customer’s perceived value of the purchase, plus the perceived value of the business’s employment, sourcing/curation, and sustainability practices. (Again, customers it deems to be repeatedly unfair might be shunted back to standard set prices.)
  • For the newspaper, value is not just how many weeks the subscription was accessible, or how many stories were read, but whether those stories had real value, what costly investigative journalism or analysis was done, how much was paid to valued reporters, what community values were supported, what waste was prevented, and the like. Some of these “social” values might be segregated to be paid for with explicit “bonus” payments to these other stakeholder categories. To the extent customers value those elements by paying for them, that is no longer “taxation without representation” as Friedman claimed. (See operational details for this example.)
  • For the retailer, value is not just the raw utility of an item, but the quality and style of design, the conditions for employees and at supplier factories, support of local and source communities, environmental practices, and the like. Again, these could be identified as “bonus” payments and again, “taxation” voluntarily paid. (See operational details for this example.)

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Richard Reisman

Richard Reisman

Author of FairPay | Pioneer of Digital Services | Inventor, Innovator & Futurist