Why the evolution of capitalism is so significant for CX strategy right now
Capitalism is evolving and anyone who has the word ‘customer’ in their job description should probably be paying attention. I am not an economist or a social scientist, but this is how I believe customer experience strategy is being impacted by emerging ideas and events connected to our dominant economic system.
What’s changed?
Let’s start with what the World Economic Forum had to say last year. The Davos Manifesto 2020 focussed heavily on the idea that stakeholder capitalism would replace shareholder and state capitalism. The theory is that because organisations are now basing their decisions on the needs of all interested parties/stakeholders (society, customers, employees, shareholders, suppliers together), neither shareholders alone nor the state are in the driving seat. Capitalism will be driven more by multiple participants rather than the traditional architects, if you will.
Some believe that this won’t work, not because it’s unthinkable that the power is shifting but that businesses don’t have the ability to equally balance the needs of all of their stakeholders to deliver on this. Anyone who has tried to implement a holistic strategy with multiple stakeholders and hierarchies can certainly understand that skepticism. As a consequence, others have suggested that a better form of capitalism is ‘customer capitalism’, which places the needs of customers above all other stakeholders. Although many CX strategists could celebrate this idea, they also know that — in practice vs theory — you cannot disconnect customers from society and state, nor businesses from the needs of their suppliers, shareholders and employees if you actually want something to work.
While we have been debating the Davos manifesto, we have also been plunged into a global crisis of epic proportions, one which has forced many of us to question capitalism as a whole and our role in it, as consumers and practitioners. The misuse of wealth and the significant economic disparity in capitalist countries has impacted democracy itself and the ability to help all citizens navigate crisis. Many capitalist democracies are currently struggling to prevent the rise in autocratic leadership or contain the damage that it can bring, while watching the most marginalised taking the brunt of the COVID crisis with little tangible economic support. America itself has been subject to impoverishment, racial injustice, violence and insurrection, provoking an existential crisis for all their citizens and anyone who believes that democracy and capitalism should make us immune from these issues. This is also playing out against the backdrop of an environmental crisis, provoking a general loss of faith in the future, while pointing the finger at the role that mindless consumerism has played in where we are today.
Some may argue that this highlights the failure of state and shareholder capitalism. Others may just be saying ‘WTF?!?’
Stakeholder or customer capitalism
Capitalism also showed up in another way as the American insurrection unfolded. Private businesses used their terms of use to slow autocracy and zealotry. Twitter removed Donald Trump and some of his supporters from their platform, Amazon ejected the right-wing platform Parler, AirBnB cancelled reservations by potential insurrectionists and multiple corporations stopped their contributions to any political representatives they believe have been detrimental to democracy (and their brand). Many on the receiving end of these censures have labelled these actions as an infringement on their freedom of speech and a war against right-wing citizens and leaders, yet what they are experiencing is capitalism in action. To prevent private businesses from taking similar actions in future, right-wing supporters would also have to support the state regulation of private business, which would be more akin to socialism and against ‘small government’ principles. Maybe it highlighted that capitalism is failing even its most historically avid supporters, or maybe they have just never been recipients of the downsides of the ideology in action. An open question which is bound to be debated further (one which I am ill equipped for beyond this point).
So, was this stakeholder capitalism or customer capitalism at play? To know that we would have to understand what happened in the boardrooms of each of the organisations involved. Did suppliers threaten to cancel contracts? Was it overwhelming employee dissent? Did customers threaten to leave in droves? Did some angry shareholders turn the screws? Was it fear of state censure in future? Without knowing whether it was just customers or many stakeholders that provoked the clamp down, what we can see is that customers sometimes have more influence and choice than citizens, which lessens the influence of the state. In fact, the Edelman Trust Barometer saw this coming in early 2020 by revealing that 34,000+ participants across 28 markets don’t really trust government, business, NGOs or the media, but they trust business more than government across the board.
Customers over citizens?
Citizens have to rely on representatives of a party to do what they want within a complex bureaucratic system. Sadly, there are often very many degrees of separation between the needs of the citizen and the enacting of political change to meet those needs. Yet organisations can make swift, impactful decisions because they (typically) have less bureaucracy to deal with and if they don’t do something, their customers will stop buying from them pretty instantly, not waiting for the next election cycle, sometimes provoked by an online movement spun up over the space of only a few days and costing millions in lost revenue.
In the case of America, I doubt most customers are fringe extremists so are unlikely to support an insurrection or any brand that enables one. Even if you remove the political preferences of each organisation, it is a losing numbers game to enable extremism. In many ways, private companies have been able to achieve what the state has not. Many have found this hugely worrying, particularly those who see such economic disparity. Others have seen the social benefit of this form of capitalism.
The impact to CX strategy
Over the past few years, customer experience has also evolved. It is not simply about the products and services provided, but how they are provided and why. Employees are also a part of the CX consideration set, because employees enable experience delivery, and valuable employees also decide who they work for based on whether organisations can enable their needs. CX strategists now need to understand the societal needs of customers and employees and how their client can facilitate those needs. In this way, contemporary CX strategists have been leveraging stakeholder capitalism for some time, yet typically believe that some stakeholders (customers, employees, society) should determine the actions of others (state, supplier, shareholder).
As a CX strategist today, you should also think about how your strategies will need to evolve even further in this awakening environment; what will the impact be to your customer value proposition, value architecture and profit equation (desirability, feasibility, viability)? Think about how your customer value proposition (desirability) should include new customer sentiment about social ethics. Your value architecture (feasibility) should consider processes and value chains that focus on employee values. Your profit equation (viability) should move beyond simple profit and loss and consider how working capital from ethical investors might enable more social innovation in the long term. And if you want to actively participate in a form of capitalism that enables equality of opportunity and — by extension — economic inclusion, you need to ensure you make every decision with diversity in mind.
For my part, I believe that when there is huge economic disparity, fascism triumphs, marginalised people remain marginalised and fewer people can participate in an economic system. When we base our economic growth on mindless consumerism, we destroy our environment and accelerate economic disparity and division. So, as an individual strategist working in a capitalistic system, I choose to work on projects that take equality of opportunity and mindful consumerism seriously, where my ability, financial requirements and ethics comfortably meet.
I am in a position of privilege to be able to do this and believe everyone should have the same opportunities. I hope 2021 is a year that provides them to us all.
