I was reading an article from the Harvard Business Blog recently that made me think a bit about why some things are the way that they are when it comes to why consumers are nearly always at the lowest end of anyones considerations.
The article is about the conflict in a business between providing value and making profits. In it, there is a reference to a campaign by the technology writer David Pogue (also referred to by @patphelan recently when he linked to this different article).
“I’ve been ranting about one particularly blatant money-grab by American cellphone carriers: the mandatory 15-second voicemail instructions.
…These little 15-second waits add up-big time. If Verizon’s 70 million customers leave or check messages twice a weekday, Verizon rakes in about $620 million a year.”
Makes you think, doesn’t it. We’re all aware of how there’s an inordinate amount of time taken up with automated messages when we call premium rate lines and companies providing 0818 contact numbers just to squeeze money out of us, but this voice mail scenario is a little sneakier.
However, I don’t think any of our Irish mobile providers engage in these tactics – yet. Though, it is a recognised tactic to increase ARPU (average revenue per user), and with revenues falling for most of our mobile companies in Ireland at the moment, it might not be too long until we see it here.
The article does give us two intriguing new terms that I hadn’t seen before. The above example of making profits is described as “thin value” – the making of profits through the economic harm of others.
Thin value is an economic illusion: profit that is economically meaningless, because it leaves others worse off, or, at best, no one better off. When you have to spend an extra 30 seconds for no reason, mobile operators win — but you lose time, money, and productivity. Mobile networks’ marginal profits are simply counterbalanced by your marginal losses. That marginal profit doesn’t reflect, often, the creation of authentic, meaningful value.
Thin value then is what is created by the “zombieconomy”. According to Umair Haque, of the HarvardBusiness.org, the zombieconomy is:
… an affliction that occurs when corporations are unable or unwilling to make decisions to address the challenges that face them. He says companies need leaders who are willing to test boundaries and make better decisions — and wake up from the zombieconomy.
And to bring us back to the current economic situation in Ireland at the moment, according to the original article:
The clearest example of thin value, is, of course, banks: they invested our national wealth in assets that turned out to be literally worthless.