Is that rain? Or someone with a hose?
By Alex Cheatle and Allen Mitchell

The Individual Revolution requires not just enabling technologies but the invention of new business models.  Ten has developed a new business model, designed to serve the complex needs of individuals, with a series of radical innovations ranging from technology design to culture creation and from complex supplier integration to the development of new revenue models.  The business model has reached profit and is now starting to demonstrate scalability with increasing margins and high growth in multiple markets.  The business began by providing lifestyle management to individuals. Now it has also created services ranging from credit card concierge to small business support and a revolutionary professional support service for Headteachers.

 
Yes, Ford was an inveterate ‘tinkerer’. But No, his world-changing breakthrough didn’t really come from technology innovation. It came from his business model: how he brought many different ingredients together, and the purpose for which he did so. Ford dreamed of making the motor car affordable to the ordinary working man, while his craft producing competitors thought he was   crazy. It stands to reason, doesn’t it? If you sell one car at a lower price you lose a little bit of money. If you sell many cars at a much lower price you have a recipe for economic suicide!

What the craft producing competitors were really doing, however, was seizing on the obvious opportunities presented by a new technology while avoiding obvious difficulties – difficulties which would be the ultimate test of the technology’s success. As a result, after an initial flurry of excitement, they ended up on the margins.

 Today we face a similar challenge. A possible by new technologies but personalised service is still a matter for craft producers. It’s the second half of the equation that’s critical now:  the business model and organisational innovation that’s necessary to realise the technology’s potential and create high value markets which, like the huge market that Ford created, have been hidden until the new business models expose them.  

An ‘Individual Revolution’ is being made So how has Ten approached this challenge of business model innovation?
	Alex Cheatle, TenUK

The first thing it did was decide not to sell anything. Ten has no products to push: it’s only ‘product’ is its willingness (and ability) to solve the problems its members bring to it.

That means it’s designed around ‘bottom up’ flows of information from individuals: not a company sending messages about itself to audiences, but individuals phoning up or emailing to say ‘can you help me do this?’.

But being designed to be receive incoming signals is pointless if you can’t act on the information you receive. Consider presenting a mouse to a cat and to a supertanker. One tiny signal sends every fibre of the cat’s body into action. But even if it notices the mouse, the supertanker passes grandly by. There is nothing it can do to respond anyway.

That’s what most scale-driven, product-centric organisations are today: supertankers oblivious to the tiny signals – requests for help – that come from individuals whether as customers or employees. Supertankers are very good at what they were designed to do, but one thing they are not designed to do is ‘jump’ to individuals’ requirements.

So Ten is designed not to only to elicit and receive – in fact, to be driven by – requests for help from different, idiosyncratic individuals, it is designed to respond to these requests, however different and idiosyncratic they might be.  Whether it’s ‘please find me a reliable plumber’, ‘buy me a new car’, ‘organise my honeymoon for me’, or ‘oversee my home improvement project’.

 

For Ten, in contrast, that unique, idiosyncratic initial input of individual information is like a grain of sand in an oyster. It’s the core around which a pearl of value is assembled.

Actually creating a culture of service, however – the idea that staff are accountable to the end-user “the member”, as Ten thinks of them, not the boss; that the person at the top of the hierarchy is the member (not the CEO) whose instructions must be carried out, and that it is the job of the bosses to help staff do this – is incredibly difficult. It goes against the habits and mindset of established product-centric businesses. It’s frightening. It takes an awful lot of hard, careful work. Individuals’ personality, training, incentives, the values of the organisation, they all have to come together if such a culture is to developed and sustained.

Yes, systems have to be developed too. Ten had to write its own knowledge management software because what it needed did not exist. But if a competitor got hold of the software without the culture and the skills – the people – he or she would not have a viable business.

But even with all this, the idea of a truly person-centric service is still just a pipe-dream. Without incentives to do all the above – without the ability to make money from it – it’s all a waste of time.

When they look at Ten most business people just ‘know’ it cannot work. Look at the costs! Look at the complexity! But as we’ve seen with Ford that’s precisely where many of the most important innovations lie: not in technology per se, but in the business model that applies the technology. The difficult bit, in other words.

One essential plank of the Ten business model is that its main revenue stream is subscriptions. Subscription renewal, not margin on transaction, is the business’ over-riding economic incentive. That helps it focus on service, rather than selling. Supplier commission is another revenue stream, but that’s only as a byproduct of Ten’s service to its member as a buying channel (not as a supplier sales channel).

But that’s just the beginning. For a service like Ten’s to work, it also has to discover new efficiencies: new sources of productivity. Take the economics of requests. The first time a request comes in, it takes Ten many hours of work to find the right answer. That costs money. Hundreds of pounds, probably.  The first time Ten had to recommend a reliable electrician in Leeds for a private member, research best practise for teaching ‘Citizenship as a cross curricular subject’ for a user of the Head Teacher Service, or source a tickets for a sold out football match; it took many hours.

But the second time a similar request comes in – thanks to our technology, and to people with the culture and motivation to use it in the right way – the costs of providing a good answer is much, much lower. And any further work on that answer makes it all the richer.

In this way, Ten is building two things simultaneously; First, significant ‘economies of scale’ and efficiency in the totally new arena of personal problem solving, and second, as a direct by-product, a rich and increasingly comprehensive knowledge bank of personal ‘life management’ problems and their solutions. Like Ford, the initial up-front costs of this production/knowledge platform are high. But the marginal cost of re-using the platform (in Ten’s case, personal problem solving knowledge) is very low. The richer the service, the cheaper it gets: truly personal service made economically viable on a large scale.

That’s the vision. The detail is tough. Incredibly tough. To build a picture like this many different pieces of the jigsaw – technology, processes, organisational design, people and culture, revenue streams and costs – have to fall into place. But something seems to be working. The increasing cashflow from successful markets is being used to grow new markets where individuals will also benefit from the Ten capability to meet their complex needs. Ten’s revenues are consistently doubling year on year because, it seems, once people experience truly person-centric service, they realise just how much they’ve always wanted it. It’s a bit like the mobile phone. Once you’ve experienced it, it’s very hard to go back to what you had before. 

So what does the emergence of person-centric services mean for organisations generally? Try this analogy. If we get soaked through in a thunderstorm, we may feel miserable but ultimately we accept it with resignation. It’s just the weather; something we can’t do anything about.

Now imagine if you discovered that it wasn’t ‘the weather’ at all but somebody with a hose. In an instant, resignation turns to rage and to very different behaviour.

In Ford’s day, people resigned themselves to poor mobility because that was ‘how things are’. Today, individuals resign themselves to faceless, bureaucratic, insensitive, unresponsive dis-service from organisations because they view it rather like the weather. It’s just one of those things that we have to put up with both in our professional and private lives.
But what if it’s not?

It’s this – the perception of possibility; seeing the practical possibility of real improvement and the means to actually achieve it – that changes the world. For evidence, just remember Henry Ford.
Alex Cheatle (CEO, Ten Lifestyle Management) with Alan Mitchell (Chairman of the Buyer Centric Commerce Forum).
www.tenuk.com and www.buyercentric.com