Fairness and the Innovation Imperative

What do you make of the following?

• Protests in front of luxurious homes of AIG executives in USA
• Windows at the Royal Bank of Scotland smashed during the recently concluded G20 summit in London
• 3M and Caterpillar executives held by angry employees in France for several hours before being released

Not exactly the second coming of the French Revolution, but definitely a telling tale of our times!  Three different countries, three different events, same message; two key stakeholders, employees and customers, are crying out loud and clear - it's not fair!

The sentiment on the street is clear - the dice is loaded in favor of the self- interest of companies and their senior executives; employees and customers are getting the short end of the stick.  

What does this have to do with value, innovation, and growth?  A lot, if you consider the role that perceived fairness plays in influencing economic well being.

Fairness is one of three key factors Akerlof and Shiller focus on in their insightful book on how human psychology drives economic cycles.  Concerns of  fairness - whether the prices companies charging for their products are fair, whether the credit terms being offered by credit card manufacturers are fair, whether health care insurance policies are fair - have the potential to override rational economic motivation.

Still not convinced? Have you heard of Julius Harper?  He's a video-game producer in Los Angeles, not a celebrity, who achieved temporary celebrity status (NBC Nightly News, etc.) by spearheading a drive against Facebook's new Terms of Service, which stated - We Can Do Anything We Want With Your Content, Forever.

According to the previous terms, Facebook's rights to original content uploaded by registered users remained valid only for the duration of the life of the account.  The rights expired when an account was closed.  Not anymore. Now, anything a user uploads to Facebook can be used by the company in any way it deems fit, forever.

Harper didn't think these new Terms were fair!

In fact, he thought - this is bull-crap.  So what did he do?  With a few clicks of his mouse, he created a protest group - People Against the New Terms of Service. The net result - the movement got support, it got the media attention, and yes it got Facebook's attention.  Its important to keep in mind that it was the perceived unfairness of the situation that triggered the action.  The Internet, the connectedness, the collaboration were all enablers, not the reasons for driving behavior.  

So, at a time, when the perception of fairness between companies and consumers is at an all time low, it is eerie to observe how few companies, consultants, and business gurus are treating it as a priority item to fuel recovery from the current slump and drive future growth.

A new equilibrium of fairness is essential if companies want to jump-start their recovery and if they want to sustain it.  In the absence of this new equilibrium companies may experience temporary short-term gains but no real long-term success.    

This new equilibrium of fairness can be achieved only if companies are willing to invest in developing new vectors of value for new/existing sets of customers.  Merely exercising greater marketing muscle, and relying on pushing tired company agendas on customers crying - "it's not fair" - is not the right prescription for long-term well being.

Several good role models exist:

• The Tata Nano, a people's car, launched on March 23, represents a very different vector of value for a different set of customers, best expressed in Ratan Tata's own words:

"I observed families riding on two-wheelers - the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family. We are happy to present the People's Car to India and we hope it brings the joy, pride and utility of owning a car to many families who need personal mobility."  

• Nokia too is creating a different vector of values for a different set of customers with Nokia Life Tools:

The goal of Nokia Life Tools is to inform, involve, empower and help bridge the digital divide in emerging markets; these tools will focus on Agriculture information and Education services with Entertainment supplementing the offering.

• By reengineering the twin concepts of credit and loans, Grameen Bank has created numerous value vectors for entirely new markets in areas ranging from fisheries to solar energy.

Opportunities for creating different vectors of value for a different set of customers abound in a number of areas, such as digital journalism, hospitality, casual and fancy dining, medicine, education, energy, peer-to-peer lending, and transportation, to name a few.  All that we need now is companies with both the will and the vision to innovate and develop new handshakes with the market.

Fairness is not just a feel-good, sound-good word or academic concept.  It's a real and significant driver of your customer's willingness to do business with your company.

And shouldn't that be the goal of every business?