Two thousand years before smartphones, Plato suggested that excessive democracy would lead directly to tyranny, because sooner or later the majority will choose to trample the rights of the minority.
One indication of the wisdom of Plato’s teachings is that all Western "democratic" governments, including America’s, are structured not as pure democracies at all, but as representative ones, or republics. This is not just because it would be impractical to allow every citizen to vote on every legal and regulatory issue, but also because elected representatives can be firmly bound by a constitution that restricts their ability to tyrannize those who didn’t vote for them.
Today, however, largely because of rapidly proliferating e-social technologies, in every facet of organized life we are witnessing an increasing amount of direct democratic influence. The Arab Spring may be the most notable case. As social platforms like Twitter, Facebook, and Skype have given increasing weight to the voice of the people, Arab dictators are being overturned, from Tunisia and Egypt to Libya, Yemen and (soon) Syria.
But in the U.S. we also see the increasing influence of the voice of the people: Witness the public outcry over the Susan G. Komen for the Cure's attempt to stop supporting Planned Parenthood or, on the other side of the political spectrum, the Obama Administration’s dictate to Catholic institutions that their health care plans must provide contraceptives to employees.
For businesses, as well, the voice of the people is carrying an ever greater influence. Just ask Netflix how it fared with its recent attempt to raise prices. Or ask Bank of America whether imposing a $5 monthly fee for the use of ATM cards was a good idea, in retrospect.
But fasten your seatbelts folks, because this is just the beginning. The proliferation of e-social platforms and tools is (1) generating an unprecedented level of transparency throughout society, and (2) enabling large groups of enthusiastic supporters for one point of view or another to mobilize their influence. While we are all encouraged by the increasing democratization of politics around the world, it would still be wise to respect Plato’s advice. It’s important to impose restraints on governments so that empowered majorities don’t tyrannize everyone else. Remember that the Nazis came to power democratically in Germany, with a 60% majority.
Businesses, fortunately, can adopt a simpler and much more direct strategy for dealing with the rising power of customers: extreme trust. Extreme trust requires being proactively trustworthy, not just by providing a reliable product and competent service, but also by understanding and proactively watching out for your customer’s own interest.
It used to be that a business could generate substantial profits by keeping its customers in the dark. Entire business models are based on charging customers fees they shouldn’t have to pay, or selling them products they don’t really need. Retail banks, for instance, actively encourage customers to overdraw their accounts and incur NSF fees—that’s one reason they promoted the use of debit cards so heavily in the first place. And if you’re paying more for your calling or data plan with your cellphone company than your usage requires, don’t expect them to tell you—unless by doing so they can re-up your contract by two more years.
But sooner or later business practices like these will put your company in as much jeopardy as a Middle Eastern dictator. So if you want to stay out of the line of fire, your best course of action is to protect the interests of your customer, proactively. Here are a few "self-assessment" questions to stimulate your thinking:
- Is your company's financial success generally aligned with what's good for customers? Have you identified conflicts between how your firm succeeds, financially, and how it does what’s good for customers, individually?
- Overall, would your company make more money from an uninformed, unknowledgeable customer, or from a well-informed, knowledgeable one?
- If a customer is well-informed, knowledgeable, and paying attention, would he choose to do business with your company or would he be more likely to choose a competitor?
- Does your company make more money when customers forget to claim what they’re entitled to? Do you make more money when a customer commits a minor error?
- Do your employees proactively prompt customers to avoid errors or oversights? Whether your answer is yes or no:
- Is this part of their training?
- Is it part of your company's culture?
- If your business were a government, would your citizens be trying to overthrow you?
[Image: Flickr user Abraham Puthoor]