From Entities to Interactions: Advent of the Self-Conscious message


From Entities to Interactions: Advent of the Self-Conscious message

Dhiraj Rajaram, Founder, Mu Sigma

From networking in Information Technology, to the internet, to social networks, to connected cars and to the Internet of Things (IoT), networks have become ubiquitous across all walks of life from personal to the professional. The primary participants in the networks are entities (nodes, people, devices, etc.) and interactions (connections, messages, etc.). As volume and velocity of the network increases with increased quantity and frequency of interactions, networks start working like eco-systems. In fact, social networks are often described as “organisms” in-themselves. Such networks take a personality of their own. Communities or dense sub-clusters start forming in a network. Interactions become more important than the individual entities themselves. Entities only have value within the context of interactions. The structural and functional attributes of the network get characterized by the type and strength of interactions, with the individual entities becoming progressively less important except for the ability to interact.
This will change the way businesses need to think about how they operate and make business decisions across the strategic, tactical and operational spectrum. Following are a couple examples and themes that reflect the underlying current of the move from entities to interactions:

1) The New CLTV - Conversation Life Time Value:

As organizations have evolved their marketing strategies from broadcast marketing to customer driven marketing, the concept and application of the metric of Customer Life Time Value has gained increased prominence. CLTV is being used across the customer lifecycle across all types of organizations - B2B, B2C, online, brick & mortar models, products or services. Many sophisticated approaches to estimating CLTV have been developed with increasing complexity in the customer journeys, need states, data and math involved and powering applications such as real time targeting, contextual advertising, mass personalization, etc.
In all cases the one common theme is that the customer is taken as the entity of monetary realization across multiple channels. At the surface this seems to be logical, since the customer is the transacting vehicle for the product or service based on the choice that the customer expresses.
However, we are already seeing this evolve to the next level in a highly interconnected world. Marketers, since long, have been talking about the “Moments of Truth” that customers experience in their purchasing cycle. P&G talked about the concepts of the first and second moments of truth. The First Moment of Truth (FMOT) is when a customer sees a product. The Second Moment of Truth (SMOT) is when a customer uses a product. That was applicable in the Product and Service economy. With the onset of the information economy, Google added the concept of Zero Moment of Truth (ZMOT) which is when a customer first searches for information and is exposed to the idea and concept of the product. Now, in the social & sharing economy, marketers are talking about the “Infinite Moment of Truth”1 which is related to the free sharing of experiences and opinions with other people across the purchase life cycle – from much before the purchase to much after the purchase.
In this environment, the unit of value realization is no longer the customer, but the “conversation”. According to the Cambridge dictionary, conversation is a talk between two or more people in which thoughts, feelings, and ideas are expressed, questions are asked and answered, or news and information is exchanged2. In other words, conversation is interaction. Choice of what product or service to buy is moving away from being a personal choice of the customer, to being a choice generated by a set of conversations that customers want to participate in. People attach themselves to conversations associated with a set of values and experiences that they want to identify as a way to make-meaning around the product or service. Here, although the purchasing vehicle is still the person or customer, the choice generating vehicle is the conversation.
We need to create and market solutions not only for people (entities), but for the conversations (interactions) they enable. In addition to targeting entity segments, organizations need to target interaction segments. In addition to thinking about customer journeys, organizations need to start thinking about conversation journeys. And in addition to Customer LTV, Conversation LTV needs to be used because entity value, while being more persistent, will be less useful when compared to interaction value, which is ephemeral and more useful.

Note: BCP38 is RFC2827: Network Ingress Filtering: Defeating Denial of Service Attacks which employ IP Source Address Spoofing.
2) Migration towards a Platform-less world:

We have seen a Platform revolution3 in recent times with companies such as Google and Amazon to Uber and Airbnb. Platforms are asset lite and focus on creating a connected eco-system of buyers/consumers and sellers/producers that can transact at scale digitally. This has disrupted the tradition buyer-seller interaction and the traditional asset heavy buy-make-sell businesses. In the past, the model was about one buyer interacting with one seller physically to make a purchase. As markets evolved, a buyer would interact with multiple sellers before making a purchase and then eventually multiple buyers interacting with multiple sellers. Although this was very effective and created competitive market places, with platforms it becomes much easier to bring buyers and sellers together in one digital location that can be accessed by all. Platforms become intermediaries enabling ease of transaction powered by on-demand resources, the sharing economy, intelligent algorithms and aggregated databases. Organizations are now vying for platform leadership in different industries and there are new rules of the game being researched and talked about4.
However, just when we thought that the right model for the digital age had emerged, we are starting to see cracks in this model. Platform models depend heavily on crowd sourcing (contribution by users) – to generate value. Both buyers and sellers are users of the platform. The platform crowd-sources the information from buyers and sellers to enable transactions. Value is generated at the intersection of the buyers, sellers and the platform. However value is often disproportionately skewed towards the platform and not the other contributors, i.e. the users. This is leading to dissatisfaction among the users who want a more equitable distribution of the value generated. New technologies such as blockchain can change this equation5. Platforms depend on the ability to provide the right combination of software, algorithms and aggregated data that can only be managed and coordinated by a platform provider. However, technologies such as block chain allow decentralized computation that can be run directly by users in a secure, peer-to-peer way without needing third party coordination. These technologies are enabling applications where the value and power equation is significantly altered. New social network applications similar to Facebook are coming up, but do not require central coordination. Users and contributors interact with each other based on code based rules and protocols. Contributors also earn back value/fees based on the popularity and penetration of their contribution to the overall.
These technologies are now spearheading the evolution to a platform-less world where the context and content of “interactions” are becoming far more important. By reducing the value of the hub-oriented “platform” entity they are creating distributed networks of buyers-sellers, with migration of value away from the platform to the peer-to-peer interactions.
So how does an individual or organization adapt to this journey from entity to interactions. Of late, there has been a lot of focus on Business Intelligence and Artificial Intelligence. The concept of intelligence is about getting to smart business solutions and decisions faster. The focus is on data, analysis and answers helping determine the short-term next-best step in the most efficient way. Intelligence works best when the rules of the underlying operating environment are fairly well defined and stable. However as the world moves from being a slow-changing clear world to a fast-changing VUCA and networked world, a new paradigm of decision making is needed – Consciousness. Consciousness is about being cognizant of the different interactions that an organization is facing internally and externally, leading to a situational awareness that helps navigate complexity. It is about getting to the long-term right-direction. Intelligence has a talent mind-set. It focuses on answers and connecting sources of data. Consciousness has a growth mind-set. It focuses on questions, the uses of data and their interconnections. Consciousness is intelligence seeking other intelligence. Intelligence seeks independence and efficiency, often reflected in silo optimisation, while consciousness seeks interdependence and a “team of teams”6 orientation, where driving a common language and collaboration across the organization is more important. Intelligence is about exploitation of entities while consciousness is about exploration of interactions.

Finally, to end on a personal note, when people ask me – mostly in an appreciative tone, how I came up with the idea of Mu Sigma, I always say, “the idea chose me.” The universe has always operated in an interconnected manner and conspires to make things happen. This concept will get manifested in networks of the future. The message will seek the messenger, unlike today, where you read and see things based on who you and your friends are. The message of the future in networks with heightened consciousness will be self-conscious.

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