New Video on FairPay -- Reisman Presentation to ISSIP 10/14/15

Video is now online at ISSIP from my 10/14/15 presentation on FairPay. ISSIP is the International Society of Service Innovation Professionals, "a professional association co-founded by IBM, Cisco, HP and several Universities with a mission to promote Service Innovation for our interconnected world."

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Video Details:  This is about 24 minutes of presentation, plus some Q&A, with a very interesting and interested audience. A full slide set (including some supplementary slides not on the video) is also online. (Should there be any difficulty with those links, there are alternative locations for video and slides, and future updates of presentation slides will also be online.)
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I was introduced to ISSIP when I met Jim Spohrer of IBM, one of its founding board members, at the Naples Forum on Service in June. Jim immediately saw the appeal of FairPay, and how it embodies many of the principles ISSIP is helping to illuminate. He has been very supportive in introducing me to the ISSIP community. That led to this presentation, which was facilitated by Haluk Demirkan of the University of Washington.

As my still-formative and inexpert encapsulation of how FairPay fits with service science and Service-Dominant Logic (S-D-L), these teachings suggest that much of our conventional thinking relates to "Goods-Dominant Logic" that developed over the past centuries -- "yesterday's logic." But now we are in a service economy, and are beginning to recognize that goods matter only in enabling a service -- for example, a nail has little value in itself -- its value is in how it provides the service of fastening, in a particular use and context. The value of a service is understood to be "co-created" by the provider and the consumer in its particular use-context.

From this perspective, FairPay is a form of co-pricing, in which buyer and seller agree on a process to seek a win-win value exchange over the life of their relationship. That opens a whole new dimension in customer relationships that can deeply alter how we do business. (Details of how are in the video, and other pages here.)

One perspective on this might be thought of as Value-Dominant Logic (V-D-L) as opposed to our current Price-Dominant Logic (P-D-L). FairPay offers a process for seeking fair value, in which price becomes emergent from buyer and seller's interactions over time. Thus price remains the metric of net value-in-exchange, but now price tracks directly to value-in-context instead of being pre-set in ways that track poorly to value. The processes of FairPay -- as embodied in cycles of customer journeys -- dynamically set prices to approximate value. This not only can transform business, but makes a better economics, because prices that track to value make the economy more efficient and productive. (Some insight into this stems from my thought experiments relating to an all-knowing economic demon.)

The idea is very simple: P=V. Price = Value (in context). Price should at least seek to approximate value over time. Doing that would make our economy work better for all of us. FairPay suggests a way to adaptively seek P=V. (I plan to expand a bit on this in a separate post.)

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On the video, after the talk, is a few minutes of Q&A, with some very interesting questions.

(To add one clarification, I should have given a fuller answer on the first question in the Q&A. The question was about crowdfunding and crowdsourcing. I neglected the second part, and would add this: Crowdsourcing fits very nicely into the FairPay logic, since it is just another form of value, which flows in reverse, from consumer to provider, and just one more dimension of value to be mutually considered and netted out in the "dialogs about value," Just as value from the provider can be measured and then valued, so can value from the consumer.)

The Naples Forum on Service -- Co-Creation of Value, and FairPay as Co-Pricing

The presentation deck is online:
Co-Pricing: Co-Creating Customer Value Through Dynamic Value Propositions

I presented the concepts of FairPay -- in collaboration with two prominent professors of marketing -- to international leaders in an emerging branch of marketing theory at the Naples Forum on Service on June 11th. It was very encouraging to see how the work I have done from a pragmatic, non-academic perspective resonates with those at the leading edge of theory.

This 5th Naples Forum on Service is dedicated to the areas of Service Science, Service-Dominant Logic (in contrast to traditional Goods-Dominant Logic), and Network Theory, which all relate to emerging recognition that business is really about the "co-creation of value" by consumers, service providers, and other "actors," and that the production and sale of goods (which provide "value-in-use") is just one aspect of this larger concept of service. This has become a focus not only in academia, but in forward-thinking companies like IBM.

FairPay and Co-Pricing

My collaboration with Adrian Payne and Pennie Frow began when I contacted Adrian about his pioneering book on Relationship Marketing, with the idea that FairPay was very aligned with his thinking.  That led to discussions of his more recent work on business as co-creation (see Strategic Customer Management by Adrian and Pennie), and how that involves many co-creation activities, including co-pricing.  The theoretical ideas of the co-pricing aspect have not yet been well developed, partly because examples of co-pricing (like value or outcomes-based pricing, and pay what you want) have been limited in applicability relative to other, more studied, aspects of co-creation. 

We think FairPay has immediate potential to radically change business practices in a way that puts a powerful new form of co-pricing at the forefront of digital content businesses (as described throughout this blog).  Likely initial applications are for digital offerings to consumers in markets such as journalism, e-books, music, video and other content, as well as games and other apps -- both directly between service providers and consumers, and via aggregator/distributor platforms. 

The slides from our presentation are now available on online, and the abstract is now published in the book of abstracts (page 51).

Research Directions

My experience at The Forum reinforced my personal view that FairPay (or a variation on its theme) will not only change a wide swath of business, but will also change the theory of marketing and economics more broadly. My work on FairPay highlights how current practices in pricing fail to correlate well to value-in-use -- and it is value-in-use that is at the core of our markets (whether we recognize it or not). Whether in practice, or just as a thought experiment, thinking more about practical ways to make prices better correlate to value-in-use (and to view that over relationships, not just transactions) will enable us to change how our economy works, and very much for the better for all.

Collaborators?

Adrian, Pennie, and I have started on a more formal paper -- and we seek other collaborators who can help us do field trials of FairPay.  This could be an unusual opportunity to do research that not only advances theory, but potentially gains wide recognition from managers and the general public -- by solving urgent problems in finding good business models for the rapidly evolving digital space. (If you have interest in assisting, or suggestions of those who might, please contact me: fairpay [at] teleshuttle [dot] com.)