How Market Commerce Can Become More Cooperative, Fair, and Human

A recent conference on Platform Cooperativism spurred some thoughts on how FairPay offers a path toward a new convergence of traditional ideas about market capitalism and alternative ideas about a "Fairness Economy." (This conference drew added attention from a Wired article about the idea that Twitter should become a co-op, "Let's Build the Next Twitter Like the Green Bay Packers.")

In exploring the concepts of a more win-win approach to commerce called FairPay, I have seen a spectrum of thinking about market capitalism and its limitations as currently practiced, and how to make our economy more in tune with human social values.

• Market capitalism has created our modern world, and proven efficient, productive, and scalable -- despite a degree of blindness to human values. 
• That has led to growing concerns about income inequality, slowing productivity gains, and concentration of power in corporations and investors, spawning a wide range of movements to change the game. These range from
  1) incremental steps like "Corporate Social Responsibility," "Creating Shared Value," and "Triple Bottom Lines," to
  2) benefit corporations and other more softly profit-oriented structures, and to
  3) more sharply different forms of organization like cooperatives (and other non-profits).
• The conference focused on cooperatives, a form of business that has existed for centuries, and harnesses the same spirit as Open Source and Peer Production, and that can now build on the openness of the Internet to put ownership of a business in the hands of its workers and/or customers.
• All of this occurred with a backdrop of the US election, which highlighted deep concerns about an economy that no longer seems to be serving middle- and working-class people well -- a hard push for change, but one with little consensus as to what kind of change can or should be achieved. 

Meanwhile, most businesses may still be far from meaningful social consciousness in their operational core, but increasing numbers do try to tack on some efforts at "good corporate citizenship." Some would argue this is just lipstick on a pig, but others see real potential to make existing businesses much better.

Hints of convergence -- human-centered marketing

The gulf may seem huge, but deep in the heart of modern marketing, a more direct incentive to being more fair and human is emerging. Companies are realizing that in this networked age, their most important customer relationships are ongoing, and that loyalty and Customer Lifetime Value (CLV) are more important than immediate sales. Companies are beginning to see that Customer Experience (CX) is central, and that they must attend at every touch-point to creating desirable Customer Journeys that build Loyalty Loops to cultivate their best customers. (Forrester recently reported that CX leaders grew at 17% per year compared to 3% for CX laggards.) This re-orientation is starting to drive companies toward deeper, more personalized dialog with their customers and more human, cooperative values.

How FairPay changes the game

FairPay enables a shift in business operations to focus on a more cooperative "co-creation" of value that improves the bottom line. That can help bridge the gap between these two very different models, by making ordinary for-profit corporations more aligned with their customers and what they value -- including human values of people and planet.

The magic of FairPay is that it can be applied in any of these ownership structures. It can work very nicely in alternative structures like co-ops, but can also work as a core operational process in ordinary for-profit businesses. It drives everyday business operations to center on the human values of each customer, in a way that makes it profitable to "do the right thing." No tacking on extra bottom lines, or a veneer of social responsibility, that compete with profit motives. FairPay serves as a kind of cooperative judo that aligns the profit motive with what the customer wants. If the customer is an owner (as with a co-op), that just adds to the alignment.

FairPay provides a structure for building relationships around value, by giving consumers limited power to set prices that correspond to the value they receive -- for as long as the seller considers them to be fair about how they do that (but not longer). This creates a balance of powers (setting prices / continuing the relationship) that rewards cooperation. It changes commerce from largely independent one-time games that are inherently zero-sum, to a repeated game that adaptively seeks win-win co-creation of value.

A new lens on market fairness

So with this new lens of FairPay -- and how it works in any kind of business to fundamentally change customer relationships into a repeated game of cooperative relationship building -- a new path becomes clear.

From one side of the divide, if we use FairPay in conventional businesses, we don't need any new enterprise structures (or any new enterprises) to start with.

• Conventional corporations can introduce FairPay into their ongoing operations, as an alternative pricing option -- one that drives a new kind of cooperation between a business and its customers (and they can start to do this in limited, controlled market segments).
• This cooperation focuses on win-win value propositions based on structured dialogs about value that can include broad aspects of value, including "externalities" of people and planet that are typically ignored by our markets (but directly affect the bottom line when FairPay pricing is applied).
• That in itself should improve things for customers, workers, stockholders, and society at large.

At the same time, we can build from the other side and create new platform cooperatives (or other new models in that vein). They show considerable promise, and FairPay can add to that promise.

• The same kind of cooperative dialogs about value that FairPay creates in a for-profit business can be applied by a co-op or other non-profit or hybrid form, with the same benefits.
• Such methods can be expected to be especially effective in such contexts, because of the deeper alignment of values on the part of the alternative business, and the greater willingness to pay of consumer "cooperators" when the business entity is theirs. (More on this in an earlier post, A Better Revenue Strategy for Non-Profits in the Digital Era.)

Thus FairPay offers a common operational logic that can serve as a bridge toward convergence from both sides, wherever along the spectrum we are.

• Conventional businesses can become more cooperative and aligned with customer and social values, and help instill more cooperative behavioral norms in themselves and their customers -- even in a for-profit, capitalist context. 
• That sets the stage for further shifts toward cooperation in for-profits -- as well as a more fertile environment for alternative structures.
• Likewise, alternative structures (non-profits or hybrids) can benefit from the fair and efficient FairPay pricing process that is more attractive and more self-sustaining than conventional pricing. The power of FairPay may be even greater in such alternative structures -- even if such structures are not as operationally efficient as profit-driven structures in some respects, FairPay might enable them to achieve greater price-efficiency to offset that, drawing on their more inherently mutual incentive structure.

Both camps can coexist and seek to flourish as they are able, and each can help drive the growth of an ecosystem that benefits all productive players, as well as society at large. Whatever mix it is that flourishes in any given context, and any point in time, we all can win with FairPay.

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For a full introduction to FairPay see the Overview and the sidebar on How FairPay Works (just to the right, if reading this at FairPayZone.com). There is also a guide to More Details (including links to a video).

Even better, read my highly praised new book: FairPay: Adaptively Win-Win Customer Relationships.  
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