We have a lot of clients in the financial sector, including banks. When we do sessions on strategy and future trends, we have recently included Reputation Economics by Josh Klein.
In Reputation Economics he sets out why he thinks reputation is becoming increasingly important. And it has nothing to do with your Klout score, but everything about exchange of value and trading.
Future business models
When you talk to clients about strategy, you also need to discuss future business models. And that is the strength of this book. Both on a business to business level as well as business to consumer level.
For large organisations, he has created a bleak picture. Imagine combining “Brand washed” (nasty marketing) with ‘Filter Bubble” (manipulation), ‘Digital disruption” (big bang disruption), “Bank 3.0“ (banks are in trouble), “Free” (building business models based on free), “Starfish and the spider” (Napster models as the way forward) and “Overconnected” (the digital butterfly in the Amazon creating a storm somewhere else). There is something of “Metaskills” (design is the future) in there too.
When designing your business for the future you need to take into consideration:
- The shared economy and collaborative consumption as a mega trend. Study Skillshare, Taskrabbit, Uber, Airbnb, Kickstarter and if in Ireland Linkedfinance.
- The different perspective on value, particularly by millennials, who are more interested in experience rather then ownership
- The perspective on money as a way to transfer value. If you know that currently 50% of the economy is informal and growing to 70%, there is a need to look at other ways to get paid. Study Bitcoin, Transferwise, the Hawala system, bartering, time banking, but also Warcraft.
- The circumvention of systems, which started with Napster, but is now hitting lots of other distribution systems, and includes the impact of 3D printing, open source and big data.
- The findings of Edelmann, that now values trust and transparency higher then the assets on the glance sheet of a company
- The ability to trade and exchange value on a one to one basis, the truest form of marketing and segmentation.
- The erosion of trust in large corporates and governments
- The ability, through technology, to build alternative, scalable platforms by a group of like minded individuals.
Cocktail of change
If you combine deregulation powered by the people, informal economy, digital, online and distrust in current systems, you have an interesting cocktail for change. In such a world of chaos, the currency that is most valuable is trust and reputation. As it was before the industrial revolution, or before the financial systems as we know it, were invented. It is hardwired into human beings. Everybody understands reputation.
Lessons for business
What are the lessons for business:
- This is an opportunity for the micro businesses as they are closer to customers and are better capable of developing a reputation and a relationship of trust.
- Everyone needs to examine their reputation trail, which is the sum of your engagements offline and mainly online. And it needs to look good.
- Your brand is your reputation and you can’t spoof it or buy it.
- If you want to tap into the informal system (70% of economy!) you will have to find other ways to exchange value.
- The definition of value itself is changing (happiness, love, delight, experience).
- Plan for system collapse.
3 basic scenarios
How you view this, depends on where you come from.
- Exchanges based on soft capital, such as trust, happiness, love, family, local community benefit and reputation. A sharing is caring economy, where you get what you give back. The true reciprocity economy.
- Or a world where banks, tax systems, governments and currencies itself are collapsing, leaving a trail of destruction and chaos.
- As is
Whatever way, you need to plan for all these scenarios. Scenario 3 is not going to happen