The impact of differences in context

by Charlie Alfred

by Charlie Alfred
Philip, To answer the question in your last blog on distinguishing the 3 asymmetries, the first test to see how clearly you are describing the issues would be for me to echo back my understanding of the three asymmetries (taken from the Governance article):

1. Isolate variations in technologies 

This asymmetry is fundamentally on the supplier side, although consumers may experience the result sometimes. For example:

  • PC manufacturers deal with different processors, memory chips, monitors, disk drives
  • Software developers deal with different databases, messaging systems, libraries, etc.

The result of this asymmetry might be invisible to the consumer (e.g. standardization of parts), or may show up as a quality difference in the product or service (e.g. auto X has a better stereo).

2. Isolate variations in business models
This asymmetry appears to straddle the supplier and consumer side. Each supplier in an industry chooses a business model that forms the basis for how they intend to complete. This business model choice will make the supplier more attractive to certain types of customers and less attractive to others.

  • Airlines: Southwest Airlines vs. United vs. Virgin Atlantic
  • Automotive: Honda vs. Mercedes vs. Hummer
  • Retailing: Wal-Mart vs. Macy’s vs. Home Depot

Consumers are affected by this asymmetry because they either must lock into a specific business model of their suppliers, or figure out an effective way to incorporate two or more (and know when it is best to use one instead of the other).

3. Isolate variations in context of use
This asymmetry predominantly affects the consumer side, as perceived value is a function of what the consumer does with the product or service. Not only can this asymmetry vary between consumers, it can also vary over time for the same consumer. For example, a person with a health club membership might use the facilities to:

  • workout to develop strength
  • workout to develop flexibility
  • workout to develop aerobic capability
  • exercise to lose weight
  • bring the kids to the swimming pool for recreation (and give mom a break)

I believe I got these right, and they are explained pretty clearly in your paper. However, I’m not sure that I understand how the SUV example is a good illustration of asymmetry #1. If I understand it correctly, I see this example as representing either asymmetries #2 and/or #3:

  • #2 Different SUV manufacturers clearly have different target markets and business models. For example, Land Rover and Jeep focus on off-road travel, while the Mercedes ML, BMW X3, and Acura MDX are targeted toward the urban luxury segment.
  • #3 Many SUV buyers select their vehicles anticipating a variety of uses, then end up discovering a few new ones after purchase. For example, someone might buy a Jeep for its off-road and towing capabilities, then get married and have kids and find value in the all-wheel drive and anti-lock braking safety features.

I think that the dynamic context-driven asymmetries are a very interesting concept. And I agree with you that the challenge of preparing for them is magnified by the difficulty of anticipating them. I’ve found with my own work on value models, that two things are absolutely essential:

  1. Very crisp, clear examples that illustrate the abstract concepts and make them real for other people. It looks like you are doing this pretty well. I really like the heart transplant, progressive disease, and investment management examples.
  2. A good description of the process that people might use to get to the endpoint. In my experience, a large percentage of people aren’t comfortable dealing with an abstract model. They need to see some sort of sequential process backing it up. I had trouble getting the value models ideas through to several bright engineers until I created an example (using a source code control system). Once that was in place, then the light bulbs began to come on at a faster rate.

I like your question about dealing with the third form of asymmetry (dynamic, context-driven). On the surface, this challenge seems daunting. A supplier wants to be prepared for whatever the consumers might need in whatever context they find themselves in. Given that the supplier’s preparedness is only going to be as good as what he is able to anticipate, this potentially has all of the earmarks of a Catch-22.

I believe that the path toward successfully addressing this challenge lies in modeling the contexts themselves. In other words, the typical reason that a consumer or supplier will be motivated to change their behavior is because something in their environment changed that alters their value experience. This includes understanding:

  • what forces drive certain contexts,
  • how and why the contexts change,
  • what the magnitude and direction of the change is,
  • how the changes impact the value models of the participants in the context.

Consider weather forecasting as an example. Changes in high and low barometric pressure, warm and cold frontal boundaries, air temperature, and relative humidity tend to trigger changes in weather. If these changes are serious enough and a blizzard is forecasted, I want to be sure that I have portable heaters, flashlights, and a few days supply of food and water. When faced with a serious storm, a strong desire for my family’s safety and my own helps predict my context-specific behavior. The same argument might be made for a person with a chronic and/or progressive disease, or a business whose market or competitors pose new challenges.

Abraham Maslow showed us that the basic forces that motivate people’s behavior are fairly straightforward and reasonably consistent across the population (at a high-level of abstraction). While the details start to fragment (i.e. not all people perceive safety or belonging the same way), two things are often true. First, these motivation drivers tend to have some consistency over time for an individual, and second, large numbers of individuals tend to think alike. My hypothesis is that differences in makeup from person to person has less of an impact on their wants and behavior than the differences in the context that they find themselves in.
Happy New Year
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