ProjectVRM Blog

Here in the VRM development community we’ve been talking (and in some cases working) for several years on the Personal RFP. Technically an RFP is a “buyer-initiated procurement protocol” for businesses doing business with businesses: B2B as they say. With VRM the buyer is an individual. Hence, Personal RFP. Not a great label, but one that businesses understand.

Now comes Scott Adams (Dilbert’s cartoonist), with Hunter Becomes the Prey. His compressed case:

Shopping is broken… Google is nearly worthless when shopping for items that don’t involve technology. It is as if the Internet has become a dense forest where your desired purchases can easily hide.

Advertising is broken too, because there are too many products battling for too little consumer attention. So ads can’t hope to close the can’t-find-what-I-want gap. The standard shopping model needs to be reversed. Instead of the shopper acting as hunter, and the product hiding as prey, you should be able to describe in your own words what sort of thing you are looking for, and the vendors should use those footprints to hunt you down and make their pitch…

You can imagine this service as a web site. The consumer goes to the section that best fits his needs (furniture, cars, computers, etc.) and describes what he wants, in his own words. Vendors could set key word alerts via e-mail or text for any products in their general category.

Once they read the customer’s needs online, they have the option of posting their solution, publicly, which gives other vendors and consumers an opportunity to offer counterpoints.

I assume this service already exists in some weaker form. www.answers.yahoo.com is a step in the right direction, but it doesn’t broadcast your needs to vendors.

My prediction is that Broadcast Shopping (as I just decided to name it) will become the normal way to shop.

I love “broadcast shopping.”

Where I veer from Scott’s approach is with the assumption that this requires “a site.” That’s because sites become silos, and silos are a big part of the problem we also have with loyalty cards. All are different. All say We have ways of making you shop. Tll trap and control you in their own ways. We need something that serves as a customer’s own tool, and works as simply as a keyring, a car key, an emailing, or a text message. “Here’s what I want: _________.” That’s it.

In business, RFPs use an open protocol (essentially, formalized paperwork and bidding processes). Anybody can use it. We need the same for broadcast shopping. Any of us should be able to broadcast, in a secure and selective way that protects our privacies, specified goods we’re shopping for.

I use the plural of privacy because what we reveal selectively will depend on who we already relate to. For example, say I have a trusted relationship with Nordstrom, Sears and a variety of smaller clothing retailers. I could broadcast only to those stores my need for a tan cotton dress shirt of a particular brand, with a 17″ neck and 31″ sleeves (my actual dimensions, there — I have a linebacker’s neck and arms like a penguin’s flippers). Or I could broadcast the same need to the general marketplace through a fourth party that intermediates on my behalf, not revealing any information about me beside my actual need.

One scenario Scott describes in his post…

For example, let’s say you’re looking for new patio furniture. The words you might use to describe your needs would be useless for Google. You might say, for example, “I want something that goes with a Mediterranean home. It will be sitting on stained concrete that is sort of amber colored. It needs to be easy to clean because the birds will be all over it. And I’m on a budget.”

Your description would be broadcast to all patio furniture makers, and those who believe they have good solutions could contact you, preferably by leaving comments on the web page where you posted your needs. You could easily ignore any robotic spam responses and consider only the personalized responses that include pictures.

… outlines a broad class of needs where the customer’s mind is not yet made up. Those are within the scope of VRM, but I think we should start with cases where the actual requirements are known by the buyer, and the buyer can set the terms of engagement. For example, “I want my receipt emailed to me in (this specified) data format, and I don’t want to receive any promotional material.”

All this is not only do-able, but inevitable.

I’ll conclude with a pitch of my own for funding research and development on this work.

Google should be interested because Advertising in Reverse, or Broadcast Shopping (a term I love, by the way), will either undermine or replace the company’s standing business model (which pays for all those freebies we enjoy).

Microsoft should be interested because this could give them something Google doesn’t have yet.

Yahoo should be interested because they need something new that’s a winning idea. Amazon and eBay should be interested because they’re already in that business, though in a silo’d way.

Oracle should be interested because it will sell more databases and Sun gear.

Apple should be interested because it’s one more area where they can push for new standards on which the range of innovation goes through the roof.

Every retailer and intermediary should be interested because the promise of the Net for buyers is not an infinite variety of closed silos, but a truly open marketplace where any buyer can do business with any seller — and on the buyer’s terms and not just the seller’s.

Like everything else we will come to depend on utterly while remaining absent in the present, VRM is thoroughly disruptive idea. It’s always smart to get ahead of the curve by getting behind what will bend it.

My thinking out loud about what came to be called VRM began with The Intention Economy at Linux Journal, which I posted from a seat amidst the audience at the 2006 eTech in San Diego. The money ‘graphs:

The Intention Economy grows around buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don’t need advertising to make them.

The Intention Economy is about markets, not marketing. You don’t need marketing to make Intention Markets.

The Intention Economy is built around truly open markets, not a collection of silos. In The Intention Economy, customers don’t have to fly from silo to silo, like a bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. In The Intention Economy, the buyer notifies the market of the intent to buy, and sellers compete for the buyer’s purchase. Simple as that.

The Intention Economy is built around more than transactions. Conversations matter. So do relationships. So do reputation, authority and respect. Those virtues, however, are earned by sellers (as well as buyers) and not just “branded” by sellers on the minds of buyers like the symbols of ranchers burned on the hides of cattle.

The Intention Economy is about buyers finding sellers, not sellers finding (or “capturing”) buyers.

In The Intention Economy, a car rental customer should be able to say to the car rental market, “I’ll be skiing in Park City from March 20-25. I want to rent a 4-wheel drive SUV. I belong to Avis Wizard, Budget FastBreak and Hertz 1 Club. I don’t want to pay up front for gas or get any insurance. What can any of you companies do for me?” — and have the sellers compete for the buyer’s business…

I also believe we need to start viewing economies, and markets, from the inside out: from the single buyer toward the surrounding world of sellers. And to start constructing technical solutions to the buyer’s problem of getting what he or she wants from markets, rather than the seller’s problem of getting buyers’ attention.

Now jump forward to David Gillespie’s 263-slide narrative titled Digital Strangelove (or How I Learned To Stop Worrying And Love The Internet). It doesn’t mention VRM, but it unpacks what’s really happening with The Internet vs. Media (the former subsumes the latter and undermines all silos, among other good things), and it brings up The Intention Economy, by name, on slide 119. Since this is also the title of the book I’m writing, I find this encouraging.

[Later... David responded with this extraordinarily generous post, in which he makes connections to what we've both been saying about The Intention Economy.]

Along those same lines we have Chris Messina’s Don’t Make Me a Target, which brings up VRM this way:

Doc Searls calls this consumer-driven leverage VRM or “vendor relationship management”. I’ve been a fan of the idea, but I think it falls down on the last word: management. Big companies are willing to devote thousands and millions of dollars “managing” their customers; individuals are not. But services like Brightkite and Facebook are beginning to change that by enabling us to leverage our real-time, real-world behavior as a gating apparatus, removing the “management” requirement of VRM, and allowing us to “flow with the go”. As we invite these attention brokers into our list of recipients to whom we release increasingly contextualized and precise information about ourselves, we stand to benefit a great deal. And privacy, then, becomes a rational, economic instrument that determines whether a company gets to serve us well (based on knowing us better) or clumsily (as they make presumptions about us through circumstance rather than intentional disclosure).

Well, again we see how VRM is an imperfect name for what the development movement is actually about, which is making customers customers both independent of vendors, and better able to engage with them. I can’t blame Chris for taking VRM’s third name too literally. But I would encourage him, and everybody else, to take a broader view of what we’re trying to do here.

We’ve been saying for some time that much of the money and effort vendors spend “managing” customers is worse than wasted: it’s disliked or outright hated by customers. VRM is about giving customers ways to manage relations (even if those are just simple interactions) with vendors. This doesn’t have to be expensive or complicated. You manage your keys with a ring, and don’t spend millions doing it. VRM won’t work unless it’s key-ring simple. It also won’t work if the only rings you keep in your pocket are ones that vendors give you. The best of these, such as the ones Chris Messina talks about, are steps in the right direction. But at a certain point those steps stop. That point is customer independence, freedom and autonomy. Those are things customers need to have for themselves. Vendors can’t give it to them. That’s why VRM starts with the customer, not the vendor. With his Laws of VRM post, Chris Carfi helps scaffold the concept of VRM with the customer (or, in non-commercial settings, the individual) at the center — as the point of integration, an observation first made by Joe Andrieu.

As David Gillespie points out in his presentation (see slides 37, 38, 50, 55, 66, 73-74…) it’s still early. The Internet is brand new. As I said in Beyond Social Media and Toward Post-Journalism Journalism, the big brands of the Web today (Facebook, Twitter, even Google) are its trilobites and bryzoans. We are in the Net’s paleozoic, not its mesozoic or cenozoic — much less its pleistocene or holocene. The Net feels holocenic to us because now is when we are living and grooving on all the cool new stuff we can do. Still, trust me: it’s early. I’m as impatient as the next geek to get on with it, but it’ll take time. (It pisses me that I’m writing this at age 62, but maybe I wouldn’t be writing it if I were younger.)

So David is right. Intention is the key.

A brief story. Last night on the way home we stopped to pick up some provisions at a big Shaw’s grocery store. We went there because their food selection is enormous, and because  have one of their loyalty fobs on my key ring. In fact it’s one of just two on there (the other is Border’s). So we got our cart, gathered a bunch of groceries and went through one of the store’s self-checkout lanes. I hate those things, because something often goes wrong. But my kid loves them. He digs pressing the buttons, scanning the barcodes and bagging the groceries.

Well, something did go wrong. The machine didn’t ask for our Shaw’s card, or if it did we missed the request. After completing the purchase I realized that we got none of the “discounts,” and went to the customer service counter, where we waited about 20 minutes while the helpful people there tried to unscramble what went wrong. During that time I mentioned to one of the service people that I hated the whole loyalty card thing. She said she hated it too, as did other people at the store. Turns out they hated the self-check-out system too. The loyalty system is a big kluge, with double-pricing for nearly everything,  slow-downs at check-out, constant de-bugging and other problems. And self-check-out is a constant mess. “We’d be better off getting rid of those things and just adding more express lanes,” she said. I agreed.

In the end they couldn’t figure out what I was due back and instead gave me a gift card with a generous sum on it. Humanity overrode The System.

My point: loyalty programs are screwed up, and so are the constant efforts by sellers to automate the crap out of everything (including relationship as well as transaction), in too many cases offloading customer support to customers themselves. There is a distance beyond which this crap can’t work any more, and we’ve reached it. Beyond that point the market requires self-empowered customers, who will gain the ability to manage relating to multiple sellers in simple and uncomplicated ways that are independent of any seller’s silo, yet able to engage with those sellers in better ways than the sellers can provide with their own systems.

Right now vendors resemble the old AOL vs. Compuserve vs. Prodigy days. Its stil 1989. They’re rolling everything for themselves. What they need is to have the Net brought to them. That’s the customer’s job. Also the mission of VRM.

A panel at

9:30am, 13 October 2009
John Chipman Gray Room • Pound Hall
Harvard Law School

Who likes being tracked like an animal by big business, big government, and every tech hustler looking to make a buck from both? Not the developers of self-tracking and personal informatics. These hot new new categories are both driven by a growing sense that primary responsibility for gathering personal data and putting it to use belongs to individuals — not to companies, governments or anybody else.

These tools help individuals become both the point of integration for their own data, and the primary authority for what gets done with that data.
Self-tracking is how individuals collect data about themselves, while personal informatics is how individuals organize that data, determine purposes for it, and share it selectively. Together these tools inform individuals’ relationships with themselves, with their social networks, with the organizations to which they belong — and with sellers of all kinds.

Tools for self-tracking and personal informatics are new, already becoming popular, and in need of much thinking about how personal data is gathered, stored and shared. Each panelist is either developing tools in these categories or has experience with new tools and the issues involved. Doc Searls, of the Berkman Center and ProjectVRM, will moderate the panel, and we expect discussion with participants (there will be no “audience” here) to be lively and informative.

The panel kicks off Day Two of VRooM Boston 2009. It’s a free event, and everybody attending the panel is invited to stay, keep the discussions going, and help developers already working on these new tools. It would be nice if you registered here, so we get an idea of how many people will attend; but it’s ot necessary.

Panelists

• Adriana Lukas – The Mine! Project and The MINT Initiative. A leading organizer of the VRM community in the U.K., her work centers on “redressing the balance of power between customers and companies, users and platforms, individuals and institutions.”
• Tim Hwang – Web Ecology Project. In addition Tim Founded ROFLCon, The Awesome Foundation, and Information Superhighway. He is working on a book on the mechanics of web culture and memes online.
• Keith Hopper – ListenLog. Keith works on digital product strategy for NPR. He is the creator of NPRbackstory, was a contributing author for the book Collective Intelligence, and has done some other fun stuff.
• Ben Rubin – Zeo.Ben is the co-founder and CTO of Zeo Inc. Zeo has created and recently launched the world’s first personal sleep coach.
• Doc Searls (moderator) – Berkman Center and ProjectVRM. Doc is also co-author of The Cluetrain Manifesto, Senior Editor of Linux Journal and working on a book titled The Intention Economy: What Happens When Customers Get Real Power.

CRM — Customer Relationship Management — is a huge business. According to this article, Forrester expected the CRM software market to hit $74 billion in 2007. This more modest Gartner report says the worldwide CRM market totalled $9.15 billion in 2008, growing at a 12.5% rate over 2007.

CRM is pure B2B: business to business. You’re not involved, except as a customer of CRM’s customers. It’s your relationship with a company that’s being managed—by the company. Not by you.

Last month Neil Davey of MyCustomer.com reached out from the CRM world to interview me on the subject of VRM. The result is Doc Searls: Customers will use ID data to force CRM change. The angle was data. If VRM gives customers more control over their data and how it is used, how does that help CRM? Wouldn’t customers want to share less of their data rather than more?

In fact data will be front and center as a topic at —

on Monday and Tuesday of next week at Harvard Harvard  (please come, it’s free). While most of the workshop will be organized on the open space model (participants choose the topics and break off into groups to move those topics forward), we decided to have one panel, titled Getting Personal With Data: How Users Get Control and What They Do With It. I invite local CRM folks (and everybody interested) to come and participate.

In his piece Neil sourced my new chapter (”Markets are Relationships”) in The Cluetrain Manifesto, as well as text from an interview by email. Since CRM+VRM is our topic here, I thought it would be cool to provide the long form of my answers to Neil’s questions.Here goes…

About what VRM does that CRM alone cannot…

Think of a buyer-seller relationship as vehicle that can be driven by two people: the buyer and the seller. The problem we have today is that only the seller—what in business we call the vendor—can drive. The buyer is in the passenger’s seat. She can’t drive. She can choose to spend or not to spend—or to leave the car and ride with some other vendor. But she can’t drive.

VRM gives her a way to drive.

To mix metaphors a bit, CRM systems are designed to operate what in the tech world we call “silos” or “walled gardens.” It doesn’t matter how nice a company makes its walled garden—it’s still owned and run by the company as a habitat for customers. The company makes all the rules, sets all the terms, provides all the means for everything the customer does with the company. The customer’s only choice is to take the whole deal or leave it.

Every one of CRM’s walled gardens is also different, and most treat the customer as if he or she has no other business relationships, save those to the government or to credit card companies. As a result customers have no common means for relating with multiple vendors. Thus, as CRM system adoption goes up, so do complications for customers.

Perfect example: loyalty programs. Most of these burden the customer with cards and key-ring tags—all to “increase switching costs,” to obtain a higher “share of wallet” or to impose other inconveniences. I know one guy who carries around a key ring with dozens of little tags. In my own case I recently counted fifteen different loyalty cards populating my wallet, my key chains and my glove compartment. None make me feel loyal. All increase my resentment more than “loyalty” by any measure.

Limiting customer choices amounts to wearing blinders. Companies can’t see what they won’t let themselves see. For example, they can’t see customers who choose not to shop at a store because the store only gives discounts and benefits to loyalty card holders. In my own case I buy groceries at Trader Joe’s. rather than Stop & Shop because Trader Joe’s doesn’t require that I carry a loyalty card to get a “discount” that I believe is nothing more than a regular price—while the non-card price amounts to a surcharge and a punishment for non-card-carrying customers. Whether or not this is true, it’s a legitimate perception, and an unintended negative consequence of the loyalty card system. Stop & Shop can put the world’s best data-collection behind its loyalty cards, but one thing they won’t find in that data is why I don’t buy at their store.

Being customer-driven means a company knows what customers actually want and what they actually feel. Wouldn’t it be better to know directly when a customer wants something, rather than to guess at it? Wouldn’t it be better to have whatever market intelligence the customer can provide, willingly, rather than to give the customer a limited set of choices, which may exclude the one thing that might cause a sale or make a better customer?

Friends of mine who have worked in the CRM business, and studied it over many years, tell me that in many — perhaps most — cases, customer-centricity is secondary to organization-centricity. They know of few cases where customers actually drive the company.

In the beginning CRM was about building a “single customer view,” with lots of talk about better understanding the customer’s needs, and how that should be become part of “integrated” marketing, selling and customer service. Over the years, however, this ambition was compromised by minimal data and cost-cutting requirements.

My wife, a business veteran with a long history in retailing (both at the store level and as a supplier) has observed that the trend in recent years has been to out-source support to the customer herself. “Go to our website,” the call center says. Yet typical websites are so poor at customer support that the customer is left to seek help from other customers, or from websites other than the company’s own. This is why so many customers now support each other, rather than bothering with companies’ own support sites and services.

The problem here isn’t bad CRM. It’s that there is nothing yet on the customer’s side to carry some of the relationship weight — other than what CRM systems provide. That means the whole responsibility lies with the vendor. With VRM we want to give the customer means for carrying some of the burden herself.

About VRM and its community…

The current VRM community is a convergence of several formerly separate efforts. In the UK, the Buyer Centric Commerce Forum came together in 2003. In the U.S., VRM grew out of the Internet Identity Workshops, which started in early 2005 — as a workshop discussion subject that broke off and acquired a life of its own. In my own case, VRM started as a sense of unfinished business after Chris Locke, Rick Levine, David Weinberger and I wrote The Cluetrain Manifesto in 1999. Listen to what Chris was saying (in the original manifesto posted at Cluetrain.com) with “we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it.” That is the voice of the customer, energized by powers granted by the Internet but not understood by sellers there.

After Cluetrain came out, I realized that Chris’s statement wasn’t quite true, because if customer reach truly did exceed vendor grasp, loyalty cards would be pointless. Customers would have native means for expressing their own wants, needs, terms of engagement and loyalties. Thus I came to realize that relationship was the next frontier. Something had to be done to liberate both sellers and buyers from the belief that a free market is “your choice of captor.”

We didn’t call it VRM, however, until Mike Vizard suggested it during a Gillmor Gang podcast in October 2006. Before that we had called it CoRM (for Company Relationship Management) and other names. As a new fellow at Harvard’s Berkman Center, I needed a project. So I titled mine ProjectVRM, and the rest is history.

On how customers control personal data and its exposure…

The short answer is that customers will disclose data on an as-needed basis, within the context of a secure and genuine relationship, and not a coerced one where the vendor does all the asking.

The longer answer is that this requires a new system on the customer’s part and a modified one on the vendor’s part. That’s how VRM + CRM will work together.

Both systems need to recognize that the individual, and not the organization, should be the point of integration for his or her own data, the point of origination for sharing that data, and the authority about what gets done with that data.

The ’single customer view’ is naturally that of the customer, not the company. If a working relationship is in place, the customer will share required information when the right time comes — and do it, when need be, for many relationships at once, and in consistent, standardized ways. For example, the customer can issue a trusted change of address just once for many companies, rather than many times and many ways for many companies. In the absence of a customer-driven data-sharing system, we have companies constantly running after the customer for updates and becoming increasingly invasive of privacy over time (Phorm being just one familiar example.)

VRM enables personal data management by the individual, in ways that work for the individual and which can also enable selective disclosure to companies. There are various ways of achieving that, many of which are being actively worked on at present. The plumbing part is easy. Processes and business models are harder, but those are being worked on too.

The challenge lies in developing a more granular view of what data is shared, by whom, how, where and why. For CRM today that equates to WHO, bought WHAT, WHERE, WHEN and HOW it was offered to them. These are all data that can be derived from a system if it is built well enough. These data can then be used to make good guesswork about WHY customers bought products, and then make educated guesses about what customers will buy next.

A well designed VRM system will eliminate much of the the guesswork that CRM currently involves. For example, VRM can provide customers with tools to say “Here’s what I’m in the market for,” or “Here’s my current circumstances. What have you got that is relevant?” — in ways that prevent that data from being used later against the individual, or to inform guesswork that wastes both the vendor’s and the customer’s time and money. The customer also needs to be able to assert his or her own terms of engagement, rather than being forced to accept those required by the vendor. Customer-driven terms would naturally include commitments to pay and otherwise behave honorably; but they might also include preferences (such as “send no junk mail” or “email my receipts”). They might even include expressions of willingness to pay for good service.

On the personal data side, this system will involve what we call “volunteered personal information.” In effect this is a new class of data. Right now that data lives mostly in the heads of customers, because they don’t have the tools or systems to express any of it on their own.

Companies need to be willing to engage with this new type of data. While this may seem scary — giving up control always is — in practice it is just a more highly qualified sales lead and a smoother customer interaction than the current system allows.

On how VRM will influence vendors who don’t want to give up control…

Money talks. Consider one form of VRM we call the Personal RFP. This is where the customer advertises his or her desire to buy a product or service at a given place and time. (And not just through a walled garden such as Facebook or eBay.) For example, “I need a stroller for twins in Grand Rapids in the next 5 hours.” Data with money behind it will fund all kinds of changes in data collection systems.

On other appeals to the CRM side…

A core purpose of VRM is to eliminate the guesswork that has wasted enormous sums of money and energy for marketing and sales — while also wasting the customer’s attention and time. We can save that money, energy and time by giving customers the means to control means of engagement with companies, and to do it in standard ways that work across the board.

It is not possible to see how any of this will work if you look at it only from the supply side of the marketplace — from the standpoint of the seller. You have to take off your seller’s hat and be the other self you’ve always been: a customer.

No customer wants to be “acquired,” “retained,” “managed” or “owned” by any seller. Customers want to be respected on their own terms, and not those of a company that seeks constantly to maintain the advantage in a relationship that actually isn’t.

In other words, they want a real relationship. Not something that is a relationship in name only.

The new dynamic is a green field. We’ve never had it. I believe that if we create the means for enabling good will as well as easy sales, real relationships will follow.

On how “realistic” VRM is…

How realistic was the Internet in 1985?

Look at networks in the 80s and early 90s. If you wanted email, or instant messaging, you had to join a walled garden called AOL or Compuserve or Prodigy. If you were an AOL member and wanted to send an email to a Compuserve member, you couldn’t. Just as today you can’t use a Costco loyalty card at a Best Buy.

The Internet changed all that, by providing new protocols for communication that weren’t owned by anybody, but could be used by anybody and improved by anybody.

VRM will likewise change buyer-seller relationships by providing new means for engagement that aren’t owned by anybody, but can be used by anybody and improved by anybody.

Customers are resigned to stuff they hate when they think there are no alternatives. Once the alternatives show up, they will get energized. “Invention is the mother of necessity,” Thorstein Veblen said. What we’re doing with VRM is inventing protocols for buying and selling that will mother many new market necessities. One of those will be reforming CRM so it can respond to real customer demand, along with much better data than was ever before possible.

About where data lives, and how…

Some VRM folks (e.g. Mydex.org) are working on “Personal Data Stores” that can be replicated with trusted “fourth parties“. Some are working on ways of representing personal data (e.g. Azigo.com, Kynetx.com). Some are working on ways of consolidating loyalty data on the customer side and reforming loyalty programs from the outside in (e.g. Scanaroo from Cerado.com). All the many digital identity systems and communities have VRM components and constituents (e.g. Kantara.org, IdentityCommons.org, InformationCard.net, OpenID.org, XDI.org). Some are working on simple customer-held means for organizing one’s own data and relationships (e.g. TheMineProject.org). Some are working on means for logging one’s own media usage, and providing means for putting the pricing gun in customer hands (e.g. ProjectVRM and its friends in various media businesses). Some are working on customer-driven terms of service (e.g. ProjectVRM and friends at Harvard Law School and elsewhere). Some are working on patient control of their own health care data and relationships with health care providers (too many efforts to name, but Google and Microsoft are on this list). Some are working on user driven search, outside the walled gardens of Google and Bing (Switchbook.com). I am probably insulting many by ending the list there, but that should be enough.

About ProjectVRM.org…

ProjectVRM is a research and development project at Harvard’s Berkman Center for Internet & Society. The project was created in 2006, and has focused mostly on development over the following three years. This next year we will be doing much more research as well.

I am a fellow at the center, and I run the project. The vast majority of the development work is going on among members of the VRM community. For them ProjectVRM serves as a central clubhouse, with workshops several times per year, a mailing list, a wiki and other supportive services. The idea isn’t to create a central VRM body, but rather to focus disparate VRM efforts on common goals.

I want to say before closing that we do not mean to give CRM a hard time. The problem CRM has had from the start is that it carries the full burden of systematizing relationships with customers. All VRM does is give customers means for carrying their end of the relationship. We won’t succeed unless it’s VRM + CRM, rather than VRM vs. CRM. If VRM succeeds, it will improve CRM enormously.

A few weeks ago I was interviewed by Neil Davey of MyCustomer.com, a major voice in the CRM (Customer Relationship Management) field. The results are up at Doc Searls: Customers will use ID data to force CRM change. Much of what Neil sources for that piece come from my new chapter (”Markets are Relationships”) in the latest edition of The Cluetrain Manifesto (Now with 30% more clues!). In that chapter, Neil says,

Searls sticks the boot into customer relationship management. And even though CRM has become accustomed to bruising encounters, some of these blows hurt – perhaps because there are some painful truths being delivered. CRM, as Searls sees it, would rather have captive customers rather than free ones. To demonstrate this, we only have to examine the language organisations use when referring to customers – how they try to ‘lock in’ customers and ‘retain’ them after they have been ‘acquired’.

Later this week, after I’ve looked more closely at what did and didn’t make it into Neil’s piece (what I said to him, by emai, was quite long), I’ll post some of what was missed.

Meanwhile, a little summary for VRM newbies arriving from the lands of CRM…

The purpose of VRM is to improve markets by enlarging what customers can do, not just what vendors can do. The latter is necessary too; but that’s what all good sellers have always been doing. And there’s a limit to how far that can go.

Better selling alone can’t make better buying. Better marketing alone can’t make better markets. Better CRM alone can’t make better customers. At a certain point customers have to do that for themselves.

That point came when the Internet arrived. It was announced by Chris Locke in The Cluetrain Manifesto, with this very graphic:

There was an equipment problem with that statement. Customers were not yet self-equipped with the means for reaching beyond the grasp of old-school marketers and sellers—a school that is still very much in session.

VRM (Vendor Relationship Management) is about equipping customers with their own ways of of relating to vendors. In the larger sense, it’s also for equipping individuals with their own ways of relating to any organization.

Thats the mission of ProjectVRM.org, which I lead as a fellow at Harvard’s Berkman Center. It’s also the mission of a variety of related projects and companies: The Mine! Project, PAOGA, The Banyan Project, MyDex, ListenLog, EmanciPay, Scanaroo, Kynetx, r-button and SwitchBook, to name a subset of the whole community.

Adriana Lukas, who started The Mine! Project, has something new at Market RIOT (Relationships on Individuals’ Own Terms): MINT, for My Information, Not Theirs. She calls it “a movement to redress the balance of market power between vendors and customers, institutions and individuals, web services/platforms and users.” Its obectives:

• “to create an ecosystem where customer data belongs to the customer, is freely available to individual customer or user, in open formats
• ‘to help the individual to become the point of integration for his or her transactional data
• “to encourage development of applications that enable individuals to enjoy the value they can add by managing and analysing their own data (buying behaviour, purchasing patterns and preferences) and potentially benefit vendors, when such information is voluntarily shared by customers.”

This should bring up plenty of discussion at the VRM East Coast Workshop next Monday and Tuesday at Harvard Law School. It’s free. The agenda will be set by participants (on the “open space” model). In addition I am working right now on lining up an opening panel on Tuesday to lead off discussion of user control of data. Stay tuned for more on that.

Meanwhile, if you haven’t signed up already, go here to register for the workshop.

It’s shocking and sad to read Jason Kincaid’s  Tipjoy Heads To The Deadpool story this morning in TechCrunch. Ivan and Abby Kirigin were neighbors just up the road from Cambridge (I understand they’ve recently moved back to California), and kindred spirits to the VRM community as well. Keith Hopper and I had a nice get-acquainted lunch with them a couple months back, and talked often in ProjectVRM conversations about how EmanciPay might use the excellent TipJoy API, among other possibilities. The key paragraph from their final blog post:

When we evaluate why there’s been so much hype about payments on Twitter, and yet so little traction for us (and even far less for our competitors) it is clear to us that the reason is that a 3rd party payment service doesn’t add enough value. We strongly believe that social payments will work on a social network, provided that they’re done within the platform and not as a 3rd party. “Simple, social payments” is *the* philosophy needed to do digital payments right, but once a service groks that, they need only to implement it on their own. We’ve been the thought leaders in this space, we see the hype and excitement, and yet we know very intimately the difficulties in gaining actual traction. The only way to get around this is for the platforms themselves to control payments – then all people wanting to operate on that platform would have to play along. We believe that a payments system directly and officially integrated into social networks such as Twitter and Facebook will be a huge success.

This is consistent with our thinking as well. It’s why we’re designing EmanciPay not as a payment system but rather as a lightweight customer-native and -controlled set of methods (rather than a “system,” which implies something big, heavy and central) for choosing not only how much to pay, but when, where and under what terms — and leaving payment itself up to the Twitters, Facebooks, PayPals and Google Checkouts of the world.

EmanciPay is also not a business in itself. When it’s done it will be a set of specifications (data types, protocols, logic) rather than a commercial venture. It will add to the still-small portfolio of native customer capabilities as independent actors in the marketplace.

To leverage what Dave said long ago, Ask not what the marketplace can do for you. Ask what you can do for the marketplace. VRM is about answering that second question.

Meanwhile, we salute the pioneers. TipJoy did much for the marketplace. I just hope that the marketplace will repay Abby, Ivan and their colleagues generously. In fact, I have faith that it will.

Arlington cafe serves gourmet food and lets customers pay what they want, by Shane Stephens in the Dallas Morning News, probes some of our assumptions with EmanciPay—a customer-controlled way to choose how much to pay for online goods that cost nothing but are worth more than that. The financial end of the story:

The no-set-price concept is intriguing, especially in this economy. Chippindale says it was inspired by One World Cafe in Salt Lake City, a pay-what-you-want community kitchen founded by her friend Denise Cerreta. But while One World Cafe is nonprofit, Chippindale intends to make money. “I definitely do not turn away from a profit,” she says.

So far, she’s not getting rich; in fact, she’s not even breaking even. Customers have been leaving an average of about $7 per person in the envelopes, and Potager’s food costs are running about $8 per person, she says.

That’s two small tests in a trial that needs many more. Think payment levels might change if the restaurants’ costs were fully exposed?

So how do we get out of this place?

Let’s face it. Mike Arrington’s problem with the iPhone, Om Malik’s problem with AT&T, the FCC’s problem with Apple + AT&T together, my own problems with Cox, Dish Network and Sprint, David Pogue’s problem with the whole freaking cell phone industry … all of these are a great big WAAAH! in the wilderness of industrial oblivity to what customers want. We’re in the graveyard of what Umair Haque calls the zombieconomy. We’re living in Night of the Living Dead and complaining that the zombies want to eat us alive.

What they really want is to strap us down while they bleed us for small change—tiny amounts of ARPU. They do this, for example, by forcing us to sit through “The … number … you … have … dialed … eight … zero … five … seven …” until a small ka-ching happens somewhere deep in their billing system, so you get bled whether or not you’ve left (or received) a message. David Pogue:

Is 15 seconds here and there that big a deal? Well, Verizon has 70 million customers. If each customer leaves one message and checks voicemail once a day, Verizon rakes in — are you sitting down? — $850 million a year. That’s right: $850 million, just from making us sit through those 15-second airtime-eating instructions.

It was JP Rangaswami (disclosure: I consult JP and his company, BT) who first pointed out to me that the primary competence of phone companies isn’t technical. It’s financial. They’re billing machines. That’s their core competency. And it was r0ml who pointed out, way back when he was with AT&T Wireless (before it became Cingular, and then the AT&T we all know and hate today), that phone companies arrived at the holy grail of micropayments decades ago. They don’t charge small amounts, but they know how to add them up, and round piles of microminutes into billions of dollars.

A better movie metaphor is The Matrix. We’re all wet cell batteries inside giant phone company billing systems. The machines took over a long time ago, and they’re still running the world.

Not that acting like machines does them much good in the long run. Umair Haque:

Profit through economic harm to others results in what I’ve termed “thin value.” Thin value is an economic illusion: profit that is economically meaningless, because it leaves others worse off, or, at best, no one better off. When you have to spend an extra 30 seconds for no reason, mobile operators win — but you lose time, money, and productivity. Mobile networks’ marginal profits are simply counterbalanced by your marginal losses. That marginal profit doesn’t reflect, often, the creation of authentic, meaningful value.

He adds,

The fundamental challenge for 21st Century businesses — and economies — is learning to create thick value. We’re seeing the endgame of a global economy built to create thin value: collapse. Why? Simple: thin value is a mirage — and like all mirages, it ultimately evaporates. In the 21st Century, we’ve got to reconceive value creation.

Constructive Capitalists are disrupting their rivals by creating thicker value. Thick value is sustainable, meaningful value — and a new generation of radical innovators is wielding it like a strategic superweapon.

Rick Segal thinks Mike Arrington’s CrunchPad is one of those superweapons. Here’s what the Crunchies say will look like:

Sez Rick,

No, this probably isn’t the next Apple or Motion Computing, but here’s the secret.

Let’s assume there are just 1000 people out of all the TechCrunch people in the world that want this device.  If this device gets made and sold to 1000 happy people and the result is a manufacturing world and process which can now do these “one off” type devices, the game changes.

That’s why I want this device to get made. It begins a high profile (and positive) disruption at the point of manufacture and that can mean exciting things to you.

One way to blow up silos and walled gardens is de-verticalize industry itself. Not by making it horizontal (that’s too abstract), but by making it personal. Rick’s angle here is to go all the way to the source, and make manufacturing personal.

That’s what Rick thinks Mike & Co. are doing here. I also think the Crunchpad is compliant with what Dave says in this post here:

I’ve been through this loop many times, this is Mike’s first. The only platform that really works is a platform with no platform vendor, and that’s the Internet.

Right. The Crunchpad, as I understand it (and the Crunchies have explained it) is a Net-native device. Standards-based. Commodity parts. Full of open source stuff. The platform is the Net. The vendor is TechCrunch, but trapping users isn’t their game. They’d rather have thick value than thin.

So how do we contribute, besides paying cash for goods? By being constructive customers, rather than passive consumers. That’s what Rick is calling for here, and why we, as free and independent customers, can choose to support something that uses the Net as the platform, and is built to be user-driven.

Think about it. Is the Crunchpad crippled by any deals with a major vendor of any kind? Is it locked into any phone company’s billing and application approval systems? Is it locked into any one industry’s Business-as-Usual? No.

So who is in the best position to contribute to its continued improvement, besides the Crunchies themselves?

You. Me. Users. Customers.

We can drive this thing. Even if what Dan Frommer says is right, and Apple comes out with the world’s most beautiful pad ever, and pwns the whole category, there’s more vroom for improvement in the Crunchpad, because Apple’s device will be closed and the Crunchpad will be open. Or should be.

You listening, Mike?

So I’m a guest on the latest TWiL (This Week in Law) podcast. Lots of VRM links at that link, below the topic, “How modernization of health data management is changing the health system.”

Here’s what I tried to say, or would like to have said better than I did.

Health care now lives in the networked world. That world is comprised of data. And the network is, as Kevin Kelly perfectly puts it, a copy machine. The result is, as Bob Frankston perfectly puts it, a sea of bits. Health care needs to adapt to this world, embrace it, take full advantage of it.

This imperative is at odds with the calculation of risk that is at the heart of our health care system here in the U.S. It would not be unfair, or even wrong, to call our health care system a risk management system. To see what I mean, imagine removing the insurance business from the middle of it.

Of course risk is always involved where odds must be calculated, and much of health care is legitimately about calculating the odds involved in a given condition, procedure or whatever. But huge hunks of our health care system, in addition to the culture surrounding it, is built around managing risk that has little to do with what our bodies and minds might require. Here are where we have fears of exposure, of disclosure, of mistakes, of all kinds of stuff that wouldn’t be a worry if we didn’t have to weigh the costs of knowning too much or too little in one circumstance or another, because something (a procedure, a doctor or a patient’s ass) might not be covered.

The nature of the networked world — of the big copy machine that constantly enlarges the sea of bits — is to reduce the risk of knowing too little, of having insufficient information, of reconciling data conflicts, or even conflicting judgment calls.

In the long run we must abandon a system that values risk more than care. I believe we have the former, to a dangerous degree, today. We will eventually require the latter. And that requires a health care system that essentially insures everybody.

In How Facebook Could Create a Revolution, Do Good, and Make Billions, Bernard Lunn of ReadWriteWeb has put forth a generous and highly understanding take on VRM. Sitting here in a big house amidst countless members of two extended families, on the morning of my daughter’s wedding, is not the ideal place to post at length on what Bernard and his many commenters have put forth, so I’ll keep it to a minimum now and pick up the thread next week when I’m back home in Santa Barbara.

The two most important questions Bernard brings up are,

1. What will it take for VRM to succeed?
2. What big companies are in the best positions to step up and make billions by serving VRM-equipped customers?

His initial focus is on Facebook as a company well-positioned to step up. And I agree with him. I also agree with him on the “the three horsemen of the consumer-clypse” (phone companies, health care providers and credit card companies) — plus Joshua Hall’s suggestion of ISPs as a fourth horseman. (Of course, phone companies are ISPs too.)

Of course we need big companies of many kinds to step up. I think in general the biggest winners will be companies doing Fourth Party Services. Facebook could easily do that. So could others among the many “horsemen.” The problem for all of them is that they see their “consumers” as an asset to “monetize,” rather than seeing themselves as services to be driven by users. For more about that distinction, see Joe Andrieu’s postings that begin with this one on User Driven Services.

To drive services, users need code. Standards. Implementations. These take time, and there are a number of projects underway. Check out The Mine! Project, including Alec Muffett’s latest — his slides from a recent Google Tech Talk. Check out what Iain Henderson says about his work with VPI (volunteered personal information) and what he calls the personal data ecosystem. Check out Media Logging, Listen Log and EmanciPay, all of which move toward providing an additional source of revenue for media that cost nothing but have values that exceed $0 (or €0, ¥0 or £0).

All this and much more work has been done voluntarily, by the way. None of these are businesses. Yet all of them can make a lot of money for businesses, once they’re in use and adopted. Which some or all of them (plus others, not mentioned or not yet discovered or adapted) will be.

Okay, I need to go rehearse for this afternoon’s wedding. Happy 4th, ya’ll.