Is the ‘forever transaction’ business model ethical?
The "holy grail" of relationships with your customer can be tricky to achieve, and even more complex to uphold.
ROBBIE KELLMAN BAXTER: People ask me all the time if forever transaction business models are ethical. And I think the reason they ask me is because they're dealing with subscription fatigue right now. A lot of people are really frustrated with subscription business models for a few reasons. The first reason is what I call product market fit. In other words a lot of companies build subscription models that aren't very good business models requiring you to subscribe in order to access something that you only need one time, for example. Or bundling in a lot of stuff that you don't want and then requiring you to pay for it. So a lot of people feel like hey, I used to love this product and now I have to subscribe to it and I have to pay more and I'm not getting what I really need. That's the first problem and that creates a lack of trust between the individual and companies. The second thing is what I call subscription overwhelm which leads to subscription guilt which is they say something like this. I love this business model. I love this subscription. It's really great except I never use it.
And so I feel like I'm wasting money and, you know, the magazines are piling up on my coffee table and it makes me feel bad when I walk by it. Or there's this organization ClassPass which has a subscription to be able to go to any gym you want and take different kinds of fitness classes. And I'm not using my credits and then I'm wasting them. So then what ends up happening is the customer feels guilty and they cancel. So in some ways you're like well, that's not really the fault of the business because our business has great value and the customer told me it's not my fault. But ultimately that customer cancelled so it is your fault and it is your responsibility to figure out how to fix that. The third reason for this whole kind of subscription fatigue is the easiest to fix but the most evil, I think the most unethical which is hiding the cancel button.
A lot of subscription businesses make it really easy. It's kind of like the Hotel California. You can check out anytime you like but you can never leave. They'll make you only cancel on Tuesdays by phone, in person, with a physical letter. That does extend your subscription maybe for a month or two but it creates a lot of I guess the opposite of goodwill, a lot of mistrust, a lot of resentment and it ultimately eats into your brand equity. The way I feel is it's ultimately unethical. Who wants to work at a place that builds revenue by charging people for things that they don't want and wish they could cancel. So when it comes to ethics and building out a forever transaction there's a pretty weighty obligation on the part of the business owner, the business leader to create a model that is trustworthy so that the consumer can take off their consumer hat, put on a member hat, stop looking for alternatives and stop worrying about whether they're being treated fairly. And I have to say that not only is this ethical good behavior, it's also good business.
Because when you have a customer who feels like a member, who's stopped looking for alternatives, who's stopped comparing your offering with other people's offerings, and who has agreed to pay you on an automatic schedule, you have kind of achieved let's say the Holy Grail of business models.
- How can you build a subscription model that continues to satisfy your consumer while avoiding fatigue and potential ethical downfalls?
- According to business consultant and speaker Robbie Kellman Baxter, you must first determine whether your service really requires a subscription in the first place. And if it does, be careful not to overwhelm the customer, which can lead to subscription guilt.
- Trust is just as important. Hiding the cancel button from your customers might keep them around in the short term, but this ultimately eats into your brand equity.
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Innovators don't ignore risk; they are just better able to analyze it in uncertain situations.
The Labour Economics study suggests two potential reasons for the increase: corruption and increased capacity.
Cool hand rebuke<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQyMTIyNy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NjY1NTYyOH0.0MCPKN3If94mYCNf3mMNrnTvJXjXN_bKLhgk9203EXk/img.jpg?width=917&coordinates=0%2C0%2C0%2C0&height=453" id="1627b" class="rm-shortcode" data-rm-shortcode-id="6d76421ba1ea0de4b09956b97e80c384" data-rm-shortcode-name="rebelmouse-image" />
A chart showing prison population rates (per 100,000 people) in 2018. The United States has the highest rate of incarceration in the world.
Who profits with for-profit prisons?<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="97ac37e6c7f6f22ec130ea2d56871701"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/dB78NV2WpWc?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>The Labour Economics study suggests that privately-run prisons do convicts a few favors at the moment of sentencing. However, proponents of private prisons often point to other benefits when making their case. Specifically, they argue that private prisons reduce operating costs, stimulate innovation in the correctional system, and reduce recidivism—the rate at which released prisoners are rearrested and return to prison.</p><p>In regard to recidivism, the research is mixed. <a href="https://journals.sagepub.com/doi/abs/10.1177/0011128799045001002" target="_blank">One study</a> compared roughly 400 former prisoners from Florida, 200 released from private prisons and 200 from state-run facilities. It found the private-prison cohort maintained lower rates of recidivism. However, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-9133.2005.00006.x" target="_blank" rel="noopener noreferrer">another Florida study</a> found no significant rate differences. And two other studies—one from <a href="https://journals.sagepub.com/doi/abs/10.1177/0011128799045001002" target="_blank" rel="noopener noreferrer">Oklahoma</a> and another out of <a href="https://journals.sagepub.com/doi/abs/10.1177/0734016813478823" target="_blank" rel="noopener noreferrer">Minnesota</a>, both comparing much larger cohorts than the first Florida study— found that prisoners leaving private prisons had a greater risk of recidivism.</p><p>The research is also inconclusive regarding cost savings. <a href="https://www.hamiltonproject.org/assets/files/economics_of_private_prisons.pdf" target="_blank" rel="noopener noreferrer">A Hamilton Project analysis</a> noted that such comparisons are difficult because private prisons, like all private companies, are not required to release operational details. In comparing what studies were available, the authors estimate the costs to be comparable and that "in practice the primary mechanism for cost saving in private prisons is lower salaries for correctional officers"—about $7,000 less than their public peers. They add that competition-driven innovation is lacking as the three largest firms control nearly the entire market.</p><p>"We aren't saying private prisons are bad," Galinato said. "But states need to be careful with them. If your state has previous and regular issues with corruption, I wouldn't be surprised to see laws being more skewed to give longer sentences, for example. If the goal is to reduce the number of incarcerated individuals, increasing the number of private prisons may not be the way to go."</p>
A vertical map might better represent a world dominated by China and determined by shipping routes across the iceless Arctic.
- Europe has dominated cartography for so long that its central place on the world map seems normal.
- However, as the economic centre of gravity shifts east and the climate warms up, tomorrow's map may be very different.
- Focusing on both China and Arctic shipping lanes, this vertical representation could be the world map of the future.
The world, but not as we know it<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMDU1Nzg1NS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzNTkwMjIyNn0.qmQfwUdjQka8JX6q4KGANagleiuucpWay5ytMenZxUU/img.jpg?width=980" id="b95e4" class="rm-shortcode" data-rm-shortcode-id="ac088ec55c0585a93a9a310faab9a4c7" data-rm-shortcode-name="rebelmouse-image" />
A Chinese 'vertical world map,' showing the world in a different perspective from the one we're used to.
Image: Prior Probability<p>Europe is tucked away in a corner, an appendage of Asia dwarfed by neighboring Africa. North America is stood on its head, facing the rest of the world from the top of the map — cut off from South America, which cuts a solitary figure at the bottom. Africa is justifiably huge, but equally eccentric. </p><p>The eye scouts elsewhere for a place to land: not the Indian Ocean, which dominates the middle of the map, but some terra firma. Antarctica and Australia are too small, mere stepping stones for the land mass of Asia. Ultimately our gaze is drawn toward China, the lynchpin of this unfamiliar world. </p><p>Managing to leave both poles intact, this "vertical" world map is about as far away as you can get from the classic Mercator projection – which slices up both, giving center stage to a puffed-up Europe. Perhaps this new map will become more familiar soon: It may do more justice to the world of the near future, dominated by China and determined by shipping routes across the iceless Arctic. <br></p>
China's 'ten-dash line'<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMDU1Nzg1Ni9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1NTI4MzQyNn0.sBe0oFTif4Jef1vWh1kAnUylU_QMPXT5xQjm-5aA3sA/img.jpg?width=980" id="a3b81" class="rm-shortcode" data-rm-shortcode-id="80fc6e4f5c9c1c978f698be2c8de5484" data-rm-shortcode-name="rebelmouse-image" />
'China without any part left out': includes Taiwan and the islands and atolls in the South China Sea, surrounded by a ten-dash line
Image: Global Times<p>While there's no indication that this map represents the Chinese government's "official" worldview, it is no secret that China has a thing with maps – and more specifically, the country's representation on them. </p><p>In China, the country's current economic success is seen as a redress of the unequal treatment meted out by western superpowers in the 19th century. China's world dominance is a return to a more natural state of world affairs, many feel. Cartographic rectifications are a symbolically significant corollary of that sentiment.</p><p><a href="https://www.citylab.com/equity/2015/12/china-cracks-down-on-politcally-incorrect-maps/421032/" target="_blank">Fines are regularly imposed</a> on companies – domestic and foreign – that fail to represent China to the fullest extent of its external borders, disputed though they may be by others (e.g. India, Taiwan and any of the countries with claims overlapping China's in the South China Sea). But the People's Republic's cartographic obsession doesn't end at China's territory itself. It also includes the country's position on the world map. <br></p>
The Kingdom at the Middle of the World<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMDU1Nzg2MS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyOTkwODEzMX0.SGrAZBH6iJVggFYSaIahzv9GvfEh17y1SwUNINbVicQ/img.jpg?width=980" id="1774c" class="rm-shortcode" data-rm-shortcode-id="99790d80a909d17a948f7c5d463d7d98" data-rm-shortcode-name="rebelmouse-image" />
Early Japanese color copy of Ricci's world map
Image: public domain<p>China's name for itself is <em>Zhōngguó</em>, which means 'Central State' or 'Middle Kingdom', reflecting its ancient self-image as the civilized center (<em>Huá</em>) of the world, with wild tribes (<em>Yí</em>) at the edge. That view is not unique to China. Vietnam, for example, at certain times also styled itself as the "central state" (<em>Trung Quóc</em>) – considering the Chinese in turn as the uncouth outsiders.</p><p>It may be surprising to recall, but Europeans themselves once considered their own continent a relative backwater, viewing Jerusalem as the true center of the world. That changed with the Age of Discovery, which placed Europe at the center of an ever-expanding world. Maps reflected that worldview, and largely continue to do so. That's why today's standard world map still has Europe at its center – with China off toward the periphery on the map's right-hand side. </p><p>The most notable feature of the very first major modern world map produced in China, the <em>Kunyu Wanguo Quantu</em> (1602), is that it places China firmly at the center of the world. Produced for the Chinese emperor by Jesuit missionary Matteo Ricci, it was the first map ever to combine that perspective with modern western knowledge: it was the first Chinese map to show the Americas, for instance. </p><p>That representation may not have taken off elsewhere, but it will be instantly recognizable to Chinese students, as it's the standard format for world maps in China's schools today.<br></p>
America on its head<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMDU1Nzg2My9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwMzQ5NTc0MH0.EqadI2Yp-2dPwi3VccFZelIDK4V9t0ZOfTfHjdB6wVw/img.jpg?width=980" id="97104" class="rm-shortcode" data-rm-shortcode-id="2b66e8de389b3d736bc28e019e445cd0" data-rm-shortcode-name="rebelmouse-image" />
Upside down you turn me: North America on its head, in Chinese characters
Image: Prior Probability<p>For those used to "classic" Eurocentric world maps, Europe's marginalization may come across as a bit of an upset. America's new position on the horizontal Chinese world map is less jarring: It merely moves from the left- to the right-hand side of the picture. But then there's this vertical world map, which deals a similar blow to the American land mass: divided in two and pushed to the upper and lower edges of the map.</p><p>Unfamiliar? Sure. Shocking? Perhaps. Wrong? Not really. First off, no world map is totally right, since it's mathematically impossible to transfer the surface of a three-dimensional object onto a flat surface without some distortion. And since the world is a globe, where you center that map is a matter of purely subjective choice.<br></p><p>Those choices have historical reasons. Mercator's map was not specifically designed to put an inflated Europe at the center of the world. That was just a side effect; its main purpose was to aid shipping: Straight lines on the map correspond to straight lines sailed on the seas.</p>
By 2050, a completely melted Arctic could enable the Transpolar Passage, shortening trade routes between Asia and Europe and boosting business for Alaskan ports like Nome and Dutch Harbor.
Image: The Maritime Executive<p>The vertical world map, showing the relative proximity of China (and the rest of Asia) to Europe and (even the East Coast of) North America, has a similarly maritime <em>raison d'être</em>, or it will have by mid-century. <a href="https://www.maritime-executive.com/editorials/the-arctic-shipping-route-no-one-s-talking-about" target="_blank" rel="noopener noreferrer">Experts project</a> that by 2050 (if not sooner), the Arctic will be sufficiently ice-free to enable the so-called Transpolar Passage, i.e. shipping straight across the North Pole. </p><p>That would shave more than three weeks off a traditional sea voyage between Europe and Asia, via the Suez Canal – and even be significantly faster than other northern alternatives like the Northwest Passage (via Canada) or the Northern Sea Route (hugging the Siberian coast). Since ships would not need to go through locks or pass over shallow waters, it would also remove current restrictions on tonnage per ship. <br></p><p>The only country seriously preparing for such a future: China. None of the other Arctic powers is giving the Transpolar route any strategic thought. On the other hand, China's Arctic Policy document, released in January 2018, already matter-of-factly refers to the Transpolar route as the 'Central Passage' – one of several 'Polar Silk Roads' that China seems to want to develop. And they already have the world map to go with it.</p>
What exactly does "questions are the new answers" mean?
- Traditionally, intelligence has been viewed as having all the answers. When it comes to being innovative and forward-thinking, it turns out that being able to ask the right questions is an equally valuable skill.
- The difference between the right and wrong questions is not simply in the level of difficulty. In this video, geobiologist Hope Jahren, journalist Warren Berger, experimental philosopher Jonathon Keats, and investor Tim Ferriss discuss the power of creativity and the merit in asking naive and even "dumb" questions.
- "Very often the dumb question that is sitting right there that no one seems to be asking is the smartest question you can ask," Ferriss says, adding that "not only is it the smartest, most incisive, but if you want to ask it and you're reasonably smart, I guarantee you there are other people who want to ask it but are just embarrassed to do so."