When communities become distribution channels.

You don’t own the distribution channel anymore, communities do. But then, will corporations try to own communities ?

I’m a so called service designer. When I work for large corporations that are not familiar with providing service, I first spend some time explaining what service design is about. And what it enlights.

Behind the famous ‘touch points’, there must be distribution channels that allow to deliver these touch points. And behind these distribution channels, there must be a company organisation and management that enable it to activate these distribution channels. The other way around, you shall start with organisation design, to build the proper distribution channel, in order to deliver the expected touch point.

It may sound similar to a branding issue. In order to ensure a global brand positioning, there is a similar need to design that brand and to incorporate it within the organisation at the same time. Service design is a similar task that relates to service delivering rather than brand experience delivering.

Working in that field, I must confess I have often been facing similar topics related to multi-channel distribution. Most of the large corporations have hard time figuring out what a multi-channel distribution world may look like. Imagine that most of these businesses did expand in a world driven by distribution channel : hypermarket, mall, billboards, TV, radio, … From these guys, we got things like the 4 P’s and the graal: the trafic.

Mastering the distribution channel — the network of organizations, including manufacturers, wholesalers, and retailers, that distributes goods or services to consumers — used to be the way to own the chain value proposition, and therefore the way to make money. Distribution channels became institution like, setting up the standards and advisoring the market rules. In other words, detaining the power.

The current struggle of these businesses boils down to the question of how a “distributed distribution system” may be designed in order to make money. Thus retaining power.

At the age of access, the distribution pipes are licking. Going digital and interconnected brought a profusion of actors to distribute goods or services, including customers themselves. Doing so, they indeed became more than simple customers.

In several industries, like music, cinema, press, book, travel, banking, retail, delivery,… , digital contents linked through internet have been quite disturbing the regular old school corporations these last years.

In most of these industries, distribution business remains, but is highly challenged by many other actors, who find ways to recreate other distribution systems : ‘distributed’ systems. The end-user has become part of the distribution channel himself, promoting or delivering services himself. There is still a matter of distribution here, but distribution isn’t owned anymore, neither fully controled.

While the distribution business changes, the goods and services that are designed to fit in that distribution, packaged for the hypermarket shelf, are changing as well in how they are produced.

Recently, in a historic step for Hollywood, Paramount Pictures has become the first major studio to stop releasing movies on film in the United States. “After more than 15 years of work, the movie industry has completed its migration from film to digital technologies,” said John Fithian, president of the trade group.

Digital cinema provides great benefit to our patrons, in the quality of the presentation, in the flexibility of programming, in 3D, in alternative content, and in so many other ways. J. Fithian

“The fact that major studios are now distributing movies domestically only in digital signals an historic transition to a new era. Digital cinema provides great benefit to our patrons, in the quality of the presentation, in the flexibility of programming, in 3D, in alternative content, and in so many other ways.” In other words, you produce something to be distributed differently.

In the music industry, musicians are editing and producing their music themselves or with the investment from peers. As coops, food retail is taking a new step in several places, with not-so-new initiatives like Park Food Slope Coop or La Louve. Even companies like DHL are trying something on the side such as their new peer-to-peer courier service ‘MyWays’.

In other words, these Customers Inc. produce and distribute themselves. While distributing goods and services, do they end up distributing value as well?

we are going to see a reinvention of what formal institution look like in the 21st century, in a decentralized, distributed way. R. Botsman

In a recent interview by OuiShare, Rachel Botsman wandered “how do we prevent the collaborative economy becoming too centralized?” According to her, when we shift from ownership to access models, the concept of ‘risk’ and subsequently ‘liability’ is transformed. She also sees two big opportunities in retail: companies can either turn their product into a service (through rentals, for instance), or engage with their communities in totally new ways to collaboratively design, develop and distribute products.

From my service design perspective, the second part remains the more challenging, although the more promising when included in this ‘multi-channel’ paradigm of the distribution process. As OuiShare once wrote, “the collaborative economy puts the initiative of the economic activity back in the hands of the civil society”. From Customers Inc. to Peers Inc.

As they become productive and distributive, these communities shall weight as institution themselves. Rachel Botsman, who was wandering about a ‘potentially too centralized collaborative economy’, thinks that “we are going to see a reinvention of what formal institution look like in the 21st century, in a decentralized, distributed way.”

To wrap up,

1. Communities are distribution channels, and therefore, on the verge to become institution themselves.
2. If community is the distribution channel, therefore what is distributed through them is designed/produced in a different way as well, mostly by them.

Distribution market is distributing itself, and those who succeeded to become institutions are willing to retain their power. What emerges today is that communities are new ways to produce and distribute information, content, product, service or even money. Communities may become institutions because there are now wired to distribute massively, widely, and maybe soon to set up the standards and advisor market rules.

Having written all that, an important question remains though : who owns these damned communities? Peers empowering themselves ? Or the corporations mobilizing them? This question is about whether corporation may succeed to integrate communities within their chain value proposition, or whether communities shall succeed to rule themselves. And here lies the galaxy of mobilisation, business and governance models yet to be approached.

PS: part of many other studies, this one from the Groupe Chronos is interesting in that sens.