THE FRENCH philosopher Jean Baudrillard, you may remember, declared that the Gulf War (the first one) took place only on television. He would be unmystified by today’s broadcasting fakes, in which the reality as constituted on TV is the mirror opposite of that experienced by everyone else – as different as life is from death, in fact. Far from being just an aberration at the BBC, faking is now revealed to be endemic: it’s the way TV works.
We should hardly be surprised. Faking it – hiding one version of reality with another – is increasingly what management is about profit is the product of an arbitrage between the company’s image of reality and yours. Consider Penelope Cruz’s eyelashes, or any number of airbrushed model images. Almost all advertising and much media production is faked in some sense.
We’re not talking about honest mistakes here, but the more insidious practice of cutting corners and stretching reality. Articles that don’t live up to sensational headlines or stories that are bulked up to justify front-page billing dispel any illusion that the print media are immune to the ’embellishing’ temptations that broadcasting colleagues have succumbed to.
Many companies practice deception as a part of their business model – sometimes without even knowing it. In the June issue of Harvard Business Review, Gail McGovern and Youngme Moon describe how companies in a range of industries, from banking and hotels to mobile phones and travel, use a variety of tricks to make you pay more than the service warrants.
All service companies compete in advertising superior customer service. Yet many profit as much by extracting value as creating it. A substantial proportion of retail banking profits, for example, comes from penalising customers for breaking arbitrary, complicated rules about minimum balances, credit limits and payment deadlines. Mobile phone companies make much of their money out of the minutes we don’t use. Hotels and travel operators make it hard to find out about discounts or upgrades some airlines have computer algorithms that run so often that it is impossible to identify what the ‘normal’ price of a flight ought to be.
Why do companies persist with such pretences? First, because they can. In the Photoshop era, any image – any digital entity – can be manipulated by the most junior computer user in the company. Which it often is, because, second, there are financial pressures to do so. Technology and financial pressures have propelled the wave of outsourcing and freelancing, by means of which much of what used to be companies’ core work is done outside, by contractors and sub-contractors.
This cuts direct costs (although not by as much as managers think), but carries heavy hidden costs. One is that freelances and outsourcers also work for competitors, reducing differentiation and making it more likely that customers will switch. Another, as the broadcasters have found, is that if the gap between competing realities becomes too large to bridge, cheap is actually dear as trust evaporates and customers turn elsewhere.
The BBC, as a public-service broadcaster dependent on a licence fee, is particularly vulnerable to charges of trust abuse, and foolhardy for perpetrating it. But the danger for non-publicly supported organisations is just as great. In mobile phones and financial services, churn is so great that a substantial part of company resource is deployed on expensive recruitment of new custom ers to replace those who leave. That is called running to stand still. In the case of newspapers, could it be that it is lack of trust that has created such reader keenness to set up their own blogs and websites – that we have created our own competition?
Organisations that want to maintain customers’ trust have two ways of avoiding broadcasting-style fakes. If they are outsourced, they need robust governance in the shape of explicit rulebooks and contracts (this is one reason why outsourcing turns out to be less cheap than expected – it needs more formal, and visible, management, not less).
Old-style unitary companies have better, and often neglected, technology at their disposal. The word ‘values’ has been so overused it is almost meaningless. But if values are strong and unambiguous enough they are both cheaper and more foolproof than the alternative, since the rules are internalised and organic, rather than external and imposed.
Of course, some companies, pleading the pressure of the capital markets, will claim they have no choice but to fake it. Investors don’t care how the numbers are made, only that they are. This is not so much the Jean Baudrillard as the Groucho Marx school of management. As he put it: ‘The secret of success is honesty and fair dealing. If you can fake those, you’ve got it made.’
The Observer, 5 August 2007