Factors to consider in the use of Lethal Generosity in your business28 July 2009


photo courtesy of catdesigns@yahoo.com

A search on Google combined with an example from my own experience suggests that several versions of Lethal Generosity are currently in operation. Regardless of where it is used, it is a strategy intended to show thought-leadership and gain commercial advantage. In this article I will look at some examples and analyze the ways in which each act of generosity may be more or less “lethal” to the parties concerned.

Shel Israel’s “Global Neighbourhoods” is the best-known source of the term lethal generosity and tells of Jeremiah Owyang’s “Hitachi Wiki” that unified the client and supplier Data Storage community behind his site’s thought leadership. Shel reasons thus: “This is about as far away from the ageing command and control philosophy as you can get. In today’s competitive environment, you need to understand that the customer is in control. If you want to win, give the customer what the customer wants. If you do this often enough and credibly enough it will be brutal to your competitors – unless the competitor rises to the occasion and tries to “out-generous” you back”.

Let us say that the parties most impacted by any act of lethal generosity are:
* The company or individual being generous
* The clients – the beneficiaries of this generosity
* The competitors – recipients of the “lethal” effects.
We can now look at some examples from these three perspectives.

This month (July ’09) Shel Israel’s Global Neighbourhood blog reported on the case of Rackspace, a hosting service that had recently experienced a brief downtime which incapacitated a significant number of their service users. The company immediately used all the social media channels available to them to apologise and explain what happened and what they were doing about it. The interesting thing here is the reactions of their competitors. One, an old-style traditional, attempted to hijack Rackspace customers with the offer of an “easy transition plan” whilst another used their blog to stand behind their competitor as “communicative, forthright and responsive to its customers” and suggesting that Rackspace’s customers stood by them too.

The impact on all concerned is as follows:
* Rackspace is viewed more positively for its responsiveness
* Their clients will feel marginally more positive through the perceived additional trust in their supplier
* The supportive competitor will be viewed positively for their stance as “thought-leaders” whilst everyone will have a very negative view of the old-style traditional opportunist “hijackers.”

In summary, some moral high-ground is taken and the good-guys win.

A less well-known manifestation of Lethal Generosity occurs in the legal profession. Mark Bennet is a criminal defense trial lawyer who makes all his motions to court freely available to anyone, including other criminal lawyers. He says: “I don’t believe I have competition among the criminal defense bar. Colleagues, yes: competition, no. We happen to be fishing in the same hole, but there are plenty of fish for all of us.” Debate following his generous manifesto sees two predictable positions – the cautious, approving “open-source” philosophers versus the “enabling incompetency is still enabling” alliance.

The debate is swung convincingly in the pro direction by Michael Schaffer: “The repeating of work is one of the worst hazards and biggest costs of any proprietary activity – it drains resources by forcing everyone to solve the same problems over and over, and it causes repeaters – even competent ones – to make the same mistakes of invention over and over. In criminal defense that lost time and those mistakes do not just lead to lost profits – they break lives.”

Applying the formula to the lawyer gives us:
* Positive impact for him as a thought-leader in criminal law
* All clients are positively impacted through the availability of tried and tested motions to court
* The competition all benefit, be they expert or “incompetent”

So the lethally generous sometimes need to balance commercial advantage with “the common good” and it helps to have a thought-leader role and an environment in which to debate these issues.

In a final example, I know of an award-winning thought-leader company which gives away free “flatpack” software to clients and non-clients alike that enables them to dispense with the cost of engaging other competing suppliers in the provision of compulsory compliance-related services. The CEO is proud of this act of lethal generosity and in a very active online environment seems unperturbed by the possibility of adverse reaction in the industry. Applying the formula, we see why:

* The company is positively impacted as any slight loss of revenue from gifting, not selling, the “flatpacks” is offset by massive gratitude of clients, both actual and potential
* The clients experience a big positive in cost savings
* Competitors are neutrally impacted if they are other similar high-end suppliers, but the impact is very negative for other competitors lower down the “food chain”.

In this case the CEO could argue that the low-end providers in the market are a drain on resources that prevent the community at large from solving much more mission-critical performance problems for their clients. This simply reinforces his whole thought-leader strategic advantage for his lethally generous company. Unlike the previous example only the low-end competitors are the ones who lose!

In our increasingly connected world, where social media brings greater transparency and sharing of ideas, we as individuals and companies must expect to see more and more of our actions reported on and questioned. The world is a free-market economy although some markets, it would appear, are more free and more lethal than others.

One Response to “Factors to consider in the use of Lethal Generosity in your business”

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    Great site, I will be back. Well done

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