Personally, there is a book called <Exit, Voice, and Loyalty> that I first came across after recommending it in 2017. Personally, I like the original title better. This book, written by political economist Albert Hirschman, is an excellent book to read even now, even though it was written in the 1970s. This is a book that explores the behavioral patterns of consumers and citizens from the perspective of economists and political scientists, and I hope that anyone in charge of human resources or management should read it. It suddenly occurred to me today and I read it and it's really good.
Albert Harshman is considered a fairly progressive figure in Korea, so there are some unknowns, but the books and theories he wrote are very interesting.
It's becoming something of a book report... but this book deals in depth with choices and their meaning in two areas: economics and politics. We explain the concepts of 'Exit', 'Voice', 'Loyalty', and 'Neglect' separately and analyze how they work in the actual market.
Many economists have focused on the coordination mechanisms of the market and have seen consumers 'churn' from unsatisfactory products as a key response. This is the act of consumers expressing their dissatisfaction by moving on to another product or service. From an economics perspective, this โchurnโ plays an important role in perfectly competitive markets. Companies with poor quality are forced out of the market, and companies that provide better products take their place .
On the other hand, political scientists view โprotestโ as the core of the social decision-making process. Community members speak out to their representatives and demand improvements. This is a different type of reaction from 'departure' in economics, and in political science, protest is recognized as a more important factor than disengagement. These differences are related to the characteristics of each field and suggest that there is a gap between reality and theory in economics.
The person with the loudest voice wins?
In actual markets, 'protest' often acts as a more important pressure for quality improvement than 'churn'. In particular, in monopolistic markets or high-end consumer goods markets, consumers tend to protest rather than leave. The actual market operates more loosely than the perfectly competitive market that economists think, most consumers do not easily change products, and it is difficult for companies to always provide products of uniform quality. This slack in the market also provides management with an opportunity to restore quality. It is convenient to think of a case where a company's decision maker makes a decision that is influenced by surrounding stories, the community, or public opinion rather than performance or the field.
From a consumer's point of view, whether to choose between 'leave' and 'protest' depends on many factors. The opportunity cost of leaving, the cost of protesting, the expected value of quality improvement, and the likelihood of protest being successful will influence this decision. The author concretely demonstrates the role of disengagement and protest through the case of the Nigerian railway. This example shows the limited role of protest in situations where disengagement is difficult and highlights that disengagement and protest are complementary. (In fact, if you donโt see anything improving even if you protest, it is beneficial to leave quickly.)
The author points out that traditional economics does not sufficiently address the element of 'quality'. It is criticized that simply replacing quality decline with price increases does not fully reflect reality. Especially in markets where there are many consumers who are highly sensitive to quality, poor quality becomes a more important issue. This has become even more evident in the 21st century. Especially in a market like today where new things are pouring out every day.
Be loyal?
The role of loyalty is also important. Loyal consumers do not easily leave even when quality deteriorates and expect improvements through protest. This gives companies or organizations time to improve quality. But for protest to be effective, it must be accompanied by the possibility of defection, the โthreat of defectionโ. Protests do not have much power in situations where escape is impossible. In fact, in this book, loyalty is a means of delaying defection. No matter how strong the loyalty, this loyalty gradually diminishes if quality is not improved or complaints are accepted.
Disengagement, Protest and Loyalty
This book explores how the three elements of disengagement, protest, and loyalty interact and how companies and organizations can develop through them. These interactions in each field of economy, politics, and society are very complex and appear differently depending on the characteristics of each field. From this perspective, the author comprehensively analyzes markets, organizations, and individual behavior, revealing aspects of human behavior that are more complex than we think. This book provides academic insights from various fields such as economics, politics, and sociology, which deepens our understanding of the society we live in.
By examining the concepts of 'Exit', 'Voice', and 'Loyalty' covered in this book from the product and user perspectives, we can more clearly understand how user behavior and product changes interact. there is. In fact, the concept of โNeglectโ also appears in the book. In fact, neglect can be seen as indifference. I've just given up.
Exit - from a product perspective:
When a product's quality deteriorates or does not meet users' expectations, users may choose to switch to another product. This is a natural response from the market and an important signal to keep your product competitive. By analyzing data from churning users, product managers can identify which parts of the product need improvement.
Voice - User Perspective:
When users are dissatisfied with a product, they may choose to complain instead of simply abandoning. This is an act of directly expressing dissatisfaction and requesting improvements to the product. When users communicate through complaints, product developers can better understand their needs and requirements and respond accordingly.
Loyalty - Interaction Perspective:
Loyalty refers to the positive feelings or attitudes a user has toward a product. When users become loyal to a product, they tend to continue using it despite temporary problems or poor quality. This loyalty becomes an important factor in the product improvement process. Loyal users point out product problems and are prepared to wait for improvements, so product managers can use this feedback to better develop the product.
Please tell us in the comments.
What position do you take in your current workplace, society, products/services, or human relationships: disengagement, protest, loyalty, or neglect? I think it would be an interesting expansion of your thinking to think about it.
