The Anna Karenina Principle

Very often in business we use metaphors to explain complex or difficult ideas, in part because people understand the stories surrounding the metaphors better than we might understand say, an equation. A recent addition to the business lexicon is The Anna Karenina Principle, which comes directly from Tolstoy’s classic novel of the same name and yes, it has quite a metaphor for business.

This is not to advocate that business people pick up Russian novels on long flights, though some might like that. But the metaphor is apt. The first sentences of the book give us all we need: “Happy families are all alike. Every unhappy family is unhappy in its own way.” You might say the same about customers, after you unpack the meaning.

In Tolstoy’s view, and this should surprise no one, life is full of competing demands on our resources, finances, and consciousness. In family life we deal with marriage (Tolstoy’s point) but also finances, careers, children, health, where to go on vacation and quite a bit more. Another metaphor that says about the same thing is “keeping all the balls in the air,” a reference to juggling. We can develop problems or challenges in any of those areas — we can drop the balls — and this can often lead to unhappiness, though as you can see, people can be unhappy for different reasons. We can also be happy if we keep all the balls in the air but also, if we have good strategies for quickly getting them back where they belong if gravity makes things difficult.

That’s the subtle lesson from these metaphors. It’s not that things always go well but happy people have a way of getting back on track or, even better, avoiding mistakes. If we substitute customers for families, we see that businesses can run the same kind of gantlet. Customers can be unhappy for any of a variety of reasons from product issues to policies. Until now, CRM has tried to be reactive to these moments, which shows good intent but serves up a nearly impossible challenge. There are billions of people, each unique, who can come up with issues and, if they are not limitless, they are at least quite voluminous.

Trying to deal with issues reactively is almost hopeless so it’s best if we try to employ some amount of organization to our activities. But too often we rely on gut instinct or someone’s experience to do our planning. This is understandable because for a very long time, that’s all we had and often it left us wide of the mark. But what if we could take a more scientific approach?

In my formulation, which I describe in my book, Solve for the Customer, I make several suggestions that invoke the Anna Karenina Principle. First, there is a limited number of challenges that vendors face regarding their customers and I call them moments of truth. A moment of truth is nothing more than any time when the vendor has to come through on a product, brand, or company promise. You should know what your unique moments of truth are and if you don’t, no worries, your customers will be glad to tell you, if you ask.

Importantly, moments of truth rarely stand alone. Rather, they connect in cascades, which is a good thing because it says that if you understand the cascades, you can determine where they break (unhappy customers are unhappy for their own reasons) and apply resources to get things back on track. Without such an approach you are the one standing alone in what looks and feels like an avalanche of demands.

Third, each business has a unique, and limited, set of moments of truth and related cascades. This is confusing because we might all agree that returning merchandise, for instance, can be classified as a moment of truth but the details involving vendor, product, payment type, taxation, policy details and many other things make your return process different from most others. That’s the Anna Karenina Principle in action.

Consider two car companies and their moments of truth, one sells luxury products the other utilitarian transportation. Each wants happy customers who sing their praises. But the luxury brand will likely invest employees to work with customers where the utilitarian vendor might opt for automation or community support, things that incur small direct costs. Each aims for happy customers within the constraints of its business model. Importantly, customers understand this because it’s part of the offer and brand promise.

But the really good news is that each business can figure out the limited number of moments of truth and associated cascades for itself and that’s a lot better than trying to be reactive in a nearly limitless set of customer initiated situations. I compile all of this into a new social science, which I refer to as Customer Science. It is much like sociology in that Customer Science aims to understand the structures that hold customers in the fold and the times when they take agency to carve their own paths.

A business’s moments of truth are the structures that keep customers in the fold the same way that walled gardens like sunk costs, long-term contracts, and frequent flier miles once did. It all starts with the Anna Karenina Principle and knowing (or finding out) our customers’ moments of truth. When we focus on those things, our job as vendors simplifies, we deliver better on our customer commitments and customers are less likely to take agency to go to a competitor.