Archives for posts with tag: Stakeholder Value

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This is one of my contributions to Jack Myers’ MediaBizBloggers site

You go to any marketing conferences and within minutes you feel the urgent need to duck and cover: There are battles for market share and share of voice. People are targets, we have campaigns that include guerilla strategies. If you aren’t cautious, you’ll be surprised by a marketing blitz. And, just like the military, marketing tries to understand our brains, wants to predict human intent.

The reason why we use this language is very clear: The Mad Men of the 1950’s at Madison Avenue had returned from WWII or the Korean War. They transferred military language to their new endeavors. It might have been a good fit during the age of passive consumers and corporate mass media dominance. Not anymore.

This language is too much “us versus the rest of the world”, it’s too disruptive and it still doesn’t understand the consumer. Just because I visited your site for a second doesn’t mean you’re entitled to target me until the end of times.

Targeting works under a false paradigm. We shouldn’t be targeting people. Reverse it. Consider your product/service as the target of your customer. And your marketing is there to help them aim and succeed better in hitting that target. Be a pleasant, exciting and entertaining presence in places where prospects spend their time and help them get their job done.

It’s time to call a truce.

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Marketers love to capture people. That’s especially true in digital marketing. We always try to find new ways and traps to keep people on our site. We make it hard for people to leave the site, creating overcomplicated processes, filling phone menus with promotional messages, trying to up-sell people throughout the whole ecommerce check-out process.

We act like jealous lovers, afraid that if they leave us they will never think about us again. It’s become so hard and expensive to get the attention of people, once we have just  speck of it, we never want to let go. Often people just want to get something done and then move on. They don’t want interaction, experiences or anything that prevents them from getting on with their lives. Think Redbox, ticket machines at a Subway, a soft drink vending machine.

People are feeling overwhelmed with all the information bombarding them all day long. Somebody tells them about a new luxury car: They just want to read a quick summary. They don’t want to test drive it, they don’t want to request a quote, they don’t want to get re-targeted all day. They wanted information, they got it. Thank you very much. Let me get on with my day.

You’re walking a fine line when you constantly remind them of your presence. You might become the annoying guy that talked to a girl once and now thinks she’s in love. She might fall for him one day but not if he badgers her with messages, love letters and other reminders of his presence each and every day. Or, even worse, traps her, making it hard for her to leave.

Real relationships are patterns of mutual investment. You invest in me. I invest in you. If all investments come from one side, you don’t have a real relationship. You have an imaginary relationship.

Next time you invest money in capturing, trapping and locking people in, ask yourself: Would you want to be treated like that? By anyone? Or would you want companies to invest in relationships of mutual respect? Based on a basic understanding of human desires, needs and mutual value exchange. (While writing this, I couldn’t stop humming “Free, free, set them free.”)

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Image: Courtesy of Pentagram

You go to a big party and you meet them all: The life and soul of the party, introverts, couples just focusing on themselves, party poopers, the networker, social butterfly. Brands are a little bit like people. Some are meant to be social, some are better off just hiding in their corporate office.

Let’s face it, most people don’t care what a company thinks about things. Do you care about Mercedes-Benz’ mission statement?

We invented the automobile – now we are passionately shaping its future. As a pioneer of automotive engineering, we feel inspired and obliged to continue this proud tradition with groundbreaking technologies and high-quality products.

“We invented the automobile – now we are passionately shaping its future. As a pioneer of automotive engineering, we feel inspired and obliged to continue this proud tradition with groundbreaking technologies and high-quality products.

Our philosophy is clear: we give our best for customers who expect the best – and we live a culture of excellence that is based on shared values. Our corporate history is full of innovations and pioneering achievements; they are the foundation and ongoing stimulus for our claim to leadership in the automotive industry.

The principle of sustainable mobility underlies all of our thoughts and actions. Our goal is to successfully meet the demands of future mobility. And in doing so, we intend to create lasting value – for our shareholders, customers and workforce, and for society in general.”

Are you still awake? This might be important to employees and stakeholders of the company. But as a buyer, I don’t care about your philosophy, your mission or vision. I care that you deliver a sexy, reliable car that makes me feel good about myself. Or whatever your reasons are to buy a car.

The majority of people don’t want to be friend with a brand. They want a brand to do their job and do it better than the competition. Actually, I prefer brands focusing on doing their job and deliver more usefulness to me. I’d rather you stay away from the big Social party and come up with new ideas/services that make my life easier/more delightful.

Still, too many brands are doing social for the sake of doing social. (“We have to be at the party, man.”) They might be better off being anti-social and stay away from the social party crowd. Instead, focusing on social where the brand has weaknesses (Customer Service, Support, Research). There’s nothing wrong with being a socially awkward introvert. Just ask Apple.

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Just read an interesting post by Don Dodge where he makes the analogy that startups play poker, big companies play chess. He continues:

Using a game analogy, startups are more like poker players. They take big risks, they bluff, they make quick decisions, change direction constantly, and they keep their competitors off balance. In poker you never have all the information, but you must make fast decisions. You never know if what you are seeing is a real threat, a bluff, or something that will soon disappear under the stress of the game.

Poker is an aggressive game where if you play your cards right you win big, and win fast, or totally wipe out in just a few hands. However, if you lose a hand on a reasonable bet,  you can come back and double your money in the next hand. There is no time to wallow over a loss. You did your best. Move on and your luck will be better next time. Chess is a very different game. Both require incredible skill and talent.

Big companies think long term. Like chess players, big companies think four or five moves (years) ahead. They protect their assets, play defensively, think strategically, and carefully consider the options before making a move. Big companies have a lot to lose, while small companies don’t. No offense to Steve Ballmer of Microsoft, but big companies like Microsoft don’t go “all in”, risk everything, and bet the company on one thing. Big companies can lose a “pawn” or even a Rook in a strategy move, but they wont risk the King.

Big companies leverage their assets (conservatively) and flex their muscles where they can. They go for incremental improvements in position. Big company CEOs, like chess players, work a long term strategy. Each short term move plays a part in a longer term strategy that is not visible to the casual observer. In fact, their strategy is often kept secret, and they take care to make sure their short term moves don’t reveal their long term plan. Strategy is a competitive advantage.”

Instead of playing chess or poker, successful companies in the 21st century have to be more like MMOGs (Massively Multiplayer Online Games). It’s not enough to be skilled at chess or poker anymore, the complexity of systems, connections and networks in the 21st century requires different skills:

  • 21st century companies will have an authentic mission that is transparent and believable.
  • As a subset of a general mission, 21st century company will set out on various quests and missions.
  • 21st century companies can’t focus on shareholder value alone. They need the community of all their stakeholders to succeed in their quests and missions.
  • A culture of collaboration and co-creation between all stakeholders is required to succeed in the 21st century.
  • 21st century companies will use game mechanics to reward their stakeholders by deploying various ranking and recognition systems. This proves to be a much better motivator than any bonus or salary increase.
  • Incentive systems that allow to divide the winnings from a “quest” improves the connection between effort and reward.
  • Hyper-transparent information with data-rich dashboards will be basic requirements for successful companies in the future.

Most importantly, you have to create “thick value”, defined by Umair Haque:

“(…) awesome stuff that makes people meaningfully better off.”

The creating of thick value will be the core of each successful company in the 21st century. Most of the bullet points are natural extensions and will develop organically if your mission is authentic and taps into the idea of thick value.

Poker and Chess were about beating the competitor at any cost, often just creating thin value. MMOGs are about co-creation and collaboration, delivering value throughout the stakeholder supply chain.

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Marketing continues to be a one-sided affair. Brands have massive budgets, highly-trained professionals, numerous support services and agencies, mountains of data and insight, arsenals of technologies to target and communicate with people.

What do people have? Ad blockers, DVR’s, unsubscribe buttons and, most importantly, indifference. As Soren Kierkegaard said: “At the bottom of enmity between strangers lies indifference.” While Social Media shows some signs of turning this one-sided relationship into more of a partnership, the fact is: All the resources are still with brands. And it’s hard for anyone of us to imagine a future where these roles we all are used to playing, will change. When the seller-centric paradigm transforms into a buyer-centric reality.

Until today.

Mydex launched today the personal data store service. It’s a first step in the marketing revolution that will turn people into owners and managers of their own data. It is a very small test but it’s an important piece of the puzzle to change the way marketing information flows. Personal Data Stores empower individuals to become owner and managers of their data, allowing for a real partnership between buyers and sellers. They will help restoring the balance between two parties.

Marketers might find that scary since it threatens their power of influence. I would argue this will transform passive consumers into more active producers, both helping the individual to achieve his goals. And help brands become more efficient in their product development, branding, marketing, advertising – you name it. And that’s just a small part of the transformation. Once individuals will take ownership of their data, major industries will be reinvented: Health Care, Education, Politics.

Please read Mydex’ White Paper for a more detailed look at Personal Data Stores: “The case for personal information empowerment – The rise of the personal data store”

Congrats to the folks at Mydex.

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Images: Courtesy of artbyphil

By now, it’s gone. A temporary city that forms during the annual Burning Man event is fading back into the nothingness of a remote desert. Most inhabitants are back in their normal life, and within weeks, the entire city will have disappeared. It’s an interesting way for a city to exist – once a year, just for a few weeks. People will talk about their experiences for months (just follow the hashtag #burningman to get a sense of the enthusiasm) and start making plans for next year’s event.

This was my second time at Burning Man. It remains one of the most bizarre, creative, inspiring, breathtaking and weird events I ever attended. Whatever you heard about Burning Man: It’s true. And, it’s completely false. You have to experience it to really understand it. It’s like having a kid, running a marathon or writing a book: Everything you heard about it is true. And, completely false at the same time.

On my way back from Black Rock City, I reflected on the lessons marketers can learn from Burning Man:

1. The paralyzing fear of change is far more inhibiting than the actual experience of change:

I’ve been a runner for more than 15 years. The first 5 years, I never ran more than 6 miles per day. A marathon was completely out of my reach, even though I was intrigued by the idea. “How do they run 26 miles?”, I asked myself many times, envisioning images of pain and agony. I tried to run 10 miles, never able to do it. Started walking after 6-7 miles, my usual comfort zone. Until one day, I decided to run 15 miles that day. No particular reason, just the feeling that I was sick of not being able to break that 7-mile barrier. And, I didn’t want to just break it. I wanted to shatter it. And so I did. Just to finish a marathon 3 months later.

Many marketers feel the same way: They want to break with the old model of marketing but they feel stuck in their old ways, the outdated processes and the aging model of broadcast marketing. They wait for someone to have the courage to change. The truth is: Nobody gets courage and then changes everything. First you change everything and then get the courage.

2. Don’t give up too early

The first time you try anything new, your senses are under attack. You don’t even know if it’s good or bad. You just know it’s new. You don’t know yet how to put it into perspective and add it to your experiences. The first time is the basic foundation of the overall process. The best advice for the first time in everything: Hang in there. Do whatever you can, the best you can. The second time is different: You have now one experience to compare your second experience to. And your second experience might be good or bad. Better or worse. It helps you to avoid bad experiences and to top good experiences. The third time is where it gets interesting. That’s when you become part of the context, when you can apply some of your experience history to the current experience. The third time gives you enough time to analyze incoming data.

This is true for visiting new cities. New countries. Starting a new job. And it’s true for marketing.

The first two digital campaigns/social media initiatives won’t be featured in any award book. I worked hard, I tried my best, I just didn’t have the proper context to deliver the best work possible. With the third campaign/initiative, I felt more grounded, more experienced. When you experiment with new platforms, new ideas or a new brand that just decided to run their marketing with you, just know you’re not going to ace it with the first idea/initiative. The fear of failure is looming large but you need to beat it by accepting this normal process.

3.) Give people a sense of ownership

The creativity and passion people pour into Burning Man has nothing to do with monetary rewards. It has a lot to do with a sense of ownership of the event. Sure, the man will burn, there will be coffee and ice, basic structures. The rest of the event is up to each one of the attendees.

Advanced managers base their ethics on fairness, harmony and gratitude to inspire a sense of achievement to goes beyond profit. Modern employees expect more from companies than just a paycheck. The work place should provide an avenue for employees to build knowledge, skills and experience.

The same is true for marketing: It’s not enough to have an offer or a discount coupon anymore. Customers review and recommend brands with a sense of ownership never seen before. Brands need to identify the best way to engage these passionate stakeholders. The future doesn’t belong to broadcast. The future belongs to companies that share values with their customers, that build platforms where all stakeholders can co-create and collaborate, and give people a sense of ownership.

4. Passion has real value

You can feel real passion. Just watch an artist or a kid immersed in something they are passionate about. Objects are not important at Burning Man. We are in the age of transition: From the economy of objects to the economy of people. Just look around: Everyone is starving for meaning. We’re meaning-making machines. All of us experienced how quickly the focus on profits can turn into an economic disaster. Instead, people want to do meaningful stuff that matters.

The new marketing reality implies that brands need to take a hard look at themselves and decide what they stand for. What is the inner truth of your company? What is your purpose? The foundation of any successful company in the future is purpose, passion and integrity, coupled with empathy and care for all stakeholders. It goes way beyond any CSR initiatives or charitable donations. The new marketing reality requires companies with big hearts.

5. The world needs more kindness

Tim Ferriss (The 4-hour workweek) discovered kindness in a sand storm. And, he shared a poem by Naomi Shinab Nye, entitled “Kindness”:

Before you know what kindness really is
you must lose things,
feel the future dissolve in a moment
like salt in a weakened broth.
What you held in your hand,
what you counted and carefully saved,
all this must go so you know
how desolate the landscape can be
between the regions of kindness.
How you ride and ride
thinking the bus will never stop,
the passengers eating maize and chicken
will stare out the window forever.

Before you learn the tender gravity of kindness,
you must travel where the Indian in a white poncho
lies dead by the side of the road.
You must see how this could be you,
how he too was someone
who journeyed through the night with plans
and the simple breath that kept him alive.

Before you know kindness as the deepest thing inside,
you must know sorrow as the other deepest thing.
You must wake up with sorrow.
You must speak to it till your voice
catches the thread of all sorrows
and you see the size of the cloth.

Then it is only kindness that makes sense anymore,
only kindness that ties your shoes
and sends you out into the day to mail letters and
purchase bread,
only kindness that raises its head
from the crowd of the world to say
it is I you have been looking for,
and then goes with you every where
like a shadow or a friend.

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When your dreams turn to dust, vacuum.

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My first impression: It’s still early in the game. Very early. We’re still wrapping our head around the whole concept of VRM. Since the idea was to bring together visionaries/practitioners of VRM and CRM, the discussion often reverted back to CRM and how to monetize the customer/data. Clearly, all of us have problems transitioning from the old marketing/advertising paradigm into a new world where advertising is pure demand creation, driven by the attention economy, and relationships between brands and people fall under the VRM umbrella, purely intention driven.

CRM was designed to control customers even better. VRM is an added layer to provide customers with controls. To create an ecosystem that delivers value to all parties. Value doesn’t necessarily mean monetary value. To build all these systems to get $1 off on a deal doesn’t seem worth all the effort. The value is in creating real relationships between people and brands. By collaborating and co-creating value with customers. The future of business is in creating something more valuable and meaningful than just pure shareholder value.

As Umair Haque says in his “Smart Growth Manifesto”,

21st century economies will be powered by smart growth. Not all growth is created equal. Some kinds of growth are more valuable than others. Where dumb growth is unsustainable, unfair, and brittle, smart growth is sustainable, equitable, and resilient.

Here are the four pillars of smart growth – for economies, communities, and corporations:

1. Outcomes, not income. Dumb growth is about incomes – are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are – not merely how much junk an economy can churn out. Smart growth measures people’s outcomes – not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.

2. Connections, not transactions. Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. It doesn’t just look at transactions at the global, regional, or national level — how much world trade has grown, for example — but looks at how local and global relationships power invention and innovation. Without Silicon Valley’s relationships powering the development of personal computing and the internet, for example, the volume of trade between Taiwan, Japan, and China, would be a fraction of what it is. Smart growth seeks to amplify connection and community — because the goal isn’t just to trade, but to co-create and collaborate.

3. People, not product. The next time you hear an old dude talking about “product”, let him know the 20th century ended a decade ago. Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people. What’s the difference? Everything. Globalization driven by McJobs deskilling the world, versus globalization driven by entrepreneurship, venture economies, and radical innovation. People not product means a renewed focus on labour mobility, human capital investment, labour market standards, and labour market efficiency. Smart growth isn’t powered by capital dully seeking the lowest-cost labour — but by giving labour the power to seek the capital with they can create, invent, and innovate the most.

4. Creativity, not productivity. Uh-oh: Creativity is an economic four-letter word. Why? Because it’s hard to measure, manage, and model. So economists focus on productivity instead — and the result is dumb growth. Smart growth focuses on economic creativity – because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China’s gonna save the world? Think again: it’s economically productive, but it’s far from economically creative. Smart growth is creative — not merely productive.”

While many VRM initiatives will be driven by innovative divisions within enterprises, the real change agent will be customers. They will be the enzyme in the evolution of VRM. We have to help them understand that tools will be soon available that give them equal footing with brands, that give them power to engage with brands on their terms. That’s a powerful message. Especially in this new normal economy, people want to extract more value out of brands than just a coupon or a silly loyalty program.

And, that’s just the tip of the iceberg. If done right, VRM tools will revolutionize all aspects of our lives: health care, government, education – you name it.

From what I gathered from the workshop so far:

  • We’re close to achieve data portability
  • While Doc Searls believes VRM code should be open source, I heard some dissenters
  • The value proposition for people is still too vague to excite people outside of our bubble
  • We’re too focused on transactions. Instead, we should focus on value exchanges
  • We still have to identify the change agents within organizations. Marketing? Customer Service? (Gulp) IT?
  • How can fourth parties create stakeholder value?
  • How can VRM complement legacy VRM systems?

I don’t think anybody was expecting comprehensive answers for all these questions in a workshop. On the contrary, I hope for more questions to arise on Day 2. My goal for this workshop was not to get all the answers. My goal was not to stop questioning.

Below a few Twitter highlights from Day 1:

@jyarmis: 1995: the invention of the cookie. the end.

@missrogue When we solve problems for individuals, we actually end up solving problems for businesses in the process.

@mjayliebs Search is really the entire set of activities i perform, including talking to friends, neighbors, trusted sources,oh, and google

@nitinbadjatia User driven search (VRM search) – control over input, control over output and control over who gets to help you

@glfceo enterprises trying to predict customers intents will fail

@joeandrieu John McKean: the real challenge is the behavioral one: will individuals move from a CRM-directed world to a self-directed one?

@joshuakahn yeah, a lot of the stuff I’m hearing here is early, but actually alot farther along than I thought.

@missrogue With VRM, I have the opportunity to say, “You earn my trust and I’ll give you the key to all of my information.”

@kevinmarks Josh Weinberger: who are the best communicators in your org? your support people. Why get them off the phone to customers?

@mkrisgman Business is based on exchange of value, power, expectation, and degrees of valuation.

@mjayliebs VRM and CRM are whole lot closer to each other than people think – the gap is culture and understanding as much as principle

@DeanLand For VRM enterprise level uptake: leverage data, show benefits (aka: enable the information) create a VRM ecosystem.

@nhbaldwin vrm offers the vendor a b2b relationship, tighter personalization, with the consumer

@candres this is the confluence of intention and solicitation.

@joshuakahn cookies; designed to be low level machine ID’s, not useful for human ID’s, no matter how you bake ’em. <- Craig Burton

@jyarmis privacy is only as good as the number of people you can be confused for

Looking forward to Day 2

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I was just reading Nicholas Carr’s “The Big Switch”, especially intrigued by the chapter discussing Edison and Insull. As a brief reminder:

Unlike many inventors, Edison didn’t just invent individual products; he created entire systems. This sets him way above lesser inventors who focused on products first before they tackled integrating these new inventions into the overall system. Edison first imagined the whole, then he built the necessary pieces, making sure they all fit together seamlessly. Edison talking about the vision of his electricity system:

“It was not only necessary that the lamps should give light and the dynamos generate current. but the lamps must be adapted to the current of the dynamos, and the dynamos must be constructed to give the character of current required by the lamps, and likewise all parts of the system must be constructed with reference to all other parts, since, in one sense, all the parts form one machine.”

To develop this system, Edison had to pursue technological breakthroughs in every major component of the system. He had to pioneer a way to produce electricity efficiently in large quantities, a way to transmit the current safely to homes and offices, a way to measure each customer’s use of the current, and finally, a way to turn the current into controllable, reliable light suitable for normal living spaces. And he had to make sure that he could sell electric light at the same price as gaslight and still turn a profit.

Despite his visionary genius, Edison couldn’t see beyond his licensing and components business. It took an employee of Edison, Samuel Insull, to perfect the economics of the technological system. What Insull understood was that utility-supplied electricity could serve a far greater range of needs than it had up to then. Electricity could become a true general purpose technology, used by businesses and homeowners to run all kinds of machines and appliances. But, for electricity and electric utilities to fulfill their destiny, the way power was produced, distributed and consumed would need to be transformed. Insull’s biggest challenge would lie in convincing industrial businesses that they should stop producing their own power and instead buy it as a service from central plants.

Which brings me to VRM.

Doc Searls just posted a few blog posts, discussing the state of VRM. Check them out here, here, here and here.

We’re in the early stages of VRM. In Edison terms, we’re about to invent indascent light. We’re still far away from developing systems and even further from integrating these systems for Fortune 500 companies, dramatically changing their business model. That leaves us with some time to think through and discuss what systems need to be developed to make this a smoother transition. Much smoother than the disruption experienced in the music and overall publishing industry.

Advertising/Marketing

According to PricewaterhouseCoopers, global ad revenue will climb to a half trillion dollar business by 2014. That’s a lot of revenue. A lot of jobs. And, even more important, deep integration into the overall fabric of our global society. What will happen to all of that when VRM takes off and becomes the dominant expression of the marketplace? What will advertising transform into? How can advertising support the VRM concept? Doc Searls states that “the amount of advertising that does nothing for customers is usually close to one hundred percent.” (I don’t agree with that statement at all. Good advertising still delivers value to people and creates demand. And always will. Unfortunately, good advertising is rare these days.) How, as a community can we bridge this gap between Doc Searls statement and the advertising industry? I’m concerned that pushing advertisers into a partisan corner might lead to obstruction and pointless territory fights. Instead, we should work collaboratively with advertisers how to make the VRM model work for each stakeholder.

It might be my own bias as a life-long marketer but I don’t believe the attitude “Marketing messes everything up” is productive and won’t get us where we want to be.

Sunk-Cost Fallacy

Rob Knight wrote brilliantly about the challenges of persuading companies happy with the current Status Quo to consider VRM as a viable concept. Larger enterprises have invested billions in CRM systems they expect to improve their ROI for decades to come. Executives have put their career on the line believing in these systems, convincing boards to spend a pretty dime. For VRM to become more than a niche concept, we need to convince Fortune 50 companies to buy into this concept. We can’t just rely on small companies with limited resources for CRM systems to create a groundswell that will force global enterprises to participate. We have to develop systems that help CRM-centric enterprises to transition into the VRM world. For many companies, Social Media was just another Second Life until the big boys (Ford, Best Buy, etc.) showed up. Doc Searls makes a good argument that VRM gives CRM systems more to relate to, and we’re not fighting a religious fight of CRM vs. VRM. Still, as we experienced with the advent of digital marketing and its challenges to be a partner on the marketing table, there are struggles ahead with people staying on the pure CRM side as long as they can. And we should be prepared for it.

Human Nature

One of the pillars of VRM is the ability of individuals to take charge of their data instead of managing them via a platform and exchanging that data for the functionality that the platform might provide. For VRM to succeed, adoption rate has to be huge. And that concerns me. We rely a lot on the willingness of individuals to participate and co-create these new systems. Let’s not forget: intelligent people post their full birth date on Facebook and check frequently on Foursquare into their own homes. My point: We can’t just rely on the individual. We have to take into account human nature which often includes laziness and carelessness. We need to invite anthropologists and behavioral psychologists into the discussion and allow them to help us in the effort. Some of this will happen organically since the VRM discussion starts to flare up more and more. But some organic planning for a more collaborative development wouldn’t hurt.

Warren Bennis once said:

“Innovation – any new idea – by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, monotonous rehearsals before innovation can be accepted and internalized by an organization. This requires courageous patience.”

Right about now, we need the courageous patience of Samuel Insull.

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Image: Courtesy of 13.media.tumblr

People don’t care about “CRM” or “Social CRM”. Sales, Marketing and Customer Support departments do. People care about great customer experiences. Since Social CRM is just an extension of CRM, I’m not sure this model will be able to answer the desire of customers for better experiences.

Clearly, Social CRM is a dramatic improvement from current CRM models, adding new features, functions and characteristics to the mix. Social CRM understands the communication revolution we’re all living each and every day, and its effect on peer trust. Social CRM helps businesses also to move their sole focus away from transactions, and incorporate initiatives that improve interactions between businesses and people. At best, Social CRM will change value metrics from Customer Lifetime Value (CLV) to Customer Referral Value (CRV) – measuring how valuable people are when they tell others about their experiences with a company.

This is all nice and dandy but most of the Social CRM discussions revolve (once again) around technology implementations. Call it E2.0, Social Business, Social Business Design, Social CRM – most of these monikers describe integration of new technologies and not how the core needs of all stakeholders can be satisfied and, thereby, improving the overall performance of the enterprise.

Enterprises have to align their whole organizational model around helping people to achieve their goals.

Let’s face it, whatever you call it, all CRM systems are based on a company’s perspective of reality. You can add social as a spice or main ingredient, everything still revolves around the company. Relationships are still managed by the company, to benefit the company. We see encouraging signs where enterprises let people in to co-create and collaborate: on product development, improving company processes, solving customer service issues. It’s a good step from the old CRM model that tracked what a company assumed the customer wanted to the Social CRM model that focuses on what customers are saying they want.

The problem with Social CRM: It’s still a crapshoot

The ability of companies to do something useful with social intelligence still lags light years behind their ability to gather it. We have great technology how to gather social intelligence but no scalable processes to utilize this intelligence. And, let’s just say, we suddenly lived in a perfect world and had access to actionable insights, we tend to forget that human beings are social primates, not rational decision-making machines. The rational actor assumption is so hard to give up, and many still argue this idea to death. Humans are ruled by motivated and unmotivated biases. We apply what we want and expect to see, ignoring what we don’t expect or want to perceive. In addition, humans are motivated by effort justification. The more effort and resource humans have spent on a situation, the more likely we continue our spending, despite losses or harm. Motivated/unmotivated biases and effort justification influence how we first perceive information. There are several more factors which affect how we process our already tainted information, thus altering the way we frame situations even further. Meaning: We all make short cuts in the way we process information. We use “rules of thumb” (heuristics) to focus on necessary information to make decisions. There’s the representative heuristic, where we make a judgement call based upon how much something resembles a situation, and the availability heuristic where we base everything upon how easily we can come up with a similar example. Last but not least, we have to take into account the risky shift (the tendency of a group to be more risk acceptant than an individual) and group think, where a group’s collective voice masks and oppresses the ideas of the individual. Looking at all these factors influencing decision-making, how can we expect an incremental improvement aka Social CRM to tap into all these motivations and be anything more than a sophisticated Magic 8-ball?

The need for revolutionary change

Most of us agree: We live in revolutionary times. Consumers transformed into producers. People can easily produce and distribute content. If the story is worth telling, it will be heard. Creating large communities is no more limited to big institutions, each one of us can create communities. Some of them large, some of them small. Institutions can’t control anymore what they want us see, read or listen to; each one of us has control over our own destiny.

History should tell us that revolutionary times call for revolutionary changes, not evolutionary improvements. Case in point: East Germany. In 1989, people were fed up. They were fed up with travel restrictions and limitations in communicating with the outside world. People were out on the street demanding drastic changes. And the East German government responded incrementally: Ok, you can travel to Hungary whenever you want. But not to France. Ok, we’ll replace Honecker with another blockhead, Egon Krenz. But not with a new way of governing. A few weeks later, the Wall came down and the whole idea of East Germany disappeared forever.

Sure, nobody is protesting on the street, asking companies to let go of their stranglehold of data and customer relations. This is a much more subtle revolution. YouTube video by Facebook update, tweet by message board activity; people are building their own world, relieved from the stranglehold of MSM, people are creating their own reality. Social CRM feels like a catch-up strategy, not anything remotely revolutionary, game-changing enough.

What to do

Don’t regard Social CRM as a panacea, rather consider it as a bridge to VRM. Since VRM tools are still in development, use Social CRM for three purposes:

  1. Support: Tap into the power of social networks to improve your customer support program. Develop tools and platforms to enable people to help each other, tap into existing networks to add your expertise and syndicate your knowledge throughout the Social Web.
  2. Communities: Use current communities (especially the ones out of your brand control) to gather feedback for each division of your enterprise. Use a mix of branded communities (Passenger, Communispace, etc.) and organic communities.
  3. Listen: Create a Voice of Customer program, understanding the desires and needs of your customer base. Don’t just listen, listen actively. Be part of the conversation to fend off small issues that can turn into major fires very quickly.

Tired already? Better get an energy drink, because the real work is ahead of us.

The road to CRM

  1. Give up control already: Give people tools to manage their relationships with institutions. Don’t try to own the tools, the data, the relationship. Nobody owns a relationship. Give people as much control over the relationship as you have and personalize these tools for the needs of the individual.
  2. It’s my data: Help people to control their own data. When they want their personal information deleted, allow them to do it. Without any opt-outs or other fancy road blocks to continue a dismal relationship. Develop tools that let people selective share their own data, determine their own “Terms of Service” and ensure that the privacy debate of now turns into a people data control story.
  3. Let’s stop the guesswork: Instead wasting millions of dollars on useless advertising, help people express their demand. Lunch on my mind? Why bother firing up the Yelp application and looking for appropriate places?Instead, let people express their desire and allow brands to answer in time. No BT or CRM segmentation needed. I share with brands what I think is needed to get a good response. Period.

It’s now. Or too late.

These VRM tools are in the making. My company is working on it. Many others are developing solutions. Once they’re implemented, they will change everything: the way people deal with institutions, the way marketing and sales works, the way company spend their budgets – basically everything enterprises do.

While companies pay a lot of lip-service to customer-centricity, they still focus on themselves first and foremost. Institutions have to take off their divisional hat first, then the brand hat. Move closer to customers and understand where they are coming from. And together build tools that improve markets and add value to each stakeholders balance sheet.

“Revolution is not the uprising against preexisting order, but the setting up of a new order contradictory to the traditional one.”

Jose Ortega y Gasset.

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Image: Courtesy of Coralie Bickford-Smith

I took this journey of 13 blog posts to better define the model of Human Business Design. It was necessary to walk through the ideas of systemic thinking, introduce various systems, introduce the idea of interactive management, planning for the apocalypse, pie in the sky models, gap and assets, how to develop a community enterprise based on market principles, design a multidimensional organization, stay away from quick fixes and develop leadership for organizational evolution.

The model of Human Business Design is based on above foundation and rooted in the belief that all human interactions inside and outside of your organization matter now. They way human beings are motivated to connect and realize value has fundamentally changed. We’re seeing a fundamental reset in the nature of work due to drastic changes all of us are experiencing in how people communicate, coordinate and collaborate. And the Enterprise 2.0 “movement” tries to capture this changed behavior by applying Web 2.0 principles to the “command-and-control” needs of the enterprise. In addition, we see a mere obsession with tools for tools sake without much understanding of the socio-business context. The old problem of throwing software solutions at organizational problems is just being re-invented in the social networking arena.

Instead, we need to focus our attention on the shifting nature of work itself and how enterprises need to evolve in a rapidly changing world, Organizations need to dig deeper, define new principles around which work itself can be reworked. Forward thinking companies will develop their own constitution, a bill of rights and a social contract for all stakeholders to have a common purpose everybody involved can rally around. In short: enterprises need to socialize their business.

Technology is the critical enable to implement Human Business Design within your organization but technology is not a sufficient agent for change. We have to focus our work on humans, the limitations of extrinsic motivators (external reward or punishment) and the need for intrinsic motivators (finding meaning in work):

– Developing a foundation of trust
– Motivating and educating the stakeholders to become more active participants
– Providing access to stakeholder knowledge and skills
– Facilitating individual freedom and control
– Encouraging emotional/aspirational co-creativity and participation.

    Successful evolution of the organization to a Human Business Design Enterprise requires them to find the appropriate locus of learning, between both market and non-market sources of ideas and knowledge. Most established firms are still trying to access these autonomous idea pools using industrial age logic and rational economic arguments, and, in most cases, tired and outdated marketing efforts where the emphasis is on surface-level tinkering of the customer engagement model, not a complete realignment and reorientation.

    Enterprises have to understand that each business, with money and investment in structures, is no more than its people within and its people outside (all stakeholders). Enterprises need to rely more on people and bridge their left-brain thinking demands with the desires of people to focus more on their right-brain capabilities.

    More than 10 years ago, the Cluetrain Manifesto exclaimed “Business is fundamentally human”. We need to stop treating stakeholders as “resources” and regard each stakeholders as clients with their own interests, desires and drivers.

    If you want to learn more about Human Business Design and how we can help you implementing these principles into your organization, feel free to contact me at uwe@bateshook.com

    And, all previous installments for this series, can be found here:

    Part 1Part 2Part 3Part 4Part 5Part 6Part 7Part 8Part 9Part 10Part 11Part 12