Welcome to the Age of the Customer. Invest accordingly.

by Josh Bernoff

Do you get the idea that things are really different now?

Everyone has a different wake up call. Maybe it was the day you heard Amazon is selling more books on Kindle than on paper. When was the last time you talked to a travel agent? Or maybe you realized the world had changed when you whipped out your iPhone in Home Depot and checked the ratings before buying that air conditioner. Disruption is rampant, it's hitting every single industry, caused by customers with powerful technology on their side. The question is not whether your industry will be disrupted. The question is when.

We took a close look at Michael Porter's five forces, the definitive framework businesspeople use to analyze competition. There's no longer any barrier to potential entrants or substitutes -- in a digital world, competition can come from anywhere. Customers have real-time information about pricing, product features and competitors; they hold all the advantages. And the key source of supply now is talent -- and talent can get up and leave. The competitive barriers that Porter defined matter far less now. The only sustainable source of competitive advantage, the only defensible position, is to concentrate on knowledge of and engagement with customers. (Scroll down for video.)

Previous sources of dominance -- manufacturing, distribution, even information mastery -- are now just table stakes. This is the age of continuous disruption. Your relationship with customers is the only thing that enable you to survive that disruption (think of the movie industry as it continually embraces new formats). That's why we are christening this "the Age of the Customer." In our new report "Competitive Strategy In The Age Of The Customer," we assert that companies must be more than customer focused, they must be customer obsessed. This is not just jargon, it has a real meaning:

A customer obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of an engagement with customers, and prioritizes these over maintaining traditional competitive barriers.

Maybe you don't believe this. If so, you can keep doing business as you do now and eventually, customer-driven disruption will get you. But if  you recognize that customer engagement is your only path forward, you need to make certain changes in the way your company runs.

You change the way you do research. You spend less on surveys whose results come back too late to act on. You invest instead in real-time listening to social media and the search for customers' unarticulated needs. You think the iPad came out of surveys?

You change the way you do service. You invest in a comprehensive cross-channel customer experience program, and stop treating your call center workers as slaves.

You change the way you do sales. You stop incenting your sales force to cram the channel and concentrate on connecting directly with end consumers. (The sorry state of the textbook industry, for example, came from concentrating more on professors than students.)

You take cash from your email and advertising blasts and spend it on interactive content and mobile apps that create real connections.

This is a corporatewide shift in thinking. The companies that master it, companies like IBM, Best Buy, and Amazon, thrive in a world of constant disruption, because their customers know and trust them, and they make investments in those customers. The companies that keep riding their current model and attempt to lock in customers are doomed. They're dead men walking. They just don't know it yet.

 

Where is your company on the social maturity scale?

by Josh Bernoff

Forrester is publishing a major piece of research, nearly a year in the making -- our analysis of the social media maturity of organizations. There are two ways to consume it: if you're a client, read the report Accelerating Your Social Maturity. Or you can get the newly updated paperback edition of Groundswell, which includes this material as a chapter.

After working with hundreds of companies -- and surveying 95 of them -- we've answered the question "What's the roadmap that organizations follow in adopting social media?" We've also got advice on how to get to the next stage.

In a nutshell, here are the stages (from RIGHT to LEFT).

Dormant stage (laggards). No social applications, typical in regulated industries or conservative culture. Our advice: get started soon, concentrate on "small victories." I've working with companies in this stage, such as retailer Eileen Fisher, where Lauren Croke, a leader in the eCommerce group, told me "We are so collaborative, things take a really long time to get consensus and approval." Recommendation: concentrate on adopting listening platforms like Radian6 -- seeing what people are saying will often get them motivated to start participating in the Groundswell.

Testing (late majority). Social applications happening, but little coordination. Often focused on popular "talking" environments like YouTube and Facebook, typically run by PR. Recommendation: build on success. Expand out from blogs or Twitter to communities, for example. Shift measurement from volume metrics (e.g. "friends" ) to business metrics (click-throughs, sales, sentiment). Hire or appoint "shepherds" to coordinate resources and learning across the organization.

Coordinating (early majority). Management recognizing value of applications and putting coordination and governance in place. While the social innovator in a testing-stage company may feel lonely, his counterpart in the coordinating-stage company feels pressure, becuase she's in the spotlight. Recommendation: build a cross-departmental council of social managers for sharing best practices (31% of the companies we surveyed have such councils). Concentrate on policy, which is a natural element of the infrastructure to allow more applications to develop. Start building a long-term plan.

Scaling and Optimizing (early adopters). Company has a plan in place, and seeks ways to do multiple social applications efficiently. For example, at Home Depot, the launch of a customer service presence on Twitter and a marketing channel on YouTube naturally led to the creation of home improvement community, staffed by knowledgeable people who work part of the time answering questions in stores. IHG (Intercontinental Hotel Group) began to concentrate on training management staff at its hotels on how to respond to customer posts on places like Facebook and TripAdvisor. Many companies in this stage have moved beyond listening and talking and are systematically embracing new ideas from customers (like Starbucks' mystarbucksidea.com). Recommendation: Use companywide tools to encourage HEROes with new social ideas to innovate throughout the organization.

Empowered (innovators). Few companies have reached this stage, where social pervades the company. Dell and Zappos come to mind. At United Business Media, an internal community for collaboration attracted 80% of the employees within 12 months, a great step on the way to an empowered, innovating workforce.

The takeway: understand where you are on this journey. Teach your managers. Shift your goals as you move through the stages. But always be moving: companies that adopt these technologies broadly outside and inside the corporate walls create brand advocates, streamline business processes, and improve product quality and success.

What if everything you did was on Wikileaks

Does Wikileaks terrify you? It probably should.

Imagine a world in which everything you write might become public. Every email you send: public. You have a telephone conversation -- the person on the other end takes notes. Public. Your support person insults somebody on the phone; she records and posts it.

What would people think? Are you transparent enough to live this way?

Wikileaks or not, this is now the world you are living in. Even if you despise Wikileaks -- even if you think Julian Assange will end up in prison somewhere -- you're not safe. There are a lot of other ways and lots of other place your "secrets" could get posted.

If this scares you, change the way you do business.

 

Take our survey, score your HERO project (social media, mobile, or other tech)

by Josh Bernoff

That social media project you are working on. Is it worth it?

The iPhone app -- is it going to pay off, or just drag your job into the toilet?

Our new book Groundswell HEROes is about highly empowered and resourceful operatives (that's you, if you're considering, building, or managing a technology project that touches customers). As we reviewed these projects, we realized that people often have difficulty up front in identifying just what they are about to get themselves into. It's not just the value for customers that's in question, and it's not just the technical effort. It's the political effort -- all the people who have a stake and try to stop you or help you (or "help" you).

We devote a whole chapter to this, and we've also developed a tool for measuring projects. Answer a few questions, and then the tool tells you if the effort is in line with the expected value, and whether you've generated a cute little idea (class 1) or a major "shadow IT" effort (class 4). We call it a value-effort evaluation (VEE score).

The tool is in beta. I'd like your help in testing it. Here's what to do:

1. Click on the "TRY IT" button below to take the survey and see how your project stacks up. It works for projects you are about to undertake, or ones you are in the middle of, or ones you have completed.
2. Please take notes while taking the survey, if you see something that seems wrong or missing or confusing.
3. At the end of the survey, we'll provide you with a screen that shows a little insight into your project and the challenges you will be facing.
4. Please help make the tool better. There's a little box at the end of the survey, you can include feedback there based on your notes. Or add a comment on this blog. Or email me at jbernoff at forrester dotcom.

I think the tool will be helpful in clarifying the path you are on. I know you can help us make it better. Look for a much nicer version of this once the book is done.

Note: because the survey tool costs a small but nonzero amount of money per completed survey, we may have to shut this down if more than a thousand people take it. Unlikely but possible. We'll let you know.

What Will Be In GROUNDSWELL HEROES

by Josh Bernoff

For several months now we've been researching "Harnessing the GroundswellGroundswell HEROes", the followup book to Groundswell. The focus is on both empowered customers (think "United Breaks Guitars") and empowered employees. In both cases, the empowerment comes from the pervasive social, mobile, video-enabled, cloud-propelled technology available to them.

A funny thing happened during the research, though. We found that all the employee examples were in marketing, sales, and customer support. Why? Because those customer-facing departments have both the budgets and the desire to connect with customers using the new technologies. And they are moving forward, in most cases without much involvement from their own IT departments.

In fact, it's the urgency created by empowered customers that's driving the employees to build their own solutions. So we came to this principle:

If you want to succeed with empowered customers, you must empower your employees to solve their problems.

Whether it's Zappos, Best Buy, or Intuit, staff are building solutions to help their customers, and not just in customer service. THAT is what the new book is about. (It's a relief to have figured this out, believe me.)

Based on this, here's a revised table of contents. Look for the book next year from Harvard Business Press.

HARNESSING THE GROUNDSWELL: Empower your employees to solve customer problems

GROUNDSWELL HEROES: Harnessing the Power Shift in your Workplace and Marketplace

by Josh Bernoff and Ted Schadler

PART I: THE TREND

Chapter 1. Empowered people and what to do about them. How customers got so much power. Four forces: mobile, video, cloud, social. Empowering staff to solve customer problems.

PART II: YOUR CUSTOMERS

Chapter 2. Customer heroes. A new metric on the value of your customers. Customer word of mouth and media.

Chapter 3. Reimagining customer service. Customer voice. Service is now marketing. Social CRM.

Chapter 4. The mobile imperative. Pervasive information empowers customers. Using mobile information to create loyalty.

Chapter 5. Mobilizing fans. Amplifying promoters and blunting detractors. Efficient ways to enable fan voices.

PART III: YOUR PEOPLE

Chapter 6. Employee heroes. What empowered staff can do. Technology projects -- matching effort to results.

Chapter 7. Is your organization ready? Measuring employee empowerment. Do your staff feel they have permission? Are they ready to solve customer problems?

Chapter 8. Helping people work together. Collaboration and innovation tools. Social technology for the enterprise.

Chapter 9. Leadership for constant innovation. What management can do to encourage innovation and empower employees.

PART IV: YOUR TECHNOLOGY

Chapter 10. How IT can empower your people. How to say yes. Select, scale, and socialize.

Chapter 11. Empowering people safely. When to say no. Empowering people while managing risk.

PART V: YOUR FUTURE

Chapter 12. The future of the groundswell.

***

Now all we have to do is write it. Look for case studies and lots of data in the coming posts.

Note (12/21): We changed the title around the concept of HEROes (highly empowered and resourceful operatives).

Economies of scale in the very personal groundswell

by Josh Bernoff

There’s a fundamental contradiction at the heart of groundswell strategy.

We’ve told you that it’s a big error to treat everyone in the groundswell as if they were the same. That’s why we find the beehive metaphor inappropriate. People’s contributions are as different as they are.

On the other hand, corporate development for the last 50 years, at least, has been an ongoing search for efficiency. Mass production means cranking out the same product a hundred thousand times at a high degree of quality. Advertising succeeds by giving the same message to everybody. Customer support representatives read from the same script, because the company can’t treat employees as interchangeable unless they treat customers the same way.

As a result, to many of our corporate clients, groundswell strategy seems like a step backwards. “You want us to deal with people as individuals?” they say. “We spent the last 30 years computerizing everything so we can avoid just that!” 

Here’s the secret. When you start a groundswell project, you will be treating people as individuals. But very soon, you’ll be able to get economies of scale. How? By enlisting those same customers.

For example, Dell told us (the story’s in Chapter 8 of Groundswell) that when they started their most recent support forum, 1999, they knew they’d need moderators. They pulled 30 support reps off the phones and converted them into forum moderators. Those support reps answered questions online, just as they had been on the phone.

Already, Dell was getting more efficiencies, since each answer could be read by dozens or hundreds of other people searching for it on their support forum.

Now, five years later, the support forum is many times larger than it was then. And the number of moderators is no longer 30. It’s five. And that’s because the members of the community are moderating it themselves. 

It’s the same in marketing applications. You seek out influencers – bloggers or key people in discussion forums. You connect with them, treat them as important. And they spread your messages into forums that echo and react to those messages, hundreds of times.

Cymfony monitors brand chatter. But the result isn’t just a number – it’s sentiment, together with specific posts you want to pay attention to. MotiveQuest does the same along dozens of dimensions. You don’t have to deal with individuals, but you can, if you determine there are some who deserve your attention.

So as you seek corporate scale economies in groundswell applications, remember these principles.

1. As applications grow, economies appear. Seek them out. You’ll need them to deal with a huge application.

2. Use members of the community to moderate, regulate, and manage the community. It makes them feel good, and it saves you time. This is how Wikipedia became so huge. Every discussion forum and Facebook group has people like this – recruit them and empower them. (And they nearly always work for free!)

3. Use technology where possible. Visible Technologies finds the influencers in your market. Salesforce.com’s idea software lets you turn your customers into an innovation engine. Vendors are springing up all over to solve these problems – paying them is cheaper than hiring people.

4. Don’t avoid the exceptions, seek them out. You’ll learn more from them than from the “masses” – they’re the creative ones. They can make the most trouble, or generate the most positive energy, depending on how you treat them.

This is just a start, but you get the idea. Feel free to add your own scale principles in the comments.

Bucking the system

by Josh Bernoff

Does your company reject change?

Of course not. You love change, don’t you. Change is good. That’s how companies grow. The bigger the company, the more a little change will do it some good.

Baloney. You all know the truth. Companies are like organisms with immune systems. If you’re a change agent, you’re the antigen. Your company wants to reject you, and it’s got lots of systems to block that -- accounting systems, legal systems, management hierarchies, policies and procedures.

Social applications and their champions run afoul of this all the time. Why? Because the people in your social applications – your customers and prospects – are out of control. Who knows what they might say or do? And you want to make that a part of how your company runs? That’s what stimulates the allergic reaction.

But you can succeed. Here are our best tips, taken right from the pages of Groundswell, which could have been called, “How to be a social provocateur and still succeed within a company.”

• Start small. Don’t try to change your whole company overnight. Pick a single project, a single brand, a single group of customers, and work on that (or them). You’ll seem smaller and less threatening to the status quo. And you’ll get the chance to foul up and learn in a sheltered environment.
• Get an executive sponsor. When the you-know-what hits the fan, you’ll need somebody in a high place to cover your back. At Dell, it’s Michael Dell who gives people cover. At Unilever, it was two top executives: Babs Rangaiah and Rob Master. Who’s your sponsor? You’ll need her. Take her to lunch now and make sure you can count on her.
• Line up the stakeholders ahead of time. Will legal be blocking you? Then get a person from legal on your committee. Or a regulatory affairs guy. Or somebody from accounting, or brand management, or whomever might be threatened by what you’re doing. You want them on your side. And you want to hear their objections early, not when you’re about to launch and they can shut you down for some policy violation you didn’t even know about. In the months it takes to spec and build your application, you can win them over, or learn from them and change what you’re building as necessary.
• Set deadlines and move fast. This is how you get the objectors’ objections out of the way now. If your launch is six months off, they won’t pay attention until month five. If it’s one month off, you’ll get to their objections now. Speed also helps – you’ll be up and running before they can figure out some new reason to object. Lionel Menchaca and his team got the Direct2Dell blog up in three weeks. (This was a week later than Michael Dell wanted.)
• Seek precedents. What’s your competitor doing? Is your community, your wiki, your blog like one in another industry? Show them to your management and anyone else you need to convince. (Groundswell has 65  examples including 25 full case studies, indexed by industry, by strategy, and by geography – you might find what you’re looking for by starting with page 265.)
• Make friends. Join communities like the Social Media Club, or Jackie Huba and Ben McConnell's Society for Word of Mouth. Find people who are doing what you’re doing. Lean on them. Learn from them.
• Measure your success. The surest way to fail is to be unable to prove you accomplished anything. Decide what you’ll measure up front – buzz, conversion rates, sales, community memberships. Prove it accomplishes your objectives. And then prove your application is delivering results. (If it isn’t . . . fix it!)
• Don’t stop at one application – build! So six months have gone by. Your first application is successful. Go ahead revel in it – for ten minutes. Then build on it. You have momentum – you’ve bested all the obstacles and proved you can deliver results. The second app will be far, far easier. Doing one proves you’re a prodigy. Doing two or more will get you promoted.

What’s your best tip? Add it in the comments.

Purists and corporatists -- you respond

by Josh Bernoff

Thanks for all your responses on the scale I posted. Recall that 10 is an extreme purist (power to the people!) and 0 is an extreme corporatist (power to the corporation!). I saw people coming in all over the scale.

Here's what I learned:

1. Nobody likes to be pigeonholed. I loved this from frymaster.

When I'm drinking [which is most of the time], I'm a 10. When I'm at the client I'm a 5. Unless I had a little nip, and then I'm a 7.

 

I also enjoyed Mark's attempt to add a dimension. People just can't get comfortable living on a line segment.

2. A lot of people seemed comfortable in the 5 to 7 range (or couldn't tell my definitions of 5 and 7 apart). Here are the definitions again.

7 The groundswell is powerful, but companies have a role in it. Groups of people inside of enterprises can get together and make themselves heard. Even so, the groundswell will always prevail over their interests.

5 Companies belong in the groundswell. They have interests just as the people do. They will set up corporate efforts -- presences in places like Facebook or their own corporate blogs -- and connect with their customers. They can't shut down or co-opt people in the groundswell, but they can form meaningful relationships with them. And they can accomplish goals like marketing or collaborative innovation, if they respect that they're not in charge.

Given the fact that our active readers are probably the biggest believes in the power of social, this shows an amazing tolerance for corporations. Maybe because to make a living doing this stuff, you have to give the corporation a role. I'm quite happy myself at 5 and expect to sell a lot of books to others who are comfortable there.

3. I was intrigued by the perception that people were moving. I especially liked this comment:

The last number [average of businesspeople you meet] is the one I see movement in every day...one at a time I'm seeing people who used to be 2 or 3 become a 4 or 5.

So here's the interesting question. Is the business world slowly creeping towards the middle, or headed towards the purist end? Are we going to end up with a balance between enlightened corporations and powerful people, or are the people just going to overrun the corporations and take over? I think how you answer this says a lot about everything you do while working in the groundswell.

Corporate social technology strategy, Purists, and Corporatists -- why companies CAN participate

by Josh Bernoff

It's time for me to weigh in on the question: can companies be part of the social world?

This is in part a reaction to Shel Israel's comments of a few months back and my colleague Jeremiah's Owyang's responses. But it's an ongoing issue that comes up often in the blogosphere in my conversations with corporate clients.

On the one side are the folks who say, "The social world is an emergent phenomenon generated by people connecting." The original Cluetrain Manifesto rails against many aspects of the corporate world and basically posits that the right way for companies to get involved is for people inside those companies to connect to their customers. Based on my recent participation at a Cluetrain event, Cluetrain author Doc Searls still harbors a lot of skepticism toward corporations pursuing goals in the social world. For shorthand, let's call these folks the Purists.

On the other side are companies who are looking at the social Internet and saying "how can we exploit this to do what we already do -- PR and advertising, for example?" PR and advertising are mostly one-way, broadcast type communications, and these folks continue to try to adapt those one-way modes of thinking in the two-way, read-write world of social computing. I'll caricature these folks as the Corporatists.

I'm here to stand up and proudly say, Purists and Corporatists, you're both wrong.

Here's how I suggest people in companies think about social computing.

If you're in a company, your company can participate. In fact, you must participate. Your customers and prospects are connecting and talking about your products and your company right now -- this is what we call the groundswell. You need to be a part of the conversation. You might start a blog, you might start a Facebook group, you might start a community, or begin twittering, but until you start connecting as a corporate employee, you won't understand what's going on out there. And it can and will bite you.

You also need to start with the recognition that you are not now, nor will you ever be, in control of this "channel," "world," "phenomenon," or whatever you want to call it. It goes its own way and it will continually surprise you. This is where the Purists are right and the Corporatists are fooling themselves. But this is not so new. When my colleague Charlene Li was writing about how to deal with Wikipedia, I suggested it's no different in some ways from the New York Times -- you can influence it, but you're not in charge of it. Same with the rest of the social world -- you can participate, but not control. If this scares you, great. If you can't deal with it, somebody else in your company had better head up your social technology efforts.

But the fundamental principle behind about 80% of our book Groundswell is that you can accomplish corporate objectives in the social world. This is what bugs the Purists. As a corporate staffer, you have no business in the groundswell unless you know what you are trying to do there. You could be trying to increase awareness, generate word of mouth, surface leads, save on support costs, on tap into innovation. But regardless, no corporate activity should go forward without a measurable goal, and this is no different.

So, do you participate as an individual or a corporation? Of course, as a corporation. Companies may be made of people, but those people are not free agents. Your boss needs to know what you're doing, and, we argue in the book, your top management should, too, since they're going to inevitably get some surprises from these efforts. You'll need budget (maybe not a lot), and you need cover. Sometimes you need to push the membrane that Rob Scoble and Shel Israel talk about, finding ways to stretch corporate attitudes just enough to succeed. But you'd better be aligned with the corporation's goals, if not necessarily its tactics and every single one of its rules.

There's a lot of talk about authenticity, too. But the tone I hear from some Purists seems to be that if it's corporate, it has to involve lying, or at least deception. Please. Corporations, like people, have interests. They can talk about their products and services honestly. Of course they will be pro-company -- that's authentic, to believe in what you're making. But a pro-company attitude doesn't prevent two-way communication. In fact, in idea-generating applications like salesforce.com's IdeaExchange, or Credit Mutuel's sijetaisbanquier.com, it's that give and take between customers and people inside the company that fuels the innovation.

Teams -- small teams -- get most social projects done. Corporate bloggers may need help with moderation. Specifying, managing, and moderating communities is not a one-person job. These applications work best when they support corporate goals anyway. That's what gets you backers within the company, not just fearful detractors.

So it is no sin to conceive, create, and deploy a corporate social application. If you have a clear objective and can measure it, you are even likely to succeed. Just recognize that you must start from authenticity, it's a dialogue, and that the social world cannot be controlled. The companies I work with are starting to do this. It's not impossible -- in fact, it's the beginning of an incredible transformation. And their participation won't kill the groundswell, it will make it richer.

Sloan Management Review: How the groundswell makes your company customer-centric

by Josh Bernoff

What does the groundswell of social technology mean for management? That's the question we had to ask ourselves when MIT Sloan Management Review invited us to write up the research in Groundswell.

I'm delighted to report that  you can now read the results. MIT Sloan Management Review has published our article, "Harnessing the Power of Social Applications." And while most of the articles in MIT SMR are behind a paywall, they are making this one available for free. [Note: as of April 1 the article is no longer available for free -- the link will send you to an excerpt.] Thank you, MIT SMR!

A quick aside. MIT and Harvard have a vigorous intellectual rivalry here in Boston (culturally, it resembles Red Sox/Yankees) -- many of the local professionals are alumni of one or the other. I went to MIT as a Ph.D. student way back when; Charlene, of course, earned her MBA from Harvard Business School. So having our book published by Harvard Business Press, and then getting an article into MIT Sloan Management Review, is a pretty sweet twofer.

While the article is was free, MIT SMR hasn't give us the right to copy it, so I can tell you about the article but not include excerpts. That said, here are some of the ideas we explored in the article, which jumps off from where Groundswell ended.

The article includes mini-case studies include CBS/Jericho, salesforce.com's IdeaExchange, the Chevy Aveo Livin' Large Campus Challenge, Fiskars' fiskateers.com community, Dell's community forum, and Best Buy's Blue Shirt Nation social network for its employees. (Some of these are also in the book, some are unique to the article.) But we stick to our central framework -- you choose your application based on your objectives -- an idea we debuted on this blog half a year ago and which remains at the heart of our analysis.

The article also includes data on use of social technologies across countries, and which applications are best for which departments within companies. Plus little tidbits of advice for the kind of managers who read MIT SMR (e.g. Line up executive backing, smart small and then expand). But our main point is that the cultural transformation that comes from embracing social applications is the best way to once again get the customer at the heart of decisions in the corporation.

I've seen a lot of advice for companies in the blogosphere, much of it really useful if mostly tactical. We tried to look bigger, at what really happens as medium and large size companies make social apps part of the way they do business. I'd love to hear whether you think we're on target. Go read the article and let us know.