The path to Social CRM: do you have a Portfolio of Real Options?

About two weeks ago I wrote my post on What a Social CRM Strategy is all about. Despite the great responses and discussions in the comments I think there is still a huge part missing: How do you do it? The Strategic Framework statement I concluded with, provides just a very rough indication of the direction I believe one should work towards as well as how this can be achieved.

Does anyone have a map?

Several people in the Twitter #scrm accidental community have since written posts with views on how to proceed (you can find links to these posts at the bottom of this one). In general there seems some kind of agreement that there’s still lots of ground to cover and we should enjoy the ride. Nevertheless we should start now, plan our journey, cross the bridge when we get there and learn from our mistakes. And, this is a hell of a job, if you do not have a map.

Social CRM has not arrived (yet), not as a technology, nor as a strategy. The absence of a clear map does not mean though, that we cannot plan our journey. The journey will not be mapped out like you plan your journey from home to work and back. There are still many unknown variables and a huge number of what-if questions. There is more we don’t know than there is we do know. Fortunately more blanks are being filled every day.

Not knowing is no excuse for not going

So, what do you do? Sit around and wait for it to have happened? Jump-in without a good view on what could happen and how you would deal with those circumstances? I hope not for both questions.

What could be a sensible way to proceed is to develop a “portfolio of real-options“, or – in other words – a map that provides you with a series of options to choose from or decline. A map that allows you to value (technology) investments and other Social CRM strategic choices based on the implications of each step along the way — without committing to anything before you have to or want to (Please read any of the suggested reads at the bottom of this post).

If you understand your options you’re half way there

Creating a map of “real-options” is not a light task. If one reads the academic papers on this, it is actually complicated. Complicated because it requires a deep understanding of your business, your Customers, your competitors and all the variables that are in play to make your Social CRM Strategy successful. First you need to understand the “value-to-cost” ratio (also referred to as NPV or ROI) of the project/investment or initiative. Secondly you need to make an assessment of the risk/uncertainty involved in combination with how long you can afford NOT to make a decision (remember: you do not have to make a decision, you may; basically this provides you with a window of time to mitigate the risks or fill out the blanks to decrease uncertainty). The theory names this “volatility“. As you can imagine: the lower the volatility and the higher the value-to-cost ratio the stronger the advice to invest now.

What’s in it for you

The above may not make it clear for you how this can help you. Here are my views on this:

  • First of all creating a “real-options” mapping for only one investment (or real-option), will provide you with the insights on what variables are important to understand. E.g. when you map the risks involved, you would want to mitigate those, hence you need to start better understanding the variables that mitigate the risks. At the same time you will (or should) start small (research) projects to find out more about the variables and what drives their values. The journey (and the fun!) starts here.
  • Secondly creating a portfolio of “real-options” will provide you with insights on how all these options of the Strategy are linked (or not). (Do not limit yourself in the definition of options and linking them together. You should be creative here. But do not forget: you need to make them “real” eventually). Whenever you fill out one of the blanks in one of the strategic projects, you have the ability to assess the (potential) effect on other real-options of the strategy. When one thing moves, all things (can) move. This in itself is fascinating. Most of all you will recognize that you are actually executing the strategy and learning along the way.
  • Thirdly you make wise business decisions and still you may (probably will) fail. The good part is that you will notice quickly, with no major harm done yet. As one says: it is ok to fail, but do it quick and learn.

These are my 2 cents to the debate on how to proceed with a Social CRM Strategy. Bottom line: you can start the journey, and have the fun, in a business smart way, today!

Let me know if it makes sense to you. I’m enjoying the journey, I hope you are too.

Wim Rampen

Further reads:

Esteban Kolsky: The slow path to SCRM

Prem Kumar: All roads lead to Social CRM; But “Hanoz Dili Dur Ast”?

Mitch Lieberman: Social CRM is a journey – not a destination

Wall-Street Journal/MIT Sloan: Stay Loose

Harvard Business Review: Strategy as a Portfolio of Options (PDF)

Credit Suisse | First Boston: Get Real (PDF)

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25 responses to “The path to Social CRM: do you have a Portfolio of Real Options?

  1. Wim,

    This is an interesting concept – but I am going to have to say no.

    Not because I don’t think it will work, to the contrary I think is a very reasonable approach to creating a map — but I don’t think that these are the proper circumstances for it. We are too early in the process for this to succeed. We have not yet seen anyone doing anything that can be called SCRM (I am not talking about communities per-se, or Twitter Customer Service like Comcast does, or similar attempts at pilots –I am talking about complete deployments with feedback analysis and actionable insights generated).

    Without having at least one proven case (two would be better, three would be da bomb!) of SCRM we are not going to generate sufficient credibility to deploy and succeed with this type of initiative. I’d be delighted to build real-options once we know them. If we build the portfolio with real theories we run the risk that none of them will succeed and we will not only not progress, we will actually be set back by trying to propagate something too difficult for people to grasp or adopt.

    I said earlier in Mitch’s blog that I had used a CRM map in the old days, still tying to find it, but what I do remember was the simplicity of it. This simplicity made it easy to adopt and implement the ideas in it, since the concept was very simple to comprehend. It also made it easy to maintain, which was essential to make sure that it was not outdated.

    So, as much as I would love to take on doing this, and will all the respect in the world, it may be time to start going down a simpler road and find a document a case that worked, then another one and maybe even three of them. Once people see that is doable, then we can take on more complex exercises and develop a portfolio of options – including the ones known to work and other better ideas.

    Of course, this is my opinion and is probably wrong…

    • I love it when we disagree! Usually what happens is a gathering of opinions, thoughts and alike from great people from all over the globe, allowing me (and others I presume) to further our views and understanding. Maybe for the future we can pre-arrange this ? ;-)

      Seriously, your opinions are no more wrong than mine, or if you will, just as wrong as mine. I think at best we are all flawed in our thinking, but together we bring a lot of good stuff on the “paper”, getting us a step ahead each time.

      With regard to your comment here: I do like more simple road-maps, so I would be thrilled to see one we can use. I also think we should not wait until we have 1-2-3 proven cases. Much like you have stated before : no company is the same. Proven cases can help you fill in the blanks or provide you with a direction. I further think that having these cases provides no more that an hypothesis that needs validation in your own specific case.

      I will not comment on the do-ability of “real-options” etc.. Graham did a much better job in his re-comment than I could ever have done.

      Last but not least: I also noticed your comment on Customer Think
      My answer: looking forward to tomorrow! (really!).

      Thx again for making this post much more than it was before you commented.

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  3. Hi Wim

    I think it is safe to say that… Esteban is wrong here. Let me explain why.

    We find ourselves in times of radical change. Traditional CRM is everywhere, but is struggling, as customers demand their quid pro quo. The CEM reinforcements management has drafted in are getting bogged down too, as companies belatedly recognise that the problem with CRM has little to do with branded experiences, but everything to do with a lack of customer-centricity. Social CRM has the potential to redistribute some power to customers.

    But how should we proceed when no-one can even define what SocCRM really is?

    I have faced similar problems in many of my ‘edge’ projects in the past; the ones where clients are pretty sure something will work, want to take a small bet on it working, but are not sure exactly how to make it work. Not having a roadmap is absolutely no excuse for not starting out on the journey. Providing you take the journey one step at a time.

    The way I tackle these projects is through a simple three part structure of Vision, Value and Venturing. The first part is developing a coherent growth vision to provide a clear description of what you want to achieve. There are many approaches to developing a growth vision, so I am not going to define one here. Suffice it to say that the growth vision provides you with a direction to take when you start the journey. It doesn’t have to provide a detailed roadmap for the journey, but it does have to set out the broad principles for the journey and be compelling enough for the company to want to get there.

    Once you have developed your growth vision, the second part is understanding the value of each step you take on the journey. Value comes from obvious things like growing revenue and cutting costs, but it also comes from less obvious things like reducing risk and to touch on your blog post, from generating insights, developing new skills and gathering experience to help decide what to do next. This is where scenario planning and real options come in very handy; scenario planning to understand what your options are and real-options to understand what the value of taking each option is. And real-options don’t have to be difficult either. They can be worked out with the aid of a simple decision trees and MS Excel. As you take each tentative step, the financial value you create helps to defray the cost of the next step, whilst the informational value helps you decide what the best next steps should be. Proceeding in this way you can create what McKinsey call a Staircase for Growth, with each step taking you that bit closer towards your growth vision.

    Now that you have developed your vision and started to take your first few steps, the final and hardest part is to run each group of steps as an internal venture that you can complete within 100 days. That means very careful planning of each of the activities in each step, developing a detailed understanding of how to get things done, only co-opting resources when you really need them, and focussing all your energies on delivering milestones and minimising cashflow. Just like you would if you were running a startup with VCs breathing down your neck for results. It is so easy just to start another project, but that is the kiss of death if you want to deliver results quickly in an uncertain environment.

    SocCRM is going to be a long and difficult journey. Now is the time to your first few tentative steps towards your own growth vision and to learn on the way. You can use the Vision, Value and Venturing approach outlined here to do that. And real options will help you understand what is worth doing during the journey. Or alternatively, you can wait until others have blazed the SocCRM trail before starting out. If you do decide to wait, don’t forget that ‘there are no prizes for coming second’.

    See you at the finishing line.

    @GrahamHill
    Customer-centric Innovator

    • –> Go to Prem’s comment –> ctrl+a –> ctrl+c –> back to this comment –> ctrl+v

      Thx for providing us with some insights in your way of working . I’m sure I’ll benefit from this, like many others. It’s highly appreciated.

      Wim Rampen
      Customer-centric Innovator “in-spé” ;-)

  4. *GULP*

    Graham, do you take apprentices? Can you take me in?! I am willing to start over from scratch, wash the dishes, etc. 8)

    BTW, what I can comprehend from all you guys are discussing here is that Esteban is looking at making a map, so that the journey becomes easier while Graham, you are helping the early explorers get themselves equipped to map out the new routes.

    Am I right? Sounds like my exploration metaphor on Mitch’s blog was right! We are the Vasco da Gama & Christopher Columbus trying to find new routes to a known land of promises called customer centricity (well not India in this case ;) ).

    Thanks a LOT for enlightening me with a whole new set of tools that I never knew of! :)

    Regards,
    Prem

  5. Wim – i like your usage of the word options. In a reply to Esteban i ranted (i usually do) that SCRM is a supermarket and not a rigid, inflexible template (http://tinyurl.com/yjmjpph)

    i am a professional manager and manage a couple of small businesses in the UK. one of them happens to be an education software business, selling to schools. our users happen to be teachers, students and parents. we have a home grown back end system that doubles up as CRM/ERP system.

    our product development has been traditionally a few key people deciding on what features go into product and then implementing them. we validated these features via user group meetings (why arent user groups considered SCRM?).

    over the last few years social technologies have penetrated schools and we decided to engage with customers and stake holders on that front too. our primary objective was to better capture sentiment into product development and improve support.

    so we invested in online discussion groups, presence on FB, Twitter, blogs etc. we have integrated our mail system and CRM system to some of these groups based on key word alerts.

    so how do we use this?

    – we use the social technology to proactively engage with stake holders (obviously!)

    – to better integrate stake holder sentiment with product roadmap( for example we have totally revamped our product approach based on such interaction and sentiment)

    – for support obviously and issue management

    – for lead generation

    what we have found is that 70% of stakeholder conversation is not really material (“its sunny today” does not help us in any way really)

    we do not have automated systems for data analysis, profiling etc, but we do this manually – there is actionable data that comes off and there are corporate actions being taken as a result of, some of those being pretty strategic actions too. our cost is a fraction of a marketing resource’s time. because we are small and because our stakeholders are not that many, we found that the investing in automated systems were not worth the return.

    so is this SCRM or not? you may not call it so, but from our perspective it is enabling us to engage with and understand customers on a different level of intimacy, using existing and emerging technologies and take appropriate corporate action. that is SCRM for us as a small business.

    I mention this wrt to Wim’s post because most of what is being articulated here by Graham, Esteban etc is more applicable to big business.

    i am reasonably sure small business will implement SCRM the way we have done, though i am more than happy to be shown different.

    there is a parallel discussion going on Wim’s post here, http://tinyurl.com/ydu9ucy and that lead me to Bob Thompson’s blog, http://tinyurl.com/ych3btn.

    a reply from Bob to Mitch rings very true for me :-

    “I’m not sure that regular business managers, the focus on this community, pay much attention to the name debates that industry insiders like to have. It would be interesting to find out whether anyone besides us cares how Social CRM is defined.”

    i think what we will find is businesses going about implementing SCRM in their own way and we still keep debating what SCRM is on the blogosphere.

    • Sounds to me like your a practitioner of scrm. That’s what I like about smaller companies. They don’t talk about it, they think about it and start doing it. Knowing that they can easily change directions when something is not working out.

      What we of course now need to know:

      Did you experience more revenue growth than before or an increase in market-share (if you even measure that)? did you experience improvement in Customer loyalty (the way you define it) and did you experience better profits. And did you find that those developments (if there) were directly related to your scrm approach?

      Most importantly: do you enjoy the journey? and do you believe your company is now better able to meet customer (and stakeholders) needs & desires?

      Thx for a very valuable contribution here.

  6. Thank you for telling us to get on board! I am much more of an explorer myself. The destination is a dual one, and are not mutually exclusive. One is for the customer, to get what he needs, when he needs it (from information, to opinions, to service and support ). The other is for business, it is simpler – to have this customer turn to us to get what he needs. Furthermore, let’s not forget that the customers are also going through a learning phase, so whilst we’re on our journey, we need to be in sync with theirs.

    The current insight is that business needs to be “customer-centric” to achieve this, to for mutual . Moreover, that we have an opportunity through Social CRM Strategy an the use technology to do so more efficiently than by going out and talking to strangers on the street…

    The tools are not the answer, but we should see what we have and what the experiences are to come up with a better answers (incremental improvements – Graham’s Toyota example).

    For our map, let’s take a satellite picture. Let’s look at what is there, where it can fit in, what is missing, and start tweaking…we’re bound to make mistakes, but as they say in Dutch : “Met vallen en opstaan wordt je groot”! (You can’t learn how to walk without falling over).

    Cheers,
    Mark

    • Mark,

      Thx too for stopping by. I like what you say about being in sync with the Customer journey too. After all scrm is about engagement and collaboration.

      And learning by doing (smartly) as you rightfully state.

      I have nothing more to add, but thx again.

      Wim

  7. I would prefer not to be wrong, but I will take it if that is the case — it won’t be the first time and certainly not the last time.

    I am not going to say that Graham is wrong, that won’t be right as there are probably as many options out there as there are organizations looking to engage in SCRM. However, I think I noticed the difference in our statements.

    Graham says at one point that we cannot even define what SCRM is, and I am taking the position that we have already done that. We are past definitions, we know what we have to do, let’s go do it. Yes, there are different ways to attack this and you can take the position of going with your choice: systems thinking, vision value and venturing (which is not that different from what i propose in actuality), traditional piloting, design approach, or any other way. Would it work? it all depends – do you know what you want?

    There is no right way or wrong way to do it (sorry Graham) and it has been proven like it many times.

    I remember when we were handing out awards at Gartner for CRM Excellence the second time. We did the award ceremony and we introduced it with a short set of slides of what it takes to be excellent. Explained what the results should be like, what the finished product should be, and what is the process that has to be done for it to work. Went into details on the eight building blocks, and the proper use of the best practices, etc. etc. etc. It was a given path to success. then we gave the first prize to a small company that had done it their own way and generated more success than any of the ones who followed our method. Sure, you can say that CRM Analysts are always wrong anyways, that all they ever look at is technology, etc. But in reality, our model did not even consider technology until the 7th out of 8 steps – and it was all about c0-design (well, early models), etc. To make it short, since I ranted already for a long time, the people who won the award had not even purchased any technology, just leveraged some tools they already had and worked on the integration of data more than anything.

    My bottom line: SCRM (as CRM was) is about results, not methods. The definition is set (thanks Paul) and we all agreed. Let’s go do it.

    Thanks Wim for the platform!

  8. Hi Wim

    I disagree with Esteban (in the spirit of the Oxford Union) that we have a proper definition of SocCRM. And that we really know enough about SocCRM to just get on and do it. As Bob Thompson’s earlier blog post on Social CRM: Strategy, Technology or Passing Fad? pointed out, there are in fact any number of different definitions of what CRM is. Some are social community focussed, some are social service focussed, some are social customer focussed and yours even had a hint of social innovation too. And for every SocCRM definition there are any number of competing technologies, all looking to be the next big thing in their own particular flavour of SocCRM. It reminds me of the CRM ‘gold rush’ in the mid-90s. And billions of squandered dollars later; look where that got us.

    Thinking about the hundreds of articles, blog posts and tweets on SocCRM that I have seen over the past year it occurs to me that the SocCRM industry is currently in the ‘complex’ area of Dave Snowden’s Cynefin Framework. This has important implications for how we should look at best navigating the SocCRM landscape.

    The complex area of Cynefin’s Framework is characterised by high unpredictability, many competing ideas, a need for innovative approaches, and the importance of spotting patterns in behaviour and responding to them quickly. A quick look around at the many different things companies are doing with SocCRM today confirms this complexity. Lego
    is using it to harness customer innovators. P&G is using it to crowdsource its marketing to customers. KLM is using it to provide additional services to its elite frequent flyers. Best Buy is using it to in-source customer service to all of its staff. These companies show that the key to managing in this situation is creating an environment to run managed experiments that allows patterns to emerge through probing, analysing and responding to see what really works. It is always tempting to fall back into comfortable ways of working – such as attempting to define a roadmap – but this is a mistake in what is still essentially an emergent landscape.

    We are at the start of the SocCRM gold rush. There are no maps of the SocCRM landscape worth reading at the moment. And there won’t be any reliable ones produced in the foreseeable future either. It’s time to go prospecting for SocCRM gold, armed with your vision of where you think gold can be found, your trusty value gold pan and a healthy venturing sprit. As Esteban and Yadu remind us, SocCRM IS about results, but you only have a good chance of achieving them IF you use the right methods.

    There’s SocCRM gold in them thar hills. Just make sure you use the right approach if you want to find it.

    @GrahamHill
    Customer-centric Innovator

    Further Reading:

    Bob Thompson, Social CRM: Strategy, Technology or Passing Fad?

    Snowden & Boone, A Leader’s Framework for Decision Making

    Innovation Case, Lego

    Marketing Case, P&G

    Community Case, KLM

    Customer Service Case, Best Buy

    • Graham (and others ;-),

      Cash is King, Profit an opinion.. A quote that comes to mind when iterating the entire process from when I entered the SCRM discussion about 6 months ago..

      With regard to Social CRM this quote could be rephrased to: Results are King, Definitions an opinion..

      Opinions are not without meaning and can have good educational and vision-development purposes, but they will not lead you to the end of the rainbow..

      And that’s the point: the end of the rainbow does not exist.. So that leaves us with nothing more than your own vision of where you should go and what you want to achieve.

      A vision that will need iteration based on learnings and new ideas emerging..

      And, like you explain so well, the only thing between vision and results is methodology..Also the world has become too complex for traditional road-mapping as a methodology.

      We probably do not only need to rethink our visions and adopt healthy venturing spirit. We need to adopt new methodologies that allow us to generate better ideas, learn faster and adopt smarter to the changing and increasing complexities of (business) life.

      We could probably all use a healthy doses of Design Thinking to better bridge the journey between Vision and Results.

      Thanks again for your contributions on this platform.

  9. Hi Graham,

    I think what Wim is trying to convey in this post is not whether we need to provide a roadmap, but rather elaborate on what options are available.

    Every business will need to find its own answers based on its business model, its customer base, its ‘social maturity level’, its vision and so on. Where we can add value is to provide guidance on the different options and their implications in terms of expected risks and benefits.

    It is an emerging landscape as you say, let’s take some pictures and bring stories back to the people that are hesitant about going on the journey. Let us explore the “Good Practice” (M.Boone) and become Tour Guides!

  10. Wow! Just the links at the end of Graham’s latest comment is worth a lot!

    Is anybody providing credits for reading & learning all these stuff? Can I get my MBA now? :D

    BTW, Graham, how about CNN’s citizen reporting via iReport or threadless.com‘s community design & marketing? Do they count too? I believe they are SocCRM too? IMHO threadless sure is!

  11. [Spoiler Warning: if you haven't watched Kung Fu Panda, skip to the last line of the below comment ;)]

    Yeah, though Po the Kung Fu Panda became the Dragon Warrior by understanding that theres no secret ingredient in his father’s secret ingredient soup as also theres no secret in the dragon scroll, he did have a great training in making soup as well as kung fu. ;)

    Methods, tools, techniques are necessary but insufficient condition for success.

  12. Graham – I completely agree with your assessment that the problem with CRM and CEM lies with the lack of customer-centricity AND that Social CRM (whatever it is) has the potential to address this issue.

    The VVV method is a go one and certainly businesses can get behind the idea of a clear 100-day roadmap (although both Harley-Davidson and my own CEO prefer 90-days).

    The stumbing block I see are the issues (whether they are conscious or unconscious) that truly block customer-centricity. My experience is that most companies say they are customer-centric, but few really are. The culture shift required to go from “saying” you are customer centric to “being” customer centric can be a significant hurdle.

    Businesses and CEO’s love clear, rational roadmaps and are certainly not all risk-averse, but handing over control to the customer, willingly, can be perceived as accepting chaos – too much risk.

    The way the world is going, it appears to be happening anyway. Would we be better off framing SCRM as a way to CONTROL CHAOS, appealing to the control side of their mental state.

  13. Graham,

    As I said, I’d be glad to take my lumps when I am wrong… but hear me out (you don’t have to agree with all of it, just a nod here and there makes me feel good).

    We can both claim out points until we turn blue in the face and walk away with a draw, you would win, I could win – but that is beyond the point here. As I see it there are two things that apply here (sorry, not many links on my side as I don’t keep them handy and hate searching on the spot and finding the wrong link to use).

    1) I absolutely agree with you on the idea of what you are trying to do. Trust me. I admire Toyota, Harley Davidson, Best Buy, Nordstrom, and any of the other Type-A (aggressive innovators) who are always at the forefront of new ways to do things better. I believe that Toyota by itself is responsible for more than 2/3 of the innovations in operations in the past century – probably more. Their will to take on exercises as you describe (as well as the other companies mentioned and probably more than I am forgetting) is truly the reason they are ahead of the game and we continue to innovate.

    But most companies are not like them. Most companies will fit within the second group you mentioned – the billions of dollars wasted in the CRM rush in the 90s and 00s. They are going to take on this one way or another, and they are not going to spend the time doing a 100-day roadmap, nor are they going to try to define the best method to clearly understand SCRM for the betterment of society and technology. We used to call those Country Club Implementations (The CEO or CIO went to the country club over the weekend, met a friend who was doing it, decided they also had to do it)

    Would they love to? Maybe I am putting too much on saying that most of them don’t believe in doing it that way. The cowboy way of just moving forward is better to them than the academic way. We could argue about that, whether is right or not (I don’t believe it is right) but would be like a commercial for a bank that used to play here at the height of the Great Recession: there is a group of bankers at lunch next to a table with two individuals. One of the two begins to choke on their food, and the bankers start the discussion on whether he is choking or not, what could be the best course of action, what are the necessary steps, they suggest a committee to study the options, meetings every week and twice a week the month before action, etc. Meanwhile another gentleman proceeds to the table where the person is choking, applies the Heimlich maneuver, saves his life and leaves.

    I am not comparing you to an old stodgy group of bankers with committees in mind – far from it. I think that your approach is probably more valuable in the long term and would love to participate. However, while we discuss the best approach to define something that is already defined by most people (whether we like it or not, or whether we agree with it or), they are going to continue to choke. I rather take a two-prong approach where we set something for today so “cowboys” can get started going the right path as opposed to staring at something that scares them and they will ignore, then proceed to buy the charlatan’s snake oil.

    2) I was there in the 90s and 00s doing CRM. I spent part of that time deploying and implementing, part of it doing the dreaded job of CRM Analyst. And the thing that struck me the most was the will of the people (not the ones you mention, my people – the critical masses) to take anyone’s word on it for lack of better options. The reason Gartner, Forrester and the others exist is because of that blissful, critical mass. The companies that won’t do the research, that won’t look into options – they will take the strongest voice in the crowd (Siebel and its partners back then) and fully trust them. The phrase nobody ever got fired for buying IBM comes to mind… Those people are the ones that caused the billions of dollars and hundreds of man-years to be thrown away because they did not know which way to go. They are the ones that pushed the CRM failure rate to the 60% and 70% levels.

    My “job” as I see it is to take the lessons learned from there and continue to shout from the mountaintops that SCRM is not a market, that there is no vendor solution, that SCRM is a strategy with supporting tools and technologies, and that you have to do the work to design your own flavor. Some of them will do the basic work of searching in Google and finding some of these posts and at least get a flavor for something they can do. Some of them will take your advice and try to work at it, others will find it intimidating. I try to provide an option for the intimidated, they ones that are trying to do something but don’t have the time or resources to go down that path. From my experience, they are the masses.

    Then again, I am probably wrong.

  14. Hi Scott

    I am pleased you like my post. It was an homage to Wim’s promotion of the real-options thinking that I have used on pretty much all of my projects – for small companies with 85 employees all the way to huge ones with 90,000 employees – for the last 10 years.

    The lack of customer-centricity in most companies is both a problem and an opportunity. It is a problem because it fails to leverage the customer-equity available to companies that become customer-centric. But it is also an opportunity because most companies are content with just saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all this corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes. Who is going to choose United Airlines in the near future when they have a reasonable alternative.

    The move from product to customer-centricity has been widely discussed. It typically goes through a number of stages including:

    Stage 1: Internal Networks
    Customer-centricity typically starts with offering support to internal networks of staff who already work together to deliver a customer-centric value proposition. No matter how product-centric a company is, there are always a few networked individuals who believe in going the extra mile for customers. Companies starting out on the journey towards customer-centricity should start by finding out who these people are and supporting their efforts.

    Stage 2: Cross-functional Teams
    The next stage is cross-functional teams that formalise the collaboration of the internal networks. Once an informal network establishes itself, the company should allow the network to formalise the relationships by forming a cross-functional team and giving them the resources to drive more effective collaboration around delivers the customer-centric value proposition.

    Stage 3: Customer-Centricity Coordinator
    The next stage involves appointing a Customer-Centricity Coordinator who takes on formal responsibility for driving customer-centric collaboration across different teams. Things start to get serious now. Collaboration isn’t just about organising meetings, but about establishing a common view of the customer, crafting a shared customer strategy and developing a coherent customer experience that pulls all the customer-centricity levers.

    Stage 4: Matrix Reporting Organisation
    The next stage develops a matrix organisation with nascent customer segment teams reporting to both product and customer management. This is often where things go badly wrong. Matrix organisations are notoriously difficult to manage effectively. However, if companies have carefully followed the step-by-step development path outlined in the first tree stages, developing their customer-centricity along the way, the chances are that they will already have learned how to avoid death by matrix management. And finally,

    Stage 5: Customer Segment Managers
    The final stage creates bona fide Customer Segment Managers responsible for all aspects of customer experience delivery. As my earlier blog post on How Customer-Centricity Drives Profits pointed out, customer-centricity is not about being nice to customers. Far from it. It is a hard-nosed approach to creating a reliable delivery system that provides value to those customers that are economically profitable. Customer Segment Managers give profitable customer segments someone who will organise the whole company to deliver the right products on their behalf. The ones that help them get important customer jobs done better. For the most economic profit, naturally.

    Congratulations, you are now a customer-centric company. And if you have taken the time to develop all the capabilities and micro-foundations required to support each stage of the journey, you will be highly adaptable company too. Today’s profitable customers will not necessarily be tomorrow’s profitable customers. Just ask all those companies whose customers changed their behaviour during the current recession and who are now bankrupt.

    @GrahamHill
    Customer-centric Innovator

    Further Reading:

    YouTube, United Breaks Guitar

    Graham Hill, How Customer-Centricity Drives Profits

    David Teece, Explicating Dynamic Capabilities: The Nature and Micro-Foundations of Sustainable Enterprise Performance

  15. Less is more.

    SCRM is not a phenomenon observed from afar, or overly theorized about. It is not a black box to passively observe. If you poke it, it pokes back.

    Your customers will tell you everything you need to know, if you will listen. If you will not, you’re not going to get very far or waste much money on scrm anyway.

    Scrm is not an expensive boil the ocean proposition like the bad old giant crm projects.

    Don’t wait for perfect clarity of vision. You can’t get it. Your customers have your vision, not the pundits, analysts, technology vendors or you. The only way to get it, is to start talking to them.

    Put a few obvious metrics in place for your project that can leave no doubt scrm has made a difference. Manage to those metrics. It isn’t hard, it isn’t costly, and it doesn’t take long.

    If it starts to be hard, costly, or takes to long, then stop.

  16. Hi Bob

    I agree with you. Less is often so much more.

    The whole point of my comment on Vision, Value and Venturing was to set out how I achieve more for clients in less time, for less money, with less risk.

    We simply do not know how SocCRM is going to turn out. We are in the initial phase with many different companies trying out many different things. And customers warming up to the many different roles they can and should play.

    We are in the complexity zone where a venturing approach based on pattern recognition, being fast to market and a learning by doing are the critical skills.

    But that is no excuse for not focussing on the things that will create the most value. This is where simple real-options thinking helps you identify what your best options are.

    And it is no excuse for not having a longer-term vision to shoot for, whether that is dominance in your industry, EBITDA growth, or increased customer satisfaction.

    All of the things I write, blog and tweet about are how I run everyday consulting projects. My smallest current project is helping a 5-man company innovate its business strategy. My largest one is helping a 90,000-man company develop its campaign management capabilities. The stuff I write about really works. Try it out for yourself; in a controlled experiment of course.

    Graham Hill
    @grahamhill
    Customer-centric Innovator

  17. Pingback: Reading EXCLUSIVE: Social CRM Vendors Don’t Walk The Talk by Jeremiah Owyang, partner, Altimeter Group « Fredzimny's Blog·

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