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I had a great conversation with Carnegie Mellon Professor Chris Labash this week. We discussed a wide range of topics as they relate to innovation, including:

• The role of technology
• The importance of understanding human behavior and culture
• The impact of non-financial rewards
• The need for methodologies and processes
• The limits of crowd-sourcing
• The requisite for risk intelligence
• The importance of communication and face-to-face exchanges

To listen to the podcast and read a more detailed post about the discussion, please visit the Collaborative Innovation community.

I had a great CMO 2.0 Conversation yesterday with Jim Davis, the CMO at SAS (I will post the conversation in a couple of weeks). As you can imagine the topic of Big Data came up.

Having done research in the area of big data for multiple clients, and having interviewed many CIO’s and CMO’s on the topic, there are a few things that stand out in this emerging market .

1. CMO’s cannot expect results by going it alone
   Some CMO’s are buying their own technology solutions to gain actionable insights from big data.  Unfortunately, most marketing departments lack the wherewithal to deploy sophisticated technology solutions and will never achieve the promise of big data on their own. Even if they have the product management skills to deploy technology, they most likely don’t have the right data-related expertise on the team to get the actionable insights from the data.
2. CMO’s cannot rely on their agency for big data
   Agencies only see a small sliver of the customer data, that related to advertising and possibly lead gen. They do not have access to the other rich data sources that most companies have about their customers, including CRM, customer support data, bricks and mortar data, credit card data, purchasing data, etc.  So relying on only a small portion of the data will leave marketers vulnerable to competitors that can truly mine and base decisions on the comprehensive customer data set.
3. CMO’s should team up with their CIO’s to tap into the promise of big data
   The only way for the CMO to tap into the promise of big data is by teaming up with the CIO. For that relation to work, however, both will have to have a shift in behavior. CIO’s have to stop considering themselves as service providers to the marketing organization and instead set themselves up as true partners to the business — with a deep understanding of the customer facing processes and desired outcomes.  CMO’s will have to become much more disciplined in how they document requirements for technology and data analytics support. As Jim suggested, a quick way to the get CIO’s and CMO’s to align is by giving them the same goals.

What do you think? I would appreciate your input on it.

Many culture scholars would argue that you always have to deal with layers of cultures. There is the gender layer, the religious layer, the ethnic layer, the regional or nationality layer, the work layer, etc. And if you have ever worked with multinational companies you will hear these differences, and especially the nationality one,  pop up every now and then — oh, but that was an American idea, we Brits don’t do it that way.

But does it really have to be that way? Or are they just excuses?

After all, some companies claim that they don’t have to deal with national cultural differences. Francoise Legoues, VP of Innovation at IBM, said that they do not see much corporate culture differences within the various geographical cultural areas. Some other folks I had the pleasure to speak with in the context of our book said the same — they do not have to account for differences in regional or national cultures.

So how does this work?

Culture is an externalization of shared beliefs and values. The way we externalize it is in the form of rituals, language, habits, techniques and behaviors.  What companies claiming to not have to account for local cultures have is a set of corporate values and beliefs that trumps the local cultural belief system. When people are at work they are IBMers first, and not Danish, Spanish or Thai.

So what happens in those companies where people constantly bring up the differences?

It too is part of the corporate culture and not an externalization of the local regional culture. In most cases it’s an excuse to disagree and form factions. It’s a corporate habit – and a bad one. It’s an externalization of a set of shared beliefs held by subgroups of people within the company. It happens when there is no strong corporate set of shared beliefs.

Now of course, nothing dealing with humans will ever be so black and white. There are, for example, some differences in how Asians, who have a more collective culture, fill out their profiles in social environments than Westeners, who have a more individualistic culture. But those differences are subtle and secondary or tertiary in companies with strong corporate cultures and true shared values.

What do you think? Do you buy that?

The students at Baruch College’s Executive MBA Cohort 31 read our book, The Hyper-Social Organization, and authored a detailed blog post with 9 principles to build a successful social business (http://baruchemba31.blogspot.com/2012/01/principles-for-building-successful.html#comment-form). They invited me to engage in the conversation with them, so here are some of the comments I have on their great piece.

On the first principle — Objectives Should Complement Strengths and Help Overcome Weaknesses –I would add that a social business strategy can humanize a brand and therefore make it more appealing to people. People relate better with other people than they do with organizations, which are a relatively new concept when compared to human evolution ( I wrote an article on this here: http://www.imediaconnection.com/article_full.aspx?id=29788 and also here in terms of how to think of social and brands – http://www.emergencemarketing.com/2011/06/25/creating-unified-customer-experiences/)

On Point II — An Executive Sponsor (VP Social Business) Should Champion Social Business Strategy and Lead Culture Change – I agree. For many (older) companies this will mean a real change management process — and that can be painful.

But I do not agree with Point III — A Single Department Should Own Social Media. I think that when successful, social needs to become part of the fabric of the company. If you give “ownership” to a department then you will end up with one more silo. Customer support needs to embrace it, IT needs to embrace it for their knowledge management and innovation, HR needs to get on board, product development. It is not just marketing and communications. You want to be like IBM, where there is no corporate twitter feed, no corporate blog, but where the employees — all employees — are encouraged to be the face of the company. See my interview with Erin Nelson, the former CMO at Dell where she talks about that http://www.cmotwo.com/2010/03/04/cmo-20-conversation-with-erin-nelson-cmo-at-dell-and-manish-mehta-vp-of-social-media-and-communities/).

I agree with point IV — A Social Media Policy and Process Toolkit is Necessary–, but you cannot be too rigid. Policies need to viewed as guiderails more so than as rigid “do this and DON’T DO THAT or else” type tools. Again, at IBM they developed guidelines, in partnership with the employees, which are encouraging rather than discouraging. The same happened at other companies like Xerox. Because the risks of screwing up are egalitarian (e.g., the CEO is as likely to mess up as the junior communications employee, and the personal risks are as high as the company risks), there is a great opportunity to mitigate risk through education.

On Point V — Technology Platforms and Investment Decisions Must be Identified Early –, I agree, but would caution not to start with technology. My partner, Scott Wilder, who used to run all communities at Intuit, used to say – if your community would not survive in a Yahoo! Group, it will probably not survive anywhere. Companies tend to start with the tools and technology, where they really should start with the tribes and their shared passion, pain and interest. They then need to pay attention at what the day in the life of a user would look like if this were to be successful. It is really product management 101 to determine the features and then select technology that will meet that need.

I agree on VI — A Communications Hub Should be Created by the Social Business Dept –, although many companies give in to the loudest megaphones on social platform and they fix the problems of the individual loudmouths instead of focusing on fixing the problems that affect everyone. A company that truly gets that is JetBlue.

I agree with VII — Trust, Train, and Certify –, although I would say that what you want to do is to allow employees to act as humans again in the work environment — and humans know how to behave as humans. Look at your families and circles of friends — it can get messy, and some people will screw up, but we know how to deal with that. So TRUST is maybe the most important aspect to focus on. Don’t build the system for the 1% of people who will screw up — build it for the 99% who will benefit from it.

On Point VIII — Be Human, Be Transparent – transparency is important, but the more important characteristic is fairness. Sometimes a company cannot be transparent, but as long as that is explained in a fair way, employees and customers will understand.

On Point  IX — Social Analytics Must Drive Key Strategic Decisions — I am not sure that I completely agree. Yes, social analytics are important. But more important is to measure the impact of a social program on a process the same way as you measure the impact of other programs on the process. So for example — if you leverage social programs as part of customer support, measure the impact the same way as you would measure the impact of the call center on customer support; if you use social programs for lead gen purposes, measure the impact the same way as you measure the impact of email marketing, etc.

But the point that you are making about mining the big data that comes with social and digital marketing is a great one. Companies need to stop storing, securing and serving up that data in fancy reports and instead mine it for actionable insights like pricing strategy, marketing strategy, distribution strategy and product development strategies.

For someone who co-authored a book on how companies that succeed in leveraging this current wave of innovation, powered by the social, do so by turning their business processes into social processes, it may seem contradictory to now hear that you should not turn your business into a social business.

There are several reasons why those two concepts are very different. And most pundits declaring that  you should be building social businesses are missing the point.

First off, a social business (see WikiPedia entry) has been defined by Nobel Peace Prize laureate Professor Muhammad Yunus inhis book Creating a World without poverty — Social Business and the future of capitalism as a “non-loss, non-dividend company designed to address a social objective within the highly regulated marketplace of today. It is distinct from a non-profit because the business should seek to generate a modest profit but this will be used to expand the company’s reach, improve the product or service or in other ways to subsidise the social mission.”

If you’re GE,  IBM, or Pfizer, you may not want to turn your business into a social business.

What you want to do is to power your business processes with humans and the social characteristics that have been innate to them for tens of thousands of years . You want the individuals and their creativity to help you humanize your brand, you want people from outside your R&D department to help you innovate, you want human employees (as opposed to corporate automatons programmed to stay on message with corporate speak) to engage with humans who may want to buy your products or come to work for you.

Companies that found the key to making this work do end up with social benefits — happier employees, happier customers, tighter-nit communities, etc. — but they do not need to become a social-objective driven enterprise to do that.

You want to turn your business into a human-powered enterprise, we called it a Hyper-Social Organizations,  not a social enterprise — and therein lies a big difference.

What are your thoughts? I will try to get back to more regular blogging…(and I know you’ve heard that one before

At the recent 2010 CIO Summit – The Year Ahead – Tony Scott, the CIO from Microsoft asked the audience the question: “who here is best friends with their CMO?” Only about 1 in 5 hands went up, to which he made the comment that by next year everyone should be friends with their CMO or risk to no longer be in their role.

That struck a chord with the audience. CIO’s should be best friends with their CMO counterparts and here is why:

1. Changing processes will require a different infrastructure
   Whether companies pro-actively embrace the social wave that is currently hitting businesses or not, most marketing and sales processes have already profoundly been affected by the social. People no longer listen to companies and instead make their buying decisions based on recommendations from peers. The funnel disappeared and is being replaced by a messy, swirly social buying process. Innovation and support can now be turned into social processes involving customers and employees whose job it is not to design and support new products. The CMO cannot enable his team to support these new processes without the CIO and the CIO’s team cannot build the right infrastructure without thoroughly understanding the new processes. They need one another to succeed in this area.
2. Cultural environment conducive to high technology adoption rates
   CIO’s need to find pockets of culture within their company that are ripe for social technology adoption or enterprise 2.0 adoption. In many companies the marketing department may be that department. Most marketing departments are being forced into adopting social tools by their customers, prospects and detractors. So for CIO’s to get a win under their belt with social tools, they may benefit from befriending the CMO.
3. Together create an opportunity to regain senior strategic roles at the executive table once again
   Many CMO’s and CIO’s have lost their strategic place at the executive table. At a recent large investment banking portfolio company retreat, the three execs from the portfolio companies that were invited to represent the  executive team were the CEO, the CFO and the Exec in charge of Human Resources. Look at many executive teams on company web sites, many of them don’t have a CMO or CIO reporting all the way to the top. The CMO and the CIO can team up together to regain a strategic seat by representing the voice of the customer within the company. That will require for the CMO to stop thinking of their role as the company advocate in the marketplace and instead become the customer advocate within the company, and for the CIO to stop thinking about how to build hard walls around the company and instead to find ways to extend the edge of the company to encompass customers, prospects and detractors. 

There are many other reasons why CIO’s and CMO’s should be best friends, but those three alone should make for the divide that exists between them to disappear now.

[self-serving ad coming up]That is also the reason why the upcoming Hyper-Social Mini Summits are now focused on both CIO’s and CMO’s – which should make for a great brainstorm session.[/ad]

Seriously — is it?

I have finally had a chance to catch up with some blog reading and have been struck by the number of people who focus on building social media programs to reach customers and prospects in new ways. And they use advertising metrics like engagement to decide how successful their programs are.

That is not what this current wave of innovation is all about!

While using traditional marketing programs in social media environments may yield some results, they do not leverage the social…they are plain old marketing programs that are driven by incentives, coupons, or other traditional marketing drivers. They die the minute you stop fueling them.

As some people have called it, social media a platform for participation. It’s actually a massive platform of participation that allows the social for which humans have been hardwired, to scale to the point where it makes a difference in business again – both as employees or customers/prospects.

Those companies that are successful in leveraging social media do not use it as a channel to reach audiences. They use it to turn their business processes into social processes – they power their business with people. They get all their employees and customers participate in product innovation processes, customer support processes, knowledge management processes, marketing and sales processes and others. They don’t care about engagement, because in many cases, as is the case when you try glean insights from the marketplace, engagement with the company is not even required – its the engagement among the people that counts.

If you are interested in the topic, you may want to join us for our Hyper-Social Mini Summits coming up in January, where we will be joined by companies who have done it before and brainstorm with executives on how to make that work.

As some of you know, Ed Moran from Deloitte and I are writing a book that will be published next spring by McGraw Hill. The working title for the book is “The Hyper-Social Enterprise – Tapping the Social Power of People to Transform Your Business.”

Not surprisingly, the book’s premise is very much inline with what I have been writing about on my blog. Here is from the overview section in our original proposal:

Whether you call it social media, social computing, the social web, or social networking – it does not matter. The importance of this latest wave of innovation to hit business is not that we have new media or new tools with which to do business. The key take-away of the changes afoot is that all business is becoming social again – whether you like it or not.

Most other books that deal with the subject approach the concept of social media from a technology- and media-centric point of view, and focus on Web 2.0 rather than Human 1.0. They also fail to explore the broader, organization-wide changes that Hyper-Sociality will have on business.

We wanted to write a book that will be informed by research from fields as diverse as evolutionary biology, evolutionary sociology, neuro-economics, and behavioral economics, but that will also draw on our own experiences as business advisers. We are also fortunate to have access to the extensive data sources from the Tribalization of Business Study, of which the 2009 version will be released shortly.

While we have an advisory board with a dozen leading academic thinkers as well as forward thinking CMOs, I will periodically post concepts that we are developing for the book on this blog. In doing so, I hope to be able to engage with a larger audience in the development and refinement of those concepts.

(Cross-posted from the CMO 2.0 Conversation site)

Today’s CMO 2.0 Conversation with GE’s CMO Beth Comstock was packed with interesting insights. On a personal note it was certainly neat to get a one hour personal marketing tutorial from the CMO of one the largest companies in the world. By working in a real marketer’s laboratory, Beth must be one of the luckiest marketers around.

We touched on three main topics: the role of a corporate marketing group in a large diversified company with strong operating companies, how to foster innovation at GE, and general changes in marketing.

As a central corporate marketing group, Beth’s team is responsible for sales growth, innovation, and the GE brand platform. Even though the company has very diverse operating companies, her team has also been able to find opportunities for developing a customer platform (i.e., cross-sell accross business units), as well as product platforms (i.e., ecoimagination, the GE green platform, and a cross-operating-business battery project).

On the innovation side of things we touched on the importance of having a robust pipeline of innovations and on the need to have the right resources deployed across the right portfolio of innovations. We also discussed the need to kill ideas faster and the opportunity to create an innovation marketplace for ideas that may not be a good fit for the company. Beth described GE’s robust innovation process, and how they have both a formal process that very much resembles an in-house venture process as well as an online imagination network that relies much more on the wisdom of the crowd – in this case their employees. Other innovation related topics we covered include:

• how they use outside coaches and customer discovery sessions to bring outside insights into their innovation process
• the importance of including detractors in the innovation process
• how innovation is not just about technology innovation, but also about commercial innovations – and how they are constantly looking for new ideas around product, space, and business model
• the cultural changes required for fast-paced innovations and the creative tensions between being a process-driven organization and the inherent messiness and chaotic nature of innovation
• how in some cases you need to step away from traditional metrics to measure progress and success of ideas that are being incubated

We also talked about the changes afoot in marketing and how the new marketing challenge is in fact a knowledge management challenge – knowing enough about your customers so you can feed them data that will make them smarter.

On the need for new marketing skills Beth listed what she is looking for in marketers – people with new world skills, people who can simplify things and engage in customer communities, and people who can curate an experience for the customer. She also described how they set up a team of “rogue marketers” within the company, whose job it is to come up with rogue marketing techniques. It would be really interesting if at some point they would publish their findings in rogue marketing innovations.

You can listen to the podcast over at the CMO 2.0 Conversation site, in the near future we will also post the transcript from the interview.

In the recent eBook that Valeria Maltoni assembled I described the main reason for why social media may not go mainstream in the near future as follows:

For starters, many company executives don’t understand the fundamental forces that are changing their business. Sure, they realize that their cost of sales is increasing dangerously, that it is increasingly harder to engage with customers and prospects, that loyalty seems to have vanished, and that switching costs and barriers to entry do not carry the same weight as before. But what they don’t understand is that with social media as a platform for participation, people can behave the way they were hardwired to behave in the first place – humanly, tribally.

These executives think of their business as “controllable” processes that need to be optimized. And they evaluate their business in terms of assets and liabilities. Which leaves little room to truly understand the impact of the exploding mass of newly empowered individuals who are now free to hang out and share information with peers, help one another in finding the best products and services, and bad-mouth organizations and people who depart from the social norms that have made us the hypersocial (and hyper-successful) species we are.

This freedom to associate, speak and share is what is fundamentally transforming the game of business – not just the rules; but also the players, the scope of the game, the tactics and the added values.

Another way of thinking about this is that social media enabled the social messiness that characterizes humans to invade all our business processes.  You cannot fight this fundamental disruption with command and control approaches, nor can you do it through process optimization or re-engineering – which many companies have grown used to, if not addicted to.

What you need to do is to empower the people through transparency, embrace the messiness, and provide leadership to bring the best out of people. Sure some people will cheat, and others will have their own agenda of gossip, but in the end what will emerge is much more powerful than anything you can create through command and control.

In fact, we may have a perfect model to follow coming to us from the world of politics. Check out the Obama campaign and the first signs of the Obama administration. Look where it leads when you empower people through transparency, embrace the diversity and messiness, and provide clear leadership…