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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

While attending the Enterprise 2.0 conference and hosting a great dinner with 28 thinkers in the space on Monday night (the dinner was sponsored by Clearvale, which is our client), I got a chance to reflect on what social CRM actually means, and how many people are thinking about it in a way that is too narrow.

Let’s start off by one of my favorite quotes from Peter Drucker: “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” Ok, so creating a customer and managing the relationships with those customers should be the heartbeat of a company – we can all agree on that. That is also why Customer Relationship Management should be one of the most important processes within a company.

In the research leading to the writing of our (award winning – sorry couldn’t resist the chest thumping) book, the Hyper-Social Organization, we found that those companies that are successful in leveraging the social as part of their business, turn their business processes into social processes. So turning your CRM process into a social process makes a lot of sense.

The question is – How Do You Turn CRM Into a Social Process?

In order to answer that question, let’s peel back the various layers of the onion that make up the CRM process. And to do that it may be useful to categorize the parts of the overall process into the following elements – the actors, the processes that make up the CRM process, the places, and the data.

The actors are the people that should play a role in your overall CRM process – they don’t just  include your customers and prospects, which most companies will consider as part of their CRM process. They also include your detractors, your employees (those that interact, and those that should interact with the customers – e.g., those that share a passion with your customers), your suppliers (if you run on tight inventories and a supplier has an delivery issue, that will impact customer relationships), and your partners.

The processes that make up CRM include not just sales, marketing, and customer support, but also the buying process (most products are now being bought, not sold), the recommendation process, and the relationship management process – processes that have already gone social and been fundamentally transformed in the past decade.

The places refer to those places where you interact with your customers, or where they interact with one another while making buying decisions and sharing recommendations. They include face-to-face encounters, email, telephone, and social media environments.

The data refers too data that typically will reside in systems of record like CRM systems and financial applications. The data you keep about your customer relationship process should include customer data, transactional data, legal data, financial data, and increasingly social data.

Some people say that a CRM system that contains social data is social CRM – but when you look at all the parts of the social customer relationship process, you realize how myopic this view of social CRM is. Some consider the act of managing customer relationships in social media social CRM – an equally myopic viewpoint.

Social CRM needs to encompass all the different parts of the Customer Relationship Management Process – the Actors, the Processes, the Places and the Data.

That of course is not an easy task, and will not happen by deploying technology applications alone. Social CRM is about culture, people, and processes supported by technology.

What do you think?

I would also like to thank the people with whom I had good conversations on the topic: @elsua, @pgillin, @billives,@dankeldsen, @scratchmm, @mkrigsman, @mingk, @marklazen, @sameerpatel, @denispombriant, @absolutezero, @pitosalas, @rawn, @crmstrategies, @jyarmis, @_richardhughes, @skwilder, @debyang, @mjayliebs.

Many companies are trying to understand and predict online social behavior using traditional marketing research techniques – both qualitative and quantitative. In most cases those companies are in for big disappointments.

Let’s take a classic social phenomenon to make the point.

You have a crowd of 300 people who come to fill a theater with 500 seats. When they are all set and done, you will have clusters of people with big empty chunks of seats in between them, maybe nobody sitting in the front, and perhaps some surprising groupings of people.

How would a market researcher approach this situation?

The qualitative person would probably try to interview everyone ahead of time and make cluster predictions based on kinship, friendship, professional affiliation, etc. Not knowing when people arrive, nor understanding the true social motives for sitting in a particular place at a particular moment, most of those predictions would be wrong. Yes, maybe a couple will tell you that they intent to sit with a pair of neighbors, but when they get there, spot a potential client who they did not know would be there, and realize that the neighbors are not there yet, they might very well change their mind. There is no qualitative data, that you could have uncovered ahead of time, that would let you make that prediction.

The quantitative person would wait until everyone sits, lift up the curtain and take a snapshot of the sitting arrangement for further data analysis. The problem is that the data won’t tell you anything. If there is a cluster of single women in the theater, you have no way to know, based on the data, whether those people were motivated by being with others who are just like them, or whether they maybe all came together as part of a mommy social group. If there is a cluster in the back, you have no clue whether those people were motivated by the desire to potentially leave early, or whether they wanted to be in a position where they could observe everyone else in the theater and just have a better people-watching vantage point. The data is meaningless when it comes to predicting social behavior.

So what can you do? You need to be more like an anthropologist and less like a market researcher. If you have the luxury to interview people ahead of time, and then watch the seating arrangement in progress, you will be able to make more informed assumptions, but you will still need to validate them through qualitative interviews afterwards. If you don’t have the luxury of interviewing people ahead of time and see the seating arrangement in progress, you can still make assumptions and validate them through qualitative interviews.

But by focusing on understanding the parts of the whole through individual qualitative interviews or the whole by capturing data about the end result only, you will not learn anything meaningful about the true social drivers of this social gathering.

The lesson – don’t try to understand online social behavior by doing traditional qualitative market research like interviews or focus groups (in which people will tell you what they want you to hear anyway),  nor by doing sophisticated quantitative analytics research. Neither one will give you good results. Instead, focus on observing what happens, make assumptions and predictions based on basic human cultural behavior (need for status, need to hang out with like-minded people, need to impress others, being competitive among groups, etc.), and validate those assumptions through qualitative interviews and more observation.

In speaking with Ed Moran the other day, the co-author of the award-winning Hyper-Social Organization, he brought up a great term – risk intelligence about social media.

When it comes to social media, many companies decide not to participate, which is a risk-averse reaction to the messiness that comes with the social, but which in itself contains a ton of risks. Countless other companies have no social media policies, which in itself is very risky as well. Those companies are not just risk-averse, they are clueless when it comes to risks associated with social media.

They need to become risk-intelligent.

But what does that mean?

1. You need to understand the risks of doing nothing or the risk of resisting adoption
   You can decide to do nothing, or worse, try to fight it. That won’t stop your customers and employees from using it anyway. By not listening and engaging with what is being said, you risk becoming another Dell Hell. By resisting it you will have to start behaving like North Korea. Both carry unbelievable risks – do you understand them and are you willing to take those?
2. You need to understand the unintended consequences of good social media programs
   Even good social media programs can go awry.  You could get technical glitches that compromises people’s privacy as they are interacting with you, which happened to many well known brands. Or people could hijack your minutiously  prepared plans into directions that you never intended. Or you might announce something only to find out that your organization is not ready to execute on the plan. So many things can go wrong, and when they do in networked environments, they spread like wildfire.
3. You need to be prepared to mitigate risks while encouraging use and embracing the messiness that comes with it
   You need to have policies to mitigate the risks of social media. At the same time you need to develop those policies in such a way that they encourage your employees to become active players in social media on behalf of the brand. If you create policies that are threatening, people will not use it and you will find yourself back at step 1 – not a good place to be and certainly not a risk-free place.

So you need to become risk intelligent and you need to realize that not doing so can have financial risks, legal/IP risks, competitive risks, and safety risks, just to name a few.

At our upcoming Hyper-Social Summit, we will be joined by Risk Management professionals from many leading companies and will dedicate a good amount of time at understanding what it takes to become risk intelligent about social media. We hope you can join us. The early bird special ends today and you can use ‘friendsofhuman1′ (no quotes) to get an extra 20% off the $500 we charge to defray costs.

Companies that successfully embrace the social as part of their business also embrace the messiness that comes with it. Social messiness comes in many forms, here are just 3 big ones:

1. Dealing with socially awkward or deviant people
   Whether you like it or not, socially awkward and socially deviant people are part of life and they will sometimes try to hurt you on purpose or harm you without realizing it. Those same people live in our communities and in our extended tribes. You cannot just avoid the social in business in order to avoid those people – we don’t do that in real life and we should not do it in business. Tribes and communities typically develop an immune system for outliers like that – they ostracize them or they use other social levers to bring them under control. We’ve been hardwired to do that for eons, and have been able to enjoy successful social environments for as long. As a business you have to trust that those same forces will keep the outliers in check, and while temporary hiccups may happen, the long term benefits from embracing the social will definitely outweigh the negative effects.
2. Reaching across organizational boundaries and silos
   The social works when you can match internal tribes that share a passion, interest or pain with external tribes that are driven by the same motivators. In order to make that work, you have to be willing to reach across organizational boundaries and silos. Those who share that passion, interest or pain that relates to your company may work in any department and at any level of the organization – and if you want to unleash that power you will have to reach across functional boundaries and hierarchical communication channels.  You will also have to let go of your organizational boundaries to allow internal and external people to behave as one tribe. 
3. Letting go of control
   Perhaps the hardest thing for executives to do when they embrace the social is letting go of control. We have been professionally trained to control just about everything in business – and when you embrace the social, you have to let go of that. That can be messy, the same way as letting go of control when children become teenagers and move into early adulthood can be messy. But for the same reasons that we do it with our children we need to do it with employees, customers, prospects and detractors. And if you think you can still control things – think again. 60-80% of all products are bought based on information that does not come from your company and without anyone from your company being involved. How do you think you still control the message – you don’t. It can be messy to let go of control, but if you rely on trust as the new currency, the benefits here will again outweigh the pitfalls by a large margin.

Social environments often operate at the edge of chaos – embrace it will all the messiness that comes with it. You have no choice.