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For my first CMO 2.0 Influencer Conversation, I spoke with Rob Kozinets, a professor of marketing from York University in Toronto, about communities, consumer tribes and word of mouth marketing – not surprising considering that Rob was the editor of Consumer Tribes, a collection of research papers on consumer tribes, recently finished a book on word of mouth, and is one of the few researchers looking at the practice of business through the eyes of an anthropologist/ethnographer (among other things).

We started the conversation by talking about the disconnect between the world of academics and the world of business, especially as it relates to marketing. It is an unfortunate fact that many mistakes could be avoided if marketers were making informed decisions based in part on some of the recent findings in the fields of behavioral economics, anthropology, complexity theory, sociology, and psychology.

One of Rob’s main themes is that consumer learning, opinions and transmission of influence happens in smaller groups – hence the idea of tribes. Today’s tribes have looser affiliations and are more hedonistic in nature than ancient tribes. They are nomadic by interest, rather than geography, and centered around expertise and commercial culture. Consumer Tribes are also not typically focused on a single brand but rather on a whole group, a whole culture or lifestyle, or a set of activities. Another challenge for marketers, according to Kozinets, is that consumer tribes don’t typically develop long-lasting relationships. Even some of the stronger tribes, like the Star Trek groups that were so popular in the 90′s, aren’t as active anymore – people move on as they get more options. It would actually be interesting to see if the Harley community is still as strong as it used to be. People move in and out of consumer tribes, and the tribes seem to have a natural life and death cycle – including a revival stage sometimes.

Of course, most marketers don’t think of their customers as tribes yet, or don’t realize the enormous impact that successful customer communities can have, so for many of them this is an non-existent problem.

According to Rob, one of the big problems with communities is that companies are setting them us expecting fixed ROI. In reality the measurement of the the impact of communities is very hard. They are hard to set up, take time to take off, and are challenging to maintain. And, as Rob points out, a lot of the successful community marketers have had their communities formed for them by their customers – much like Harley.

We also talked about the proliferation of special interest communities sponsored by various companies – e.g., small business focused communities, of which there are dozens. Obviously members will not want to belong to multiple small business communities, so what then? Consolidation, with most members gravitating towards the most successful small business community, or further fragmentation, with more user-driven communities aggregating around micro objectives? It’s hard to predict where we will see consolidation vs. fragmentation of communities as we do not quite understand how people move in and out of those spaces.

An interesting concept which Rob brought up was “share of community time,” which, in a way, is a measurement related to John Hagel’s Return on Attention (John has also agreed to conduct a CMO 2.0 Influencer conversation with me – stay tuned for a date). The problem with calculating share of community time is that there is a huge spread in the estimated number of people who participate in communities – between 100M and 1b.

Other things we talked about include:

• The role of payments and incentives in communities
• Whether online focus groups are stretching the possibilities of online community environments
• How to engage with your detractors as well as your champions
• How, if you are going to open things up, you should have a strategy to deal with criticism that will come
• The pros and cons of having a neat classification system for communities based on the different needs that they are trying to solve
• How community organizers need to think about members first and brand second

We also touched on word of mouth and how most marketers expect word of mouth to amplify their message, when in reality most word of mouth will transform your message.

As usual, you can listen to the podcast on the CMO 2.0 site, and we will be releasing transcripts soon.

The 2008 Tribalization of Business Study that was released last week led a lot of people to conclude that online communities do not work and that companies are spending too much money on making them happen.

Well – there is some of that and then there is a whole other side to the story that we uncovered as part of the study.

Let me use this post to clarify some of the misunderstandings in the interpretations of the business community study results.

Do most online communities indeed fail?

In fact we found many very successful community examples in the companies that participated in the study – many of them well known and well documented case studies, some less so. We should also point out that most communities that were part of the study are less than 1 year old – so we do not really know whether they are successes or failures.

It is true that many communities fail, and will continue to do so. When they do, however, they do so for very similar reasons – so you’d think it should be fairly easy to avoid the pitfalls.

The first reason is that many companies who embark on community initiatives are putting their company or product at the center of the effort. As many pointed out, that is obviously WRONG – you need to put the community member at the center and make sure that there is some passion around the initiative.

Do companies spend too much on Technology?

The second main reason for community failures, and one that got misinterpreted by many, is that companies are starting community initiatives by focusing on the technology first. It’s not that they are spending too much on technology, it’s that the technology platform is not what is going to result in the dynamics of increasing return that characterize successful communities.

Should all companies have community initiatives?

If you can create a place for your customers and prospects to come and share their passion, and that place does not yet exist, then you should absolutely try to have a community initiative. But don’t be blinded by “the not invented here” syndrome – maybe the best way for your company to leverage communities is to go on Facebook, MySpace or some other community that is user controlled, like the Tivo community used to be.

As some pointed out, there is another big reason why companies should always think about affiliating with other communities – and that is that people will only participate in a limited number of communities. I won’t participate in a Bank of America small business community and a Microsoft small business community and maybe a few others – I only have so much bandwidth.

When is $1M too much to spend on a community?

Many jumped on the bandwagon that it is unbelievable for companies to spend $1M on customer communities…[update 07/21 @7:45pm ET - only 6% of the companies who participated in the study spent more than $1M on their communities]

Maybe yes, maybe no…

If you are small startup, then $1M is definitely way too much. If you are a bigger company and spend $1M on designing a slick community with worthless technology bells and whistles, then that is too much to. But as I wrote by using the example of Bank Of America, in some cases companies are not spending enough to make a difference with their online community. If you are a Fortune 50 company with billions of dollars in revenues, and routinely spend multiple millions of dollars on advertising media, then only spending a few hundred thousand dollars or even a million dollars on your community will just not move the needle. And if the goal of everything you do is to create new customers in a way that will make a difference for your company, then you need to invest appropriately.

Now if you are going to spend $1M – you have to make sure that the investments need to be made in content creation, moderation and awareness development (no, I did not say advertising or direct mail ) to support large numbers of users.

Do CMOs get it?

Talk about a loaded question…but since many were quick to dismiss the capabilities of marketers it is one that I thought should be addressed.

And the answer again is – some do, some don’t, and many are trying to figure things out.

Some are indeed looking at communities as another channel through which to interrupt their customers and prospects with product messages – and most of them fail fast and miserably.

Some don’t quite get what they inherited and keep it small and contained so that it does not make it on their radar screen.

And some know that it is transforming their role and giving them a renewed chance to be the key market strategist at the executive table and the representative of the voice of the customer within their company – and those are the ones who are reaping all the gains.

So, again – do most communities fail?

Our study did not show that. But yes, many community initiatives do fail – either because nobody comes (or they come once and then never come again), or because they fail to move the needle for companies and do therefore not receive the executive attention that they deserve. As I said before, the reasons why they fail are very similar from one case to the next and should therefore be avoidable. But there are many case studies where companies delivered game changing results to their company’s bottom line – and the reason why they succeeded are very similar as well.

[photopress:Hierarchy_control_sm.jpg,full,alignright]I had the pleasure to meet JP Rangaswami in person last week, who I had invited to speak as a keynote speaker at the FASTForward ’08 conference. He spoke of the three main forces that are causing a powershift towards the individuals within the enterprise.

The first one is that of youth versus expertise. In this day and age, expertise is no longer connected to age, and while that is causing a fair amount of friction between the geeks and the geezers, it is an inevitable force that is driving change.

The second one is the democratization of participation. No longer is participation elitist, no longer do you need to ask for permission – the amateur hour has arrived.

The last one is that FAST is the new GOOD. Releasing alpha software, having perennial betas is the new way of doing business.

While there is major resistance to all those forces, combined they will cause a massive transformation within the enterprise. Combined with the powershift which already took place between companies and their customers, they could very well alter the way we think of firms forever.

[photopress:evolution.jpg,full,centered]

A new report jointly produced between Forrester Research and Heidrick & Struggles paints a bleak picture of the (d)evolved CMO (Chief Marketing Officer). You can download the report here, but only after agreeing to become a “lead.”

While two thirds of CMOs want to get a higher involvement with business strategy development and increased P&L responsibility, the reality is that far too many of them are in fact disconnected from where the real action is.

Some of the findings are mind-boggling:

• Only 45% of CMOs have responsibility for product, service or solution development. Only 37.5% are responsible for pricing.
• Only 27.5% are in charge of sales  training.
• Only 25% are responsible for in-store buying experiences.
• Only 12.5% are accountable for the activities associated with customer service and support.

How can you be the Chief Market Listener and not be in charge of what customers say after they buy your product? If you are the Chief Market Officer, how can you not be in charge of deciding what gets sold in the marketplace and how much it will cost the buyer to acquire it? And if you are the Chief Customer Officer, how can you not be in charge for the in-store customer experience? The sales training issue is either a cause or effect for the ongoing rift between most sales and marketing department…

But wait, it gets worse…here is some data about their top objectives:

• Only 27.5% have “increase customer life-cycle value” as one of their top objectives.
• “Innovate” is an objective for only 40% of the survey takers
• Only 27.5% have “increase customer retention” as an objective

And just when you thought you got the extend of the sorry state of CMOs, you find this:

• Only 12% consider “personal knowledge of your customers” as one of their top 5 competencies to their personal success.
• Only 17% consider technology savviness to be one of those top 5 skills

Thankfully (sarcasm intended), more than 65% see people management as one of those top skills. But wait a minute…isn’t it leadership characteristics that get you into the C-suite? Management skills are so Industrial Revolution/last century skills…

Other interesting tidbits from the report include:

• On a scale from 1-3, with 3 being the most important, CMOs found marketing measurement (2.55) to be way more important than customer community development ((1.89) and social computing/web 2.0 tools (1.73).  That goes hand-in-hand with the fact that 92% have advertising as one of their main responsibilities.
• There is room for new industry marketing organizations, conferences and publications. Those three resources come in dead last in a list of 16 resources that CMOs ranked most valuable to their professional career development.

 The recommendations from the authors to improve the situation?

• Spend more time on career development
• Seize the opportunity to lead the organization towards customer-centricity
• Build credibility through the marketing team and leadership contributions.

How about not accepting the CMO job if it does not mean you are really the Chief Market Officer, or the Chief Customer Listener, or the Chief Voice of the Customer Officer, or the Chief Customer Lifecycle Value Owner?

[photopress:aura_sm.jpg,full,alignright]While most people haven’t really yet grasped the meaning and the potential impact of the web 2.0, some are already trying to define the Web 3.0, and along with that comes the usual litany of buzzwords – let go of control, more pervasive, more intelligent, always on, we are in control, etc. (Stephen Baker from Business Week talks about it here and here, Valeria Maltoni has a very eloquent post with a great discussion here, and then of course Phil Wainewright and John Hagel were already having this debate two years ago).

One of the things that most people forget is that we always overestimate the amount of change in the short term and underestimate the amount of change in the long term.

Let’s start by taking a look at the short term. The adoption of web 2.0 is not anywhere near a done deal – with very powerful barriers to adoption standing in the way of success. Many of those barriers were the same that the web 1.0 tools and even pre-web tools faced. In fact many of those barriers are the same as the ones described in the context of innovations as far fledged as agricultural innovations in third world countries by Everett Rogers in his seminal book on adoption of innovations – Diffusion of Innovations.

Most of those barriers are from people, culture and political nature – the hardest of all to overcome (I like how Valeria calls it the Human 1.0 ability). Web 2.0 tools and processes have the potential to change organizational structures and to overhaul existing hierarchies, causing people in charge to resist those tools and come up with smoke-screens to defeat them – think security and compliance. Web 2.0 tools are social and collaborative in nature and many organizations just do not have a collaborative or social culture. And because of the collaborative nature of the tools, even self-organized groups face the classic collaboration conundrums – the white screen syndrome (how do we get started and who in the group decides how we organize ourselves in this collaborative space), and the fact that the value of the tools goes down to zero for all team members even if only one of them decides not to adopt the tools.

So with that in mind, trying to extract what the web 3.0 will look like based on what is currently happening with the web 2.0 is an exercise in futility. In fact, many of the extrapolations have been part of the innovator’s toolbox or vocabulary for a long time. Are we not overestimating the amount of change in the short term?

On the flip side, the web 3.0 could come with new forms of organizational structures, new political realities, and a new workforce – one where a new class of artisans bring their own tools to “the” work at hand. Some thinkers have painted big picture futures, including many great sci-fi authors, but also some business thinkers and magazines like Kevin Kelly, or FAST Company, just to name a few.

So, aren’t most of us underestimating the amount of change in the long term?

It is interesting to read about the new Google OpenSocial API. Jeremiah Owyang had a great article on his blog about it last week – titled: Explaining OpenSocial to your Executives. The mainstream media jumped on the bandwagon trying to explain things.

But my favorite analysis comes from Don Dodge – 50M Facebook users don’t care about OpenSocial APIs. Sure, he comes to the discussion with a Microsoft bias – but who in their right mind thinks that non-geeks will abandon Facebook and flock to OpenSocial apps? Is OpenSocial likely to drive new traffic to MySpace? Would I want to be listed as a friend of someone I “friended” (amazing how things tend to become verbs) on LinkedIn who has a personal profile on MySpace?

[Tags: OpenSocial social media facebook don dodge marketing 2.0]

According to a new commentary released by the Pew Internet Project, It will be hard to close the broadband divide in the US (pdf here).

We now rank # 15 among countries worldwide in terms of broadband subscribers (19.6 subscribers per 100 inhabitants compared to 31.9 for Denmark and 29.1 for Korea).

Yesterday I was fortunate to be the host of a really enlightening conversation on adoption issues related to enterprise 2.0 projects with Andrew McAfee, Euan Semple, Jenny Ambrozek, Jerry Bowles, and Jim McGee (you can listen to a replay of the event here). We had another session on Monday – but since we had some technical difficulties during that session the audio needs editing. I will write about that one when the audio is available.

One of the questions that crossed my mind is whether enterprise 2.0 tools (web 2.0 tools deployed within an enterprise environment) have the same barriers to adoption as traditional collaboration tools. One of the main barriers to adoption with collaboration tools is to not be able to get everyone who is working on a project to use the tools. This can happen for a variety of reasons – i.e., “the blank screen” syndrome, which happens when people do not quite know how to use the tools or organize their work within those tools, and revert back to email, face-to-face and phone instead of working within the specialized collaborative environment, or for cultural/political reasons, when people do not like the way the project is organized and boycott the use of the collaborative tools. In all those instances the value of the collaboration environment goes down to zero for all the other team members who want to use it. If some part of the work or the project lives outside of the project collaboration environment, then that environment has no more value than a person’s inbox – it is not complete.

Enterprise 2.0 tools on the other hand are less project-centric and a little more individual-people-centric, meaning that even if I am the only one who is using tagging or blogging on a project, that still has value to me. I am not sure that holds true for wikis, which are true collaborative environments.

Note that we also set up a Ning social networking group for Enterprise 2.0 Ravers – feel free to join and engage in that conversation as well.

[Tags: enterprise 2.0 web 2.0 adoption ]

Are you in the process of deploying Enterprise 2.0 Tools or thinking of doing it? Who in your organization is involved? What do you anticipate the biggest barriers to adoption to be? How will you measure success? Which process will you start with?

If you are interested in participating in a project in which we collectively come to an answer for these and other questions, then take a few minutes to fill out the Enterprise 2.0 Market Readiness Survey. We will share all the results with everyone who’s interested.

And of course feel free to post it on your blog for your audiences to fill in and participate (just point them to http://www.surveymonkey.com/s.asp?u=937203810006).

I have been looking for a group “to-do” list for a long time, and never really found what I was looking for. Most to-do lists are for individual usage – which is not what I am looking for. And unless you are Google, I do not even get why people bother developing those apps as there are a ton of applications on people’s desktop that already have that service integrated – for free.

But as far as a simple group task list for truly distributed teams….there isn’t much available. I finally found a solution that looked promising….integrating/synchronizing with Google calendar, etc. – all for $15. So I bought it thinking that would solve my problem. Except that when I tried to invite one of my closest associates, it required that he too buy that same application. That was almost a week ago, and of course that has not happened yet.

How can people do that? Group applications already have plenty of barriers to adoption to overcome – so why a company would artificially add one extra barrier in the mix is a mystery to me. I bet you that most “potential” users of this app would use it with teams of 2-3 people. So if that is the case, charge the buyer of the app $30-50 instead of trying to get $15 from all the users. That way you may end up with some real users instead of frustrated buyers.

Elementary…my dear Watson…

[Tags: barrier to adoption group application]