The key to inovation is not in a spreadsheet

Businesses seem to value analytical skills highly. Indeed, a recent study found that 68% of all job postings list “analytical skills” as a requirement or desired characteristic and 39% of all resumes claim the applicant has that quality.

Dictionaries define analysis as the separation of a whole into its component parts.

Ok, breaking things apart and then being able to understand each of the components separately. That is an important skill. If we have a complex problem to solve, decomposing it into self-contained components helps us to organize a group of people to solve it efficiently. That is the basis of the Classical Strategic Process.

But we all know that more often than not, analytical data in companies is manipulated to support the agenda of the person creating the PowerPoint presentation. A study found that 84% of all cited statistics are manipulated or made up to support a pre-made conclusion. That includes this one and the one in the first paragraph of this article.

I am hoping that the examples above show that well crafted baseless “analytical” headlines can be very effective tools of communication and influence.

But when businesses talk about analytical skills, they are thinking about the ability to use analysis to drive good business decisions based on historical or real-time data. As someone with self-declared strong analytical skills, I am a big supporter of that.

Most businesses and projects are too complex to be solely grasped holistically. Good and honest analysis can help us to identify the key performance metrics to both monitor and identify problems and target efforts for continuous improvement.

I am a skeptical about analysis being the key to growth and innovation. Let me explain why.

Humans are very good at establishing and detecting patterns. Most of the times we do it unconsciously. To illustrate that, you might want to take this short Vision/Brain test. I guarantee it is short, fun and enlightening.

True innovation happens when we look at incomplete data and are able to fill the blanks before it becomes obvious to everyone else.

Your typical analyst can find whatever is hidden in your historical data. If you want to improve processes, optimize existing business, identify problems, monitor and improve performance, prioritize actions, then the answers are there and you need good analysis.

To innovate, create new business, develop new products, you need to detected patterns, look forward and synthesize the future. To increase the organizational capacity to innovate, you need to leverage good synthesis – or “analysis of the future” (I love the research firm IDC tagline).

So here are some thoughts I offer:

• If you have no time nor interest in directly participating in the analysis, ignore the numbers and focus on the rationale. In my corporate career, I’ve seen too many decisions being driven by bogus cited statistics off a PowerPoint presentation.

• Most of us have strong innate synthesizing skills. If you want to leverage that human characteristic, expose data at the point where it is needed, trust and empower people whenever possible. Afraid people will be confused or misled by incomplete or noisy data? Look at how good regular people are filtering the extreme product reviews at Amazon.com. Look at the vision test above.

• Hire people with good analytical skills to look at the aggregation of data. Be honest and transparent when using the results of the analysis. If your intention is to start the spreadsheet from the bottom line, skip all the analysis crap. Real-time KPI dashboards are good because they inhibit “what-if” spreadsheet manipulations.

• If all you are going to give people is decomposed tasks and personal MBO goals, they don’t need “strong analytical skills”. Stop asking for what you don’t need or, better, start offering holistic views of problems, data and the freedom to act outside the corporate boxes they are in.

• If you are a successful business leader, it is probably because of you have above-average synthesizing skills. Remove the line about strong analytical skills from your resume.

The future of the Enterprise is more social

Have you watched the 30-second “Evolve” on the Click Company Community home page? If you haven’t, take time to do it. An interesting exercise is to invite children to watch it and then ask them to tell you what the film is about. “Evolve” was produced by Birdo, an award-winning animation studio based in Brazil.

The message is: “The world has changed”. How so?

• The emergence of Social Computing is affecting the way people interact (you have probably noted the shorter attention span, emphasis on interaction over reflection, context over content).

• A new generation of consumers and workers who grew under the influence of the digital medium is now taking positions of power and decision-making (the generation born in the 1980s, who grew with video-games and computers, are now turning 30)

• As a consequence, organizations are evolving to adapt into (or being replaced by) what we call “Click Companies”

Those changes are not good or bad. There is no resisting or promoting them. They just are.

There is change in customer behavior, with control shifting away from the company. The informed and connected customer has access to information (competition, price, business value) and is no longer dependent on and captive to the vendor communication channels.

Marketing needs to listen and resonate rather than influence. Sales need to engage with people and facilitate rather than manage transactions with faceless “contacts”. Companies don’t “own” accounts.

“Customer Relationship Management” (CRM) is the set of business processes and associated tools companies use to manage their relationship with customers. The “Social” in Social CRM is the layer that reflects the shift in control from companies to the customer.

But it is not only customer relationship that changes. People are also changing how a company operates. “Enterprise 2.0” is the name of the framework that attempts to model the organizational transformations to adapt to a more social, collaborative world.

Concretely, Enterprise 2.0 and Social CRM processes and tools attempt to promote and leverage increased levels of:

• Customer Participation – customers can interact with their peers and with the company to generate knowledge, form communities, and direct affect company processes (such as product design). Think next-generation of knowledge base, user communities, and customer service management tools.

• Workforce Collaboration – new workers perform better in a less hierarchical, more transparent environment. Social tools emphasize collaboration to solve jointly owned problems over personal accountability and functional segmentation. Think next-generation Wikis and SharePoint, with focus on people and interactions rather than on documents.

• Real-time Visibility – Social CRM attempts to eliminate brokers and aggregators of information and short-circuit long analytical cycles. Agility is emphasized over efficiency. Think next-generation ERP and BI tools, but capturing conversations in addition to transactions and bringing information where it is needed in real time instead of delayed reports from a central relational database.

Enterprise 2.0 and Social CRM are not pieces of technology you can buy in a box. Technology is shaping people by affecting the way they think and interact. People are changing how business is done. Tools can support the evolution needed to cope with those changes.

Are you ready?

Are you a social person or a salesperson first?

More often than not, meetings at work are an inefficient use of time. A problem that could be solved by two people in five minutes take eight people for half an hour. Outlook sets meetings in half-hour increments and the conversation degenerates in arguments unrelated to the problem at hand.

There are many books written about that.

What about sales meetings with customers? A substantial part of the life of the salesperson is going from customer to customer, often investing several hours of travel for each hour of face-to-face interaction. That doesn’t sound very efficient, but is it even necessary?

I know what you are thinking: “People buy from people”.

In the discussion that followed the previous “Speak like a Person” article, a couple of you commented that, like marketers, customers also play their deception games.

To get past the mistrust created by the game-playing, we need to personally connect with the customer and build a sense of mutual interest. I ask my friends in sales and they confirm that most customer meetings are not about selling; they are about building a relationship.

Ok, nothing new there either. There are piles of books and papers examining that subject.

Now, if I saw the world exclusively through my rosy social new world lenses, I would argue that if companies become more transparent and authentic, they could establish a trust-based relationship with their customers from the beginning.

A Click Company doesn’t need to get out of the credibility hole because it did not dig it in the first place. It can focus more on delivering business value and less on rebuilding lost trust.

Business is more complex than that, I know. We can envision a future in which vendors and sellers meet frictionless in a perfectly transparent market, but that doesn’t mean it will happen overnight (if ever).

Still, the digital medium is creating an environment that is more conducive to transparency. Let’s look at consumer retailing for a minute. I can go to Amazon.com and compare products in a neutral environment, shop for the lowest price (including vendors other than Amazon), see reviews and recommendation by my peers (including negative ones).

Whether granted or not, I feel a sense of trust and confidence when buying in that environment. I am less inclined to shop elsewhere (because I can see the competition in the same place), I don’t haggle (because there is embedded transparency and competition), I am willing to share more information (because sellers use it to recommending products, not to take unfair advantage of the knowledge).

Can a similar experience be had in B-to-B?

As of early 2010, LinkedIn has about 60 million users, half of that in the US (Source: LinkedIn). Facebook has over 350 million users and 61% are 35 or older (source: Pingdom, based on Google data). Almost all B-to-B decision makers already have a social media footprint.

How can we concretely leverage that footprint to better connect with our customers and accelerate the trust-building process? Here are a few ideas to consider before meeting your next new prospect:

• Use social channels to interact with your contacts. We are moving from a sender’s discretion to a recipient’s discretion world (the audience chooses when to engage). You can communicate more often without being intrusive and meet less resistance from your customer audience.

• Don’t use PowerPoint just because. Don’t create artificial excuses to trigger a meeting. If it is a relationship-building meeting, focus on relationship and be transparent with the customer about its purpose. Listen first.

• As others have suggested, before meeting a contact for the first time, take the time to check their profile on LinkedIn and other sites. Learn about their interest in Photography and the fact that she has a Brown Labrador. Ten minutes of learning about them can save a couple of relationship building meetings in the future.

• Make your profile in social media richer and proactively share it with your prospects before the first meeting. Show yourself as a person, with interests and passions other than work. Let your human face precede your sales persona. People buy from people, you know?

• People also follow recommendations from people. Ask existing happy customers to introduce you new prospects in their community. Have you proactively tried to offer the opportunity to talk to an existing customer to a new prospect? We have recognized the power of “customer cases” for a long time, but in sales we have resisted letting customers freely talk to each other. There is more upside than risks and you would be surprised on how willing they are to do it for you.

Try something different in your next meeting and let us know the results.

That is only a start on how Social Computing changes customer relationship management. For more on that, check the research paper by the Altimeter Group on what they is called “Social CRM”, the emergence of a social layer on top of existing CRM  efforts.

The force behind social computing [tweetmeme source=”Marcio_saito” only_single=false]

The Free/Open Source Software movement has demonstrated that community-based development can generate software that is at least comparable to what is produced by organized and well-paid professional developers in a company. Volunteers of Wikipedia have beaten the army of experts at Encyclopedia Britannica in producing uptodate and comprehensive reference information.

How did it happen? How could “regular people” outperform professional experts?

An even better question: If communities of volunteers can generate such good results, why did we get into creating companies to organize professionals experts to solve complex problems in the first place?

To understand that, let’s look at how knowledge distributes among a population. The picture above shows a Long Tail distribution. It refers to a statistical property of a distribution where the “tail” of a distribution is larger than in its “head”. This concept was made popular by Chris Anderson in a Wired Magazine article that applied it to the retail business.

If we agree that knowledge distributes in a long tail configuration, the group at the head of the curve (the “experts”) accumulates personal knowledge that is much higher than the average individual. But the total knowledge held by the experts is still relatively small compared to the knowledge held by the population.

The written language is suitable for unidirectional transmission of knowledge. Someone spends time studying something, then writes it down.  Others reads it. There is no interaction between the writer and the readers.

Because we have been using primarily books and documents to accumulate knowledge, the voice of the expert became the voice of knowledge. We have built a segmented-knowledge society where each of us is an expert in something (be it tighening a bolt, writing software, doing tax returns, or defining strategy). Collective intelligence does not have channels of expression.

The result is hierarchical organizations with focus on personal acccountability. We can see that in companies today. Management is primarily concerned with decomposing goals into tasks that can then be assigned to specialized professionals. Specialization and segmentation is a less than ideal, but efficient way to cope with the high cost of collaboration.

Collaboration is impossible when the communication medium is the printed word. Noise and cost of collaboration grows exponentially when it happens through rich face-to-face interaction. That is why the world is the way it is. To solve complex problems, we need to segment and specialize.

But if there were technologies that lower the cost of collaboration, there is a point where the long tail of knowledge can be tapped to produce concrete results.

The digital medium, embodied by the Internet is starting to do exactly that. Collaboration is still noisy (have you tried to use Twitter?), but in some domains, the long tail of knowledge is now able to express itself in ways that are competitive. As technology advances and people adapt to it, segmentation will cease to be the most effective way of solving many problems. We call the organization adapted to the digital medium “Click Company“.

Rather than decomposing goals into tasks, leaders will be synthesizing results from interactions.

Businesses in domains of knowledge more intrinsically associated to the communication medium (encyclopedias, newspapers, software development, music, etc) are the first to feel the effects of that transition. But that shift is affecting every other area of knowledge.

How is it going to affect your business?

The difference between “hot” and “cool” media [tweetmeme source=”Marcio_saito” only_single=false]

Picture yourself presenting at that very important customer meeting. You have rehearsed it, you know the subject, and the PowerPoint slides are polished, colorful and have no more than 7 words per bullet. Your delivery is impeccable. The audience is mesmerized.

You rock. You are hot!

The bad news: there are situations where being too hot is not what you want. You might want having your performance described as a cool presentation instead. Let me explain why.

Marshall McLuhan was a media expert who produced most of his work in the 1960’s and 1970’s. He became popular and is probably better known by the general public for analyzing presidential debates on broadcast TV.

Marketers think of media as being magazines, newspapers, TV, and, more recently, social web sites. McLuhan had a broader definition of medium. He described medium as technology, extensions of humanity.

In Understanding Media he explains that media invite or demand different degrees of participation from the audience. McLuhan defines as “cool” medium the type that is open to participation and “hot” medium the type that is not.

So, for example, one can admire a realistic painting for its beauty or photographic-qualities, but the viewer does not need to make much effort filling in the details. The painting is complete; it calls for passive absorption. It is “hot”.

An impressionist painting attempts to capture the transient effects of sunlight (which cannot be done literally). Perceiving the mood of the scene requires the viewer to interprete the broken brushstrokes to capture the intention of the painter. Compared to realists, impressionists are “cooler”.

In a modern abstract painting, the picture does not say much literally (we have all been to the MOMA staring at a splosh of paint and thinking “I could have done that”). The viewer needs to actively participate, and often co-create the meaning of the art piece. Abstract art is incomplete, open ended. It is “cool”.

So, according to that definition, books are hot compared to verbal communication. A PowerPoint-driven meeting is hot compared to a round-table. A film is immersive, requires passive concentration, it is hot; a videogame is interactive, cool it is. Brittanica is hot. Wikipedia is cool.

McLuhan said: “The Medium is the Message”. It is difficult, to create a cool movie or power point slide deck. You can try, but is is almost impossible to convey structured and well formed ideas on Facebook. Content is important, but the medium defines the character of engagement. In order to change the communication dynamics, one must consider changing the medium itself.

You have probably noticed that every content item in this website keeps track of the number of views, the number of comments and a “cool factor” (the ratio between comments and views). The idea is that if people reading a piece feels compelled to comment, the content is cool.

Why is it important for people in business to think about hot and cool media?

First, it helps us to select the medium we use in our interactions depending on their goals. If you are at the first stages of a sales engagement with a prospect and want to qualify the opportunity and discover requirements, you want the customer to talk. You want to use cool media. If you consciously want to control the agenda and keep the audience in passive mode, you want to be hot.

Second, the generation born in the 1980’s and later is heavily influenced by the digital medium. For the next couple of decades, there will be a trend towards cool, participative communication. If we believe that, social media will gain priority over print and newspaper ads. Presentations will be less effective than interactive conversations. A seminar or round table may be preferred over a lecture. Facebook and Twitter become marketer’s media.

Am I cool or what?

Can Marketing People do it?[tweetmeme source=”Marcio_saito” only_single=false]

From the spirited and visionary Cluetrain Manifesto, first published in print in 2000:

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.

These markets are conversations. Their members communicate in language that is natural, open, honest, direct, funny and often shocking. Whether explaining or complaining, joking or serious, the human voice is unmistakably genuine. It can’t be faked.

More than 10 years later, reality catches on with vision and markets have turned into conversations outside the control of companies, enabled by social media (PR expert Brian Solis has declared “Ladies and Gentlemen, the conversation has left the building”).

Empowered customers, both consumers and businesses, are well informed and connected. They are not dependent on marketers to obtain product information and often know about the product and the competitive landscape better than the vendor itself.

Customers cannot be easily manipulated. Marketing-speak doesn’t move us anymore. Consumers can see through it and understand the intention and motivations of corporate marketing. Besides knowing Marlboros won’t turn us into rugged cowboys, we understand why marketers tried to make that association. Further, consumers don’t even care to pay attention anymore.

The paper-printed word creates formality.  Its unidirectional nature implies communication from an expert to a broader audience receiving information without the opportunity to interact. It is natural to use language distinction as a symbol of that separation.

In the digital medium, the conversation focus shifts towards interactive peer-to-peer communication and collaboration. The marketer no longer has control over the ears and eyeballs. To engage in that conversation, the marketer needs to listen first, then dispense messages that resonate with the community.

In this new environment, listening and speaking like a person to talk to people becomes essential to marketers who want to connect and be heard. (if I was not thinking about marketing-speak, I might have written this last sentence as “using a human voice to interact with and influence the prospect”)

Being able to handle both positive and negative feedback with honesty, integrity and transparency (this last one being the hardest), to react to customer feedback in real-time. Those are new challenges.

A few days ago I saw an advertisement from Oracle/Sun. It was a “product comparison” ad, with pictures of a server from Sun compared to an IBM followed by a checklist and specs table. The copy read: “our goal is to design really fast computers, their goal is to create intelligent planets”.

I had a good laugh seeing Oracle poke fun at IBM’s “Building a Smarter World” tagline. But Oracle was also using the technique of comparing apples to oranges (the still-to-be-released Sun server was being compared with a 3-year old IBM server). Does Oracle think disclaiming it in very small font keeps users from noticing the manipulation?

Look at this paragraph taken from the website of a random IT vendor.

What sets the successful IT operations apart from the rest is how they manage a fluctuating environment. How they bring control to the chaos. How they ensure they’re an indispensable contributor, rather than an annoying hurdle, to helping their organization achieve business goals.

Now, look at the website of any IT vendor. You will find very similar scramble of words (complexity, need to take control, achieve business goals). Do buyers actually read that or do their eyes glaze and relegate the message to noise?

Marketers are faced with a complex dilemma: use marketing-speak or talk like a person? Leverage overcooked industry language to describe their products or just say what it is? Do you sell based on what it is or try to create the perception of a bigger problem?

They need to participate in the conversation, engage and connect. They are after a new generation of consumers and buyers who grew up under the influence of the digital medium. But they still face the pre-conceptions of the past, where the “corporate voice” is not like regular people’s voice.

Can Marketing People do it?