The Boundaryless Corporation

About a month ago, I purchased an iPad from the Apple online store. I am greatly enjoying it, thank you. But the inspiration for this post is not the use of the iPad, but the experience of purchasing and getting it delivered to me.

If we look at the Fedex tracking below,  we will find that the iPad did not leave from an Apple warehouse in the US, but directly from the manufacturing place in China.

iPads shipped from China directly to end-users in the US

It makes sense, no? Apple is shipping so many iPad’s that Fedex can probably consolidate full shipping containers flying over the Pacific anyway. A US-based warehouse would just add more cost and time to fulfill orders, so there is no reason for not having the contract manufacturer in China drop ship them directly to end users.

When I placed the order, I was able to request custom engraving of my name on the back of the unit. So that unit was mine from the time it left the assembly line and was packaged for the first time.

That level of personalization would not be possible if Apple and Foxconn, its manufacturing partner, were not working intimately together and sharing information about my order.

Boundaryless Organization

This term was originally coined by Jack Welch, former chairman of GE, to describe companies that break down barriers between them and their customers and suppliers.

Companies need to embrace suppliers as true partners to seamlessly deliver value to its customers. That is how I, the consumer, get the experience of a personalized product even before I open the box to use it for the first time.

That is true for suppliers, but should companies also embrace its customers within its boundaries, to include them in the value creation process?

More and more, the answer is yes.

IKEA has the smartest furniture assemblers in the business: You

One of the biggest logistic challenges of the furniture business is that products like desks and bookcases are difficult, expensive and fragile to transport when fully assembled.

IKEA, a Swedish company, eliminated that problem by selling furniture in flat packs and having customers to carry and assembly it themselves once they get home.

In this case, the company included their own customers in the value delivery chain and, by doing that, was able to deliver relatively stylish and high-quality furniture at very low-cost and an overall better customer experience. Because delivery of the product is a huge pain point in traditional business, for many customers, the extra work (or fun, perhaps) of assembling furniture is offset by the benefits.

Embracing customers as your brand advocates

The “Social” in Social Media means that influence travels from person to person, following social connections and interactions. Instead of buying broadcast media to reach all potential customers directly, companies need to embrace and include customers as past of the marketing strategy.

If you provide a positive experience to your customers, and provide them with the knowledge and resources to influence others, they will bring their friends to you. That is the essence of social media marketing.

In the 21st century, companies need to break the isolation with supply chain partners to deliver customer-centric product/service experience. They also need to break the break the isolation with their customers so that they can expand their business.

In other words, boundaries of the traditional corporation dissolves. The new company need to see itself as part of an integrated value delivery ecosystem.

Four ways to go boundaryless

  • Shift from supply chain to the value chain. Hierarchical and segmented business cannot dream of offering a personal experience to its customers. Apple embraces its delivery partners to deliver me an iPad that is mine from the assembly line and can deliver it to me faster and at a lower cost than traditional hardware vendors.
  • Customers are your best partners. There is nobody more interested in the value your company provide than your own customers. IKEA revolutionized the furniture business by designing products with the value delivery chain in mind and empowering their customers to participate in the process.
  • Cultivate Transparency in relationships. Neither Apple or IKEA are particularly good examples of general transparency, but they do it where it matters. Your company must give partners access to the information they need to take responsibility for the customer experience. Arm customers with the information and resources they need to become brand advocates.
  • Embrace Social Technologies. Free flow of information enabled by social technologies is the main catalyst to making boundaryless companies more competitive than traditional ones. Customers can talk to and influence each other through Social Media. Organizations can let information flow horizontal in real-time (not hierarchically, in monthly reports).  Let it happen and gain a competitive edge.

Was it as good for you as it was for me?

The impact of Social Media in Customer Feedback

A few weeks ago I wrote a post arguing the not all the excitement is justified, that some of the early experiences with Customer Service in Twitter are not sustainable in the long-term. But I do think adoption of Social Media by customer service departments is mandatory and can have a very positive impact on customer experience and bring change to the Marketing/Customer Service balance in companies.

Quality and Excellence

Quality is defined as “consistently meeting specifications”. It is, by definition, a statistical exercise: constantly measure results and manage the process so that we can control and continuously improve it. This is how you can be confident your Big Mac will taste about the same whether you are ordering it New York, Fresno, or Shanghai.

Consistency and predictability has value. That is why we stop at McDonald’s when we feel the need for a quick and predictable meal when driving across an unknown stretch of road.

When it comes to Customer Service, quality is achieved by monitoring results (through operational metrics like resolution times) or by directly measuring customer satisfaction (through feedback methods like customer surveys). Close the loop and you can ensure that identifying past problems will help you to offer a better and more consistent experience to future customers.

Alice Water’s Chez Panisse restaurant is a temple of California cuisine. Potatoes are not shipped pre-cooked and frozen from some national distribution center. They might not even be in the menu if it is not the right time of the year. Diners are not looking for consistency or predictability in a special-occasion restaurant. They want to be surprised and expect a memorable experience. They are looking for excellence.

In Customer Service, excellence is achieved by empowering the front-line agent to autonomously solve problems on the spot within reasonable business parameters. Prioritizing quick resolution will occasionally generate service inconsistencies and might limit the ability of the organization to learn about root cause of problems.

There is no intrinsic conflict between quality and excellence, but there are operational trade-offs every company needs to make. The most successful are the ones who can strike the right balance.

But in the era of Social Media…

Social Media does not change the business basics. What it does is change the business environment outside the company.

When the media let customers air dissatisfaction in public, customer service problems affect more than just one specific person. Other prospects watching the interaction are influenced by a negative exchange. On the other hand, a happy customer praising a quick problem resolution might influence many others favorably.

That peer-to-peer influence (which mirrors old-fashion business in small communities of the past) and the loss of control by the company over media (like in print and broadcast) increase the relative importance of excellence over quality. It favors companies that can develop deeper relationships with their customers because customers behave as a community, not as isolated individuals.

It is necessary but no longer enough to detect and measure past problems to improve future service. Without excellence, there might be no future customers.

Adopting Social Media is a shift driven by the market as customers become empowered by the new medium. It neither solves all problems nor is necessarily a better way of doing anything.

But it is a reality. Adoption of Social media by companies is not mandatory only because survival is optional.

In Conclusion

  • It is no longer about prompting customers to evaluate their experience, but listening their feedback where and when it is dispensed. Could be Twitter, Yelp or a specialized forum. It could even be a survey.
  • It is real-time and about the current experience, not learn how bad it was so that you can fix it for the next customer. You cannot afford a dissatisfied customer negatively influencing others.
  • It is personal, not statistical. Strive to make each customer’s experience as good as it can be. The days of working on averages and getting “80% of customers strongly agree that service was satisfactory” are gone.

The impact of social media is the ability to get feedback without being intrusive and, for most businesses, to shorten the time between awareness and action so that we can fix customer experiences before they become bad experiences.

Business and Relationships

What you can learn about social business in the Farmer’s Market

Saturday mornings is farmer market’s day Guarulhos, Brazil, where I grew up.  My mom is a customer of this particular meat stand for more than 35 years now.

Last week I was in Brazil and woke up early on Saturday to accompany her grocery shopping for the week.

When we arrived at the meat stand, the butcher greeted mom and looked at me. After a few seconds of puzzlement, he smiled. “The boy who went to college and then moved to California!” (in the community where I grew up, going to college is memorable).

He immediately left what he was doing, cleared the edge of the stand and pulled a few boxes to improvise a coffee table. He then got a thermos from his pack under the counter and served three cups of coffee. Made us sit there and asked me how I had been.

That is a portion of the world frozen in time. My mom doesn’t use a bankcard. The food sellers know what she buys every week and some still remember that I used to follow her as a child along those aisles 35 years ago.

Brazil is changing fast and Carrefour and Walmart are building giant supermarkets all over the country as fast as they can, selling meats in much flashier (and probably more sanitary) facilities.

Business is no longer like it was in the good old times.

Or is it? As most of the world is still shifting from relationship-based business to a marketing-driven business models, in Social Media circles and Enterprise 2.0 conferences the talk is about a new era of “Social Business”, where companies invest on building personal relationships and creating positive customers experiences and trust that “marketing” will take care of itself if we our job well.

Happy customers tell others about their experiences and bring their friends. That is how business has always been done.

I certainly don’t expect the butcher at a Carrefour store to remember me after 35 years and invite me for coffee. But companies who spend more energy promoting themselves than understanding and addressing customer’s needs will not survive in an era where consumers recover the ability to influence each other via Social Media in a similar way as they did in small communities.

And, if you grew up in a small community, I suggest you go back to some old store of the past and see how business is still done there. You might learn more about business than at an Enterprise 2.0 conference.

Klout: Like.

Over the past couple of weeks, I have participated and seen several discussions on the merits of general score analytics in Social Media engagement (like Klout and PeerIndex).

On one hand, most of the criticism come from experts (for the most part deserving of the title) who complain about the score not expressing the quality of their expertise. They say the scores are just a measure of the “time you spend in Twitter”.

Yes, I think it is important to understand what is being measured: level of engagement in social media. Once we acknowledge that, I think general scores are useful and can be considered a valid dimension of “influence”.

On the other hand, if we accept it as a valid measure, a social media engagement score reflects influence only to the degree you use social media to exert it. It is not a measure of the total expertise or influence of a person.

We should take general engagement scores like Klout and PeerIndex with a grain of salt. I agree with the ones who consider the tagline “The Standard for Influence” a bit of a stretch. But every marketing slogan is a stretch.

Then this morning, Klout had a technical problem and most users saw their scores drop drastically o single digits for a couple of hours. That gives the critics the perfect opportunity to say: #fail!

The irony of the incident is that the Klout score for @klout (the user representing them in interaction with the community) will go up because there were so many people complaining about their scores (increasing volume of mentions and conversations impact the engagement score positively).

Does that event show the flaws in social media engagement scoring? (How can a negative incident increase your score?!)

Or does it simply reflect the fact that the event validated the influence of @klout (or else why would so many people check their own score early in the morning, notice the glitch, and trigger such large number of conversations?).

What do you think?

Social Media and B2B Sales – Change is coming

Last week I wrote about Customer Service and Twitter and argued, among other things, that first experiences with social media are not necessarily sustainable. There is unrealistic optimism that social media can solve all problems in Customer Service (and Marketing, of course).

Now, when we come to use of social media by B2B sales people, we observe the opposite: I hardly hear anything. It is as if Social Media had nothing to do with Sales.

If sales is largely a social activity based on personal relationships and if social media supports more personal, bi-directional communication in real-time, one would expect sales people to be avid early adopters of social media, right?

Sales People are a pragmatic bunch

They are always going after their sales quota and that keep them very focused on results, not hype or future promise.

For example, as of 2011, less than 2% of the people in the world uses Twitter. Even in advanced economies, penetration of Twitter among business decision makers is still in the low single digits. Facebook has more penetration, but its use in business is still rare. LinkedIn is probably the most useful in B2B today.

While checking the LinkedIn profile of new prospects as preparation for important meetings is a routine now, a more active use of Social Media for engagement is still an exception.

Another reason limiting use of social media in sales is technology. Social media has been widely adopted by consumers, but business tools (cell phones, existing CRM systems, corporate communications, etc) lag behind the curve integrating with Social Media.

But change has already started

Have you had someone return a voice message lately? Do you still send quotations by fax? Can you trust people read every single e-mail message you send?

As social media gradually increases its participation in the routine of most people, it will become more and more difficult to engage with customers (be them consumers or business buyers) through classical channels. People will simply stop checking voice mail. The day a Skype message or a Twitter DM is not only more acceptable, but also more effective than an email in getting people’s attention is not very far in the future.

Sales People are also smart

I talk to a lot of sales people these days. Most of them are very aware of the role social media will play and many have already started experimenting with personal social media engagement tools. They connect with contacts in LinkedIn and follow customers in Twitter.

As business software tool vendors race to incorporate social media and corporations catch up to consumers on its adoption, we approach the convergence point where mainstream business communication will shift the same way consumers’ have. Change is gradual, but manifestation of change is not.

Are you ready for that shift? Do you have a different opinion? Let us know (just don’t leave me a voice message – I no longer have a voice mail system).

Customer Service through Twitter – Sustainable?

In recent (Twitter) discussions, I heard statements that “Twitter is the future primary medium for Customer Service” and descriptions of experiences like “I get faster and better response from companies when I express dissatisfaction in Twitter.”

But it is important for us to question it. Is Twitter really a medium that can support the full delivery of customer service to customers who choose it as the initial channel? Is the perception that Twitter allows for better/faster response realistic?

As of 2011, less than 2% of the people in the world uses Twitter (there are about 175M of registered accounts, with a significant number of inactive ones). Even if we discount the fact that the world isn’t an uniform place, penetration of Twitter among consumers and business decision makers in advanced economies is still in the low single digits.

Companies monitoring and using Twitter and social media are allocating resources to that task that are disproportionately large compared to that penetration. They are also empowering better-trained agents compared to other channels to act on behalf of the company. That is the main reason we, privileged early adopters of social media in a business context, can get faster and better response complaining in Twitter.

(Does anyone have data confirming or negating the previous paragraph?)

Don’t get me wrong. I believe adoption of Twitter and other Social Media tools in business is going to grow in the next years. The early adopters of Twitter are highly influential and there is a good business case to give them unfair attention. Companies should be investing in understanding and exploring the new medium. Twitter will have a very important role in customer service.

My point is that we are still in learning mode. We cannot assume that our initial experience as early adopters are sustainable in the long-term. Over time, we need to find the role of Twitter and other social media channels in customer service (and other corporate functions).

Personally, I believe engagement through social media can scale (see article) and Twitter has an important role in the detection and identification of issues, first contact, case triage, etc. Customer Service presence in Twitter also leverages the social character of the media (amplify voice of customer, offer solutions to many at once, promote peer-to-peer help, etc).

But I don’t necessarily think it is the medium for the delivery of the entire customer service resolution process.

As said, this is learning period, so what I believe is just what I believe. What do you?

The Social Media Protocol

It is interesting to see posts in Twitter of  people chronicling their constant fight to empty their email inbox. It is equally amusing to hear people say “you should know, I sent you an email yesterday.”

Email communication inherited its protocol (and the “Carbon Copy” metaphor) from Memorandums of earlier corporate paper communication. An email message is a uni-lateral communication from the sender to the captive audience. The acknowledgement of an email message is implicit in its receipt.

The protocol of email communication asks for sender discretion to ensure that the message is relevant, balanced, and appropriate. When senders don’t exercise that judgment, email becomes less effective.

Social Media inherits its protocols, instead, from rich direct interaction. Like in live conversation, to communicate effectively in social media, you must first get someone else’s attention and focus. Once you start communicating, the channel is bi-directional and the recipient is not only allowed, but encouraged, to interject and co-lead the conversation.

The social media protocol is of  recipient discretion. There is no implied assumption that the receiver of a message has to acknowledge or even become aware of every message. The receiver sifts through the talk and find what is relevant. Because there is so much noise, the filtering happens through established social connections (I pay more attention to people I know and trust what they say or who they connect me to).

Why is understanding media protocols important?

Email, brochures, paper memos, websites, Twitter are communication tools. They all have specific functions, strengths and weaknesses. If we understand the differences and respect the implied protocols, we can all communicate better and avoid spending too much time trying to empty our mailboxes and tweeting about it.

Customer Service and Free Lunches

This morning, my friend Alan Berkson (@berkson0) was at the ball park, announcing it live to the world through Twitter:

When you can actually count the number of fans in the stadium its not a big number #mets

Then, he was waiting in line to buy lunch. The line was long and, to provide better service, they opened a second station and broke the line in half. Good for everyone.

But Alan was half way through and suddenly found himself back at the end of a shorter line. The guy who arrive right after him was now first in the second line.

I followed the situation unraveling from my desk at work, until I saw this:

Rep turned #custserv #fail into #succeed at #citifield #shakeshack=free lunch. FTW.

The intention of the service provider was to feed hungry people faster, but after the action they had a bunch of unhappy customers who before were about half way through the wait and were suddenly the last ones in line.

Is fairness (as perceived by customers) important as a metric of quality for customer service? The consensus in the Twitter discussion that followed is a big “yes”. Inconsistency translates into customer dissatisfaction.

If you are going to treat customers differently, it better be because of a tangible criteria (SLA’s, tiered services, etc).

Karina (@KarinaHowell) added that not only it is important to maintain service consistency from interaction to interaction, but also, and perhaps more important, across the multiple channels where service is dispensed.

This is a big source of perceived unfairness, with people who complain in public getting more attention than the ones calling the customer service phone lines.

As more of customer server traffic moves from phone to email to social media, companies will need to ensure consistency across channels, or have to provide free lunch to unhappy customers who find themselves at the end of the line.