This article was just posted on Forbes.com

I read The Checklist Manifesto eager to be enlightened.  I wasn’t.  Don’t get me wrong… it is a good book and likely a worthwhile read for almost anyone outside of industries that have a long history with project management.    The red-thread of the book is this:  simple checklists can dramatically improve results of complex projects – even those that require a high degree of operator expertise (doctors, structural engineers etc.).   Successful checklists detail both the sequence of necessary activities as well as the  communication checkpoints to ensure dialog among project participants…

Read the full article here

Here are four key principles for creating a better business in the network economy:

· Listening beats Talking

· Open beats Closed

· Relationships Beat Transactions

· Questions beat Answers

I have been going into details on each (very slowly if you have been paying attention). If you have questions or other examples to put into the posts – please add them into the comments. This is the third post in the series:

Relationships beat Transactions:

Most companies are structured to talk and not listen (marketing, PR, tradshows and events etc.). Similarly, most companies are structured to reward transactions (the sale, the time it takes to process a support call etc.) as opposed to relationships. This is in large part due to the fact that relationships are more difficult to measure. However in the network economy it is strong relationships that insulate a company from price sensitivity, create word of mouth, and foster collaboration (see Open Beats Closed). Just because it is harder to measure doesn’t mean you shouldn’t be working hard on building stronger relationships. (and just to be clear – relationships beat transactions doesn’t mean giving up  core skills on managing operational efficiency.  It does mean that those core skill no longer differentiate you from your competition).

Here is how:

Engage the Community beyond your borders

There is a world of conversation taking place about your company. I have long wanted to write a post titled, “Your Company Sucks – But Don’t Take My Word For It….” About how many Facebook groups are solely organized around how your company sucks (If you don’t believe me – just start searching for your company + “sucks” in Facebook or Google. If you are in a company of good size, prepare to be appalled.) There are tons of good ways to get started listening to what people are saying about you on the social web. You can get started here. Once you are tuned in – you can start participating in some form. Since the web is essentially an emergent (bottom up) force – it is best to think about responding in a similar way. Consider how you might empower your employees to adopt social tools. At my employer, O’Reilly Media, Tim O’Reilly has led the charge by blogging and avidly using Twitter. He models the behavior, tone and manner of how these social technologies are used at O’Reilly. This goes a long way. There are dozens of O’Reilly employees listening, responding and posting to the social web everyday. This far exceeds what any single, top-down strategy could get done – which leads me to the next point.

Mobilize Your Workforce

As the number of customer-to-company interactions increase – it is hard to scale relationships through traditional, narrowly-controlled broadcast channels. Customers expect some level of interaction if not intimacy with the brands they are engaging with and five people in marketing aren’t going to get you there… Digital outreach should no longer be the sole domain of marketers. In other words, the whole workforce can be motivated to participate. The key is appropriate training. Intel is doing a good job by providing a Digital IQ workshop.  This is also the idea behind the innovation labs I run.

Start Operating within the Social Contract

We have many years of refining a martial model of management that centers on routinization of work and command and control hierarchy. We have extracted as much productivity as we are likely to get from these techniques. We are entering an era when the more fluid, open models of collaboration and cooperation will be the ground where competitive advantage is won and lost. But playing on this field has different rules. It requires operating under a social contract – social contracts are very different from business contracts that dominate the 20^th century organizational mentality. In the business contract the basic metaphor is the binding, legal contract. The basic metaphor for the social web is relationship. The building blocks are trust, reciprocity and authenticity. This is the hardest change for companies to make because it involves a fundamental shift in culture. For more on this – see my Forbes post – Why Business Needs to Get Social.

Realize that Customer Service is the New Marketing

In an always-on environment companies need to stay engaged on a personal level with the people they interact with.  Customer Service is the New Marketing simply because every customer is now a broadcast tower and their opinions carry a whole lot of weight.   It also means you should probably stop looking at your call center as a cost center and more like a public relations department (though I dread the connotation of that word).

Examples of great relationship companies – The Ritz-Carlton hotel where every guest is recognized and remembered and where every employee is empowered to solve any customer issue they encounter (‘If you find a customer problem, you own the problem” is one of their mantras),  Zappos, where every first customer is surprised by an upgrade to overnight shipping and the customer service is legendary.   And I humbly submit my company O’Reilly Media – where we constantly have our ear to the ground. If we find an unhappy customer on the web – we try and fix it. When your problem gets fixed without you ever directly contacting customer service – that can be a conversion moment.

For more on this subject see my post on Emotional Transactions or “Moment of Truth: We are all Marketers Now”

The last time I saw Charlene Li was in the speaker’s lounge of the Web 2.0 conference.  It was March 2008 and her  defining book on social technologies, Groundswell, (co-authored with Josh Bernoff) was just being released.   There have been tectonic shifts in our economy (and Charlene has moved from Forrester to found the Altimeter group) since then so I wanted to get her sense of the state of social media today.

A couple of points from our conversation stand out to me.

• Social technologies (blogs, wikis, social networks and Twitter) are being utilized by more companies.   We are seeing these tools begin to go mainstream in the enterprise.
• When it comes to social media it is not about getting it right all the time.  It about the leadership and how they deal with failure.
• Salespeople natively understand how to work from relationships – Marketing departments don’t.  ( see Listening beats Talking on this point).  The real question now is how do we move those skills towards the center of the organization.
• In trying to allay the fears that come with employing social technologies Charlene performs a classic risk mitigation technique:  What are five or ten worst-case scenarios?  Are they realistic?  How might they be mitigated?  You can usually mitigate risks once you identify them.

Thanks to the good people at FastFoward for producing these videos during the FastForward 09 conference.

Imagine resellers, bloggers and trade press being able to host your videos, screencasts and demos on their own sites while you are  measuring response (engagement and demand).    Your company (especially those of you with reseller channels) should be syndicating your web content to reach a massive, global web audience beyond the reach of your own web site.   The reason is simple; at any given moment online, there are more prospects and customers viewing sites other than yours. Content syndication using widgets (think of YouTube videos that you watch on a site other than YouTube etc.). allows you wider reach and more consistent messaging from  channel partners.  It also allows resellers, bloggers etc. to add valuable content to their own sites at no cost (win/win).  Technically this is a simple operation but it requires leadership to drive this as a company-wide strategy.  Widgets in the consumer space are relatively old news but larger companies are just starting to get the picture in terms of how to create an extended content syndication strategy.   I have yet to see a major non-media company that is executing a strong off-domain strategy.

For more info and syndication resources check these out:

Widget ‘platforms’
These companies all offer basic content syndication to the full range of social networks and blogs.  Very consumer focused.  No commerce or direct-response functionality apparent but that is the obvious direction.

Widgetbox (disclaimer – I have worked with Widgetbox before)
Consumer focused.  ‘Source’ publisher offers content (common blog formats supported).  ‘Distributor’ can design widget by selecting content, style and layout etc.
Example of taking Ben Smith’s blog from Politico.com and creating a widget for your own site here.

Clearspring
Premium platform gives more customization/control to the content owner.

Gigya
Similar to Clearspring.

Commerce widgets
Tumri
“Ad pod” designed to optimize display advertising by dynamically building/testing offers.

Popshops
Commerce syndication.  Let’s you build a store using affiliate programs and feeds from Popshop’s database of merchants.

Cartfly
Similar to Popshops.

Last week I took a walk with Tim O’Reilly (my boss) and cameraman Kirk Walter (who has perfected the art of walking backwards with a 15 pound camera on his shoulder!).  We spoke about a wide range of topics that will be released over the coming weeks.   This is the first in that series,  “Work on Stuff that Matters,”  a subject that Tim spoke about throughout 2008.   It seems even more relevant in 2009.   The original Radar post that I did is here.

Tim’s passion and focus is with the entrepreneurs who are working in garages and small businesses around the world on big, audacious projects.   This discussion really got me thinking about my own role in working on stuff that matters.  How do I as a consultant ensure that my work is done in service to stuff that matters and congruent with my values?   That post is coming up soon.
These videos are a companion piece to Tim’s recent blog post, of the same name.  A great read, especially for the comments that support the original post.

We will be releasing the other segments over the next few weeks. They will also live on at www.thefutureatwork.com (where the video series has a home).  There you can also download the files for offline viewing.

Part One:

Part Two:

Part

During a client meeting this week on creating an online community I was trying to understand what might motivate their customer to participate.  (Principle: think of your user first when getting into any social technology like blogs, wikis, social networks and communities.  More on that here).   The client’s response to my question essentially was, “they save money” – hardly a rallying cry.  This led me to a concept I have wanted to put in writing for some time now.

Every transaction has two components –one rational and one emotional.   If you win the rational component – you get a rational buyer.  If you win the emotional – you get loyalty and a shot at community.   Rational loyalty is an oxymoron.

For years the emphasis of business transactions (checking in to a hotel, resolving a customer service issue, buying a product) has been on the efficiency of the transaction.  Success is measured in time saved or dollars spent etc.  Yet each transaction contains an emotional component that eludes our traditional metrics.  Paying attention to the emotional component of each transaction (happiness, contentment, surprise, delight, insecurity) delivers the keys to the new kingdom; engagement, loyalty and community.   I am not talking about a generic notion of creating a “great customer experience.”   I am talking about understanding the specific emotional context in which the transaction is occurring and creating ways to emotionally connect with your customer.
Here are three stories of companies delivering on the emotional side of the transaction:
1. Zappos understands the emotional component of shopping for a personal item (in this case, shoes) online.   Will they fit?  Will I need to return it?  Will it be a hassle?   In other words, the emotional component at work here is insecurity or doubt.  They proactively address these with a free shipping and free return policy.   Then they take the emotional transaction to another level.  When you are a first-time buyer they automatically (and unbeknownst to you) upgrade your shipping to next day air.  Your shoes arrive the next day compliment of Zappos – your new best friend.   There are two pieces at work here.  First, the surprise of something welcome and unexpected.  More importantly – Zappos has done you a favor – and in the primordial social contract, favors bind people together in mutual reciprocity. Another tidbit on that here.

Insight: Consider how you might deliver a pleasant surprise of the unexpected.  Better yet, do your customers a favor.  They will owe you one.

2. The Fiskateers is an online community of what might appear to be scissor enthusiasts.  Scissor enthusiasts?  Well, yes and no… It turns out that many people who buy these high-end scissors are actually scrapbookers… They may buy the scissors for rational reasons of quality – but when it came to creating a community, Fiskars tapped into the passions these scissor owners had about scrapbooking.  They recruited four passionate users and asked them if they would form an ambassador program…  These ambassadors invited other members personally – each new member received an engraved pair of scissors with their name and their number in the community.   Fiskars had a goal of having 250 members in the first six months… They beat that goal in 48 hours.  They now have 5,000 members.   The Fiskateers have had a great affect on sales though they won’t say how much.
Fiskars delivers community by tapping into the shared passion of a small group of their customers – it isn’t about scissors, it is about scrapbooking and crafting.  They also gave their members a clear sense of belonging and exclusivity (custom scissors with your community identity engraved on them).

Insight: The emotional life of your customer is likely not about your product – but it may be about what they do with your product.   Build on that possibility. (For more on The Fiskateers see my video interview with Francois Gossieaux where he discusses it in more detail – or see this great case study from B.L. Ochman)

3. Ethnography is another powerful tool in reaching the emotional side of transactions.   This example of how ethnography had an impact on a hotel comes from INC magazine:

“…while the hotels had long offered packages to families, the ethnography revealed that children were essentially ignored at the hotels. Now, when families arrive, the front desk ignores the parents and checks in the kids. That tiny gesture has been wildly popular, building lots of goodwill — and promises of return visits. Thanks to these kinds of changes, leisure business is up some $500,000, Conklin says. Not a bad return on the $45,000 he spent on the ethnography.”

The rational transaction might be measured by how quickly I can be checked into the hotel (save you time, saves me money) but the winning solution is to check the kids in first.  Why?  Because if you make my kids happy you have made me happy.  “Goodwill” is earned through the emotional transaction.

Insight: look deeper into the minute interactions you are having with your customers and there are likely some small but powerful changes to the way you interact with them.

While we think of ourselves as rational creatures, new research is finding that emotions lie at the center of our memory and decision-making skills.  Recently, David Brooks gave a lecture at the Aspen Institute discussing the case of Elliot (minute six in video)  who, after a stroke lost the ability to feel emotion.  As a consequence he began making a series of terrible personal and business decisions (lost his wife and his business).  Without emotional cues he also lost the ability to remember events.  The punchline Brooks tells us is that emotions tell us what to remember, what to value and are the central organizing principle for thinking.   When you frame it this way you see clearly that getting to the emotional transaction is critical to building sustained, meaningful relationships with customers.

This is a cross-post from Radar:

Recently I spoke with Francois Gossieaux of Beeline Labs about the role of online communities in the enterprise.   Francois has been evangelizing the learning gained from his recent study, The Tribalization of Business (click here for the Slideshare presentation).  I am embedding the second in the three part series but you can see all of them here:

The interview is broken into three parts.  Francois is a great storyteller, bringing case studies in to support nearly every point.  Here are a few insights I took away from our conversation:

Community First: (Note: in the original post I called this “Community for Community’s Sake” and had this to say….)

Most businesses begin planning a community with traditional objectives (lower support costs, drive innovation, increase customer loyalty etc.).  On the Social Web this is the equivalent of entering a personal relationship with an ulterior motive (which never works out quite right).   Businesses should begin with the question, “how can I satisfy the needs of this community?”– and then follow the community’s lead.   Be open to the unexpected.

In my experience this is one of the hardest things for companies to get behind and relegates this kind of “enlightened” community effort to either top-level leadership or skunk works development.  Middle management is typically the most reluctant to deviate from standard practice and place a bet on community for the community’s sake.

After a bit of reflection I think this summary is insufficient.   I didn’t ask Francois to clarify the “community first” position – leaving the viewer with an impression that community building should be an abstract leap-of-faith.  I don’t think this is the case.    Business leaders have every right to ask how allocating a significant amount of time, resources and funds are going to deliver value.   The Tribalization of Business study is an attempt to answer that very question.   Community first is an approach that allows businesses to nurture a successful community by thinking about what motivates community behavior and user contribution (after all, if you can’t get that, all your business objectives go out the window too).  So the thrust of my revision (not sure if Francois agrees) is that business objectives are important and should be part of the planning process and should be measured – yet if you aren’t dead clear about what value you are delivering to the community first you are going to have problems.  

Communities require a social framework to thrive – most companies have a mindset that reflects the legal, contractual and hierarchical underpinnings of their business and carry these behaviors with them into the community.   This informs their planning, measurement and how they encourage contribution.   These incentives and disincentives have little sway on the Social Web where the mindset is social and trust, reputation and relationship are big drivers of contribution. As Francois says, “The most successful communities occur when you tap into that social framework”

Consider stories as a success metric: While there is a fair amount in this interview about measurement – this was my favorite: A great anectdote about how one company views the stories that emerge from their community as a key metric of success.  Great stories are inherently viral and can have a profound impact on decision making in an organization.
Think Bigger: Most large companies are satisfied to have small communities; essentially replicating a focus group model.  Doing so misses the potential of the online community to transform your business.   Consider how Intuit is now embedding live community directly into their application – allowing users to seek help and get questions answered directly.
Transformative communities blur the lines between company and customer and portend a future where retail ecommerce sites go well beyond ratings and reviews and provide problem solving, shopping mentors, product development and other services directly from the community.   Where internet sites are co-evolved (from interface to feature-sets to codebase) in cooperation with community,  where complex applications (desktop and cloud-based) meld standard functions with community functions.    Communities are certainly helpful in providing feedback on customer behavior but that is just one small part of the story.

Attending the recent Forrestor Roundtable on the future of the Social Web I made an offhand comment that we are all in the business of marketing now – whether we like it or not.   Here is what I meant:  The ubiquitous, always-on nature of the Internet has turned many elements of our business inside out – exposing them to customers for review, comment, sharing and even improvement. You see it occurring in assessments of product quality delivered by customer ratings and reviews, in product roadmaps developed by customers, in brand enhancement through community idea exchanges, in marketplaces for community innovation and sharing.  On and on… Company and customers are interacting like never before.

Jan Carlzon called these “Moments of Truth”, the moment when customer and company touch.  Carlzon thought Moments of Truth consisted of ANY touchpoint – whether with a person or with a system or process (like calling an automated voice system).  The Social Web puts Carlzon’s concept on steroids because it (1) radically increases the number person-to-person interactions between company and customer and (2) it magnifies the value (good and bad) of these interactions (It only took one sleeping Comcast technician to garner 1.3 million views on YouTube).

That Means Every Moment of Truth is a Marketing Moment of Truth

Currently people speak about this phenomenon through the lens of their own business responsibility:
“Customer service is the new marketing…” right! (Look no further than Zappos)
“Product development is the new marketing…” right! (Look no further than Google)
In fact even your legal department is the new marketing if you aren’t careful… Stop us before we sue again! (Look no further than the Associated Press).
Connect the dots and you reach the conclusion that marketing is now a horizontal discipline – it cuts across nearly every business unit in the company.
I am not saying that we won’t have a CMO anymore, or people who are marketing experts – I am saying that, like it or not, marketing has become everyone’s responsibility.   “The technique of promoting, selling, and distributing a product or service” engages everyone in your organization because nearly everyone has moments of truth (if they don’t now, they will soon – trust me).    Those that factor customers into each business unit (with care) and see it as a marketing moment of truth; will be unstoppable companies.

If you aren’t allowing your business to benefit from customer input and charging everyone that does has some marketing chops (in the best – moment of truth – sense of the word)… I have a news flash; the train has left the station.   Drop your suitcase and run.  You might still make it ☺

Thanks to everyone who attended the recent webinar.  Here are the slides from that presentation.  The “slideshare” icon will allow you to download the set from Slideshare.   I would love to hear any follow up questions or issues you might have.   I am going to try and take many of the questions that I had today and post responses here.

[slideshare id=627719&doc=evangeliststoolkit20080930-1222798741941391-9&w=425]