My first impression: It’s still early in the game. Very early. We’re still wrapping our head around the whole concept of VRM. Since the idea was to bring together visionaries/practitioners of VRM and CRM, the discussion often reverted back to CRM and how to monetize the customer/data. Clearly, all of us have problems transitioning from the old marketing/advertising paradigm into a new world where advertising is pure demand creation, driven by the attention economy, and relationships between brands and people fall under the VRM umbrella, purely intention driven.

CRM was designed to control customers even better. VRM is an added layer to provide customers with controls. To create an ecosystem that delivers value to all parties. Value doesn’t necessarily mean monetary value. To build all these systems to get $1 off on a deal doesn’t seem worth all the effort. The value is in creating real relationships between people and brands. By collaborating and co-creating value with customers. The future of business is in creating something more valuable and meaningful than just pure shareholder value.

As Umair Haque says in his “Smart Growth Manifesto”,

“21st century economies will be powered by smart growth. Not all growth is created equal. Some kinds of growth are more valuable than others. Where dumb growth is unsustainable, unfair, and brittle, smart growth is sustainable, equitable, and resilient.

Here are the four pillars of smart growth – for economies, communities, and corporations:

1. Outcomes, not income. Dumb growth is about incomes – are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are – not merely how much junk an economy can churn out. Smart growth measures people’s outcomes – not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we’ve learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.

2. Connections, not transactions. Dumb growth looks at what’s flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. It doesn’t just look at transactions at the global, regional, or national level — how much world trade has grown, for example — but looks at how local and global relationships power invention and innovation. Without Silicon Valley’s relationships powering the development of personal computing and the internet, for example, the volume of trade between Taiwan, Japan, and China, would be a fraction of what it is. Smart growth seeks to amplify connection and community — because the goal isn’t just to trade, but to co-create and collaborate.

3. People, not product. The next time you hear an old dude talking about “product”, let him know the 20th century ended a decade ago. Smart growth isn’t driven by pushing product, but by the skill, dedication, and creativity of people. What’s the difference? Everything. Globalization driven by McJobs deskilling the world, versus globalization driven by entrepreneurship, venture economies, and radical innovation. People not product means a renewed focus on labour mobility, human capital investment, labour market standards, and labour market efficiency. Smart growth isn’t powered by capital dully seeking the lowest-cost labour — but by giving labour the power to seek the capital with they can create, invent, and innovate the most.

4. Creativity, not productivity. Uh-oh: Creativity is an economic four-letter word. Why? Because it’s hard to measure, manage, and model. So economists focus on productivity instead — and the result is dumb growth. Smart growth focuses on economic creativity – because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China’s gonna save the world? Think again: it’s economically productive, but it’s far from economically creative. Smart growth is creative — not merely productive.”

While many VRM initiatives will be driven by innovative divisions within enterprises, the real change agent will be customers. They will be the enzyme in the evolution of VRM. We have to help them understand that tools will be soon available that give them equal footing with brands, that give them power to engage with brands on their terms. That’s a powerful message. Especially in this new normal economy, people want to extract more value out of brands than just a coupon or a silly loyalty program.

And, that’s just the tip of the iceberg. If done right, VRM tools will revolutionize all aspects of our lives: health care, government, education – you name it.

From what I gathered from the workshop so far:

• We’re close to achieve data portability
• While Doc Searls believes VRM code should be open source, I heard some dissenters
• The value proposition for people is still too vague to excite people outside of our bubble
• We’re too focused on transactions. Instead, we should focus on value exchanges
• We still have to identify the change agents within organizations. Marketing? Customer Service? (Gulp) IT?
• How can fourth parties create stakeholder value?
• How can VRM complement legacy VRM systems?

I don’t think anybody was expecting comprehensive answers for all these questions in a workshop. On the contrary, I hope for more questions to arise on Day 2. My goal for this workshop was not to get all the answers. My goal was not to stop questioning.

Below a few Twitter highlights from Day 1:

@jyarmis: 1995: the invention of the cookie. the end.

@missrogue When we solve problems for individuals, we actually end up solving problems for businesses in the process.

@mjayliebs Search is really the entire set of activities i perform, including talking to friends, neighbors, trusted sources,oh, and google

@nitinbadjatia User driven search (VRM search) – control over input, control over output and control over who gets to help you

@glfceo enterprises trying to predict customers intents will fail

@joeandrieu John McKean: the real challenge is the behavioral one: will individuals move from a CRM-directed world to a self-directed one?

@joshuakahn yeah, a lot of the stuff I’m hearing here is early, but actually alot farther along than I thought.

@missrogue With VRM, I have the opportunity to say, “You earn my trust and I’ll give you the key to all of my information.”

@kevinmarks Josh Weinberger: who are the best communicators in your org? your support people. Why get them off the phone to customers?

@mkrisgman Business is based on exchange of value, power, expectation, and degrees of valuation.

@mjayliebs VRM and CRM are whole lot closer to each other than people think – the gap is culture and understanding as much as principle

@DeanLand For VRM enterprise level uptake: leverage data, show benefits (aka: enable the information) create a VRM ecosystem.

@nhbaldwin vrm offers the vendor a b2b relationship, tighter personalization, with the consumer

@candres this is the confluence of intention and solicitation.

@joshuakahn cookies; designed to be low level machine ID’s, not useful for human ID’s, no matter how you bake ‘em. <- Craig Burton

@jyarmis privacy is only as good as the number of people you can be confused for

Looking forward to Day 2

Image: Courtesy of dropular

Cheap encounters

Not everything was better years ago but some things were better defined. Clarity has become a rarity. A good example: relationships. Decades ago it was clearly defined. A relationship was between two people who liked or loved each other. Even without engagement ring or marriage contract, a relationship was nothing vague. A relationship was a well-defined thing with clear rules and a precise goal: improving the relationship over time. Before you started a relationship, there were declarations. We defined our expectations and were ready to hear the same from the counterpart. Besides these defined relationships, we had cheap encounters: We had something but no real ties that held us together, many exit doors in close vicinity. Nobody wanted to define expectations. More booty call, less duty call. That’s what we called a cheap encounter.

We’ve become used to this. Today we call it network.

Everyone does it with everybody. And it starts earlier than we think. Do brands really have a deep connection with their customers? Why do brands address me with my first name as if we just had a beer together? Do we know each other? Why do brands think it’s better to become my buddy than treating me with respect as a paying customer?

Sure, when you ask those questions you sound like an old fart. Nobody talks about basic politeness and a healthy distance. A healthy distance that would help us identify forced and real intimacy much easier. All these networks nobody claims to be able to live without, support the idea of social promiscuity. That leads to many cheap encounters but rarely to real relationships.

Global Relationship Economy

The word “Network” transformed into an empty word in the last few years. Scientists, database modelers and engineers defined network precisely. And enterprises started to understand that inflexible, hierarchical organizations that see themselves as a walled garden have problems adjusting to a new world of complex and collaborative work structures. Old enterprises were successful because they had everything under control. New enterprises are successful because they know who to work with others to solve a problem.

The last few years made clear that new enterprises got it right: Energy, IT, Research and Innovation: You can’t survive without  cooperation, collaboration and co-creation. The walls of the walled garden came tumbling down. The old control economy will be replaced with the new relationship economy. Are we ready for that?

Looking for friends

Let’s pose the question differently: Are we engaging enough? Are we open to a cooperative working environment? Are we ready for relationships?

Actually, the word ‘Network’ is for most people a throw-away word, mostly used to avoid the answers to above questions. The Web made everything so easy. So much interactivity, so many opportunities, often too many opportunities.

Are we looking for friends on Social Networks?

I know the phone numbers of my friends, know where they live and have a beer with them once in a while. I don’t need a friend confirmation before contacting them. Those relationships are transparent, in almost every way.

I know the strengths and weaknesses of my friends, their likes and dislikes, their destination. I invest trust in and have respect for them. Sure, it’s a pretty big risk. I’m more interested in them as a holistic person, less in one of their characteristics. Human beings are more than the sum of ‘likes’ and favorites. And I know I can have in-depth discussions with them, advancing our relationship. These relationships don’t need to be dissected by my preferences and categories. There’s one rule in life: If it’s not for real, there will be a form you need to fill out. 500 million people have done so on Facebook to present themselves to the world. The results (just like government forms): Nothing. Or almost nothing. Instead of a blooming relationship economy, we now have a new form of social bureaucracy. Voluntary. And very 2.0.

Quid pro quo

To be very clear: Not all relationships on Social Networks are equal. And, let’s please stay away from relationship therapy, talking about relationships until there’s nothing to talk about. Social engineers work on their relationships until they deal with a complete wreck. That’s based on the crazy idea one can plan human relationships, direct them, construct them – until they conform with their view of the world. Leaving relationships to the arsenal of manipulation.

Cooperation and collaboration despises manipulation because they always ask: What can you offer me? What can I offer you? How can we create something together we wouldn’t be able to do alone? Cooperation is an evolutionary principle. We band together and 1+1 turns into 3. Nothing new or revolutionary here. Romans used the phrase “quid pro quo” to express this sentiment. A relationship is not a self-service kiosk.

A relationship is not a present. A relationship is a business. A deal. Quid pro quo.

Oh, I’m sure many readers will shake their head in disgust. At least, I hope so. Maybe they start to question the value of 14,453 global friends while there’s no time to meet a real person for lunch. Do we create peace, improve justice and new technologies with our network friends? Or are we just trying to avoid the real work? We could act, do and work together. Instead, we’re developing a fetish. That’s easier. And meaningless.

Quickies and Wikis

That doesn’t mean networks and wikis are useless because that world is is maturing. We see two separate network trends: the Facebook world and the Wiki world. On one hand you have cheap encounters (quickies), on the other hand constructive cooperation. Here self-indulgence, there collaboration.

The Wiki world works together because they extract value. Many enterprises use these tools because they experience the benefit of working together, not against each other. This is not the old team where everybody hid behind the other person. The Wiki world goes beyond that thinking: Innovative projects happen because the old control model ended in the trash. The other department/division/company is not an enemy, they are partners.

Quid pro quo. The network matures.

It might be also a sign of our recessionary times. When people prosper, they focus on themselves and don’t see any benefit in working with others. It’s easier to complain, criticize and bitch about others. Cooperation in this world feels like capitulation. A defeat. We can beat them by merging or owning them. But working WITH them? Please.

Cooperation/Co-Creation and Collaboration has increased in the last few years. It might be the tough times or just the plain insight that enterprises don’t have to do everything themselves. They can become better companies and more competitive when working with others. In the old days, enterprises were forced to collaborate. Now they want to.

Explanations

Collaboration as a basic element of economic activity has been researched by academia for a long time – game theory as an example. Home Cooperativus is far superior to Homo Oeconomicus. Cooperation and collaboration grows up and becomes just a normal part of the business routine. A good sign. But as long as we talk about networks with this quasi religious undertone, we still have a lot to figure out. Homo Cooperativus is not a new form of humankind, a new us. We’re still driven by our own motivations and desires. We just know that we have to cooperate and collaborate to achieve those. The old term ‘relationship’ is filled with moral implications, always implying there are no selfish motivations. That’s why we read so much crap about the new way of working together, Office 2.0, Enterprise 2.0, co-creation. Nobody wants to be honest and admit the one reason for the advent of collaboration: It benefits us.

Until a few years ago, cooperation meant attacking each other (Call it Mergers & Acquisitions.) Those translated in conquering market shares, not developing new markets. A successful merger was one where the winner eliminated the last traces of the losers corporate culture. Often not motivated by a sense of business. Motivated by legacy emotions.

That doesn’t work anymore. Structures are too complex. Employees too confident. Markets too saturated. Forced marriages were replaced with marriages of reason. We should be happy about that.

That forces all parties to adjust to various corporate cultures. They have to negotiate, find a consensus and then decide: What is the value for each of the stakeholders? How much of my identity do I have to give up to succeed? Answering questions like that lead to clearer rules, clearer rights and duties. If you want to have a relationship, you have to declare your self. Clear and explicit.

Results

Enterprises are trying to break through the walls and silos, expanding the definition of relationships. Collaborative efforts become the norm of corporate culture. The groundswell has just begun, forcing enterprises to rethink everything. I’ve worked in the agency world for almost 20 years, often more involved in a client culture than my employers culture. More often than not, feeling more loyalty towards my work than my boss. Good relationships center around content. Not form factors.

Still, many people have problems sharing their knowledge. One of the skills we learned in the corporate world was to hide our expertise and knowledge from competitors and internal divisions. That’s was a key to survival. We all know those little organizational piranhas. Ready to digest any little piece of knowledge and spreading it around the organization, poisoning the culture. Didn’t we get punished for collaboration, being too open for cooperation? And how often do terms like “Team” and “Group” equal “Buddy System” and “Organized Nothingness”?

That’s the trick: Eliminate organizational piranhas, the buddy system, the “relationships” that kill an enterprise. These little games have to stopped before they start. Fact: If your organization lacks cooperation because of internal parasites, your business will suffer. That’s a leadership problem. Maybe the most important leadership challenge for years to come.

So easy and so hard. Cheap encounters sold as relationships are still running the network. As relationships, these encounters are nothing better than a fling between teenagers. We’re still far off from transforming these connections into 1+1=3 relationships. That’s the only result that counts.

A relationship between adults.

Image: Courtesy of Coralie Bickford-Smith

I took this journey of 13 blog posts to better define the model of Human Business Design. It was necessary to walk through the ideas of systemic thinking, introduce various systems, introduce the idea of interactive management, planning for the apocalypse, pie in the sky models, gap and assets, how to develop a community enterprise based on market principles, design a multidimensional organization, stay away from quick fixes and develop leadership for organizational evolution.

The model of Human Business Design is based on above foundation and rooted in the belief that all human interactions inside and outside of your organization matter now. They way human beings are motivated to connect and realize value has fundamentally changed. We’re seeing a fundamental reset in the nature of work due to drastic changes all of us are experiencing in how people communicate, coordinate and collaborate. And the Enterprise 2.0 “movement” tries to capture this changed behavior by applying Web 2.0 principles to the “command-and-control” needs of the enterprise. In addition, we see a mere obsession with tools for tools sake without much understanding of the socio-business context. The old problem of throwing software solutions at organizational problems is just being re-invented in the social networking arena.

Instead, we need to focus our attention on the shifting nature of work itself and how enterprises need to evolve in a rapidly changing world, Organizations need to dig deeper, define new principles around which work itself can be reworked. Forward thinking companies will develop their own constitution, a bill of rights and a social contract for all stakeholders to have a common purpose everybody involved can rally around. In short: enterprises need to socialize their business.

Technology is the critical enable to implement Human Business Design within your organization but technology is not a sufficient agent for change. We have to focus our work on humans, the limitations of extrinsic motivators (external reward or punishment) and the need for intrinsic motivators (finding meaning in work):

- Developing a foundation of trust
- Motivating and educating the stakeholders to become more active participants
- Providing access to stakeholder knowledge and skills
- Facilitating individual freedom and control
- Encouraging emotional/aspirational co-creativity and participation.

Successful evolution of the organization to a Human Business Design Enterprise requires them to find the appropriate locus of learning, between both market and non-market sources of ideas and knowledge. Most established firms are still trying to access these autonomous idea pools using industrial age logic and rational economic arguments, and, in most cases, tired and outdated marketing efforts where the emphasis is on surface-level tinkering of the customer engagement model, not a complete realignment and reorientation.

Enterprises have to understand that each business, with money and investment in structures, is no more than its people within and its people outside (all stakeholders). Enterprises need to rely more on people and bridge their left-brain thinking demands with the desires of people to focus more on their right-brain capabilities.

More than 10 years ago, the Cluetrain Manifesto exclaimed “Business is fundamentally human”. We need to stop treating stakeholders as “resources” and regard each stakeholders as clients with their own interests, desires and drivers.

If you want to learn more about Human Business Design and how we can help you implementing these principles into your organization, feel free to contact me at uwe@bateshook.com

And, all previous installments for this series, can be found here:

Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12

Image: Courtesy of farm4.static

Transforming an enterprise into a community is consistent with an increasing amount of dissatisfaction with the dominant concept of what a corporation is and who owns it. Community enterprises are created by common purpose rather than a common place. Nobody owns the community. Communities consider members as citizen and not as human resources. Citizen with varied responsibilities as well as rights.

Transforming an enterprise into a community is imperative to allow the system to focus on interaction of all parts and not on separate actions. A community enterprise allows everyone to participate in making decisions that affect them directly. In addition, control is circular, not linear. We don’t recommend eliminating hierarchies because labor must be coordinated in a complex working environment. But hierarchies don’t equal autocracies.

Community Design

Each manager will have a board, consisting of the manager’s supervisor, his subordinates and pertinent stakeholders. Most managers will be part of three levels of boards, interacting with five levels of management. This amount of interactions and access significantly reduces internally generated problems.

The boards are tasked to plan, police themselves, coordinate and integrate with other boards, improve quality of work life and overall performance and, last but not least, approve the board chair.

Boards meet at least once a month. The difference to normal meetings, that often accomplish nothing, is that managers don’t consider them as work interruptions. Instead, board meetings help managers to manage interactions with all stakeholders and facilitate their work. Boards don’t operate under the tyranny of majority, their goal is to operate by consensus. If consensus can’t be achieved, board members are tasked to work under the premise of consensus through experimentation. However, board members have to consent on the success metrics of the test and  a follow-up plan.

The agenda can be set by any member of the board. In the early stages of the enterprise transformation, a facilitator might be used to help the board with the first baby steps. This should be supported with an initial introduction to group processes.

Each board acts independently, can implement any decision if it doesn’t affect any other or the organization as a whole. Managers should ask their boards for advice on decisions they have to make but the responsibility for the decisions is solely with the managers, not the boards.

Empowering all stakeholders compered to empowering a few managers will improve the performance of the enterprise dramatically.

Let’s discuss this further in Part 9.

Previous installations can be found here: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6 and Part 7.