TEEMU ARINA SAMI VIITAMÄKI E-book no:1 May 2011
Why should you read this e-book? 1. Make sense of the cultural and economic implications of emerging social technologies. 2. Understand and shape internal and external digital communication strategies. 3. Design models for thinking and communicating new strategy and vision. 4. Increase efficiency and effectiveness by lowering the transaction costs of doing business in a digital world. 5. Make great products that are more meaningful and valuable for customers. 6. Empower employees in ways that bring greater customer satisfaction. 7. Leverage transparency to gain greater reputation, credibility, and trust in the marketplace. 8. Avoid constant reorganization by being more sensitive and open to changing customer needs. 9. Redefine the competition in a way that expands the market opportunity for everyone. 10. Stay focused on improving the bottom line and not be continuously driven by new tools and technologies.
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What? Cloud Company is a book and media project exploring digitally distributed practices and social technologies for strategy, management, and communications.
Why
It’s clear that succeeding in today's networked world requires companies to be ever
For
Cloud Company is produced for global leaders developing strategy and culture,
How
Through www.cloudcompany.cc, we discuss and develop the fundamental concepts through research, articles, and dialogue with executives and experts. During 2011 we
Stay connected:
more agile, responsive, and intelligent in a digital environment. What’s not as clear is how to build these capabilities in a company. Cloud Company seeks to answer this question with a systematic framework.
management and operations, as well as communications and customer relations to answer the demanding challenges of everyday business and decisions for the future.
will develop this material into a comprehensive book illuminating the roots, transitions, and practical issues in designing and building a Cloud Company.
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Who? Sami Viitamäki
• •
Partner and Strategy Director, TBWA\
•
Known and praised speaker on the impact of digital and social practices and technologies on marketing, communications, and customer relationships.
•
Ex-marketing manager and member of group-level social media unit at TeliaSonera, the largest telecom operator in the Nordics.
•
Key strengths: crowdsourcing, digital branding & marketing, service design & content development, social technology & distributed practices in management and marketing.
• •
Public speaker, writer, journalist, and management consultant for digital technologies.
• • •
No. 1 speaker on social media at Speakersforum, the largest speakers agency in Finland.
www.samiviitamaki.com
Teemu Arina
www.tarina.me
M. Sc. (Econ.) Degree in International Design Business Management (Economics, Arts & Technology).
Given approximately 100 presentations a year at recognized conferences, business summits, and universities in Germany, the U.S., the UK, Belgium, the Netherlands, Finland, and Italy.
CEO of Dicole Ltd. and award-winning technology entrepreneur for over 13 years. Key strengths: social media, open innovation, net generation, knowledge management, service design, digital ecosystems, collaborative learning, and e-learning.
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We live in turbulent times...
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globalization shifting balance of power
evolving structures remote (co)working
vertical & horizontal mobility
information overload decreased stability
organizational novel management ideas
global hunt for talent
geopolitical
networked economy ‘free’ services & goods
frugal innovation disruptive competition
vanishing middle market economic
new forms of payment
transparency
deal hunters true social shopping
Businesses face several transitions simultaneously... net generation accidental entrepreneurship
global village
individual end of 9 to 5 the augmented human
continuous partial attention
aging societies
cloud computing
prosumers open standards & interfaces
contextawareness & mobility
technological social next gen. technology & search & platforms analytics ubiquitous computing
digital divide societal
educational reform
creative class smart mobs
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...while the traditional organization struggles. 80% of leaders, when asked, state that they’re strategy is communicated understandably across the organization...
Executives routinely require new initiatives to prove their potential through a tedious, time-intensive and watertight process...
...but according to middle management only 15% of them can effectively communicate and thus execute the company’s strategy.
...which should in theory lead to more than the existing rate of 10% of new offerings surviving in the market place.
Management
Ref: TBWA\ study 2009
Ref: Copernicus Marketing Consulting
Employees
Customers
When company management are asked if they offer a superior experience to their customers, over 80% claim that they do... ...which is in sharp contrast to customers saying that only 8% of companies they deal with really deliver this kind of value. Ref: Bain & Company (2005)
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The situation calls for rethinking and redesigning Strategy & Leadership
Management & Operations
Communications & Interactions
and
for the digital era. 9 www.cloudcompany.cc
It calls for a
Cloud Company approach.
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Cloud Services I know... • 1980s - Network TCP/IP, ICT, mobile phones, 1G.
• 1990s - World Wide Web GSM, hypertext, commercial internet, search engines, mobile internet.
• 2000s - Web 2.0 Web as a platform, social media, user-generated content, geolocation services, crowdsourcing.
• 2010s - Cloud Cloud computing, cloud-based services, application stores, augmented reality, Deep Space Internet, internet of things...
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...but what is a Cloud Company? Traditional & charismatic domination
Precision, speed, standardization & specialization
Vertical and horizontal, multiple roles & multinational design
Cloud Company
Entrepreunial & cooperative structures
Functional & divisional structures
Matrix structures
Virtual & network structures
Pre-bureaucratic
Bureaucratic
Post-bureaucratic
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In a Cloud Company
distributed practices and social technologies play key roles in transformation on every front... 13 www.cloudcompany.cc
...Enhancing interaction and bringing results. Utilization of the company’s collective intelligence for better decision-making processes. Empowerment of workers who manage their own knowledge for constant, iterative learning.
Management
Intelligence and insight for (co)creating propositions more valuable to customers. Effective communications and interactions for increased market footprint and sales.
Employees
Customers
Fast and personal customer service and care that spur loyalty and recommendations. Internal resources, partners, and customers effectively organized for daily operations.
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So what does a
Cloud Company look like?
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Cloud Company extends to all areas of business.
LEARNING FROM THE ENVIRONMENT
g p ate hi Str ders Lea LEARNING IN & ON ACTION
The Triskelion
M an O p ag er e m e ati nt on s
y
ications Commun Interactions
LEARNING FROM CUSTOMERS & PARTNERS
Cloud Company extends to all areas of business. It is about deep strategic learning, constant adaptation, and change in near real-time.
LEARNING LEARNING FROM FROM THE THE ENVIRONMENT ENVIRONMENT
g p ate hi Str ders Lea LEARNING LEARNING IN&&ON ON IN ACTION ACTION
The Triskelion
M an O p ag er e m e ati nt on s
y
ications Commun Interactions
LEARNING LEARNING FROM FROM CUSTOMERS CUSTOMERS & & PARTNERS PARTNERS
Cloud Company extends to all areas of business. It is about deep strategic learning, constant adaptation, and change in near real-time.
LEARNING LEARNING FROM FROM THE THE ENVIRONMENT ENVIRONMENT
It utilizes open and distributed practices, social technologies, and digital interfaces.
LEARNING IN & ON ACTION
The Triskelion
Systems Thinking
y
DIGITALLY DISTRIBUTED Technologies Interfaces Practices
M an O p ag er e m e ati nt on s
Personal Learning Environment
g p ate hi Str ders Lea
Transparency
Active Intelligence
Usercentric design
ications Commun Interactions
LEARNING FROM CUSTOMERS & PARTNERS Crowdsourcing
Cloud Company extends to all areas of business. It is about deep strategic learning, constant adaptation, and change in near real-time.
LEARNING FROM THE ENVIRONMENT
g p ate hi Str ders Lea
Transparency
y
er Pe nt on cie cti Effi odu Pr
Personal Learning Environment
LEARNING IN & ON ACTION
The Triskelion
Agile Planning & Development
DIGITALLY DISTRIBUTED Technologies Interfaces Practices
M an O p ag er e m e ati nt on s
A Cloud Company improves intelligence, agility, and responsiveness across all areas and business functions.
Active Intelligence
Usercentric design
Systems Thinking
ications Commun Interactions Va Int lu er e ac Cr ti ea ve ti on
It utilizes open and distributed practices, social technologies, and digital interfaces.
LEARNING FROM CUSTOMERS & PARTNERS
Crowdsourcing
A Cloud Company runs on data Social networks, online shops, mobile applications, websites requiring registration, more sophisticated equipment at factory floor or point of sale, even evolving outdoor advertising – all enable us to tap into an explosively expanding ocean of realtime data on human behavior. In contrast to low-performing companies, industry top performers are more skilled in applying analytics over intuition in business decision-making on any given area – not just the traditionally analytics-heavy areas such as finance and operations. Areas such as customer service, sales and marketing, customer experience management, brand communications, and workforce planning and allocation are all areas in which sophisticated analytics are traditionally not deployed. Yet industry top performers routinely beat low performers in analytics application in these areas as well – and reap benefits as a result. After the more basic needs of operational efficiency and revenue growth have been met, analytics on the areas of innovation and learning should be seen as a top priority. Interestingly, the more advanced a company is in analytics, the higher pressure it perceives for coming up with even better data sources and tools. 20 www.cloudcompany.cc
A Cloud Company is not overrun by data While data capture and analysis is essential for a Cloud Company, the ways to actually utilize it in actually guiding daily work and future strategies are where the true distinctions between winners and losers lie. But utilizing data in an environment in which we produce more data each year than the whole human history up to the previous one is not an easy task. A total of 60% of companies readily admit that they get more data than they know how to use effectively. Managing data in a Cloud Company involves many considerations new to a traditional company: how do we relate to utilizing others’ data; how do we approach the openness of our own; what is the level of perfection and completeness we require from the data our actions are based on; what is the frequency of collating, inspecting and acting on data; how and in which form do we disseminate data across the organization and how do we refine it into knowledge, know-how, and competitive advantage? These are all questions a Cloud Company needs to answer. However, a lack in understanding and know-how, adequate resources and skills as well as management bandwidth among other reasons currently prevents many organizations from effective data analysis and application.
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But where to start? Rethinking, redesigning, and rebuilding strategy, management, and communications requires more than a will to get there. It requires a framework for innovation.
Enter A.D.E.P.T Developing strategy, management, and communications to respond to challenges of the networked world requires a comprehensive approach. We have crafted our A.D.E.P.T. framework through years of exploratory research, expert discussions, and practical experience with organizations. The framework systematically addresses essential issues and challenges in designing and developing distributed practices and social technologies for strategy, management, communications, and market Interactions. We now want to open up our approach and thinking for discussion through our blog and e-books. We do this to share what we have learned so far and to develop our own thinking further. Ultimately, we aim for the best possible end result in our framework, the Cloud Company book, as well as the accompanying cases and tools through interaction with our readers.
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The A.D.E.P.T. framework for redesigning strategy, management, and communications consists of five elements:
A D E P T
Assessment addresses the organizational perspective, analyzing the current situation in terms of environmental, competitive, market, and public contexts, establishing goals and urgency, as well as assessing the organization’s apparent and hidden strengths and challenges. Domain emphasizes the human participants’ view: their desires, goals and needs as well as their current strategies and methods for achieving those goals, the frequency and intensity at which participation and interaction are required, as well as the most potent shared objects and topics around which to generate interest. Engagement is about designing interaction around the established objects and the mode of engagement, openness, and commitment over the course of the interaction, as well as effectively motivating participants, be they customers, employees, or other actors. People comprises the human factors required to build and maintain sustainable interaction, assess skills, and realize full learning potential as well as redefine and redistribute rights and responsibilities, and also support and reinforce daily interaction loops and flow of information. Technology addresses the technology-related issues in creating an accessible and sustainable environment for interaction, choosing the right infrastructure and platforms, crafting or selecting the right applications for different purposes, and delivering the experience through the right media and interfaces.
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ASSESSMENT IN SHORT: Why do we need to change – and where do the opportunities lie?
Environment opportunities & threats
Aspiration needs & urgency
Organization strengths & challenges
Directions, goals & schedule
The
The assessment phase means setting the stage for change and consists of three areas – Environment, Aspiration, and Organization. Environment In a world of constant disruption, the environment is never again a static landscape, but instead is an ever-flowing and changing seascape – usually a stormy one. It is crucial to parse, grasp, and rank the most relevant trends and developments in the market fast enough to be able to exploit them – and avoid threats and pitfalls. Aspiration After recognizing the opportunities, current business needs on all Cloud Company areas – strategy and leadership, management and operations as well as communications and customer interactions need to be assessed, prioritized, and ranked according to urgency and criticality for success. Organization Realistically assessing the company’s strengths and challenges in meeting the needs of the marketplace and the business itself is key for effective development. 25
A.D.E.P.T. Framework
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ASSESSMENT – Case In Point How do you rid yourself of old habits and open up your eyes for new business opportunities in practice? Consider the case of The Atlantic Magazine. The Atlantic was a quality ensemble that had been around for 150 years, but one that had not turned a profit in over a decade. With the onset of the recession and everincreasing shift to digital media consumption, they were at a low-point in 2008, and forced to admit that if nothing changed, they would soon face bankruptcy. What they did was simple and ingenious: they started looking at their business from the viewpoint of an imagined Silicon Valley startup that was aiming for disrupting, cannibalizing, and overthrowing The Atlantic’s business. The results? The magazine’s revenues have doubled since 2005; digital ad revenue is currently 40% – compared to an industry average of 15% – and most importantly, after a decade in the red, they turned a profit of $2 million in 2010. Read more about it here. The
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DOMAIN Domain is about in-depth knowledge about the human actors in the system gained by examining Actors, Contexts and Objects. IN SHORT: Where in the participants’ lives and minds do we focus to be relevant?
Actors desires & needs
Contexts situations & environments
Actors Knowing the actors means being familiar with the participants’ world and their inherent desires and needs, not merely demographics or expressed wants. As Alexander Manu has thoughtfully observed, “The whole modern global economy would not exist if it was not for man’s irrational desire to become something else than what he now is”. Contexts
Objects shared topics & issues
The contexts represent the situations, frequency, and intensity of interactions and where they currently happen or could take place. This can unearth opportunities for meaningful exchange in unobvious situations and environments. Objects
Actor / context / object opportunity map
On the basis of knowing the actors and contexts, we can identify and decide on the social objects around which to generate activity. As no activity revolves around links between people per se, these topics of genuine interest help bring people together, converse, and co-create with a shared purpose.
The
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DOMAIN – Case In Point As a case in tackling customer needs with analytics and meeting them with a sophisticated, networked solution, we have Assurant Solutions, a company that sells credit insurance and debt protection, and faced a 16% retention rate when customers called to cancel their services – good in the industry but still far from desirable. What they did was to challenge the conventional wisdom that customers valued operational excellence metrics – low abandon rates, fast speed to answer – above all. When they brought in IBM’s team focusing on deep analytics to uncover the customers’ real needs, they discovered something interesting. Customers were actually happy to wait longer – if that meant being paired with a customer service representative (CSR) best suited to their needs. Pairing each caller individually and in real time with the best possible CSR tripled their retention rates and led them to launch a B2B offering called RAMP together with IBM. You can get familiar with RAMP here. The
28 A.D.E.P.T. Framework
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ENGAGEMENT IN SHORT: How to interact fruitfully, effectively, and sustainably?
Access transparency & commitment
Mode competition, collaboration, or other
Motivation rewards & incentives
The engagement phase involves designing the forms of interaction and co-creation most potent for achieving the identified goals through the areas of Access, Mode, and Motivation.
Access Access is not a trivial issue even in a time when gurus preach about the virtues of universal openness. Who can interact, on which terms, how access and privileges are leveled, and other elements of access can all act as powerful accelerators or detractors regarding engagement initiatives and their effectiveness.
Mode While collaboration is the form of interaction most often springs to mind when talking about social technologies and distributed practices, other basic forms, such as competition and selfexpression, are suited to different needs and require their own considerations to be successful.
Motivation Engagement and phasing plan
The A.D.E.P.T. Framework
Motivating participants requires thorough thinking about intrinsic incentives – such as pure enjoyment from taking part, creativity, and challenge; extrinsic social incentives – such as visibility and authority; and extrinsic material incentives – such as redeemable points, products, or cash. Remember that cash is not necessarily the best participation driver.
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ENGAGEMENT – Case In Point In 2010 GE launched the Ecoimagination Challenge, a open innovation experiment for businesses, entrepreneurs, innovators, and students around the world to share their ideas about a next-generation energy grid as well as electrical applications. The challenge generated multiple new business and growth opportunities for GE. So far the challenge has attracted thousands of high quality ideas, suggestions, and proposals that are elaborately presented through scientific papers, system descriptions, images, and videos. The participants range from ten year olds to veterans in their nineties, and from seasoned professionals to clever hobbyists. Up to this point, the public has answered to two major challenges: one of them focusing on powering up the grid and the other on powering up peoples’ homes. More challenges are on the way. One of the key reasons GE has succeeded in this ambitious endeavor is that they are offering a serious opportunity for would-be innovators. They have partnered with known trusts and venture capital firms, and have together with them raised a 200 million dollar fund to invest in winning ideas. The
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PEOPLE IN SHORT: Who has to do what, what do they need for it, and how do they do it?
Capabilities skills & learning
Empowerment rights & responsibilities
Flow interaction & coordination
Despite all the technological advancement, the inevitable and extremely critical element in Cloud Companies – as in any company – is the people who ultimately manage all interaction.
Capabilities With new methods of working come new requirements for skills readiness and learning needs. These capabilities can’t be acquired overnight. It is thus important to assess the current level of know-how, future paths for personal development, and recruitment and staff turnover goals.
Empowerment Cloud Company people need a comprehensive, clear, and simple set of rights and responsibilities that allow them to act effectively act in the best interest of the organization. According to Gary Hamel, people need real-time visibility to performance metrics and motivation to act, as well as the power to change things that affect performance.
Flow Resourcing blueprint and development paths
The A.D.E.P.T. Framework
It is worthwhile to describe the interaction and coordination flow with different internal and external actors to a certain degree of fitness, so that it is clear who does what in which situation – especially in critical situations requiring an added level of attention. This way interactions, reactions and responses do not get unnecessarily delayed.
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PEOPLE – Case In Point Zappos, the largest online shoe store in the U.S., relies in superior customer service as their competitive advantage against lower-cost rivals. All their employees go through an intensive training period, after which they will be offered $2,000 to quit instantly. Even director candidates go through the same exact program that involves, for example, a period of practical front-line customer service. Those who do pass, get permission to represent Zappos on social media channels of their choice using only their own best judgment as guidelines. The same applies to customer service: every employee is pre-approved by the CEO to do anything within the company’s means to offer great service and build customer satisfaction. That means no target answer, resolution or cross-selling targets for customer support. The result? Even Amazon with all their muscle, technology, and prices could not compete, but had to acquire Zappos for close to $1 billion. The
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TOOLS
The final step deals with how to realize the collaborative experience internally and externally. Here we consider the issues of Architecture, Solutions, and Delivery.
IN SHORT: Which means to use for most effective but sustainable delivery?
Architecture infrastructure & platforms
Delivery media & interfaces
Solutions applications & features
Architecture Today’s ecosystem offers many solutions for building a Cloud Company’s backbone. Architecture can be built on external providers’ cloud services using software-as-aservice, platform-as-a-service, or even infrastructure-as-aservice offerings to set up operations – with little or no investment to internal ICT capabilities. Delivery In addition to back-end and front-end services, a company needs to assess the devices, interfaces, and media required to deliver its services and content. In the age of device operating system wars between partly non-compatible platforms, this is certainly a non-trivial issue. Solutions
Ecosystem depiction and phased delivery roadmap
The A.D.E.P.T. Framework
Ultimately, a Cloud Company needs to craft or acquire the applications and solutions for the task. Modularity, flexibility, sustainability, and openness are considerations that need to be taken upon. Where a comprehensive suite is sometimes effective, some environments require a more eclectic and shifting set of tools.
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TOOLS – Case In Point An example of an innovative use of available tools and platforms is Best Buy, who noticed that their customer service people and salespeople were answering the same customer inquiries time after time, e.g., about differences between plasma and LCD displays in modern TV sets. To help both their staff and their customers find the answers more quickly, they set up Twelpforce, an open and public, 24/7 customer service on Twitter, a popular microblogging service. Anybody with a Twitter account can direct a question to the Twelpforce with a specified tag and will shortly get an answer from one of the customer service reps – or another customer. What’s more, Best Buy, doesn’t force any of its employees to sign in and help, but they do it since it is an invaluable source of information for them as well.
The
Even before Twelpforce, Best Buy innovated on architecture and solutions. When facing a multi-million-dollar platform investment for an internal social network, they decided instead to build the system with internal resources and people their staff knew. The result is Blue Shirt Nation, one of the best working examples of internal SNS solutions – surely in part thanks to ownership and pride in the endeavor. 34
A.D.E.P.T. Framework
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Environment opportunities & threats
Aspiration needs & urgency
Organization strengths & challenges
The A.D.E.P.T. Framework
rights & responsibilities
Flow interaction & coordination
Who?
Capabilities skills & learning
Context situations & environments
e? er
Objects shared topics & issues
A.D.E.P.T Engagem ent People
s l o To
Wh
?
en t
?
at h W
Empowerment
Dom ai n
hy W
m
s
Solutions applications & features
es
Architecture infrastructure & platforms
Ass
Delivery media & interfaces
Actors desires & needs
How
?
Access transparency & commitment
Mode competition, collaboration & other
Motivation rewards & incentives
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Conclusion The cloud is shaping is our forms of organization, intertwined with technology and culture. In technological development, the influence and importance of culture and people cannot be underestimated. Media theorist Marshall McLuhan famously said, “We shape our tools. And then our tools shape us.” We predict that the transition to the cloud will be as dramatic for businesses as the transition from the fixed landline to mobile phone. The shift was not only about the technology, such as the disappearance of the phone cord. The mobile phone became a personal identity device to be used at a point of creative expression. The cloud will dramatically lower the transaction costs of doing business. As companies decentralize various layers, including infrastructure, research and development, marketing, and sales, they eventually allow a new form of organization to emerge: the company as a cloud. This transition calls for new approaches to strategy, management, and communications. We would like to continue the dialogue with our readers at www.cloudcompany.cc. If you are an expert, we hope that you will consider becoming a guest author at our blog to share powerful ideas on how to become a cloud company. In the Cloud, Teemu Arina & Sami Viitamäki
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About the Authors Cloud Company is a joint book and media project initiated by two writers, consultants, and practitioners of social technologies: Mr. Sami Viitamäki and Mr. Teemu Arina. The authors have a background in technology, media, and telecom industries. As members of the net generation, they consider themselves post-industrial thinkers, pushing hard in order to discover an alternative view on business and culture. They are successful advisors to leading organizations and have written numerous articles and given popular presentations at major conferences internationally. Like us on Facebook
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