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|In: Industry Commentary|Last Updated:

CRM is an old story. Digital is the hot new topic. Digital without CRM? Can’t happen.

Or else it easily can. Both words have been tortured in ways that violate seven of the ten commandments and most of the Geneva Conventions, so a lot depends on your definitions.

Here, for example, is McKinsey’s definition of Digital: “… digital should be seen less as a thing and more a way of doing things. To help make this definition more concrete, we’ve broken it down into three attributes: creating value at the new frontiers of the business world, creating value in the processes that execute a vision of customer experiences, and building foundational capabilities that support the entire structure.”

To help you through this round of buzzword bingo, what I think McKinsey is saying is that Digital means:

1. Offering new products and services that weren’t possible before.

2. Making sure you don’t treat customers like dirt.

3. Building all this into the business instead of stopping with a flashy proof of concept.

Which I think means running businesses the way they should have been run all along, if it hadn’t been for consultancies like McKinsey that relentlessly promoted efficiency and cost-cutting as the sin qua non of business management until Digital came along.

But at least, with Digital, there’s an excuse: Its actual, adjectival meaning … pertaining to discrete numbers … has nothing at all to do with business strategy. No wonder it’s a head scratcher.

CRM, in contrast, has a plain, clear meaning: “Customer Relationship Management.” If that still isn’t clear enough, it means paying attention to how your company manages the relationships it has with its customers.

And yet, in the world of buzzword bingo, “CRM” has four, quite distinct meanings, only two of which fit:

1. System implementation: We need a system of record for customer data, so we’re buying a system and need to integrate it into the rest of our applications portfolio.

2. Business integration: Now that we’ve installed and integrated our CRM system, we need to make it support our sales, marketing, and customer service departments.

3. Business optimization: Wait wait wait wait wait … you mean, our new system can do things our old patchwork collection of ad hoc databases and spreadsheets couldn’t do? Let’s figure out how we can use the new system to actually improve how we interact with our customers.

4. Customer relationship management: We want to be like the Chicago Cubs, who aren’t selling any more tickets this year than any other during the more than a century they defined “loser” in the world of baseball. Why? Because they’ve always sold out every game, because everyone on the north side of Chicago is, deep down inside, a bleacher bum.

It isn’t that I’m against having a system of record. It’s that having a system of record for customer data has little to do with managing customer relationships.

For that matter, I’m also not against configuring software to support how you want to do business. It’s that if you start with how you do business today, you’re ignoring a central reality of old, tired, patchwork systems: The business processes that depend on them will include lots and lots of pretzel logic that’s there only to work around system limitations. “Embrace your inner pretzel” just isn’t much of a rallying cry.

The Cubs know how to manage customer relationships, and in fact they’re the archetype, followed closely by Harley Davidson.

Companies that successfully manage customer relationships establish a sense of affinity between their customers and themselves. In retail businesses, renamed “B2C” so as to further damage the English language, this is a difficult but sometimes achievable and highly profitable goal. Its essence: Customers feel like they’re members of an exclusive club. They’re the cognoscenti, unlike those south-siders who just don’t understand what real baseball is about.

Establishing a sense of affinity is even more difficult in business-to-business settings. There are, of course, golfing events and such, but they’re more along the lines of soft bribery than affinity building.

Which isn’t an ethical complaint: Frequent Flier and similar so-called loyalty programs serve the same purpose. They offer a tangible reward for repeat business.

Quid pro quo is just as valid a model for defining customer relationships as member of an exclusive club.

What matters isn’t how you define your customer relationship model. It’s that you design it.

The software is just a way to help put your design into practice.

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|In: Cognitive Enterprise|Last Updated:

Want to volunteer?

Enterprises need to become more cognitive — a point made in The Cognitive Enterprise and reinforced in quite a few of our weekly conversations.

And yet so far as I can tell, enterprises are, if anything, becoming less and less like organisms that act with intention. They aren’t even doing a good job of acting like mechanisms, as my process-oriented consulting brethren recommend.

No, taken as a whole, your average enterprise seems bent on devolving into a collection of semi-autonomous squabbling siloes.

It’s like this: If OODA loops are how enterprise cognition operates, informal collaboration is the cultural attribute that allows it to happen. And organizational siloes with high walls and impermeable boundaries are the single biggest organizational barrier to informal collaboration.

It’s time to do something about it. Here’s what I have in mind.

The Challenge

We need a metric — a way to measure silo height that satisfies the 6 Cs of good metrics. In case you haven’t read chapter 3 of the KJR Manifesto, they are:

  • Connected to important goals.
  • Consistent, always going one way when getting closer to the goal and the other way when getting further away.
  • Calibrated, so the act of measurement yields the same results whoever takes the measure.
  • Complete, because anything you don’t measure you don’t get.
  • Communicated because otherwise, what’s the point? Metrics drive behavior — that’s the most important reason to have them.
  • Current, because business goals change, but not if how the business measures itself doesn’t.

Fortunately, while we’re pretty much starting from scratch when it comes to measuring silo height, we do have a model we can use to help jumpstart the process — the Net Promoter Score.

Most business leaders understand that customer satisfaction matters, which means measuring it matters too. But measuring the psychological state of a customer is no easy task. It’s more like a fool’s errand than a difficult but rewarding undertaking.

And so was born the Net Promoter Score (NPS) (credit to Fred Reichheld) — a tool based on an easy-to-ask, easy-to-answer question: How likely is it that you would recommend this company to your friends?

If the NPS stopped with giving companies a measurement it would have limited value. But it doesn’t: Companies that participate in the NPS project also see statistics for their industry as a whole, which provides a sense of how they’re situated in their competitive landscape.

This is invaluable.

And finally, Bain & Company, the folks who own and administer NPS, are in a position to correlate NPS with business performance. No, correlation doesn’t prove causation, but it’s better evidence than just taking it all on faith.

The Silo Height Index Project (SHIP)

Here’s the plan, such as it is. We need to:

  • Develop a simple question or short set of questions that can be answered on a 1 to 10 or equivalent scale and that will reliably reveal an organization’s silo height — it will be a calibrated measure.
  • Promote the concept widely enough to reach critical mass — enough participants to do some statistical slicing and dicing with the results so the results are interesting enough to matter.
  • Establish a repository to manage the data. Following the principle of permeability, this should be made widely accessible at no charge, to give anyone interested the ability to play with the data. But, the public database can’t contain any … what shall we call it … Corporately Identifiable Information (CII) … so we’ll also need a private database that does contain CII. This will allow for follow-up research of a more sensitive nature, should that prove desirable.
  • Flesh out the business model. I’d like this to be an open-source-like effort without it being a crowdsourced effort. I’ll take initial responsibility for curation, but there’s always the danger of success — it by some strange combination of circumstances this catches on in a serious way, I don’t want to become a pothole in the road of progress.

If you find the concept appealing enough that you’d like to work on it … and I do mean work; this won’t happen without real effort … please send me an email letting me know what aspects of SHIP you’d like to participate in, and what qualifications you have for doing so.

One more thing: If you like the idea, spread it around. There’s no time to start promoting this like the present, so please forward this edition of Keep the Joint Running to anyone and everyone you know who might want to be in on it.

Launching this SHIP (I had to) is going to be a long shot, but what the heck. Even long shots sometimes find their target, and this target is certainly worth shooting at.

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