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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:

A couple of decades ago, when I joined Perot Systems, I greatly admired the weekly employee newsletter.

It was entirely prosaic — a text-only email layout-and-design tragedy where bold-face and italicized letters were the boundaries of formatting sophistication.

It was concise and readable, told employees the essentials of what was going on, and, every edition included a story. Not a tale of Ross and how brilliant and fabulous he was, but of a team that had done something that exemplified the company’s aspirations, goals, and values.

Which was far more effective in making sure all employees understood what constituted “how we do things around here” than any mission statement posters, values cards, or other empty gestures.

Perot Systems wasn’t a cognitive enterprise, but its employee newsletter was a step on the right path to making sure whoever made decisions on behalf of the company made decisions Ross Senior and his inner circle would agree with.

It’s no small challenge, and the bigger the company, the harder it is to push and prod the organization so it acts like an organism — a single entity with a single purpose. Large enterprises tend to be more like ecosystems than organisms. Why? Like ecosystems, the component parts of an organization are diverse, self-interested individual organisms — those pesky human beings you’ve probably had to work with once or twice in the course of your career.

Just in case you still aren’t convinced: Your brain, stomach, kidneys, and spleen all have different functions, but they all have the same goal — your survival and success.

Your company’s supply chain, IT, accounting, and manufacturing departments also have different functions, but there’s no reason to assume their managers and staff even care about the survival and success of anything beyond their little silo, let alone agree in any way, shape or form on how to achieve the survival and success of the enterprise as a whole.

One place to start is the golden rule of design: Form follows function, which is to say, understand the problem you’re trying to solve before you start designing solutions.

With a cognitive enterprise, one of the problems you’re trying to solve is how to give customers the impression they’re interacting with the equivalent of a person that acts with intention, not the complex, hard-to-navigate bureaucracy that’s the underlying reality.

There’s no single magic bullet for this. Creating a cognitive enterprise is a tough, tough challenge, as Scott and I discovered while writing the book. One starting point among many: Design the default sequences through which you expect typical customers to pass, and the mechanisms for exiting the default sequences when they don’t fit the situation.

Doing so enumerates what the customer touchpoints are. The next step is deciding what the customer experience should be within each one, for each channel through which customers can interact.

There are, as you might imagine, quite a few different variables to take into account. For example: Should you maximize the number of required touchpoints so as to create a soft, we-care-about-you impression, or should you minimize them so you don’t waste your customers’ time?

The answer, and you knew this was coming: It depends.

For example: If you’re an Emerald Club member and rent a car from National you can walk right past everyone, grab a car, and drive out. National caters to customers who appreciate convenience.

Enterprise, on the other hand, which is part of the same car-rental conglomerate, takes the opposite approach: Someone accompanies you to your car, walking you through every step of the rental process up to and including looking for dings and dents.

Enterprise figures its customers want the personal touch.

Which company is right? They both are. Different kinds of customer have different preferences. What the two companies have in common: Both started with what they wanted their customers to experience, then designed their processes and systems … and educated their employees … to provide that experience.

What else? Three rules:

  • If something interrupts the flow, what changes is the touchpoint sequence, not the touchpoints themselves.
  • Touchpoints are functionally identical, regardless of the channel. What customers do doesn’t depend on whether they’re using the phone, the web, or a mobile app.
  • Touchpoints might initiate or rely on back-office processes, but they do everything possible to hide those processes so customers don’t know anything about them.

Once you escape the one-dimensional mindset that everything is about cutting costs, creating the appearance of cognition really isn’t all that complicated.

In principle, that is. Making all this work in practice is as difficult as business gets.

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