Michael Fauscette

Sense and Respond, Operating a Social Business

Over the past several years I've spent quite a bit of time looking at the impact of several change factors, including the application of social web driven ideas into business, the impact of mobile, cloud, and socialytics and a few others on business. All of these tech changes really are connected to the continued evolution of the Internet. Looking back a decade or so, it's obvious that the concept that the post-industrial information driven business environment is leading to a fundamental shift in the way businesses are managed and operate has deeper roots than just the past few years of research into social business. In fact a lot of the theory that could support these changes is at least twenty years old. Not that everything is "figured" out yet of course, many businesses are trying to sort out what this shift is really and how they can take advantage of the emerging models. The Internet is creating changes that impact business models, social interaction and technology. Subsequently businesses are reacting to these new models, technologies and maybe even more compelling, the change in people's expectations, be they employees, customers, partners, or competitors.

In the early 1990's an IBM researcher named Steve Haeckel, put forward a new business management concept that he called sense and respond. The sense and respond (S&R) model is optimized to make organizations in the information economy more competitive by encouraging adaptability and by adjusting the business to react to demand, not plans. The industrial age model could then be called make and sell (M&S), and is in almost every way the antithesis of the sense and respond organization. Sense and respond companies take real time contextual market information, map that against the inherent capabilities of the company and then adapt the business to the new conditions, all of which could be characterized as an "open system". The company is structured in a way that gives maximum flexibility (not rigid hierarchy), minimizes silos, incents team collaborative behavior and is a knowledge sharing culture.

Make and sell organizations operate in a near static environment that is built around a mission, that leads to a strategy which is then translated into objectives and tactics, or in other words, a "closed system". The organizational structure is hierarchical and operates in a command and control model where controlling information is a power base for many managers. M&S companies are predictable and stable, they focus on things like efficiency, planning, goals and in general operate in multiple silos. Actually, M&S probably sounds pretty familiar to many people.

Now take the sense and response paradigm and move it forward into the social business frame of reference. It is, I believe, the more effective management system for the social business, but there's more to it than that. Think of it as the operating model for the social business, an open system that takes inputs from many data sources and uses those to support business decisions and ultimately form a response. This diagram is a simple representation of the process:

The inputs could come from many different sources, including structured and unstructured data. From the social listening systems (or social media monitoring) there is a wide range of useful data including customer feedback, comments, interactions etc.; influencer comments; competitive information, employee comments... basically any relevant social data. The sources could range from blogs and public social networks to private communities and internal communication systems like email and IM. General market and economic data are important inputs as well as data from the traditional transaction systems, which is extremely important and would be a critical part of the decision process. In fact some of the most important information could come at the intersection of the transactional, market and social data.

There are a bunch of system issues related to this process of course, not the least of which is tagging all data with some method of identifying the sources and finding ways to correlate different data points. For example businesses would need the ability to uniquely identify a customer across multiple "channels" so that all of the disparate data could be used to build a single model. I don't want to detour into a discussion of the technical issues with this seemingly "simple" task of identifying people on multiple networks and channels nor do I want to spend time at this point talking about master data management issues, but I'd be remiss in not at least mentioning them in this context. The data would, in many cases fit the definition of "big data" as well, but I'll just refer you to my post on smart data. It's smart data we need to develop and use in this process, not big data.

Responses could take many forms. A response could be as simple as reaching out to a disgruntled customer about a product issue that is discovered from monitoring a social network, or it could be as dramatic as a major business model shift caused by some new competitor changing the competitive landscape. Because the system is open, the responses can be as flexible as necessary to provide the correction. In the S&R model changes are iterative if required, as each correction produces more data that can be used to revise and adjust any change in real time. The focus is on finding the solution that produces the right outcome, not on following some predefined plan. Rather than building a business plan / strategy that spans some time period, the S&R managed business is constantly adjusting and responding to changing conditions in real time.

What do you think? Do you know any examples of businesses that use the sense and respond model?

Tags: S&R, socbiz, social, enterprise, business model, management, strategy, adaptive

Microsoft Buys Enterprise Social Network Vendor Yammer for $1.2B

The much anticipated and highly rumored announcement finally hit the wires today. One of the biggest questions was where would the company reside in the Microsoft organization, a question that was also answered today, the Microsoft Office Division under Division President Kurt DelBene. Yammer will continue to be lead by founder / CEO David Sacks and will continue to be housed in its current San Francisco location. According to Microsoft the integration will be handled in a similar way to the Skype acquisition, with a notable exception that Skype is its own division.

On the press and analysts call this afternoon a few details did come out, although of course it's still early to really get a detailed picture of the level of integration and roadmap that will likely not be available for several months. The intent is to integrate Yammer into as many apps as possible quickly, to include Office365 and of course Sharepoint. It's doubtful that Yammer will be included in the upcoming Office 2013 release since it's very close to public beta, at least if the rumors can be believed. The exposure of the Yammer ESN to the Microsoft distribution engine should be interesting to watch, and while $1.2B is quite a lot to pay for a company that IDC estimates to have done around $22.3M in 2011, remember that Yammer operates in a freemium model and has quite a bit more users that the revenue number reflects and adds somewhere north of 250,000 new users per month. I should also mention that Yammer is #8 in the social software market for 2011.

Microsoft needed a strong move into the social software game, something that I think is important for three of its large franchises, Office, Sharepoint and Exchange. Yammer has a solid product and a good reputation, you might even say it's "cool", much like Skype and adds some to building a new Microsoft image. It's early of course, but in my opinion, this was a good move by both companies (well, I guess it would be hard to argue that turning down $1.2B if you're a social start up at this point would be a sane move anyway, but still). I'm looking forward to seeing the real roadmap and seeing what will happen to the oneDrum functionality, which I also think could be put to great use by Microsoft. Oh, and congratulations to David Sacks and the Yammer team!

Tags: yammer, microsoft, msft, acquisition, social software, socbiz, ESN

Consumerization of IT, Social Business and Other Challenges; a View From Latin America

I had the pleasure of spending part of this week in Santiago de Chile with some of my colleagues from IDC Latin America to present the first event in the LA Consumerication of IT Roadshow. I presented a view of the subject from the Worldwide team while Frederico Amprimo gave a perspective from the region. The highlight for me though, was a roundtable session with ~20 CIO's from companies in the area and spread across a diverse set of industry verticals.

I won't go back through what I've already posted on the comsumerization of IT, you can re-read it if you're curious, but it's probably useful to bring out what I think are the most important points that underpin the topic, the shift in the source of technology innovation away from the enterprise to the consumer sector and the changing expectations of people in general (employees, customers, suppliers, partners, etc.). The two shifts, at least in part facilitated by the growing hyper-connectivity provided by the Internet, have helped serve as catalyst for many changes in business, including playing a role in pushing adoption of social business tools, concepts and processes. Connectivity is having a big impact on the economy (and business models), society and on technology.

Anyway, what I really wanted to focus on in this post is the 2+ hour conversation with the group of CIO's. I have conversations with CIO's and IT managers often enough, but this is the first time in a while that I've sat down with a group from South America, so I wasn't sure what I'd hear as top issues and concerns. It's probably no surprise though, that the conversation was pretty similar to any other roundtable meeting I've done over the past few years. The major issues facing CIO's in this region are pretty much aligned with the overall issues facing businesses these days, including:

• Dealing with employees that insist on using non-approved devices at work (BYOD), including the effort required to support multiple devices, maintain security, protect IP and manage costs.
• Dealing with the social customer who insist on interacting with businesses on terms defined by them, not by the business.
• Providing collaboration tools / enterprise social networks that meet employees needs and desires while providing a good return on investment. Once implemented getting adoption of the new tools and changing the ways of working to best leverage the open and transparent workplace while building a knowledge sharing culture.
• Managing the use of public social networks for business in marketing, customer service, sales, etc. including how to make the connections secure, how to police them for IP protection, and how to ensure proper behavior that represents the business in proper fashion. I should note that Chile has the highest percentage of the population on Facebook in the world.
• How to ensure that social tools will scale to meet business needs, particularly when they connect with public social networks in support and marketing.
• Managing and getting the most value out of previous IT investments in a rapidly changing technology landscape, particularly how to deal with aging software systems that can't from a strategic and cost perspective be replaced in the near term, but provide such an outdated user experience that employees don't want to use them anymore. This is of greatest impact in areas where employees will bring alternate free / freemium publicly available but unauthorized tools into the business as workarounds to software they is not meeting the needs and expectations.
• What to put in the cloud, how to get the most out of investing in the cloud going forward, and how to manage a heterogeneous or hybrid IT shop effectively.
• How to reposition IT from compliance enforcer back to strategic business partner.

I'm sure there were more issues discussed, it was a lively group, but this list captures the bulk of it I think. We discussed a lot of ideas on dealing with the challenges. From my perspective here are a few of the higher priority suggestions that were offered:

• Build a social media / social network use policy and train all employees on its use.
• It's important to have a social strategy as a business. That strategy should address both internal enterprise social networks and external use cases with customers, partners and suppliers. These are a part of the same strategy, 2 halves of the same coin, etc. It's folly to just focus on customers, IMO, you must also address organizational silos.
• Implementing social tools and trying to build a collaborative culture is sure to fail if employee incentives don't match those objectives.
• To succeed, an enterprise social network needs visible executive support and active use. Adoption is critical, executive use goes a long way in sending the right messages to employees.
• Champions or super users (or whatever you call them) can be a great tool to help with adoption of social tools.
• BYOD is a reality. The business must figure out a strategy to support multiple devices. There are several options including deploying a new device management platform to using one of the mobile virtualization solutions like Citrix Receiver or VMware Horizon. Offering device allowances instead of providing specific devices is proving successful for many businesses as well.
• There are many free or freemium tools that are secure enough for some uses and that can add significant value to the overall set of social tools. For example one CIO of a mining company shared that he had implemented Skype as a inexpensive way for various field sites to keep in touch with great success.
• Scale is a concern. Using enterprise class social tools for key initiatives is critical. For example, connecting to customers on public social networks is a reality, but in support, those connections must tie into a scalable customer service system to ensure an acceptable customer experience while enabling agents to do their jobs effectively.

There were some very interesting discussions along the way, I wish I had the ability to share the entire experience but hopefully these few notes offer some insight.

The roadshow continues this Fall in Mexico City on Sept 20th.

Tags: socbiz, latin america, chile, social, SCRM, customers, employees, enterprise social networks, scale, enterprise

Guest Post: Integrating Social Networks Across the Enterprise

I'm happy to announce that I have added a new analyst to my SBS team at IDC. Vanessa Thompson (@vanessathomps) joins us from our IDC Apac region where she was a market analyst covering software in Australia. She will manage the Worldwide Enterprise Collaboration and Social Software practice.

Guest post: "Over the past few weeks I have met with two separate groups from an Australian insurance company. One group looking after enterprise analytics and the other a project team tasked with the standardization of the company's social software tools. These separate conversations present a great opportunity that many organizations now face. How to bring two separate business networks into a single network based around data and information.

With the company heralding analytics as a source of competitive advantage, a number of initiatives are underway to build maturity of enterprise data and analytics as well as consolidate existing data management platforms. When we met however, the discussion centered on the enterprise analytics manager role that is currently being recruited for, with the person in this role tasked with creating a business network around data.

The use of social software in this company has created subsequent business networks and the intent to move to a consolidated platform is a direct result of wanting to tie current business networks together into a broader systems of networks.The social project team are working to minimize disruption of users that have built up around current social tools.

As companies become more open, collaborative and people-centric in the way that work gets done, shifting the primary network node without disruption becomes critical to maintain the current cadence of engagement around social tools. This is a great example of an increasingly common challenge and I look forward to sharing more conversations and social business strategies as I work with Mike in the social business team."

Tags: social, socbiz, collaboration, network, ESN, integration