A CIO Who Gets Social Business

CIO Tom MurphyOne of my favorite CIOs is Tom Murphy, who long headed IT at AmerisourceBergen and who is now in transition to a new role (any company will be lucky to have him). Tom addressed the CIO Solutions Gallery at the Fisher College of Business at Ohio State University this morning on the subject of the role of CIOs in social media. Earlier in the day, a show-of-hands poll of his audience had indicated considerable skepticism among the audience about the value of social business in general and a clear sentiment that CIOs should not be closely involved with social business other than as gate-keepers. In light of that reluctance, I found Tom’s comments particularly refreshing. What follows is a more-or-less verbatim transcript of what he said. I hope other CIOs will listen:

To me this looks very much like the early days of the Web. Everybody figured they had to be out there but they didn’t know what it meant. We’re going through a lot of the same machinations. In the early days of the Web you saw consumer packaged goods firms throwing up Web sites without a lot of idea what they were trying to accomplish. The same is happening with the social space, but it’s happening so fast.

The speed of social media today is stunning. I think the biggest mistakes we’re making are around the consistency of the message, the brand quality and the way we have traditionally done things, which is a one-way dialog. By definition, social media is a two-way dialog between your customers and your employees. I have seen more mistakes with people jumping into the social media space without understanding this simple precept. This is a two-way dialog and someone needs to be handling that conversation.

Also, if you’re going to ask for opinions, be prepared for what you get. You need to be able to react to requests and to complaints. You turn this thing on and you get hundreds or thousands of dialogs coming in. How effective is the organization at responding to that? Do you have the tools to effectively engage in this dialog?

Social media is not a technical expertise. It’s a cultural expertise. Right now the pendulum is swinging more and more toward social media as the tool to communicate. It is a tool, but companies should not lose that direct contact with customers. There’s a risk of losing face-to-face engagement with customers and employees.

The other thing I worry about is the explosion in data collection. All this dialog has created a mountain of data and we have to figure out how to apply social analytics and who’s got the toolsets that can help us. How do we collect all this data and apply tools in a space that’’s moving so fast that people expect immediate responses. How do we do that while protecting the integrity of the brand?

Most of us do not have the skills to collect and understand the data we’re collecting. They’re spending a lot of money on this and there’s a lack of understanding about the value we’re getting.

The other issue I worry about is security. Social media doesn’t introduce new risk in itself, but it does present the opportunity to identify risks earlier. However, it also creates the opportunity to detect problems within the organization. If I can listen in on my associates’ dialogs, I can analyze it and identify potential risks in the organization before it’s apparent. I can identify individuals who may present a threat to the organization. Now there’s a big leap between doing that and taking action without evidence, and I’m not advocating a Big Brother approach, but I think a big part of the social future will be companies’ ability to listen in and understand what employees are talking about.

Organizations that are going to optimize social are going to need to make organizational changes, put tools in the hands of their employees and then get out of the way. But that’s not really a big leap. The fallacy of our current situation is that you think you have control and you don’t.

As the CIO I don’t want to own this space but I want to enable it. This is a fabulous opportunity to take your relationship with the CMO to the next level.

This is one in a series of posts sponsored by IBM Midsize Business that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.

A Chance for CIOs to Lead in Social Business

I’m presenting a session at the CIO Solutions Gallery at the Fisher College of Business at Ohio State University tomorrow on the topic of “Measuring Social ROI: The CIO’s Role.” The subject got me thinking about a topic that’s close to my heart, which is the low profile IT executives have assumed in driving social business at their organizations. The absence of IT at the strategy table perplexes me,  since social technologies are arguably the most important force guiding the evolution of relationships between companies and their constituents. IT departments played an important role in the last transformational change, which was the adoption of enterprise resource planning in the late 1990s and early 2000s. So why aren’t they more active in driving the socialization of business?

I created the presentation below largely for my talk tomorrow and wanted to share it. In particular, look at slide 3, which shows the results of a recent Economist Intelligence Unit Survey of 329 Business Leaders. The survey asked which group within the company had primary responsibility for social business. Not surprisingly, marketing topped the list. Surprising is that IT isn’t even on it.

Study after study has documented that companies are doing a poor job of measuring the results of their social media marketing efforts and have made only weak attempts to integrate customer service data and so-called “social CRM” to create a holistic view of their customers. IT leaders are experts at measurement, and they also have cross-functional visibility that makes them the most logical candidates to integrate islands of automation. This is an opportunity for them to pick up the ball.

I suggest in my presentation that there are several initiatives IT could lead that would give them a critical role in social business. They include standardizing and improving measurement criteria and give businesses a more complete view of their markets. Feel free to download the presentation; it’s posted on a Creative Commons Attribution License.

And please let me know what you think.

As Business Goes Social, CIOs Sit on Sidelines

CIOs scrutinize social mediaThe disconnect between CIOs and the emerging world of social business became clear to me at a conference I attended about two years ago. I entered the room late, but figured I could quickly catch up on the proceedings by checking the Twitter stream of attendees. With an estimated 300 senior IT executives in the room, I expected there would be plenty of chatter going on.

To my surprise, not a single tweet had been logged during the past hour. A technology that was revolutionizing the way business people communicate was being completely unused by the executives who manage technology in America’s largest corporations. As I began prodding my network of CIO contacts, I learned that this was not unusual.

Most CIOs are taking an attitude of, at best, benign neglect toward social networks. A large percentage of them are still actively blocking employee access to sites like Facebook and YouTube. The most recent research by Robert Half Technology found that 31% of U.S. companies block social networks completely and 51% limit access to business purposes only. While those numbers have improved from two years ago, they still indicate an entrenched suspicion that social networks are at best time-wasting extravagances and at worst latent security threats.

Same Old Song and Dance

These fears are legitimate, but we’ve heard them before. The argument that employees will waste time on new technology goes back to the introduction of the personal computer. CIOs also closed ranks against Internet-based e-mail and the Web itself in the early days of those technologies, citing fears that employees would use their new toy computers for games or would subvert the central control of the IT organization.

In fact, that’s exactly what they did. And given access to social networks at work, people will use them to play and waste time. CIOs should not only accept this fact but embrace it.

Anyone who has children knows that playing is one of the most effective learning techniques humans have. Experimentation unearths ideas that have practical applications. On the early Web, people “surfed.” In the process, they learned the skills that have redefined office productivity. Today, the people who can quickly find, organize and interpret information are among the most valuable in the workforce. Playing pays off.

In its formative years, social media has been largely relegated to marketing departments under the assumption that it’s just another form of communications. BtoB magazine asked 375 marketers last year who was primarily responsible for social media within their companies. Only one person identified the IT department. My anecdotal observations pretty much echo that. CIOs just don’t see social as part of their charter.

What a shame, because social technologies has about as much to do with marketing as enterprise resource planning (ERP) does with accounting. This is about the finding new ways of doing business with a customer base that’s empowered with information. It’s the very center of where business is going.

Demand-Driven Economics

How Companies WinIn their book, How Companies Win: Profiting from Demand-Driven Business Models, Rick Kash and David Calhoun argue that developed economies are in the process of transitioning from supply-constrained to demand-driven. We are awash in goods and services today, they point out, and prices are flat to declining in many markets. That means that there’s little incremental benefit to be had from making supply chains more efficient. In the future, value will come from generating demand that never existed, as the iPhone has done.

A decade ago, CIOs played a key role in implementing ERP and optimizing supply chains in many companies around the globe. While some of that was a byproduct of the Y2K problem, their willingness to lead such mission-critical projects was a feather in their cap.

Now the rules have changed and the new challenge is to drive demand. The information-empowered customer will impact every business at every level. We are in the first stages of the shift in market conditions from supplier push to customer pull. Understanding the dynamics of these new interactions and organizing businesses around them will be the major business challenge of the next five years.

Why would CIOs not want to be at the center of all that?

John Dodge agrees with me. Writing on the Enterprise CIO Forum, he suggests that one reason CIOs aren’t more active in social business is that they see themselves as analytical types, making their skills ill-suited to social interactions. That may be true, but I’d argue that analytical skills are sorely needed to help companies make sense of the cacophony of conversations going on around them and their markets. Social business isn’t just about engagement, but also about listening and understanding. CIOs have a lot to contribute by applying algorithmic discipline to that process.

Surveys Show ‘Social Business’ Concept Gaining Traction

A quartet of new research reports suggested that small and midsize businesses (SMB) are rapidly waking up to the potential of social media and cloud-based infrastructure to create new operational efficiencies and better engage customers – and that they may also be leading the US out of recession.

Fall 2011 Attitudes and Outlook Survey

A recent survey of more than 2,000 small businesses by e-mail marketing provider Constant Contact found that 81% say they now use social media for marketing, up from 73% in the spring. Furthermore, a significantly larger percentage agreed with the statement that social media marketing is “easy to use,” “doesn’t take up too much time,” and “works with my customers” than did so in the spring. Facebook was identified as the most effective tool by a comfortable margin, but Twitter, LinkedIn and video sharing are all creeping up.

It should be noted that the majority of respondents to the Constant Contact survey were customers, which means they are already marketing online. Other research studies over more general populations have indicated that small businesses still lag far behind large enterprises in their adoption of social media tools.

It’s also worth noting that 81 percent of respondents use face-to-face interactions to connect with customers or prospects, underlining the fact that Facebook has its limits.

A new global study of chief marketing officers (CMOs) at midsize businesses released today by IBM shows that marketers are concerned about improving customer engagement but are unclear about how to proceed. More than seven in 10 respondents said they aren’t sure how to improve customer loyalty at a time when peer reviews and open sharing are making customers more informed, more critical and less loyal. Only 40% are taking the time to understand and evaluate the impact of consumer-generated reviews,  blogs and peer rankings on their brands.

The CMO research further reveals that 62% say they are unprepared to take advantage of the opportunities presented by mobile commerce and 72% say they don’t know how to cope with declining levels of brand loyalty that could result from easier comparison shopping. So while midsize firms may be using social marketing, they aren’t necessarily confident in the results.

There is no question that the concept of “social business,” which is being promoted by IBM and others, is gaining traction. Social business involves using tools both inside and outside the organization to unearth knowledge, improve business responsiveness and create new paths for engagement with customers. The concept has gained momentum in the form of “intranet 2.0” platforms, which augment traditional intranets with Facebook-like features.

An IBM study of more than 4,000 Information Technology (IT) professionals from 93 countries and 25 industries found that adoption of the social business concept is erratic and geographically influenced. Indian companies were three times as likely to have embraced social business concepts as Russian companies. The US and China showed strong adoption rates, but both lag India by a significant margin. The research, which was conducted by IBM’s DeveloperWorks organization, also showed rapidly growing acceptance of cloud computing as a platform for application development and a swing toward developer preference for the Android mobile operating system.

If, as many people believe, small and midsize businesses are leading indicators of economic growth, then there’s also good news in survey of 1,295 small and medium business IT professionals conducted by Spiceworks. The study found that IT budgets grew 9% in the second half of 2011 compared to the first half. That’s the largest increase in two years. Nearly one third of SMBs said they are planning to hire new staff, which is also an improvement over the stagnant staffing rates of the past two years.

Disclosure: IBM’s Midsize Business organization is a client of Paul Gillin Communications.

The Cloud As Platform

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

Nearly a decade ago, a well-funded startup called Storage Networks promised to revolutionize the data center by moving enterprise storage into the cloud. Customers would keep their production data off-site in a highly secure facility and access it over the Internet. Unfortunately, the concept of cloud computing was unknown at the time, and the Internet itself was neither fast nor robust enough to permit large corporations to get comfortable with the idea. Storage Networks flamed out.

Now EMC is taking a run at a similar idea using the concept of cloud storage. Its technology, called Atmos, offers a glimpse of how far the cloud concept has come in a few short years and how its emergence as a new platform could drive a new wave of innovation.

As described by EMC, Atmos is a lot more than just a new breed of network storage.  The distributed technology uses an object model and inference engine to make intelligent decisions about where to store, copy and serve data.  With the world as its data center, Atmos is said to be able to flexibly move information to the point where it can be most efficiently served to the people who need it.  For example, if a cliffhanger election in Florida causes a surge of interest from local voters, election results data could be automatically routed to nearby servers.

Intelligent routing is just one of the intriguing ideas that the cloud supports, and it doesn’t have to apply just to storage.  In the future, virtual data centers will consist of computing resources spread around the globe.  Server power can be flexibly deployed to regions that need it. Backups could be administered at a high-level. For example, an organization could specify dual redundant backups for some critical data but only a single backup for less important information.  When the entire fabric is virtualized, this kind of flexibility becomes part of the landscape.

At this point, Atmos is still brochureware, and EMC isn’t sharing any customer experiences.  But I think the concept is more important than the product. Very large and distributed cloud networks can theoretically provide users with almost unlimited flexibility and economies of scale. Systems management, which is an expensive and technical discipline that very few companies do well, could be centralized and provided to all users on the network.  Customers should be able to define policies using a simple dashboard and let the inference engine do the rest.

We are only in the early stages of realizing these possibilities, but the emergence of real-world cloud computing platforms will usher in a new era of innovation.  Platform shifts invariably do that. Coincidentally, NComputing this week will announce an appliance that turns a single desktop PC into as many as 11 virtual workstations.  The company claims that the technology lowers the cost per workstation to about $70.

When applied to a cloud of servers, you can imagine technology like this scaling much higher.  Instead of having to run around supporting hundreds of physical workstations, IT organizations would only have to worry about a few powerful servers providing virtual PC experiences to users.  Move those servers into the cloud, and you can begin to apply best-of-breed security, resource and systems management to each user. The economies of scale become very compelling very fast.

The biggest leaps in technology innovation take place whenever platforms shift.  The cloud is now beginning to come into its own as a legitimate platform. Things should get pretty exciting from here.

Crisis Tests IT’s Influence

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

Between checking retirement portfolios and flipping over to wsj.com or Moneywatch every hour or two, a lot of people aren’t’ getting much work done this week. Who can blame them? Between the unprecedented bankruptcies of some of Wall Street’s biggest firms, the turmoil in the stock market and dire statements from top officials in the U.S. government, it’s easy to believe that the world is caving in.

I’m nervous, too, but I’m also resisting the urge to forecast disaster because I just don’t think the Great Depression can happen again. Part of the reason is information technology.

There are two ways in which IT can make important contributions to pulling the U.S. economy out of chaos: by empowering rapid decisions and enabling communication. As evidence of the first dynamic, look at the chart below. It shows growth in U.S. gross domestic product from 1930 through 2007. You don’t have to squint much to see where the trend has been going. The huge swings in GDP performance that occurred during the Depression and war years have gradually become gentler and more predictable. Negative growth, which was a regular occurrence during much of the 20th century, has only occurred once in the last 25 years. The further right you go on the chart, the more boring economic performance becomes. That’s precisely how businesses like it. Consistency sets the stage for more confident long-term planning.

Technology’s Shadow Role

There are multiple reasons why the economy has stabilized in recent decades; globalization and the Federal Reserve are certainly two of them. But I would suggest that information technology plays a shadow role. Note that the GDP numbers show a clear smoothing trend beginning around the middle 1960s, which was when computers began to make their way into back offices on a grand scale. The trend becomes even more refined in the late 1980s, when PCs started landing on every desktop.

I think it’s no coincidence that economic cycles became less volatile when managers and regulators began deploying sophisticated models to predict the path of business. Even as the economy has been roiled by financial crises, 9/11 and the bursting of the Internet bubble over the last two decades, recessions have tended to be shallow and brief and recoveries have been smoother and more sustained than in previous cycles. One factor may be that economic plays have more sophisticated means to model the impact of their decisions than they did before. That leads to better forecasting and quicker mid-course corrections, which makes for less volatility. No one’s suggesting that we aren’t in for some difficult times, but if the past is any indication, we’re better equipped to pull out of the tailspin today than ever before.

The other potentially positive IT influence on economic cycles is the Internet, and in particular Web 2.0. Within just the last five years, businesses have embraced robust new ways to communicate with their constituencies. As new economic surprises have turned up almost daily over the past few weeks, people have flocked to their Facebook groups, Twittered their concerns and voiced their opinions on news sites like never before. Smart business leaders should be tapping in to these conversations and using them to help guide their own decisions. If you want to learn how your customers are thinking about the latest dose of bad news these days, you need only to ask them or just listen. Trends that used to take months to identify can now be discerned in a few hours. It’s too early to know what the impact this fact will have on economic performance, but it’s likely to encourage faster and more competent decision-making.

Web 2.0 also enables corporate leaders to communicate directly to their constituents to offer own perspectives on unfolding events. Unfortunately, they aren’t doing much of that yet. A quick check of blogs operated by Chrysler, Marriott, McDonald’s, Whole Foods, Accenture, Boeing, Wal-Mart and Southwest Airlines shows that none has yet departed from delivery cheery good-news fare to comment upon the economic issues that weigh most heavily on American minds. Cheers to General Motors and PriceWaterhouseCoopers for attempting to lend some of their perspective to the conversation. I only hope the others are too busy listening at the moment to make time to state their own views. America certainly wants to hear them.

Reshape IT Via New Models Like Software-as-a-Service

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

IT should embrace SaaS enthusiastically, as it can save a whole lot of headaches building prototypes that users reject.

Anyone who’s been in IT for more than a few years knows the dirty little secret of the profession: many IT projects (in fact, most of them, in my experience) fail. That’s been the story as long as I can remember. Why, after so many years, are we still so frustrated by failure?

There are three main reasons I’ve observed:

  • In too many companies, IT is an island that is organizationally and even physically removed from the business it serves.
  • Too many users suffer from throw-it-over-the-wall syndrome, which leads to projects that fail to match the needs that exist at delivery.
  • Turnover and organizational change undermine too many projects, making them irrelevant by the time they’re delivered.

Let’s look at how you can approach each problem.

IT is an island – IT people themselves are often too willing to accept a balkanized structure that isolates them from the business. There is a bad idea for so many reasons, but the insular, often introverted nature of technical professionals lets them rationalize this situation. They don’t communicate well with the business side, so they settle for separation.

You can’t change people’s personalities, and you can’t force people to work in situations that make them uncomfortable. But you can make sure that IT project leaders have the capacity to work productively with business end-users. That means not talking down or clamming up, but rather showing tolerance, acceptance, and humor. Your project managers are ambassadors. You need to select people with strong diplomatic skills.

With the right ambassadors in place, you can afford to set the rest of your IT organization apart to some degree. The project leaders should serve as both diplomat and translator, buffering the relationship with the business side while speaking both languages fluently.

Customer accountability – The throw-it-over-the-wall problem begins with the user sponsor, and is perpetuated by gullible IT organizations. Often, the perpetrator is a senior business-side executive, a “big idea” type who conceives of a grand vision and then hands off half-baked requirements to an IT group that often doesn’t fully understand what it’s supposed to deliver. Six months later, IT comes back with a prototype, by which time either the requirements have changed, the user has moved on, or he or she has forgotten about the whole thing.

Let’s face it: no one likes creating spec documents or sitting through progress report meetings. They’re tedious and boring. But they are absolutely essential if a project is to remain on track. The CIO needs to be the bad guy here. He or she must insist upon project management discipline and review meetings at least once a quarter to make sure the project is still relevant. The CIO needs the backing of a top company executive in taking this approach. Otherwise, IT will be buffeted by constant changes in the business environment. Which leads to the final problem.

Organizational change – How many managers can you name in your organization who have been in the same job for more than two years? In many companies today, half the leadership has taken on a new assignment in that time. So why do we still start IT projects that have deliverables scheduled a year or more down the road?

The business environment is too changeable these days to permit that kind of scheduling. Projects must be componentized, with deliverables scheduled every few months. If you can’t decompose a project like that these days, it probably isn’t a very good idea in the first place.

Technology may be riding to the rescue. The rise of the so-called “software as a service” (SaaS) business – epitomized by Salesforce.com is enabling users to try applications before they commit to them. SaaS delivers applications over the Internet, and users can often achieve results in a matter of days. In some cases, users may find that a SaaS solution is all they need. But even if they don’t, SaaS is a heckuva way to prototype different approaches and solutions. A lot of IT organizations are approaching SaaS warily, worried that they will lose control. Instead, they should be embracing the model enthusiastically. It can save them a whole lot of headaches building prototypes that users reject.

How to Encourage Innovative Thinking in Your Organization

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

If you ask most corporate executives whether they value innovation, their answer would almost certainly be an unqualified yes. After all, innovation ranks right up there with motherhood and the American way as a core value. But if you look at how those same executives are evaluated at bonus time, it’s typically on the factors that most discourage innovation: cost-control, risk avoidance and profitability.

Why is there such an imbalance between our objectives and our behavior? In the case of large companies in particular, it’s because cultural values discourage risk-taking, which is the soul of innovation. We may give lip service to being innovative, but come review time, we tend to base evaluations on successful completion of objectives, with the emphasis on “successful.” Failure is considered a negative, but failure is intrinsic to innovation. In my view, if less than a third of your new initiatives don’t fail, you’re not trying hard enough.

I’ve seen a few characteristics common to many organizations that I’d define as innovative.

The leadership takes risks – If employees see company leaders avoiding unpopular decisions and always taking the “safe” route, they will quickly learn to emulate that behavior. Innovative companies are willing to pursue untested ideas, even if the odds are against them. And they’re not afraid of admitting failure if they thought the idea had potential. In my experience, leadership example is the most important factor in creating an innovative culture.

They value individual achievement – While everyone recognizes the importance of teamwork, the reality is that innovation flourishes when individual employees are given the leeway to pursue their own ideas. The issue is not recognizing individual successes, although that often helps. It’s a matter of giving people the satisfaction of seeing their initiative result in meaningful improvement. The more potential a person demonstrates for innovation, the more latitude he or she should be given to realize that potential.

They respect their instincts – In his excellent book Blink!, Malcolm Gladwell describes how a person’s intuitive reaction to an event, experience or idea is very often the best one to follow. Yet many organizations research ideas to death, allowing innovation to die the death of a thousand focus groups. Research has its place, but its principal value is to validate good ideas – or at least identify terrible ones – rather than to tell you what to do. Innovative companies are fast because their leaders trust their instincts enough to take action without waiting for the market to give them the okay.

They shred bureaucracy and streamline approvals – Meetings and committees are the enemy of innovation. They lead to consensual decisions, which are usually safe but unimaginative. Managers need a fast-track process to move promising ideas through the approval process. Committees need tight deadlines and time limits on discussion. The more you talk about something, the less likely you are to act on it. Innovative organizations give leaders the flexibility to shortcut committee approvals.

Their performance criteria recognize innovation – Is there an innovation category on your performance review form? Can an employee get an equally good rating for failing to succeed with a risky project as succeeding with a safe one? Does your employee newsletter celebrate great ideas that didn’t work out or just the ideas that succeeded? If you’re not rewarding risk-taking in your own employees, you’re going to breed a play-it-safe culture.

In coming posts, I’ll elaborate on other factors that make companies innovative. Playing it safe isn’t one of them.