Executives long for “customer-activated company” but social media is a stumbling block

digital marketing

The business world wants to go digital … and fast. But they just can’t figure out social media.

That’s one of the conclusions of a landmark study released today by IBM called “The Customer-activated Enterprise,” — a result of face-to-face conversations with more than 4,000 C-suite executives worldwide. Because IBM is a client, I was privileged to get a preview of this research to share with the readers of {grow}.

This study included a variety of businesses from “Midmarket” SMB’s to global giants. The study paints a picture of executives determined to drive change in every facet of the organization through digital initiatives. In fact, they now see technology as the dominant driver of their businesses.

The research discovered three major strategic shifts enabled by technology:

The customer-activated company

ideaThe “most radical” of the three shifts is an overwhelming recognition of the social web’s unleashing of customer influence and its impact on not just new product development, but collaborative approaches on business strategy.

“The cultural and organizational implications are huge,” the report states. “Relationships must be fully reciprocal and once that relationship is established, companies of all sizes need to be prepared to act based on the influence of the customer. In this way, organizations are shifting from being merely customer-centric to becoming customer-activated.”

As a result, technology must have a role in gathering and assessing customer input in key business decisions. This also has some important organizational implications as businesses work to overcome customer’s mistrust of being “targeted” and C-suite leaders being asked to give up autonomy and control.

An integrated digital organization is ideal, but social ROI is a stumbling block

The emergence of social, mobile and digital networks has played a major part in democratizing the relationship between organizations and their customers, the study reports.

ibm quote 1

Businesses are stepping up activities to digitize beyond just marketing, including supply chain, analytics tools and workforce skills required for collaboration. The majority of CIOs surveyed say they aim to digitize their front offices within the next few years to sync with customers more effectively. The use of mobile devices plays a key role in doing that.

roi of social mediaDespite this focus, less than half of Midmarket organizations have a fully integrated physical and digital strategy. Their biggest hurdle isn’t technology or security. Their challenge is to understand how social media fits into the mix, and its return on investment. To achieve full value, social media, as well as social business, needs to inspire entirely new ways of working, learning, and orchestrating processes across the organization and beyond.

Craft engaging customer experiences

Companies of every size told IBM that a re-balancing is occurring from spending on “IT systems” to “creating customer experiences.”

ibm quote 2

Despite this strong trend, the ideal of a customer-centered “social enterprise” is still far from reality.

“Surprisingly, organizations of all sizes are lagging in social initiatives,” the study noted. “A social approach starts with giving customers opportunities to air their views. The most advanced enterprises go even further. They analyze data to understand people holistically – what’s happening at the moment, what their core values are. These insights provide the foundation for a customer experience tailored to the individual.” But the path to accomplish this is not always clear.

Technology is the easy part

On a personal level, my own experience certainly validates the trends IBM has identified and explained. I interact with hundreds of executives every year who are putting tremendous resources toward enabling a digital enterprise … but with mixed results.

technology is the easy partHere is a firm conclusion I have made along the way. Yes, technology absolutely can make changes like a customer-activated company possible. But making it a reality requires not just technological change, but dramatic organizational change. We can make technology do anything we want. That is not the case with people.

Technology promises radical change. Guess what? People hate radical change.

As this study states, the intent to make these organizational changes is ubiquitous, but I think measurable success will be far more rare because it will take extraordinary, tenacious, and patient leadership to forge entrenched company cultures into something radically more open, more collaborative, and more responsive.

That’s my take any way. What are you seeing out there?

Illustration courtesy BigStock.com

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions
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  • One big issue is that, in the shift toward social media strategic planning, the folks who were used to writing detailed marketing plans that spanned multiple quarters are having a hard time pivoting. By the time the digital ink dries on a social media strategy, it needs to be tweaked. That’s a big problem, especially for large entrenched organizations.

  • That is SUCH a key point Rosemary. That would make a good blog post. Strategy is temporal and fleeting. How many executives realize that?

  • So true Rosemary! Companies rely on planning and study to make decisions. But, as they become more aware that their markets are shifting and opportunities are created “by the second”, more will learn how to leverage this new visibility into their customer’s attitudes. Companies like Amazon are masters of this game and look what they have done to the “brick and mortar” retail world!

  • useradvocate

    Another excellent article Mark.

    Just a point about the technology aspect: You mentioned that technology can do anything and the implication is that it’s amenable to radical change. In contrast to that, people hate radical change. I would put it this way: technology can do anything, but it can’t do everything. Radical change can also be difficult for technological *implementations*. If the implementation is wrong, a lot of (expensive) restructuring will have to take place to correct it. This is true for software, hardware and ‘conceptware’.

    So it sounds like the issue here is the radical restructuring required for a given business to change its organizational ‘implementation’ which ultimately is based on a set of relationships. The part that people hate about this is the uncertainty around where they fit in the new paradigm. It takes time to build trust and there’s no way around that. I think your last statement about patient leadership, as it applies to determining and promoting core values, is the key.

  • The vast majority of employees aren’t entrepreneurial. Yet, social media requires individuals to think, and act, entrepreneurialy. We have been conditioned for 9-5, leave it in the office, ask permission, don’t screw up for over 100 years. It takes a massive cultural change to get an organization to fully embrace sm. It starts with the C level. If the top of the organization isn’t individually acting entrepreneurialy in their use of sm, the employees never will.

  • Excellent points as always Michael. Thanks for sharing your wisdom today!

  • Amen. Could not have said it better Frank.

  • from my personal and professional experiences, i’ve learned that traditional institutions tend to blame technology (or the teachers//consultants that want to use the technology…cough, cough) as the problem. they see technology (and social media) as the stumbling block…not the solution to their problem.

    there’s so much opportunity for traditional organizations to make an impact with social media. unfortunately, opportunity is often seen as a threat – which makes employees act like gigantic gorillas (due to uncertainty within the new paradigm). it’s such a shame because it slows down the gazelle-like nature of any errant entrepreneurial types.

  • Thanks Mark! I do owe you a guest post…

  • Agree on all counts. It feels threatening to some but I think the bigger problem is that it is being thrown in the same bucket as “advertising.” CMO’s expect a quick pay-off and it probably won’t happen that way. Thanks Jessica.

  • Mark, you talk about “Social ROI”. I think there is still a lot of misunderstanding regarding this metric. Social media is not all about gaining new leads and converting them into customers. It is about building relationships. Sure, you may win a few sales via social media. But many companies look at a low conversion rate as equaling a failed social media plan. This is unfortunate, and it is a challenge to social media managers to fight this assumption.

  • Social media can be used for a lot of different goals — recruiting, awareness, and service to name a few. But the leading use is sales and marketing and that must result on sales leads. If that is your goal, conversions would be the correct metric, so I don’t think there is any confusion on my part. : ) Thanks for your comment Shona.

  • I don’t think these articles are incompatible with what I was saying. We need to measure everything we do, based on the goals. ROI is very difficult to measure many time but we can usually find leading indicators.

  • IBM is one of the few social business players not pushing a big biased BS agenda to make money. The main reason is they are selling technology vs ideas. While they can enable businesses to connect in new and exciting ways with customers, they don’t tout the employees as your face of social lie or the customers want to talk with you lie. They just sell technology for folks to use.

    The problem with the first is pay. 80% of people make so little in the US they just have jobs. Tell a walmart or mcdonald’s worker or bank teller to tweet about their job and you risk the ‘Hate my job’ posts. When I have challenged the Edelman’s saying unless you pay more forget it, the response is crickets and shhh don’t mess with our storyline’. And what business wants to funnel profits from shareholders and upper managers to front line workers? None (big failure in US capitalism and why GErmany kicks our butt).

    The second is we don’t talk with brands. The average facebook user talks/engages/takes action with each brand page they Like on average less than 1x per year even if they spend a lot with the brand. And what if every Starbucks facebook fan and twitter follower tweeted/posted needing service in 1 day? They would need thousands and thousands of workers to respond. So it is a good thing we don’t talk with brands very much.

    So while the customer activated business is great on a small scale it is impossible to manage and your org would be crushed if it was on a mass scale.

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