The nature of business is inexorably changing. The changes are being driven by a number of factors: ranging from the need to compete differently after the recession, through the availability of huge volumes of new information, to the rapidly growing influence of social customers.

I would almost go as far to say that we are fast approaching a period of ‘Business Enlightenment', based not so much on the linear thinking that drove the Enlightenment in the 18th Century, as on networked, emergent thinking which is driving so much new thinking in the 21st.

Many different themes are coming together and new business models are emerging from where they meet and mutually reinforce each other. Together, they have the potential to change many aspects of what we call business today. They have the potential to create a new kind of Social Business, driven not so much for social purposes as by social relationships. Many companies are already experimenting with these themes, some companies with a number of them. Although no companies are experimenting with all of them yet, it is only a matter of time.

Here are the fifteen themes (the Manifesto) driving Social Business:

• No1. From Individual Customers… to Networks of Customers
  Read more »

We find ourselves in times of radical change. Traditional CRM is everywhere, but is struggling, as customers demand their quid pro quo. The CEM reinforcements management has drafted in are getting bogged down too, as companies belatedly recognise that the problem with CRM has little to do with branded experiences, but everything to do with a lack of customer-centricity. Social CRM has the potential to redistribute some power to customers.

But how should we proceed when no-one can even define what SocCRM really is?
I have faced similar problems in many of my ‘edge’ projects in the past; the ones where clients are pretty sure something will work, want to take a small bet on it working, but are not sure exactly how to make it work. Not having a roadmap is absolutely no excuse for not starting out on the journey. Providing you take the journey one step at a time.

Many companies talk about customer-centricity. They tak about it in their annual reports, they talk about it in their analyst briefings, and their CEOs talks about it all the time when they are interviewed. But talk is all they do. A recent port on Customer Centricity: Discovering What Consumers Really Think of Customer Service by customer data specialists Dunn Humby shows the majority of companies score negatively for customer-centricity.

This lack of customer-centricity is both a problem and an opportunity. It is a problem because it fails to leverage the customer-equity available to companies that become customer-centric. But it is also an opportunity because most companies are content with just saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all the corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes. Who is going to choose United Airlines in the near future when they have a reasonable alternative. Any company that starts to become customer-centric benefits from their competitors' sloth.

The move from product to customer-centricity has been widely discussed. It typically goes through a number of steps including:

One of the foundations of successful business is understanding customer needs. Really understanding their needs. Developing a deep, almost visceral understanding of what customers’ need lies at the heart of innovation to create winning new products and their marketing to target customers. As Peter Drucker said, ‘because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs’.

But understanding customer needs is not as easy as it sounds. You can’t just go out and ask customers what they need. As Lance Bettencourt showed in a recent article on the Debunking Myths about Customer Needs, it isn’t because customers don’t know what their needs are, but because they come mixed-up with wants, expectations, benefits, and above all solutions. If we struggle to define what a need is in a universally accepted way, what chance do we have of marketing, sales and service agreeing on a common customer management strategy? Precisely nil, if like me, you often sit in meetings with marketing and sales people (service is not usually invited) talking mutually incomprehensible languages.

Peter Drucker the gurus' guru famously said, "Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs." Marketing is hard enough to get right, but innovation is a whole lot harder still. Depending on the industry, about 80% of new products fail on introduction in the market. And up to 60% fail in reintroduction.

To overcome this disastrous failure rate, companies have started to recruit customers to generate ideas for new products. A process Jeff Howe called Crowdsourcing in a 2006 article in Wired magazine. There are a number of great examples of successful crowdsourcing programmes, however, two examples illustrate what happens when companies start crowdsourcing programmes without really thinking them through properly.

Take a look at the Wikipedia definition of customer co-creation and it will tell you that:

"Co-creation is the practice of product or service development that is collaboratively executed by developers and stakeholders together".

The Wikipedia definition, whilst not wrong, isn't right either. Let's just call it a fluffy 'co-creation lite' rather than the real McCoy. Strictly speaking, co-creation as designing products or services together with customers hardly counts as co-creation at all. Why, because it still tacitly assumes that value will primarily be created at the point of exchange ("great looking new camera, here's my credit card") rather than in a lifetime of camera usage ("stop the car! I must take at picture of that fantastic sunset over Point Lobos"). That doesn't mean that we shouldn't design products (services and experiences) together with customers, far from it, just that it doesn't count as co-creation.

If you read some of the growing number of papers on service-dominant logic, service science and even design thinking, you will see co-creation set out as a series of principles that guide our thinking about what co-creation is, how to do it and the benefits of adopting customer co-creation:

Social CRM is at the earliest stage of its development. The rapid evolution of social tools, particularly Internet based ones (and in the near future, mobile Internet based ones) is driving the co-evolution of their adoption by leading edge users. (Who would have thought that I would all but abandon one-way blogging at CustomerThink for the two-way conversation on Twitter?) But in another sense, Social CRM has been around as long as people have indulged in commerce. Relying on friends and family for the best advice is literally thousands of years old. In many local economies, it is part of the glue that holds traditional markets together.

As Social CRM increases in importance to business, people naturally start to ask who should 'own' it. The obvious answer is 'the customer', as almost by definition, they currently own Social CRM. But that isn't good enough for the control freaks in management. So who should own Social CRM? Most of the organisations I look at don't have any natural home for Social CRM. Why shoehorn it into a department that isn't able to manage it properly? Rather than say, stuff it into Customer Service, it should be placed with those best able to use it, indeed, those who are probably already using it.

I have noticed a recent change in how Customer Experiences (CEX) are designed. A change for the better.

In the past CEX design was often the domain of the B-school trained consultant or manager. They used a logical, touchpoint-driven approach. Process design (using a variety of process mapping methods) was a big part of this approach. But the results of their work has been mixed at best. Despite a few well publicised successes, most of their CEX designs failed to deliver value to customers in the way they, customers, want it.

More recently, I have seen service design agencies get more and more involved in CEX design. These D-school trained people use a broad range of tools and techniques (including the servicescaping process-mapping method) to create superior CEX designs. Designs that pull the logical, emotional and aesthetic value levers that customers are looking for in a CEX. That create satisfaction, preference and maybe even loyalty.

If I was advising a client today on who are the best CEX designers, I would be pointing them to design agencies like Design Thinkers, live|work or Engine Service Design, not to the CEX consultancies that I might have used only a few years ago.

Customer loyalty is the consequence of providing a superior customer experience in ways that matter to the customer. That create value for the customer. Value includes cognitive elements (so beloved of the B-school crowd), emotional elements, aesthetic elements and others elements too. Only the customer decides what is of value. If we want loyal customers, we must concentrate on building a customer experience that delivers superior value, on customers' terms. Not just on the company's (or the brand's) terms.

But this is not as straight forward as it sounds.

Type in the word “recession” into Google and at the last count, it returned over 62 million hits. Everyone is talking about the recession and many companies have already started to do something about it too. Often this means cutting swathes of staff without much thought to their long-term success: British Telecom announced it is cutting 10,000 jobs, Citibank that it is cutting 52,000 jobs and the City of London is forecast to lose over 370,000 jobs during the recession!

No Company Ever Shrunk to Greatness

Whilst job cuts are to be expected, they are by no means inevitable. Research by McKinsey showed that companies that beat the last recession in 2001/2 actually increased spending in key areas. The research tracked almost 1,000 US companies over 18 years, including during those all important recession years. The companies that emerged in the top quartile after the recession actually increased spending on sales, innovation and marketing. Although this reduced their cash reserves, the companies traded short-term profitability for long-term gain. And it worked; their book-to-market ratio was more than 25% greater than their less successful peers.

Understanding the Value Equation