Restructuring the C-Suite for Digital Business: The Future of the CMO, CCO, CIO, and CDO

I’ve noticed lately what appears to be an emerging trend in marketing and communications leadership in some large companies. Specifically, the positions of chief marketing officer (CMO) and chief communications officer (CCO) are sometimes being consolidated into a single role, even in very large enterprises. Such consolidation has already happened at PG&E, Walgreens, and Citi, and I’ve recently encountered other notable instances as well. This might seem odd at first glance, as specialization of roles is usually emphasized in large entities as expansive purviews tend to be harder to manage.

It actually turns out, for several key reasons, that examining this closer is an interesting — and both useful and practical — thought exercise in how the single vast continuum of digital is putting growing pressure on the traditionally separated functional silos that have comprised most of our organizations for over a century.

This trend, and another like it I’ll propose we’ll see soon, is actually an apparent reversal of what organizations have been doing lately to better organize for technology, which is moving to the very center of how our organization operate and create value. In fact, the proliferation of C-level stakeholders for the rapidly expanding world of digital business has continued unabated in recent years, as chief data officers, digital officers, community officers, experience officers, analytics officers, and other similar C-level tech roles emerge and grow rapidly.

The Consolidation of the CMO and CCO for Digital Transformation

Too many cooks in the kitchen, some might say, but I pointed out last week on ZDNet that digital disruption — a wildly overused yet still quite apt phrase of our times — is now anticipated by most executives within the current planning cycle. The counter argument that is made for proliferation is that we need a lot more leadership on deck to more rapidly adapt our organizations to digital and head off disruption. The imperative is that we now have to a) think more like venture firms and startups, in other words our digital efforts have to move out of the quarter earnings cycle and become long term, while shifting to experimenting and failing fast until finding what works and b) our organizations require digital change capacity that is matched to today’s exponential cycle of technology evolution. Without both, we can’t maintain a sustainable pace matched to the market or reach a successful future state quickly enough.

In fact, what’s often hampering us in fact functional silos, both in our org structures and in our technology. We saw this very painfully with social media and social business a few years ago, and now we are witnessing it writ large as our customer experiences, the vital journey of which is the very lifeblood of our organizations, becomes ever more fragmented and divided across digital channels and our organizations’ operational silos. Customers get thrown over the wall to disorganized and inconsistent experiences as their journey takes them through our marketing departments, sales teams, customer service staff, and product development groups. Increasingly, our attempts to engage with companies as a customer is just ignored as we use new digital touchpoints that is obviously so much better — to us, but still unfamiliar to companies. In short, as organizations, we don’t have the capacity to be everywhere we are expected to be in the customer journey, and as organized today, don’t have a way to get there.

So how does the convergence of top-level roles in communications and engagement solve this problem? By removing a key silo while also adding the responsibility for both internal and external comms. Internal comms in particular is a critical addition, and is a key part of what a corporate communication officers oversee, as they are often the sponsor for the corporate ESN and intranet, essential platforms for organizing change at scale. As gaining holistic and integrated oversight and control of experience management — across customers, business partners, and employees — has become paramount, this merging of roles gives us a way to prevent it from fragmenting across projects, initiatives, technologies, tools, and digital channels. No more dividing internal and external engagement, giving us less inconsistent messaging and responses. In return, we can achieve better internal scale, more unified platforms, policies, and governance. We have one role for primary engagement.

One Likely Outcome of Digital Transformation: A Refactoring of the C-Suite

In other words, with CMO and CCO consolidation, we will have a single top-level org structure that is substantially better suited to oversee engagement across the single continuum of digital. We used to think that digital/social centers of excellence were required to bring together a consistent response to technology. This may be a better answer.

We will see how this trend plays out — and there are still open questions about where secondary engagement such as customer care and product development fit in — so I have begun tracking the industry data in LinkedIn to see if we can confirm a real trend based on my and others anecdotal experience. But from an critical thinking standpoint it makes sense why organizations are doing this.

The Fall of the Chief Digital Officer Too?

Which brings to my second trend, which is that we’ll likely see the same consolidation of function happen with the chief information officer (CIO) and the chief digital officer (CDO). I was initially bullish on the CDO a few years back — and still think they have an important combined innovation and P&L role to play, but as some like Theo Priestley have observed, the role is already under pressure and it’s time is likely to come to an end, at least as a top-level role. It will still exist of course but in this consolidation, would appear under the CIO purview. It now seems likely that many CIOs will merge CDO functions back in for all the same arguments that the CMO and CCO purviews should be combined.

Following this argument, removing silos in our organizations so that we can remove them from our digital products and experiences makes sense on its face. It can eliminate friction, make it possible to scale better, reduce poor execution, and create more shared value. I should point out however, it’s only part of the story for organizing better for digital. While other related topics like the bi-modal/multi-modal conversation seems to have hit a fever pitch, with McKinsey even joining the bandwagon, I think it’s vital that we also carefully consider simpler “digital hacks” to our organization that should be far easy to implement, but would in practice have significant impact.

Consequently, the consolidation of top digital roles into a chief marketing and communications officer (CMCO) and chief information and digital officer is — I now believe — a practical response to the proliferation of C-level digital roles to create the consistency, coherency, and effectiveness we need to change. However, this centralization will be an improvement as long as — and only as — such consolidation is properly balanced by bottom up and grassroots digital change programs, like a network of excellence powered by decentralized change agents, or a formally supported Shadow IT and marketing technology program. Without realizing both C-level role consolidation and networks of change together, sufficient digital scale and capacity will simply not exist for converged leadership to cultivate and guide.

Additional Reading

How Should Organizations Actually Go About Digital Transformation?

The digital transformation conversation shifts to how | ZDNet

How Chatbots and Artificial Intelligence Are Evolving the Digital/Social Experience

Digital engagement is once again shifting, as we can see from the main discussions at Facebook’s F8 conference this week about the new release of Messenger and its smart chatbots, or when we look at what’s happening with popular team messaging services like Slack, which is being “overrun by friendly, wonderful bots.” While bots seem like a minor improvement to digital user experience, some believe — including myself — that a combination of today’s latest technologies will transform this what’s-old-is-new-again technology into a major new force in contemporary digital experience and social engagement.

Over the last couple of years, conversing in everyday language with our digital devices has become relatively commonplace with the advent of widely used digital concierge services like Siri, Google Now, and Amazon Echo. Known more formally as ‘conversational user experiences (UXs)’, this dialogue-based interaction model actually has quite a long history going way back to command-line programs like Eliza and Zork (both of which yours truly spent far too much time with when younger), the first commercial expert systems in the 1980s, IRC bots, and other early examples.

Anatomy of a Chat: How Conversational UXs Add Value

While there’s always been an assumption that bots had a bit code behind them with a little situated intelligence — from performing simple services like scheduling reminders via IM all the way up to the first textual AI-based systems such as MYCIN for helping doctors diagnose infections — most conversational interfaces tend to be relatively simple affairs with a little bit of basic natural language processing connected to a decision tree.

That’s clearly about to change in a major way as the introduction of more powerful forms of artificial intelligence and machine learning are combined with new UX channels like voice, video, virtual reality (and soon enough brain/machine) into solutions designed to assist people in their daily activities. These bots will ultimately be unleashed on a) all of the visible digital data in existence, b) apply vast computing power and cutting-edge algorithms to make sense of it all, and c) provide the ability to use this knowledge to converse with us about the world in a deeply meaningful way.

Siri on Apple devices, the conversational UX I use most, has been able to handle increasingly complex and useful queries over the years, often aided by deep smarts from 3rd party services like Wolfram Alpha. Siri is a good example of the overall progress of general purpose chatbots, but it — and the others like it — are really just the tip of the iceberg. I predict you’ll see chatbots appear in almost every user interface in the near future as a way to almost completely remove the friction between our computing systems and us.

How Chatbots Will Impact Online Community

How will the rise of chatbots with AI affect the most important new digital environments for our organizations, online communities and enterprise social networks? I wondered this recently, in particular how it might affect the highly strategic and valuable role of community management. To explore this more, I posed this question yesterday on Twitter to a couple of top colleagues in the space, Rachel Happe and Carrie Basham-Young, with Constellation’s Alan Lepofsky joining in:

Chatbots for Community Management: A Twitter Conversation with Rachel Happe, Alan Lepovsky, and Carrie Basham Young

Why would chatbots help with digital leadership roles like community management? By being connected to the global activity stream and then assisting in the most fundamental — and therefore most common — community management scenarios. This would offload a very overworked role to handle routine digital enablement like helping users through common issues, basic community skill building, ensuring a basic SLA for questions and answers, and providing coaching to community/ESN users on the fly. Other likely scenarios include capturing community data and reporting on it and providing a queryable interface on community needs, hotspots, and quiet zones to improve social business adoption and drive business performance. Chatbots in this space have great potential in my opinion and we’ll soon see them more and more in the social business world.

How Chatbots and Artificial Intelligence could Help Community Managers

But are chatbots for community management — and other domains of digital engagement — really going to happen? I’d argue that since they already are in many other similar functions, such as Web site sales and support, that it’s almost certain, as a greater share of conversation shifts from human-to-human (H2H) to human-to-machine(H2M.) In fact, an employee from Cognizant even chimed into the above Twitter conversation that they are actually working on this. A smart chatbot to aid in community management will likely do volumes to improve the effectiveness of online communities, which are still getting short shrift in terms of investment in the professional skills needed to manage and facilitate them well.

In short, I believe smart chatbots will revolutionize digital/social engagement by adding a much needed automation and support of communication, knowledge management, and collaboration. There are also high value scenarios for chatbots connected to the e-commerce especially, an area that Facebook was careful to emphasize at F8. Chatbots will likely contribute to some digital noise as well, but filtering has proven effective in general for social environments in recent years. Overall, the emerging ensemble of conversational technologies is going to offer a compelling new access point to digital value for the average people in a very substantial way. At this point, I’d strongly recommend that most organizations add them to the new enterprise technologies to watch.) I will be adding smart chatbots to my upcoming 2016 enterprise tech watchlist on ZDNet as well.

The Long Game is Winning in Digital Ecosystems, and Other Global Tech Trends

I’ve traveled nearly 70,000 miles all over the world since the beginning of the year, talking with digital practitioners in the trenches. Most often these are passionate but often frustrated change agents, IT managers grappling with tech evolution, and corporate leaders on both the technology and business side looking towards their futures and feeling uncertain.

Where to best focus digital enablement efforts in their organization, while coming from behind, with scarce time and resources is question that is top of mind right now. Worse, leaders at the very top often don’t seem motivated to make the necessary moves.

From these conversations and many observations at conferences and events so far in 2016, it’s obvious to me at this point that we appear to be entering a new inflection point with digital: Those who began early, made the right decisions, and stuck to their Internet identity in terms of rethinking the future — as opposed to chasing traditional firms back into their own industries — are seeing outsized rewards in an increasingly winner-takes-all online marketplace. The rest of us are watching them pull away.

In short, the early entrants to the global digital business competition that were either a) lucky enough to discover the digital rules of success from the outset, or b) followed a positive market feedback loop to the same place are quite clearly sucking the air out of the room. Perhaps most importantly, they also had the ability to execute without the many constraints of our legacy organizations.

The Impact of Leading Digital Ecosystem Methods for Digital Transformation

Of course, I’m talking about Amazon, Google, Facebook, and Apple — sometimes referred to as the Four Horsemen of the Digital Apocalypse, for good reason — on the consumer side as well as Salesforce, and now surprisingly Microsoft, on the enterprise side, the latter two which are making major new inroads to enterprises I speak to. Microsoft in particular seems to be suddenly winning a lot of enterprise-wide “Microsoft company” deals as their digital/cloud vision matures. As a whole, these technology companies are increasingly seizing broad swaths of digital territory as they move at near light speed compared to their non-digital native brethren, breaking into new category after category with with relatively high levels of repeatable success. Certainly, their track record is head and shoulders better and much more rapid than most Internet startups, or most traditional enterprises that is.

Using the Inherent Power of Networks and Sustained Tech Investment

Why this is has been the subject of endless analysis, scrutiny, and speculation about this very small cohort of tech companies eating the world, but I propose that the core reasons are actually fairly basic. To restate the above: There are certain fundamental rules to digital ecosystems and the businesses built on top of them. While it helped enormously to be early, organizations that understand these rules and can also execute and invest for a sustained period of time can still dominate if they understand a few crucial pivot points.

Networks effects, one of the most basic measures of a successful digital ecosystem, quickly become exponential yet look relatively minor at the beginning, fostering complacency in competitors at the worst time, when a new digital market seems small and uninteresting. It’s not until critical mass has been reached a little later on, that a digital platform grows very swiftly into a market dominating and self-sustaining force. Then it’s relatively easy to crush lessor players that aren’t utterly focused on k-factor and other measures of these effects.

Simultaneously, and harder to prevent, is the tendency of make basic subsequent design changes to online products that then impede the carefully built channels that have created the initial growth and scale. I’d argue that many digital contenders frequently make this last mistake, making simple but disastrous changes — often when turning over the product from the 1.0 team to the maintenance team — by not staying true to the inherent power laws of digital systems that got them there (patterns such as “enabling networks effects by default” or “anyone can participate.”)

Needless to say, the aforementioned tech leaders managed to navigate past all these obstacles, including shooting themselves in the foot later on as they had to bring on fresh talent to grow the company. The critical design parameters that enabled growth stayed in place, and long enough to provide returns. This also highlights the big difference between most of these organizations and traditional companies: They had venture backing that isolated them from the quarterly financial cycle of immediate and continuous returns. Some would argue that Amazon has been doing this anyway, despite being a public company, and reaping enormous rewards in the long game of digital, where increasingly it’s apparent the winners reside. As BCG has noted, “even sharp minds can fail to grasp the power of sustained exponential forces.”

The primary lesson here: Deeply understand the rules of digital ecosystems and build one that solves a real pain point for a lot of people. Optimize the results relentlessly and pour the returns back into growth. Don’t stumble along the way.
This is a playbook that is simple enough to understand, but that most industrial era organizations fully embrace in a meaningful way, despite all the marketing talk — and I’m guilty as many of us in this regard — about digital transformation.

What does this have to do with the conversations I’ve been having? To person, almost everyone thinks their organization is moving too slowly, tentatively, and uncertainly towards becoming effective digital organizations that can compete, what I’ve called a next-generation enterprise. As SAP’s excellent Sameer Patel — and fellow Enterprise Irregular — once famously said, businesses have digitized quite a bit, but they haven’t really transformed.

Getting Past the Digital Innovator’s Dilemma

The real obstacle is one which I’ve been exploring in various forms over the last several years: Most organizations have accumulated and/or designed in enormous amounts of legacy culture, process, mindset, and infrastructure that got them where they are, but now has to be undone to a large extent to be fully realized and effective digital organizations. The world of agile, lean startup, OKRs, open APIs, devops, relentless A/B testing, and growth hacking are all words or phrases sometimes heard in the halls of the average classical business, but they just don’t lie at the heart of them, and won’t any time soon.

Worse, we’ve greatly over-centralized technology enablement so that it’s become a profound chokepoint in many organizations. CIOs and CMOs feel this acutely when this is the case, and yet a few are now reaping the benefits of going in the opposite direction. There are indeed solutions, but they require more ideas that traditional organizations aren’t good at: Open innovation, Kickstarter-style ideation programs, app stores, customer co-creation, change agent programs, hackathons, employee incubators, BYOT, enterprise architecture that’s designed for loss of control, and more.

The second big observation from my travels this year is that the technology world is maturing in some interesting ways. These trends too tend to favor those that invested early or invested big, or both. One is the realization that digital success stories aren’t coming from very many places. The United States and Asia dominate the top of the list, arguably having an unfair advantage through better investment policies for startups and very large markets that make it easy to take advantage of power laws. Larger markets, even ones relatively undeveloped, seem better to attract both talent and the numbers required to build market presence that can’t be ignored.

So what are organizations to do? I’ve suggested some digital transformation blueprints for both boards of directors as well as for the C-Suite that can help develop and grow true digital native lines of business in a sustainable way. But I also think that there is now a very steep curve to climb to respond to the network effects that Internet startups have created in many new and existing industries.

Become a Network Orchestrator and Harness the Market

The reality is that there is really only two ways for companies behind the digital maturity curve — which is still almost all of them right now — to catch up: a) Invent new industries that are irresistible in terms of the value and utility they offer b) employ the latest lessons learned on how to play to the strengths of the digital marketplace and turn the knob all the way to the right, beating the existing players at their own game by more purely and deeply plumbing the inherent factors that make digital ecosystems such an uneven playing board. Most digital contenders fail to understand even the most basic concepts of digital, such as the network itself is the single biggest resource you can and must use to digitally fuel your ecosystem to transform. It will do almost all the work, as long as you have a vision, a value proposition, and a platform which truly embodies and orchestrates both. Network orchestrators, in fact, are at the top of the Internet food chain. Organizations must live there, or become fodder for those that are. As Forrester’s Dan Bieler noted recently:

Digital ecosystems empower the CIO [Dion: and other internal tech leaders, official and unofficial] to become a critical business enabler by providing a technology platform to redefine approaches toward innovation, knowledge management, supply chain optimization, product development, and sales and marketing. In particular, traditional firms put survival at risk due to slow innovation cycles. CIOs who define a clear strategy to exploit the possibilities that digital ecosystems offer for their organizations position themselves as powerful change agents.

I’d only add that it’s not just about defining a strategy, but leading and executing on it sustainably. I’ll be exploring more about my travels and lessons learned on the emerging edge of digital shortly. In the meantime, your insights on this challenge are very welcome in comments below.

Additional Reading

Going Beyond ‘Bolt-On’ Digital Transformation

Is it IT’s last chance to lead digital transformation?

Dear IT Department, Why Community Management Matters

It’s one of the curiosities of enterprise technology: Despite collaboration and engagement being an exclusively human activity — even when augmented and improved by digital tools — it’s the IT department that most often gets put in charge of rolling out said tools and then operating them long term.

According to recent research by the Real Story Group, IT is in fact far and away the most likely the department to both fund and sponsor, as well as implement social platforms in most organizations. Certainly, this seems to make sense, if one looks at social engagement as primarily a technology concern, rather than a powerful new human endeavor and way of working that is only in the end supported by new technologies.

Thus, even though HR, corporate communications, marketing, and other functions are very likely to be primary drivers and have direct input into the strategy for a social business effort, they have very little operational role in making the realization successful or managing it long term. Instead, IT typically treats the entire process like any other technology rollout to the organization. It goes through its tried and true playbook for bringing a new software product into the business, not fully understanding something rather different is required this time.

The Three Operational Elements of Communities: Project, Technology, and Community Management

The primary issue at stake is this: Social business in all its flavors — from social collaboration and social marketing to social customer care and even social supply chain — is not just another communications technology. Instead, it’s focused on engaging people in powerful new ways that requires a new set of digital skills in, yes, an enabling new technology environment. The tools are secondary (though important), how people work in effective new ways is what matters. Most significantly, a new operational entity emerges from this, called an online community, that did not exist before and requires its own cultivation and management.

The initiating business sponsors typically, for their part, are interested in connecting together people and their knowledge in more streamlined, dynamic, fluid, and actionable ways that benefits the work they are doing. It’s the people, ideas, and information they seek to tap into and unleash. But they don’t have the ability or responsibility to manage technology on their own. So they are usually required to reach out to the IT team to make their dreams come to life.

How Community Management Often Gets Left Out of Enterprise Social Projects

It’s at this point where things sometimes go off the rails. I’ve had this experience personally and continue to hear stories like this over and over again from social business practitioners, despite a growing body of evidence that shows what it takes for social business efforts to actually be successful. What I’m calling the “standard IT implementation process” leads too many community efforts to fall into a dysfunctional state that ensures they underperform. Perhaps the most common scenario is this:

  • A sponsor in the business comes to realize that a social business approach can benefit what they do. They seek to build and unleash communities on their business problems, and start thinking about the supporting technology they will need to make it happen.
  • The business sponsor involves the IT department for the technology component. The IT department, already owning a vast portfolio of tools, likely has a preferred solution from an entrenched vendor, instead of looking for the right technology to support the business requirements. Sometimes, if the business sponsor is lucky, a real technology evaluation is done. Either way, IT increasingly owns the project and planning because of the technical details. The business sponsor often loses control over the detailed planning and strategy, as complex technical details and issues start to obscure the original goals. Finding the best enabling environment for the community often becomes an afterthought.
  • The business sponsor seeks to drive forward the people-side changes and organizational support for the new social business effort. Proposals for shifting to new ways of working, providing education on new digital skills, and hiring support staff for the operations are too often to first items to get cut by the IT project committee. The technology should be self-evident, some say. It’s a simple training problem, say others. To almost everyone on the outside of the effort, looking at social business as a largely technology-based roll-out, it’s not obvious there’s a need for sustained workforce learning/skill building, change management of relevant business processes, or that the effort will create a large, new, unguided group of virtual people who are not directly supportable through traditional management or support processes. Because it’s new, few are even thinking about network leadership skills, for example.
  • The business sponsor, talking to social business efforts that were a success, learns about community management, a vital new support function for community-centric ways of working. The sponsor proposes that the company bring a couple of community managers on board, as they have heard they’ve turned out to be so helpful in other organizations. The response, because the request seems (and is) foreign and unusual, is either to deny the requests or offers up part-time volunteers that are currently available, usually interns or other junior staff with little to no experience actually managing large-scale business communities.
  • The big rollout happens, and the community limps along in an unmanaged fashion, with little direction or support. In the community, people ask questions, look for information, or otherwise engage but it often doesn’t go well and there’s no one to make sure it does. Other participants don’t know what to do with the new tools, or when/how to use them. The community often seems undirected and random, not guided or coached towards important business outcomes. With no one to inspire, troubleshoot, educate, and otherwise support the members, the community putters along with occasionally useful, but minor impact.

While I’m singling out IT departments for sometimes not providing the right resources to make online communities successful, the reality is community management, what I’ve long called the essential capability for online communities, can be neglected or underserved by anyone. Yet long-standing research from highly respected organizations like The Community Roundtable have found to be a top successful factor in realizing a social business solution.

Number of Community Managers by Organization Size

Ensuring Success with Social: Investing in Community Management

My advice to IT in order to avoid this scenario — based on many projects I’ve been involved in and many, many case studies — is this:

  1. Any social software that connects more than a handful of people together in a sustained way requires community management. You wouldn’t dream of rolling out an IT application without training or a help desk, or starting a project without project management, so please don’t operate an online community without its own relevant and critical form of enablement and support. Also, make sure you find the right community platform for your users. Note: That’s usually not the product that your incumbent vendor happens to have lying around.
  2. Use professional community managers. Hoping that you can have this strategic capability carried out by junior or inexperienced staff is a leading cause of low effectiveness of social platforms after rollout. While all communities usually have a big spike of usage upon release, there is usually a let down after everyone initially visits to see what it’s about. This is followed by a slow buildup as work steadily shifts to the enterprise social network, social customer care platform, customer community, and so on. This growth is greatly aided by community managers. This buildup is actually (mostly) created hundreds and even thousands of weekly activities taken by community managers to nurture, troubleshoot, support, and educate users on how to get the most from the new ways of working the technology makes possible.
  3. Community management, like IT support and training, never ends so plan for the long-term. Look at the historical data from average and best-in-class communities in the diagram above. This is a good starting rule of thumb on staff size. The amount of community managers required to make social business a success is actually quite small, but you must budget and staff them with experienced people year-in and year-out. Be sure to do so while accounting for the community growing over time, which it will if you have community managers.

IT Applications and Communities Both Need Management Support and Nurturing

As the old saying goes, I’ve actually come here to praise IT, not to bury it. I have an extensive IT background myself and so I know well the insane pace and enormous responsibilities for operations, security, and governance that are required to make technology in the enterprise successful. But I also know that when something very new and different is presented in a technology guise, that it’s hard not to run the same well-worn playbook that’s worked so well in the past. IT support and understanding for what is unique and important about communities is essential for successful social business. Many CIOs are indeed enabling it, just as many have not yet studied why it’s such a different technology animal.

Instead, IT leaders — and everyone really — has to understand why social business is special, why it requires both giving up non-essential control and letting the network do the work. And why it creates an vital new self-organizing entity of immense power that has started to change how organizations create value around the world: The digital community, and its critical enablement capability: Community management.

Additional Reading:

Online communities learn new practices, report higher ROI

Where to Position Online Community in Your Digital Strategy

The Hardest Lesson of Digital Transformation: Designing for Loss of Control

It goes hand in hand with another key principle that sets digital strategy well apart from many other traditional ways of achieving organizational objectives. One of the counterintuitive lessons of digital and social business is that the network itself can and should do the majority of the work, if you’ll only build a little social capital and then enable interested participants — people, in other words — access to a platform that allows the co-creation of shared value at scale. Oh, and yes, you must provide a good motivation for doing so, but they’ll often figure that out too.

By “majority of the work”, I mean that aligned stakeholders in digital platforms that allow participation will help produce literally nearly everything of value to them, from co-creation of content, activities, ideas, to even the very management, governance, and gardening of the digital ecosystem itself. The lesson here is clear from the consumer world where pioneering services such as YouTube, Facebook, and LinkedIn have long proved the viability and repeatability of this model on a global scale: Today’s most successful open digital platforms create virtually nothing themselves directly. Instead, they have gone through great lengths to provide a carefully constructed platform for their communities of millions and millions to do it indirectly instead.

It’s the asymmetric warfare model for the digital age and far too many organizations do not fully understand how profoundly the rules of business in the digital era have changed. Consequently, they are often at loss on how to lead the organization to better adapt. The test question is this: How can any traditional, internal, do-it-all-the-hard-way model for value creation compete with the hypercharged mass of networked participants — aka social business — that digital savvy organizations have gathering around them and are choreographing to create far richer results, often many orders of magnitude richer than the old guard methods?

The Key to Digital Transformation: Loss of Control

While the consumer space has seen the most success with this model, we now have good evidence that this is happening in the traditional enterprise with organizations like Bosch, Deutsche Bank, and a good number of others, that the same approach is making it into the business world. For the organizations that can fully tap into their stakeholders and inspire them to co-create the future together, nearly anything is possible, and consequently the competitive stakes are unsurprisingly, enormous and have been reshaping industries for the last decade, first media and software companies, and now nearly every industry with the rise of the sharing economy.

But successfully adopting a native digital perspective requires mastering a mindset that traditional management culture is both unfamiliar and rather uncomfortable with. Frankly, of all the top obstacles to digital change, very few are technological. They are almost always barriers created by people, and of the mental barriers, this is perhaps the most foreign concept of all: Deliberately giving up control in a conscious and designed way over your organization’s digital results, while guiding the emergent outcomes in directions that are good for both your business and your stakeholders. As I’ve been clear about before, this very much does not mean all positive control, just the non-essential elements (which admittedly is still most control.)

The motivation for doing so is very clear: Industrial age management structures, while effective (albeit with considerable cost) at producing linear output predictably, actually fail to tap into the lion’s share of potential value. A recent study by Cross, Rebele, and Grant of several hundred organizations only underscores this point:

[The] research we’ve done across more than 300 organizations shows that the distribution of collaborative work is often extremely lopsided. In most cases, 20% to 35% of value-added collaborations come from only 3% to 5% of employees. As people become known for being both capable and willing to help, they are drawn into projects and roles of growing importance. Their giving mindset and desire to help others quickly enhances their performance and reputation. As a recent study led by Ning Li, of the University of Iowa, shows, a single “extra miler”—an employee who frequently contributes beyond the scope of his or her role—can drive team performance more than all the other members combined.

The key is understanding why this is such a powerful concept and the key to digital business, is realizing that the more control you give up and relinquish to the network, the more value comes back through peer production. A lot more. The secret lies in having something of value in the first place, that can be somehow enriched by others. This is where having a digital platform becomes essential, one that is designed with an effective architecture of participation that opens up your data, processes, distribution channels, supply chain, or anything of value that is digitally connected in some way to your organization.

The good news is that what a successful architecture of participation looks like, at least applied in generic terms, is increasingly well understood for many important digital business activities, even if it surprisingly is missing even today from many views of the digital enterprise, such as this one from McKinsey.

Common Architectures of Participation

Architecture of Participation Target of Open Participation Extended To Typical Value Change/Magnitude
Crowdsourcing Any type of digital content Interested parties 10x-1000x
Working Out Loud Work narrative, process, product Any stakeholders of work output 2x-10x
Affiliate E-Commerce The digital sales funnel Any interested entity with traffic 1.5x-5x
Open APIs Corporate data External partners desiring to innovate with the data 1.5x-100x
App Stores App ecosystem Developers seeking customers/revenue 100x-1000x
Online Customer Service Community Customer issues/problems Those willing to help 1.3x-3x
Digital Change Agents Platform Unmet digital needs in the org Those interesting in solving them 1.3x-3x

What’s worth noting is the powerful amplification/scaling effect that digital architectures of participation have. That’s because the cost of being connected to everyone who is already connected drops, like everything digital, quickly towards zero, as does the cost of creating and operating a platform that provides your carefully exposed points of participation to those stakeholders.

In effect, nearly no older way of working, managing, or doing business can fight the power laws of digital systems, which continually apply exponential forces to make value creating activities much faster, cheaper, higher volume, better quality, and so on.

This then is one of the key drivers to digital transformation and why it has such urgency. To get to the other side, however, requires a major shift in understanding where the majority of business value comes from, how best to capture it in digital markets, and what kind of thinking it require to design products and services that operate in an increasingly peer produced world. In other words, genuine hard work of creating the cultural, process, and organizational shifts that will lead to digital adaptation.

Perhaps most importantly is understanding is that shifts in mindset are the key to entry to digital business in general. When thousands of startups do little but obsess around the clock about how best to use the mass global connectedness we’ve attained with the Internet to achieve the previously unachievable — and most traditional businesses are not — we will almost certainly miss the very opportunity we were trying to accomplish with our old command and control methods. For sure, the jury is still out for many on the digital economy and who will ultimately be the beneficiaries, but to not even understand the game means that organizations are flying blind. And that’s the worst environment to achieve control one can imagine.

Note: I’d be rather remiss in not giving original credit for the Design for Loss of Control meme to the great JP Rangaswami. The concept goes right to the core of how to remove the many significant barriers that hold back digital in most organizations. Startups famously don’t have those blinders build it, the rest of us have to do a lot of relearning, and JP was instrumental in helping us see that.

Additional Reading

Shifting the Meaning of Business Hierarchy to Community

Designing the New Enterprise: Issues and Strategies

How Online Communities Became Central To How We Work

Communities make just about everything we do today in our organizations better. That was essentially the message at FeverBee SPRINT last week in San Francisco, a confab of several hundred online community practitioners sharing lessons learned and best practices.

To be sure, we have sometimes been able to do what digital communities make possible in other, older ways, but these outdated methods are invariably more time-consuming, costly, and scale up relatively poorly. In fact, it’s the singularly remarkable concept of letting the network do the work that is the foundational concept behind what makes a community so special in how it achieves the many remarkable things that it does.

Today, all of our organizations today are greatly outnumbered by their stakeholders. We always were. But now they are all connected continuously to us and attempting to engage. We’ve also learned that the more that we can somehow engage with them, the more shared value that can be created. One key strategy, is to gather our stakeholders around us digitally, and let them share in the effort. This offloads us and makes engagement at scale manageable, even possible.

How Online Communities Have Matured In Terms of Use

None of this is new or surprising for those who’ve been involved in communities. Created around a group of people with a set of common purposes, communities will go almost entirely of themselves, with its members supporting each other, learning from each other, innovating together, co-creating, and more, with some oversight by that absolutely key role, the online community manager.

So when companies develop purposeful digital venues and enlist the participation of interested stakeholders, those communities will still do those same things, but around more work-focused goals, like customer care, product education, sales enablement, product development, and numerous other use cases. The key concept here is that effort is shared by the entire community, and not provided entirely by the one stakeholder that used to do most or all of the work in a fairly limited, expensive, and slow fashion by comparison: The organization itself.

Getting back to the conference, I was invited by FeverBee’s Richard Millington to provide a look at the near future of community management, the profession that has emerged to make communities thrive and succeed, and which no community can afford not to invest as much as it can, if it hopes to see the desired results. Using the latest case examples and customer results, I took a look at some of the leading examples of what organizations are doing with community, to extrapolate what we all might accomplish with a bit better understanding of what’s possible. Here is what I believe that we’ve learned and what’s next for most of us.

Recent Strategic Lessons of Community Management

    • Community success measures and KPIs are maturing. In some cases, companies have gone well beyond superficial adoption metrics like unique monthly logins, and measured business impact such as process effectiveness, productivity improvements, higher customer satisfaction, and more. This letting organizations that measure and optimize for these outcomes, get outsized results.
    • New ways of working are being developed using a community-first model. Organizations like the industrial product giant Bosch have imagined how their core processes work to literally require community to get the them done, in order to maximize the benefits. I cited how one key process that took 4 weeks, was collapsed to 6 days when it was re-engineered to work using the company’s enterprise social network.
    • Community is becoming the organizing principle for digital experience. At first, using the scale of community as a shock absorber for engaging at scale, companies are finding that community makes virtually every customer and workforce function better by unleashing co-creation. Marketing works better (advocacy), sales works better (community reference checks), operations work better (social exception handling), customer care (community-based support), and so on. The same across digital channels as well, from Web site to mobile application: When community is present, the channel works better.
    • Companies that teach their employees modern digital literacy skills do better with community. Folks like John Stepper at Deutsche Bank are building skills like Working Out Loud to maximize the returns on community.
    • Community ambassador programs are driving sustained results. Just like the data now says that advocacy programs work with customer communities to drive an increase in corporate growth, the communities themselves are using formal champions programs who can be used to spread awareness, skills, and support.
    • Human resources has discovered community. The CHRO in many organizations is now sponsoring enterprise-wide community-based employee engagement efforts, while the rest of the department has discovered what amazing stakeholders are already in our communities, ready to be tapped for recruiting, hiring, onboarding, employee retention programs, learning and development, and knowledge capture.

In short, I believe the future of management itself is significantly described by the emerging role of community management, a skill which is borne out of guiding — and therefore leading — large groups of decentralized people with shared objectives towards common goals. We are witnessing the network-enablement of management in powerful ways, and it’s part of the whole package of digital skills that we must convey to our entire workforce, not just community managers, though they are the ones that need it first.

It was also great to see industry luminaries like Rachel Happe, Kare Anderson, and others at the event show us how far we’ve come with communities.

The keynote deck I used for FeverBee SPRINT 2015 in San Francisco can be found on Slideshare below:

What Lies at the Cutting Edge of Online Communities and Community Management

Additional Reading:

Defining the Next Generation Enterprise with Community

Is the Window Closing on Enterprise Customer Communities?

What’s Coming Next in Digital and Social in the Enterprise?

I’ve been taking a close look at what’s over the enterprise horizon for much of the year as the pace of technology change continues to accelerate, as most experts have long predicted and which will only continue. New platforms, technologies, product, services, and models are appearing at a constant pace these days. Many topics that are hot today were barely on anyone’s radar a short while ago, from the blockchain and holacracy, to social performance management and trimodal IT, to name four of a great many important topics that have been significant recently.

The result is, if you’re not currently dedicating a significant amount of time in some part of your organization researching what’s happening, the digital world is almost certainly leaving you behind. In fact, as I’ve been making the point recently, our traditional methods for adapting to and absorbing new technology are breaking down in the face of the torrent of digital innovation our organizations are currently experiencing. In short, we need new models and effective strategies for technology adaptation, and the good news is that some workable approaches are now emerging, discovered and proven in recent years new through bold experiments by IT and business leaders in the field. Even though culture and practices are likely to be the biggest obstacle, as Isaac Sackolick recently observed, we still need new processes that span IT and business that can greatly accelerate our ability to adapt to the marketplace.

Tracking Digital/Social Innovations with Business Impact

But, as we’re sorting out how we should strategically manage our technology portfolios today, we still need to keep a close eye on the stream of what’s happening in digital and social, making sure key developments are on our evaluation and adoption plans as appropriate. To that end, I’ll be taking my latest survey of high impact new digital technologies likely to offer significant advantage to the enterprise in the very near future for my upcoming session at Dreamforce 2015 next week in San Francisco.

What is next in the enterprise for digital and social

One thing is sure however: Digital transformation must take place hand-in hand with human transformation. So I’ve broken the list down into those two swimlanes, as we have to both change our technology landscape and ourselves into order to more successfully adapt. I’ve also included three verticals that I believe are experiencing particular disruption/renewal due to recent digital advances.

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Technology Dimension Human Dimension
Digital
Wearables Future Skilling
Digital Assistants Citizen Developer
Robotic Process Automation Work Hacking
Mind/Machine Interfaces Networks of Excellence + Change Agents
Virtual Reality Platforms Trimodal+ IT
Microframeworks InnovationDevSecOps
Low Code Platforms Digital Management Models
Applied Machine Learning New Digital Career Tracks
Blockchain
Social
AI-Based Social Analytics SocBizOps
Community Management-as-a-Service Social HR and Sales
Social Aggregation 2.0 (Apps/SNS Silos) Swarm Intelligence, Working
Social Payments Social Performance Management

Note: I’ve included links to some of these advances above, but will explore them individually in more detail on ZDNet soon.

I also believe there are some major developments in healthcare (wellness tracking, social electronic medical records, healthcare communities), financial services (cryptocurrency, partner networks, digital advisors), and higher education (adaptive learning communities, student/alumni communities, and new digital learning spaces) that represent major opportunities for the majority of organizations in these sectors.

To get a deeper exploration of each of these topics, please attend my Dreamforce 2015 session, titled “Vital Trends in Digital/Social Impacting Your Business in 2015 & Beyond” at the Hilton Union Square, Continental Parlor 5 on Tuesday, September 15th at 2:30PM PT.

Update: My deck for this session has now been posted on Slideshare.

Additional Reading:

The Enterprise Technologies to Watch in 2015

How Digital Collaboration Will Evolve in 2015

The Modern Digital Workforce: Engaged with Knowledge Flows and Each Other

State of Social Business Adoption

The Five Paths to Enterprise Online Community Engagement

How To Scale Social Business For The Real World

The Journey Of The Social Customer

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