Lean thinking in CRM and Social CRM

I first came across Lean thinking in CRM when I met with the COO of a large Dutch financial services company. At first I was sceptical, I had previously only associated Lean with Japanese automotive companies; particularly Toyota where the concept was created. But lights began to go on in my head when the COO described the application of Lean principles to customer-facing operations and I have been a fan of Lean CRM thinking ever since.


Lean thinking starts with the customer

With its supply chain origins, Lean stresses the importance of understanding customer demand, then "pulling" items through the supply chain. Any CRM initiative should start with the customer's value creation process, working out how mutual value can be created for both provider and consumer. Social CRM extends and accelerates our understanding of the customer by placing the customer in control of the conversation and connecting customer feedback (in the form of tweets, ideas, sentiment etc) directly with product development, marketing, sales and service.

Lean encourages customers to "pull" value themselves

Traditional CRM would see customer's "pulling" value as being self-service. Allowing customers to answer their own queries, place orders, track status etc on their own terms via the internet, SMS or via voice self-service. Again social CRM extends this principle, as it facilitates customer to customer collaboration. Customers participate in marketing, sales and service by creating content, answering questions, giving recommendations etc (see my post on "outsource your marketing, sales and service to your customers").

Lean eliminates waste

Lean works backwards tracking the value streams that enable customer value and eliminating waste. Toyota identified 7 waste types (overproduction, unnecessary transportation, inventory, motion, defects, over-processing, waiting). At first these all sound manufacturing-specific but think about the waste in front office operations, for example, a typical call centre. The call centre takes on too many agents for a peak period (over production), customers enter their account number on the IVR then again when the agent answers the call (over-processing), the first agent to speak to the customer can't answer the customer's problem (defects), the call is forwarded on to another agent and held in a queue (motion), the second agent asks for the customer's account number again… you get the idea. The same idea can also be applied to marketing (e.g. wasted spend on advertising) and sales (admin time versus productive time in front of the customer).

Lean focuses on standardising processes but allowing flexibility

The idea of Lean is to standardise processes, but not to straight-jacket an organisation so that it cannot respond to unexpected events. If you can standardise processes then people can perform multiple roles to maintain the "flow" of value to the customer. For example, consolidating down to one complaints process allows agents to deal with multiple complaints types, rather than having to learn a different process for each different complaint type. In this way, the organisation can flexibly respond to a sudden peak in a particular complaint type, rather than seeing one group's work load dramatically increase and stop the production line.

Lean drives a continuous improvement culture

One of the most important elements of a lean program is the creation of a continuous improvement culture. Lean is not a one-off initiative. Viewed this way it normally yields dramatic benefits for the first couple of months but then the organisation reverts to its pre-Lean state and the benefits fade quickly. All successful Lean programs place a huge amount of emphasis on cultural changes and working practices e.g. morning meetings.

Lean is typically technology-light

Most Lean purists would say that technology has no place in a Lean transformation. My own view is a little more pragmatic. Technology can help enable and facilitate Lean thinking through enhancing customer understanding (see my post on "customer listening mechanisms and Social CRM tools") and through enabling new business processes. Most CRM and Social CRM technology can be implemented in an Agile way which is strongly aligned to the continuous improvement / incremental element to Lean.

If you know of any good examples of organisations using Lean to drive their front office transformations please let me know.

For further reading on Lean I'd recommend Journey to Lean: Making Operational Change Stick by John Drew, Blair McCallum, and Stefan Roggenhofer.

Star Wars and Social CRM

The other day I was trying to explain to a client what social CRM was all about and what the difference was to the first generation of CRM. Knowing the client was a film-fanatic, I used a Star Wars analogy.

Despite the best of intentions first generation CRM systems were about technology-enabled command and control. Think of the Original Star Wars film, Darth Vader and the Death Star. As Supreme Commander of the Galactic Empire, Vader built the original Death Star to defeat rebel forces in the Galactic civil war. The Death Star was a monumental technological feat designed to control the Empire and attack the Rebels. Relating this to the first generation of CRM (the boom before the bust)

• First generation CRM systems were technology-centric monoliths
• They aimed to own and control all customer data and customer facing processes
• Marketers used this data to segment and bombard customers with spam
• Sales managers used this data to control sales reps
• Customer service managers used CRM to standardise and micro-manage agents

The first generation of CRM put powerful tools into dangerous hands resulting in many failed CRM initiatives and the CRM market going into the doldrums for several years (I likened this period to the start of "The Empire Strikes Back", when Darth Vader and the Galactic Empire had driven the Rebel Alliance into hiding on the remote ice planet Hoth.)

During the early years CRM had a fairly high failure rate (some analysts estimated 60-70%). Those projects that did succeed were small, agile and focussed on outcomes (like the x-Wing Falcons that attacked the first Death Star at the end of "Star Wars"… I realise I'm jumping around the Star Wars trilogy a little but bear with me!). The successful projects paid a great deal of attention to the customer experience, front line staff, incentives and culture. Typically they broke down the CRM vision into small digestible chunks and built incrementally.

Over time CRM bounced back. The industry made a mental shift from "Inside-Out" to "Outside-In", putting the customer back at the rightful heart of CRM programs and learning from previous failures (big-bang approaches, poorly aligned culture and incentives, lack of exec commitment etc). The industry woke up and started to get CRM right and companies started to reap tangible rewards for their investments. In "The Empire Strikes Back", Luke Skywalker's awakening began at Dagobah where Yoda introduced him to The Force an "omnipresent form of energy which can be harnessed by those with that ability…an energy field created by all living things that surrounds us, penetrates us and binds the galaxy together". The Force allows users to perform a variety of supernatural feats and can amplify certain physical traits.

Relating this to Social CRM, the Force is the sum of all customer comments, feedback, blogs, tweets, yelps, diggs and sentiment. Some organisations are able to tap into this using direct customer feedback to improve products and processes, drive customer word of mouth for marketing and customer collaboration for service. Those who do this well are able to achieve amazing feats - see my post on outsourcing your Marketing, Sales and Service to your customers. Social CRM is therefore a natural extension of CRM. It further energises the return of CRM by placing the customer not just in the centre but now in control of the conversation.

So when we get to "The Return of the Jedi", the final film in the original trilogy, Luke Skywalker is now a fully fledged Jedi Knight, the Ewoks lead the rebel fight and Lando Calrissian launches a final assault on the Death Star in the Millennium Falcon. In an ideal world, that would be the death of technology-centric, command and control CRM (the Rebel alliance would celebrate the fall of the Empire) , but I suspect things aren't quite that simple. The battle is far from won. The Force can be used for both good (Jedis) and evil (Siths). It amplifies the things that an organisation does well along with the things they do badly (see my post on 10 angry customer created sites and campaigns).

Some people think visually so here's a Prezi describing the above story. Enjoy and please let me know any feedback!

What would Google CRM look like?

A few years ago, when I was working for SAP, I posed a question to my team: "If Google were to launch a CRM solution, what would it look like and how would SAP respond both tactically and strategically"? I mocked up some fictitious "Google CRM" screenshots showing Google CRM mashed up with Google Docs, Google Adwords, Google Maps etc and I described the solution as a free CRM solution funded by advertising revenue that would shake up the CRM market.

The session promoted heated debate. Some ideas, like mashing SAP CRM screens with Google Maps were fed into SAP's CRM Product Development and were embraced into the product, others, like partnering with Google to create a SaaS solution, never left the room.

Skip forward a few years and last month I read Jeff Jarvis' book What Would Google Do? In the book, Jeff Jarvis takes his readers into the Google mindset, discussing the tactics that have made Google so groundbreaking. He then applies his framework of thoughts to other industries, asking how Google would approach running a cable company, a restaurant, an airline a hospital and many more. I found it an extremely well written and thought-provoking read.

So while the book was fresh in my memory I decided to revisit the question of "what would Google CRM look like"? Here are my hypotheses (all open to debate and comment!):

1.   It would be free (standard edition) or offered at a nominal per user per annum cost (premier edition). Google commodities' everything. They would provide basic CRM and Social CRM processes like Sales Force Automation, Campaign Management, Customer Service free of charge, powered by advertising revenue. Above a certain user number or storage capacity, they would offer a Premium Edition which might include additional functionality (for context Google Apps Premier Edition costs $50 per user per year).

2.   Google CRM would be integrated into all existing Google Tools & Apps for example:

a.  Google Docs - for word processing e.g. proposal generation, presentation and spreadsheets e.g. reporting

b.  Google Maps and Google Earth - for mapping customer, employee or site locations (most CRM solutions already do this)

c.   Google Adsense and Adwords - integrated into campaign management to allow closed loop creation of adword campaigns (Salesforce.com already have this functionality)

d.  Google Alerts - to alert customer facing staff of key information relating to their customers

e.  Google Sites and Google Checkout - for basic eCommerce functionality

3.   It would be platform based - Google would  allow developers to build out CRM and Social CRM functionality via Google App Engine, similar to Blogger where Google provides a basic blogging tool but allows the tool to be extended with third party widgets. In the current CRM world Salesforce.com's Force.com platform is the best comparison as it allows extensions to the Salesforce.com solution to be built and distributed on AppExchange. Google would release Google CRM in beta then let developers and early customers build it out.

4.   It would be communications-enabled throughout, with unified communications and presence. This is similar to SAP's concept of communications-enabled business processes with their Business Communications Management solution, but Google CRM would leverage all of Google's communications and multi-media collaboration capabilities:

a.  Google Wave for team room collaboration

b.  Google Talk for IP telephony

c.   Google Mail & Chat

d.  Blogger (internal and external blogs)

e.  Picassa & Youtube for multimedia file sharing (e.g. social sales scenarios)

f.   Google Reader for RSS subscriptions

g.  Nexus One and Android for mobile use

5.   Google would think distributed, doing what they do best and linking to the rest.  Unlike CRM solutions of the past they would not seek to master all customer data and processes. They would seek to index and organise customer information wherever it sits and guide users to the right answers through intelligent search.

6.   Google CRM would be insanely easy to use. Jeff Jarvis describes Google's approach as "Simplify, Simplify", a philosophy most CRM vendors could still learn a great deal from. Think iGoogle widgets, voice control, unified experience across multiple-devices.

7.   Google CRM would leverage the Wisdom of the crowd:

a.   Internally to improve system performance and suggestions. For example, Google CRM would self-optimise business processes based on usage and it would re-engineer under-used functions.

b.   It would facilitate internal social collaboration. Oracle's social tools like Sales Genius are probably the closest and best I have seen in this area allowing sales reps to find similar customers to sell to, and allowing customer-facing staff to tag useful collateral.

c.    Externally, Google CRM would favour peer-to peer above traditional CRM channels. It would provide customers with open, transparent information about what other customers were buying and what service issues existed. It would encourage peer-to-peer as a primary communications channel, allowing customers to talk to each other directly to review products, give recommendations and solve issues themselves via  crowd-service (see my post on outsourcing your marketing, sales and service to your customers).

8.   Finally, (and I acknowledge that this one may be optimistic…) I'd like to think that my fictitious Google CRM would prevent evil! Google captures a huge amount of information on users and is often accused of compromising privacy. However,  Jeff Jarvis talks about an invoice relationship between trust and control. Perhaps Google CRM would allow customers to maintain and control the information stored about them inside the system, giving them control what offers they receive and what their relationships look like. Doc Searls calls this VRM or the inverse of traditional CRM where the customer controls the conversation.

Disclaimer and disclosure: this post is purely hypothetical. I have no knowledge of Google considering, building or buying a CRM solution. I have no direct vested interests in Google or in any of the other software vendors mentioned.

Outsource your Marketing, Sales & Service to your customers

No - the title of this blog post is not a typo… nor am I suggesting you ask your customers to set up an offshore call centre in Mumbai... Some organisations have customers who are so passionate about their product or service that they do their marketing, their selling and their customer support on their behalf. Of course there's nothing new here. Word of mouth has been around as long as trade and commerce, but the internet has enabled connectivity and a network effect to drive scale like never before.

Let's take a practical example. A few months ago I had a problem with my iPod - the screen had frozen. I looked around for a reset button but couldn't find one. So what did I do? Phone Apple's call centre? Of course not, I Googled it. Someone called "Apple_Fanatic" had already posted instructions on how to reboot a frozen iPod in an online support forum. Apple had, in effect, outsourced the first line of their customer support to their customers.

Problem fixed, I then started reading other posts in the forum. Apple had just launched their 3GS iPhone. I'd heard that the 3GS had new video features and was supposedly faster but I hadn't been onto Apple's web site to tale a look at the new product. I was tempted to look into the 3GS but I also knew that the price was pretty high so I started to read the comments and reviews in the forum. Most were impressed with the video, but many questioned the level of improvement from the previous 3G model, especially since prices of the 3G had dropped considerably. As price was a more important factor to me than video recording or additional speed, I went onto a price comparison site, found the cheapest supplier (who was looking to off-load a bunch of 3G phones before the 3GS hit the high street) and I made my purchase. Once my 3G phone arrived I again Googled instructions on how to set it up, read reviews on the best Apps to download and I am now a happy and enthusiastic Apple customer.

It struck me recently that through my customer lifecycle with Apple I had actually had almost no direct interaction with Apple. I'd been into an Apple store once to see the 3GS iPhone working but my primary contacts had been through other Apple customers who had done Apple's marketing and service on Apple's behalf. You could argue that in this example, the outcome wasn't entirely positive for Apple as I purchased the old 3G phone rather than the new 3GS, however, that would be more then offset by my long term value to Apple.

Of course not every company has products like Apple's that are so good they drive passionate loyalty amongst their customers. But in many industries, companies are trying to establish peer to peer  (P2P) collaboration:

• Amazon.com has a policy of "The best customer service is no customer service". They probably led the way in establishing peer to peer collaboration with product reviews (despite a slight glitch in 2004 when many authors were exposed to have written glowing reviews of their own books!). Their customer service was famous for not publishing a phone number, instead, encouraging (or rather forcing) customers to self-serve. Early on they had their fair share of criticism for not having a large call centre (one angry blogger published their phone numbers ), but these days their customer service is pretty well regarded and most customer accept their online policy. I had a recent problem that was solved quickly and easily.
• NikeiD allows customers to design their own sports trainer, review other users designs and post reviews online.
• SAP has created a number of communities for Developers (SAP Developer Network), customers, analysts and consultants (BPX community) and for Business Objects customers (Business Objects Community). All offer a forum for members to exchange information, blog, collaborate etc. In total the sites have more than 1.3m members in 200 countries, generating around 6,000 posts per day.
• O2 have created a customer forum with the explicit aim of encouraging P2P service collaboration. The site currently has 75,000 members who have posted 186k comments.
• Salesforce.com set up IdeasExchange to allow their customers to suggest product improvements, then vote on suggested product enhancements. The same technology is also used by Starbucks and Dell to gather ideas from their customers.
• As a slightly different example, Innocentive allows both companies and individuals to leverage the wisdom of the crowd. Users submit problems they are facing along with a "challenge reward" to tempt people into submitting solutions.

In most of these examples it only takes a tiny % of contributors to make P2P collaboration work (only a tiny percentage of Wikipedia users contribute to the content).  The challenge is how to maintain participation and reward and motivate those who participate. Wikipedia was recently reported to be losing tens of thousands of volunteers per month.

If you know of any good crowd-service examples, in particular ones that reward participants, then please let me know.