Last week I had the great pleasure of catching up with a social media thought leader I really admire, Charlene Li. Founder of the Altimeter Group and author of Groundswell and Open Leadership, she’s been educating and inspiring the business world to use social technologies since they first emerged. As we head in to 2011 we discuss the critical role that a CEO or any leader must play if that organization is to profit from social technologies in the future.
SM: What inspired you to write about Openness?
CL: Well, it came from talking about the first book I wrote, Groundswell, and how new technologies are going to impact people. More and more people were saying, “I get it, I need to use these tools,” but they would still have a problem with giving up control. A secondary question came up after people accepted that they had to give up some control, that was a question of how much. The first time I heard that question I thought it was ridiculous, but the more I thought about it, the more I realized it was a good question. How open do you need to be? How open should you be to be successful?
SM: Was this concern equally true of B2B and B2C?
CL: Absolutely. It’s a universal concern. It wasn’t just something at the C suite level or CEO. This was a question I was getting asked across the board. It would manifest itself as discomfort with receiving negative comments or an uncertainty towards how to begin dialoguing in general. Nobody knew what to expect at the other end of things. It got to the point where people knew they accepted the fact that they had to do something, but didn’t have the right mindset. It had nothing to do with the technology and everything to do with the mindset.
SM: So how does a CEO then reconcile this tension between corporate hierarchy and distributed communication across social networks?
CL: The way to think about is that nothing is completely hierarchical or unstructured. The best conversations, in many ways, are those that are highly structured. If you think of the best discussion boards or meetings or communities that you’re in, they’re clearly defined as far as what their goals are or what you can expect to have happen when you come in for a conversation. When you go on to your blog, for example, you can expect a certain dialogue with the people who are there. Even though it is fairly free flowing, it’s not about everything under the sun, it’s fairly structured. The same thing goes with hierarchies. The hierarchies are there but the reality is that even in the most structured organizations things happen outside those hierarchies. It’s called work. So if there are going to be ways to be open and have dialogue, it needs to be defined, structured and have processed guidelines as well as a policy around it in order for them to be constructive.
SM: Do you think companies need to fundamentally reorganize themselves?
CL: We look at five different organization structures. All of them can work very effectively. For structured companies we suggest they operate decentralized, while for the open companies who are going to have a lot of structure inside of them, a lot of the work should be done informally. The ideal structure doesn’t make sense because it has to take into account so many things from your environment to your value chain to the way people want to work with each other. It’s a much more nuanced thing than to insist every company has to be decentralized.
SM: The three models you talk about in the book are organic, centralized and coordinated. What are the other two?
CL: One is more like a hub and spokes coordinated model, but it has multiple hub and spokes coming off the main one so you’d be distributing it out even more so from the center. There is a strong center, but there may be more hubs and spokes like a dandelion. The last one is something we call holistic where openness is embedded in everything everyone does. This idea that you be open with each other and with your customers and partners is embedded and imbued in the responsibilities of everyone in the organization.
SM: From a process point of view where do you start?
CL: It doesn’t have to come from somebody who has been designated as an open leader. But I do believe that in order for an organization to be successful, it does need to come from the leadership at the top at some point because this is something that becomes so transformational. But it can begin anywhere, from IT to finance to customer service. A lot of time it begins in marketing, but it can begin anywhere.
SM: In your book you talk about how open leadership can make a company more profitable. How so?
CL: Again, it goes back to what leadership and what being open does. More than anything, it develops a relationship in a new way that you couldn’t do before. One of the best ways to think about relationships is in terms of lifetime value, especially for your customers. In the traditional sense when you think about lifetime value it’s simply how much a customer purchased and how much it cost to acquire and to retain them. But with some of the metrics we look at, especially with these new technologies, there are so many more ways to look at the relationship. For example referrals. You can actually see if you’re customers are saying things to you, if they’re introducing new customers to you. They may be providing support, and therefore reducing the costs of supporting other customers. It’s about taking these behaviors and assigning and understanding the value they create inside your organization and comparing and contrasting that to the existing things that you do today. As an executive, what you are tasked with in business doesn’t necessarily bring the bottom line in. Instead it’s saying, “I have limited time and resources and people to accomplish that. What’s the most effective way to do that?” I think that if you have these new technologies and tools they can be very beneficial in helping you achieve those business goals.
Do you believe Ceos are genuinely embracing social media? And, if not, why?