Developing & Measuring Open Leadership Strategies

Developing & Measuring Open Leadership Strategies

Charlene LiAltimeter GroupMay 7, 2010

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#openleader

© 2010 Altimeter Group

CMO: We need a blog and Twitter strategy. VP Customer Service: We’ll just complaints.

VP Product Development: But we need feedback and new ideas to beat the competition.

VP Sales: Competitors will steal the ideas and unhappy customers.

CMO: With reviews, we’ll know what’s wrong and can then fix it.

CEO: Negative reviews will kill sales.

VP Biz Dev: Dell does this

CEO: We’re not Dell.

Determining how open you will be2


Social technology forces you to be open

3

When people get what they need from each other

“How open do I need to be?


Open Leadership4

Having the confidence and humility to give up the need to be in control,while inspiring commitment from people to accomplish goals

How to give up control, and be in command


1. Identify a strategic goal to address.2. Put in place learning systems to support

that goal.3. Determine which open-driven objective can

help the most.4. Gauge the need to be open.5. Gauge your ability to be open.

Steps To Create Your Open Strategy5


Align openness with strategic goals6

Examine your 2010 and 2011 goals

Pick one where open and social can have an impact


Four goals define your open strategy, but always start with learn

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Open learning adds to traditional tools

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Learn with basic monitoring tools10



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Community insight platforms12

» CommunispaceNetworked Insights

PassengerUmbria



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Understand who that person is – in real time

LinkedIn in Lotus Notes

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Service Cloud w/social


Listen so you can respond appropriately

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Is “lkilpatrick” an elite customer?


Traditional Learning

OpenLearning

Speed Days and weeks Minutes and hours

Scale Thousands Millions

Costs $$ to $$$ Free or $

Distribution Market research All employees

The value of open learning16


Description Benefit

Reduce the cost of focus groups- Assumes 12 sessions @$5K each

$60,000

Real-time insight generation- One extra product per year- Avoid a big mistake, cost savings from not doing a campaign

$100,000$25,000

Alignment for a strategic goal- Reduce training classes- Increase employee buy-in, morale, retention-- Strategic partners develop solutions

$160,000$200,000$250,000

Total benefit $795,000

Total cost $410,000

Net benefit $385,000

Return 94%

Calculating the value of open learning

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Spreadsheets online at open-leadership.com


Finding the signal in the noise.• Analytics are still in infancy stages.

Insights are not always representative. Distributed, open learning threatens the

market research department.• Example: CEO keeps repeating “insight” from a

single tweet or blog post. Market research reasserts its authority by

being the enabler of open learning.• Aggregate and distribute with speed• Analyze and distill with deeper insights.

What’s hard about open learning?18


Dialog with your community19


Blogs establish thought leadership20

Richard Edelman has

been blogging since 2004.


DellOutlet drives sales with Twitter21


Kohl’s has conversations on Facebook

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Engagement Pyramid: Focus on Watching and Sharing

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Curating

Producing

Commenting

Sharing

Watching


United States

South Korea Brazil United

Kingdom

Curating <1% <1% <1% <1%

Producing 26.1% 53.1% 52.7% 21.1%

Commenting 34.4% 76.2% 54.0% 31.9%

Sharing 63.0% 64.6% 79.3% 61.8%

Watching 78.1% 89.3% 89.3% 78.9%

Engagement Pyramid Data24

Source: Global Wave Index Wave 12 Trendstream.net, January 2010


Engagement scores of 100 top brands

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+18% revenue+15% gross margin

growth

-6% revenue-11% gross margin

growth


growth


growth

Source: EngagementDB.com


Description Benefit

Increased revenue-$3 million incremental revenue (10% profit)- Deeper engagement with customers

$300,000$100,000

Increased awareness-Advertising equivalent (5M impressions at $10 CPM) $500,000

Improve reputation of the organization-Negative sentiment reduced from 25% to 10% and reduces customer churn

$100,000

Avoid potential PR blowup- Assumes cost of $250,000 in lost revenues

$250,000

Hire better peopleScale engagementImprove SEO

$400,000$500,000$500,000

Total benefit $2,650,000

Total cost $150,000

Net benefit $2,500,000

Return 1,667%

Calculating the value of open dialog26


Help your members support each other

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Solarwinds uses community for call deflection and product development


Comcast made support proactive with indirect deflection

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Took 3 minutes to

notify entire system of

off-air channel


Cisco supported employees with open collaboration and social platforms

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Description Benefit

Call deflection- 10% of 100,000 calls/year at $10/call $100,000

Identify support problems in advance (indirect call deflection)- Notify customers ahead of time

$100,000

Greater employee productivity (fewer emails, find experts, fewer meetings)-Get back two hours/week- Cost avoidance because employees find solutions

$600,000$200,000

Better employee moral and commitment- Lower employee churn, reduce recruitment costs

$200,000


Total cost $300,000

Net benefit $900,000

Return 300%

Calculating the value of open support

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Innovate with customer feedback32


Dell’s IdeaStorm measures the health of its community, not value of ideas

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13,000 ideas389

implemented(11/month, 3%

of all ideas)

Metrics used:- % who comment

- quality of ideas

- rate of Dell’s response to

ideas


Starbucks involves 50 people around the organization


P&G goes outside for innovation35

P&G made outside-in

innovation a priority


Description Benefit

Diversity of designs and ideas- Results in products that sell better $1,000,000

Innovations develop faster- Gets product to market quickly $250,000

More accurate projections and predictions- Anticipates product won’t be a success, so closes it

$50,000

Customer & employee commitment and loyalty- Better buy-in, reduce customer/employee churn $200,000


Total cost $200,000

Net benefit $1,300,000

Return 650%

Calculating the value of open innovation

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+ Value of purchases- Cost of acquisition

____________________

= Customer lifetime value

The new lifetime value calculation

• Percent that refer• Size of their networks• Percent of referred

people who purchase• Value of purchases

• Percent that provide support

• Frequency and value of the support

+ Value of new customers from referrals

+ Value of support+ Value of ideas

+ Value of insights

Spreadsheets for call calculations available at open-leadership.com


Find more fans with

large networks

Encourage fans to make

more referrals

Use metrics to help make decisions38


1. Identify a strategic goal to address.2. Put in place learning systems to support

that goal.3. Determine which open-driven objective can

help the most.4. Gauge the need to be open.5. Gauge your ability to be open.

Steps To Create Your Open Strategy39


#3 Understand how open you need to be

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Determine how open you need to be to meet your goals

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Platform

Crowdsourcing

Open Mic

Conversing

Updating

Explaining

Today

More on openness metrics at open-leadership.com


Open-driven Objective

Apple’s Openness

Learn Apple closely monitors high levels of dialog for ideas, opportunity

Dialog There’s already a great deal of dialog, but without Apple. In fact, customers anticipate big announcements so secrecy adds to the Apple experience.

Support Apple support forums have many eager contributors, Apple rarely participates.

Innovation Arguably already the most creative minds are inside Apple. They don’t want/need outside input.

The Apple Factor42


Brilliant engineers and designers Charismatic CEO Brand that its customers love and support

Why Apple can afford to be less open

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Define your objectives, and make sure they are aligned with your strategic goals.

Identify the most important key performance indicators already in use in your organization.

Identify open activities that support your KPIs.

Establish a baseline for your objectives and KPIs.

Optimize and adjust your KPIs and priorities.

Action Plan44


Finding & Supporting Your Open Leaders

• Friday, May 14th, 10am PT

(bit.ly/openleaderweb3)

How Open Leaders Embrace & Recover From

Failure

• Friday, May 21st, 10am PT

(bit.ly/openleaderweb4)

Upcoming Open Leadership Webinars

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Focus on relationships.

Align your social strategy with strategic goals.

Support open leaders in your organization.

Be prepared for failure – you’ll encounter many.

Summary46


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Thank you

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Charlene [email protected]

charleneli.com/blog

Twitter: charleneli

For slides, send an email to

[email protected]

Learn more and buy the book at

open-leadership.com

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Developing & Measuring Open Leadership Strategies