Business Networks and the Digital Economy


I have had the ongoing pleasure of participating in SAP’s Coffee Break with Game Changers radio program, the most recent one on August 26th. I was joined by Dennis DeGregor, Worldwide Group Executive for customer experience services at HP, and Drew Hofler Sr. Director, Solutions Marketing, Ariba network and Financial Solutions. The show was titled “Business Networks and the Digital Economy: Ready for Digital Humanism?” and was expertly moderated by Bonnie D. Graham.

The episode description: What does it really mean for you to have a connected business? Analysts estimate that by 2020, social networks will connect 2.5 billion people, the number of connected devices will total 75 billion, and the volume of global business trade between connected businesses will reach $65 trillion. As we move to an era of true hyper-connectivity in our digital economy, how can your company turn these challenges and your business networks into sustainable profitable opportunities?

Bonnie kicks off each show by analyzing a quote provided by each panelist. The following are our quotes and their relevance to the topic: 

Dennis: “The digital CX revolution is dead – long live Digital Humanism!” (Dennis DeGregor)

Dennis equated digital humanism to digital empathy. He described a digital CX revolution where the prevailing wisdom had digital technology taking over the world of customer experience management. He stated that this is not the case, as products and services have grown more complex, driving the need for a higher degree of human touch to get the marketing and services effectiveness that we need. Smart leaders are realizing that people are at the center of this digital revolution, and they must be enabled by advanced technology to engage in this empathetic customer experience.

Frank: The networked organization of the future knows that the lion’s share of value exists outside its walls; it looks to capture that value and bring it inside (Dion Hinchcliffe, Chief Strategy Officer at Adjuvi, LLC).

I described how value creation and capture is growing more complex, and in the process, complicating the customer experience. A shift towards horizontal ecosystems that have no regard for industry or enterprise boundaries is at the heart of this complexity. As the number of stakeholders involved in value creation and capture grows, so too does the challenge of creating the types of experiences we have all come to expect. The other significant discussion point is the rise of the crowd.  With three billion more people expected online by 2020, leveraging their passion and collective knowledge and wisdom becomes critical to success. 

Drew: “We build too many walls and not enough bridges” (Newton)

In a digital economy what matters is connections to all stakeholders. In the previous era, it was all about silos – internal units that did not talk to each other and information that resided in COBOL databases behind brick walls. In the digital economy, value is really created in the bridges we build between these stakeholders, where the flow of information in a controlled and open manner is leveraged to create value from previously disconnected parties.

Each panelist provides Bonnie with four or five discussion statements that drive the dialog. The 30 minute panel discussion started with Dennis, and the discussion statement focused on Digital humanism. The Statement:

Digital Humanism is the intersection of personal service and self-service technologies. Companies that rely on an Omni-channel operating model to service and sell to consumers are in the crosshairs of this intersection. The implications:  Analytics, technologies, training and hiring profiles must be radically different.

Machines cannot deliver empathy – its humans empowered by technology that deliver empathy. Dennis used an example: he was in the global command center of an automaker when a bunch of tweets and Facebook posts hit the network. The surge was from parents concerned about a recall rumor that a specific car would unexpectedly back-up. The intersection of advanced technologies is allowing us to engage customers in digital empathy. It’s these contextual and meaning-based technologies that take very large data sets and distill them down to the 2% of the data that matters to the consumer. In this recall example, Dennis described the ability of the call center to track this social media dialog and provide context and business rules that guided the response. Speech and text analytic technologies allow us to detect the level of concern expressed in these posts. This represents a huge breakthrough in the areas of service and one-to-one marketing, as it allows us to anticipate and address customer concerns. This enables digital empathy and actually drives net promoter scores (NPS), first contact resolution and cross-sell, up-sell opportunities. Bonnie asked if this was shades of artificial intelligence (AI), and Dennis responded that these advanced technologies are a form of artificial intelligence.

I commented on these early days of AI being a narrow application of artificial intelligence in that it is tailored towards specific use cases. Over time, AI becomes more general purpose and not use case specific. With regard to empathy, context at the point of interaction is critical. But until we embrace holistic systems of engagement that leverage the advanced technologies described by Dennis, it will continue to be an elusive goal. Drew added that this era of Big Data is the epitome of too much information. But inside of all this is critical information that is necessary to have, driving the absolute necessity to grab it as it flows through our processes. There is just too much information flowing for humans to discern and capture. In the business networks world, gigabytes of information move between partners all the time, and critical information must be highlighted so that humans can interact only on that which is most important.

Bonnie was intrigued by the concept of the “Internet of Me”, positioned by Dennis as the new frontier of innovation. Dennis explained that the digital customer experience paradigm claims to be customer centric, but it’s really not organized around customers. He referred back to the point I made about narrow AI, describing the automaker example as a leading example – not a wide spread one. In an Internet of Me paradigm, there are five components: The Internet of Things, Places, Information, Companies, and People. These five pieces represent the entirety of the Internet. The challenge for the future of brand marketing and service is to put the consumer in the middle of those five components, and connect them to the consumer using digital halos – meaning organizing the fingerprint or digital portrait of the consumer to better serve them. I mentioned that the Internet of Me metaphor is a good one, and it’s a great point in time to be using it as an organizing principle. Drew offered from a B2B perspective that the Internet of Me metaphor applies (although may be better stated as the Internet of Business). He used a business services example to describe how information from various sources can be used to drive better decision making. In closing this piece, Dennis stressed the notion of digital halos and the importance of tracking and anticipating consumer behavior using analytics. This concept of digital halos connecting the five components of the Internet into a true customer centric model is the frontier of innovation.

Bonnie then moved to one of my discussion statements on next generation experiences.

Excellence in traditional customer experience is foundational – but not sufficient. The unbundling phenomenon has changed the expectation of experience, and shared value creation and capture in the context of ecosystems creates the need for next generation experiences.

We fixate on a channel mentality, but the unbundling of traditional services (think newspapers being unbundled into a discrete set of services) has led to an optimized set of experiences for niche services. This has created an experience expectation for traditional companies. This expectation drives the need for a different kind of experience. If you think about emerging ecosystems like smart homes, connected cars and connected healthcare, those are all experiences too. But a growing number of stakeholders are involved in creating those experiences, and as a result, the complexity grows. This complexity will drive companies to focus on a next generation experience that steps beyond traditional channel-centric views. Bonnie asked if next generation referred to demographics. Next generation refers to the need for traditional views of customer experience to change. The things we’ve talked about so far are elements of how that change manifests itself, but experience creation gets more complex over time. If we don’t view it through a different lens, we will find that it is no longer cost effective to deliver the kinds of experiences people are looking for – it’s a moving target. Companies are struggling with the cost foundation of that moving target and keeping up with experience expectations.

Bonnie always does a great job linking the shows Twitter dialog into the discussion. She broke here to ask for thoughts on a Tweet from Kevin Mulcahy:

KM Tweet During SAPRadio

Bonnie asked me to comment. I responded that there are two sides to this conversation. There’s the artificial intelligence side that allows us to leverage the growing volumes of data – and we will drown in this data if we don’t find an effective way to understand “me”. On the other side, there are the privacy and security issues associated with just how much data we are gathering on the individual and how it is used. Drew mentioned that experience is critical in B2B. More and more, people are expecting to have information at their fingertips. You are the sum of your supply chain, which makes knowledge of that supply chain critical. He used issues of slavery in the supply chain and understanding where your stuff is coming from to underscore the critical need to understand what is going on around you. Dennis interjected that the consumer privacy issue was going to grow in importance with the emergence of the Internet of Me. Brands will need to get very good at allowing consumers to opt-in or opt-out. Kevin’s tweet speaks to the concern that big brother is watching me, and Dennis hears a lot of that in the market place. But the reality is that leading digital marketers are not just looking at the individual, but looking at their social media connections and marketing to them as well. Digital natives between 18 and 35 tend to share more and not be as concerned about privacy as boomers and Generation X. His advice is to be proactive about managing your own privacy.

Bonnie described a real time scenario about a woman whose Facebook postings are being used by her husband in a contentious divorce case. The contention is that he should get child custody since she travels all over the world – supported by the fact that her timeline has pictures of her against these great monuments and buildings. Her attorney argued that the pictures were not admissible because absence of a child in the picture does not prove she left them somewhere else. This could be the first time that a Facebook chronology may be admitted as evidence in a divorce trial. In wrapping up the experience discussion, I re-emphasized that value creation and capture will increasingly be a multi-stakeholder phenomenon, putting more pressure on delivering the kinds of experiences that are expected. How do you operate in an ecosystem with a number of stakeholders? Who owns the customer experience? Will experience brokers emerge in the context of these bigger ecosystems?

Bonnie then moved to a discussion statement provide by Drew:

In a hyper-connected environment, companies can take advantage of the knowledge sharing that is possible with the valid corporate need to share some info on a need-to-know basis only. One of the benefits of this connected environment is crowd-sourced solutions and unexpected contributions. But one of the downfalls is TMI – which can have serious deleterious effects on a company.  The right balance needs to be struck. How?

Drew described this as an important discussion, especially in light of the generational differences that we are witnessing. In the business environment, where you are dealing with intellectual property, or sensitive information that shouldn’t get out to the street, more control is required. Referring back to his quote on building bridges, he noted that some walls are necessary, but more bridges need to be built. He described unexpected contributions by using a procurement and finance example where better intelligence from the business network on advance ship notices enabled the reduction in Days Sales Outstanding (DSO). This talks to visibility across processes that creates an impact in areas you would never expect. However, there have to be some walls and a balance struck between visibility and protecting sensitive information. Dennis added that this topic needs a lot of development. Information management is a big issue in the digital age. He views the entire data warehousing industry as obsolete.Data formats are very different than the formats that exist in company information systems today. He described a movement away from the 360 degree view that reflects customer information in our databases, to a 720 degree view that also accounts for customer information in the Internet of Me. Bonnie asked who will handle all of this. Dennis responded that it is primarily the role of the CMO and the executives that run the channels – working together in a steering committee type environment and driving requirements for IT.

I interjected that two pieces struck me from Drew’s statement: knowledge sharing and the crowd. In my mind, we aren’t really talking about information anymore, but the collective intelligence of the world. How do you take the crowd to a community that can participate in your process, and leverage the knowledge they deliver into that process in a way that creates value. Examples include companies that have leveraged the crowd to take product development cycles from 300 days down to 29, and dropped millions to the bottom line of an Insurance company by improving algorithms at very little cost. Taking the increasing levels of knowledge available to a company and leveraging it to create value is a critical success factor. In response to the notion of the CMO leading information efforts, I mentioned that the broadening of digital beyond Marketing drives the need for a different executive(s) to lead these efforts. Who is it that can get to an information base that impacts everything – not just sales, service and marketing? Drew mentioned that Chief Risk Officers must be involved, as information loss impacts financial risk. The CIO also plays a role, but it must be balanced against the business need. It’s a partnership between the business, IT, and risk officers.

Bonnie took the time to thank our Twitter participants and shared some of their Tweets:

SAPRadio Tweets

At the close of each program, Bonnie asks for our 2020 or beyond predictions:

Dennis: Generation D – the group of influencers – will take over. Mckinnsey studies show that 1% of people in the Internet ecosystem impact 33% of sales transactions. This group of influencers can either drive your brand to new levels or detract from your brand through their Internet activities. Managing those relationships and providing them with the information they need to create positive brand value is a great frontier of innovation for both marketing and service. He predicts that capital will be invested in creating relationships with Generation D.

Frank: I agreed with the prediction that Dennis made on capital investments in Generation D, and added that I envision significant investments in the broader relationship ecosystem in the next five years. I had mentioned that 3 billion more people are expected online by 2020, and when you consider the implications, I envision a significant focus and investment in next generation experiences and collective intelligence. You will also see the continued evolution of value ecosystems and the emergence of new ones, which will blur the boundaries between industries and companies, and increase the number of stakeholders involved.

Drew: What is happening on the consumer side is somewhat of an experimental box for B2B, as everything comes later and slower in B2B. What we will see in 2020 is a much more connected environment, where all stakeholders are connected to central hubs where information will be available. Information will flow in context and connect groups together. Processes are not siloed anymore, but intimately connected.

I really enjoyed the dialog with Dennis and Drew. The re-broadcast is available via this Link.

4 thoughts on “Business Networks and the Digital Economy

  1. I think this comment is spot on: “A shift towards horizontal ecosystems that have no regard for industry or enterprise boundaries is at the heart of this complexity”. This is going to be the biggest shift businesses will need to make.

    Matrix structures just won’t work anymore; command and control is out, outbound push is out, and the silos created by the old top down matrix will ensure complete collapse of the organization.

    Ecosystems are what will work going forward; inbound pull is in, influence is in, connection is in, and ultimately the customer is in control. Not to mention the fact that their smartphone is now their new trusted advisor. And I know that Google especially is working incessantly on ensuring the internet does provide the experience people are looking for.

    Liked by 1 person

    • Agreed Heidi.It will be interesting to see what models emerge to replace command and control. The holarchy model is being experimented with – most famously at Zappos – but the jury is still out.

      Like

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