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Thinking about the Social Enterprise

[Disclaimer: As most of you know, I work for salesforce.com, and have been doing so since October 2010; you will also know that it is not my style to write corporate plugs on this blog, and I'm not going to start with this one. I've written it for two reasons. One, if you're interested in enterprise software, I think you will gain from reading it. And two, if you're interested in enterprise software, I will gain from your comments, observations and links.]

I’ve just come back from Dreamforce, where Marc Benioff revealed his vision for the Social Enterprise. It’s an amazing vision, and well worth spending time on. If you couldn’t make it and still want to take a look at what happened, the keynotes are available here (the Day One keynote), here(the Day Two keynote) and here(the keynote session with Google Chairman Dr Eric Schmidt).

People find it hard to describe Dreamforce. Last year, one of the journalists present (I believe it was Victoria Barret of Forbes) compared the event to a political convention; President Clinton spoke last year, and European Digital Agenda Commissioner Neelie Kroes was there this year. With all the musicians present (over the last two years Neil Young, Stevie Wonder, Will.i.am, MC Hammer and Metallica have been there; in addition, Joanna Newsom, Neil Young and Alanis Morissette played at the UCSF Benioff Children’s Hospital Benefit Concert during the week) some people liken it to a rock festival. And this year, with over 45,000 registered, it became the world’s largest enterprise tech conference.

I think it’s all of the above, a watershed for the enterprise software industry. If it was just about salesforce.com making a few announcements, I would not write about it on this blog; my readers don’t expect it. If it was about the future of enterprise software, I would write about it: a significant proportion of the posts I’ve written here over the last six or seven years are on that topic.

Now, having come back from Dreamforce, and having had the opportunity to speak to customers on the way back, and having had time to rest and reflect, I think it’s about more than that.

I think Marc Benioff’s vision for the Social Enterprise is about more than just enterprise software, it is about changing the way customers deal with companies. Transforming it. Irrevocably.

 

“The major advances in civilisation are processes that all but wreck the societies in which they occur”

That quote is something I treasure, one that I found in Marshall McLuhan’s absolutely brilliant book The Medium Is The Massage, which he co-authored with Quentin Fiore. It’s a fantastic book, incredibly prescient. Just like The Cluetrain Manifesto, written decades later, whence comes another of my favourite quotes:

 

[Disclaimer: I count the authors of the Cluetrain Manifesto amongst my friends, and had the opportunity to contribute a chapter to the 10th Anniversary Edition of their bestselling book].

There’s a third quote to bring to your attention. This comes from Dr Eric Schmidt, Chairman, Google, while in conversation with Marc Benioff at Dreamforce. I may not have the words verbatim, but I’m sure I captured the sense of what he said:

 

Microsoft organised itself around the structure of the industry; Apple organised itself around the customer. You have to organise around the customer.

I think these quotations are at the heart of the Social Enterprise. We’re at a point of advance in at least a part of “civilisation”, how consumers engage with businesses. This advance is based on three big learnings:

  • learning that the customer has always had a voice, but businesses haven’t always had the tools to hear
  • learning that the customer is now using that voice, with mobile devices and in social networks, to engage with businesses
  • learning that those conversations are, too often,  characterised by the absence of the businesses they’re about

Ten years ago, the Cluetrain authors were reminding us that customers had a voice, and that ignoring them was futile; more recently, Eric Schmidt was reminding us that the only valid response for any business is to organise around the customer; and, over 40 years ago, Marshall McLuhan et al were warning us that the changes would have a significant impact on life as we knew it.

All this in itself may not sound like something new: we’ve been talking about organising around the customer for a long time, customer-centricity is a decades-old term. But, as you look more closely at the Benioff vision of the Social Enterprise, you will find that there are some radical shifts away from the past:

  • We’re now talking about real customers engaging directly with real businesses, in “real time”, a level of engagement hitherto unseen. No more “thinking a reflection of the moon in the pond is the sun” proxy approaches, no more focus groups, no more control samples. Actual customers. Saying what they think, about you, your products and services, their wants and needs.
  • We’re now talking about real customers doing this in full view of other customers, a level of transparency hitherto unseen. No more price and contract obscurity, no more “what they don’t know won’t hurt us”.
  • We’re now talking about real customers doing this with multiple businesses at the same time, a level of maturity hitherto unseen in retail market models. Not just across one company’s supply chain or distribution network, but “organised around the customer”.

Because you know something? That’s what customers would do, given the chance. Organise around themselves, their needs, their preferences, their perspectives.

And it so happens they now have the chance. And they’re taking it.

The Social Enterprise, as Burberry CEO Angela Ahrendts stated during the conference, is not optional. “You have to do this. You have to be social. Otherwise I don’t know what your business model is in five years”.

We ain’t seen nothin’ yet.

Customers are already in the process of organising businesses around them; to be around in five years, businesses will have to get better at letting customers do this.

  • Understanding what the customer is about, and letting them understand what your business is about, is the first step
  • Customers and businesses becoming part of the same networks,  with the ability to speak as well as to listen, is the second step
  • Rebuilding markets the way customers would build them is the third step

Those of you familiar with Doc Searls and his works will know that he’s been banging on about this for at least a decade, most recently via VRM. Markets are conversations. Those conversations are conducted by customers. They decide.

That’s what I believe Marc Benioff has been talking about, a vision that transforms the way customers engage with businesses.

The Social Enterprise vision is about rebuilding markets the way customers would build them in the first place.

That vision needs an enabling platform, a platform modelled around ecosystems rather than vertically integrated stacks, open rather than proprietary, actively engaging the customer and engaged by the customer.

That in turn requires an approach of federation rather than competition, federation with organisations that have similar principles, prepared to be built around the customer at the behest of the customer.

Salesforce.com has lined up with that vision and consequently has been executing to it for some time now. As one organisation.

There will be others. There must be others. Others who are prepared to be organised around the customer, by the customer.

Peter Drucker famously said:

What the customer buys and considers value is never a product. It is always utility – that is, what a product does for him.

 

He also said:

 

People make shoes, not money.

 

And, for my last quote, again from Drucker:

 

The purpose of business is to create a customer.

 

Put those three together and you begin to see the social enterprise.

It’s still early days. As customers begin to reorganise businesses around themselves, there will be many problems to solve, problems of federation and interoperability and portability. Problems that have been obfuscated in the past by incumbents with vested interests. Problems that will be solved by the Social Enterprise.

The Social Enterprise is here. Customers have seen it and won’t let go.

The businesses that will succeed are those that go where the customer has gone.

Posted in Four pillars .


31 Responses

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  1. Lars Plougmann says

    Putting the three Drucker quotes together I get “customer shoetility” and although it sounds foolish at first I have convinced myself is not a completely silly way to think about business structure expressed as a compact mnemonic.

  2. francine hardaway says

    I wish things inside the enterprise were moving more quickly, but they really don’t seem to be. I work with two or three enterprise companies that haven’t a clue.

    I think long-time enterprise employees don’t know how to deal with this, although the customers REALLY do. The customers are way ahead of the companies, feeling empowered and sticking it to backward brands. I see a lot of further disruption coming.

  3. clive boulton says

    Best Occam’s razor for The Social Enterprise. Yet, Consumer Internet not Enterprise is still winning the lions share of new startups and funding. Probably because attracting customers and converting their attention via big data into measurable, monetizable ad revenues is lucrative over comparable enterprise monetization methods. Feels like we need a Google page rank business model breakthrough to really start a long boom in enterprise software centered around the customer rather than incumbents.

  4. Dan Pontefract says

    “you have to organize around the customer”

    Got me thinking about the school system. What’s happening in our various industries (social enterprise, customer first advances) needs to occur in our children’s schooling paradigm too … something I know you and I share an equal passion for as well.

  5. Mahendiran says

    Nice & Great to go …JP

  6. JP says

    @larsz :-) amazing how the Drucker quotes sustain over time….

  7. JP says

    @francine I think it’s because the incumbent vendors have a “lock” on the environment, so there’s some Stockholm Syndrome present

  8. JP says

    If you really believe in consumerisation then you must believe that it will reshape the enterprise

  9. JP says

    @dsn you must read the McLuhan book and what it says about education. Echoes of Sir Ken Robinson and those like him, but 40 years earlier….

  10. JP says

    @mahendiran thanks!

  11. Jas Dhaliwal says

    JP, thank you for this wonderful gift of a post, the quotes are very powerful and have reminded me to re-read The Cluetrain Manifesto.

  12. Geoff Barbaro says

    Great post which also brings us back to the true foundations of modern business/leadership/management of customer delight rather than the bean counting/profit/shareholder focused activity it became during the 20th century. I would recommend to anyone looking for additional information on methods to introduce these concepts into organisations, the work of Stephen Denning, especially the Leader’s Guide to Radical Management which outlines the creation of High Performance teams to achieve customer delight. And for those commenting on the education system, there is a wonderful dicussion happening now on Steve’s “Rethink” blog on the Forbes website on introducing the priciples above into US education. All the best, geoff

  13. Seb Abbott says

    It was exhausting just watching Marc Benioff on YouTube this morning – it must be amazing and exhausting to work with him – but with motivation and the right colleagues (spot on, Dr. Schmidt), it’s amazing what can be done.

    There was naturally a lot of showmanship there, plus a lot of bluster, but I do think the basic message is right; social enterprise could and should be the next normal. I’d love to try it out, to see how customers and colleagues react to being more open.

    Working in engineering development, the key for me lies in collaboration and curation – which still looks a lot like separate platforms. I hope that it does eventually boil down to separate applications on the one platform, but as I watch my Facebook stream fly by, the history seems lost; I live in present but I, my products (and our auditors) need a past, too.

  14. Steve Christensen says

    Lest we forget, business is a series of transactions required to deliver the customer’s value: this includes utility and the product/service. http://www.babblewareinc.com/index.php/2011/08/64-transactions-drive-your-supply-chain/#more-3805

    Collaboration and Communication are essential elements in delivering higher and higher utility. Employees, Vendors and Business Customers are held hostage by their legacy (ERP, Best of Breed and Homegrown) system investments. Hence the Stockholm Syndrome. But business cannot modify, replace or integrate these systems without tremendous cost, risk and disruption to customer value. Since the entire ‘supply chain’ is trapped in legacy systems the barriers rise exponentially, the inverse of Metcalfe’s law.

    The Social Enterprise is already shifting how business is conducted. Next generation enterprise software available from any number of innovative companies, ours included, offer a rapid path by which the legacy systems remain untouched. Mitigating the risk of changing these systems opens innovation with agile, easy to use & custom Apps that bridge the gap of out-dated transactions. Included is the ability to Collaborate and Communicate on platforms such as Chatter. Now the subject matter experts in your company, your vendors and your customers can self-organize around the inter-dependencies that increase revenue, margin and competitive advantage. The companies that adopt this strategy first will obliterate their competition and delight the customer.

  15. mark slater says

    we have built a Vendor relationship management platform in the personal RFP space. you can come see it at http://www.getabl.com

    we are big fans of Doc!

    Your post was very enlightening – thanks

  16. AEM says

    45k registered! That is amazing! One thing though: I disagree that Microsoft organized itself around the industry and not the customer – I think both were components. Certainly to begin with, both companies were just trying to make home computers; it was only within the last decade or so that they really took different paths.

  17. Hamish MacEwan says

    Like you I like the quote from “The Medium is the Massage” but I note it was Alfred North Whitehead who made the observation:

    The major advances in civilization are processes
    that all but wreck the societies in which they occur.
    – Alfred North Whitehead

  18. Jemima Gibbons says

    Hi JP,

    Thanks for this good and thoughtful post. Would you mind very much if I republished it (with full credit and back links, of course) in the monthly ‘Social Brands’ e-newsletter I send out to 65K+ SMEs here in the UK? It sums up the ‘social enterprise’ so well and would be great food for thought.

    Many thanks,
    Jemima

  19. Dave - Lifekludger says

    Hey JP. Got me thinking about what the “customer organising around themselves” looks like for the Govt. services arena. Like What’s Govt. ‘product’? How does making shoes not money fit a services sector? etc … “ecosystems not vertical stacks” seems to resonate somewhere in my gut.
    Cheers. Hope you’re well.

  20. Jeremie Averous says

    Great post!
    Fully agree that the social Enterprise is here, and it is mandatory to thrive through the Fourth Revolution. Organizations need to be able, not only to communicate to customers, but to engage them in a relationship, to have them be part of their network. Organizations borders will blur, and the people, emotional side will be increasingly valuable.
    I wonder why so many organizations today are still continuing in their closed, broadcasting style. Do they realize they are going to be wiped out by the power of long distance collaboration?

  21. Social Enterprise says

    Hello, admiring the hard work you put into your website and thorough information you present.

    I’m searching more material about what is a social entrepreneur,
    do you know any forums that talk about this topic?

  22. JP says

    @deborah if you’re in the UK you should start with http://www.socialenterprise.org.uk/

Continuing the Discussion

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  5. Salesforce.com: Understanding the 'social enterprise,' part 2 | ZDNet linked to this post on September 14, 2011

    [...] recent blog post from salesforce.com’s Chief Scientist, J.P. Rangaswami, describes the company’s vision as a collaborative ecosystem: The Social Enterprise vision is [...]

  6. Salesforce.com: Understanding the ‘social enterprise,’ part 2 linked to this post on September 15, 2011

    [...] recent blog post from salesforce.com’s Chief Scientist, J.P. Rangaswami, describes the company’s vision as a collaborative ecosystem: The Social Enterprise vision is [...]

  7. Patti Anklam » Thinking about the Social Enterprise – confused of calcutta linked to this post on September 25, 2011

    [...] Thinking about the Social Enterprise – confused of calcutta. [...]

  8. JP Rangaswami Thinks About The Social Enterprise « Connect.Me Blog linked to this post on January 3, 2012

    [...] joined Salesforce as Chief Scientist after holding the same position at BT. He just published a powerful rationale for the vision of The Social Enterprise that Salesforce CEO Marc Benioff evangelized at the recently concluded Dreamforce conference (with [...]

  9. Elucidating “Confused of Calcutta” « The Manticore blog linked to this post on March 12, 2012

    [...] theoretical musings for some time while I tried to figure out what they were getting at. One is Thinking about the Social Enterprise, the other is a concept he proposes about application types (pillars) of enterprise [...]



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