Developing knowledge-based client relationships: Chapter 1

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The second edition of Developing Knowledge-Based Client Relationships was released 18 months ago now. The first edition, launched in January 2000, was on several Amazon.com bestseller lists, including ranking at #1 from Australia for the two months after its release, and on the top 20 sellers list for Deloitte & Touche for over two years, and sold through five printings. When the time finally came to update the book, it ended up as half new material, including a couple of entirely new chapters. I wanted to include what I’d seen in my work with major organizations, and what did and didn’t work in practice. The response to the second edition has also been very pleasing, with a good presence in the market, and getting named one of the Best Books of 2005 by BOSS magazine.

From the outset two of the book’s chapters have been available online for free download, but sometimes these kinds of things get overlooked. I thought it was worth pointing to the free chapters here.

Developing Knowledge-Based Client Relationships: Chapter 1: Leading Your Clients

To provide some context for the chapter and the changes I made, here’s a snippet from the preface to the second edition.

The first key lesson is that even if you are brilliant at engaging in knowledge-based relationships with your clients, that doesn’t help you if your clients don’t recognize the value you can create for them through this deeper level of engagement. Professionals must lead their clients into knowledge-based relationships by demonstrating the value of collaboration. On every front, the future success of professional services firms will depend absolutely on the leadership capabilities within the firm. They must lead their clients into new ways of working, they must lead their professionals into combining their expertise collaboratively, and they must lead their industries by showing that new business models and approaches to value creation are possible and desirable. Thus the new subtitle of this book: “Leadership in Professional Services.” The subtitle of the original edition, “The Future of Professional Services,” still applies, as knowledge-based relationships are indeed the future of the professions. However the essence of this second edition is how to develop the leadership that will brings these kinds of professional relationships to reality.

Here is an overview and link to Chapter 6, which is on implementing key client programs and enhancing client relationship capabilities.

New portable displays will transform mobile data and video

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I’ve been interviewed a number of times recently about the future of mobile devices, both for media and also in financial services. I always emphasize the importance of the new generation of displays that are going to make viewing and interacting with mobile devices a great experience. People go on about how no-one wants to watch video on the screen on a mobile phone. In general, that’s true. But as soon as you can get larger screen experiences, everything changes. I’ve written before about the transformative power of video glasses, which I believe will become big over the next five years, and the role of e-paper. However the most likely candidates for broad mobile use are rollable and foldable screens, once they are in affordable commercial forms. Up until now most of these types of screens have been prototypes. One of the most exciting releases at the massive 3GSM conference in Barcelona was a rollable display from Readius, a spin-off from Philips. It gives a 127mm diagonal display that rolls out from a pocket-sized case. It has a high-quality screen and 10-day battery life. It won’t be commercially available until later this year, but we can expect competitors to come to market at a similar time, finally beginning to open up the doors to a rich mobile experience for all. As I’ve written before, one of the implications is an extraordinary surge in demand for content. This really will be transformative.

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Source: Crave CNET.co.uk

Dissatisfaction with mainstream media drives the rise of citizen journalism

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Americans are unhappy with quality of journalism. That will be the key driver of the citizen journalism, or more broadly, new forms of media content creation and distribution. A survey performed in conjunction with the recently held We Media conference in Miami by John Zogby interviewed 5,384 adults nationwide, giving some pretty solid results. The figures below show that, not surprisingly, professionals (in this case the conference goers) are not quite as cynical as the population at large. However conservatives and older people are particularly contemptuous of the standards of journalism. As a result, a significant majority of Americans believe that blogging and citizen journalism will play a vital role in the future of journalism.

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Source: WE MEDIA-ZOGBY poll

While I’m a true believer in the power of media creation outside the establishment, I’m still a little surprised by the broad enthusiasm of the respondents for blogging and citizen journalism. What it comes down to is dissatisfaction with the status quo, and having seen the potential for something better. This is certainly not to say that blogging in its current form is a viable alternative to mainstream news media. New models that combine professional expertise with amateur participation will absolutely become alternatives, or at least strongly complementary to existing media. My favorite example is NewAssignment.Net. David Cohn from NewAssignment.Net reviews the idea of “crowdsourcing” in journalism, and points to techPresident, which will include input from contributors across the nation.

The relationship economy and vendor relationship management

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This is great! Doc Searls of The Cluetrain Manifesto fame has written an extremely rich and interesting piece titled Building an Relationship Economy. He begins by describing a series of stimulating conversations, during which Eric S. Raymond, author of The Cathedral and the Bazaar, one of the seminal pieces of the open source movement, suggested that there are three levels to markets: transactions, conversations, and relationships. Doc goes on to discuss several perspectives on the relational foundation to the economy, notably in open source projects, but also in public broadcasting.

Towards the end of the piece Doc alludes to ProjectVRM, which is a project to explore “VRM”:

VRM, or Vendor Relationship Management, is the reciprocal of CRM or Customer Relationship Management. It provides customers with tools for engaging with vendors in ways that work for both parties.

CRM systems until now have borne the full burden of relating with customers. VRM will provide customers with the means to bear some of that weight, and to help make markets work for both vendors and customers — in ways that don’t require the former to “lock in” the latter.

I will be following this very closely – there are already some very interesting resources on the site. I have to admit I’m guilty of writing a White Paper for Microsoft titled “How to Lock-in Your Clients,” though I think the spirit of what I write in the paper is in keeping with the project:

Wouldn’t it be wonderful if you could lock-in your clients, make them yours forever more? It’s a nice idea, however the reality is we live in an increasingly open world. Today it’s almost impossible to get clients to buy closed systems that would mean substantial switching costs if they then chose to move to another supplier. Given a choice, clients will always go for the option that gives them more flexibility. The trick is to create lock-in in a business environment in which systems and standards are more and more open.

In this world, the only way to lock-in clients is by consistently being able to create more value for them than your competitors can. This is a positive form of lock-in, in contrast to the negative lock-in of trying to make it expensive for clients to leave you. There are three key foundations for how professional services firms can keep clients coming back through positive lock-in.

1 You know your client better.

It is nothing new for professionals to have to know their clients well. It is just that now doing this better is the primary field of competition. Today, it is important not just to know your client better, but also to apply it in customizing your communication and service delivery, as discussed above. If you do, this creates a very powerful form of lock-in through the unique value you can create.

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Breaking down silos and building networks in financial services

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Yesterday I gave the keynote at a senior management offsite for a top-tier global financial services institution. One of the key issues for the organization – as for its peers – is building collaboration within and between a very diverse set of operations. Part of my presentation covered how effective organizational networks underpin the ability to create value. If an organization functions in deep silos, what is the value of being agglomerated into one company? Or more to the point, what are the lost opportunities in the missing connections and collaboration across divisions?

I showed the framework created by Harvard Business School’s Tiziana Casciaro in her excellent article from the June 2005 issue of Harvard Business Review, Competent Jerks, Lovable Fools, and the Formation of Social Networks. The key insight in Casciaro’s research is that while people claim that they go to competent jerks to get work done, the reality is that they gravitate more to lovable fools. The lovable fools are often the social glue that holds the organization together. Without them, communication can break down.

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Source: Competent Jerks, Lovable Fools, and the Formation of Social Networks, Casciaro.

In my presentation I remarked that the high-level financial services industry was characterized by competent jerks. While most laughed in acknowledgement, a few seemed put out. But it’s true. Investment banking and corporate law in particular are full of people who are extremely talented, but not necessarily highly likeable. This has a strong impact on the effectiveness of collaboration and the structure of social networks in these organizations. There are no simple solutions, but recognizing these realities can help in designing ways to bring the right expertise to bear on problems and opportunities. I’ve written before about expertise location in financial service firms such as Morgan Stanley. While locating optimal expertise is a critical issue in large professional organizations, the harder part is getting connections between professionals to bear valuable fruit through a process of collaboration. The reality is that most major financial institutions are currently doing very well without being good at internal collaboration. It will be a gradual process, but over time the ability to collaborate effectively will start to be a key differentiator in market performance, partly driven by client perceptions. Clients are already getting tired of dealing with highly siloed banks, and are responding by allocating their business to different firms. There are major opportunities on the table for the large financial institutions. Enhancing organizational networks is at the heart of seizing these.

Announcing: Web 2.0 in Australia

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[UPDATE 13 March:] Updated information on the Web 2.0 in Australia event is here.

Oh well, information sometimes flows a little more freely than intended… I wasn’t going to discuss this publicly until after the event, since it is invitation only, but since word is already out, I might as well start talking about it.

Future Exploration Network is kicking off the Future Exploration Network Series, a series of focused events that bring together leading thinkers to examine key business and technology issues. They will be attended by senior executives in business, technology, media, and government, and top journalists, by invitation only. The intention is to bring to life our organization’s tagline: Connecting Ideas and People at the Edge of the Future. The events will be extremely participatory, creating focused, relevant conversations between the highly selected attendees.

The first event will be titled Web 2.0 in Australia, and will be held in Sydney on [UPDATED] 6 June, for just 2.5 hours over lunch. The preliminary information document, intended for sponsors and partners, was created this week, and given only to a very small group of potential sponsors. I also sent a copy to Brad Howarth, the journalist in Australia with probably the deepest understanding of this space. He posted the document on his website with some commentary, and as a result we’ve already had quite a bit of attention, including enquiries from additional potential sponsors. Since this is now in the public arena, here are more details.

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The event summary:

The set of technologies and innovations described as Web 2.0 have transformed the internet, triggered an array of new business models, shifted internal communication, and provided powerful new marketing opportunities. This invitation-only senior executives forum will examine the state of Web 2.0 in Australia, including:

* Frameworks for thinking about Web 2.0

* Why progress has been slow in Australia

* Current leading examples of Web 2.0 in Australia

* Implications and opportunities for corporates, start-ups, and marketing

There are in fact two good reasons to make the event public now:

Sponsors and partners

Let us know if you are a corporate, start-up, media organization, or association who would like to discuss getting involved. There is already strong interest in the two major roles, so sooner is better.

Showcase participants

Part of the event is a showcase of five of the best examples of Web 2.0 in Australia. We’ve already had quite a few suggestions, and of course are familiar with the more prominent examples. If you’d like to submit a company, technology, or implementation, please let us know. We will select what we believe are the best examples, which each will be showcased in a 5 minute presentation – there is no fee for participation. We are only interest in examples that are truly Web 2.0. A key element is that broad participation results in collective outcomes. We are keen to include enterprise applications as well as consumer and new media sites. We will create and launch a strategic framework for Web 2.0 in the lead-up to the event, which will clarify what we think is exciting in the space (or you can look at my thoughts on the Web 2.0 Revolution) . All suggestions and submissions welcome.

Uncovering the structure of influence and social opinion

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An article in the Wall Street Journal titled The Wizards of Buzz zooms in on a group of people much discussed by the tech crowd over the last year, but who have not visible in the mainstream media before now. They are the people who submit stories to the social news sites. The article includes a nice sidebar describing the most prominent social news sites: Digg, Reddit, StumbleUpon, Del.icio.us, Newsvine, and Netscape. These sites create what I call “social opinion” (as distinct from the traditional approach of status-based opinion). Each of these sites depends on people submitting what they think are the most interesting news items. Then the community at large votes on these suggestions, with the links getting the most votes going to the front page, being seen by thousands or even millions of people, and sometimes creating overnight stars. The main focus up until now has been the ‘You’ named by Time magazine as the person of the year – that is the many who vote on the stories. Yet there is only a fairly small pool of people who submit stories.

The Wall Street Journal did its own analysis of who was submitting stories on the sites, and came up with some interesting insights, including the startling fact that on Digg, 30 people (from 900,000 registered users) are responsible for one third of stories that made the front page of the site. The article names 20 of the most active and influential people who are submitting to social news sites, putting in the limelight people who are working hard for no pay, scouring the web for interesting stories, and being the first to submit them for a potential 15 seconds of fame.

Of course, influential people of all stripes can be wooed with attention, invitations, presents, money, and other nice things. Netscape, in a bid to attract some of these influencers, offered $1,000 a month to some of the top submitters on Digg to get them to switch to Netscape. No doubt PR people are already keenly courting these influencers. This research and article has helped to uncover the structure of influence in a world driven increasingly by social opinion rather than status-based opinion. What interests me in particular is how the structure of these influence networks will evolve – we are absolutely in a transition phase, and the way social opinion is formed will quickly change. Michael Arrington calls it a “crazy ecosystem”. Jason Kaneshiro focuses on the potential for these influencers to be paid – they are creating value, including being central to the very high valuations of some of these sites, so they should be rewarded. The question is, in what form does that reward come? Being written about in the Wall Street Journal is a strong reward in itself, for many. And if they are paid, who pays them, and is it overt or covert? This will be a fascinating space to follow.

Narrative workshops in Boston and Seattle

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Over the last few years the use of narrative and storytelling has become an almost mainstream approach to organizational change and development. Steve Denning, first at the World Bank, and then in his own consulting practice, has been at the forefront at spreading the gospel. Anecdote, an Australian-based consultancy, has become prominent in the field, sporting among others Shawn Callahan, who previously worked as regional leader of IBM’s Cynefin Center, at the time lead by Dave Snowden.

Anecdote is running workshops on Narrative Techniques for Business in Boston and Seattle at the end of March – full details here. Hopefully these will be well-attended – effective use of narrative inside organizations can be extremely powerful in building collaboration, culture change, uncovering strategic issues, and capturing implicit knowledge, among other rather useful outcomes…

Impressions of Ad:tech Sydney

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A short, random collection of impressions from Ad:tech Sydney…

It was undoubtedly a big success, with very good attendee numbers (meaning all the keynote sessions and quite a few of the breakout sessions had a crowd of people standing at the back), a very positive response from all the attendees I spoke to, and all the exhibitors I chatted to saying it was very worthwhile for them to participate. It was well organized and provided both quality content and an opportunity for the industry to get together. I have long criticized the events industry – globally but particularly in Australia – at being very formulaic and non-interactive. Ad:tech is lifting the bar for this kind of event in Australia. Not to say that it couldn’t have been done better, but it certainly created value for the local industry, and I’m told Ad:tech head office is pleased with the event’s performance, including financially.

The New Media Mix keynote panel session I chaired this morning (pre-session description here) was good fun, with Harold Mitchell and Richard Kimber in particular responding to my request for some differences of opinion. The core of the discussion ended up being about what is making the shift in media, channels, and online slower than it should be. Skills and education were a prominent topic, with all panelists pointing to education as a fundamental issue in Australia’s future success, which is currently not supporting the skills and capabilities we need as a nation. Harold went on to say how he believes the nation is being fundamentally held back by low bandwidth and poor internet infrastructure, at one point sparking applause from an audience that no doubt feels likewise. I noted the very slow uptake in social media participation in Australia. Certainly I’m concerned that as a geographically isolated country, Australia is far from taking full advantage of communication technologies, meaning that it risks falling behind in a global, networked, information-based economy.

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Ad:tech Sydney: The five dimensions of Blogs as a Marketing Tool

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At Ad:tech Sydney this week I’ll be chairing the panel on Blogs as a Marketing Tool as well as the keynote session on The New Media Mix. My esteemed colleagues on the panel will be Mark Jones, IT editor at the Australian Financial Review, business coach and blogging evangelist Des Walsh, and Fred Schebesta of Freestyle Media. Given the topic is blogging, it seemed appropriate to have a conversation rather than a series of presentations. We had a conference call to discuss what we’d talk about, and agreed to have a single presentation for the panel, using five screenshots to illustrate the topics we’ll discuss.

The five dimensions of Blogs as a Marketing Tool are:

1. Advertising on blogs

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Advertisers now have an additional medium to reach potential customers, in addition to the usual array of newspapers, magazines, TV, radio, outdoor etc. Blogs readers are affluent, influential, and highly targetted – this is a prime demographic. Yet there are almost no Australian blogs that are attracting advertisers. We use a blog on the Sydney Morning Herald as a starting point for conversation, as blog readership in Australia is still heavily overweighted to traditional media websites. There is advertising on the blog, but the SMH is using the same ads as the rest of the site. Individual bloggers can sell Google Adwords or other aggregated advertising, or sell directly to advertisers that are highly relevant to their readership. Blogging networks make it easier both for bloggers and advertisers to match up. So, what should advertisers be doing about advertising directly on blogs?

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