I wrote about how to build customer feedback loops in my book Living Networks, shown below. The advice is still just as relevant today, not least as still so few companies are doing this well.

Building customer feedback loops

Consumer expectations have soared over the last years. In a world of digital connections, customers take for granted virtually immediate responses to their problems and desires. For the last few years companies have been working hard to improve their service response, by creating new service delivery channels, building sophisticated automated response systems, and enhancing call center processes. The intent is to respond to customers’ issues quickly and efficiently.

What companies now need to do is to close the loop. This means using feedback to change how things are done. What customers tell you should result, not just in fixing a problem or trying to keep them happy, but actually in enhancing services, products, and their delivery, and swiftly getting feedback on those changes. This creates a living cycle that builds powerful relationships, and a level of value to customers that can be hard to equal.

Applying customer feedback to improving how business is done is not new. What is new is how communication technologies enable companies to integrate input and feedback so quickly that the customers become deeply involved in the company’s core processes. This tight customer feedback loop is illustrated below.

The heart of the issue is how customer feedback is used. It’s easy today to gather feedback quickly and effectively through Internet focus groups and by monitoring online discussions; but unless that input is applied to make things different, it is wasted. It is only when customers’ feedback results in changes that they can notice that there is a true customer feedback loop rather than simply a response to complaints. There are four key steps in bringing these customer feedback loops to life, and in the process creating true competitive advantage.

1. Monitor customer discussions

Many people who would never have complained to a company are happy to express their thoughts on PlanetFeedback.com, a website where consumers can share their experiences and views. It’s easier and less confrontational than writing a letter or making a telephone call, consumers feel that their voices are heard because at least their peers will read their opinions, and they understand the power of numbers in attracting the attention of corporations. In a typical story on a similar Australian website, aptly named notgoodenough.com, one user found the manufacturer of a faulty heater responded with alacrity when his complaint was posted in a public forum, after getting no answer to letters and e-mails.

The new forms of dialogue that have emerged in the Internet Age present a massive opportunity for companies to gain a deeper insight into their customers’ views and opinions. Chat and discussion forums are the new agoras—public, open spaces in which everyone can hear what others are saying and join in with their own thoughts. The proliferation of these means that far more of the world of customer interaction is visible, but it is harder to monitor everything that is going on. Companies like eWatch, a division of PR Newswire, scan public activity on the Internet and report to their clients on any references to their company and products. However these services are promoted mainly as a means of identifying and dealing with negative messages. For example eWatch also offers services such as getting forum hosts to delete messages, and tracking down anonymous posters. There may be times when these are useful, but monitoring what is being said about the company is far more than a public relations tool. It should be one of the primary inputs into everything the company does, and how it tries to continually improve what it does. Staples.com has a “service improvement” team that uses feedback directly from customers as well as from third-party monitoring sources to enhance the website and service.

Customer communities often provide the best source of direct input, because participants expect the company to be monitoring discussion, and are more likely to make constructive comments. Unfortunately, there are quite a few customer forums that provide customers with a chance to interact, but their comments are either left unread, or are not acted on in any form. This is a big missed opportunity.

2. Get faster, richer feedback… and use it

Procter & Gamble now does almost half of its product tests and focus groups online, allowing it to get feedback on new product trials within a few days rather than months. Every one of the more than 250 brands within the company’s vast empire of consumer products regularly runs focus groups, so the shift results not just in cost savings but also probably more importantly a substantial acceleration in the feedback and product development process. In a similar vein, every day eBay e-mails thousands of customers that have been in touch with the company within the previous 24 hours to invite them to respond to a detailed satisfaction survey. Companies can now swiftly get far more detailed feedback from their customers. The obvious first step is to take advantage of communication technologies to tap that faster, richer feedback. The initial problem is that there is now often far too much information. In addition, business processes must change in order to take advantage of the new wealth of feedback.

Clearly one of the richest channels for customer feedback is a company’s salesforce. The challenge is taking the immense wealth of information potentially available and making it useful and actionable, without disturbing salespeople from their primary duties. Companies can get their salespeople to contribute ideas or snippets of information into an online system. This is only worthwhile if a streamlined filtering mechanism is in place to ensure action is taken, however this also means that salespeople can be rewarded for valuable contributions. Innovation processes such as the BT Ideas systems referred to in Chapter 5 can be adapted to tap customer feedback. One company provides a different topic each week for its salespeople to focus on in gathering customer feedback.

In technology product development, traditionally alpha testing is an early stage process performed inside the company, while beta testing gathers feedback on a pre-release version from potential customers. It is now possible to rapidly get input from a very broad range of external beta testers, but doing this effectively is becoming an enormous job. BetaSphere, a company that provides software and services to incorporate customer input into product development, has attracted clients such as Palm, Cisco, HP, and Federal Express. These companies need to recruit a broad and representative range of testers; work with them to ensure they are providing useful, timely information; and collate their input into reports that developers can apply directly in enhancing products. Taking full advantage of the new possibilities of information flows requires applying effective processes. In addition to making beta testing far more valuable, the development of the networks means that even very early stage alpha testing can include customers. This is exactly what IBM’s alphaWorks unit does, as described in Chapter 5. Customer involvement can shift from product development to innovation—generating the ideas that drive a business.

3. Involve customers in innovation

United Parcel Service (UPS) regularly visits its largest clients, sending teams that include product development, strategy, and innovation executives, as well as the account manager, to meet its clients’ senior management for up to a day, presenting and discussing forthcoming UPS initiatives. Everything from recently launched products through to very early stage concepts are brought to the table to see what may strike a chord with the clients. In one of these sessions with Gateway, UPS proposed the idea of merging goods in transit. This meant that UPS would put together the shipments from all of Gateway’s suppliers as they were being transported, to result in regular deliveries of all the required goods for production, rather than a multitude of uncoordinated parcels coming into the dock. Gateway expressed enthusiasm at the idea, worked with UPS to refine the concept and implementation, and was the first to adopt this new service that was subsequently offered across all of UPS’s major clients.

Customers always have and always will be the greatest source of innovation. That doesn’t mean that companies can simply ask their customers what they want, and give it to them. Innovation stems from the interaction between a company and its customers, bringing different perspectives together both to come up with novel ideas, and develop them into a useful form. The challenge for companies today is to find effective ways of involving their customers in the innovation process, rather than simply seeking feedback or market testing along the way. The potential power of this is unleashed in a networked world. British consultancy KSBR works with major firms such as Lloyds TSB to identify customers who have complained vocally. It asks these customers to develop ideas to help the companies improve their service, and gets them to present their ideas to company executives in highly interactive forums or on video. KSBR finds that most customers who complain have very constructive ideas, and actively want to help companies to perform better.

Lucas Arts asked its customers to help develop its game “Star Wars Galaxies”. A year before the planned release date, the developers launched a website specifically to get broad participation in the design process. As the game was developed, updates were posted to the site, participants were asked their opinions on design issues, and the lead designers answered questions from the community. Die-hard fans were able to debate issues dear to their heart, such as whether any player should have the ability to achieve the ultimate Star Wars gaming ambition—to become a Jedi Knight. Clearly the exercise was valuable for its promotional value, but as importantly, it resulted in an award-winning, top-quality game that was truly designed from the perspective of the user.

In Chapter 5 you saw how open source software demonstrates the power of customer innovation, as well as the distinction between idea generation and development. This helps frame how you can involve your customers in innovation. Focus on getting ideas directly from customers, as well as gaining insights that will spark your own ideas. Actively engage in dialogues about their needs and issues. Get designers and product developers, not just marketers, to interact directly with customers. And design development processes that involve customers throughout. Customer testing is not enough—you have to get them involved earlier. That is what creates winning products and services.

4. Use input for customization

The product designers who spend a day at GE Plastics’ Customer Innovation Center in Selkirk, New York, can leave the premises not only having developed the exact color and effects they require for a new product, but toting home in their luggage an initial batch of color resin and sample plastic parts in their very own custom color. If the library of 20,000 standard colors isn’t sufficient, customers can create a new one, within a few minutes produce plastic samples to view under a range of lighting conditions, and then if they have brought plastic molds, can evaluate how their own product looks in the selected color. For those who prefer to avoid leaving the office, an online service allows a similar interactive process for color development, producing small lots of the customer-designed color within 48 hours. The customer colors are held in the system, and an extranet gives customers a secure way to share color information with third-party designers and manufacturers.

Billions are spent annually doing customer surveys, yet many of these focus mainly on asking customers how satisfied they are with different aspects of service. This feedback certainly can be useful, but far more valuable is applying information directly to customizing service and products. Consider how you can build this approach into your business model, as GE Plastics has done.

Many companies have missed much of the potential value in how they have implemented customer relationship management (CRM) systems. These systems can only ever be as valuable as the information they contain. As firms gather information on all of their interactions with customers, they can learn a great deal on how to service them better, and what sorts of offers they are likely to accept. However, whether you interact with your customers online, through call centers, or through dedicated salespeople, you have an opportunity to ask them questions. So given your customers’ limited attention span, what few questions do you want to ask them?

Rather than asking your customers whether they are satisfied with your service, try asking questions that will enable you to customize what you do for them. In Chapter 4 you saw how this kind of approach can be applied in high-value services relationships, but it is just as relevant in every industry. Depending on your business, you might ask what communication channels they prefer, whether they prefer a large typeface, what operating system they use, or the configuration of their loading docks. Customers recognize that this sort of information enables you to provide them with better service, so they are usually very open. The trick is designing your CRM system so that it can both accept this sort of information, and apply it directly to customized service. If the system is designed with this in mind, then it can prompt customers or relationship staff for the information, and then immediately demonstrate to customers that you are listening to them, by using it to directly enhance service. This can do an immense amount in making them more open to sharing information with you, creating loyalty, building rich customer feedback loops, and uncovering far more revenue-generating opportunities.

Customer feedback loops link the people inside an organization with the most important people outside: the customers. However in order to be able to respond effectively and create the service levels and innovation that will delight customers, the workers in a company themselves need to be closely networked. Let us examine the flow of knowledge and work within organizations.

You can view a video of the segment by clicking on the image below.

We primarily discussed the fantastic Wikihouse project, which provides Creative Commons plans for parts which can be 3D printed or machine cut and readily assembled to build inexpensive homes.

The genesis of Wikihouse was in addressing housing affordability in the UK, however it is now a global movement, enabling both individuals and communities to inexpensively build homes.

Open source concepts are at the heart of the project, freely providing plans with a license that means that improvements must be shared back with the community.

Yet this approach for house-building is only enabled by 3D printing and machine cutting, allowing digital plans to be easily made into the components from which the buildings can be constructed.

Open source evolved from the world of software and has now been applied across many other domains including physical objects.

3D printing has until recently been limited to fairly small-scale objects, however this is being rapidly scaled up.

Given the broader scope of these technologies, housing seems like an obvious application, and Wikihouse a fantastic initiative in this space.

Where else can open source plans and 3D printing be applied to bring value to communities?

Over 400 senior news executives from 45 countries are gathering to gain insights into the leading edge and path forward for news organizations globally.

My keynote provides a highly positive perspective on the extraordinary opportunities for the news industry. I am currently refocusing on the future of news and media, and will be sharing a lot more on this topic during this year.

For now, here are the slides to my keynote. As always, note that my slides are designed to accompany my keynote and not to stand alone, and also contain many videos that do not show in the slides below. However they may still be of interest to people who are not attending my keynote.

Government was designed to be institutional, providing stability to nations. Yet that design and structure means that governmental institutions are generally very poorly prepared to change as required in the face of extraordinary shifts in society and business.

I have been drawn more into the future of government over the last few years, among other activities creating and sharing my Transformation of Government framework with a variety of groups of senior policymakers.

William Eggers and his team at Deloitte have distilled some excellent analysis and insights into the future of government at their Government 2020 site, which includes an overview of drivers and trends shaping government, and views on the implications across domains of government.

The following slides and video provide nice high-level overviews of the work.

The other resources on the website are well worth a look, including the Drivers and Trends sections.

It is an exceptional program providing a deep dive into the exponential technologies driving change, including AI, robotics, crowds, 3D manufacturing, medicine, genetics, computing, digital finance and the strategic implications for enterprise.

I presented the session on crowds on the first day, providing a big picture overview of crowds, crowdsourcing and the sharing economy.

My slides are below. As always, they are not intended to be meaningful for those who did not attend the presentation, but may still be useful to others.

I intend to distill some of the ideas in the presentation into a simple framework to be released soon.

Channel 7 News did a piece on the story, including an excerpt with an interview with me about the initiative. You can watch the clip by clicking on the image below.

In my interview I discussed some of the many ways that crowdsourcing is helping to provide traffic solutions, ranging from aggregated data approaches such as that used by the US Department of Transport, through to individual reporting in Fix My Street or New York’s Vision Zero map which allows people to report traffic danger spots.

Interestingly, in the TV segment they interviewed both government and opposition politicians, with the government officials saying they were looking to the best people to provide solutions – the citizens – while the opposition declared it a complete failure of the government in being unable to do their job.

I understand that opposition parties often see their central role as criticizing anything the government does, but this does seem more than a little deluded.

Maintaining a strong delineating boundary between government and citizens is, among many other problems, highly inefficient. It is far more effective to allow people to contribute ideas and insights than to leave that responsibility solely with elected officials, who as a broad generalization do not tend to be highly imaginative.

The real issue, unaddressed in the media coverage of this announcement, is in the effective filtering of ideas to flow through to effective decisions. Getting many ideas is not at all useful if you are deluged and cannot discern the good idea from the bad.

As I am quoted as saying in the segment, it is more likely to be a single idea that creates value, rather than the aggregation of many ideas. Yet that filtering process can be very hard work. This is the precise reason that the next phase of crowdsourcing is in building more effective mechanisms to distill value from crowds.

Introducing crowdsourcing to government can be highly political. However it is in how crowdsourcing is implemented that value resides, or not.

Over the past year I have used the framework extensively as a starting point for executive briefings and strategy workshops on the strategic implications of the rapidly changing world of work.

However the static visual can be hard to interpret on its own, so we have now created a short video that delves into and narrates the framework.

I hope you find the video useful, please feel free to share it or use it in your internal meetings. We will continue to evolve the framework over time.

He gave the keynote at the Future of Crowdsourcing Summit I ran in San Francisco and Sydney in 2010, and his agency was featured as a case study of crowd business models in my book Getting Results From Crowds.

John has just published an excellent article on HBR Blogs titled The Future of Marketing, as Seen at Cannes Lions.

He reports that there was a marked change at Cannes this year. Last year he observed the event was predominantly populated by dinosaurs, yet this year there are, among the dinosaurs, many of the next generation of marketers, all based on open systems.

The shift to open systems in marketing disintermediates traditional agencies, most importantly giving companies direct access to their customers and community, and the ability to drive their own agencies.

John notes three things that brands can do to take advantage of open systems:

1. Adapt your business models to exploit new opportunities rather than try to apply your existing one. As discussed, open-system species are agile in part because they see opportunities and create new models to go after them.

2. Take more control. It used to be that brands needed an agency to communicate with customers. Today, with the falling price of media and the real time nature of the two-way conversation with consumers, brands can do more of this themselves. Some of the best-known brands including Patagonia and Apple are building their own in-house strategic agencies, taking control of strategic and creative leadership while using an open system to collaborate with great outside talent. Those brands realize that one of their most important assets is their relationship with consumers. There will still be a place in the ecosystem for lots of players and collaboration, including agencies, but brands increasingly can take the lead.

3. Seek out great ideas wherever they are. Companies and their brands need to get away from idea myopia, the notion that one outside organization, usually an agency, must be the sole creator of marketing ideas. Not only do your most passionate fans have great ideas and the tools to communicate them but there are ideas to be found from retailers, distributors and other outside partners. Likewise, internal team members have some of the best creative ideas but are sometimes afraid to participate.

The shift to an open world is highly challenging for traditional agencies, that look to be the conduit between brands and their customers.

Yet it is providing massive opportunities to agencies that understand this new world, can facilitate the connections between brands and communities, and tap the most relevant talent and insights from across the planet to bring a brand to life in a networked world.

They played this video, narrated by John Hurt, who starred in the film 1984. Apparently American audiences have thought this clip to be highly controversial, however it seems to provide a reasonable view of how things are.

Take Back Control from Respect Network on Vimeo.

The real drawcard for me and many others was that Doc Searls, co-author of the seminal book The Cluetrain Manifesto and originator of the concept of Vendor Relationship Management (VRM), has been deeply involved in the project and is speaking at each of the 4 global launch events for Respect Network.

The vision of individuals controlling their own data was clearly articulated by John Hagel and Jeffrey Rayport in a 1997 Harvard Business Review article The Coming Battle for Customer Information. Yet despite many initiatives since then seeking to bring this to life, none has achieved widespread success.

The Respect Network seems to have a very solid foundation. Founder Drummond Reed has co-chaired the committees for the OASIS XDI protocol that underlies the protected sharing of identity and relationship data, though he emphasizes that the legal infrastructure of agreements is in fact an even more important enabler.

The focus of the Respect Network global launch has been the “Login with Respect” button, which seeks to provide an alternative to the Facebook and other social network logins which enables users to have complete control of their data.

There is a one-time fee to join the Respect Network of US$25. My initial response to this was that this will inevitably limit the uptake of the network. Today’s major social networks have memberships in the hundreds of millions or beyond. To provide an alternative where individuals can expect to find their family and friends means there should be no barriers to entry.

As a counterpoint, Drummond noted that for many, paying for a social network gives people confidence that they are not “the product” that pays for the business. Drummond also changed his language to describe the upfront payment as a ‘crowdfunding’ mechanism, suggesting that at a certain point the network may become free to join. This would be particularly important in allowing the network to reach beyond the developed world.

One of the initiative’s great strengths is its partner network of over 60 organizations, including two very interesting Australian-based platforms, Meeco, an app-based life management dashboard, and Flamingo, which “goes beyond crowd-sourcing and ideation by enabling customers to design the experience they want, beyond product and price, within parameters that the business can deliver”.

At this point it seems that the Respect Network has a better chance of succeeding in empowering individuals with their own data than any other initiative to date.

However one of the real questions is the proportion of people who care enough about their privacy to do something about it. The last couple of years, including not least Snowden’s revelations, have primed us to be far more receptive to the idea of protecting personal data than ever before. Yet it will require a significant critical mass of people to shift from their current online behaviors to help a broader group to follow suit.

I have signed up for my Respect name and I look forward to seeing what it will enable.

Perhaps we are ripe to turn the tables on the companies who are making us the subjects of their big data compilation, and take back control. If so that would be a critical juncture not just in the Internet, but in the relationship between companies and individuals. However it plays out, this space will be very important to follow in coming months and years.

I was recently named one of the top 30 influential thought leaders in crowdfunding in the world (of which there are only 2 outside the US). I think it’s fair to say that’s an exaggeration of my prominence, however as I am increasingly focusing on the future of crowdfunding I hope the insights and perspectives I am currently developing will have a significant reach.

One of the most obvious ways in which crowdfunding can have a far broader impact than it does today is in playing a role alongside government, by allocating funds to benefit citizens. The “civic crowdfunding” space, focused on funding local community projects such parks, community centers, festivals, and education, has thrived, with platforms such as Spacehive and Neighborly doing well, and strong enthusiasm from cities such as Bristol.

MIT researcher Rodrigo Davies has written a very interesting 173 page report Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place as part of his studies.

Rodrigo compiled data from major crowdfunding platforms, including specialist civic crowdfunding platforms as well as general platforms such as Kickstarter which are also used for civic projects, showing the dramatic rise of the space.

Source: Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place (CP = Civic Platforms – civic crowdfunding only; GP = Generic Platforms – multi-category crowdfunding)

Very interestingly, the 81% success rate of civic projects on Kickstarter is higher than that of any defined category on the site, as Kickstarter does not specifically have a civic category.

Many projects are low budget and ones that local citizens see value in supporting, such as local gardens or events, however there is a very diverse range of kinds of civic projects.

Source: Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place

The report is rich in scope, going into some edge-case examples of civic crowdfunding, examining some theoretical frameworks for understanding the space, and looking at how government can best engage with crowdfunding.

Crowdfunding and the future of government

This goes to the broader point of the role of crowdfunding in the future of government and society. From my perspective, civic crowdfunding begins to blur the role of government and citizens. Democratic governments are effectively agents of citizens, acting on their behalf for their good. Yet now we have tools that allow citizens to take that role for themselves, choosing directly how they allocate their financial contributions to society.

There are a variety of possible responses from governments, with as noted in the report Hawaii referring to civic crowdfunding in new legislation for school maintenance, while other governments essentially ignore their citizens’ efforts.

As I noted in a recent keynote I gave on the future of crowdsourcing in government, there are clear principles that allow governments to engage successfully with their citizens’ contributions.

Could crowdfunding ultimately replace taxation? It is doubtful, but as a futurist I would like to explore how far that may be possible.

Perhaps citizens could have some element of control over aspects of budget spending or discretionary allocations. Certainly the increasing financial challenges of governments globally suggests that citizens may often need to support worthy initiatives that would otherwise go unfunded.

Civic crowdfunding is very early in its development, but will definitely play an increasingly important role in government and community.