The increasingly tight limits of propriety for bloggers

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There’s currently a massive discussion going on in the blogosphere about a series of Microsoft ads in which they asked prominent bloggers such as Michael Arrington, Om Malik, Fred Wilson, and Richard MacManus (the links are to their comments on the brouhaha) to say what they thought the term “people-ready” meant. These were compiled in a site sponsored by Microsoft, which does not mention any products or services, but simply promotes the concept of people-ready.

The controversy was sparked by a brief article on rabble-rousing blog site Valleywag, which starts its piece saying:

“The stodgy old media industry has a rule that newspaper reporters, and TV news hosts, shouldn’t trade on their public trust to endorse products.”

…and goes on to attack the people-ready campaign. I don’t get this. These bloggers are not endorsing products in any conceivable form. They are giving thoughts on a concept. How this could be seen to affect their credibliity is beyond me.

Among other business activities, I am a professional speaker and writer. I’ve written white papers, done webcasts, and given keynote speeches for payment, for among many others Microsoft, SAP, and IBM. At no point in these activities do I ever endorse a product or company. I share my views and expertise, and my clients pay to be associated with these ideas, and to attract an audience who want to get an unbiased perspective on business trends and strategies. The fact that I’m being paid to share my opinions on business and technology issues does not impact my credibility.

The bloggers in this campaign have not done anything that would affect how any reasonable person would perceive their integrity. They have not endorsed anyone. They’ve shared their thoughts on a topic. The fact that some of these bloggers have now shied away or even apologized shows that their sensitivity to potential perceptions is extreme. The degree of propriety expected of bloggers now goes far beyond that expected for mainstream media. That there is transparency and debate on the limits of propriety is good. However it is crazy to say that sharing opinions and ideas is wrong, when these could apply to any company, any product, and any service, and are not linked to any of these.

Chapter 6: Implementing key client programs

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I recently pointed to the launch of the second edition of Developing Knowledge-Based Client Relationships, including the free download of Chapter 1 of the book. Following on from this, the other free chapter from the book is

Chapter 6 – Enhancing Client Relationship Capabilities: Implementing Key Client Programs.

Over the last decade most major organizations have implemented key client programs or strategic account initiatives in various forms. Technology and institutional financial services organizations got there a little earlier in the piece, while most large professional services firms have developed solid initiatives just in the course of this decade.The fundamental issue is how organizations continually enhance their capabilities at client relationships. Whatever their organizational abilities at client relationships, they must develop these further over time. Increasingly the field of play that distinguishes competitors, particularly in professional services, are the firm-wide capabilities in engaging in collaborative, knowledge-based relationships. In this chapter I look in detail at the five domains that organizations must address to enhance their client relationship capabilities, as illustrated in the diagram below.

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However the most vital issues are in the realities of how key client programs are successfully established and implemented. The majority of these initiatives experience limited success. The chapter goes into detail on launching programs, selecting key clients, segmentation, remuneration, developing client strategies, establishing client action plans, and more of the nitty-gritty of making key client programs work. Have a read.

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.

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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Changing investor disclosure could transform the world of blogging

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I have previously written about blogging and Regulation FD, which is a Securities and Exchange Commission (SEC) regulation that requires egalitarian dissemination of substantive news that could affect the share price. On the face of it, blogs and RSS are the perfect way to allow perfectly equal access to news by everyone. Yet this is not allowed by current SEC regulations. So Jonathan Schwartz, CEO of Sun Microsystems, has written to Christopher Cox, the chaiman of the SEC, to ask him to change the regulations to allow blogs and similar tools to be used for disclosure of substantive news. He says that previous conversations with Cox indicate this will be heard with receptive ears. Schwartz has of course disclosed this on this own blog, together with the full letter to Cox. If this change is approved, this will be an enormous boost for blogs, because it will mean investors and intermediaries will have to monitor the blogs of public company officers, and it will allow company directors to disclose substantive information on their blogs, in turn reducing the governance issues of corporate blogging. It makes all the sense in the world to use the power of RSS to disseminate information – this in fact would be a significant improvement to current mechanisms – so with just a tiny variation in the regulations on what are appropriate ways of disseminating corporate information, blogging could become quite a different world, with the development a thoroughly corporate segment of the blogosphere focused on egalitarian diffusion of investor information, and by-the-by, resulting a deeper and broader view of public company activities, and better informed investors.

The slow pace of change in distribution channels

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BusinessWeek reports that Apple is readying release of move downloads from its iTunes site, pitched at $14.99 for new movies and $9.99 for back catalogue. At the same time, it says, WalMart is actively lobbying Hollywood studios not to allow Apple to provide these downloads. Wal-Mart’s actions are said to have included threatening not to sell Disney’s High School Musical for a period, subsequent to Disney releasing it initially exclusively on iTunes. Disney is apparently the only studio signed up for the iTunes movie releases, with the others on the sidelines for now. Wal-Mart has clout with the studios, since it accounts for 40% of DVD sales in the US, which is one of their most important revenue sources.

This is an oft-told tale, in which the shift to new and more efficient distribution channels is blocked by incumbents who have the power to slow progress. In this case Wal-Mart’s actions seem to be on the border of US anti-trust legislation. However its ability to generate revenue for their wholesale providers gives it enormous power to influence. Notably, Wal-Mart is also said to be readying its own movie download site, so it recognizes that the shift to the new distribution channel is inevitable. It just wants that shift to happen on its own terms. Of course Apple and Wal-Mart are hardly the only players in this market, with an array of pretenders to the online movie distribution market, notably Amazon.com. The primary bottleneck here is that any distribution rights have to be approved by the studios, and it really has to be all of them for a download site to become predominant. Apple has the Disney relationship and access to a ready market of buyers, Wal-Mart has existing distribution channels, others have different offers. As in so many other cases, the incumbent will try to shape change to its favor. Yet there is little reason to think that Wal-Mart has what it takes to be a big success in the online distribution market. One other thing to note is that Wal-Mart only stocks the very top selling DVDs, so studios can gain revenue from their hits but nothing else. Online distribution, such as on iTunes, enables them to generate revenue from their entire list. As the Long Tail story tells, there is gold beyond the hits.

Business transparency or mob justice?

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The recent case of a blogger who had a poor experience with a camera shop brings out the phenomenal power of the blogging. Thomas Hawk, a professional photographer, ordered a camera online from PriceRitePhoto. When he was called by a salesperson to sell him expensive accessories, which he turned down, they reportedly refused to deliver the camera and abused Hawk. Hawk blogged his tale. Many other bloggers wrote about the story. However most importantly, Hawk posted the story at Digg, a technology news site that allows its readers to vote on the most interesting stories. Thousands of votes for Hawk’s story later, the story spread onto top-ranked blogs such as Boing Boing, and on to the mainstream media. PriceRitePhoto was quickly delisted by Yahoo Shopping, CNET, and PriceGrabber, and is under investigation by the New York Attorney General.

In the aftermath, Hawk wrote:

I think that the popularity of this story comes in large part because the message resonates so strongly with all of us. Although in a sense it is the classic tale of David and Goliath retold, it is much more than this. We all have at one point or another in our lives been bullied and most of us have been defrauded or ripped off. The fact that so many times in the past there was nothing we could do about it makes us feel all that much better about the fact that in today’s internet and blogosphere we actually CAN do something about it.

Absolutely. In an intensely connected world, trustworthiness becomes completely visible. You used to be able to get away with doing poorly by your customers, because although you wouldn’t get much repeat business, there would always be suckers who hadn’t heard about you. The ability to do business this way is quickly disappearing. Customers have the right to complain, and today the ability to be heard by many. Partly as a result, there is no question that the general level of customer service in the economy will continue to improve at a significant pace.

Some would ask whether this is not a case of mob justice. We’ve only heard one side of the story, after all. This neglects the fact that PriceRitePhoto too has the right of reply, one that they haven’t chosen to exercise in a public forum. I wrote recently about how a scientist exercised his right of reply when he felt he was misquoted by a journalist. We now all have that power. Perhaps this was mob justice, yet the answer is not to cut off people’s ability to complain publicly about the service they receive. As with the case of the Sony DRM debacle, any small signal will get amplified in line with how strongly people respond to it. That is the world in which we live. And we are better for it. However what it certainly means is that companies today need to be in a position to respond effectively, by themselves engaging in the debate rather than simply being subject to it.

Blogging in business

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My book Living Networks, which came out at the end of 2002, opened with the words “Macromedia, the company best known for selling Flash software, is blogging,” and went on to describe what blogs were, and how they were just beginning to be used in business. A few years on, and according to the title of a conference I spoke at in New York earlier this year, we are seeing Blogging Goes Mainstream. The week before the conference BusinessWeek came out with a cover story Blogs Will Change Your Business. Indeed, blogs are far more than a social phenomenon. They are playing an increasingly important role in business.

Now, Bill Ives, who formerly ran Accenture‘s knowledge management and portals practice, and marketing consultant Amanda Watlington have just released a new book Business Blogging: A Practical Guide. Not surprisingly, given Bill’s background, it is an extremely pragmatic guide for businesses looking at the applications of blogging. I strongly recommend it for any organization that is considering implementing blogging, either externally for profile-building or customer relationships, or internally for knowledge management and collaboration. The heart of the book is its 70 case studies of bloggers and their experiences, including individuals, consultants, large companies, and not-for-profit, encompassing an extremely diverse range of objectives and design parameters. Every organization should at least consider how they might apply blogs. For those in this situation this book should be considered on a par on quality and value with the ultra-expense reports from the tech analysts – just with a lot lower sticker-price!

Book Now Launched!

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The second edition of Developing Knowledge-Based Client Relationships is now out, with the Global Book Launch in New York in late June a big success, despite storms that evening. It will still take another couple of weeks before it’s in bookshops outside the US, but it’s available from online booksellers. Two free chapters are available from the book website. Chapter 1 provides the high-level treatment of the idea of knowledge-based relationships, and the critical new theme in the book of professional services leadership. Chapter 6 is entirely new to this edition, covering how to develop and implement key client programs. Further book launch events or workshops are scheduled or in planning in Sydney, London, Hong Kong, San Francisco and various other US cities in the fall – see my global schedule for details as these are finalized. Please let me know if you have any thoughts or feedback on the book, and in particular further examples of leading practice in the field – I’m very interested to hear from you.

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Review of Collaboration in Financial Services Europe

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A few weeks ago now I chaired the Collaboration in Financial Services Europe conference in London. The White Paper on How Collaborative Technologies are Transforming Financial Services is now available from my website. If you’re interested in the topic, the review of the original Collaboration in Financial Services conference in New York last September is also worth a look. Both in moving on nine months from the New York conference, and crossing the Atlantic, the shift in themes was striking. It was a great day, exploring in detail many of the fundamental issues the financial services industry faces in an economy increasingly centered on collaboration. The key sponsor of the Europe conference, Reuters, has played a significant role in the development of instant messaging in financial services since David Gurle left Microsoft to spearhead the company’s collaboration initiatives. Reuters has established interoperability with all the three public IM vendors. Now, companies like Facetime, Aconix, and IMLogic have provided the wraparounds to make public IM secure and compliant. At this point we can say that IM is pretty much a robust corporate tool, though the space will certainly evolve considerably in the next year or two. One of the most interesting aspects of Reuters’ positioning is its emphasis on chat and building communities. It wants its major financial institution clients to use chat as a primary medium for knowledge-sharing, and to create spaces that link buy-side and sell-side, for example for conversations around research issued by the firms. Intelligent agents will identify posts that are of particular interest to individuals, so they don’t need to trawl through everything themselves. In addition, they want IM to become embedded in workflow, for example automating trading and integrating into STP (straight-through processing). Another domain that was explored in detail at the conference was insurance. I moderated a panel with Christoph Harwood of Kinnect and Alex Letts of RI3K. Both are essentially new-breed B2B exchange for the insurance industry – Kinnect was set up by Lloyds of London for commercial risk, while RI3K is in the reinsurance space. Their challenges and progress over the last few years are great case studies for similar initiatives that can bring great benefits to an industry, but require collaboration between many players. Clifford Chance also presented on an advanced in-house system that provides partners and staff with a portal view of activity and communication around a particular client or matter, which is just being rolled out. As far as I’m aware, the system is more sophisticated than any of the investment banks have implemented for sharing information on complex transactions.