What’s it worth?

If social tools and practices can fundamentally change how we work, how much is that worth?

As a starting point, I estimate the top 4 US banks alone can use social business efforts to realize an extra $5 billion of value.

At least.

Things to focus on

Sameer Patel is a noted social business consultant (now at SAP) who writes about accelerating business performance using social software. In a recent post, he pointed out that much of his audience is still asking the wrong questions.

“…we’re still looking at things such as “Encourage Sharing”, “Enable Action”, “Knowledge Capture” and “Empowerment” as end value points via social business…If practitioners can’t draw connectors between strategic and tactical objectives and how social networks facilitate execution, end users and executives won’t experience the needed aha moment.”

Focusing on people is important. But to be relevant to businesses, we better also focus on eliminating waste and increasing revenue opportunities.

Where to look

At large firms, in particular, controlling expenses is always difficult. The larger the firm, the harder it is to know who does what and who spends what. The costs – and the waste – add up quickly.

In just the top 4 US banks, for example, there are over 1 million employees and over $287 billion in costs.

Employees

 Costs
Bank of America

285,000

$90 billion
JP Morgan Chase

260,000

$81 billion
Wells Fargo

264,000

$65 billion
Citigroup

266,000

$51 billion

Not all costs can be reduced using social tools and practices. (Legal costs, for example.) But, in looking to improve efficiency, a good place to look is in the support areas – large divisions that cost a lot but don’t bring in revenue. A good rule of thumb is that about 1/3 of the people and 1/6 of the costs are for 3 such functions – IT, Operations, and Finance.

Just that slice of these firms costs $47 billion.

A good match for social business

Drilling further into that number, a firm like Bank of America might have 50,000 people in IT alone. (In contrast, Facebook is worth almost as much as all of BofA yet employs only 3,000 people.)

What are those IT people doing? They’re not writing software. Largely, they’re moving information around. They’re coordinating work among multiple teams and functions. They’re supporting systems and trouble-shooting problems. They’re overseeing the use of expensive hardware, software, and market data.

And those are terrific areas to apply social tools and practices.

Social business efforts are ideal for connecting people across locations and across teams to solve problems more quickly, reduce cycle times, reduce service calls, optimize the use of resources, and a wide range of other use cases.

These banks have all tried the traditional, centralized approaches to cost-cutting – offshoring, vendor management, bonus reductions – with some good results.

But the waste is too insidious, too pervasive, to just be managed centrally. And the only way to drive out the waste in that $47 billion of support costs for these 4 banks (and in the overall $287 billion of expense) is to enable much more distributed approaches.

  • Can the 4 banks improve the spread of best practices to reduce their computing costs of $12+ billion by more than 8%?
  • Can they reduce the time associated with chasing information to increase productivity of the 300,000 support people by more than 5%?
  • Can they crowdsource the quality of who’s using what (and how) to reduce overall expenses – not just cut but optimize – by an extra 5%?

Yes, yes, and yes. It may not necessarily be $5 billion in savings. It could be more.

How to generate more revenue

It’s important to focus on costs because those are the hard dollars. Still, a lot of revenue flows through banks. The 4 big banks generated revenues of well over $300 billion.

How much more could they generate using social tools and practices?

Morten Hansen writes about one aspect of this answer – cross-selling – in his excellent book, “Collaboration.”

“Wells Fargo is able to collaborate internally across its eighty-four businesses to present “one Wells Fargo” to customers, who in turn buy more products. This collaboration contributes to profitable growth.”

Social tools and practices are ideal for exactly this kind of objective – connecting people, products, and ideas across the firm to deliver “one Bank.”

The Wells Fargo CEO knew that “The cost of selling a product to an existing customer is only about 10 percent of selling the same product to a new customer.” And, with a focus on cross-selling during the period from 1997-2007, Wells Fargo doubled their sales-per-customer.

Importantly, that number was twice what Bank of America sold per customer in 2007. And the profits-per-customer was also double. (Hansen includes excellent data in the endnotes of “Collaboration” to back up these numbers.)

With well over 100 million customers, think of how much more revenue the 4 banks could generate. Now, add that to the cost savings above and my estimate of $5 billion of extra value looks conservative.

Think big

In the past year, I’ve been guilty of aiming too low. Of trying to save, say, $10 million so I could have a positive ROI. That’s nowhere close to good enough.

We’re in the middle of a megatrend. And now is time to go after the big commercial benefits.

As Sameer writes,

“The first innings of social in the enterprise is over. Those organizations that like to experiment have done so…But there’s massive untapped opportunity out there to revise the value proposition…Until then…executives will treat “social business” as another Mickey Mouse program until they see how it matters to revenue increase, cost reduction and risk mitigation.”

For the social business movement to be sustainable and relevant for enterprises, then we have to focus on achieving measurable commercial benefits.

To help the people working in our large enterprises, we have to go beyond just connecting them. We have to make our enterprises much more efficient and effective.

The best way to implement social tools & practices

The Lean Startup

If you want to change how large companies work – if you want to eliminate all the waste you know is there while uncovering more commercial opportunities – you can learn a lot from the founder of a Silicon Valley start-up focused on 3D instant messaging.

In most social business efforts, you work on your use cases. You research the technology. You plan everything as best you can leading up to a big launch, and then…you see what happens.

That may teach you something about what works and doesn’t work. But that method of learning costs a lot and takes an awfully long time. And, unfortunately, it’s exactly the approach I’ve been taking.

Until now.

The problem

When it comes to social tools and practices, we simply don’t know the best ways to apply them nor which problems we should try to solve in our firms. In the midst of this uncertainty, we need to try different things – some of which will fail – while we learn.

The problem is that, in most of the companies we’re trying to change – firms with annual budget and performance review cycles – we’re used to planning our way out of uncertainty. And we ask questions at the end.

Why aren’t more users signing up? Why aren’t people using the new features? Why isn’t it working as we’d planned?

Even if you do a brilliant job executing your idea, waiting till the end to learn how effective it will be turns your brilliant execution into a wasteful meander through the possibilities.

Treat your social business effort like a “Lean Startup”

A different and extraordinarily useful approach is described in detail by Eric Ries in “Lean Startup“.  (Ries defines startups as “any human institution designed to create a new product or service under conditions of extreme uncertainty” – a definition that certainly applies to social business efforts.)

Many of the concepts in the book will be familiar, since the approach includes some of the basic methods from the lean manufacturing and quality movements. Examples include using Toyota’s “5 Whys” for root cause analysis and genchi genbutsu for investigating problems in the field.

The big innovation, though, comes from combining these ideas with modern development techniques. Concepts like agile development and user stories. Techniques like building a Minimum Viable Product (one with just those features that allow the product to be deployed and no more). And using cohort analysis (measuring user engagement over time) versus vanity metrics (things like registered users, downloads, and pageviews that don’t necessarily correlate to measures relevant to your business model).

Ries successfully weaves all of these far-ranging ideas into a simple framework you can use whenever you’re trying to “create a new product or service under conditions of extreme uncertainty.”

Build, Measure, Learn

At its core, the framework is a feedback loop focused on quickly learning what you need to do to transform ideas (hypotheses about what will be effective) into products (the minimum thing you need to test the idea) that can generate customer feedback that can then further shape your ideas.

That is, when you have an idea, your first thought shouldn’t be “how will we implement it?” but “what’s a fast, inexpensive way we can test this idea with customers?”

As Ries says, “although we write the feedback loop as Build-Measure-Learn because the activities happen in that order, our planning really works in the reverse order: we figure out what we need to learn and then work backwards to see what product will work as an experiment to get that learning.”

The way forward

As we try to change the way we work, vision and strategy are still important. They’re just not enough.

“Only 5 percent of entrepreneurship is the big idea, the business model, the whiteboard strategizing, and the splitting of the spoils. The other 95 percent is the gritty work that is measured by innovation accounting; product prioritization decisions; deciding which customers to target or listen to, and having the courage to subject a grand visions to constant testing and feedback.”

As we try to understand which problems to solve, which customers to work with, which incentives to use, we can embrace the fact that we don’t know what will be effective.

And then we can get to work, using the Lean Startup approach to turn uncertainty into a set of quick, inexpensive experiments that can guide our learning and help us make the difference we know we can make.

3 lessons from a forced career change

“We’re going to make a change.”

I heard those words a few years ago, just before bonus time. And that short conversation made me realize how little control I had over my career. How I was too dependent on my manager to define who I was, what I did, and how well I did it.

This week, at an event in Singapore, I talked with 120 people about what I learned since then.

I wanted to share 3 lessons that could give them a bit more control over their career – and their life.

#1: Career plans are graphs, not ladders.

I used to work in prime brokerage technology during the hedge fund heyday. So, if I needed a job, our 1000s of fund customers could have been a rich source of opportunities for me.

But how many hedge fund people did I know? Zero.

The reason was that I viewed career progression too narrowly – as a path upwards through the hierarchy. I simply didn’t invest in relationships with people who might have helped me.

More importantly, I didn’t know how to build those relationships anyway. I thought of networking as something superficial, transactional, or both.

It was only in recent years that I learned opportunities come from a broad and diverse network. (We’ve had evidence of this since the famous “strength of weak ties” paper in 1973.)

And it was a year-long course with Keith Ferrazzi, author of “Never Eat Alone” and “Who’s Got Your Back?”, that taught me how wrong I was about building relationships at work. That I could be generous, vulnerable, and authentic while still being purposeful.

Instead of trying to climb the ladder, with a limited set of opportunities at the next level, I learned to build a network, where the possibilities multiplied and were more diverse.

#2: Don’t be an Eagle or a Rattler. Be your (whole) self.

The second lesson was that I was thinking too narrowly about who I was and what I had to offer.

In Singapore, I talked about the Robbers’ Cave experiment that I wrote about last week. People smiled when I described the Eagles and Rattlers and how quickly we identify with our given organization. How, when we introduce ourselves in meetings, we start with our place in the org chart – our acronym instead of our contributions, aspirations, or passions.

For me, tying my value to my role in the organization was unnecessarily limiting. “I’m a prime brokerage IT guy and so my value to hedge funds must be related to prime brokerage IT.”

Ferrazzi and others taught me that people actually want to relate to real people, not the professional veneers of people and organizations. I learned, gradually, that by making work personal I could add value to others in many different ways – and I could establish much more meaningful relationships with people I’d benefit from knowing.

#3: The key is “Building a Purposeful Social Network”

Those first 2 lessons, combined with ideas from Seth Godin, from Gina Rudan – even from Dale Carnegie – taught me that the way to a more fulfilling career and life was to build a purposeful social network.

I learned that I had a choice. I could let my manager control my reputation or I could shape my own reputation through public, online contributions on topics that mattered to me. I could rely on the hierarchy in my firm or I could actively seek to build personal relationships with a broad and diverse network of people I liked and whom might help me reach my goals.

So, in the years that followed “we’re going to make a change,” I tried to add value to my company in other ways. I actively sought to build relationships in my firm and across industries. I wrote weekly blogs and presented on ideas I cared about.

I’m still amazed – and grateful – that I could fundamentally shift my career while at the same firm. That I could go from prime brokerage technology to something I truly love doing – using social tools and practices to change how people work.

The best thing about these 3 lessons are that everyone can use them. Just as every can and should develop good writing and presentation skills, everyone can and should learn the skills needed to build a purposeful social network.

Collaboration: are you an Eagle or a Rattler?

Boys' camp in the 1950s

In most firms, we divide people into distinct groups, set up systems that foster internal competition (like rating people on a curve), and are dismayed at the lack of teamwork across the company.

An experiment from a boys’ camp in 1954 tells us a lot about why we don’t collaborate well in most firms – and what we can do about.

The Eagles and the Rattlers

The experiment (described in Morten Hansen’s excellent book “Collaboration”), involved 22 eleven-year-old boys in a 3-week summer camp. It showed how easily people can be divided into arbitrary groups and drawn into conflict with each other.

The boys were broken up into two groups: the Eagles and the Rattlers. In the first week, the boys in each group bonded by hiking, swimming, cooking and eating together.

In the second week, the researchers tried to induce conflict between the groups by holding several competitions. The winning group would get a trophy.

Over the course of the week, the competition became intense. A loss in a game of baseball resulted in name-calling. A loss in a grueling 48-minute tug-of-war led to the “enemy” camp being raided.

After the final competition, at the awarding of the trophy, a fistfight broke out and adults had to step in.

But, in the 3rd week…

Despite the bad feelings in the camp, the researchers wanted to see if they could now unite the warring groups. They introduced a series of seven unifying goals that could only be achieved if the boys worked together – e.g., locating a “broken” pipe somewhere in a large area that only a coordinated effort could find and fix.

It worked. The boys grew increasingly close as they found the broken pipe; pushed the stalled truck; and accomplished more and more together. By the end of the week, they took turns entertaining each other around the campfire. As camp ended, they all wanted to return home on one bus instead of the two they arrived in.

It’s not just kids and camp

These same kinds of behaviors – both the bad and the good – can be found at work. “Collaboration” opens with the story of the Sony Connect, the new version of the Walkman that Sony was building just as Apple was developing the iPod.

In 2001, Sony was in a much better position than Apple to build a next-generation music player. Sony already had the Walkman division; their own computer division (Sony VAIO); the Sony Music division; Sony Electronics for batteries and other devices; and, notably, much more money.

As Sony’s chief technology officer said at the time, “We can do this in nine months. We got the product, hardware, software.”

Nine months was indeed a good estimate – for Apple. Despite having to combine 6 key components from 6 different companies and the need to work closely across 3 internal divisions, Apple shipped the first iPod in October, 2001.

Sony’s effort was riddled with internal competition. Each division – and sometimes each region – had its own ideas about what to do. Hard disk versus MiniDisc. MP3 versus ATRAC. Different groups even produced entirely different players.

Sony finally introduced the Connect in May, 2004. Panned by customers, reviewers, and the market, they actually issued a public apology in January, 2006. By August, 2007, they killed the product altogether.

Which group are you in?

The hierarchies in large companies are naturally divisive. So, just like the Eagles and the Rattlers, we can easily be drawn into internal conflicts. Sales versus marketing. Investment bank versus retail bank.

Social tools and practices make it easier than ever to fix this. To connect people across organizations. To build relationships based on more than acronyms. To create purposeful social networks focused on company goals instead of on managers in the hierarchy.

The ability to transform the way we work is presenting us with our own iPod opportunities. But will we be Apple or Sony?

Think of it the next time you introduce yourself in a meeting. Are you an Eagle or a Rattler? Or are you aiming for something more?

On presenting well

Hans Rosling

Many of us have seen good presentations. Just not at work.

In your career, you might sit through 10,000 presentations and most of them will be dreadful. And you may be guilty of some of those.

But it doesn’t have to be this way.

Presenting – that is, engaging an audience while articulating a point of view – is a basic life skill. And, like writing, it’s something everyone can learn to be good at.

Here are 4 things that can help you.

Creating better visuals

Presentation Zen” by Garr Reynolds is a simple, beautiful book. It will teach you that it’s okay to be different. To step outside of entrenched communications traditions and templates and to create, instead, visually interesting presentations. And it will teach you how to create them.

The book is full of examples of what to do and not to do. It’s full of simple, practical guidelines and gorgeous images that will inspire you and will absolutely improve your very next presentation.

Every student, every knowledge worker, every person who might ever present material  should read this book.

Telling a better story

Nancy Duarte’s “Resonate” uncovers the patterns underlying great narratives. She dissects and diagrams historic speeches, TED talks, and keynotes, and shows you the common framework they all share.

Whether it’s Ben Zander or Steve Jobs or Martin Luther King, “Resonate” exposes the same basic patterns in all great talks. The same narrative arc. The same kinds of changes in rhythm and tone. The same kinds of aspirational endings.

After reading “Resonate,” you’ll view your role more as storyteller than presenter. You’ll understand why you need to engage an audience instead of just deliver content – and you’ll learn how to do it well.

Learning from others

TED talks allow you to sample from a wide range of disciplines and a wide range of presentation styles. Each one holds a lesson in refining how you present your ideas.

How could you use props? In Jamie Oliver’s talk on teaching children about food, he rails against the amount of sugar in elementary school food, notably in chocolate milk. Then he takes a wheelbarrow full of sugar and dumps it onstage. “There’s 5 years of elementary school sugar…just from milk.” It’s a more powerful and memorable statement than any slide.

How could you present complex data? Hans Rosling  is a Swedish doctor and statistician. And he’s also a master at making statistical analysis of complex subjects sound like commentary for a good soccer match. His talk on China and the developing world, for example, will surprise, inform, and entertain you.

How could you tell a good story without slides? Imagine a talk on spaghetti sauce research and how dull that might be. Now imagine it without any slides or other material. And then watch Malcolm Gladwell bring the story to life. He informs and engages you by making it personal – by framing it as the story of his friend, Howard Moskowitz. He artfully weaves in details and quotes and anecdotes while he’s making you care about his main points.

Every talk you watch can give you something new. Something you might emulate in your next presentation.

Practice, Practice, Practice

In Carmine Gallo’s “Presentation Secrets of Steve Jobs,” I was surprised to read about Job’s meticulous preparation and planning before his keynotes. He seemed like such a naturally good speaker with decades of experience. Yet he practiced?

In “Confessions of a Public Speaker,” Scott Berkun also wrote at length about preparation and practice. And my friend, Gina Rudan (author of “Practical Genius”) described how she prepared for her TED talk for 62 hours.)

Talking about practicing is much easier than doing it. If they all practiced, why didn’t I? Perhaps I was too afraid, or lazy, or self-conscious.

Only recently, before a particularly important talk, I screwed up my courage, stood in front of a mirror, and delivered my talk start to finish 20 times, making adjustments along the way.

It wasn’t about memorizing it. It was about becoming comfortable with the material – the slides, the main points on each, the transitions, the overall flow.

That comfort gave me a much better chance of being me. It let me put my energy into my authentic passion for the topic instead of on the mechanics of my talk.

You deserve better

When it comes to presentations, don’t be like everybody else. Be better.

Learn the mechanics of preparing better materials and telling better stories. Watch what others do. Practice before your talks and learn by giving more talks.

If you get nervous each time (I certainly do), think of that anxious feeling as a reminder that you’re learning. A reminder that, with each effort, you’re getting better at a skill that’s incredibly useful and will help differentiate you.