Interview in Computerworld Romania

Back in September 2011, I made a presentation at the Eastern Europe Mobile Monday summit in Bucharest. Following that presentation, I got interviewed by Computer World Romania in their November 2011 issue.

Here is a transcript of the Interview in English:

Computerworld Romania: We are facing now may be one of the most disruptive moments both in the technologies (cloud, virtualization…) and in the business models in the advertising world. How do social media and its penetration in our business and private lives impact the marketing and the promotions of products and services?

Sylvain Cottong: The social revolution, induced by the rapid rise and development of Internet technology & distributed communication is indeed fundamentally changing the way we live, communicate, build our environment, interact and do business.

First, the relative importance of traditional one-to-many advertising in the marketing-mix is declining. Today, businesses need to have real personalized conversations with their customers and manage their customer communities in a very transparent and open way. Word-of-mouth has become the single most important influencer in customers’ buying behavior and social media are a fabulous and almost instant way for word-of-mouth to spread.

Second, communication and marketing can be much more targeted today through all the data that is available on customer behavior by combining data from many different sources, digital and non-digital ones.

Imagine an event organizer sending an SMS to a young follower of its Facebook page who is known to be an influencer in his personal big network and known as somebody (by the system) who intensively uses his Iphone for communicating on Facebook with his network in the evenings…

Furthermore, Location Based Services help to communicate with customers in a much more contextual way as well, offering them for example in shop discounts or inciting them to go to specific places.

Today’s web presences are called “dynamic web presence” as each seller has to optimize the way in which he uses all the available digital channels for streams & conversations with customers in a dynamic interplay including his website, social media, discussion forums, support communities, email campaigns…etc.

There are also many possibilities today for a business to reward its Facebook & Twitter followers: Coupons & discounts, service or product upgrades, exclusive tips & announcements, special events, fan recognition (“follower of the week”), loyalty & rewards programs as well as contests.

But it’s fundamentally important to first define a clear social media strategy, write down social media guidelines on how to communicate & talk with customers, have an open & transparent culture in internal communication with and between employees and allocate the necessary human resources to social media management internally. Without a clear strategy and a defined way of communication it’s better to not be on social media channels at all as the wrong messages at the wrong time can also rapidly lead to communication disasters…

To start with, a company should listen to its customers on the social channels to hear what they are saying about a company’s brand but also about the competitor’s brands. Then it should start talking to them, and then engage with them through the above mentioned reward mechanisms for example to finally get them as brand advocates and loyal customers that influence new customers. That’s real value !

It’s also important to use social media as a support channel, react very quickly in case of service failure, monitor customers “sentiment” towards the brand as well use customers suggestions for future service & product development or improvement (value co-creation & open innovation). Well managed customer communities also provide support between themselves, which again creates value for the company and for its customers alike.

There are many new types of software tools out there, emerging almost on a daily basis that help manage all these social media activities.

And imagine all the technologies that are already there and waiting around the corner for their breakthrough to be integrated in the digital marketing mix: augmented reality, NFC-RFID-Internet of Things, indoor location based services & navigation, context awareness and push via big data analysis….

That’s why business analysts start talking about “social business”, meaning internal social software deployment for collaboration & communication within their Intranets (social networks, activity streams, microblogging, groups, video & photo sharing, social bookmarking, blogs, wikis…etc). Although this is a big challenge for many established companies from a cultural point of view (as it flattens their hierarchies and potentially enables every employee to be an entrepreneur within the company), analytics show that the pioneering companies in this area outperform their competitors as they use the power of social software to unleash the collective intelligence of their employees and also make themselves more attractive for highly skilled digital natives that use these tools naturally in their private lives and don’t understand why they shouldn’t be able to use the same communication power in their professional life.

So using social software tools (also called “Enterprise 2.0″) applications internally allows also for a much more seamless integration of external social media (where customers, partners & competitors communicate) in the overall communication flow. And this brings us to the fundamental paradigm shift that is happening in business models: The traditional business model that has it’s origin in the industrial revolution was based on information and knowledge ‘stacks’, meaning that companies hided and protected their information as their main potential for value creation. Industries also tended to integrate vertically to reinforce knowledge stacks.

Today, you can find almost every information on the Internet, meaning that value now has to be created by knowledge and information ‘flows’. Companies have to take part in multiple open value networks as it is by being in this constant flows that value is co-createt, without trying to control these networks.

In economic terms, we witness the rise of social capital, adding up to the traditional production inputs financial capital, human resources and natural resources.

So you see, a lot of stories to tell here & and a future world emerging;)

Computerworld Romania: Quoting a very well known French writer, this century (it is too much to talk about the millennium!) will be one of the services or it will not be at all. How do you see the “services world” we are living in?

Sylvain Cottong: You are completely right. First, there is a paradigm shift in marketing as well as in the microeconomic interpretation on how value is created.

The traditional definition of value in political economics is value in exchange: A car seller sells you a car, you give him money in exchange and the transaction is done by that act, meaning that value has been generated at the moment of exchange, and only then.

In service-dominant logic the basis of every exchange is service and goods are only a means for masking service provision. So if you buy a car, you buy it because of the mobility service it provides you, or because the impression you can make to your colleagues, family, partners…etc. So one and the same good can mask very different types of services.

Also in service-dominant logic, value in exchange is replaced by value in use: meaning that value is only created when the customer uses the service that he bought, i.e. when he drives the car to get from A to B. This immediately illustrates the potential of customer lifetime value: A car seller can imagine many meaningful additional services for the customer for the time he owns the car. If he does this right, he can capture high amounts of additional value to the initial value he got during the sales act. The emergence in recent years of new methods and framesets in marketing like service design (analyzing all the touchpoints and interactions that happen between the customer and the company in the customer’s life time – and not only the new digital ones – and the related concept of “Customer experience management” which is looking far beyond Customer relationship management) proves that the concept of value in use is real as these disciplines provide the tools for capturing & sharing value with the customer during customer-life-time. These methods help for example to discover which additional services the customer needs in his context of use matching his mental model (meaning which problems he tries to solve and what his desired outcome to those problem resolutions are)

The concept of value in use also incorporates the concept of value co-creation: Value is co-created with the customers in many ways: by using the service provided by his purchase, by using the additional services during the life-time and by being part of the process of open & continuous innovation, by helping other customers to solve problems in customer communities…etc.

Second, the technological revolution offers an unprecedented potential for real service innovation. Many services today already are complex service systems, where different technologies & processes are assembled in specific ways to solve specific problems. Look for example at ZipCar, the well known car sharing service: In the eyes of the customer this service provides him with the individual mobility service of a car without needing to deal with all the hassle to own a car and without “loosing” money when he doesn’t use his car. But for this service to be possible different technologies have been assembled together: microprocessors in smartphones where the service’s mobile app runs on, RFID chip cards (soon being replaced by NFC enabled phones) to identify the user at the car, databases in the cloud that handle all the calculation, optimization and management of the service system, RFID chips in the cars for identification, wireless connectivity as well as GPS services.

Already today, most of the goods have additional services around them, and even branded content and marketing has to be considered as additional services (For example a spice producer who runs an online customer community with lists of recipes on how to use the spices in addition to customer generated & shared recipes).

Now imagine when in the near future all smartphones will be equipped with NFC technology as well as almost every other product, device or facility which will be equipped with an RFID chip (once IPv6 will be widely deployed). I predict that we will witness an avalanche of new types of services emerging on the market and we will also need them: Because it’s these type of services that will provide the future growth for our economies & also help solve major societal challenges (like health care provision and environmental sustainability for example).

And that’s where there is a huge potential for Romania and its many talented developers and innovators and its vivid start up scene.

Last, the Big Data & Open Data trends will also boost service innovation: Big Data is about the enormous amounts of new behavioral data that is logged and captured on many different channels, mainly digital ones but not only. This data hides behavioral patterns that once decrypted, will unveil many unmet human needs that can be encountered with a new service. Open data on the other side is about the treasures of current & historic public data available within government agencies. Many governments (like for ex. the UK government, US government, Swedish government..etc) start open data initiatives by making all their data publicly available on the Internet. But we will need new types of talents & skillsets to be able to do the right analysis on top of that data by combining marketing, IT & social science skills which brings us right to your next question.

Computerworld Romania: Is the technology enough? Do we have to know more about the human behavior vis-a-vis the technology? Is there a new horizon for some very “human” disciplines like psychology, sociology and others?

Sylvain Cottong: Traditional socio-demographic quantitative research is not sufficient anymore as a market research approach and as a means of understanding what type of products & services to offer. Today, marketers need much more granular “qualitative” insights into their customer’s needs & behavior. This has several reasons:

First the availability of advanced technologies provides us with an almost infinite set of usage & combination possibilities. But people don’t want to become technological experts for using these technologies, they just want simple solutions to their problems. Look at the iPad: Touching, swiping & moving fingers are the first exploratory actions that little children do when discovering the world and Apple just transposed this observation to one of the most advanced & innovative technologies available.

Second, people’s lives have become more complex and more multi-faceted: The same person can be a business man on travel with specific contextual needs & purchasing behavior and at the same time be a family father doing outdoor tracking with his family during the weekends. This means that he is not just “one” person in the eyes of marketers.

Third, most human needs are already fulfilled with today’s products & services. To be innovative and create new sustainable growth companies thus need to get much deeper & different insight in human behavior. At the same time, the world today faces many so called “wicked problems” like for example in the area of the natural environment, health care systems for aging populations or social systems for heterogeneous populations.

Fourth, and as already mentioned above, organizations own new types of big data sets of customer behaviour that have to be analysed with both the eye of the social scientist and the eye of the designer in order to discover the patterns that can lead to innovative products & services.

It’s for all these reasons that anthropology and it’s sub discipline ethnography (also sometimes called commercial ethnography or industrial ethnography) plays an ever more important role in product & service design. It’s part in today’s design processes and integrated in design research. Most of the big tech companies like Microsoft, Apple, Samsung or Xerox have anthropology departments for more than 10 years now and it’s these departments that play an important role in new product development or in the improvement of existing products, services & processes.

People have tacit & hidden needs that they often are not able to articulate in a clear manner when you ask them about them. Anthropologists are trained in observing human cultural behavior and in discovering behavioral patterns. That’s why the rising disciplines like service design, UX design but also the design thinking innovation framework are all using ethnographic methods at the beginning of their respective design processes to gain these types of insights. It’s all about empathy!

Computerworld Romania: You are in the consulting business in new media. How do you split your role between the evangelist one and the businessperson? Besides the communications skills and social media knowledge what other sciences are in your “portfolio” to convince your clients about the best on-line presence customized for their needs?

Sylvain Cottong: The field I am working in can be described as innovation management and about getting management 2.0 to work. And innovation normally means change and people tend to have a natural resistance to change. So you are right, this job requires sometimes-lengthy sensibilization processes before a project happens. Yet, more & more organizations now feel the need for change, for doing things differently, because of the still ongoing crisis, uncertainty and rising complexity, but also because of globalization and the rapid rise of Internet technologies & business models and the resulting changing behaviors.

Concerning the scope of disciplines I’m in, I think the combination of my answers to the preceding questions already illustrated them in some way. In fact, today’s innovation processes need multidisciplinary approaches & non-siloed thinking. In other words, there is less and less difference between R&D, marketing, sales, IT & HR for example. That’s why I try to bring together innovation management, service design & innovation, UX design, design research, business model innovation, IT & enterprise architectures, internal communication & collaboration, social media, customer experience management & new marketing in a comprehensive management 2.0 framework.

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  1. [...] Last but not least, thanks to a great crew and people in Bucharest and all what they did to make this conference a good experience. And thanks to IDG Romania, the editors of PC World, Computerworld Romania and Network World Romania who interviewed me on these and other topics. The interview was published in November 2011 and here is an English transcription of it. [...]

  2. [...] Read more from the original source: Interview in Computerworld Romania | New management paradigms [...]