Enterprise 2.0: Here's Why You Need It - Customer Relationship Management

The contemporary workforce has a different outlook than the traditional workforce,which leads to a different kind of thinking.Those same people who are likely your customers are also employees of the company whose expectations are not what they used to be.

The use of Enterprise 2.0 tools fosters a culture of collaboration and outreach which can only benefit the transformation of a company to a customer-centered culture that’s defined by how it administers the customer experience and engages customers in a continuous fashion.The culture is egalitarian and informally iterative by nature.The successful use of those tools reduces cost and increases productivity.Familiarity with their use helps in the implementation of the same or similar tools with the customers.

The Transformation of the Workforce
we found that the 76,000,000 Gen Yers are the first generation to spend more time on the Internet than watching TV.It is a multitasking generation that grew up with the idea it could have what it wanted and have it now.

An anecdote from a Wisconsin Technology Network story on Gen Y:
As CEO of Madison-based cdw Berbee,formerly Berbee Information Networks Corp.,Paul Shain is familiar with the challenges associated with managing the next generation of IT workers.

On the day the iPhone first became available,Shain said Berbee received no less than 125 requests from staff members who asserted that they required the devices “immediately” in order to effectively perform their jobs.

The Gen Yers need to communicate right now,and in the way they want to communicate.This has had a dramatic impact on the workplace.But the differences in expectations go beyond just constant and immediate communication.They can be:

  • Work to live,not live to work
  • Desire to have fun in the workplace
  • Increased involvement of parents in their workplace decisions
  • Desire to collaborate (which extends to Gen X also)
  • Not a lot of respect for formal authority via titles
  • Expectation that the tools they need to work will be available to them-at least as available as they are outside of work.

Ignoring the differences between the expectations of Gen Y and other generations is at your own peril,with anecdotal evidence that “at your own peril” is more than just a metaphorical expression.

For example,Penelope Trunk,Gen Y human resources influencer and popular writer of the Brazen Careerist blog,wrote in a 2007 Time magazine article of a study done by Deloitte consultant Stan Smith on the high Gen Y attrition rate at the firm.What Smith found out was not all that surprising.

People would rather stay at one company and grow,but they don’t think they can do that. . . . Two-thirds of the people who left Deloitte left to do something they could have done with us,but we made it difficult for them to transition.

What kind of Enterprise 2.0 culture would have made it easy?

Cultural Change:We Trust You—Really
While communications and technology tools are certainly part of the necessary internal workings of an enterprise,the culture change is even more critical.You can see the most visible exhibition of the kind of culture a company has in how it invests in and manifests its customer service-and we will see that in coming Chapter.Empowered,happy employees,and their associates such as contractors,business partners,or vendors,make for very loyal customers.

What makes the Enterprise 2.0 culture particularly effective is that the employee is valued.While this sounds like standard operating procedure,it is actually rarely seen. But there are companies like Zappos,the online merchandise store,and Best Buy, the consumerelectronics and appliances retailer,who have established cultures that work in a contemporary environment, allowing for the nature of new employees,and also offer advantages to the other generations of employees still at the companies.

We’ll look at Zappos.Sorry, Best Buy, maybe another time.

Zappos:The Company
The best way to describe what Zappos does is to call it a shoe store.But that’s not all it does.It also sells clothing,handbags,watches,and other accessories in an incredibly wide array of brands and styles.

My (fake) disclaimer:I’m a diehard Zappos fan and have ordered New Balance sneakers and Mephisto brand shoes from their online premises over the past year.I’ve also ordered shoes from little-known Israeli brand Naot for my 92-year-old mom.I’ve had every single pair delivered to me within one to two days of when I ordered,with clear instructions on returning them at no charge at any time in the next 365 days.

Zappos has over 1,200 brands,200,000 styles,and more than 900,000 unique UPCs.They have 4 million items in their warehouse with every single item in their catalog inventoried.They don’t believe in drop shipping because of the extra layer of “something could go wrong” that drop shipments imply.

The success of their business is measured by multiple numbers (see “Zappos:The Results” later),but one telling statistic.They have 9.7 million customers.That is almost 3.5 percent of the U.S. population.Yet, even with the recession and a 10 percent cutback in their workforce, they continue to provide sterling service to that large customer base, including free upgraded overnight shipping to repeat customers or VIP Club members.(Even that level of service was a cutback concession to the recession:new customers were often upgraded by surprise to overnight shipping.No longer.)

What distinguishes them from almost any company on the planet,much less in the United States,is that even with the scale they operate on,they have a truly remarkable culture.

Zappos:The Culture
The culture is premised on 10 core values.They are:
1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous,Creative,and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble

These are so much more than just verbiage.To reinforce them,the performance objectives are not based on measuring call time,so CSRs can focus on the quality of the call,rather than the call efficiency—the time spent on the call and the call volume.There are no sales-based performance goals,so concentration on service is the core value of the culture.Performance reviews are 50 percent based on the 10 core values.

But wait.There’s more.There are five weeks of customer service and core value training for every single employee.In the course of those five weeks,they offer you first $1,000 and then later $2,000 to quit before the training is over,if you don’t feel you’re fitting in.They used to offer less than $2,000,but they felt that not enough of the trainees were taking the offer,so they sweetened the pot.

Tony Hsieh,the CEO and founder (and plurality but not majority shareholder),also walks the walk.In an era when bank CEOs getting federal bailout funds take millions of dollars in salaries and bonuses despite their failures, this highly successful fella takes a salary of $36,000 a year,success or not.

One other salient feature of the culture.Any employee is empowered to give any other employee a $50 bonus for whatever reason makes sense.Not just managers,any employee.

All of this is annually captured in a “culture book,”which is the unedited,raw commentary by Zappos employees and senior management on the anecdotal success of the company’s culture over the year.The 2008 culture book,a whopping 480 pages,is available to anyone who wants a copy.

This isn’t altruism or appeasement to Gen Y.Zappos understands the nature of an Enterprise 2.0 culture,even if they don’t think of it using that phrase.This means that anyone who doesn’t take the $2,000 to quit is implicitly agreeing to the core values and the standard of service that has to be provided to each and every customer and internally among the employees.By no means is this an informal or trivial matter.That standard has to be adhered to by all the newbie employees for the life of their employment with Zappos.

The 1,300-plus current “survivors” of the five-week $2K “take it or leave it” marathon training are trusted—which is perhaps the most important part of the Zappos culture.As Alfred Lin,the COO/CFO (yes, he’s both) of Zappos made clear in a February 2009 online presentation,one of the most important items in building a brand that matters is “Be real and you have nothing to fear”—a.k.a.authenticity.That goes for all relationships and the way the corporate left brain is exposed—meaning the data that this private company shares—which is refreshingly extensive.

Zappos:The Tools
Zappos knows that they need to build a cohesive set of standards that can be institutionalized and thus don’t depend on any specific employees.To do that,they need to communicate with the employees internally and provide the tools for the employees to communicate with the customers.

They use social media tools to externalize their culture and to inspire the culture internally.They not only have outreach to Facebook,LinkedIn,and Twitter,but they use blogs and a Zappos TV presence for both internal and external broadcasting.

Twitter has perhaps been their most successful effort in both outreach and internal communications.In November 2008,Zappos,which still ultimately hit over a billion dollars in revenue that year,had to lay off roughly 125 employees due to the downturn.They chose the unfortunates based on performance,reliability,and attendance.The severance package,given everything it could have been,was very strong—salaries paid until end of the year for those with under two years of service;for more senior employees,a month’s severance pay for every year worked;six months’ extension on health insurance;and counseling for stress created by the layoffs.At the request of the laidoff employees,Zappos allowed them to keep their 40 percent employee discount through Christmas.

But it wasn’t just he package alone.It was how the adversity was communicated.For example,after each of the employees was informed by their respective managers of the layoff,an e-mail explaining why the layoffs occurred was both sent out and posted on Twitter.Keep in mind,CEO Hsieh has almost 960,000 followers on Twitter as of July 2009.Why exposed that way?Core value #6 is “Build Open and Honest Relationships with Communication.” That’s why.

They don’t just work with Twitter.They have a number of blogs that are highly transparent and very useful.For example,the CEO blogs but so does the full-time life coach.The CEO’s blog entries are onthings like,“How Twitter can make you a better (and happier) person,”while the life coach blogs with a daily hint or tip—as of mid-July 2009 there were 805 of those.Other blogs cover running,family,couture,and Zappos internal events.

But they don’t stop there.There is Zappos TV that offers a whackedout look at things like “Brett sets fire to Melissa’s car” or a video of the Zappos internal ping-pong tourney or annual head-shaving day.

All in all,they understand how to utilize social media tools to improve culture,not just simply define the collaboration efforts at the company—as most other companies who are Enterprise 2.0–focused do.They get results that are phenomenal because of this approach.

Zappos:The Results
In 2000,a year after they were founded,Zappos turned over $1.6 million in revenue.In 2003 it was $32 million,in 2005 it was $370 million,and in 2008 it was just over $1 billion.They not only made money,but even though they are venture backed (Sequoia is a big investor),they are profitable with a 5 percentnet margin on 2007 revenues and cash flow positive.

But investment numbers aren’t the only measure of success for this remarkable company.They have a repeat buyer customer rate of75 percent with 9.7 million customers.These repeaters don’t only buy once either.They buy 2.5 more times over a given year,and the amount they spend increases as it goes.

Think that’s all?Nope.

As with customers,a culture premised on trust and collaborationwill end up with the happiest employees-and thus,those best suited to engage customers-because of institutional support,not just individual merit.In 2008,Zappos debuted on Fortune magazine’s Best Places in America to Work list at number 23-the highest for any rookie company that year.If you think now we’re at the end of it,wrong again.In July 2009,Amazon acquired Zappos for $928 million.

Oh,in case you’re curious . . . only three now-former employeesin-training took the $2,000 bribe to leave the company in 2008.Yep.

Enterprise 2.0 Tools—Really Briefly
The tools of Enterprise 2.0-the social software that Bosox-loving Professor McAfee discusses-are explicitly aimed at collaboration.These include the aforementioned blogs,instant messengers like Twitter,and,as importantly and perhaps even more so,wikis.

Enterprise 2.0 culture like Zappos. Now we’ll take a brief look at how they are structured inside the contemporary intelligent business.

What you see in Figure is a matrix of the most likely tools to be used by the enterprise to bridge the gap both technologically and culturally between the operational side of the company (left column) with the interactions of the customers (right column).That intersection becomes real when the culture of the company supports the use of the tools internally.Not only is productivity improved,but the staff is familiar and comfortable enough with their own collaboration and their subsequent empowerment to work with their customers in the same way.But note the figure’s central column.Those are the tools most commonly used to internally collaborate.For example,IBM created its social software product,Lotus Connections,based on its internal use of wiki-like collaboration spaces called activities,social bookmarks and social tagging,blogs with the capability to rate and comment on the wiki,and community threads thrown in for good measure .
Enterprise 2.0 Tools
Enterprise 2.0 tools lead to customer transactions

That doesn’t tie any given tool down to a single use either.A blog can be used as a means to let employees and senior management communicate.It also can be provided to dispense advice (see the Zappos life coach).It can be something that’s also lighthearted such as The BeeHive,the blog of Steve Bee,head of pension strategy at Royal London Group.Bee is known for actually living up to his tagline of “Pensions Gobbledygook Explained.”He has 28,000 unique visitors per month and was named in 2007 as one of the London Times’ best business blogs.Do you think pension strategy blogging would draw 28,000 visitors if it wasn’t fun?

To further the case, Future Changes:Grow Your Wiki ,a site devoted to the effective use of wikis in business run by Atlassian evangelist Stewart Mader,did an informal poll of roughly 200 of its readers and found a remarkably diverse spread on how wikis were used at companies.
Future Changes
The business uses of a wiki

What is very clear is that social software tools are used according to the needs of those using them.They are malleable and agnostic in their functionality.They are valuable because of their contribution to a new kind of enterprise culture that has to be a foundation for how companies act and think when it comes to the social customer-their social customer.


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