The New Axis of Business Initiatives: Strategic Community Engagement The power shift from business to consumer -- in the works for decades -- is now complete.
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In today's business world, customers can easily discover one other, share real-time updates on vendor price and performance and express their satisfaction or dismay in a public arena within seconds. This new world puts market power and influence literally at the customer's fingertips. With a click of a mouse or a swipe on a screen, company reputations can be made or broken.
Those are the new realities. If companies want to survive them, they can no longer afford to leave their customers out of key decision-making processes. Businesses need to move away from the mindset of traditional product development cycles, in which the customer is the "other" and is on the outside. Today, businesses need to create strategic community engagement.
This power shift from business to consumer has been in the works for decades. In the opening paragraph of his 1989 book, The New Realities, renowned business scholar and management consultant Peter Drucker identified the fundamental forces that are now so clearly driving marketplace change. "Capital can go where it is paid the most," Drucker observed a quarter-century ago; "Knowledge workers know that their knowledge gives them freedom to move."
He described the result of these major shifts as a world economy changing "from international to transnational."
In this kind of system, Drucker further warned, there is no such thing as "external." Traditional business systems, he said, siloed their activities and interactions, treating the customers and partners on the outside as almost an alien species. But in contrast, in the world where we will do business for the rest of our lives, everyone and everything should be regarded as potentially "inside": The question then becomes how to make those customers and partners want to be our insiders, rather than a competitor's.
In this new setting, businesses must redefine their mission and way of doing things. Instead of pushing products linearly to customers, companies should now iterate product versions based on ongoing dialogues with and feedback from customers. Traditional practice might convene a focus group to test an idea, develop a product over a cycle of months or years and then release the product into the market -- never obtaining broad, large-scale customer feedback until the product is already in the market. But, here's the problem: At that point in a traditional development cycle, change is extremely difficult to effect.
Such long product development cycles also make these traditional first-movers vulnerable to smaller, more agile competition: They incur a risk that they are defining and illuminating a problem or opportunity that smaller but more agile competitors may then seize, refine and dominate. "The early bird may get the worm, but it's the second mouse that gets the cheese," is the catchphrase here.
Today's world of instant gratification demands enablement of greater customer involvement. The customer expects his or her voice to be heard, and expects the product to be tailored to individual needs more quickly than ever before. Moreover, the customer wants a fully connected experience: to see a product in an ezine, to buy it on a tablet, to sign for it on a handheld terminal and to have an interactive video chat on a smartphone regarding questions about setup and operation.
What customers today further crave is radically superior service and transparency, to which they respond with greater (than in the past) loyalty and active involvement in product/service improvement. This is the foundation of today's great brands -- and tomorrow's breakout disruptors. A company like men's apparel retailer Trunk Club, for example -- recently acquired by Nordstrom -- is proof that such an approach is not merely possible, but can be compellingly successful.
As an example, what LinkedIn has done for individual professional identity is what companies now want and need to do for their own communities of customers and partners: provide a trusted environment of integrated knowledge, communication, collaboration and action that serves common interests while also enabling new opportunities. Companies like Health Leads are adopting this model as part of their mission to re-invent basic industries like healthcare. As Health Leads director of systems and technology Zach Goldstein says, these companies are "trying to move healthcare to a model where providers are compensated, not just for the number of procedures they perform, but for managing overall patient health."
This kind of transformation depends on the natural, conversational connection that people have learned to expect from public social networks. That connection is closely coupled with related data, but managed and protected with the security and data integrity required of vital personal services.
The August announcement of a "Community Cloud" offering from Salesforce, already embraced by professional services partners, including Deloitte Digital, reflects the fact that the necessary technology and skilled support are already available for such initiatives.
So, take notice: This power shift to consumers is not a fad, not a swinging pendulum; it's continental drift at the speed of an earthquake. No media budget in the world can elevate a brand above the fray of well-informed customers in a global, 24/7 community. No capital barrier to entry can protect an incumbent market leader from nimble startups using contract manufacturing, fulfillment as a service and cloud-based IT for marketing/sales/service.
Earlier this year, The New York Times answered the "so what?" question that someone might have asked upon reading Drucker's book 25 years ago. Indeed, the Times quoted author Geoffrey Moore as saying, "Companies have to create human communities of supporters, advocates for what the company does." The Times article then added: "That personal advocacy, [Moore] says, will matter more than anything an impersonal company can do for itself."
This makes complete sense today. To stay relevant, companies must look to technology for collaboration, leading to community creation, as the critical driver for their next generation of business investments.