Re-Inventing Collaboration: CRM as Social Technology

Social technologies change the way we collaborate. Though we don’t often see it as such, CRM (or Customer Relationship Management) truly is a social technology.

Organizations use CRM to manage relationships with customers and partners, and one day they’ll likely use it to manage relationships with employees. CRM is more than just a database for managing information about relationships, however. Organizations now use CRM to orchestrate the way people inside the firm engage people outside the firm. That’s because of a general law I am now proposing:

“The systems we use to manage our relationships eventually transform into the systems we use to collaborate with those relationships.”

I’ve been thinking about this idea since we developed our CRM program in my last job, but it was a series of three posts about “social objects” by JP Rangaswami (one of my favorite bloggers, by the way) that finally got me to write some of this up. Here, in my opinion, is the most interesting line from his posts:

“We have to start thinking about social objects in the enterprise as having two primary purposes: to collect patterns, via the metadata generated around the social object; and to collect pattern recognisers, via the communities built around the social object.”

- JP Rangaswami

Social Objects

If you’re more technical, you may want to read the original piece to get the full context, but for everyone else, I’ll try to explain that quote briefly here.

When we collaborate, we share objects. In a digital medium, we might share a document, a photo, or an invoice. We make these objects ‘social‘ through sharing them, and that process of sharing leaves behind a record of our interactions with the object. You and I might “favorite” or comment on a photo on Flickr, for example, and each of our interactions with that photo generates data, such as a time stamp and possibly even a geo-coded location stamp (if I commented via my smartphone). This would be the “metadata” behind our patterns of interacting with the photo, and you and I would be the pattern recognizers interacting with that photo.

Think of it as the objects we share, and the fingerprints we leave behind from that sharing.

Social Objects and “Orders of Engagement”

To help throw a little more light on how we share social objects, let’s connect it to a piece I posted a few months back on “Orders of Engagement.” Here’s the basic idea. First-order engagement is when we engage employees in the work of the organization. Second-order engagement is when employees engage customers and partners in the work of the organization. Third-order engagement is when customers and partners engage other customers and partners in the work of the organization.

Each order of engagement gets progressively more difficult but also more powerful. As an employee, I can sell you one of my company’s products – and that’s second-order engagement. When I figure out a way to engage you, the customer, in selling the product, that’s third-order engagement. It’s more risky because I have less control over customers than I have over employees , but with the right systems and processes in place, getting customers to sell products can be a very powerful sales model. Amazon’s Affiliate program is a prime example.

Collaborative sales are just one aspect of third-order engagement. Companies like Twitter and Facebook actually build their services with second and third-order engagement. When I post, tweet and share stuff on these services – they’re “engaging me in the work of the firm.” That’s second-order engagement. When I comment, like, or favorite your posts, that’s you engaging me “in the work of the firm” – and that’s third-order engagement. When I join one of these services because you and other friends have joined them, that too is a type of third-order engagement.

Twitter, Facebook and other social network services have mastered what it takes to scale all three orders of engagement with massive investments in technology. But the same principles operate in all firms – just on a smaller scale, and in ways that are less technology-intensive.

Three Orders of Social Objects, Coming Right Up

First-order Engagement:

We’ve been sharing social objects in first-order engagement for a long time – ever since people within an organization started sharing things with other people in the organization. Once we networked our computers, this sharing turned digital.

It wasn’t long after that that companies started making lots of money by selling solutions to make that digital sharing easier. Microsoft Office is still the behemoth here, but Enterprise Resource Planning (ERP) solutions evolved over time so that they too, play an important role in internal sharing of social objects. The social objects we share in first-order engagement include Word docs and Excel spreadsheets, but also bills of material, engineering diagrams and paychecks. When I turn annotations or highlighting on in my word processor, I leave my metadata ‘fingerprints’ on a document. The same thing is true when I route that document to people via email or upload it using something like Sharepoint.

So how did companies keep track of the relationships behind all this internal sharing of social objects? Some of that knowledge about individual employees was stored in ERP systems, and that’s largely what Rangaswami refers to as “systems of record.” But to be actionable, that database of people needs to enable those people to connect with each other – and that’s exactly what mail servers like Microsoft Exchange did. The Exchange directory made it possible for employees to find one another and use email to easily share social objects like Word docs and Excel spreadsheets. Why? Because the systems we use to manage our relationships eventually transform into the systems we use to collaborate with those relationships.

In first-order engagement, security is paramount. The firm needs to be able to protect certain information from people outside its organizational boundaries. The ERP “systems of record” were built to be quite good at that, but once people were able to attach social objects to email, there was nothing to stop those objects from flowing outside the firm. Email gave us lots of flexibility in our collaboration, but it also made it tougher to keep our organizational boundaries secure, as Wikileaks so dramatically demonstrates. In this sense, you could say that email is the first step towards more porous organizational boundaries.

Second-order Engagement:

We’ve been doing second-order sharing of objects for a while too, of course. Remember, second-order engagement is employees engaging customers and partners in the work of the firm. In the old days, that might have been clients collaborating with architects with paper-based blue-prints, or with lawyers over legal documents, or with real estate agents to prepare a listing for their home. Our first attempts to digitize some of this sharing were pretty clumsy adaptations of our systems for first-order engagement. In other words, we pretty much just emailed stuff to each other.

The first step to improving the way we share social objects with customers and partners was to improve the way we manage all those relationships in the first place. It started quite simply at first, with contact management solutions like ACT!, which sales people used to manage customer contacts. Employees with less sophisticated needs simply added customers and partners as contacts in Outlook. This highly decentralized approach to managing relationships was easy and flexible, but it replicated valuable information on customers and partners across hundreds if not thousands of separate silos throughout the firm. Remember, the systems we use to manage our relationships eventually transform into the systems we use to collaborate with those relationships – and when those systems are disconnected, it weakens the organization’s ability to coordinate the way its employees engage customers and partners.

The next step was to better organize all this customer and partner data. We started by centralizing our knowledge of customers in Salesforce Automation solutions and our knowledge of partners in the Supply Chain Management modules of the ERP. Salesforce automation was eventually subsumed into Customer Relationship Management (CRM) and partner management is rapidly moving in this direction too. In short, CRM databases are becoming the primary systems that organizations use to manage all of their relationships with people outside the firm. In this sense, CRM is the engine that drives second-order engagement.

These solutions are so much better at managing relationships with people that I would go so far as to speculate that CRM will one day transform the way organizations track relationships with employees inside the firm as well; that is to say, that they will soon subsume first-order engagement of employees as well. Email servers like Exchange will become radically hollowed out, as their directory functions migrate to the CRM. Collaboration within the firm is about to get radically different and CRM will be the heart of that disruption. It may eventually need to change its name to simply RM –  Relationship Management.

To see how this will happen, it’s useful to first look at how CRM is changing the way objects are shared with people outside the firm. Extranets and customer portals are how we do this today by, in effect, punching a hole in organizational boundaries so that we can safely share objects with people outside the firm. We then use RSS and email to deliver secure links to specific customers as a way to notify them about information. Security is the tricky part here, of course. You don’t want company “A” seeing company “B”‘s sensitive financial data, and sometimes you may even want to allow access to some people in company “A” while restricting it to others. So now we’re talking about restricting access to documents and other social objects based on the nature of an individual’s relationship with the organization. CRM systems are how we manage these relationships and they are increasingly being used for this very purpose. This is why solutions like Salesforce.com’s Customer Portal are so important, and how they are enabling really powerful customer engagement.

It’s true that Google Docs collaboration is very innovative and it would be a mistake to dismiss the possibility of real innovation one day coming out of Microsoft Office again. But both these solutions are missing critical organizational context such as my reporting structure, the projects I’m working on, the customers assigned to me and other information that affects what I should – and shouldn’t – have access to and with whom I should – and shouldn’t – share it. That’s all information contained in the CRM. Even more important though, the CRM provides a way for the organization to track these collaborations within an organizational context. This strengthens organizational intelligence and the firm’s ability to coordinate collaboration and engagement across people, departments and even organizations.

Being able to track and restrict access to social objects based on the firm’s relationships with individual people is the next step in making organizational boundaries more porous. This is truly mind-bending stuff when you digest the implications. It’s going to make it way easier to coordinate collaboration between people in different organizations and it’s going to redefine the way organizations collaborate with their customers. CRM transforms organizational boundaries from dumb walls into smart membranes through which firms coordinate their second-order engagement with customers and partners.

Third-order Engagement:

But wait, there’s something even cooler, even more powerful on the horizon: systems for managing third-order sharing of objects. That’s right; systems for helping customers and partners engage other customers and partners in the work of the firm. This post is already getting too long, so I will save this juicy topic for another post focused more specifically on “Social CRM.” What I will say here though is that it has everything to do with the social graph. Just as Exchange servers were the heart of first-order sharing of social objects, and CRM solutions are proving to be the heart of second-order sharing of social objects, third-order sharing of social objects will depend on the social graph.

The systems we use to manage our relationships eventually transform into the systems we use to collaborate with those relationships.