Open Business is the ‘what comes next’ for social media – the framework through which organisations can take advantage of the open door social media gives to their customers.
The 10 Principles of Open Business take us beyond messages towards a partnership with customers. In partnerships there are shared ambitions, shared beliefs and shared benefits.
If this all sounds a little radical consider this: Knowing what you now know about how new technologies have disrupted traditional business processes (from marketing to customer service, from raising capital to delivering innovation) would you choose to recreate your organisation as it is now?
Tesco didn’t think so, for example – and is in the process of redefining and rediscovering itself as an Open Business.
Many of the greatest success stories of the 21st Century are built on Open Business Principles. Google, Apple and Amazon among the best known.
According to a survey of CEO’s by IBM in May 2012, companies that outperform their sector are 30% more likely to identify ‘Openness’ as a key factor in their success. McKinsey says companies are 50% more likely to outperform their rivals and grow sustainable profit following an Open approach.
The 10 Principles:
1. Purpose: The why, the belief which all your stakeholders share and to which all your organisation’s actions are aligned.
2. Open Capital: Using crowd-funding platforms or principles to raise capital through micro-investments
3. Networked organisation: The organisation functions as a platform connecting internal networks to the external for a common purpose
4. Sharability: Packaging knowledge for easy and open sharing both internally and externally
5. Connectedness: Connecting all employees internally to one another and externally through open social media
6. Open Innovation: Innovating with partners by sharing risk and reward in the development of products, services and marketing
7. Open data: Making your data freely available to those outside your organisation who can make best use of it
8. Transparency: Decisions, and the criteria on which they are based, are shared openly
9. Member led: Your organisation is structured around the formal co-operation of employees, customers and partners for their mutual social, economic, and cultural benefit
10. Trust: Mutually assured reliance on the character, ability, strength, or truth of the partnership
Activated together, the nine other Principles of Open Business combine to deliver the tenth. Trust is the far from insignificant output of Open Business.
Without trust there can be no relationships of any value. Without relationships there can be no organisations, no customers, no believers, no advocates, no future.
Evidence from neuroscience (eg ‘The Neurobiology of Trust’ by Paul J Zak, 2008) suggests we get chemical feel-good rushes when we trust and are trusted and that there are large portions of the brain developed specifically to deal with its complexities. Being able to trust our neighbour allowed us to build civilisations. We’ve evolved to demand it.
To work closely with people, requires it. Partnership, the paradigm of Open Business, requires it.
Trust, by almost any measure you care to mention has shifted from the centre to the edge: from a faith in Government, Media, Corporation, to a faith in each other, what we say to each other, and our own relationships. We trust Government, Institutions and Brands less than we did. If the neuroscience is any guide that is because we feel our trust in them has not been reciprocated.
In an increasingly connected world transparency becomes a default. More of us are equipped and able to find out more of the things they didn’t want us to.
Social media has in part revealed this, in part accelerated it. It has revealed it by showing the interconnectedness of our world like never before. It has accelerated it by enabling us to self-organise at next-to-no cost and in next-to-no time.
Before social media it took time and resource to create a space to invite people into, to find them, to bring them together and to surface their solutions to shared need. It took the kind of thing we called the means of production.
Today everyone has access to the same organisational infrastructure. After the London Riots of the summer of 2011, crowds took to the streets for a mass clear up. This was not organised from the centre, but via a Twitter hashtag. It was self-organised by people to whom it mattered. Had the centre tried the same it is likely the response would have been weaker. Self-organisation breeds self determination.
Where trust is stronger and more sustained you find corporations which have shifted their view of what it is: from an economic one (in which reliability of transaction is king) to the more human one demanded of (and delivered by) Open Business.
Trust, for an Open Business, is a measure of the belief in the honesty, fairness or benevolence of another party. Build this kind of reciprocal trust and your partners are more likely to forgive your failures.
This delivers more resilient and meaningful relationships with stakeholders; builds brand equity – and therefore shareholder value; offers cut-through in cluttered markets (choosing the brand you trust acts as a short-cut for decision making); creates a very human, emotional connection with customers, partners and employees, reducing the cost of both acquisition and retention.
It is this kind of trust which cannot be built behind closed doors and the kind that is both required and delivered by taking the Open road.
It means placing the good of the customer ahead of profit (and therefore ahead of the – at least direct – good of the shareholder. Profit should be a consequence. It is a KPI of fulfilling your objective (delivering the customer agenda).
Brands have to re-orient themselves away from mass towards one-to-one relationships in which the individual gets a sense that the brand is working for them, that it has the customer’s interest as its core-purpose.
They must prove themselves not through telling people but by demonstration. They have to win trust one customer at a time, one experience at a time and learn to value the outputs of those experiences.
David Cushman is the author of The 10 Principles of Open Business – Building Success in Today’s Open Economy published by Palgrave-Macmillan in January 2014.