The Value of Collaboration #5: Using purposeful communities to optimize spend

Finding & fixing holes at work In some cases, collective efficiency is about specific kinds of cost reductions - printing, mobile bills, service costs. But sometimes it can be about a general technique you can apply to a wide array of costs.

This post describes how purposeful communities can make improvements that could easily be in the 10s of millions.

The problem

As a firm gets larger, there’s usually more distance between the people who pay for things and the people who use those things. That’s certainly true for personal consumption (printing, etc) and previous posts described ways to reduce that kind of spend.

But the problem is even bigger when it relates to consumption at the team level or at the departmental or firm level. The cost of that server or database license, for example, is something that individuals don’t think about or have much control over. They just order it to get their job done. (The government mechanic doesn’t want to spend extra for a hammer, but he has no idea how to procure a cheaper one.)

To control costs, firms typically focus on policies, contracts, governance processes, and vendor management groups. While these approaches can be useful, they typically don’t leverage the knowledge of people actually using the products and services. Now, it’s easier than ever to do that.

The solution

One way to bridge the gap between a firm's consumers and payers is to organize communities around specific kinds of work. Then, you influence people in the communities to look for ways they can eliminate waste or otherwise get more value for money the firm spends related to the work they do.

Two specific kinds of communities include role-based communities of practice and vendor communities. For example, an IT department would have communities organized around specific roles such as developers, testers, and project managers. As a natural part of doing the work - e.g., posting questions, sharing lessons - community members can expose process deficiencies and work out better ways of optimizing the use of shared resources.

Another way to organize communities would be to connect people who use the products or services of a particular vendor. Far too often, it’s the vendor who knows more about how their products are being used inside the firm and they’re motivated to increase revenue, not reduce costs. So if Oracle, say, is one of your top providers, you’d want to identify and connect your top users of Oracle products and have them actively participate in troubleshooting, shaping standards, and evaluating the need for new products and services.

There's a wide variety of ways communities can find value. (Nick Milton identified “17 value delivery mechanisms for Communities of Practice”, from solving problems to collaborating on purchasing to exchanging equipment to coaching.) You can think of these communities acting as centers of excellence for every role or vendor. Except these aren’t distinct groups, separated from the work and formed by appointment. Instead, they’re made up of people deeply embedded in the work and formed by those with the most to contribute.

What’s it worth?

The benefits will range wildly from the intangible to the incredible. At Shell, for example, their communities of practice helped avoid drilling “dry wells” and saved the company in excess of $100 million.

Examples I’ve seen firsthand include a case in which started with a post in a testing community about the acquisition of expensive software. The subsequent discussion prompted members to form a working group which came up with a better licensing arrangement and saved several million dollars. In other cases, teams avoided spending hundreds of thousands on new equipment because experts in the community solved performance problems shared online.

Like the Shell example, hard dollar savings in a few communities could add up quickly with even a few wins. Large firms can easily spend more than $50 million with major vendors like Oracle, IBM, and HP. And so connecting the experts in your firm who are most familiar with how those vendor offerings are used can make it possible to find your own "dry wells".

In addition to the big wins, we also see many, many small improvements with harder-to-quantify benefits. Things like faster access to expertise by new joiners, shorter problem resolution times, and incremental process improvements.

In one case, for example, a community member posted a simple complaint about poor response times from a 3rd party service provider. The post received 2500 views and comments from dozens of teams sharing their own stories of waste and frustration. That made the problem and its consequences so visible that management announced changes to the vendor engagement.

When management announced the change in the community, their post received over 4000 views and dozens of comments like “thank you for making us more productive”. How much did we save by improving the productivity of dozens of teams and turning their frustration into gratitude?

Why doesn’t everyone do it?

Etienne Wenger, who’s the intellectual father of communities of practice, wrote in Harvard Business Review in 2000 about the 3 reasons why they aren’t more prevalent.

“The first is that although communities of practice have been around for a long time—for centuries, in fact—the term has just recently entered the business vernacular. The second is that only several dozen forward-thinking companies have taken the leap of “installing” or nurturing them. The third reason is that it’s not particularly easy to build and sustain communities of practice or to integrate them with the rest of an organization. The organic, spontaneous, and informal nature of communities of practice makes them resistant to supervision and interference.”

That last reason is the one we’ve struggled with the most. Communities aren’t so much about systems as they’re about people. People need recognition, role models, support, and much more to maintain the structure and vitality found in successful communities. And so we've found it difficult to build and sustain role-based and vendor communities.

But they're worth it.

The Value of Collaboration #4: Reducing the cost of internal communications

How much does your intranet cost? The Intranet

In addition to the core infrastructure, add all the different applications - content management systems, Sharepoint, blogs, wikis, etc. Then add the engineers that customize the tools to make them look like modern websites. Then add the people dedicated to producing the newsletter and e-zines and other corporate content.

How much does all of that cost? You probably have no idea.

It turns out that most large firms can comfortably reduce their total intranet spend by $3 million to $7 million if you effectively use modern social platforms and practices.

The problem

In an era where anyone can cheaply and easily publish their own book, ebook, or blog - where even the best newspaper are cutting costs while citizen journalism is on the rise  - most firms are spending far too much money on tools and specialists dedicated to communications.

If I want a beautiful, mobile-friendly, professional website complete with social features, analytics, and more, I can create one in a few minutes for free. Maybe add a few dollars a year to eliminate ads or select a premium design.

Now try and do that at work. You’ll be pointed to a variety of poorly integrated tools, most of which will require customization to have basic features like comments and customizable pages. And that customization, multiplied by 100s or even 1000s of websites, adds up. (A popular statistic, cited here and here, is that for every dollar a firm spends on Sharepoint licenses, they spend $6 to $9 on customization.)

Worse, there are a lot of people involved in producing and governing content. Traditionally, we’ve relied on dedicated communications professionals tell employees the news of the organization. They’re often gatekeepers, too, deciding whether you’re even allowed to have a presence on the intranet. Now, though, the news spreads much more quickly and cheaply, and Communications departments must either be smaller or change what they do.

The solution

The solution involves replacing traditional intranet tools with a social platform and replacing traditional Comms practices with a greater reliance on employees publishing and sharing information.

A modern social platform makes self-publishing at work as easy as it is at home. They tend to support a wide range of content (sites, documents, video, photos, blogs, discussions). Search works extremely well. And the best ones have social and mobile features as core elements of the platform. In all the benchmarking we’ve done, almost every firm that introduced a modern platform has eliminated old tools and greatly reduced their use of dedicated staff or design firms for customization.

And when it comes to content, you may still need people to craft the latest org announcement or news about quarterly earnings. But, since around 2008, people have increasingly relied on social filters for their news rather than professional curators. It’s the popularity and ease-of-use of social platforms that are the cause of that shift.

When everyone can publish, the information flow in your organization can be more relevant, more real-time, and cheaper than ever before.

What’s it worth?

The reduction of communications costs comes in 3 areas.

Consolidating the intranet: Firms I’ve spoken to have eliminated up to a dozen or more  applications and hundreds of websites. That reduces software licenses, hardware, and engineers who develop and support the tools. In all cases I know of that have pursued an intranet consolidation strategy, the savings exceeded $1 million.

Customization: This is one of the most insidious and often the most poorly-controlled costs because it’s typically found in pockets throughout the firm without any central oversight. Combined, my estimate is that large firms spend between $2 million to $10 million on intranet customization by staff and by 3rd-party design firms. (My own group, for example, once spent over $100,000 customizing Sharepoint to support our communities of practice. I’ve heard of internal sites at some firms costing 5x or even 10x that amount. And a large firm might have 100s of groups doing customization of some kind.)

The era of spending large sums tweaking intranet sites should be over. Firms should slash their customization costs by at least 50% for savings between $1 million to $5 million.

People editing content: Perhaps the most contentious and political category is the number of people producing official content and governing the intranet. Of course, most  Communications departments do far more than this. But a considerable subset of what they do is “focused on the announcement of management conclusions and the packaging of management thinking into messages for mass distribution to the 'troops'".

Adding up all of the work related to this subset could easily equate to 50 people across a large firm. And this should be reduced by at least 20%. Assuming a fully-loaded cost of $100,000 per person, that’s another $1 million in savings.

Why doesn’t everyone do it?

The biggest barriers seem to be control and fear. The people who own their particular tool or website cling to it as part of their value to the firm. And it’s the rare person who actively seeks to reinvent their job while trying to keep it.

But even communications professionals recognize the need for change, as described in this useful post entitled “The Internal Communications Department of the Future” by a former Communications head:

 “No longer can we afford to (only) cascade messages down from the top. Our organizations have become too complex and too slow to rely upon such an antiquated method. We need to be more nimble, transparent, and inclusive."

He then points out that the story can be about more than cutting communications costs. It can be about changing the very work of Communications to make it more useful and meaningful:

"...Even though I advocate a future where everyone is a communicator, communications professionals still have a pivotal role to play: helping others, throughout the organization, to become better communicators, and highlighting the best of employee contributions, while also reinforcing key messages around strategy and values. Such reinforcement aids in prioritization, so that scarce resources are more productive on the right things.”

In addition to saving millions, such a change would be good for the firm and all the people in it.

Please steal this idea! (How a bill at work can save money & save lives)

Saving money while making a difference What if you could do the right thing while also doing good? If you had a way for people at work to save money for their firm while contributing a portion of those savings to a good cause?

We’re working on implementing just such an idea. It’s something every firm can do. And maybe the lessons we’re learning can help your firm realize the benefits faster.

The idea: myBill

The idea is to give every employee a personalized bill of what the firm pays for on their behalf - software, hardware, phone bills, etc. - and make it easy for them to eliminate things they no longer need or want. Then they can direct a portion of the savings (say 5%) to one of the firm’s philanthropic efforts.

We had the idea for myBill almost two years ago and first described the problem in a blog post. Here’s a snippet:

“Most cost management energy is usually spent on the approval process. Once an item’s approved, though - whether it’s hardware, software, market data, or even real estate - it’s inherently difficult to know when something’s no longer required unless the employee leaves.

Also, employees often don’t know what’s being charged on their behalf. And, if they do, they don’t have much incentive to give things back (even if they knew how). So, as people move and re-organize, and as needs changes, the waste adds up.”

The bill would let employees quickly remove things they don’t need and point them to low-cost alternatives for the rest. It might even include analytics comparing their costs to those of other employees. And by connecting the bill to our internal social platform, we’d make it easier to spread the word about the possibilities. “John just saved $112 and is helping provide clean drinking water to those without it.”

The barriers: no funding, no resources, no permission

Although you can quickly see your bills at home, you almost never see one at work. Since different resources are managed by different departments, the data about who uses what is locked up inside many different golden sources. And each resource tends to have its own idiosyncrasies. For example, getting a unit cost for a piece of software might be difficult if the firm has enterprise licenses. You may not save anything if you give up 1 unit but you might save a lot on the next contract if you give up 1000.

Discovering these idiosyncrasies is difficult and time-consuming. And so we had trouble building a credible business case and attracting funding.

It’s also hard to connect the bill to philanthropy. It’s much easier for the corporate social responsibility department to give money to a charity than to tie operational benefits to that same charity. That may have more to do with budgets and org charts than policy. But the lack of a convenient precedent means you’ll have to create new processes from scratch. It may not even be clear what approvals you'll need and from whom.

The lessons: how innovation really happens

For a long time after that original blog post, not much happened. We pitched the idea and people liked it but we never got funding.

Then we worked on it anyway. One person, a former Peace Corps member, was passionate enough about the idea to keep pressing. He found two software developers who generously volunteered their time to build a prototype. And he used the “Lean Startup” method to build enough of a product so he could get feedback and some early results.

The first online bill had all sorts of problems. Data quality issues. A lack of automated processes. No unit costs.

But it was enough that people could see what we were trying to do. And when the first few hundred people reviewed their bill, they could share their results with their online network. So now their connections knew about the project, too. myBill went from being an old blog post to being something a lot more people understood, were talking about, and could become a part of.

The lesson was that we should have built the prototype and got feedback much earlier. If we had the chance to do it again, we’d have done less pitching and done more to make the idea real so we could build a tribe around it, share early results, and get noticed sooner.

Now, finally, some of the people talking about myBill are those with the funding to overcome the barriers and make it real across the firm.

What if...

Every company I know is trying to eliminate waste. What if more of them created their own myBill project and scaled the possibilities?

For example, a 100,000-person firm might spend $10 billion on non-payroll expenses. What if we could trim just 0.5% of those expenses by people seeing their full costs and identifying waste? And contributed 5% of the savings to a good cause?

That could mean $47.5 million for the firm and $2.5 million for others. It could mean tens of thousands of employees being as careful with the firm’s money as they are with their own while providing 100,000 people with clean drinking water for life.

Now what if 10 companies did that? 1000 companies? What if,  by simply nudging employees to eliminate waste, we could save millions of lives and be part of something wonderful?

What if you tried to implement myBill at your firm?

“Collective efficiency” - from possibilities to programs

Over the past few weeks, I’ve been writing about ways to use collaboration platforms to reduce costs at work. More self-serviceLess printing. Lower mobile bills. They're mundane topics but the value of just these 3 solutions is about $23 million to a large firm. These examples, and many more like them, are part of an entire class of cost management possibilities we call “collective efficiency” - solutions that use social tools and practices to help a firm identify and eliminate waste. Other classes of solutions produce revenue - e.g.,  through improved innovation, cross-selling, or lead generation. But costs are tangible and revenues are in the future. If you can reduce costs, you’ll earn credibility and the right to do more business-building work.

To realize the potential of collective efficiency, though, you’ll need the power of grassroots efforts combined with the structure and process of successful programs.

Why we need collective efficiency

The usual way to cut costs is top-down, perhaps through an overall goal that’s apportioned and cascaded throughout each department and sub-department. This works reasonably well in some cases. (Only the real estate division, for example, can decide on what buildings to occupy.)

Yet, there are at least 2 problems with this approach. The first is that it tends to limit cost-cutting to things aligned to organizational boundaries. After all, budgets are allocated to organizations and you can only cut what you own. The second problem is that there are often unintended consequences of cuts aligned by organizational boundaries. The costs you cut in one area may well increase costs somewhere else in the firm.

By enabling individuals across the firm to identify and eliminate waste, collective efficiency solutions complement the top-down methods and open up new ways to realize value.

From possibility to proposal

To come up with ideas for collective efficiency, you don’t need a complicated innovation program. (The first 3 solutions described so far are evidence of that.) You can start by looking at all the different places your firm spends money and, for each one, think “how could connecting people and best practices result in smarter spending?”

Turning the ideas into proposals requires things you’d find in any business proposal: the problem you’re trying to solve, how much could you save, and the resources you need to save it. (For example, your firm’s total printing costs $30 million, you have specific 5 ways to reduce printing by 20%, and you need 1 person and $100k to do it.)

But since it’s a social business effort, you’ll need 2 additional things.

A community structure

Though collective efficiency solutions get their power from individual contributions, they require a structure to drive change in a scalable way.

“...grassroots change movements as diverse as charities, open-source software, and crowd-sourced content actually all [have] well-defined structures.

While the movements appear “natural and spontaneous,” all the successful efforts create specific roles and rules that concentrate responsibility and help with decision-making.

Even in wikipedia, in which anyone can make an edit, there are key roles of administrators, bureaucrats, and stewards, each with clear guidelines on what to do and how to do it.”

The structure for each solution (e.g., increasing self-service) echoes the structures in most successful communities. You’ll need a passionate leader/community manager. You’ll need local champions in different locations. You’ll need people to head up each idea that comprises the solutions. If there are 5 ways, say, to increase self-service, then each is a working group or special interest group with its own set of roles.

Without formal roles you’ll dilute the effort and limits its impact.

An engagement plan

Also akin to communities, you’ll need an engagement plan to attract people to the effort and sustain contribution. That involves finding a way to grab their attention, creating an emotional connection, and enabling people to take action and make themselves part of the tribe.

The best framework we’ve found is from the “The Dragonfly Effect”. It's called the FGET framework (for Focus, Grab Attention, Engage, and Take Action) and we’ve described it in a previous post and applied it in the solution for reducing printing.

Applying this framework will benefit every proposal in your collective efficiency portfolio.

From proposals to programs

Lastly, you’ll need a formal link to the org chart. Why? Because tying the effort explicitly to a spot in the hierarchy transforms the solution from a volunteer effort to one that is recognized by the firm; one that's tracked and reported on and made part of people’s objectives. It changes the effort from a nice-to-have to a must-have.

Here’s an excerpt from a post on the need to “embrace the org chart”:

“This may seem at odds with the spirit of social business efforts. After all, they’re typically associated with a self-organizing, emergent, network-style of getting things done. And so Andrew McAfee, author of “Enterprise 2.0,” tackled the question: “Does or should the network render the hierarchy obsolete?”

His straightforward answer was “No.”

Rather, the new form of management is “a fantastic complement” to the more traditional ways of getting things done. “You don’t have to abandon roles, job titles, and chains of command.” In fact, you need those things to implement the kinds of changes the social business movement is after in the first place.

As Bertand Duperrin also said “enterprise 2.0 is the ally of a hierarchy that wants itself to be agile and efficient.”

Yes, social tools and practices make it possible to connect expertise, coordinate efforts across divisions, and drive behavioral changes in ways that weren’t possible before. And to realize the full value of this at your firm, you’ll need to turn these possibilities into specific business proposals and connect those proposals to the org chart.

That’s how you’ll be able to turn ideas into institutional priorities. That’s how you’ll be able to programmatically implement collective efficiency across the firm and realize its full potential.

The Value of Collaboration #3: Reducing Blackberry costs & mobile phone bills

Remember about 10 years ago when your firm would reimburse you for your Internet connection? That’s over now. We reached a tipping point where so many of us wanted a connection anyway that firms didn’t need to pay for it any longer. Now, a similar shift is underway with mobile phones at work.

By using social tools and practices to accelerate that shift - and to trim mobile bills for corporate mobiles that remain - large firms can save more than $7 million.

The problem

The problem is both the number of phones and the way we use them.

A large firm can have 20,000+ Blackberry devices and 20,000+ monthly mobile bills in addition to the cost of licensing and operating the Blackberry service. Yet, in many countries (US, UK, Germany, Brazil, Russia to name a few.), we already have more mobile phones than people  - more than 6 billion mobile phones globally. Does your firm really need to pay for you to have another one?

Worse, those 20,000 phone bills the firm pays every month, particularly in a global firm, are inevitably higher that what you’d pay at home. Roaming charges and international rates routinely inflate mobile bills simply because people aren’t as careful as they are with their own phone and their own money.

The solution

The main reason everyone originally got a Blackberry in the first place was mobile access to email. Now, though, technologies like Good and MobileIron are making it increasingly common for people to access their corporate email and calendar (and even documents and the intranet) via their personal iPhones, iPads, and other devices.

Unlike Internet access, it won’t be as simple as a change in policy (“In 2013, the firm will no longer pay mobile phone bills.”). Solutions involving personal devices are sometimes intrusive requiring, for example, that individuals let the firm install corporate software on their device, monitor usage at certain times, and wipe all the data on it. And you can’t force everyone to accept that.

That’s why you’ll need other methods to change behaviors.

As we saw in a previous solution aimed at reducing printing across the firm, applying the “Dragonfly Framework” can help raise awareness and nudge people to make different choices. For example:

Pick a clear goal: “Reduce Blackberries by 20% and mobile bills by 10%.”

Make people care about it: “We can save over $7 million! Donating 5% of that can bring clean drinking water to 14,000 people!”

Make it easy for them to change: “The Geniuses will be in the lobby this week to help you set up your iPhone or iPad.”

Give them feedback and stories to keep changing: “Here’s a story from Jane who said iPad access to work “changed her life.” And a moving video taken by our Mumbai office about a nearby village using their new well for the first time.”

You’ll need this kind of campaign to quickly drive meaningful adoption and realize the potential savings.

What’s it worth?

For years I’ve had a Blackberry and an iPhone. And yes, I’ve had the occasional $300+ bill when I travelled because I didn’t make the effort to use local numbers or to use Skype to call home.

Now, though, I have access via my iPad and iPhone and I’m tired of carrying multiple devices. So I gave up my Blackberry, eliminated the extra phone bill, and realized  annual savings to the firm of at least $1500.

Across the firm, even conservative estimates of  the costs get quite large:

20,000 phone bills * $100/month * 12 months = $24 million

20,000 devices * $300 upgraded every 2 years = $3 million

Reducing the number of devices by just 20% yields a savings of $5.4 million. (I don’t count a reduction in the Blackberry service itself as we assume, conservatively, that’s those savings are offset by other mobile infrastructure.)

Now you’re left with 16,000 mobile bills every month:

16,000 * $100/month * 12 months = $19.2 million 

Reducing those bills by 10% (through awareness of the costs, cheaper alternatives, and the benefits) yields another $1.9 million for a total savings of $7.3 million.

Why doesn’t everyone do it?

Re-examining mobile access to the firm is a relatively new source of savings, involving trade-offs for both the firm and the employees. In that face of newness and complexity, change will be slow. People will just stick with what they have and what they know.

But there are more than 7 million reasons to use social tools and practices to accelerate the change.

It’s another mundane example, far from the revolutionary rhetoric about overthrowing management. But it underscores how everywhere you look, everywhere your firms spends money, you can augment policy with greater awareness and behavioral change. You can nudge people to do the right thing both for the firm and for themselves.

The Value of Collaboration #2: Reducing how much your firm prints

Could you pick a more mundane use case than reducing how much people print at your firm? Yet a collaborative effort to do this can be worth a lot of money - more than the cost of your entire social business effort.  In the catalog of solutions we’re compiling, printing is in a class of solutions targeting personal consumption. Printing, mobile phone bills, car service usage, file storage. All of these services tend to be bloated by waste since people typically don’t know how much they cost nor how to access cheaper alternatives.

We’ll examine each of these solutions in separate posts. Just reducing printing by 20%, though, could be worth $6 million to a large firm.

The problem

Although environmental awareness has reduced printing at many firms, we still print too much. And much of what we print is unnecessarily costly.

Without including printing for external clients, a large firm still prints between 500 million and a billion pages a year. For perspective, the World Trade Center in NYC is about 5 million pages high. Now imagine 100 or even 200 World Trade Centers stacked on top of each other stretching 60 miles into the sky. Or, worse, imagine cutting down a forest of 120,000 trees every year.

And we have more control over printing costs than you might think. A complex full-color title slide, for example, can cost well over 50 cents - 50 times more than a less colorful version and 200 times more compared to a simple black and white version.

The solution

There are many ways to reduce printing. Defaulting to black & white and 2-sided printing. Using simpler templates that don’t require as much toner. Using “pull print” technology to avoid those stacks of printouts people never pick up. Accessing docs via iPads instead of printing anything at all.

The hard part is changing behavior. And that’s where the social platform comes in.

Most people don’t know - don’t even think about - how much their personal printing costs and how much it adds up across the firm. The same is true for other personal consumption at work. For all of these campaigns, we’ll use the 4 elements of the “The Dragonfly Effect” framework that I described here:

Focus: Identify a single concrete and measurable goal.

Grab attention: Make someone look. Cut through the noise…with something unexpected, visceral, and visual.

Engage: Create a personal connection, accessing higher emotions through deep empathy, authenticity, and telling a story. Engaging is about empowering an audience enough to want to do something themselves.

Take action: Enable and empower others to take action…move audience members from being customers to becoming team members.”

Applying that to printing might look like this:

Pick a clear goal: “Reduce printing by 20%.”

Make people care about it: “We can save 22,000 trees and $6 million!”

Make it easy for them to change: “Here are 3 great alternatives.”

Give them feedback and stories to keep changing: “You’ve already reduced your printing by 8%. Together we’ve saved 5,200 so far this year.”

Just as “The Dragonfly Effect” relates numerous stories of using social media to drive social change, you’ll be using your firm’s social collaboration platform to drive behavioral changes across the firm.

What’s it worth?

I used to print and file everything - handouts from every meeting I attended, every document I commented on. Now, at work, I can store all those docs on the firm’s collaboration platform and access them via an iPad. That shift has reduced my printing costs to zero.

For those who don’t have this setup, simply changing templates and getting everyone to switch can reduce toner costs by 15%. Setting defaults to double-sided printing can reduce paper consumption by half.

The key is to spread the new behaviors across the firm.

Given all the alternatives, you could realistically cut printing by half within your firm. To realize $6 million in savings, you’d only have to reduce printing by 20%.

Why doesn’t everyone do it?

The main barrier here is that no one is responsible - and everyone is responsible - for printing. You need to find and connect the few technical people who can, for example, change printer defaults globally. And you also need to inform and motivate everyone across the firm to reconsider what they print.

That used to be impossible. Now, though, social tools and practices make solutions like this something every firm can and should implement.

The Value of Collaboration #1: Reducing internal service costs

When it comes to the commercial value of collaboration platforms, there’s still a gap. McKinsey thinks social technologies can unlock a trillion or so of value annually. For a single large firm, social tools and practices could easily be worth $500 million. But these projections are too high-level to help people change anything. Despite the possibilities, many firms simply aren’t realizing the commercial benefits of their collaboration platforms.

I hope to fix that. In a series of posts, I aim to create a solutions catalog of sorts, including:

  • specific problems large firms need to solve
  • how social tools and practices solve them
  • the commercial value of solving them (where value calculations will be based on available research and applied to a hypothetical 100,000-person firm)

The next time an executive asks “Why do I need a collaboration platform?” I want readers to have at least 50 million answers (and ultimately 500 million).

The first solution in the catalog, and the first $10 million in value, are based on reducing internal service costs by increasing self-service.

The problem

At home, when you have a question, you search for the answer. But at work, you call someone or send them an email. (Or, worse, you interrupt several people around you and ask whom to contact. Then you call someone.)

That’s because the knowledge to address your issues is locked up inside different knowledge bases across the firm and there’s no simple way for individual employees to find it.

How big a problem is it? Employees in a large, complex firm can generate 200,000 email and phone queries per month about desktop, mobile, and HR issues alone. And those are just the official requests to help desks. In addition, there's another 200,000 queries per month at least (e.g., for the firm's 1000s of individual applications) that typically get routed to other staff.

Handling all of those 4.8 million activities every year requires a lot of people. A good estimate is $50-80 million for the firm’s cost of internal service. And that doesn't include business opportunity costs or lost productivity for employees.

The solution

By using the online forums of a modern collaboration platform, you reduce this cost by making answers easy to find and easy to trust so users can help themselves. (Here is a good, succinct summary of other benefits in addition to reducing costs.)

This isn't a new idea. Companies have repeatedly shown the value of doing this with their customers. Now, though, you can readily apply the same tools and practices inside your firm.

The solution has 4 parts:

  1. Use the collaboration platform to store answers you already have.
  2. Post all new issues as forums on the platform (and nudge users to post their issues there as well).
  3. Recognize and rewards users who provide feedback or help answer questions.
  4. Assign a curator for every application support team and every help desk who’ll be responsible for content and for interaction with users online (monitoring and responding).

IT and HR teams are already doing most of this this work. They’re just doing it - and doing it less effectively - on their own information islands. By coordinating support efforts around the use of a searchable set of forums, you make a single, universal search box the point of user contact instead of a phone number.

Not all issues lend themselves to self-service. And some, like password resets, require some automation before users can help themselves. So you’ll still need support staff and ticketing and workflow (e.g., to dispatch a technician and track status of an outage). You just won’t need as much.

What’s it worth?

Besides being more convenient, online self-service can easily be 80 to 120 times cheaper than service via phone or email.

Importantly, the feedback and contributions from customers make it so the online knowledge keeps getting better and better - and so even more issues can be handled online. (Even in 2009, there was a compelling business case for creating customer communities, for example. Over time, the numbers just keep getting better.)

My own experience is that a single curator and her community of users can build up a knowledge base of 500-1000 questions in just a few months by working out loud (pushing content onto the collaboration platform as issues come up) . That has translated into support costs plummeting by more than half for certain kinds of applications.

Across both IT and HR, a conservative estimate is that you can move 20% of the support burden to online channels. At the low end of the range for a firm’s annual support costs ($50-80 million), a 20% shift to on-line self-service would save $10 million every year.

Why doesn’t everyone do it?

The biggest barrier isn’t adoption by users. As the Corporate Executive Board put it, it’s one of the rare cases of “cost savings customers want.” For many simple requests, on-line self-service is simpler and faster and so users actually prefer it.

The biggest barrier is that each department, and very often individual teams, cling to their proprietary knowledge bases. They’ve created systems and processes optimized for tracking activities instead of increasing user satisfaction and the speed of finding answers. (This is particularly true when help desks are outsourced.) And they're loath to change what they do for the greater good.

So you'll need more than a grassroots campaign to implement this solution. To help users help themselves - and realize at least $10 million of value - you’ll need to prescribe the use of the firm’s collaboration platform for all help desks and IT support teams.

7 elements of an enterprise collaboration strategy

I used to talk more about strategy. I used to think of it as high-level, important work while I saw “tactical” work and “implementation details” as somehow beneath me.

As Bugs Bunny used to say: “What a maroon.

After creating many shelved strategies, I’ve come to understand the genius of execution and appreciate the people who ship and get things done.

So this “strategy” - 7 basic things you should include in your company’s collaboration program - is meant as a simple starting point. With these in place, you’ll be much more likely to succeed in the real work: changing what people do every day.

Commercial value

Generating real, measurable value should be at the heart of your collaboration program. Not just the ROI acronym but a set of specific problems you solve, each with a specific way to measure value.

Sometimes you’ll be able to measure hard dollars. Sometimes you’ll need to do analysis on a few specific cases and extrapolate from there. In all cases, it’s best to use an independent group in your firm to keep score.

The credible accounting of commercial value is what will sustain corporate commitment through the vicissitudes of business. And a firm of 100,000+ should aim to generate 100s of millions of value.

A Center of Excellence

You’ll need a small central team to help divisions across your company effectively use social tools and practices. Without a core group that has deep expertise, you’ll just be unleashing new concepts on people who won’t know how to apply them.

They'll act more as hands-on management consultants than IT or communications people,  engaging divisions across your firm to implement change.

Individual benefits

Just as you’ll need commercial value to sustain corporate commitment, you’ll need to focus on personal value - a clear answer to “What’s in it for me?” - to sustain individual commitment.

Here are 3 examples of ways to ensure people feel your effort is relevant for them:

  1. Systematic recognition: use all the communications channels at your disposal - from manager emails to internal comms to community sites - to recognize people when they contribute
  2. Better access to opportunities: draw clear links between collaborative behaviors, reputation, and internal mobility.
  3. Convenience: include ways to improve basic employee processes - from searching the group directory to getting approvals to reporting a problem - so they see the collaboration program as making their job easier.

Community managers

Perhaps the biggest problem with collaboration efforts - the reason it’s so difficult to create a successful program or even to copy one - is that they are highly dependent on people.

More than good processes and tools, a few handfuls of passionate, knowledgable, capable, social people are critical to building communities at work and driving change.

While it’s hard to find, train, and retain those people, there are more and more resources to help you do it.

Management engagement

There’s a limit to what grassroots efforts can accomplish (“The Grass Ceiling”). While part of your goal may be to work around the hierarchy, you’ll still need the hierarchy to do certain things like change policies, allocate resources, or sign contracts.

Beyond having a sponsor, an example of a particularly useful management structure is a collaboration board at the divisional level. These groups can set priorities, assign people in the line to work on them, and define measures for work in their division.

This kind of management engagement is what turns good ideas into organizational objectives and measures that cascade through the org chart. That drives adoption from within the line instead of just from the sponsor or the small central team.

A network of advocates

The only way to scale the efforts of the core team while keeping costs low is to build a network of people who are passionate about the effort and willing to contribute. Just as opensource projects have volunteers contributing in all sorts of ways, your program will also need toolsmiths, marketers, connectors, and other help.

Identifying those needs; making it easy for people to contribute; connecting and recognizing them. These are all parts of an advocacy program that will be key to reaching employees of all kinds in every location and every division.

A platform

Yes, collaboration programs are about much more than the technology. But IT matters. If the collaboration platform is too difficult to use, or not well-integrated, then most people won’t bother.

So choose wisely. But know that the other 6 elements of your strategy are all more difficult and important than the platform.

The most important part

The most important part is the doing and the learning. The best way to implement social tools and practices is a simple, low-cost, iterative approach described by Eric Ries in “Lean Startup” and summarized in a recent post:

As we try to change the way we work, vision and strategy are still important. They’re just not enough.

“Only 5 percent of entrepreneurship is the big idea, the business model, the whiteboard strategizing, and the splitting of the spoils. The other 95 percent is the gritty work that is measured by innovation accounting; product prioritization decisions; deciding which customers to target or listen to, and having the courage to subject a grand visions to constant testing and feedback.”

As we try to understand which problems to solve, which customers to work with, which incentives to use, we can embrace the fact that we don’t know what will be effective.

And then we can get to work, using the Lean Startup approach to turn uncertainty into a set of quick, inexpensive experiments that can guide our learning and help us make the difference we know we can make.

What’s it worth?

If social tools and practices can fundamentally change how we work, how much is that worth? As a starting point, I estimate the top 4 US banks alone can use social business efforts to realize an extra $5 billion of value.

At least.

Things to focus on

Sameer Patel is a noted social business consultant (now at SAP) who writes about accelerating business performance using social software. In a recent post, he pointed out that much of his audience is still asking the wrong questions.

“...we’re still looking at things such as “Encourage Sharing”, “Enable Action”, “Knowledge Capture” and “Empowerment” as end value points via social business...If practitioners can’t draw connectors between strategic and tactical objectives and how social networks facilitate execution, end users and executives won’t experience the needed aha moment.”

Focusing on people is important. But to be relevant to businesses, we better also focus on eliminating waste and increasing revenue opportunities.

Where to look

At large firms, in particular, controlling expenses is always difficult. The larger the firm, the harder it is to know who does what and who spends what. The costs - and the waste - add up quickly.

In just the top 4 US banks, for example, there are over 1 million employees and over $287 billion in costs.

Employees

 Costs
Bank of America

285,000

$90 billion
JP Morgan Chase

260,000

$81 billion
Wells Fargo

264,000

$65 billion
Citigroup

266,000

$51 billion

Not all costs can be reduced using social tools and practices. (Legal costs, for example.) But, in looking to improve efficiency, a good place to look is in the support areas - large divisions that cost a lot but don’t bring in revenue. A good rule of thumb is that about 1/3 of the people and 1/6 of the costs are for 3 such functions - IT, Operations, and Finance.

Just that slice of these firms costs $47 billion.

A good match for social business

Drilling further into that number, a firm like Bank of America might have 50,000 people in IT alone. (In contrast, Facebook is worth almost as much as all of BofA yet employs only 3,000 people.)

What are those IT people doing? They’re not writing software. Largely, they’re moving information around. They’re coordinating work among multiple teams and functions. They’re supporting systems and trouble-shooting problems. They’re overseeing the use of expensive hardware, software, and market data.

And those are terrific areas to apply social tools and practices.

Social business efforts are ideal for connecting people across locations and across teams to solve problems more quickly, reduce cycle times, reduce service calls, optimize the use of resources, and a wide range of other use cases.

These banks have all tried the traditional, centralized approaches to cost-cutting - offshoring, vendor management, bonus reductions - with some good results.

But the waste is too insidious, too pervasive, to just be managed centrally. And the only way to drive out the waste in that $47 billion of support costs for these 4 banks (and in the overall $287 billion of expense) is to enable much more distributed approaches.

  • Can the 4 banks improve the spread of best practices to reduce their computing costs of $12+ billion by more than 8%?
  • Can they reduce the time associated with chasing information to increase productivity of the 300,000 support people by more than 5%?
  • Can they crowdsource the quality of who’s using what (and how) to reduce overall expenses - not just cut but optimize - by an extra 5%?

Yes, yes, and yes. It may not necessarily be $5 billion in savings. It could be more.

How to generate more revenue

It’s important to focus on costs because those are the hard dollars. Still, a lot of revenue flows through banks. The 4 big banks generated revenues of well over $300 billion.

How much more could they generate using social tools and practices?

Morten Hansen writes about one aspect of this answer - cross-selling - in his excellent book, “Collaboration.”

“Wells Fargo is able to collaborate internally across its eighty-four businesses to present “one Wells Fargo” to customers, who in turn buy more products. This collaboration contributes to profitable growth.”

Social tools and practices are ideal for exactly this kind of objective - connecting people, products, and ideas across the firm to deliver “one Bank.”

The Wells Fargo CEO knew that “The cost of selling a product to an existing customer is only about 10 percent of selling the same product to a new customer.” And, with a focus on cross-selling during the period from 1997-2007, Wells Fargo doubled their sales-per-customer.

Importantly, that number was twice what Bank of America sold per customer in 2007. And the profits-per-customer was also double. (Hansen includes excellent data in the endnotes of “Collaboration” to back up these numbers.)

With well over 100 million customers, think of how much more revenue the 4 banks could generate. Now, add that to the cost savings above and my estimate of $5 billion of extra value looks conservative.

Think big

In the past year, I’ve been guilty of aiming too low. Of trying to save, say, $10 million so I could have a positive ROI. That’s nowhere close to good enough.

We’re in the middle of a megatrend. And now is time to go after the big commercial benefits.

As Sameer writes,

“The first innings of social in the enterprise is over. Those organizations that like to experiment have done so...But there’s massive untapped opportunity out there to revise the value proposition...Until then...executives will treat “social business” as another Mickey Mouse program until they see how it matters to revenue increase, cost reduction and risk mitigation.”

For the social business movement to be sustainable and relevant for enterprises, then we have to focus on achieving measurable commercial benefits.

To help the people working in our large enterprises, we have to go beyond just connecting them. We have to make our enterprises much more efficient and effective.

The joy - and commercial value - of social learning

How do we get better at what we do? Hundreds of years ago, craftsmen taught other craftsmen. There were guilds and apprenticeships - a community and a structure based on the craft. That helped people to develop their skills and become experts.

But today, how do private bankers become better private bankers? Or client service reps become better reps? Or IT developers become better developers?

We’ve lost touch with the simple idea of social learning. In our overly mechanical view of the firm, we’ve made learning a department.

Today, all the knowledge workers in our firms - “our most important asset” - get a standard orientation and some courses from a catalog. Then they’re largely set adrift. “If you have any questions, ask your manager.”

There’s a better way.

Communities of Practice

Books by Etienne Wenger inspired us to implement communities of practice at our firm. (If you want to learn how to build, grow, and sustain such communities, read this. If you want more about the theory of social learning, including a beautifully-written, in-depth example, read this.)

We started by creating role-based communities - people who do similar work organized to learn and measurably improve how they perform that work. And we slowly figured out how to balance structure, incentives, and other factors so both the members and the firm got value.

These communities, now with thousands of members, are becoming a standard way to learn across more and more of the firm.

But we have a long way to go before we master the art of community, and we needed help.

2 days with Etienne Wenger + Bev Trayner

At a conference last year, I talked with community strategist Lauren Klein who recommended I work with Etienne and Bev. That led to a 2-day workshop in London this past week.

I was expecting an academic discourse on social learning and maybe a few high-level ideas. But we got so much more.

After they reviewed everything we’d done and hoped to do, Etienne and Bev worked closely with our community managers, gave us dozens of specific adjustments to make, and slogged through detailed planning sessions with our entire team.

In a few days, we had a multi-year plan that will help us broaden what we do while accelerating how we realize the benefits.

The commercial value of social learning

Throughout the workshop, we spent a lot of time on how to measure the value of our communities. We know the individual members benefit by learning. And by shaping their reputation in a public way that can unlock access to opportunities.

That's important. But it’s measurable commercial value for the firm that's the key to making these communities sustainable in an enterprise.

Etienne told a story about the “blue book” at Shell - a systematic way of collecting value stories. In one area, the thing everyone wanted to avoid was drilling a well that didn’t produce oil. A dry well could cost the firm $20 million. Their systematic review showed that, even with very conservative accounting, Shell's communities avoided 6 dry wells each year.

$120 million saved by taking a social approach to learning. Now that’s value.

What’s your “dry well”?

The very next day, I spoke to some investment bankers. After giving them my elevator pitch about our collaboration platform, we talked mostly about how client service teams could be more effective.

“Great.” I said. “But what’s the value of that?”

There was an awkward pause.

Then I told them the Shell story. “What’s your dry well”? I asked.

“Oh,” he said, as if the answer was obvious. “It’s cross-selling.”

Of course. For decades, large financial firms have tried to connect their people and products so they could add more value for existing clients. Most firms already have systems to track such opportunities, usually involving a virtual currency and some specialist roles. But they all know there’s much more they can do.

Now, armed with insights about social learning and communities, we think we can readily discover more opportunities. In just a few minutes talking with the bankers, we came up with 4 new ideas we want to pursue.

How much is it worth?

Etienne and Bev are such smart, lovely people, that we started a friendship as well as a plan to work together more, including participating in their fantastic retreats in California.

They taught us how to improve and extend our communities of practice. And they taught us how we could apply their social learning concepts more broadly, giving us an extremely valuable new lens to look at old problems like cross-selling.

How many more deals will we do? How much more value will a social approach to learning realize for our customers and our firm?

We’re going to find out.