Marginal Column

Jerry Michalski

is an independent corporate consultant. Among his many interests, he analyzes the effects of increasing digital networking on relationships between vendors and customers.

Photo: Jerry Michalski

“Make your development process public!”

Customer relations in the B2B sector, according to Jerry Michalski, are based on an outdated concept of the secretive business environment. This independent corporate consultant instead places faith in the positive effects of transparency when dealing with customers, in order to further the innovation process.

 

Nowadays everybody is talking about “customer proximity”. But what’s the meaning of this term from your point of view?

It’s funny. In the U.S. since the early days of the Internet there was the idea of being customer centric. Unfortunately most companies mean by that, that the customer is in the crosshairs of a gunsight. The customer is a target of their marketing machine to spend more. Customer relationship management is really about managing information for the benefit of the vendor not the customer so much.

If you think about it, the language of marketing and advertising is one of a military campaign: You launch a campaign, send flights of messages against target demographics. You try to reach market penetration. This is how we were raised to do marketing and advertising – but it’s not how to build a relationship. If you want to be trusted, you have to come up in a completely different way. Partly what’s happening is the re-leveling of power relations. Which means that the things that work between humans on a friendly basis are the kind of things that have to be mastered by companies and governments.

What are the characteristics of a successful customer relationship?

We could talk about what makes good service, which is interesting and people are getting better and better at that. But if I don’t feel safe in a relationship I might not buy from you at all. In these days vendor brand loyalty is still strong for some things but diminishing for a lot of other things: Safety has a lot to do with privacy and respecting people.

In B2B the really interesting thing is about design: How do you really start to mingle your insights, your feedback, your design between different participants in a product web or service web? How can you innovate within these boundaries? How can you learn enough about what everyone is doing and trust each other enough to create breakthrough products?

How to get a sense of the actual needs of the client?

What’s happening right at the moment is that people are voicing what they want and what they think in all sorts of media – whether it’s private or it’s public. If you’re adopting those new technologies, you just have to find what you were looking for, listen to it and respond to it. If you haven’t done that, then the question is how you engage in those conversations?

And how can you go deeper than just talking – into co-design-sessions, where you basically create working-relationships and innovate with those who represent the clients and with people with other insights. Can you innovate by creating events or sessions or processes that combine both of you into something productive for all of you? Basically, you should treat clients more like extensions of your company.

Does new media play an important role even in B2B relationships?

Definitely, because everybody’s talking! The wall around companies used to be impenetrable and whatever happened inside companies was successfully kept inside. Now that everybody is using a smartphone, Facebook or LinkedIn a lot of what they do and say is visible outside. So like it or not, people are using new media and that makes it easier to put useful things in front of other people.

You simply have to go back to the basics of how people build trust in a relationship with other people and connect that thought with what is useful for the person you are trying to build a relationship with. And that naturally leads to inventing things or doing things with or for them.

What has changed? Does the client of today have more individual or different needs than some decades ago? How can companies achieve enough flexibility to fulfill these needs?

It depends how far they have gone into the new way of doing business. If companies are stepping into what is happening, the refresh cycle of new product development and how products are developed is shifting dramatically. The sources of innovation and of your ideas on how to offer them are changing. And the ability to filter these things to bring them in is crucial!

So there are many different ways of how to talk to prospective buyers, to design the thing you’re offering them, of how much transparency you offer into your own process, of whether or not you are using open source tools or making your plans open – which then would affect your business model in some ways. These things are cascading around the industry right now.

How can a big company achieve the “human dimension” you’ve postulated?

As I said before, the wall surrounding companies used to be strong and hard to penetrate. In this era we gave the task of communicating to the outside world to the marketing and public relations department and maybe to the customer service department. Now everybody ought to be talking to somebody.

In some cases it’s inexpensive and it’s much more credible for example to talk to the designer than to talk to the marketer. A whole bunch of value is created when you open up and have a lot of people talking about what they know and what’s up. The old way of communication limits the creational value of companies.

How do successful customer relationship and innovative ability correlate?

That’s one of the big areas where relationship can be built: For example hackathons, open spaces and other sorts of events and meetings where people from different companies come together. That’s how innovation is happening these days a lot. In the old school innovation was something the research department did. The new way is to prototype in public.

Everybody is using beta software because that’s the perfect way to perfect your product. If you’re selling somebody an automotive transmission you probably don’t want the beta but if you’re innovating in transmissions you may well want to innovate in public and use inventions that other people are creating. Innovation is happening worldwide in lots of different scales and ways.

But usually for example machine builders are trying to keep their innovations as secret as possible!?

One great example is opensourceecology.org of Marcin Jakubowski, where all the designs for a set of 50 different industrial machines are open source. This is a great source of innovation. What’s more, helping on such a project builds enormous goodwill. Helping people who try to build a more resilient society or doing things with less is a mission. And these mission-kind of questions are good ways to unify with business partners. One way to talk to your business partner is to say ‘We want to sell more bearings’. Another way is to want to help people to have more available local power.

How to make the employees accessible for the client’s perspective, without just paying lip service?

Everybody participating needs to have a felt experience of two different things: One is the possibility that their company won’t be around in a year or two – the experience of fear. And that is dangerous because fear reduces our ability of creativity. The other is to experience the benefits of these new kinds of projects. And one good way is to give employees a little bit of a time budget to donate to that. You need adaptiveness to the ever faster changing markets to the permeability of the outside world to continue to flex the organization to cope with what the world really needs.

What are the best ways to make this a part of personnel development?

One thing that is happening in the U.S. is what is called hacker spaces – and I’m aiming at industrial companies here. A formal one is for example TechShop (www.techshop.ws). They have a facility with machine tools, software and teachers where you can learn to make things and collaborate with other people and invent things. For people who do not want to build, there are similar spaces to learn how to deal with social media, to run events like open space.

All of these are practices that companies can adopt because a lot of business will go to open spaces. And a really interesting question is how to become the preferred supplier of industrial goods to the open enterprises, to innovators in the Brazilian favelas, to unexpected innovators who are not in your normal food chain right now.

Doesn’t that has to start at the top? Otherwise hierarchy and process could overrule.

This can also be done as an insurgency with a small group of people in a company. They try something and then other people will do it too because it’s good. It doesn’t have to start with the CEO but it helps if it does. If the company and the country culture are ones of centralization and control these are very strong forces.

But if you look at the Open Street Map project: Germany is the most mapped country in the world. That’s an experience of open source – and it was done by Germans. Sometimes you have to choose projects that are not directly in the critical line. Some years ago a paper plant started running machines with new controls nobody was willing to use. So they put a weather station on the roof of the building. So people used the keyboard just to see how the weather was like. It had nothing to do with running the paper plant but it broke the ice and people got familiar with the new workstations. So it’s always useful to implement something that’s not important but fun.