Open innovation - building engagement between governments, companies and citizens

The McKinsley Quarterly has published a very interesting piece on the future of innovation, The next step in open innovation.

This explores the concept that companies - and government departments - have traditionally been 'closed shops' for innovation. All their innovation has occurred internally with few linkages to the work underway at other organisations.

However this is changing as organisations realise that collaborative innovation, across organisations, reduces waste and stimulates new concepts.

Anyone who has ever sat down and written a report on their own has probably experienced this at a personal level. Bouncing ideas off others triggers new directions and leads to new insights.

With the internet, a global participatory environment, we're beginning to see organisations work more co-operatively with their supply chains, with players in other markets, with the public and even with competitors.

McKinsley gives examples such as:

• LEGO - invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable.
• The shirt retailer Threadless sells merchandise online—and now in a physical store, in Chicago—that is designed interactively with the company’s customer base.
• Open-source platforms developed through distributed cocreation, such as the “LAMP” stack (for Linux, Apache, MySQL, and PHP/Perl/Python), have become standard components of the IT infrastructure at many corporations.
• Peugeot invited customers to submit car designs and built and exhibited the winning entry at a car show and integrated it into a PC game.
• The Missha cosmetics brand in South Korea has reached 40% market share on the basis of cocreated cosmetics products.
• Wikipedia has grown to over 9.25 million entries (2.44 million in english) in over 250 languages in under ten years (the English wikipedia alone has over 1 billion words - 25x the size of the next largest English encyclopedia).
  

Why would private organisations wish to co-operate? Because it gives them a competitive edge, as discussed by Harold Rhiengold in his fantastic TED presentation on collaboration.


This isn't purely a private sector development - it is also occurring in the public space. I can think of examples such as New Zealand's collaborative police wiki legislation, or the UK government's mashup competition.


Back to the McKinsley article, one of the points raised is that traditional media and organisational sites are growing in usage at a rate of 20-30% per year.

However sites focused on user-created content are growing at 100%.

The public has demonstrated that it is ready and able to engage organisations in productive discussions - co-developing concepts, products and policy - with suitable incentives.

The article's recommendation is that;

Even the most advanced businesses are just taking the first few steps on a long path toward distributed cocreation. Companies should experiment with this new approach to learn both how to use it successfully and more about its long-term significance. Pioneers may have ideas about opportunities to capture value from distributed cocreation, but fresh ones will appear. To benefit from them, companies should be flexible about all aspects of these experiments.

Where does your department stand?

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The seven deadly sins of social media

For a good summary of how organisations should not use social media, check out The Seven Deadly Sins Of Social Media from DJ Francis.

This approach applies as strongly in the public sector as it does in the private.

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A guide to engaging social media for government communicators

Last week the Social Web Analytics eBook 2008 was released by Phillip Sheldrake of Racepoint Group.

I've been browsing the book for a few days and have found it a very coherent view of the development of the online channel and the approaches now available to communicators to listen, engage, influence and be influenced by their customers, stakeholders and community.

In particular the book focuses on how to locate and monitor the conversations even now going on about your organisation, to more fully understand community views and trends in real time.

It's written at a level where beginners or those experienced with social media will still get value out of it.

I recommend it to any government communicator seeking to make sense of what is going on in the online world.

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Drawing the lines - effectively structuring government online teams

There are many approaches in government - and the private sector - to managing their online channel. The area is still young and as yet I've not seen best practice structures emerge, as has occurred within other areas of organisation management.

In this post I intend to reflect on the different approaches and my own experiences of how well I have seen these work in practice.

I'll then propose the approach that I believe delivers the best outcomes for an organisation and its customers in today's environment.

I welcome all comments reflecting other peoples' experiences and views.

Axes of online team management
When I consider the approaches towards structuring an online area within an organisation, I start from the perspective of thinking about the different activities, products and mandate involved.

Activities
I believe there are six primary activities involved in managing an online presence,

• Marketing (advertising, online engagement, online participation)
  
• Content (writing, editing, publishing, training authors)
  
• Design (standards-based, rich media)
  
• Reporting (analysis, business reporting, technical reporting)
  
• Development (coding)
  
• Infrastructure (network/hardware management)
  

Organisations quite often manage these activities separately - a traditional approach being Infrastructure and Development managed within IT teams, the Marketing and Content functions within Comms and Marketing (or HR) areas, and Design and Reporting sitting in either, depending on the organisation's structure.

Products
There are also often product/service or brand divisions in play,

• Intranet - one or many
• Website - one or many
• Extranet - one or many
• Online campaigns

Some organisations make different business teams responsible for different products, services or brands - which lends itself to each team having responsibility for the website and online campaigns related to the products it manages.

In these cases there is often - but not always - a central IT team looking after back-end activities.

Mandate
Finally there are different levels of mandate for sites within an organisation

• Official sites (endorsed by entire organisation)
  
• Semi-official sites (endorsed by a group, may be known but not endorsed at senior levels)
  
• Unofficial sites (managed by teams and commonly kept under the radar)
  

In organisations with significant network flexibility it becomes easy for individual teams to build their own unofficial sites - particularly for internal team collaboration. I've even seen cases where ares build intranets in Powerpoint or similar tools to avoid the limits of a central IT system.

These may have a level of mandate within the area, or senior managers may turn a blind eye to them so long as they are adding value to the organisation.


Team structuring
Combine these three axes together and what do you get?

Massive variation, blurred lines and confusion - there are literally thousands of ways to organise an online team.

Worse yet, many of these approaches appear to work - they allow an organisation to achieve its underlying objectives through,

• Achieving organisational goals (meeting deadlines, delivering on targets
• Delivering appropriate quality outcomes (products, services, support)
• Managing people (authority structure, accountability and measurement)
• Controlling budgets
• Avoiding litigation and perceptual disasters (spin control)
  

However it can be very hard to judge whether the organisation is getting the best possible outcomes for the resources committed.

A change in structure could result in a better ROI - or a worse one - but how is an organisation to know?


Common structures
Below are some of the structural approaches I've seen in action over the years and my take on how well they perform.

All in one - Technology focus
One of the first models for online channel management to evolve lumped all activities together within an IT function. This commonly occurred because the internet was new and still perceived as a technological artifact rather than as a media channel.

The approach has had mixed success. Where the IT team was leading the business, highly in-tune and integrated with other groups and contained excellent communicators, they could evangelise the medium, work collaboratively and get business stakeholders involved.

Where the IT team was seen as a blocker, divorced from the organisation or had communications difficulties, the approach had limited or no success. IT didn't engage the business effectively and at times became protective of 'their' websites and intranets - even fearful at times that business people would ruin them with marketing-speak and flashy graphics - rather than focusing on pure substance.

I last saw this approach in practice only a few years ago, where an organisation's IT team saw the intranet, because it used a content management system, as a technology tool. They controlled all aspects of the content that could go in it, the promotion and support of the intranet. As a result the intranet had no credibility, barely anyone used it and the organisation found other pathways around this 'blockage'.


All in one - Marketing focus
The other extreme is a situation that became popular around 1998 when the internet became 'hip'. Marketing and Communications teams got online and realised that websites were a communications channel. Where IT teams didn't have the skills or culture to support them, the Marketing groups went outside to commission, and even employ, web developers to build corporate, product and advertising sites.

This resulted in a huge explosion of interest. By nature Marketers are more interested in communication than IT groups, due to the goals of the area and the personality types attracted to it. The internet was popularised and brochureware abounded.

It wasn't all beer and roses however. Standards suffered - leaving some users unable to access certain websites. Also code standards and reliability declined - many people became web developers without much formal coding discipline.


Single-split - Marketing and IT
At around the same time (1998), IT teams who had been working hard to collaborate with business areas had their first major successes - Marketing teams were interested in taking over the website, but wanted IT to take care of the backroom technology tasks.

This is one of the most common splits today - IT takes care of infrastructure and development, while business teams look after content and marketing. Design and reporting are split between the two.

This approach has worked very well in situations where the two groups share common organisational goals and collaborate well.

However in situations where the priorities of the groups differ, it has resulted in power struggles and poor outcomes. These are generally framed in terms of budget disputes or in one group imposing its will on the other, either making changes and releasing sites without the knowledge of the other group, or refusing to take certain actions without extremely senior approvals.

I see this issue occurring quite often today. As a result while the approach does suit the political or cultural bent of some organisations, I don't believe it delivers the best outcome for them.


Double-split - Marketing/HR and IT
Another very common approach is similar to the Single split - but involves a third group such as HR managing content on internally facing sites (intranets) while Marketing focuses on externally focused sites.

This situation often arises as staff communication is not seen as being as critical or as rewarding as customer communication. In many organisations intranets are the poor cousins of the websites - despite being extremely effective tools for equipping staff in their external dealings.

These situations add stress to the relationships between teams as commonly IT is expected to handle the back-end for both the externally and internally focused sites. This increases competition over limited budgets and resources. It also can lead to more political infighting.

At the same time, without extremely tight relationships between the content teams, websites and intranets do not support each other. I've very commonly seen a new promotion on an external website, yet the staff were not informed of it via the intranet. This results in inefficiencies across the process, lowers ROIs and can damage an organisation's image.

So in summary - the teams need to work together closely, but simultaneously need to compete over limited IT resources. I see that as a recipe for disaster in most cases.


Multi-split - Product teams/Marketing/HR and IT
An approach common in organisations with many brands or products is to devolve website and intranet responsibility to different product teams. In the public sector this is like having many school sites, or sites for each set of services offered by an agency.

The approach appears to integrate sites more closely with individual areas, thereby improving the overall quality and timeliness of information. However, unfortunately, not all teams have the same abilities or commitment - so the end result can be greater variation in quality and an inconsistent experience with the organisation as a whole.

This approach can be executed effectively if it has strong governance and technical support; however this hasn't proven to be the case in the public sector at least. At the moment many state governments are cutting their number of websites dramatically and moving to centralised management.


Integrated team
The final approach I'm looking at today is one where the online team becomes its own group, not directly beholden to Marketing, HR or ICT.

This approach is only four or five years old and represents an evolutionary step in online management It reflects the growing importance of the online channel to organisations and the specific disciplines and skill sets required for effective channel management.

In many ways it is similar to the evolution of call centres. As telephones became an important customer engagement channels, call centres were spun out of communications teams into their own structures. This seems to have worked pretty well.

Some key planks for success in this approach are that the Online group must remain in a business area and be managed accordingly - technology is the enabler, but not the aim of the channel. Also the group must maintain strong ties to Marketing and HR areas, which become its key customers. Commonly this group would report to the CMO or equivalent in an organisation.

The most successful Online groups vertically integrate web development together with reporting, content and design. Commonly IT remains responsible for infrastructure and often the marketing team shares responsibility on online marketing.

This vertical integration ensures that the group has the internal integrity to be able to address both marketing and standards-based organisational needs, while simultaneously innovating in the online space.

The most effective online developments require content, design and development to work together and this is harder to achieve in split situations, where IT and content resources are under the control of different management structures.


Evolution of structure
In many cases organisations move between different models over time.

A prime example is the agency I currenlt work for, which began with an all-in-one Marketing model where the website was a Communications initiative (and intranet was embedded in another Department's intranet).

After a period of growth the technical management of the site (together with the web development team) was handed over to ICT, who had also taken over the intranet's backend. Different content teams looked after the website and intranet - a double-split model.

The agency then used a project approach to develop and manage a secure portal, turning the situation into a multi-split model - intranet, website and secure portal all managed by different teams, but with the same ICT back-end.

When I arrived at the agency I proposed changing to a single-split model, with an interim step whereby our public website and intranet would be managed by the same team.

Thus far the organisation has implemented the interim step, taking us back to a double-split model and I expect further evolution to occur.


My pick
I am a strong proponent for the Integrated model - a separate online group with its own resources and budgets.

This is reflective of the importance of online for organisations today and the need to be able to innovate within the channel without being tied to the slower pace of applications development or be an afterthought to other communications channels.

Where this isn't achievable due to geographic, political or cultural reasons, a single-split model is the next best alternative.

This approach reduces the number of stakeholders competing for IT resources, allowing the alignment of priorities and budgets and cross-development for different online properties.

It does require more active engagement and co-operation at senior levels, as IT and Marketing groups must play nice and, where possible, share the same goals. Otherwise funding and prioritisation issues will see resources directed away from the channel towards other initiatives, crippling the organisation's ability to deliver online outcomes.


Your pick
I'm intensely interested in others' views on this topic - on their experiences of online channel management, on the different approaches that work, and on the approach they believe is best.

Which approach - if any - do you believe is best for an organisation?

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Digital influence - Online is the most influential medium

Eyeballs is the primary measure of choice of all mass medias - how many people viewed a television program, listened to a radio station, read a newspaper or magazine, or visited a website.

It's a great measure for the advertising industry as it's relatively easy to quantify and track over time and simple to value.

It's also easy for advertisers. They simply pick a demographic, choose the programs that attract the most eyeballs (and divide by two) and lay down the cash.

When it comes to reporting the process is equally simple - the cash invested divided by the number of reported eyeballs (divided by two) equals your cost per contact, and can then be compared again the number of sales or actions taken to provide a view of the advertising's ROI.

However the basic reasoning is flawed. Eyeballs, even targeted to specific demographics, do not guarantee engagement, influence or effectiveness.

This is where the June 2008 Digital Influence report comes in.

Digital influence
After surveying 5,000 people in England, Germany and France, Fleishman-Hillard Research determined that in terms of influence the internet has double the influence of the second most influential mass medium - television. Radio was third and print trailed far behind.

This was calculated using a combination of the time consumers spend on each medium and the importance attached to each in their daily lives (charts below for UK).


















Major conclusions
The report reached five major conclusions, which I've paraphrased here:

1. Organisations significantly underspend ad dollars on the online channel.
   It's time to rethink the media mix, and not simply rely on advertising agencies to pick the channels. Many ad agencies still do not 'get' the net and, in any case, receive higher margins on other channels.
   Note that I do not entirely agree with this conclusion - I'd like to see advertising measured in terms of reach rather than dollars. Television can be an expensive medium to use and therefore, even if online is your major medium in terms of reach, your TV ads could cost significantly more.
   
   
2. There are different types of online behaviour - marketers must formulate the right approach for maximum effect.
   The report distinguishes 5 different behaviour types, research, communication, commerce, publishing and mobility. People have different goals in mind when engaging in different behaviours and recognition of this should impact on the design and message of advertisements.
   Personally I'd add 'relaxation' and 'networking' as behaviour types as well.
   
   
3. Depending on the involvement level of decisions, people use the internet in different ways.
   Certain decisions are more heavily influenced by online than others - such as travel, consumer IT purchases and political choices, which all tend to involve significant online influence, whereas charitable donations and utility selection choices don't.
   I've not seen a compario
   
   
4. People see the benefits of the internet, but still have strong concerns that need addressing.
   Security, privacy and content quality/accuracy are the top concerns of internet users. These need to be addressed as a baseline in all online engagement.
   
   
5. Different countries/cultures use the internet differently, requiring different approaches. If you're marketing across cultures and nations, be aware that it's not one-size-fits-all. Culture does have a large impact on the style of usage of services such as blogs, wikis and mobile internet - backed up by local access costs and differences in behaviour.

Key learnings
My key learnings out of this study were that:

• Traditional media still work well to create awareness, however online is the most effective in generating an action or change in behaviour
• Internet is still growing in reach and influence, all other mass mediums are shrinking
  
• Print is becoming more niche focused
• The marketing mix needs to be rethought - not in terms of medium, but in terms of goals. If awareness is the goal, the current mix still delivers effective outcomes. If trust and action are the primary goals, online needs a much higher weighting

Last word
To give the report itself the last word...

The Internet today is the most important source of information for millions of consumers and organizational stakeholders, impacting personal and corporate reputations, brand perceptions, product consideration, buying decisions and the management of issues, among other things.

Beyond having a robust Web site that meets the expectations of today’s digitally savvy consumer, all companies need to monitor their presence on the search engines, their Wikipedia entry, and online conversations involving their organization, brand, or issue.

Beyond that, it is becoming increasingly essential for organizations to engage and interact directly with audiences online and through mobile handheld devices.

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