24 employees of France Telecom, the third largest telecom company in Europe, have committed suicide since February 2008. The last person to die was a 51 year old employee who jumped today from a bridge in the Alps region. Many victims, including the last one, have pointed to the despair brought about by the constant restructuring of the company resulting from its transition from public service, government enterprise to publicly-listed, for-profit entity. This has brought calls from the unions for the resignation of Didier Lombard, France Telecom’s CEO and has generated passionate comments from many politicians, including the country’s President Nicolas Sarkozy.
It is at best adventurous to offer a point of view on as delicate a topic as the death of a large number of people belonging to the same firm. But as a “foreigner” spending a lot of time dealing with transformational issues impacting large French organizations, let me point out a few differences in how change is handled in France compared to the rest of the world (and particularly with the US, where I reside).
French managers are cartesian and technical, sometimes technocratic, when it comes to matters of work. Their schooling is in analytical optimization and process design. Middle managers tend to emulate the thinking process of their senior leaders, who are quintessentially left-brained, shaped by their schooling at the leading engineering and administrative schools of the country (Polytechnique, Ecole Nationale d’Administration or ENA). Leadership myths are about the brilliance of senior leaders asking difficult questions about a particular number in the middle of a giant spreadsheet and destroying a presenter’s credibility by pushing him to recognize he cannot explain how this particular number was arrived at. I was for example asked a week ago by a senior leader running the distribution arm of a large French electronics company why the employee utilization curve “starts behaving asymptotically when approaching infinity” , when the real purpose of the discussion should have been to discuss why the customers’ and the employees’ experience inside the stores of this company were so abysmal. Maybe French managers are indeed guilty of asking the question: “we know it works in practice, but does it work in theory?”
Organizations in most other countries have developed a behavioral or change management view of business, which supplements the analytical approach. Co-creation is arguably the most advanced form of this human-centric view of corporate transformation, but most firms that have had to restructure in the last 20 years have done so using some form of change management process, paying great attention to the human dislocation that change inevitably produces and involving people in the design of the new order. Strangely, France has sat out this major development in business thinking near completely. When I suggest to my French clients some kind of involvement of the people being changed, I frequently find my suggested approach characterized as “American” or ”psy” – which means I’m a shrink masquerading as a professor or consultant. “But we need short-term results”, I’m often told, implying that involving people is a massive detour away from the true objective. I even had to learn a new word in my mother tongue: “angélisme”. When applied to change, “angélisme” suggests that I view employees as angel-like creatures willing to participate in the transformation of their own work, rather than as the tough birds requiring “reclassement” that they are.
I unfortunately cannot offer a prescription for how to stop suicides at France Telecom. But maybe watching what other countries have done in change management over the last twenty years – maybe even including the reputedly ultra-capitalistic United States — might help.
Executive education is hardly relevant to business. This is why it is always one of the first items to get cancelled in tough times, as has been the case over the last twelve months. In most organizations, executive education is not viewed by C-level executives as a transformative force for their organization. Unable to link to the strategic agenda, many senior HR people console themselves by hob-nobbing with star professors and select over-priced programs where canned teaching is provided to a small number of manager students as reward and entertainment, in exchange for cash to the school and supplementary income to its professors. From the business schools standpoint, it is a brochure-mailing and call center-selling machine that tries to put “buns on seats” on an industrial scale for hard-to-sell programs, while trying to keep professors sufficiently motivated to accept the distraction these programs represent to their research agenda.
O.K., I’ll admit this is a bit of a cynical view. But it comes from dejected love. I view executive education – “exec ed” as it is affectionately referred to in the trade – as a giant missed opportunity. Before I die, I’d like to see at least one major corporation link up with one major business school and reinvent executive education as it ought to be. So what is this “ought to be” model?
Exec ed ought to be a series of programs where the solution to vexing business issues is co-created between company managers and leading business academics. I dream of executive education programs that would be co-designed and co-taught between a few business school professors and a large number of managers in the company. These programs would not be canned modules taught by business school professors and organized along the traditional disciplines of marketing, finance, operations or leadership, with passive audiences soaking up knowledge.
These programs would bring together particular issues of interest to many people inside the company – say, how to reduce cost in the cabinet-making division of a large manufacturer of household products – with a particular set of internal company resources that could contribute to solving that issue – for example, people in the sourcing department, in manufacturing, in marketing or in legal, whether part of the cabinet-making division or not. These “new teachers” would comprise managers of the company with insights on the issue and some ability to teach what they’ve learned over the years. They would be supported by, say, one or two business school professors in design and manufacturing, who would share a few relevant frameworks and teach them how to teach.
I dream of a thousand professors creeping out of the company woodwork and becoming the transformational force of the organization. We need to inject massive leverage in exec ed. One of the main limits of executive education today is its very high cost per trained manager – in theory, managers attending exec ed programs are supposed to share their newly acquired knowledge with other people at the company, but in practice, this never happens because we do not provide them with a convenient way to cascade their learning. There ought to be tens, if not hundreds of trained managers for every intervention of business school professors, or else the exec ed market will remain what it is today, i.e., an overpriced perk for a few people the organization wants to recognize.
Creating this open market of seekers of business solutions and internal business teachers would require first setting up a process to surface the issues the company faces, and a second one to “smoke out” the would-be professors of the organization with relevant knowledge. This could initially be done through live meetings, evolving over time into some kind of electronic platform – an eBay-like system where solution seekers and would-be professors could continuously frame the issues and the available solutions to tackle them.
A few programs on either the corporate or the business schools side have made some progress in this general direction. General Electric, in the tradition of its Work-Out program, continues to bring together internal managers and executive education resources from the outside to solve specific issues. The Ross Business School at the University of Michigan is also making a commitment to co-creation in some of its classes (full disclosure: I teach in the executive education program at Ross). But by and large, the pace of change in executive education remains pathetically slow.
Everybody would win in the co-created system. Exec ed, if provided on this scale, would catch the attention of C-level executives. Senior HR people would naturally find their place at the strategic table if they became brokers between owners of business issues and capable providers of resources to solve them. Executive education managers at major business schools would find it easier to sell large-scale, recurring programs and would avoid being priced down to smithereens by corporate purchasing departments. Professors willing to submit themselves to the harsh test of business reality would become more relevant than they are today. Managers who attend those programs would be able to use what they have learned in-day-to-day life, not to mention the fact that some of them might receive personal gratification by teaching in partnership with a major business school.
As for me, I could at long last die happy, knowing that teaching has finally found its legitimate place in the business world.
The market research profession offers a variety of reactions to co-creation. At the negative extreme of the spectrum, some market research professionals reduce co-creation to a customer workshop technique close to ethnographic, observation-based research. Damning co-creation with faint praise, they’ll offer comments such as: “We’re all for co-creation; it’s like prose and we’ve been doing it for years.” We might call this the “defensive expert” attitude. Because the training of most market research people involves an expert paradigm – the PhD density can be quite high in the market research functions of large firms — it is hard for them to let go of the idea that they must “own” the science of market research.
At the opposite, positive extreme, co-creation is rapidly gaining ground inside the market research profession. In the early days of co-creation, say five or six years ago, market research departments were never sponsors of co-creation initiatives inside organizations. In the last year or so, though, some powerful agents of corporate change have emerged in market research departments. So how do these aficionados of co-creation describe the role of co-creation in market research? (By definition, co-creation is wider than customer market research, in that it also involves an economic point of view on the cost of interactions, or applies to other interactions than the interaction with customers, but we will limit ourselves in this blog entry to customer market research). These early adopters of co-creation usually point to four areas of difference.
The first difference has to do with who is targeted in the research. A co-creation workshop focuses on the interactions between at least two (and often more) populations. You cannot co-create by having in attendance, say, only the customers or prospects of a bank– which, by the way, is exactly what a traditional focus group does. Like for tango, it takes two to co-create. A bank co-creation workshop will have at least bank advisors and customers, possibly also call center agents who speak on the phone with customers. Participants will not be random customers with random advisors and random call center agents. They will be people who deal with each other in day-to-day live, i.e., real people who have interactions with each other. In other words, we want twosomes (or threesomes, foursomes, etc.) and want to start from their existing interactions, rather than proceed from an intellectualization of their future experience.
The second difference deals with how attendees participate in the workshop. The philosophy of traditional market research is to be as protective as possible of the customer’s natural habitat, “so as not to bias the answers”. This is where the one-way mirror concept comes from, as well as anonymous surveys and hidden camera filming. The basic assumption of traditional research is that experts should design those interventions, manage them to minimize the dangers of intrusion, and generate the insights which will then be communicated in distilled form to business users who will (hopefully) act upon them (some business people, usually quite junior, may attend the session behind the one-way mirror, or an occasional executive may be invited, but both are instructed not to say anything).
In co-creation workshops, we want to have as many company participants as customers, and we want them to be actively involved. The idea in co-creation is to shatter the one-way mirror. We don’t want company employees to be flies on the wall. We want them engaging customers all over the room. Co-creation involves having two parties share their experience and come up with new ideas on how to improve their respective experience. The experience of the bank adviser is as important as the experience of the customer, and customers can contribute as much to the bank adviser’s experience – once it is explained to them – as the adviser can contribute to the customer’s. For example, customers can do more than generate views on their own experience. They will for example routinely offer insights on how bank advisors could earn more commissions with their help, once they understand the bank’s performance measurement system. In fact, a significant portion of co-creation workshops involves sharing the inner workings of the company, a process called “making the company into a glass house”, to invite customers to imagine new experiences for themselves. As one can intuitively understand and mathematically prove, the quality of experience is deeply correlated between the two populations, hence the need to work on both simultaneously.
The third difference is one of analytical vs. analytical/emotional philosophy of change. The paradigm of traditional market research is an analytical one. Insights are meant to be powerful new views of the customer experience coming from an observed, documentable, and ideally quantifiable fact. Co-creation also builds a strong analytical case for the ideas identified, but generates a much richer set of new ideas through a deeply intuitive, emotional territory. The passion for a new customer experience comes from the excitement of one or two company executives participating actively in a new dialogue with customers. It originates from the sheer excitement of company managers being asked to “make up new stuff on the fly” with customers. Transformational ideas start from the enthusiasm or pain felt by one or more managers connecting with a single customer or company-facing employee. This emotional endorsement of an idea by internal managers is what produces sustainability in co-creation, not the brilliantly articulated PowerPoint presentation that may accompany it. Arguably the most distinctive characteristic of co-creation research is not in how it approaches the customer, but how it engages the internal organization.
The fourth and final difference is one of discrete vs. continuous process. Typical market research involves trying to generate insights through a one-time investigation. Most focus groups, customer surveys, and anthroplogical observations are one-time affairs. As my colleague Venkat Ramaswamy likes to say, “there is no feedback on the feedback”. Some advanced research departments conduct longitudinal studies and use permanent panels of customers, but they often limit themselves to tracking simple satisfaction measures over time, rather than engage customers in co-creation (with some notorious exceptions such as Procter & Gamble’s VocalPoint and Teen Tremor communities, for example). Co-creation is a continuous process where the external customer is made over time into an extension of the company’s staff. Not only does the company learn about customers, but customers learn more and more about the inner workings of the company, enabling them to contribute more. The first co-creation workshops typically do not lead to killer insights – co-creation is as much a journey as a destination, to use the cliché — but the longer the customer remains engaged in the process – usually this involves a series of workshops, followed by the putting in place of an electronic platform of some kind – the deeper the insights and their value.
Of course, all this requires a personal transformation of market research people themselves. Abandoning an expert view of oneself and moving to a “broker of co-creation insights” role is no easy task. Those who embark on the co-creation journey have a unique chance to make market research into a new force inside their organizations. The cards are being dealt as we speak.
Yesterday, I spent the morning with IT people at a large European multinational, and the afternoon with some advertising people at a Top 5 global advertising agency. Both groups were attempting to work with their clients – internal for the IT group, external for the advertising agency. Both were struggling. The IT group had set up a whole intermediate function to connect the nerds from IT with the suits from the business. Of course, this group had credibility with neither side, but was trying very hard to earn it by showing they could elicit specifications from users with exquisite precision. The word “specs” is a tip-off that co-creation will be an uphill battle.
Co-creation is getting other people to do the work and love you for it. While most people think of co-creation as a way to innovate and change the competitive rules, it is also a way of cutting cost. Why is Apple so profitable? Among other reasons because it gets its customers to market to each other. If my friends sell me on the latest Black Eyed Peas release by sharing their play list with me on iTunes, Apple doesn’t have to spend marketing dollars to promote it to me. And by the way, my friends love selling me on this new release because it allows them to show how far ahead of me they are in their understanding of latest trends in rock music. Why is IBM able to reduce its R&D cost? By setting up “collaboratories” where its partners not only bring their expertise in specific domains, but also underwrite some of the cost of that research. Not only do these partners do what would have been IBM’s work in the past, but they also see unique value in engaging IBM in a proprietary development from which they will benefit.
Many companies are in retrenchment mode in this down-cycle. In their renewed attention to cost, they are reverting to the quality and re-engineering paradigm of the last century, attempting to take cost out by streamlining business processes, shortening cycle times, or implementing enterprise resourse planning software packages. While this approach is helpful to create a performance baseline, the traditional efficiency reserves in most organizations have been tapped out. Most of these companies will die completely healed.
A more fruitful avenue is co-creation. In general, organizations bite off more than they can chew. They think of themselves as having to control and optimize a wider set of one-sided processes than is necessary. They want to single-handedly deliver predictable outputs from those processes using only company resources, failing to recognize that people at the receiving end of those processes no longer want to be passive, but want to engage in the design of the process and the co-creation of their experience. And they’re willing to do the work required to get there, therefore allowing companies to externalize some of that cost. The cost saving opportunity lies in letting go.
The two areas best known for co-creation are at the two extremes of the value chain: in customer-facing processes (like Apple) and in the product or service development area (like IBM). We routinely see companies able to cut their marketing, advertising, sales, or customer service costs by 30% or more by involving customers in the design and delivery of those processes. We witness the same order-of-magnitude improvement when companies engage third-parties in their product and service development processes.
Ultimately, though, the greatest gain lies in applying the principles of co-creation inside the company. Individual functions inside a company suffer from the same evil as the company as a whole. They try to do too much on their own, attempting to create value by defining themselves as “process owners” responsible for delivering a repeated and predictable output to their “process customers,” typically another function in the firm. Whenever sourcing views manufacturing as its client rather than as a co-creation partner, it inevitably generates too much cost for itself and for manufacturing, and destroys some experience value for both. The same is true when an actuary in an insurance company views marketing as its client, when a chemist formulates a product “for” marketing, or when the Human Resources department views the management team as its client for coaching services. Most cost to be “engineered out” lies at the intersection between company functions.
Eliminating this cost requires setting up platforms that engage both parties in a dialogue where the processes on both sides are made transparent, enabling a new dialogue between them and leading to the development of new experiences beneficial to both parties at a fraction of the cost. Unlike in the old re-engineering and quality paradigm, these platforms do not attempt to create a deterministic process that optimizes the flow of goods and information between functions based on some perceived need. Instead, they enable faster, more contextual decisions that dramatically reduce cost and improve cycle time by tapping creativity on both sides in continuous fashion. These platforms sometimes require some form of information technology investment, but they often involve a simple reconfiguration of basic day-to-day interactions between people.
In that sense, co-creation is the new frontier of productivity.
It started close to home. My friend David Norton, of Balanced Scorecard fame, came to see us as soon as he heard in the morning that two of our guys were in the first plane that crashed on the Towers. Several times during the day, he visited our conference room, as we were trying to find out information from the American Airlines emergency call center and relay it to the two wives of our colleagues. Dave is not the exuberant type, but seeing him there provided a strongly reassuring presence. I particularly remember the deeply egalitarian nature of human suffering, which brought everybody together at that moment, from simple front-desk people to world-class scholars. Toward 7 pm, American Airlines told us there was no hope left. No more need to look stoic and resourceful. We all broke down and cried.
While the emotional burden felt heavy, it was nothing compared to what the families of the victims were going through. I remember this time as one of extraordinary clarity of purpose. My role was not to show compassion, but to provide support: help the widows and their children financially, provide support mechanisms for the surviving employees of the firm, and figure out how to survive economically as a firm in spite of the human losses. Undoubtedly to make me feel better, people undeservedly kept praising me for my focus in managing our little ship through the storm. But what else is there to managing a ship in a storm than try to survive it?
We discovered we had famous friends. The widow of one of the victims sang for the Tanglewood Festival Chorus, chorus of the Boston Symphony Orchestra. The entire group came and sang at the memorial service. Warner Music — the company for whom my two colleagues were working on that fateful day — not only sent superb artists for the service, but gave us another project to make sure our little firm would continue to exist in spite of losing two of its key people. Ted Kennedy — who passed away recently — intervened to allow one of the two victims to be recognized as the father of the child he and his wive were in the process of adopting — the first time in Massachusetts a child was adopted by a deceased father.
We also learned we had a lot of other, regular friends. The downstairs cafeteria in our building had a particularly gruff employee –nicknamed the “soup Nazi” after the Seinfeld episode. When he handed me my food a couple of days after the attack, he had a tear in his eye. The landlord in our building erected two flag posts in memory of our two fallen comrades, one at each end, and both flags still proudly fly today at that building. We received e-mails and cards from friends we never knew, simply because people all over the world were touched by the story of what happened to our little firm. The memory of our two guys still lives at the new firm we have created since then. Two members of our current firm were close to one of the victims, and although we rarely speak about it, we know the memory of our fallen friend binds us powerfully.
So tomorrow, I will not be sad. I will celebrate the community that these two people built for us. Through this community, they still live with us. Co-creation is eternal.