Channel 2.0: “Collaborative Ecosystem Management”

We are in the midst of a dramatic shift in the way business is done.  In most industries, a much more open and collaborative network model is replacing the traditional closed and controlled firm-centric view of the world.   This shift has been well documented by my colleague Don Tapscott in his bestselling book Wikinomics.  Don is the head of nGenera Insights (a Customer Innovations partner).

As this shift takes place, companies must reconsider many of the foundational assumptions about their role in the complex ecosystem of customers, competitors, intermediaries, and other influencers.   While many basic relationship management capabilities are still important, there are two major problems with the traditional approach to  “Channel Management”:

1. The first problem is the “channel” part. In a network view of the world, a channel is an outdated, linear way of viewing the market.  In many ways, it reinforces the notion that you move your products and services forward through the channel to reach end-consumers.  This doesn’t work in the presence of media-savvy and networked consumers.  These next-generation consumers can easily find better deals with more agile providers and, in the process, are more likely to either by-pass intermediaries all together or deal with newer intermediaries (e.g. Amazon, etc…) that consolidate products and services in a way that makes it easier for them to get what they want.
2. The second problem is the “management” part. In a more agile, networked view of the world, channel participants are more difficult to manage or control.  They tend to either have or believe they have more alternatives.  In most cases, they have the all-important relationship with the ulimate consumers who are paying the money.  In addition, they have to deal with a rapidly changing set of consumer demands that change what it takes for them to be successful.  If I’m an insurance agent, retailer, distributor, etc… struggling to keep up with changing consumer demands, preferences, and alternatives, I’ll challenge anything that product providers do that gets in the way of my responding to and serving my customers.

As we move beyond the linear, Channel 1.0 view of the world, companies must begin to more effectively position themselves as part of a collaborative ecosystem.  We call this Channel 2.o model, Collaborative Ecosystem Management.

Channel 1.0:  Traditional Channel Management	Channel 2.0:  Collaborative Ecosystem Management
Linear, feed-forward value delivery system	Complex, shifting network of participants
Static and known list of channel relationships	Evolving and emerging channel participants
Product and service fulfillment model	Demand creators and accelerators
Inflexible channel structures and systems	Adaptive collaboration processes and technology

The new channel model builds on many of the Channel 1.0 capabilities (covered in:  Channel 1.0: Foundational Capabilities for Optimizing B-to-B-to-C Performance) but must express these capabilities in a world that includes a complex, shifting network of participants, an evolving and emerging set of channel partners, and, as a result, must leverage more adaptive collaboration processes and technology.

Example:  The SAP Developer Network (SDN) is an online community for SAP developers. It is a resource and collaboration channel for SAP developers, architects, consultants and integrators. The SDN hosts forums, expert blogs, a technical library, downloads, a code gallery, e-learning catalog, a Wiki and more.  All these support open communication between active members of the community, which includes more than 1,455,000 members.  The SDN has fundamentally transformed the scale and effectiveness of integrated and supporting SAP’s products in a way that continued to fuel the growth of the company.  This allows SAP to maintain a primary focus on evolving their product while managing an enabling network of other participants that can apply the product and fuel their growth.

In general, we’ve learned that moving to a Channel 2.0 model must integrate three dimensions.  This builds on and extends the basic Channel 1.0 Capabilities, as well as, the Consumer-Back Approach that were introduced in Channel 1.0: Foundational Capabilities for Optimizing B-to-B-to-C Performance.  The three dimensions that must be integrated are:

1. Consumer-Back Experience Design. Creating a platform for integrating complementary providers and partners in order to provide a seamless end-to-end consumer experience around goals that are important to consumers.
2. Provider-Forward Experience Design. Creating an “experience chain” that helps makes traditional intermediaries, as well as, the wide range of other ecosystem participants successful in serving their downstream customers, whoever those customers are.
3. Collaborative Ecosystem Platforms. Providing an open communication environment for connecting consumers, channel customers, complementary product/service partners, and other influencers.  This collaboration platform often creates the opportunity for channel customers and complementary product/service providers to collaborate with each other in ways that are currently impossible.

These are not three alternatives.  Effective Channel 2.0 strategies must integrate all three.

Dimension 1:  Consumer-Back Experience Design. A more ecosystem-oriented environment makes it possible to integrate capabilities across complementary service providers in ways that were previously impossible.  Often that integration was left to the customer.  For example, if your goal was to relocate your family from New York to San Francisco, the experience you would have as a customer would involve integrating the capabilities of real estate agents, mortgage companies, movers, banks, schools, doctors, utilities, home furnishing retailers, cleaning services, hotels, airlines, the post office, etc…    A significant step beyond the Consumer-Back approach described earlier would be to do what we call Consumer-Back Experience Design. This is what “The Right Move Group” did when they created an integrated platform of services address all of the elements listed above for families moving to the San Francisco area.

We are starting to see an increasing number of Consumer-Back Experience Design examples in other areas.  For example, the range of integrated platforms for launching small businesses (a.k.a. Business in a Box platforms).  This includes platforms like:  Smart Online and Microsoft’s Start Up Zone.    Other examples include travel integration services like TripIt, wedding experience integration service like Wedding Channel, and personal concierge services like Fini.

We believe that building an effective Channel 2.0 strategy starts by thinking Consumer-Back.  However, success is dependent on also considering the other two perspectives.

Dimension 2:  Provider Forward Experience Design. Forward Experience Design builds on and significantly extends the capabilities described in the Channel 1.0 Capability Model.  A more technology-enabled, ecosystem-oriented model makes it possible for providers to collaborate with their channel customers in fundamentally more effective ways.

Examples of technology that can enable Provider Forward Experience Design include:

• New Media Broker/Agent Portals. This includes the systems provided by FirstBest, iter8, or  The Broker’s Workstation.  These systems provide capabilities that help make intermediaries more effective in meeting the needs of their customers.  Systems like this can offer significant additional collaborative capabilities, dashboards, information, and what-if-oriented sales tools that go beyond the first generation portals many companies provide their intermediaries.
• Salesforce.com. Salesforce.com provides a suite of tools that enable partner channel management on a collaborative community platform.  It’s worth checking out their whitepaper with ideas on next generation channel management.  Their suite includes it’s Partner Portal, Partner Marketing, Content Management, and the innovative Ideas Platform.  This Ideas Platform is currently being used for Dell’s IdeaStorm and Starbuck’s mystarbuck.com sites.
• Other Partner Relationship Management Vendors. This includes companies like Channeltivity and Treehouse Interactive which provide sophisticated partner relationship management systems.

Dimension 3:  Collaborative Ecosystem Platforms.  As we move towards more of a Channel 2.0 world, both of the previous two perspectives will increasingly be enabled by an Collaborative Ecosystem Platform.  A Collaborative Ecosystem Platform creates an environment within which participants from multiple organizations can work together to create an integrated experience that improves the performance of participants and, in the end, creates more value for customers.  This can run the range from:

• Relatively unstructured sites for sharing information, like Microsoft’s Technical Community Platform
• Process specific platforms for collaborative service like Get Satisfaction (enables product companies, intermediaries, and end-consumers to all collaborate on generating answers to technical and service issues.
• Domain specific platforms like Sermo which provides an environment for physicians to discuss courses of treatment, the application and effectiveness of pharmaceutical and medical device products, etc…
• Social networking platforms like Facebook which is providing additional ways for companies to reach end-consumer and participate in the dialogues that consumers have about the experiences that are important to them.

The migration to a Channel 2.0 strategy is very much an emerging capability for most companies.  It creates the ability to mobilize a much larger and more diverse set of participants in a way that can accelerate growth.  At this point, most of the companies we’ve seen and worked with are putting their toe in the water.   In our experience, it’s still very important to address any gaps in the foundational capabilities that are left over from Channel 1.0.  Very often addressing those gaps can have a substantial and immediate impact on business performance.  In most situations, we are recommending  a parallel set of activities aimed at:  1) addressing Channel 1.0 capability and performance gaps and 2) developing a Channel 2.0 strategy and roadmap that includes identifying the business experiments required to start to learn about and get traction in a Channel 2.0 world.

Effective Experiential Storytelling

What are the stories your customers tell about their experience with you and your business?  What do they think you really stand for?  What are the most memorable aspects of their experience?  What surprises them?  What frustrates them?  How do you make them feel?  The nature and quality of these stories has a profound impact on the success of your business.

We make sense of the world around us through the stories we tell… the stories we tell ourselves and the stories we hear from and tell to others.  If you think about the defining moments in your life, you’ll see that the stories you tell yourself about those moments have a powerful influence on your identity and the way you see the world.  Aside from these personal stories, across human history, we’ve shared meaning and knowledge with each other in the form of stories.  This includes the legends and parables shared within and across generations, as well as, the stories we share about more immediate events.

Stories are our Primary Means of Sharing Knowledge and Transmitting Culture

Humans have evolved as storytelling animals.  The story form is one of the core knowledge structures we use to encode and recall our experiences.   As I covered in a previous post (see:  Making Experiences Memorable), when we recall past experiences we actually reconstruct the experience from a limited amount of information encoded in memory.  Understanding how this happens provides powerful insight into how to design experiences that are both more memorable and more influential.

In business, the nature and quality of your relationships with customers is reflected in the nature and the quality of the stories your customers tell.  Your ability to retain customers is directly related to the nature and quality of the stories they tell themselves about their experience.  Your ability to cost-effectively acquire new customers is increasingly dependent on the nature and the quality of the stories your customers tell to other prospective customers.

The Experience Must Tell Customers the Story You Want Them to Retell

If you don’t effectively tell the story… how can ever expect that your customers will either get the message… or have the material to be able to pass the story effectively on to others.   In a previous post, I drew a parallel between experience and music.  (See:  Great Experiences are Music to My Ears).  The experience that customers have with most organizations is a lot like the Billy Preston song that goes, “I’ve got a song that ain’t got no melody.”  The experience doesn’t communicate anything effectively… it just defaults from the bunch of the things that organization does… and that bunch of things is generally all over the map.  Similarly, most organizations have a story that’s “got no message… and got no script.”

Earlier this week, I led several dozen executives from a wide range of companies through a full-day customer experience immersion event at Disneyland in Anaheim, CA.    Disney is an organization built on powerful storytelling.  There are stories of Walt; stories surrounding some of the worlds’ best loved fictional characters; the stories that unfold in movies, rides, and many of our personal memories of visits to one of the Disney theme parks.

As part of that event, we took a close look at one particularly well-crafted story; the “Pirates of the Caribbean” ride.  If you’re one of the more than half a billion people that have had the pleasure of experiencing this ride… take a moment… close your eyes and recall the experience.  What stands out as most memorable?  How do you remember feeling?  Over the course of about 13 minutes, a complete and highly immersive story unfolds.

Although it might seem like a stretch, there’s a lot that most businesses can learn about customer experience by considering how they can make the experience more like “Pirates of the Caribbean.”  For example, if you work for a bank, how can you make the experience customers have opening an account, applying for a loan, developing a financial plan, etc… a “Pirates of the Caribbean” experience?  If you’re a professional or business services provider, how can you make the experience that your clients have as engaging and meaningful as “Pirates of the Caribbean?”  In order to answer that question, we must start with three common characteristics of the most engaging, memorable, and retellable stories:

1. A Simple, Purposeful Message

A simple, purposeful message is at the core of many of the experiences that people find intuitively understandable and compelling.

By “simple” I mean a message that people can understand immediately; because it’s concrete rather than abstract and doesn’t require a lot of additional explanation. In their book, Made to Stick , Chip and Dan Heath do a great job of describing how the “Curse of Knowledge” often gets in the way of communicating in ways that people can easily understand.  The more knowledge you have of the strategy and inner workings of your industry and business, the more difficult it becomes to put yourself in the shoes of customers who don’t have that knowledge.  What seems intuitively obvious, concrete, and simple to you… may be confusing, abstract, and complex for your customers.

The Heaths illustrate the “Curse of Knowledge” using an experiment conducted in 1990 by Elizabeth Newton.  In that experiment, people were assigned to be either “tappers” or “listeners.”  Tappers were asked to select from a list of 25 well-known melodies and to tap out the selection’s rhythm on the table.   The listeners would then have to guess the song the tapper was tapping.  Tappers predicted that the listeners would guess correctly one out of two times (50%).  It turns out that the listeners were only able to guess one out of about forty times (2.5%).   The tappers thought it would be easy to communicate their “message” to the listener because, as they were tapping, they were hearing the song in their head.  However, the listener wasn’t hearing that song; they were just trying to decipher the message from what sounded like Morse code.  I don’t know how many times I’ve seen people try desperately to get their customers to understand when the underlying issue is that the customer just doesn’t have the same background music playing in their heads.

Beyond being simple, the message must also be “purposeful.” It must not only clearly articulate what you stand for BUT ALSO contrast that to what you stand against.   People will find it easier to understand who you are, when it’s clear who you’re not.  Heroes are boring without villains.  Triumphs don’t make sense without understanding the challenges that made those triumphs meaningful.  Stories without tension, uncertainty, or risk aren’t worth listening to.  The conflict built into the message clarifies the things that make the experience differentiated and worth engaging in.

It’s important to choose your enemies wisely.  For example, just about every insurance company out there portrays the enemy in their story to be the uncertain outcomes they protect you against.  As a result, the message from those companies pretty much boils down to the same thing… with only minor variations on how effectively they communicate that same old story.  Compare that to Progressive that has gotten a lot of mileage out of telling a different story; a story with a message that they provide competitive quotes that enable customers to feel they’ve made a more educated decision.  Allstate is also getting traction by telling a story around the message that they recognize and reward people for safe driving.  In both of these cases, the enemies are prevailing industry practices.

One of the best examples of a simple and purposeful message is Salesforce.com’s “Success, Not Software.”  Salesforce.com’s “software as a service (Saas)” platform allows you to focus on your sales processes rather than having to implement complex and risky CRM software.  We’ve also worked with many companies that provide further examples of strong messages:

• Jewelry Store Message: “The Perfect Gift Guaranteed.” It’s not about selling you jewelry. It’s about helping you give the perfect gift, in the perfect way that contributes to your relationship with the recipient.
• Mortgage Bank Message: “A Better Way Home.” It’s not about just giving you a mortgage. It’s about a well designed and flawlessly executed home buying experience.
• Automotive Financial Products Firm Message: “Driving Dealer Performance.” Rather than just providing financing and pre-paid maintenance (to their automotive dealer customers), we work with you to measurably improve the performance of your finance and insurance operation.

In each of these cases, the message is crisp and clearly articulated.  As you may guess, this is actually quite rare.  Most organizations become enamored with a message that doesn’t really communicate anything specific or concrete.

If we take a step back and look at “Pirates,” beneath the relatively light entertainment value, the story ends up hanging together brilliantly around the message:  “Despite the adventure, there is a price to be paid for a greedy and vile life.”

2. Characters that Make Sense

The most effective stories have characters that are authentic and intuitively understandable.  These characters make the experience more concrete.  This is particularly important if the product or service you provide is complex and abstract.  For example, if you’re in the insurance business, what you sell is abstract; a policy that represents the transfer of risk in exchange for a premium.  This raises the stakes on identifying both the characters in your story, as well as, the role they play.  If you’re in the banking business, who are the characters?

The strongest brand stories have great characters.  The book “Storytelling: Branding in Practice” by Klaus Fog, Christian Budtz, and Baris Yakaboylu describe the typical characters as follows:

• The Hero. Who is fighting for the goal described in the central premise?
• The Adversary. Who or what must the hero overcome to achieve that goal?
• The Supporter(s). Who (or what) assists the hero in their quest?
• The Benefactor(s). What superior character or force(s) provides aid in the quest?
• The Beneficiaries. Who benefits in the end?

In many situations, the company and/or its representatives are the heroes; the customers’ situation or the alternatives provided by competitors are the adversary; and customers are the beneficiaries.  This is true in the case of Salesforce.com.  Many great services businesses, like the Four Seasons, really cast their frontline employees as the heroes that overcome the ordinary and predictable in order to provide the guest the most comforting and personalized experience.  In this case, the Four Seasons plays a supporting role rather than a heroic role.  (See:  A World-Class Hospitality Experience:  Four Seasons Aviara).

In  many marginally successful services businesses, like the major US airlines or many call center operations, frontline employees wind up playing the role of victims… caught between the demands of the customer and the constraints and frustrations imposed on them by their company.  In fact, there are many situations I’ve observed where the frontline associates not only play the victim but do untold damage to the brand my making their employer the adversary (e.g., “I’d like to help you but it’s against our policy”).

We’ve also seen many examples of companies that do a great job of telling the story in a way that makes the customer the hero.  One of the best examples is the wonderful grocery retailer, H.E.B., that’s core message is “Come Home a Hero.”    In the case of the jewelry store example above, the core message of “The Perfect Gift Guaranteed” is framed in a way that the male gift giver (70% of their customer base) is the hero… and the gift recipient is the beneficiary… but with a subtle message that, when the gift experience is a WOW, the gift giver becomes the ultimate beneficiary (figure it out).

3. An Engaging Plotline with “Signature Scenes”

There are common, relatively predictable patterns to the way stories are structured.  It doesn’t matter if these are verbal, or told in books and movies.  Think about your favorite movie.  With very few exceptions, the story typically opens with an Initiating Event that gets the audience hooked and encourages them care what will happen next.  That Initiating Event introduces the tension described in the message (described above).  Then, over the course of the story, there are a sequence of memorable, Signature Scenes that gradually increase the tension.  Typically each of those scenes introduces a question about what will happen next.  By doing so, it keeps the audience engaged and increases their investment in finding out how the story will eventually be resolved.  Finally, the story reaches a climax that answers most but not all of the questions that were posed over the course of the story.   The best writers and story tellers purposely don’t answer all the questions at the end.  The presence of unanswered questions is one of the reasons why people still talk about the movie the next day and, very often, the thing that leaves them wanting to see the movie again next week.

Experience Director, Adam St. John Lawrence, in his blog Work-Play-Experience has a very insightful way of putting this.  He says great experiences, like great stories go “BOOM Wow-Wow-Wow BOOM.”

One of the reasons that “Pirates” is so engaging is that it follows a very well-designed plotline and includes highly memorable “Signature Scenes.”  Here is the plotline:

• BOOM: The Initiating Event: After lazily floating through the bayou for just long enough to feel immersed in the environment, guests encounter Jolly Roger who issues the warning that sets up the  conflict, “Psst! Avast there! It be too late to alter course, mateys… and there be plundering pirates lurking in every cove, waitin’ to board…. there be squalls ahead, and Davey Jones waiting for them what don’t obey…” Guests then plummet through two rapids drops that represent a Point of No Return.

• Wow1: Guests enter the “Grotto of Lost Souls” where they see the skeletons of three unfortunate pirates, two of whom have been run through with swords. As guests progress through this scene, the skeletons progress from realistic to much more surreal states of animation… steering the ship, drinking at the bar, and finally the captain’s remains lying in bed still studying the treasure map with a magnifying glass.

• Wow2: The Attack of the Wicked Wench. After leaving the Grotto, guests are thrown into the middle of a battle as the ship, The Wicked Wench, is attacking the walls of the city while cannon balls splash all around.

• Wow3: Sacking the Town. As the guest round the corner, they find that the pirates have captured the town and are now dunking the mayor in the well asking him about where to find “Jack Sparrow” (Disney added the references to the movie characters in 2006) as the town’s leaders are tied up and led away.

• Wow4: In the Town… The Wench Auction and the Chase Scenes. In a series of memorable comedic scenes, guests are offered the opportunity to “buy a bride” and entertained as they see the brides and grooms chasing after each other. The characters are animated on turntables that circle the balconies of the buildings. As we progress through this scene, the characters are shown at progressive levels of drunkenness as the town sinks into chaos.

• BOOM: The Town in Flames and the Escape. Eventually, the town is in engulfed in flames with spectacular effects and burning beams threatening to crash down on the guest’s boat. Meanwhile, the pirates are either too drunk to care or they’re in jail desperately pleading with the dog to let them out. As the guests escape up the waterfall, they are entreated to a final warning from Jack Sparrow (again, added in 2006).

So… how does all this apply to you?  Let’s look at one of the cases I mentioned earlier; the case of a leading specialty jewelry retailer that designed their experience around the message, “The Perfect Gift Guaranteed.”  After agreeing on that message, the customer experience was then designed to deliver that message using a set of Signature Scenes organized into a coherent plotline.  The Initiating Event was a specific greeting that welcomed the guest into the store.  That welcome introduced the message of helping the customer give the perfect gift… not just selling them a piece of jewelry.  This was then followed by a set of supporting, highly differentiated, Signature Experience Elements (or scenes).   These Signature Experience Elements included:  collaborative gift planning (differentiated from traditional selling), preparing the male gift giver to “romance the gift,” ensuring customers know what will happen if the gift doesn’t work out (the “guaranteed” part of the experience), creating a wow on exchanges or returns, and a clienteling process designed to maintain the relationship with the customer for future gift giving occasions.

Similarly, the mortgage company mentioned earlier designed a set of five Signature Experience Elements that happen over the life of the customer relationship, all designed to tell the story, “A Better Way Home.”

Building on the above points, The Disney Institute’s book, “Be Our Guest” summarizes their set of principles for delivering a compelling story, as follows:

1. Know your audience. Clearly define who are you creating the experience for?  How do they think and what do they desire?
2. Wear your guest’s shoes.  Design and evaluate the experience from the customer’s perspective by experiencing it as a customer.
3. Organize the flow of people and ideas.  Think of a setting as a story and tell that story in a sequenced, organized way.  Build the same order and logic into the design of customer movement.
4. Create a visual magnet.  It’s a visual landmark used to orient and attract people.
5. Communicate with visual literacy.  Language is not always composed of words. Use common languages of color, shape and form to communicate through a setting.
6. Avoid overload–create turn-ons.  Do not bombard customers with data.  Let them choose the information they want when they want it.
7. Tell one story at a time.  Mixing multiple stories in a single setting is confusing.  Create one setting for each big idea.
8. Avoid contradictions; maintain identity.  Every detail and every setting should support and further your identity and mission.
9. For every ounce of treatment provide a ton of treat.  Give your customers the highest value by building an interactive setting that gives them the opportunity to exercise all of their senses.
10. Keep it up. Never get complacent and always maintain your setting.

Over the past 25 years, we’ve worked with organizations that run the range from business-to-consumer to the most complex business-to-business relationships.  In the course of this work, we’ve found that Experiential Storytelling applies equally well everywhere along this range.  In practice, the business-to-consumer companies have the easiest time understanding it… while the business-to-business companies have the most to gain.