The 10 Principles of Open Business

The 10 Principles of Open Business

The Social Partners’ David Cushman has a new book out on January 28, 2014 (Feb 25 in the US).

It’s titled: The 10 Principles of Open Business - Building Success in Today’s Open Economy - and is written with Jamie Burke.

“This book is an exciting rallying cry for the future business; one that is a productive collaboration between customers and the businesses which seek to earn their loyalty.”

-Matt Atkinson, Chief Marketing Officer, Tesco

The demand from customers for transparency, trust, and collaboration is driving change. There has never been a more important time for businesses to open up and partner with all; finding new partnerships with other businesses, creating new services in collaboration with customers, and sharing their assets in a way that creates new innovation.

The 10 Principles of Open Business looks at the epoch-making shift happening around us and examines why ‘openness’ is a key factor for the future of our organisations.

 

According to IBM’s CEO survey in 2012, companies that outperform their sector are 30% more likely to identify ‘openness’ as a key factor in their success; and companies are 50% more likely to outperform their rivals and grow sustainable profit following this approach.

The book includes case studies and interviews from leading proponents; a preface by the Chief Marketing Officer of Tesco, interviews with Editor of The Guardian Alan Rusbridger, former UK Defence Minister Tom Watson and presidents, VPs and CEOs of international blue chip companies and ground-breaking start-ups.

The 10 Principles of Open Business is a serious, challenging, wide-ranging and practical guide to organisational design for the twenty-first century, covering essential topics such as Crowd Funding, Co-Creation, Open Data, Transparency, Open Innovation and more.  This book provides the tools to work towards becoming a truly Open Business.

List price: £19.99. Published by Palgrave-Macmillan.

David Cushman is Strategy Partner at The Social Partners. Previously he co-founded Open Business consultancy 90:10 Group and was digital development director at Bauer Media. He is a former journalist, writing for the FT, Wall Street Journal, Marketing Week and Admap, and has presented keynotes around the world. He is a permanent member of the Financial Times Judgment Call panel, a member of the World Economic Forum on collaboration and copyright and a trustee of Citizens Online – a UK Charity which aims to ensure no-one gets left behind by the internet revolution.

He lives in Huntingdon, Cambridgeshire and works in London.

Why Twitter is worth its asking price.

Facebook made it nice and easy for anyone to publish to their friends. Twitter made it easy and worthwhile to publish to the world. The latter is likely to prove more valuable in the end as it enables more people to connect more easily around things they care about.
If you lower the cost of bringing people together in this way – ie if you lower the cost of organisation – then you lower the cost of action. And as any economist will tell you, this is where value gets created. If the IPO is successful at $26 dollars per share Twitter will be valued at $14bn.

While that’s nowhere near as high as Facebook’s current market capitalisation (ITRO $121bn despite having yet to pay a dividend), it is high enough for Twitter to finally stop claiming to be a ‘pre-profit start-up’.
One of the reasons so many see a bright future for Twitter is that it is reshaping our view of what news is and in so doing has changed our relationship with the people who make the news.

It is faster and more complete. Like Wikipedia it can be wildly inaccurate but also like Wikipedia (and unlike traditional media) instantly corrected.

Our experience of the news through it is not so much of a-man-in-front-of- the-action-holding-a microphone variety (ie one point of view, predicated by the broadcast, one-to-many models we have been used to since printing presses started rolling). No, instead Twitter delivers the rich tapestry of many different experiences of the same event. Think of the Mumbai bombings, each Saturday’s X-Factor or any big sporting event.

Twitter delivers a more satisfying and realistic capture of the variety and confusion of real life as we actually experience it.
We are just learning how to apply our own filters to it – as is Twitter with the appointment of a Head of News Partnerships from NBC.
Twitter is also giving TV advertising a new lease of life by revealing that TV viewing is (like pretty much everything else) better done with others. That’s best achieved if you and your friends all watch it at the time it’s broadcast. Watching Question Time on catch up is nowhere near as entertaining for me now. The X Factor – and therefore its TV ads – benefit from the same effect.

The show makers have caught on and use Twitter hashtags – not Facebook pages – to corral the conversation. They have learned that it is fundamentally better at connecting people around common interests (in adhoc self-forming groups) than Facebook’s much more closed groups can hope to achieve.

Celebrities and politicians – those whose relationships with their fans, supporters or detractors has traditionally been mediated by, er, the media, have found Twitter offers a way around – a cut through they value.

My favourite example is John Prescott – the former Labour Deputy Prime Minister. For many years the mainstream media span that he was something of a bumbling buffoon. Twitter is a medium that suits his straight-talking. But it also reveals his integrity and intelligence in a way no one can control or manipulate. The result; follow him and discover and undistorted version – the real John Prescott.
I pointed this out to UK Prime Minister David Cameron at a chance meeting in 2010. He joked that in Prescott’s case the brevity of Twitter was a blessing. But he also said politicians shouldn’t tweet because they ought to think before they speak/tweet.

That attitude is part of the old illusory world of spin. Twitter’s fast, always on, life in the now, demands and delivers greater authenticity – enforced by the transparency of social tools of the web. That’s not to say we don’t pause before we tweet. It’s not ESP. But what we tweet is ours – unmediated, undiluted, chosen by us to represent us. And no one gets to mess with that.
It’s something we value – and so it appears does the market.

Building trust through Open Business

Open Business is the ‘what comes next’ for social media – the framework through which organisations can take advantage of the open door social media gives to their customers.

The 10 Principles of Open Business take us beyond messages towards a partnership with customers. In partnerships there are shared ambitions, shared beliefs and shared benefits.

If this all sounds a little radical consider this: Knowing what you now know about how new technologies have disrupted traditional business processes (from marketing to customer service, from raising capital to delivering innovation) would you choose to recreate your organisation as it is now?

Tesco didn’t think so, for example – and is in the process of redefining and rediscovering itself as an Open Business.

Many of the greatest success stories of the 21st Century are built on Open Business Principles. Google, Apple and Amazon among the best known.

According to a survey of CEO’s by IBM in May 2012, companies that outperform their sector are 30% more likely to identify ‘Openness’ as a key factor in their success. McKinsey says companies are 50% more likely to outperform their rivals and grow sustainable profit following an Open approach.

The 10 Principles:

1. Purpose:  The why, the belief which all your stakeholders share and to which all your organisation’s actions are aligned.

2. Open Capital:  Using crowd-funding platforms or principles to raise capital through micro-investments

3. Networked organisation: The organisation functions as a platform connecting internal networks to the external for a common purpose

4. Sharability: Packaging knowledge for easy and open sharing both internally and externally

5. Connectedness: Connecting all employees internally to one another and externally through open social media

6. Open Innovation: Innovating with partners by sharing risk and reward in the development of products, services and marketing

7. Open data: Making your data freely available to those outside your organisation who can make best use of it

8. Transparency: Decisions, and the criteria on which they are based, are shared openly

9. Member led:  Your organisation is structured around the formal co-operation of employees, customers and partners for their mutual social, economic, and cultural benefit

10. Trust: Mutually assured reliance on the character, ability, strength, or truth of the partnership

Activated together, the nine other Principles of Open Business combine to deliver the tenth. Trust is the far from insignificant output of Open Business.

Without trust there can be no relationships of any value. Without relationships there can be no organisations, no customers, no believers, no advocates, no future.

Evidence from neuroscience (eg ‘The Neurobiology of Trust’ by Paul J Zak, 2008) suggests we get chemical feel-good rushes when we trust and are trusted and that there are large portions of the brain developed specifically to deal with its complexities. Being able to trust our neighbour allowed us to build civilisations. We’ve evolved to demand it.

To work closely with people, requires it. Partnership, the paradigm of Open Business, requires it.

Trust, by almost any measure you care to mention has shifted from the centre to the edge: from a faith in Government, Media, Corporation, to a faith in each other, what we say to each other, and our own relationships. We trust Government, Institutions and Brands less than we did. If the neuroscience is any guide that is because we feel our trust in them has not been reciprocated.

In an increasingly connected world transparency becomes a default. More of us are equipped and able to find out more of the things they didn’t want us to.

Social media has in part revealed this, in part accelerated it. It has revealed it by showing the interconnectedness of our world like never before. It has accelerated it by enabling us to self-organise at next-to-no cost and in next-to-no time.

Before social media it took time and resource to create a space to invite people into, to find them, to bring them together and to surface their solutions to shared need. It took the kind of thing we called the means of production.

Today everyone has access to the same organisational infrastructure. After the London Riots of the summer of 2011, crowds took to the streets for a mass clear up. This was not organised from the centre, but via a Twitter hashtag. It was self-organised by people to whom it mattered. Had the centre tried the same it is likely the response would have been weaker. Self-organisation breeds self determination.

Where trust is stronger and more sustained you find corporations which have shifted their view of what it is: from an economic one (in which reliability of transaction is king) to the more human one demanded of (and delivered by) Open Business.

Trust, for an Open Business, is a measure of the belief in the honesty, fairness or benevolence of another party. Build this kind of reciprocal trust and your partners are more likely to forgive your failures.

This delivers more resilient and meaningful relationships with stakeholders; builds brand equity – and therefore shareholder value; offers cut-through in cluttered markets (choosing the brand you trust acts as a short-cut for decision making); creates a very human, emotional connection with customers, partners and employees, reducing the cost of both acquisition and retention.

It is this kind of trust which cannot be built behind closed doors and the kind that is both required and delivered by taking the Open road.

It means placing the good of the customer ahead of profit (and therefore ahead of the – at least direct – good of the shareholder. Profit should be a consequence. It is a KPI of fulfilling your objective (delivering the customer agenda).

Brands have to re-orient themselves away from mass towards one-to-one relationships in which the individual gets a sense that the brand is working for them, that it has the customer’s interest as its core-purpose.

They must prove themselves not through telling people but by demonstration. They have to win trust one customer at a time, one experience at a time and learn to value the outputs of those experiences.

David Cushman is the author of The 10 Principles of Open Business – Building Success in Today’s Open Economy published by Palgrave-Macmillan in January 2014.