The digitization of enterprises as well as their socialization work much better on the external side (towards customers) than on the internal one (employees). A solid trend that’s been observable for years and seem to become stronger every day instead of being resorbed. For the better and the worse.
I’ve already mentioned this point in a quick review of a McKinsey study but the number of conversations I’ve had on the matter make me think we really need to go beyond the acknowledgement to understand the root causes, benefits and pernicious effects.
More means for customer-facing innovation than for employees
Of course, the customer has been king for ages and the subject of much more attention than employees. Or, rather, that the same level of attention did not lead to the same level of effort to make them satisfied. But on the IT side the trend is more recent. It started in the middle of the “web 1.0″Â era and accelerated with the web 2.0 and the social web. The reason is easy to get : before the web the power it gave to individuals, communication tools were dedicated to internal purposes. To talk with customers, businesses had Tv, radio and the press. With the web, businesses had to learn to talk to and with customers with the same technologies they use with their employees. Marketing departments took the lead on a field they used to disdain, with their financial power that’s always beenÂ bigger than their colleague’s dedicated to internal support. A means gap that’s not likely to shrink in a communication and information era.
Let’s talk about the means gap. If some can argue that if the payroll is included the budget of HR is colossal, the reality is different if we consider investment, innovation and operations budgets, what I call “innovation, initiatives and progress budgets”. Of course, products make a business live and are the primary reason of many initiatives but if we look at the gap with budgets dedicated to major transformation initiatives regarding employees and their work tools (intranet, change management, training etc..) one can have vertigo. Not because marketing budgets are higher but because of the proportion in which they are higher.
Customers are revenue. Employees are costs.
Of course customers are tens of millions while employees are tens of hundreds, customers drive revenue and are the raison d’etre of the company, can kill or save a business, are social, active and empowered (a good reason to empower employees too..). Customers are not only an opportunity but can also become threats if poorly managed (but when the economy will recover some will be forced to admit that disengaged employees are a threat too), so nothing is too much for the. But the equation behind is simplistic and wrong : customer = revenue, employee = cost. Spending money on the one is investment, developing the other is an heresy. But maybe with new valuation models…
It’s also true that external facing innovation is easier. The customer field is rather a virgin and poorly formalized territory, most of all if we consider the soft side of customer relationship, contrary to internal matters where things are often more formalized than necessary and when rules already exist for anything. Another point is that the market is moving and businesses know they need to adapt while the internal organization has been made as rigid and predictable as possible, maybe to counterbalance the market, maybe to avoid any kind of risk. But the result is obvious : external facing innovation is bringing something new, often nice, fun and engaging while internal facing innovation means breaking what exists to replace it.
It does not mean that external facing stuff is easy to implement but what sometimes makes it complicated is internal rigidity.
You can add “one more thing” on to external communication and customer relationship, next to what’s already existing, while internal success needs either integration or replacement. In short, dealing with customers has room for creativity while changing things internally means fighting against sacred cows.
Adding is easier than changing
Last but not least : it’s easier to start a campaign of Facebook than to change an internal process or reverse the pyramid. The failure of anÂ external facing initiative is only the failure of an external initiative (even if it has side effects). In case of problem it’s possible to amputate. The failure of an internal one impacts the whole company, trust…and amputation is more difficult. People will always remember…
Peter Drucker used to say that the purpose of a business was to create customers. But don’t take it too literally and keep in mind that the ones who create the customers, manage the relationship and service them are employees.
Vineet Nayar understood that employees had to come first. Be he looks quite lonely.