I occasionally take some time in the mornings to either work off-site (and actually get some work done outside of answering email) or meet with an industry cohort. This morning, I met a long-time friend and colleague at Starbuck’s —Terry Pageler. Terry is a former art director and worked for years in various agencies around town. For the last (what’s it been, 12 years?) he’s been out on his own pursuing his own personal vision. Terry has developed a process/system/software for a pretty unique method of analyzing company performance, primarily based on customer prioritization through historical and current sales data.  That’s putting it VERY simply compared to the unique vision and relevance that Terry can bring to it.

We’ve all heard about how the business world has/is changing and that the customer is gaining more influence and control over how companies interact with their customer base. Well, Terry’s basically been trying to sort that new relationship out and he’s got some pretty clever ideas on how to deal with this new reality. But – what did I learn from our conversation?

More than anything I think I’ve gained a wider understanding of customers, how business now views customers and how that view needs to change – and how our idea of what “social media” is all about must change. The final thoughts/ideas I took away from our conversation are these: “It’s more about the relationship than the transaction.” and “Stars and clusters.”

To the first topic. Companies have always thought of customers as “transactions.” And even in the world of social networking, it’s still mostly about PR, promotion and leading to a transaction of some sort. In discussion with Terry, it’s clear that the true performance criteria for businesses in the future will be about their ability to keep as many customer relationships on a positive course as possible. The only way to do that is to view that relationship in long form, over the course of their involvement with the company and it’s products. In other words, to look at the number of customer transactions is not enough – you have to understand the context of where the negative as well as the positive events take place. http://www.linkedin.com/pub/terry-pageler/0/215/91b

Now for the second topic. Another observation of Terry’s is the idea that corporations are still tied to the ideas of control and structure. That to be successful, you need structure and control. The problem is, in this new era of doing business—those two concepts barricade a new corporate imperative—change. Once you set up a structure and control, and things are “working,” the momentum to maintain status quo is very strong. Any effort to implement change is seen as undermining the proven methods that have resulted in success. Then only possibility for creating change is to take on a “single case” approach. Find one small area of the company, implement change, show results—then work to carry out the same changes to another small area, then another, and so on. Ultimately, the hope is that you will create the necessary change to be successful. The problem is, that in most cases within a large organization, different processes and structures are so inter-dependent that implementing change in one area may result in complete failure due to the fact that it no longer supports the existing structure. The effort to change dies and is determined to be a terrible idea—and the resistance to change is reinforced.

So that’s where the idea of Stars and Clusters comes in. An example is proper here. Say you work for a company that has grown a great deal and departments were grouped by “what they do” and you end up with teams of specialists. In a desire to keep the overall structure simple – you don’t have a  massive overarching structure, but you do have a number of smaller structures that are semi-independent. The smaller teams work well, but the interaction between teams is difficult and often-times frustrating. The result is poor integration, lack of consistent effort and measurement—and poor morale. The initial reaction may be to create a larger, all-encompassing structure to pull the smaller teams into one large team under a massive structure allowing control over all teams by a single overseer. Or, what if another option existed?

“Stars” are those who others are naturally drawn to. Natural leaders that can take a team of various people from different groups and get them to work together. “Clusters” are the groups of people who are drawn to the star. Assign key projects to a star and they will cluster a group to address the problem. As new skills are needed, more people are added to the team to carry out that element. Do away with seniority aside from a few business managers, and detach title, authority and seniority from skill set and function. You would end up with an organic, networked organization that can literally change shape as the need dictates.

In many ways, much of this is not new thinking. The “team” concept is nothing new – but perhaps not in this same context. If nothing else, I know that I learned that having friends and connections like Terry keep me thinking, challenge my approach and make things a lot more fun than they would be without them. Keep those connections alive and foster the ones that make you really think.

See you tomorrow.