Most people would agree that the Groundswell is here in full force. And while many organizations embraced it, there is still some resistance – fear, perhaps – from companies afraid to leave their comfort zone and cede control.
According to Charlene Li, social technologies are no longer ‘an alien race’ ; that bright shiny object to gawk at. But in order to adapt to the changing landscape, businesses will need to move from command and control to a culture of sharing. She calls this approach Open Leadership (the subject for her forthcoming book). The SXSW hashtag is: #openleadership.
Li contends open leadership can only happen when people have the confidence and humility to give up the need for control, yet still remain in command. It’s based on a fresh and more transparent approach to relationships and requires that new structures/processes be put in place.
She suggested five ways companies can become more open:
- Align openness with strategic goals. Start with a plan and select goals where being open and social can have an impact.
- Understand the upside. What’s the value of a relationship and can you quantify that in business terms? Right now, that’s still a challenge to measure.
- Consider a new formula for customer lifetime value (CLV). The old formula is: CLV = value of purchase – cost of acquisition. The new formula could be: CLV = value of purchase – cost of acquisition + value of new customers from referrals + value of insights + support +customer ideas.
- Develop open leadership. Leaders should be realist-optimists, who combine an openness to change with a strategic understanding of what needs to be done to make it work. Risk can be managed with ‘sandbox covenants’; a process for sharing with clear rules of engagement.
- Embrace failure. Keep a failure file in order to learn from your mistakes and move on.
Open leadership… that’s a pretty revolutionary idea, especially when it seems like so many corporations and businesses are entrenched in hierarchies based off of power. I agree with Charlene Li’s words when she said that open leadership “can only happen when people have the confidence and humility to give up the need for control, yet still remain in command”. Some may read that phrase and think that it is a contradiction: giving up control to remain in command? It may not sounds like it makes sense, but it does sound like the next step for businesses. Especially when one considers how more and more control is being transferred from the businesses and to the consumer, via social media.
I liked the five suggestions for companies to become more open, but was wondering if you could elaborate on the ‘sandbox covenant’ idea? The phrase triggered my curiosity! Thanks for the interesting and stimulating post!
Thanks for your comment! I believe the term sandbox covenant is an analogy for group collaboration with ground rules set at the beginning based on the way kids play and share in a sandbox (i.e. if you’re playing together, don’t throw sand in anyone’s face). And the result is individuals can contribute ideas/skills and work to build something together. Hope that helps.
Thanks! That does help explain it a lot! I like the picture that analogy paints!