The Top 10 Guiding Principles of 1-to-1 Enterprises

Originally Submitted on 7/2/99.

Only two of these Top 10 Principles are my own, but I felt that great benefits could be gained by bringing these to the world. Thanks to Bruce Kasanoff and Accelerating 1-to-1 for the richness of these principles.

In the coming months and short years, we will start to see true 1-to-1 Enterprises emerge. These nimble, adaptive organizations won't just be customer-driven. These will utilize simple rules to simplify the complexity of individualizing millions of relationships.

Simple rules govern the behavior of many systems that appear complex. In 1986, Craig Reynolds created a often-cited software program that successfully simulated the flight of a flock of birds. In essence, Reynolds' program tells each bird to take just three actions:

1. Don't bump into anything.
2. Keep Up.
3. Stay Close.

If Reynolds had tried to dictate a process that governed how the whole flock turned right or descended, it would have been hopelessly complex. Fortunately, these simple rules were all he needed.

Since no organizations have yet to evolve completely to 1-to-1 enterprises, the guiding principles presented are offered as examples of our current thinking. But much work remains to be done to verify and further refine these principles, and we look forward to working with our partners and clients to accomplish this.

Author David Taylor suggests that there are three types of organizational frameworks in existence in business today. The first is to be Reactive: wait for the market to reveal what it wants and then mobilize your product army to deliver - obviously a dying strategy. The second is a Proactive strategy in which you do an incredible amount of research to find out what is about to break on the horizon and then start working on it before there is the demand - again a failing strategy because things change so fast.

The final strategy - the adaptive one - he calls Creative, "Where you are not reacting to or predicting change but rather you are creating the change." This is where Accelerating 1-to-1 enterprises will operate, because it is through the collaboration of customer and company that new innovations are born. Often the customers don't know what they want and the company doesn't know where to focus, but together they can create a profitable solution.

Bruce Kasanoff in a key note speech on ACCELERATING 1-TO-1: http://www.accelerating.com/Tools/8Principles.htm#8

1. Profit from use of the system, not from a specific outcome.

The online auctioneer, eBay, is an example of an automated business system in which the enterprise profits from use of the system. The customer gets to auction an item online, using eBay's system. The company profits regardless of the price the winner pays for the item. If you only profit from specific outcomes, you run the risk of biasing the system against delivering the best solution for this customer. This is the handicap product-driven firms bear: they must bias the system towards their solutions.

2. Maximize the customer's control of the system.

Give customers as much control as they desire, even to the point where they take on functions previously controlled by the enterprise. Priceline allows customers to name their own price. Numerous companies allow customers to design their own products, and many more enable self-service. If you design your systems to follow this principle, you ensure your system will be managed on a bottom-up basis, which is a prerequisite for a self-adapting system.

3. Use the simplest system possible.

The simpler a system is, the more likely it is to succeed and be reliable over time.

4. Provide the minimum specifications possible.

To enable a system to adapt, you must give it as much freedom as is possible. For example, if you tell an order-fulfillment system how to ship packages of a certain size and weight, it will never do better than you specified. But imagine this: you create a shipment-optimization agent, and simply instruct it to always find the option that gets the package delivered ahead of schedule for the lowest possible price. You now stand the chance of getting a better outcome than you anticipated.

5. Set system boundaries.

To enable principle #2 to operate, you need to set limits for each system. Although you want to keep customers happy, you don't necessarily want to do it at any price. What are the limits of acceptable behavior? A system without boundaries will dissolve into chaos. Think of a customer service center in which agents are empowered to do whatever it takes to keep an angry but valuable customer's business... as long as the cost of their actions represents no more than 10 percent of the revenue generated from that customer over the past six months.

6. Use the customer's information to benefit the customer.

Always attempt to follow the customer's wishes. If you have a customer's credit card on file and their permission to use it for purchases, use it instead of asking the customer to resubmit the information. If you know of similar customers who have enjoyed a particular service, ask this customer if he or she would like a recommendation based on this insight.

7. Ensure that feedback can change the system.

Any system you build must be able to respond to feedback from the customer, the enterprise or other stakeholders (within the boundaries of the principles above). If a product is out of stock, the system should stop promoting it, or inform the customer of a backorder. If a customer expresses dissatisfaction with an outcome, the process must be adjusted and the enterprise must seek to solve the customer's problem.

8. Eliminate the rigid remnants.

The best software system in the world is useless if the truck driver who delivers each shipment doesn't bother to read the customized delivery instructions. Likewise, a compensation system that incentivizes salespeople to sell products to customers who don't need them will topple weeks of customer-sensitivity training.

9. Seamlessly integrate all touchpoints.

A touchpoint is any place where customer or information about the customer are likely to touch, including finance, marketing, fulfillment, service, brand effect, etc. Create a digital nervous system that literally and rigorously (thanks Doreen) captures, collects and converts all touchpoint data in digital form--delivering it back to the touchpoints as smart information (Gate's Idea from Business @ the Speed of Thought).

10. Eliminate all energy drains!

Energy drains occur when people have to pursue separate communication channels to put 2 & 2 together--a sales report's numbers with focus group information--quantitative data & qualitative data must be managed in the same context. Energy drains occur in the system when the autonomic processes--that Gates refers to in the book--like manufacturing, administration, lead management, knowledge management, etc. fail to function efficiently. These drains create inefficiencies in the 1-to-1 system that create black holes for information, follow-through and responsiveness--as perceived by the 1-to-1 customer.

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