The ‘Architecture of Competition’

Don Peppers on the Role of People and Technology in Engagement

By William Keenan Jr.

Don Peppers, co-founder with Martha Rogers of Peppers & Rogers Group and 1to1 Media and co-author of the recent book, Rules to Break and Laws to Follow, says he came to understand the need for both employee and customer engagement through his work in marketing – particularly his study of marketing technology – over the last decade and a half.

“The whole one-to-one marketing concept is based on technology,” explains Peppers. “It’s concerned with the fact that interactive, database and computer technology were making it more possible for companies to talk to customers one at a time, customize products and services for them and hear back from them, as opposed to simply talking at them through mass media. There’s a whole architecture of competition now built around this sort of interactive relationship with customers. But at its core, it’s driven by technology.”

Some Things Can’t be Automated

Peppers is the first to admit that this same technology has – in a round-about way – led us back to a very non-technological conclusion: People are the key to success in the 21st Century.

Companies have automated a lot of their internal processes, he explains, but this kind of streamlining has also made certain jobs more important. “These are the jobs that are not routine enough to be automated,” says Peppers. “They’re jobs that require judgment, creativity, intuition, experience, empathy. I can automate how a sales call is reported to upper management after a salesperson’s visit to a client, but I can’t get a computer to look into the prospect’s eyes to determine whether this is the right time to bring up the next issue or move the sale along to the next level.”

So what has happened, he notes, is that the people left behind in the organization – people whose jobs have not been computerized or outsourced – are increasingly required to exercise judgment and creativity and intuition, and you simply can’t have an employee base like that that is not engaged. Engagement is much more important now than it was 10 or 15 years ago, when many jobs were very transactional and routine in nature and less based on the human element. And that’s what got us interested in engagement.”

A Foundation of Trust

Peppers can even pinpoint when he and Rogers began thinking in terms of employee engagement. “It was when we wrote our 2005 book, Return on Customer,” he recalls. “It argued that good customers were a scarce resource. And one of the principle admonitions in that book is that your job as a business is to maximize the value that each customer creates.”

And when does that opportunity best present itself? “[We realized] that the customer is willing to create the most value for you at the point where he thinks you’re creating the most value for him – and all other things being equal, when does that happen? Well, there is a lot of research that says that happens at the point where the customer feels you’re the most trustworthy.”

That’s when Peppers and Rogers understood that maximizing the value that customers create means earning their trust. “And that led us to say, wait a minute, that’s a shortcut for the very complicated financial metrics that we’ve been putting together,” says Peppers. “If you can’t measure lifetime value and the changes in lifetime value of your customers, you can at least tell your employees to focus on the customer’s interest and always try to earn the customer’s trust – even when that might mean giving up some short-term profit. We realized that’s the role that employees have to play. They have to work constantly at developing a culture of trust – a culture where, whenever any two employees meet to solve a problem, one of them is always going to raise the issue of what is in the customer’s interest. And that’s the type of culture that leads to engagement.”

Vital Interaction

“We favored the technology argument until we realized how vitally interactive both the technology and the employee culture really are,” says Peppers, “…how important it was to have employees who really want to do the right thing – not just that they’re empowered to do it. Looking back, we were a little late to the party. All the people who were talking about customer satisfaction and good customer service had all gotten to the understanding that you had to have good employees – smart, capable, customer-oriented employees. We knew that too, but we thought it was the soft underside.”

Asked whether an organization can have a culture of engagement that involves all of its constituencies – employees, customers, channel partners, shareholders, etc. – Peppers says it depends on understanding a simple premise. “A company that buys into the whole philosophy of engagement of both employees and customers is basically buying into the philosophy that people in the end matter, that the organization is not just a bunch of automatable processes and data, but that people’s motivations – both customers’ motivations and employees’ motivations – really matter. And it follows that in order to get the most value out of those motivations as an organization, you have to have employees and customers engaged in your brand. They have to be collaborators with you, and they have to want to do it.”

Of course, it’s a lot harder than it sounds. “If it were easy, everyone would be doing it,” he says. “But it’s not impossible, and it’s the kind of thing you can improve with study and practice. We do a lot of consulting with companies, and we always tell them, ‘No matter what you do, you’re chasing a moving target.’ You may think that if you just wait a little bit longer there will be more to learn. And you’re right – there is. But there’s a lot more to learn about engagement whether you wait or not. The pace of change is accelerating, not decelerating. So our argument is that waiting is not a good strategy for business.”

You Have to Let Go

Another trap that Peppers sees some companies fall into is when they falsely think their organization “has some sort of physical reality that’s easy to pin down and doesn’t depend on people’s personalities,” he says, “when in fact there’s so much irrationality in the world, and so much emotion in people’s decisions, that just the opposite is true.”

The fact is, you’d be hard pressed to find an organization that actually behaves according to rules it has already put in place. “That’s what computers do, that’s not what human beings do,” Peppers says. “And that’s difficult to grasp, because in order to grasp it you sort of have to let go of the idea that you can control things. You can’t control things. You can’t control the future. The future comes at you in the form of financial meltdowns or airline accidents or the invention of a new product that makes yours obsolete. And the only way to be prepared for these random fluctuations in your existence as a business is to hold on to solid, long-term principles – and these have to do with employees, the human beings in your organization. It is a dangerous thing to believe that the CEO has control over all of the levers of power in an organization.”

Employees are what give a company resilience, says Peppers. “If employees are engaged in their work and engaged in executing a corporate mission they can believe in – whether it’s to do the right thing for the customer or something similar – they’re more likely to make the right decision, so your company comes out on top when it faces those difficulties.”

Engaged vs. Enabled

And that’s where technology re-enters the picture. Technology plays an important role in making today’s engagement efforts possible, but with an important caveat: “You have to use the technology for more than cutting costs,” Peppers says, adding that technology is a tool – a means to an end, not the end itself. “You have to use it to do a better job, to automate the routine stuff in order to give you more time to concentrate on the stuff that you can’t automate – which is the important stuff.”

Getting back to his original point about building a foundation of trust and identifying that critical point in the company/customer relationship, Peppers notes that the two key elements of trust are intent and competence. “It doesn’t matter how good your intentions are,” he says. “If you don’t have the tools and competence to carry them out, then I still can’t trust you. And that’s directly analogous to the two elements of a really powerful and resilient employee body – being engaged and being enabled. When we say enabled, we basically mean that you want your employees to have the competence to carry out that corporate mission, and for that they need to be armed with the right information, have the right tools and technology available, and have the authority to act on their good intentions. That will make for a much more vibrant and resilient organization than one that waits for the CEO to make a decision and pass it down to the troops.”

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