Managing "Informed Channels" with Business Intelligence

Information Management Special Reports, January 2006

Jerry Kurtyka

In a previous article, I analyzed the structure of institutional memory and its relation to business intelligence (BI) technology and organizational learning. Here, I propose to explore how the enterprise uses customer relationship management (CRM) and BI technology to learn about its customers through contact channels and, subsequently, to identify the message content appropriate to send across different types of channels. The end result is that channels are "informed" and can execute a consistent customer strategy, capturing the results in institutional memory that I will henceforth call organizational intelligence, which includes the BI suite and much more.

Channel Dialog with the Environment

An organization is in dialog with its environment, including customers. The dialog consists of sending messages to the environment by way of customer channels and receiving and processing feedback from these channels. Channels range from physical venues like retail outlets, sales agents and direct mail to media (radio, TV and print advertising), to electronic channels such as the Internet, contact centers and voice response. Each channel has unique characteristics, economics and capabilities. These are related to the cost, the type of customer and the type of product. For example, high value complex and/or customized products lend themselves to a human agent channel such as a sales rep. Less complex and lower value products can be distributed over lower cost channels, like a contact center or Web site. Some channels provide the organization with direct feedback (e.g., a Web site or customer agent) while others (radio, TV, print) have only indirect feedback response. Contact channels effectively act as the "sense organs" of the enterprise.¹

To understand how organizational intelligence informs the channel dialog, we need to consider the enterprise as a cognitive system. To learn from experience, the enterprise has to perform several important cognitive tasks: 1) sense and monitor the environment (e.g., using its channels); 2) relate the information gained from this to the operating norms that guide the business (e.g., using the BI suite); 3) detect deviations from these norms; and 4) initiate corrective actions when deviations exceed some preset level.²  If these tasks are done well, a process of cybernetic information exchange is created between the organization and its environment, including that of customers (see Figure 1). The overall experience is captured as organizational intelligence.

Figure 1: Cybernetic Information Exchange of the Enterprise with its Environment

The technical part of this process is usually constellated as the channel(s) platform together with a CRM data repository and its analytic software - the BI suite. The CRM repository collects historical records of customer interactions with various contact channels and allows managers to apply analytic tools to digest the data. From this information, marketers can derive business rules from the data in the repository that drive personalized customer interactions; the channels are "informed" by the results of analysis and the results monitored against expectations.

The only problem with this idealized model is that it doesn't explain actual experience with CRM. Why are the technical periodicals full of CRM and enterprise resource planning (ERP) failure stories, ranging from 55 percent to 70 percent of installs, depending on whom you believe? If we can get beyond the BI component as a technical artifact that assists this process, we can see that real management of customer relationships is a strategy and way of doing business. It is embodied in organizational intelligence, which includes the BI technology.

Organizational Intelligence

For our purposes, we will define organizational intelligence as the capacity for the enterprise to collectively know itself in relationship to its environment and to act on that knowledge in a way that furthers its position with customers and the marketplace. To see how this fits together, we need a model for how organizations store and use the intelligence gained from experience. This is illustrated in Figure 2.

Figure 2: Organizational Intelligence

Here, organizational intelligence is a three-level field of consciousness: acting, thinking and being. Each level is associated with certain types of knowledge, actions and decisions appropriate to the level. By "consciousness" is meant a field of knowledge that everyone and everything involved in the channel dialog can access and use to inform their activities. This model is consistent with how scholars understand the structure of organizational knowledge previously described in DM Review. A coherent multichannel customer strategy has to be anchored in all three of these levels.

• Acting is the tip of organizational intelligence. This is the level of channels, business processes, software technology, the BI suite as well as the physical channel apparatus that customers use to interact with the firm. Sales and service reps that meet daily with customers function at this level of intelligence, as do retail outlets, Web sites and contact centers. This is the level of sensing the customer, capturing the customer's responses and responding to the customer, whether the response is personal or emanates from automated systems that are embedded deeper in the organization's infrastructure.
• Thinking and strategy are the next and less visible level of organizational intelligence. This is where the explicit rules that govern customer interaction reside. These rules are embedded in software and technology or in processes and policies and the general know-how of employees. For example, if a bank uses a campaign manager tool, the campaign rules exist at this level. The second level is what informs the channel level for action and execution. The firm managers advance thinking can help figure out how they want to direct the dialog with customers, implemented as rules that drive customer interaction over channels. It is the level of knowing the customer.
• The third level of organizational intelligence is that of being. This is the level of principles and values where the firm's vision and reason for existence are known. Here is where the firm's basic value proposition exists, the reason why the customer should do business with the firm instead of with its competitors. At the level of being, the firm decides what it is in the world and why that is important to its customers and the market. The decisions at this level inform the level of thinking and strategy. Articulating the level of being is a senior management responsibility and can never be delegated to technicians, though it can be disseminated to all. The level of being is generally stable, and decisions here do not change often, but need to be revisited occasionally to determine if the firm is aligned to the feedback it is receiving from its environment.

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