May 18, 2010

Review of ‘Open Leadership’: Winning by letting go


Charlene Li at SxSW in March (photo by Jen Consalvo)

Charlene Li’s latest is a worthy addition to your business books shelf

JD LasicaThe first thing to understand about Charlene Li’s smart new book “Open Leadership” is that this is not a call to arms for top management to deploy a loosey-goosey, feel-good strategy of giving up complete control of your management structure. Nor is it yet another business book about effective corporate leadership techniques.

Instead, Open Leadership: How Social Technology Can Transform the Way You Lead is about how to reinvent companies (as they must be) for the age of social media. It’s filled with smart, practical strategic advice — not only for company CEOs but for middle managers, social marketers and change-makers at all levels of an organization — about how to set out a vision, how to overcome internal barriers and how to navigate a brand through these turbulent waters.

Like “Groundswell” before it, “Open Leadership” (336 pages) brims with anecdotes and real-word examples of how companies are making the transition to the conversational era. (The publication date is May 24; Charlene gave me an advance copy of the book at SxSW.)

Charlene lays out her premise early on: That businesses require its executives to adopt an “open leadership” style of management in place of the command-and-control paradigm in place at most large companies. “Face it — you’re not in control and probably never really were,” she writes. “You need to let go of the need to be in control.” As she explains, you aren’t really giving up control — “you are shifting it to someone else that you have confidence in.”

In other words, openness (and letting go) is just the first step in Open Leadership. But it needs to be matched by an equal commitment to provide a structured, integrated framework in which an openness strategy can succeed.

The book begins with the telling example of United Airlines’ boneheaded reaction to a customers’ complaint about its baggage handlers damaging his guitar. (I recently interviewed musician Dave Carroll about it and will post it here soon.) The resulting negative publicity spawned by Dave’s United Breaks Guitars series on YouTube surely cost the airline millions and a damaged reputation that has not yet been repaired.

While those of us who run social media agencies will no doubt be familiar with much of the terrain Charlene covers throughout — Dell’s IdeaStorm, Best Buy, Starbucks, Comcast, Motrin Moms — every reader should come away with at least a handful of stories that provide tangible evidence of the transformative effects of social media and open leadership across departments — customer support, product development, marketing, PR, HR — and across sectors.

A telling chart on ROI

Those of us in the field know that ROI (return on investment) is a frequent subject of internal conversations about deploying social media inside the enterprise, and Charlene provides plenty of cold, hard numbers about the financial payoff. Take, for example, the interesting graphic on “Understanding the benefits of support” at a large company:

Benefits/savings

• Call deflection (assumes 10% of 100,000 calls/year at $10/call): $100,000
• Identify support problems in advance (avoids 10,000 new calls): $100,000
• Greater employee productivity (fewer emails, fewer meetings, find info/experts faster): $600,000
• Cost avoidance because employees find solutions: $200,000
• Better employee morale and commitment (reduced turnover, recruitment cost avoidance): $200,000

Total benefits: $1,220,000

Costs

• Discussion forum software: $50,000
• Collaboration software: $50,000
• Two full time people: $200,000

Total costs: $300,000

Net benefit: $920,000

Charlene gets down in the weeds in the section mapping out “New metrics for new relationships,” including measurements on calculating “the New Customer Lifetime Value,” which goes well beyond looking at just the ROI of a campaign. She cautions against “dashboard delirium” syndrome, where companies measure KPIs (key performance indicators) just because they can.

The book is filled with such smart, no-nonsense actionable insights. So if your company is still not very clueful about the social media revolution’s effects on business, buy a copy for your boss.

You can find “Open Leadership” at this list of online bookstores, or by buttonholing Charlene at one of her frequent public appearances.

Final word: I don’t see the directory of social media policies and guidelines on the Open Leadership site, promised on page 100; but then, we already have a great directory of them at Socialmedia.biz, and the Altimeter Group wiki has a list as well.JD Lasica, founder of Socialmedia.biz, is now co-founder of the cruise discovery engine Cruiseable. See his About page, contact JD or follow him on Twitter or Google Plus.

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