Countering a Customer Insurgency
By Mark Bonchek and Chris Fussell of The McChrystal Group.
Originally published in Harvard Business Review.
We don’t usually think of consumers as a threat to our business. But thanks to social and mobile technologies, consumers are now “hyper-connected and super-empowered,” to use Thomas Friedman’s memorable phrase. No longer passive audiences, they can organize to overturn even the most strategic initiatives. The result is a fundamental change that has put executive teams and board directors on high alert.
We call this new dynamic “customer insurgency.” While this term may seem a bit dramatic, we don’t use it lightly or without experience. One of us (Chris) served as a U.S. Navy SEAL for 15 years and helped lead counter-insurgency forces in Iraq and Afghanistan. The other has guided numerous companies through digital transformations, most recently as SVP of Communities and Networks at Sears Holdings.
By definition, an insurgency consists of a small and less-powerful force seeking to overturn the leadership of a much larger and more powerful institution. We normally think of insurgency in a political context, but today’s digital technologies are creating a similar dynamic in business. It is a simple matter of the big and strong (but often too slow) being unable to manage, or even see, the small and weaker (but fast and agile) threat.
If you want to know what it feels like to be on the other end of a customer insurgency, just ask Tropicana, Gap, or Netflix. In 2009, Tropicana brought out brand new packaging for their orange juice, then pulled it a few weeks later. In 2010, Gap announced a brand new logo, then retreated after a week. In 2011, Netflix announced it would split into two businesses, then retreated after only three weeks. In each case, executives had proudly announced what they thought was a bold step forward for their business, only to find they had stepped on a social landmine. The result was a rapid, costly, and somewhat embarrassing retreat.
Insurgency doesn’t always come in the form of blowback from a big announcement. Sometimes it starts out in the field. Take the infamous example of the United baggage handlers who broke a passenger’s guitar. After nine months of negotiating, he gave up on the usual channels, wrote a catchy song, and posted it on YouTube. Within a week “United Breaks Guitars” had three million views (it’s more than 12 million now), and United had a PR crisis on its hands. With access to his own broadcasting channel, Dave Carroll became an insurgent — quickly outmaneuvering a much more powerful organization.
What does this mean for leaders? How can organizations adapt to consumers armed with inexpensive weapons of mass collaboration?
The first step is to understand the nature of insurgency. There are many different types of insurgencies, ranging from terrorism (such as the Taliban in Afghanistan) to non-violent resistance (such as Gandhi in colonial India). The common thread is a shared vision for change. This vision spreads from a small group of discontents to a broader population, fed by growing sense of empowerment and solidarity. An effective strategy must therefore either prevent discontent in the first place, or prevent it from spreading to a wider population.
The second step is to understand the objectives of the insurgents. Are they fighting to improve the existing institution, or to replace it with a new one? Are they fighting to change the current leadership, or simply to influence the leaders’ decisions and actions? Unlike political insurgency, customer insurgency is often looking to improve the existing institution, rather than overthrow it. It is an act of advocacy rather than destruction.
The third step is to understand the most effective strategies for countering insurgency. No one knows about insurgency better than the military, especially after 9/11 when the military reinvented how it approaches insurgency. The “super-empowered” label was originally applied to terrorists. As the post-9/11 conflicts grew in size and complexity, some U.S. military leaders realized we were fighting a type of enemy that would require fundamental changes in operations and strategy. It takes a network to defeat a network became the new mantra for approaching counter-insurgency.
The military’s experience fighting terrorism provides a useful guide to corporations learning how to manage customer insurgency. Most companies today are at Level 1, with a growing number at Level 2, and a select few at Level 3.
Level 1: Listen and Respond
Many brands get into trouble by failing to notice the warning signs before its too late. The military realized that intelligence, not firepower, was the central ingredient to counter-insurgency. Sophisticated software looked for exceptions, patterns and relationships that might reveal terrorist activity. Fortunately for brands, terrorists try to hide their tracks, but customers usually try to get your attention. All you need are some good tools for monitoring social media, a crack team of social analysts and customer advocates, and a genuine commitment to act on what they see and hear.
Level 2: Engage and Dissipate
You don’t have to do this alone. In fact, you can’t. One of the military’s key insights was the importance of treating civilians as potential allies instead of potential enemies. By gaining the trust of local populations, our forces gained valuable intelligence and cut off the supply of food and shelter. Soldiers became more than warriors; they became community builders. The same strategy applies to brands. To neutralize customer insurgency before it spreads, build your community and engage your brand advocates. Potential insurgents are far more likely to trust a fellow customer than to you. So create your own volunteer army, and reduce the space for would-be insurgents to gain footing.
Level 3: Involve and Transform
Listening and engaging are useful to catch insurgency before it spreads. But the best strategy is to prevent it from happening in the first place. This requires involving customers and transforming strategy, relationships, and processes, both inside and outside the organization.
Retired General Stan McChrystal (the current boss of one of the authors) describes this strategy as building a “team of teams.” This collaborative approach was central to his leadership of the U.S. Special Forces and the coalition forces in Afghanistan. He created a shared purpose across all of the relevant constituencies, both military and civilian, top down from headquarters and bottom up from the field.
One of the best examples of a company evolving to counter customer insurgency is Dell. In 2005, a single post by blogger Jeff Jarvis led to a customer uprising now known as “Dell Hell.” Dell’s response, led by CEO Michael Dell, was to “join the conversation your customers are having without you.” Dell began with customer feedback systems, a listening command center, and a customer SOS team to detect early signs of potential customer insurgence (Level 1). They established communities for customers to provide peer support and a forum for product co-creation (Level 2). Finally, they implemented cross-functional processes, leadership, and accountability — a “team of teams” across marketing, operations, product development and customer support (Level 3). The result is a measurable improvement in Dell’s net promoter scores and, according to Dell executives, a shift in the culture from a fear of the customer to co-operation, transparency, and openness to innovation.
Dell learned the hard way that consumers are not just consumers any more. They are collaborators, conspirators, and co-creators. Fail to listen, engage, and involve and you may find yourself with a customer insurgency. As a brand, you can’t create strategy exclusively from headquarters, any more than the military can fight terrorists from a battleship. But by listening to social channels, creating a volunteer army of brand advocates, and including customers in your team of teams, you will find yourself a winner in the social revolution.