At Friday’s Collective Intelligence leadership retreat at the Gleacher Executive Center in Chicago [ http://www.pmcluster.com/ ], one of the main themes was implementation of enterprise social media, notably enterprise prediction markets, collaborative forecasting applications and innovation leadership subsystems.

The Sponsors of your Worldwide Prediction Markets Community and the Chicago Collective Intelligence Summit are these leading firms:

• Aurora WDC -- http://aurorawdc.com/
• Consensus Point -- http:/consensuspoint.com/
• Crowdcast - http://crowdcast.com
• Exago Markets -- http://exagomarkets.com
• Motorola -- http://motorola.com/
• Spigit -- http://wwww.spigit.com/

Principals from these firms activated engaging conversations concerning Next Practices to achieve enterprise success with social media (ESM), particularly collective intelligence and prediction markets. These posts identify some of the success factors and truths required for adoption, pull-thru and achievement with prediction markets and collective intelligence.

Part I: Background Success Factors for ESM Deployment Success

ESM Project Selection

Among the most important steps for ESM success is project selection. Recognizing the enterprise is a commercial business entity makes this activity simple. Recall the sole purpose of the enterprise is to create free cash flows (FCF). These are distributed among the holders of securities of the organization. Period.

All enterprise employees are fiduciaries. They are charged with creating FCF from capital. No exceptions. If you aren’t doing this for your company you should question your role.

Valuation of enterprise activities uses discounted cash flow (DCF). All enterprise initiatives must drive DCF. This includes enterprise social media. There are only six ways to improve DCF.

1. Decrease Expenses
2. Increase Profit Margin
3. Increase Revenue
4. Lower Taxes
5. Decrease Amount of Rqr’d Capital
6. Decrease Cost of Capital

If your enterprise social media, prediction market or collective intelligence initiative does not drive one or more of these essential DCF properties, abandon it immediately and find one that does.

If you can’t find an ESM project that will sharply expand DCF do not pursue ESM, prediction markets or collective intelligence. The stakes are too high. Honestly, activities that aren’t driving DCF are no use to anyone.

Most enterprise projects fail because they cannot be linked to DCF improvements.

Note: concerning social media product selection ask you supplier how their offering(s) drive DCF. The suppliers above and others often have excellent cases on how their offerings improve business performance. However, if a supplier cannot comprehensively articulate how their clients are achieving performance improvements on at least one of the DCF requirements, move on immediately.

Now with your newly-minted enterprise fiduciary certificate in hand, you may begin to consider ESM implementations.

People Come First

First and foremost, never take ESM deployment advice from people with zero or limited enterprise application deployment experience. Avoid corporate IT experts, management consulting blowhards and professorial dilettantes. Avoid journalists, developers, bloggers, suppliers, researchers and vendors with no enterprise deployment experience whatsoever.

People, by far, are the most important element of every ESM deployment. Billions are lost every year in failed enterprise deployments. Greater than 60% of enterprise projects are severely challenged or outright failures according to the famous, annual Standish Group research. Most of these failures are traceable directly to inexperienced people that have not mastered the value creating properties of enterprise projects expressed by DCF. 

This dismal rate is especially true of enterprise projects with the specious ‘executive sponsorship’ or worse, the insidious ‘change management’ nonsense. Avoid these code words like the plague. They are useless. Recall, ESM undertakings, like markets, are complex adaptive systems. They cannot be planned or controlled -- only led and served. Besides, if there exists a compelling DCF narrative there is no need for these deceptive concepts.

To assure ESM success and prosperity develop your deployment narrative around value, DCF and above all, attract and hire the right people. Top enterprise leaders realize ESM outcomes are largely non-deterministic in nature. Controlling and directing ESM as a conventional management activity will lead to confident failure every time.  

The most important rule to remember for ESM success is: seek out and hire talent with demonstrable enterprise deployment success. Achievements must span at least a decade. Talent in diverse environments including ERP, SCM, CRM, SFA and socially-mediated applications like enterprise collaboration is scarce and difficult to find. It is also extremely valuable.

“As managers, we need to shift our thinking from command and control to coordinate and cultivate - the best way to gain power is to give it away.”

- Thomas W. Malone
Sloan School of Management
MIT Center for Collective Intelligence

The secret that all experienced ESM implementation leaders know is that success depends entirely on achieving DCF improvements and comprehensive value for the end-users - nothing else. They know how an offering is used, is far more important than how it works. Meanwhile, time after time, successful ESM projects like prediction markets start as grassroots efforts.  

Leaders implementing ESM with focus on people and a value-based, DCF approach enjoy enormous improvements in performance. They also discover three key advantages of this approach: subsidiarity, resiliency and sustainability.

• Subsidiarity is the principle that value creation must be done by the least centralized, qualified person. Focus must be on empowering people to create value in the enterprise marketplace. The ESM deployment advantages of subsidiarity are far lower cost structures and substantial productivity growth.
  
• Resiliency is the ability to recover positively from change. A competent DCF narrative is robust. The people focus can absorb shock extremely well. Well led people will automatically rebuild themselves to produce even stronger networks and business performance. 
  
• Sustainability is the property of ESM that makes itself usefully productive indefinitely. Leaders expand sustainability through interdependence and relationships, not command and control. “Coordination and cultivation” propels business performance to new heights.

Be patient since it is not easy to un-learn conventional management. Remember, equipped With a compelling business DCF narrative and the right talent, your two biggest hurdles to ESM success are overcome.

Tomorrow Part II: Axioms of ESM Deployment Success