The Editors Report: Internal Marketing as Seen by the Harvard Business Review

How much time do you spend pondering how Linux open-source development processes could improve your business?

Not much, we’ll bet. But the brains at the Harvard Business Review have been thinking about it, as shown by two articles in their July-August issue.

We gave them a read, and were impessed that both articles address the subject of internal marketing.

The first piece is “Collaboration Rules,” by Philip Evans and Bob Wolf of the Boston Consulting Group. It urges readers to foster “self-organizing communities” in the workplace.

That sounds to us like the “horizontal networks” proposed by Northwestern U.’s Don Schultz. And Evans and Wolf offer similar advice on how to activate them.

First, open up the organization and make it easier for individuals to organize around common goals, they say. Make any ideas the property of the whole group, not just the person who came up with them. Above all, improve your communication.

The payoff?

“Bring together all these elements, and you have a virtuous circle,” the authors write. “A dense, self-organizing network creates the conditions for large-scale trust.”

This, in turn, will drive down transaction costs, resulting in “lots of small transactions, which create a cumulatively deepening, self-organized network.”

What’s this have to do with Linux? Linux is “the creation of an essentially voluntary, self-organizing community of thousands of programmers and companies,” Evans and Wolf write. “Most leaders would sell their grandmothers for workforces that collaborate as efficiently, frictionlessly, and creatively as the self-styled Linux ‘hackers.’”

The second piece is “Manage Human Sigma,” by the Gallup Organization’s John Fleming, Curt Coffman and James Harter. It advises firms to inject a human element into data-driven quality management processes—and do it locally.

“High-level averages of company performance may provide good marketing copy,” the authors say, “But because they obscure the considerable variation from location to location within a company, they don’t give managers and executives the information they need to improve performance.”

Like Evans and Wolf, the Gallup trio claims that deeper employee and customer engagement can lead to a virtuous cycle and improved financial performance.

The answer is a quality improvement approach called Human Sigma, they continue. And the driving factor is human emotion.

Gallup studied Japanese consumers, going so far as to measure their brain activity. It broke the customers of a luxury retailer into three emotional groups: Strongly attached (to the retailer), moderately attached and unattached.

What happened?

“The brains of customers who had the strongest levels of emotional attachment to the retailer were significantly more active while the subjects were thinking about the company,” the authors write.

Their conclusion: That a proper approach to “measuring and managing the quality of the employee-customer interaction needs to take customers’ emotions into account.”

And this means that employees must be positively engaged. Those who are have” higher levels of productivity and profitability, better safety and attendance records, and higher levels retention. Not surprisingly, they’re also more effective at engaging the customers they serve.”

There’s more to chew on, of course, and we urge you to read the HBR articles. At their most basic level, both pieces stress trust and communication. And they note that the two can become mutually reinforcing.

Another key takeaway is the importance of thinking small—focus on the human network, they say, and that will take care of the organization.

Technology is not the answer—it is a tool whose function it is to help employees work together as teams. Peter Drucker identified marketing as one of the two basic functions of a company and said that concern for it should “permeate all areas of the enterprise.” Since then, it has become a cliché to say that every member of an firm can in some way be considered a marketer.

But that’s just what Evans and Wolf are getting at: If common goals are established and understood by all, powerful ideas can come from anywhere.

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