Engagement is what enables organizations to coordinate external contributions of work and intelligence. It’s also the future of the human-machine relationship.
Engagement is one of the most important things that organizations do. It is the lifeblood of companies like Google, Amazon, and Uber. (In Facebook’s annual report, you’ll find “decreased user engagement” ranked as a top-three risk to investors.) It’s been said that data—particularly user data—is the new oil. As we’ll see shortly, this data—and the engagement that creates it—serves as a foundational platform for much of today’s tech sector. It is also the key to understanding the ongoing automation of the service economy. And finally, engagement is the emerging nexus of contact—the interface—between humans and machines.
A Metaphor for Stakeholder Engagement
So, what is engagement, really? At the most basic level, I’d like to propose to you that it’s individual parts coming together and working as a new whole. That might seem like an abstract way of thinking about the topic. But I think it’s useful for shifting perspective and seeing engagement in a bigger frame.
The best metaphor I’ve found for describing parts coming together into a new whole is a cell. To be more specific, I’d like you to think of the cell’s membrane as a metaphor for engagement.
The membrane is how the cell engages its surroundings. It’s what separates the cell from its environment—but in a ‘semi-permeable’ way that allows it to be picky about what gets in and what gets out. Pictures of membranes often look like walls with stuff protruding from them. But they are actually more like oily soap bubbles with fats, proteins, and sugars floating in their surfaces. These tiny, embedded structures enable the cell to communicate and coordinate with the outside world. (See this fun, informative video by the Amoeba Sisters.)
Like cells, businesses—and organizations of all types—coordinate outside work. Cells use membranes, while companies use a mix of processes, people, and technology that we commonly describe as “engagement.”
Internal Management Vs. External Engagement
Work happens inside companies too, of course, and we can extend our metaphor by picturing it as organelles within the cell. Unlike working with the outside world, cells are able to exert direct control over this internal coordination. Like cells, firms maintain internal control through organizational structures (management hierarchies) and a shared DNA (management objectives). Hierarchies and goals are very effective for organizing lots of people around shared goals.
Outside work has to be coordinated differently, however, since it sits outside of the control of the management hierarchy. To organize this work, managers often partner with other organizations. You can think of it as outsourcing the goals of one organization to an external management hierarchy.
This approach to external coordination doesn’t work, however, without a hierarchy to hold it. And as we’ll see, that is precisely the case with end users and their increasingly critical role in value creation in the service economy. Companies can’t manage this group of collaborators—they can only engage them.
Stakeholder Engagement in the Service Economy
To see why engagement matters with end users, we need to understand some important aspects of the service economy. For example, when you look closely, you see that companies always create services by partnering with their end-users. Without you listening to that song, Spotify can’t actually fulfill its role as a service provider. You, the end user, are a key part of the value-creation process.
In this sense, end users play a critical role in the way firms coordinate their work. And since we don’t report into their organizational hierarchy and aren’t paid, we can’t be ‘managed’ in the normal sense. The only way to coordinate our work is to ‘engage’ it.
The Stakeholder Engagement Membrane in Services
End-user engagement is becoming more important for two reasons. The first is that it’s tied to the dynamic services sector, which now accounts for 80 percent of US GDP. Services have also driven most of our job growth over the last eighty years:
The people in those jobs—the store clerks, trucker, and doctors—have long been our primary point of contact in service businesses. In this sense, people traditionally acted as the membrane through which we engage services. Your grandparents would never have used the word “engagement” to talk about their local butcher or baker though. That’s because, in the economy of their time, buying a pork chop meant simply talking to Fred.
As service markets evolved, they consolidated. Local grocers turned into Wallmarts and burger joints into Burger Kings. These larger—more profit-oriented—corporations ushered in a relentless focus on productivity. They built systems to make working with users more efficient. And as a result, our contact with companies changed. The engagement membrane became less human—and more machine.
An Early Peek into Web Engagement
Between 1994 and 1999, I actually sold cars for Microsoft. Back then the company was a leader in consumer websites like Expedia and CarPoint, the car-buying service that I started. Even in those early days, we knew we’d hit on something revolutionary. We just didn’t quite understand what it was.
Our team soon came to see user movements through the CarPoint site as a kind of engagement funnel. At the top of the funnel were some 7 million monthly visitors. We designed the site to convert these users, step-by-step, into prospective buyers coming out of the bottom of the funnel.
In early 1998, we started tweaking our design, hoping to entice more users through the funnel. In one case, we let people choose the features and color of their car before asking for their name and contact information. That simple change had a huge impact. Conversion rates jumped from 1.8% to 5%, increasing our flow of likely car buyers by more than 650%.
What we didn’t realize then was that we’d gotten a sneak peek into the emerging field of user engagement. We were unwitting witnesses to the birth of a new feedback loop between software and human psychology.
Automating the Service Economy
That feedback loop wasn’t just my team automating the way people bought cars though. No, we were part of a much larger wave of automation just beginning to sweep across the service economy. Employees who once served us shakes and movies were washed away. And in its wake, this wave deposited a new breed of technologies for serving ourselves.
As the service economy automates, we bypass employees and directly engage companies through their machines. As a result, end users now create economic value with far less assistance from employees than in the past. This activity may not feel like work. But that’s because we haven’t fully digested the implications of booking our own flights on travel sites like Expedia. We watch movies in bed, buy books over breakfast and create music playlists on the bus. And we do all this by serving ourselves through a new engagement membrane—made of machines.
And this gets us to the second reason end-user collaboration matters so much today. Self-service machines are what automation looks like when it meets the service economy. They range from early gumball machines to bank ATMs, websites like CarPoint and mobile apps like Lyft.
By reducing the need for more employees, these technologies make it easy to scale coordination with millions—and even billions—of people. The more users these services attract, the more data they collect. That data then fuels machine learning, making the services smarter and more compelling. The result is a feedback loop between software, hardware, and end users spiraling upwards into uncanny intelligence.
A Smart Stakeholder Engagement Membrane
Automated self-service is thus the interface through which companies harness vast new pools of work and organizational intelligence. The self-service interface is thus the new engagement membrane.
Self-service is the common thread that runs through today’s most exciting—and valuable—companies. Together, these firms are automating the service economy.
Their software and hardware is designed specifically to automate user engagement. Self-service automation is what allows these companies to coordinate “Internet-scale” contributions of work and intelligence. Their self-service interfaces are the new engagement membrane. There is no other place where more humans contact machines and than these interfaces. That suggests that they play a very important role in our future relationship with machines.
This is why automated self-service is so important. It’s also why engagement matters so much and why so many cutting-edge technology firms invest so deeply in it.
11 thoughts on “What do Automation and AI Hold for the Future of Stakeholder Engagement?”
Thank you Gideon. You always help me understand the complexity of an issue.
Thanks for the note, Rick. I’m glad it’s useful.
Gideon, explained with verve. Love this.
Thanks, Zara. Verve!! I love it.
Spot on. This aligns very closely with my own thinking. I look forward to your further thoughts.
Thanks very much, Jonathan. That’s good to hear.
Very interesting and well done! It is interesting for me to see how I choose so many providers based primarily on how easy they are to buy from or work with. Chewy.com is a great example, whereby we can order cat food or whatever with a few simple clicks, and get it tomorrow. I was fearful when PetSmart bought this innovative company, but so far they have left them alone. Other sites can be difficult. We do extensive online shopping. For reasons too lengthy to explain, frequently our street address shows up as “not a valid address”, or “incorrect address.” Many sites now allow us to click “Use this address anyway.” Ulta.com not only doesn’t have that button, but one cannot call in to ask them to override the address, as they are not allowed “for security reasons.” ?? Therefore, my wife has migrated to other sites. I have tried to explain to Ulta how they are unnecessarily losing business. American Airlines has vastly improved its site, compared to others who are still cumbersome and confusing. Those companies who catch on, to provide simple and easy, will be the winners.
That’s really interesting about your address, Bill. Weird how a glitch in a GIS layer of these systems effectively makes you an ecommerce persona non grata. The fact that it shows up in multiple sites is interesting too. I wonder if it’s a sign that they are all using the same system.
And yes, the service companies that nail these interfaces are the ones that will actually be around tomorrow. The others? Probably not.
Through all of my research in the address thing, I have learned that the USPS maintains an address database that UPS, FedEx, and most all online companies draw from. Unfortunately, I have the same issue at our other home in Colorado, as well. Imagine trying to correct something like this with USPS, which is why after numerous meetings and conversations over several years, the problem still exists.
Wow, that must be incredibly frustrating, Bill. You’d think that they’d have some sort of process for handling this.
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