InformationWeek: What happens to customers if you can't obtain or share that information about them?

O'Leary: People think of Chase as one entity. They don't think of it as 450 legal entities--or whatever the number is--that are operating independently. There's an expectation that they should be able to transact across the institution. If someone calls up this morning and says, "I'm interested in paying off my mortgage. How much do I have in my money-market fund and how much do I have in my savings account--and by the way, can you make that payment now for me?" they expect us to be able to tell them the information and make the payment. If we say, "Sorry, you have to make another phone call to find out what your balance is and call me back once you know it, then make another phone call if you want to pay something down," that's not a feel-good situation. That's the kind of balance, right now, we're not able to do.

Guleri: There's the issue of whether consumers getting access to all this data is a threat to a company or an advantage. It depends whether the company is aggressive and tries to turn hosting and managing and listening to and facilitating the community into a positive, where they're learning more and creating more, vs. a company that gets caught by surprise as communities that have been informed give information to the consumer that the company wasn't aware of. Companies that are aggressive about creating community around their products and their industry can be at a substantial advantage, even as customers are getting more powerful.

Prahalad: The communities are going to form, with or without the companies. The question is, What do you do as a company? How do you selectively participate in the community without appearing to intervene and abuse that relationship? Because, increasingly, the ability of the company to participate in an ongoing dialogue in the community is going to depend essentially on how much the company is trusted. So I think the more transparent the company becomes--the more transparent the value chain--the greater it's going to be trusted. It raises a whole new set of issues for managers who traditionally assume that they can hold information as a source of advantage.
The nature of competitive advantage may be shifting dramatically from an efficiency-oriented view of the chain to the capacity for continuous innovation and allowing consumers to participate in the innovative process. It's a very different model for managers to come to terms with.

InformationWeek: What do people think about letting the customer participate in the innovative process? What do you see with your customers, and how are you practicing that in your company?

Chen: As was said, it's inevitable, whether you take a proactive approach or not. And you have to nurture it, because if it's a free-for-all, it could be a big time drain, and not constructive of the whole process.
There are a number of dot-coms out there trying to become third-party griping sites, so a lot of this information could be analyzed and channeled into a positive sort of use for the company. Companies are beginning to realize how powerful this is and how to put it into a positive process to help themselves improve their businesses. It's certainly not a surprise that all this has to be coordinated, vis-à-vis your traditional channels.
We're a small company, so we employ a direct sales force, typically with third-party consulting. We touch our customers pretty closely, and therefore, from an E-business standpoint, operate more as a B-to-B company than on the massive scale of [interacting with] customers in the consumer space. For us, I wouldn't say it's easy but perhaps a little more familiar in the traditional sense. So we have lots of feedback loops that we're trying to construct. And we utilize third parties to do surveys for measuring the more meaningful things and then try to assign the top 20 executives to the top 120 accounts and just basically take a very watchful eye on all that's going on and then make sure that we got all our ops and dials on very clear alert about what's going on in the marketplace.
The key here is that feedback will be absolutely essential in constructing an E-business presence. And whether you proactively do it or not, it's bound to happen because customers want to be heard and you might as well try to leverage that and make that into a positive experience for both sides.

InformationWeek: Can you talk about customer entertainment and your role in creating customer entertainment and getting closer to the customer?

O'Leary: The best technologies are ones with definitions like embedded or passive, simple or fun. Those are the really good technologies. The ones where you know you're dealing with technology really don't work well in the B-to-C model. At the end of the day, they don't work that well in B-to-B, either. Most of the technology being deployed today is ugly. It's not fun. It's not passive. It's an active challenge to the user and to the client to take advantage of. We're going to have to build more of the instruction set into a model that anyone can pick up and use intuitively if we're going to be successful--not only use it intuitively but enjoy the experience. Those are the kind of models that are going to win most frequently going forward.

Prahalad: In our work, we've used terms like engagement and excitement. We want consumers to be engaged with whatever they're doing, whether that's a checking account transaction or a market transaction. They're willing to talk with the company and provide feedback because they're emotionally and intellectually engaged.
At the same time, I'm moving from thinking about customer satisfaction to customer excitement. A satisfied customer doesn't do much for me; an excited employee and an excited customer does a lot. So the question is, How do you create the systems that allow people to innovate and become engaged and excited? It's a big challenge, but it's the direction in which our society is moving. The companies that start with those kinds of words--fun, passive, exciting--are going to win.

InformationWeek: How do you measure that success? Do you only look at the classical set of measurements, or will a new kind of metric need to be created?

O'Leary: For a customer metric, instead of, How much did you earn? or How long did it take? which are efficiency based, it might start with--How did they feel and what did you learn?

Prahalad: I'll go one step further. Customer retention can be a very good metric. Customers coming back for other services can be another metric. The point is very important. We can't just go back to the old market share measurement. We need to get a much deeper understanding of the qualitative nature of the relationship that's being built.
If you look at the telecom market, retention is a huge issue. The cost of losing customers continuously is a big problem. The same is true in the credit-card business. The question is, Do these people come back for newer businesses with the same company? Do they ask for more? Do they give suggestions? These are the metrics we ought to dial up in any marketplace. And I would say that this thinking is at a very embryonic stage in most companies.

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