On a personal level, most people will only fundamentally change their diet and exercise routines after experiencing a catastrophic event - a stroke, a heart attack or a coronary bypass. In fact, some study suggest that two years after a coronary bypass, 90% of people will revert back to their old diet habits. Maybe that event is not catastrophic enough.

On a company level, Apple and IBM would probably not have been able to become what they are right now had they not had a near-death experience.

And on a societal level, look at what happens to our oil-dependency. We know that we could wean ourselves from fossil fuel dependency in a decade or so, but serious talk about this possibility did not happen until oil prices reached levels that became painful for all of us - individuals, companies and government. And if oil prices decrease enough we could well find ourselves back in a situation where we are all fat and happy with cheap oil and not planning for the inevitable fact that we are not only going to run out of it, but that we are also ruining the environment in which we live by using it.

So if fundamental change requires a catastrophic, near-death experience, have we yet reached the point where marketers will change the way they market, or are we just not there yet? Companies shut off marketing budgets as if they had no impact anyway - and the average CMO tenure is clearly an indicator that companies think marketing is no longer working. But is it enough to fundamentally change the way we think about marketing?

What do you think?

We created a slidecast from the experience, which you can view/listen to here:

Note that next week Thursday at 2pm ET , Ed and I will be at it again during a webinar hosted by Awareness. We hope you can join us there and that perhaps we can address your questions directly as well.

So is it a good idea to have your community efforts led by IT, or not?

Personally I think it is not a good idea for two reasons. First off, the default first step that you would expect an IT department to focus on is technology. And as we have found and documented, that is the wrong place to start. If your community will not survive in a discussion thread it will not survive anywhere. The key forces generating dynamics of increasing returns are content, members, member profiles and transaction - not the technology infrastructure nor the social infrastructure as described in this post.

The second reason why IT may be the wrong place to start is because if they get the budget and the mandate to build a community, they will do exactly that - build one. And yet your community may already exist somewhere else - on Facebook, Yahoo Groups, or in some other user-started community like the Tivo community. If that is the case then the best results from leveraging communities will be gained from engaging with the community on their existing turf instead of going through the expense of trying to get them to relocate on your turf.

What is your opinion?

Well - there is some of that and then there is a whole other side to the story that we uncovered as part of the study.

Let me use this post to clarify some of the misunderstandings in the interpretations of the business community study results.

Do most online communities indeed fail?

In fact we found many very successful community examples in the companies that participated in the study - many of them well known and well documented case studies, some less so. We should also point out that most communities that were part of the study are less than 1 year old - so we do not really know whether they are successes or failures.

It is true that many communities fail, and will continue to do so. When they do, however, they do so for very similar reasons - so you’d think it should be fairly easy to avoid the pitfalls.

The first reason is that many companies who embark on community initiatives are putting their company or product at the center of the effort. As many pointed out, that is obviously WRONG - you need to put the community member at the center and make sure that there is some passion around the initiative.

Do companies spend too much on Technology?

The second main reason for community failures, and one that got misinterpreted by many, is that companies are starting community initiatives by focusing on the technology first. It’s not that they are spending too much on technology, it’s that the technology platform is not what is going to result in the dynamics of increasing return that characterize successful communities.

Should all companies have community initiatives?

If you can create a place for your customers and prospects to come and share their passion, and that place does not yet exist, then you should absolutely try to have a community initiative. But don’t be blinded by “the not invented here” syndrome - maybe the best way for your company to leverage communities is to go on Facebook, MySpace or some other community that is user controlled, like the Tivo community used to be.

As some pointed out, there is another big reason why companies should always think about affiliating with other communities - and that is that people will only participate in a limited number of communities. I won’t participate in a Bank of America small business community and a Microsoft small business community and maybe a few others - I only have so much bandwidth.

When is $1M too much to spend on a community?

Many jumped on the bandwagon that it is unbelievable for companies to spend $1M on customer communities…[update 07/21 @7:45pm ET - only 6% of the companies who participated in the study spent more than $1M on their communities]

Maybe yes, maybe no…

If you are small startup, then $1M is definitely way too much. If you are a bigger company and spend $1M on designing a slick community with worthless technology bells and whistles, then that is too much to. But as I wrote by using the example of Bank Of America, in some cases companies are not spending enough to make a difference with their online community. If you are a Fortune 50 company with billions of dollars in revenues, and routinely spend multiple millions of dollars on advertising media, then only spending a few hundred thousand dollars or even a million dollars on your community will just not move the needle. And if the goal of everything you do is to create new customers in a way that will make a difference for your company, then you need to invest appropriately.

Now if you are going to spend $1M - you have to make sure that the investments need to be made in content creation, moderation and awareness development (no, I did not say advertising or direct mail ) to support large numbers of users.

Do CMOs get it?

Talk about a loaded question…but since many were quick to dismiss the capabilities of marketers it is one that I thought should be addressed.

And the answer again is - some do, some don’t, and many are trying to figure things out.

Some are indeed looking at communities as another channel through which to interrupt their customers and prospects with product messages - and most of them fail fast and miserably.

Some don’t quite get what they inherited and keep it small and contained so that it does not make it on their radar screen.

And some know that it is transforming their role and giving them a renewed chance to be the key market strategist at the executive table and the representative of the voice of the customer within their company - and those are the ones who are reaping all the gains.

So, again - do most communities fail?

Our study did not show that. But yes, many community initiatives do fail - either because nobody comes (or they come once and then never come again), or because they fail to move the needle for companies and do therefore not receive the executive attention that they deserve. As I said before, the reasons why they fail are very similar from one case to the next and should therefore be avoidable. But there are many case studies where companies delivered game changing results to their company’s bottom line - and the reason why they succeeded are very similar as well.

The folks at Fiskars did a lot of things right in order to build this community - they found an area of passion, scrapbooking, and they put the users at the center of their community, not their company nor their products.

In a nutshell, the Fiskateer community is a community of passionate scrapbookers who are helping one another in every aspect of the hobby - from providing social interaction guidelines for the community to finding the right tools for the job. A handful of community leaders are paid by Fiskars, all others are volunteers.

What started as a modest PR project, with a goal of recruiting 250 community members within 6 months, ended up with a movement of 5,000 passionate fiskateers in 18 months. In fact they achieved their original goal of 250 members in less than 48 hours. Another goal was for them to increase chatter by 10%, which they instead grew by 600%. They also blew past their original goal of increasing store sales by 10% and instead increased store sales by 300%.

What’s even better is that the program, which was originally funded by Fiskars at the tune of $1M, is now fully paid for by the box stores.

And just like we found with our own study on how companies leverage communities, they had some unexpected benefits from their community, including:

• The participation of the community in the R&D process
• Having the community members create better advertising than they used to
• Having community members take over much of the customer support function
• Having the community rally around the company when they had a PR crisis on their hands.

The key to success, said Fiskars’ Jay Gillespie, is to keep yourself accountable to the fans - not the company.

When companies deploy successful communities, the benefits are not level-setting; they are truly game-changing.

Bob Loidice, the President and CEO of the ANA, opened the conference with a pretty strong message to attendees - It’s Time to Reinvent Marketing. With technology having put the customer in charge, you need to think about all aspects of marketing differently - think differently about the buyer, think differently about media, manage your brand differently and think differently about your measurement platform.

It’s a message that I had not heard at a variety of other advertising conferences which I attended in the last 18 months - where most attendees and speakers were still very much in denial of the tsunami that is currently hitting marketers all over the world. Although I think I did hear Bob say that there are new tools for consumers to “receive” messages, a glitch which I’ll attribute to a lifetime of working in the advertising industry, his message was very strong and well informed.

In his welcome address he listed companies who are doing it well - including:

• GE, which developed a complete new system for marketing management
• IBM, which completely transformed itself (although I believe that would not have been possible if they had not experienced a “near death” experience)
• Google, with its Adwords business model
• Apple, with the iPod
• Toyota, with their extreme Six Sigma focus
• Burger King, where they outsourced just about all marketing to consumers
• Philips Norelco, with their clever Men Grooming campaign
• Mastercard, with their Priceless campaign
• Unilever, with Dove redefining beauty
• Best Buy, with their organizational changes that eliminated the importance of “face time”
• P&G, with their content driven pampers campaign

He also reviewed some of the depressing stats that characterize the state of marketing accountability in companies today - including the fact that 40% of marketing departments have goals that are internally focused instead of goals that are in support of corporate objectives, and that 30% have no measurement system in place whatsoever. No wonder that the marketing budgets are the first ones to go when the economy hits the skids - apparently with 60% of marketing budgets being decreased in this latest downturn.

There were some real interesting takeaways from the study, many of which I have been writing about in more detail over the past few months. They include:

• The worst practices (i.e., build it and they will come, focus on technology first, etc.) for managing communities are well entrenched and will continue to cause many community efforts to fail.
• Business communities have the potential to transform the role of the CMO, but for that to truly happen it will take some new management thinking
• There is a significant mismatch between the goals that companies set for themselves and their size and the associated investments and measurements that they use to measure the success of those communities.

If you would like a briefing on the findings, please contact me (francois [at] beelinelabs.com or 617.899.1698) and I will arrange for you to get one.

On July 30th, you can also join us for a webinar debrief which will be hosted by Deloitte and for which you can register here.