And of course we have Dave Barnes, the senior vice president and chief information officer at UPS.  I think we’re all familiar with UPS.  Dave is a member of the Management Committee that oversees the day-to-day operations of the company and he also chairs the UPS Information Technology Governance Committee, which is responsible for the direction of UPS technology investments and ensuring that IT stays aligned with the company’s business vision and strategy. 

One of the things you learn at UPS is the scale of the company.  We’re operating in 200 countries and territories.  We’re the world’s largest small package company.  We’re a world leader in logistics and we’re well known for our skills in freight.  What that means at the end of the day is we have a wide range of customers – from the smallest businesses to the largest businesses, from small entrepreneurs in the United States to emerging entrepreneurs in India and China.  We’ve had to adapt to get the message to the customer through all of that without becoming bureaucratic. We have to manage complexity of scale like the previous speaker talked about.  We handle 15 million plus packages a day but we still have to be able to do it in a way that it looks like we’re doing it just for you rather than you’re just one of many.  So customization has played a key role and an area where we’ve been able to move forward.

We also have to deal with information on a very large scale. We have the largest IBM DB2 database in existence in private hands managing those environments.  It takes a lot of effort.  It creates a lot of complexity in terms of privacy laws.  Both speakers have mentioned the issues with privacy.  It benefits us and very succinctly so.  We have a lot of very valuable information and over seven million daily customers. It’s proprietary to them – knowledge that competitors would love to get their hands on.  It’s knowledge on regulatory authority that governments around the world would like to know.  It’s shared with us because we don’t share that information with anybody.  And that issue of security is paramount for our company as it is for most others.  It’s also different in that we’re in 200 countries and territories so we have to deal with multiple regulations.  It’s not just the U.S. regulatory environments and the maze of those particular sets of issues that are presented to us but all the countries around the world.  It’s a full-time set of jobs just to stay abreast of the emerging legislation in those areas.  And of course there is the other side of life, which are the terrorist threats and the issues of how to handle information dealing with goods that these people are very interested in getting their hands on.  So we go to great lengths to protect things. In terms of goods moved, we handle about 6% of the U.S. GDP and about 2% of the world GDP. So if you’re manufacturing something or shipping something out, we’re part of that in some perspective.

It’s part of our DNA that we have to be very close to customers.  We think our best ambassadors are our drivers.  In fact most of the ideas that come in – if you were to look at in terms of just pure quantity – will come through the interactions of our drivers and our customers around the world.  However, we have to go across multiple channels and that has grown dramatically over the last couple of years.  The social media channel has opened a whole new environment for us.  If you went back to where we were before, it was a lot of interaction – all different levels of senior management, all the way down to our drivers, everybody in between – very much trying to understand what does the customer want and try to take those ideas and reflect them in the products and services that we would make.  But that’s kind of a one-to-one communication.  You might have some focus groups but you really have a hard time managing seven million-plus customers that way.  With the addition of social media you’ve got another world going.  One-to-one becomes one-to-many.  And even more interesting is the communication of customer-to-customer that’s come about.  You do spend a lot of time and effort communicating with them – and them to us – in developing that trust.  Well, now they’re communicating to and from themselves and we’re just a participant in those discussions and trying to understand the space like I think most of the other people in the room are.  It’s evolving so fast you really can’t stand still.

It’s not an issue of voice or unvoice.  It’s an issue of you have to be, as Gary said, where your customers are.  At the end of the day, they really control this game.  So if they want to be on a voice-initiated activity, you’ve got to provide that and you have to differentiate yourself from your competitors with high quality to solve their problems or whatever the customer is after.  If they interact on the Web, you have to be there.   If they want to do it on a mobile, you better be there.  If they want to do in a social media environment, you better be there. 

Let’s take a look at Twitter.  It’s your favorite.  We’re just now getting into Twitter.  We’ve been in it for a few months.  We’re in there in three formal ways.  One, we have Thomas at UPS, which is an employee of ours in an interactive communications group, which is part of our marketing communications team.  And he has developed a persona there.  So people will go and seek him out and he will seek out people – it works both ways – who are talking among themselves and to and from themselves about problems they’ve had with UPS or issues or concerns. He’ll interact with them and give them a way to accelerate their problem into a more effective channel.  If they want to stay in Twitter, so be it.  If they want to pass on to a phone center, so be it.  If they want to pass over to email, so be it.  So it’s been a very good way for us to seek out customers proactively and solve their issues. 

We have another one, which is UPS Racing.  It’s on Twitter and it follows our driver and how he performs in races on the NASCAR circuit.  That’s actually our most actively watched one.  People just love to hear the minute-by-minute tweets of what’s happening out on the race track if they couldn’t see it on TV because they can take the tweets out in whatever environment they want whether it be tied to a PC or a mobile device. 

But perhaps even more important to us are the other channels.  Web is first and foremost our key channel.  We have over 23 million packages tracked on a normal average day.  At peak season that will go to over 37 million packages that people track just through the Web interfaces.  It’s important for that to deliver value from their perspective, not ours.  So this whole thing is measured on a customer-centered point of view.  We have chat but what’s more interesting is now we have avatars that chat, which again is the ability to present a persona in a chat environment rather than just the chat itself.  So you’re always looking for how to differentiate, to serve the needs, to provide the media that the customer chooses.  We have phone centers that are massively consolidated but they are still global.  For some customers that will always be there as an opportunity.  But we see it moving rapidly into other channels and we’re there with them and always trying to seek out new ones.

But what about the risk of allowing customers to have interaction that you can’t control.  Is it something that companies just have to get over and deal with or is there a way for you to play a greater role in that discussion?

It’s not a choice of whether you can control it or not.  It’s already happening.  There are a number of websites out there where people will go to great lengths to provide a forum where they can talk about your company and the interactions that people have had with you.  You can choose to participate in that environment or you can choose to ignore it.  I think it’s much smarter to choose to participate.  It means you better have a strategy though.  You can’t just haphazardly wander in social media without a strategy.  If you have a clear-cut strategy, you can go in.  You can definitely do brand building.  There’s no doubt that if you have people out there talking about things in a negative way about your company, about your services, about your products, then you can interact with them and try to uplift your brand if indeed it can be uplifted. I’m sure there are some companies out there who suffer from things that are very difficult to correct.  For us we found it to be a very good thing.  There’s no doubt if we’re handling 50 million packages a day there will be some problem somewhere for somebody.  We’d rather be out there interacting with customers than to have them interacting without us.

I certainly agree with the entire panel especially Gary’s point about how there’s a new generation coming in and these are technologies that people are going to deal with anyway.  I’m just wondering if anyone has looked at some of the network appliances that stand between the enterprise and the outside world just to make sure they know what sensitive information is going out -- looking at what employees are putting out there because people are going to use it whether you allow it or not even if you have a policy in place.  How do you enforce that?

What’s interesting about that question, if I can add to it, is there are not really two separate universes – although we in the business world would like to make it that way.  And definitely I side with Gary that internally you have no choice for a regulatory environment to position your company appropriately.  And so you don’t lay around a set of tools of whatever type – whether you want appliances or software – to take a look at what you can.  There’s a whole bunch of other security protocols.  It first starts back with the people – the people who are part of our team and our company and our customers.  We’re not separate universes.  We’re really one.  At work we think we can control it but we all leave work and what do we go into?  We go back into the social media environments where those security tools don’t exist anymore.  So we start with training and education and communicating -- before it sets in place the momentum to carry forward into our private lives from our business lives – and try to bring those a little more together.  You don’t want that exchange of proprietary information to occur at home using Twitter any more than you want it to occur in the office place using email. 

So we talk about those policies quite openly in our company –about how you need to understand there are legal ramifications for you and your persona in the virtual world.  You’re not immune to them – you need to protect our brand if you’re communicating as part of our company and that your personal life is separate but they cross over.  We acknowledge that crossover, so I think these issues are really a bit of a concern to all of us on both of these spheres more than we actually know.  There’s a lot of information moving out there now. As for security outside of our corporate environments, the list of those companies that have been hit including Twitter not too long ago – it’s a pretty long list.  I don’t know how secure I feel about those environments right now.  We’re all still wrestling with discovery rules.  In terms of our company, just protecting email through discovery is about an $11 million investment.  That’s a lot of money.  Now, what are we going to do about Twitter, Face Book and MySpace?  It just keeps going.  Eventually all of those things will most likely fall into the sphere where the judiciary side of our government is going to believe that we should have taken those steps.  And this evolving law, as we sit here in places like Massachusetts and California, is moving faster than other states, but around the world is evolving at different paces. There is a growing belief in that we’re supposed to be accountable for all this information.

Now obviously there are many, many risks to opening up this way but let’s talk about some of the benefits too because I think that there is a great opportunity in terms of innovation to connect more through customers.  Can any of you share some thoughts on that and some experiences or wins you may have seen so far?

This multi-channel thing Gary was hitting on -- XML, Web services – there’s not one way to do it.  You’ve got to get used to the fact that you must have a broad set of communication channels.  One we have is basic customer interaction, whether it be in a digital or in its personal form.  We had this idea – how do you handle 15 million packages a day and yet allow you to be in control of one package? It’s opposing.  To handle 15 million a day on a global basis we standardize everything – yet how do I offer you a customized service?  We had a small company come to us.  They move jewelry.  It’s an interesting company.  They’re moving very, very fast.  They use us for reliable service, etc. We got into in an exchange of ideas where they said, “what can you guys do to help us with a fraud problem we have?”  We asked, what kind of fraud problem?   You do credit card verification right?  “Yes, we do all that stuff but the other side of that coin is getting so smart that they’re always trying to stay a half a step in front of the credit card companies.” At the end of the day, most of the fraud merchants eat the losses, not the credit card company.  So he was going through something that has become a growing problem for him.  What could he do?  We said, well, you need to have a multi-tier look at how to handle fraud because you did the proprietary up-front ones but you also need to do it during the life cycle of the package movement.  We could assist you and give you the whole life cycle movement to detect fraud and actually recover the package up to the point of delivery.  We created a product called Delivery Intercept for that customer’s needs and others –and it puts the customer back in control.  They can do it through phone.  They can do it through Web.  They can do it off their cell phone if they want, but the bottom line is they now control their packages to their advantage.  It’s really quite interesting.  There are so many of those ideas out there and so many ways we have to meet these issues.  It’s really more interesting now than anytime in my career.

What kind of open innovation forums have you put in place that allow you to have direct connection with not just your customers, but their customers as well, to help drive new products and services?

We see that really on two areas. On the internal side, how do you unlock 425,000 people and the energy they have and get that focused?

Our employee portal has a section where people can go in, using a whiteboard concept, and create the concepts.  Those will be moved through the organization to the groups that need to interact with them.  And we have quite a lot of interactions going.  It’s actually more of a viral-type scenario.  We don’t try to oversell it but it picks up in some community within the company around the globe. People create ideas and send them in from all sides of our business, whether it be the airline pilots or somebody who’s moving goods on an ocean liner or whatever.  The ideas come in.  They can go through our marketing groups, through operations groups or whatever, and that works effectively.

On the external side, how do you get the millions of customers we have to get their ideas coming in?  They’re going to come at us in multiple languages.  It’s every language you can imagine out there so that’s been a bit of a challenge for us because it’s much easier if we all had one language.  But we don’t.  There’s a lot of interaction to and from our sales people and our drivers, and direct driver activity with our customers.  But one of our most successful methods is to involve the customer in the product development process.  Our previous speaker talked about massive complexity and how they handle that.  One of the things we do is usability labs.  Everything is prototyped.  We build all of our tools on a global scale.  We don’t build U.S. tools and a separate set of tools for Japan and a set of tools for the UK. Everything is built and deployed globally.  So to get those regional customizations done and to get products to work globally so you can build at one time, we have the customers involved from the beginning to the end.  And that usability interaction and aggressive piloting and prototyping has worked effectively for us.

How do you get people to interact with you that way?  Do they just innately want to or do you have to encourage them?  Do you want to give them an incentive to engage?

With the customers, the encouragement is really just getting into their channels and into their communities and they take off.  You don’t have to really over-encourage.  Take something like WorldShip, which is a desktop shipping platform.  We have about 580,000 units deployed around the world.  We release it once a year.  When it comes to beta, the customers sign up in the thousands to participate because there’s a community there.  It’s their own little working world.  They get to exchange ideas.  They get to see the product long before it’s coded so they’re seeing it when it’s in the stage of just screen design all the way through process center design because there’s a voice for them.   They can talk to and from themselves, not just to and from us.  As a community they can develop a product.  They actually over- subscribe to it. 

Very much so.  The business is so complex with so many different lines under the umbrella of UPS and that leads to a lot of ideas exchanged just among customers who say, “Here’s how you can use this UPS product in a different way.”  We talked about the anti-fraud part of Delivery Intercept.  Delivery Intercept is one of those interesting scenarios where it’s whatever you want to make out of that service.  We have customers talking about how “we use it for this, we use it for that.”  The fraud concept that one person developed has been used by a large number of customers now because it’s viral.

How do companies gather up that knowledge and distribute it to the people who make decisions about the types of services that get put into the field? Dave, how has this been for you?

It’s interesting.  It works best when the both ends of the spectrum see it as valuable – the top leadership of the company and the people who work throughout the tiers.  You can exclude certain sections and it still becomes quite vital.  Just because it’s not the best doesn’t mean it doesn’t work.  There are many vital things that go on in a company where we’re not totally rushed into it.  In the great communities that are forefront to everything we do, business analysts have their own communities in UPS.  So there’s a whole section for them – a series of communication tools including just the basic IM and email and share point environments. But they want more sophistication.  That community tends to thrive when ideas are exchanged.  “Hey, I’ve got this way of handling this customer interaction or getting ideas better generated.”  And they really propagate that across the groups quite effectively.  Architect groups do the same thing where they exchange how to take emerging technologies and make them work in the real world –the real world with scale issues.  And they really like being in the community.

Now when I say in the community, it divides into two dramatically separate sections.  There’s the activist – those people who write the best blogs, the best Wikis, the best tweets or whatever – and they really add value.  Then there’s a bunch of people, far more in size, that are the close followers.  They really don’t interact as much in writing but they’re sensitive to the value that the social media environment creates for them so they’re reading constantly, although they’re a bit of a silent partner in the concept.  That silent partner is the biggest single piece we have.  It’s the same with our customer base.  We have a lot more customers that like to engage in terms of listening to what we have to say and what we are doing.  In a small group, that’s the activist side.  But they’re both equally important and we try to work them both.

We have a thing at UPS called Brown Book. The Brown Book is a Face Book type concept and we didn’t even announce it.  We put it out there just out of curiosity with a small number of people on it.  We’re very discreet about the investment.  It didn’t take much money.  That’s one of the nice things about these mediums.  We said, “Let’s just put it out there and see what happens,” and it was interesting.  All of the sudden it started in the United States because we put out these tools everywhere. We started in different places.  Within three short weeks our UPSers in Germany were already in it.  A few weeks after that the UPSers in Asia were in it and it became extremely viral – with no money invested and no publicity.  It’s got its own life now and it’s actually more popular than we thought it was going to be.  Can you get value out of it at the end of the day?  That’s the question a lot of companies ask is, “give me the business cases.  I don’t want the intangibles.  Give me the tangible black and whites.”  A lot of companies struggle on that transformation from the intangible side. It looks very valuable and the tangible side says, “give me the money breakdown – we invest X dollars showing X money back.” Not all these can be articulated that way.  It doesn’t mean it’s not valuable. 

Do you think they will be articulated some time in the near future?

What kind of approaches and applications are you looking at to reach out to that group as a market segment regarding support, retention and service and expansion with Face Book, Twitter, Linked In, MySpace – getting out to the customer market segment itself?

I’ll just use Twitter because we used that a lot today. Thomas at UPS is the persona we’ve created as the customer advocate. He’s a source of interaction for customers on how to solve problems.  It’s like having a call center in the middle of Twitter.  People seek him out.  He seeks out people.  It works both ways and that’s a support angle that we didn’t even envision a couple of years ago.  It works very effectively.  The only drawback is that when you go back to how it’s technically put together, it’s 140 character limitations, so we see in complex interactions the need to navigate out of that and the most common navigation is actually back to email, believe it or not. 

Stepping away from customers for a minute, it sounds like social media also has a potential to really help in collaboration and knowledge management with all these other issues you have in terms of sharing data across the enterprise.  Would you agree with that?

Yes. There is the reality role that I deal with in my own personal life. I’m inundated with emails so I have multiple email accounts.  There’s the formal one for the role of the CIO of UPS on a global basis. That’s very popular – more popular than I even have time to think about entertaining all the things that come in there.  It’s the same thing with Linked In.  I have a formal one and there’s very few people connected to it because a number of people are signing in but I have no idea who they are.  It’s just overwhelming so the formal one sits there just as a presence.   But I have another one that is the social network that I use, which is people that I want to interact with that differentiate themselves by providing value to me.  I think that’s the key at the end of the day through all the different social medias – how you differentiate the clutter from the value.  If you differentiate that and tell me something of interest, then I want to have you on my network.  Fellow CIOs, people who are leaders in technology industries, people who are into the different lines of business that we support – that to me is a valuable use of my time.  Miscellaneous things just being thrown at me are not a great use of my time.

think another part of your question is reputation brand management.  I can’t imagine a company of any size – from a small entrepreneur on up – that wouldn’t want to make use of them to understand what’s being said about your company, your products, your services and your employees, which are ultimately your ambassadors.  We use an awful lot of that. That will lead us to understand things that our more traditional research sometimes won’t capture near as swiftly or perhaps as extensively as social media spaces.  Once you understand it, you may want to go out and influence it.  Brand management moderates some of the issues that are out there.  As long as you’re up front, you don’t try to hide behind things, and you establish a clear personality I think you can do an awful lot with these tools.  Not to be cognizant of them I think puts you at a competitive disadvantage.