BB+HW+CC+A&SN=D&O

Last night I had the pleasure of presenting at a Keble College alumni event for entrepreneurs. The main focus of the event was for alumni entrepreneurs to showcase their start-ups and it was great to see the success of start-ups like Bulldog (Simon Duffy) and Mobank (Ben Carswell). I really have a huge amount of respect for entrepreneurs who have thrived in such difficult economic times.

Not being an entrepreneur myself, I had to take a different tack in my presentation. I focused instead on describing some of the market themes and opportunity areas that I see for businesses.  Notes from my presentation are as follows.

BB – over the last 10 years we have seen the mass roll-out of broadband connectivity. Slow dial up lines have given way to fiber-optic superfast broadband, which in turn will be replaced by even faster networks.

HW – the last 10 years has also seen an explosion of hardware devices that tap into that broadband connectivity. Product lifecycles have shortened as has the time to mass adoption of blockbuster devices. For the last few years Apple have trailblazed the market inventing entirely new product categories but the Android eco-system are snapping at their heels. The range of connected devices is also extending to include TVs, cars, household appliances etc 

CC – Nicolas Carr brilliantly described the emergence of cloud computing in his book “The Big Switch”. He uses the analogy of switching electricity generation from individual turbines to the grid to describe the ability to leverage cloud computing to rent storage, computing power, applications and development platforms from the cloud.

A&SN – Apps and Social Networks have radically changed the way we interact with information and with other people. They have placed unprecedented knowledge and connectivity into the hands of users .

D&O – the combination of the above has created both disruption and opportunity. Many businesses have struggled to keep up with the rate of change, whilst others have thrived.

I then described three opportunity areas (deliberately ignoring mobile which was already covered during Mobank’s presentation).

Opportunity area 1 – Customer-driven businesses. Many businesses pay lip service to customer-centricity. The words are there but the reality is that they are customer-centric when they want customers to buy from them (the last few days of the quarter) or when they are trying to shift customers to a lower cost service channel. GiffGaff, Threadless, Zappos and others have focused on a customer-driven approach, building customers into their operating model and being driven by their needs. See my write up of GiffGaff. 

Opportunity area 2 – Service aggregators. One of the opportunities presented by cloud computing is that you don’t need to build everything yourself. Some businesses are moving faster and punching above their weight by combining multiple services from the cloud. Take, Zestia, for example, a tiny CRM software company recently profiled by CRM Idol. They have built out a CRM offering with just a handful of developers, focusing instead on integration to existing services, rather then building everything from scratch themselves.

Opportunity area 3 – Data. It’s almost a cliché at the moment to call data “the new oil”. However, unparalleled opportunities exit for businesses to collect vast quantities of tiny pieces of information (think check-ins, likes, Tweets, photos of pot-holes in the street, blood pressure readings from an iphone app). The value of the information lies in its aggregation. To use a simple example, think of the way the property site, Rightmove, combines Google Maps with information from Realtors to mash properties for sale onto a map. Or take the way Google Flu aggregates web searches for flu to try and predict which regions will suffer from flu outbreaks. Vicks recently used insight from Google Flu to drive their marketing spend for a new digital thermometer.

I finished with a short quote from Jack Welch that I have used in this blog a number of times. He said of GE: “we only have two sources of competitive advantage; the ability to learn more about our customers faster than the competition, and the ability to turn that learning into action faster than the competition”. It strikes me that today’s entrepreneurs have more opportunity that Jack Welch ever imagined.

Many thanks to Duncan Macintyre from Keble College for inviting me to present and thanks to all who attended.

What comes next after Facebook and Twitter? The challenge of keeping up with a constantly changing digital world

Note - I originally posted a short version of this post in July.

The last 5-10 years have been characterised by a communications revolution. During that time we have seen the mass roll out of broadband and mobile broadband, an explosion of new hardware devices that tap into that connectivity and an explosion of software-as-a-service (SaaS) solutions, apps and social networking sites that have transformed the way people interact with data and processes. Together these changes have given users unprecedented access to information and connectivity to peers, transforming the way we complete tasks and transforming many different types of relationships from consumer to employee to supplier. Fundamental human behaviors may not have changed much – we have always been “social” - what has changed however is connectivity, access, transparency, speed and scale.

The communications changes we have seen do not represent a single one off disruption. If the last five years have taught us anything it is that constant disruptive change is here to stay. Think about the rapid rise and fall of mySpace and SecondLife, the speed at which Twitter has grown, the rapid evolution of Facebook from a college social network into a social commerce platform, or the extent to which the tablet PC has entered our daily lives. It seems that almost every week a new disruptive hardware device is being launched or a new social network or online game has spread like wildfire and carved out a new niche in the market.

For most businesses the changes in communications and the constant disruption that we have seen present both opportunity and threat. On one hand, those that can move fast are taking advantage of new devices and platforms to create new business models or new marketing, sales, service and R&D platforms. GiffGaff, for example, an MVNO in the Telco industry (with a total staff of just 14 employees) has created a community-driven business model that incentivises consumers to contribute to product development (tariff structures), customer acquisition and customer service. GiffGaff customers contribute to product development (one of their customers even built them an iPhone app!), they generate between 5-7k new acquisitions per month purely from word of mouth marketing and they fix 90% of service problems with an average response time of under three minutes within the community support forum.

Other digital start-ups are being equally disruptive. Think of the “mesh-business” that ZipCar or Streetcar have created and the way that they have disrupted the car rental industry; or look at how Netflix or the Huffington Post have disrupted the media industry (as I write, Netflix looks like it may also be disrupted; partly through its own doing and partly through the start-up of streaming only platforms with no legacy in DVD distribution). Or consider, micro-finance companies like Kiva, which is generating millions of dollars of loans per month and transforming access to funding for people who otherwise would have no access to banking services.

Businesses taking advantage of digital disruption are not just limited to start-ups. Consider how Proctor & Gamble engage with hundreds of thousands of mothers on the Mumsnet social network and on its homegrown social networks to develop new product ideas and test new concepts. Proctor & Gamble’s Connect-and-Develop program allows idea co-creation with third parties and enables them to crowd-source solutions to fix some of its most complex R&D issues. Similarly, KLM, the Dutch airline has also embraced new digital technologies and platforms with great success. Its KLM Clubs China & Africa have allowed it to build communities for entrepreneurs travelling to emerging markets with KLM, creating additional value for club members way outside what you would usually expect. Even BT, often criticised (perhaps unfairly) for lacking innovation, has been a pioneer in online self-service, community and social media customer care. Its BT Care team actively monitors social networks, reaches out to customers to offer support. It has also focused on building an online community to facilitate peer-to-peer support, deflecting calls from its contact centres.

On the flip side, many IT departments are struggling to keep up with the constant game of catch up. Picture the corporate IT department burdened with a huge maintenance overhead now overwhelmed with a backlog of requests to support the latest Apple device, the latest app or the latest social network. In addition, corporate IT looks aghast at employees connecting their own devices to corporate systems, departments creating their own social media sites and lines of business managers purchasing software-as-a-service solutions and putting the subscription costs onto their expenses account. Many IT departments have simply lost control and are struggling to embrace new digital technologies and ways of working. Most are trying to re-establish their value to the business, fully aware that IT departments that fail to add value to the business run the risk of making themselves irrelevant and perpetuating the cycle of rogue purchasing, data silos and an inconsistent, disconnected user experience.

The problem of catch-up is not limited to the IT department. In exactly the same way those businesses that fail to keep up with consumers run the risk that their own customers will simply disengage and swarm on to a competitor that supports the latest device, app or social network. Constant change can be just as much a headache for the business as it is for the IT department, as keeping up with the constantly changing consumer requires keeping a strong finger on the pulse of the consumer, as well as being agile enough to change plans on the fly without creating chaos.

Within this environment of uncertainly it’s tempting to try and form predictions of what might happen next; for example, what will come after Facebook or Twitter? Whilst I am all for creating a compelling vision, planning and keeping a finger on the pulse of the changing communications happening right now, I suspect that for the majority of organisations, the reality is that thinking about what comes after Facebook and Twitter might be entirely the wrong question.

We don't yet know what will come next after Facebook and Twitter. We don't know what disruptive device will be launched next by Apple or another hardware manufacturer. We don't know what game changing moves Google or Facebook will make next; nor do we know what new social network or online game is currently being dreamt up by a college student in San Francisco, London, Tel Aviv or Bangalore. What we do know is these things will happen. What we do know is that constant disruptive change is now the norm and that without question each change will have an impact on the way that consumers (feel free to substitute with employees, suppliers, analysts etc) interact with companies, data, processes and of course, with each other.

Better (and potentially tougher) questions to think about might be:

1. How can we build stronger customer relationships based on true value co-creation that will be less susceptible to cannibalization by passing fads?

2. How can we keep track of where our customers are currently engaging with our brand and with each other? How can we spot changes, trends and spikes?

3. How can we cut through vast quantities of unstructured customer data with accuracy and drive insight into action faster than the competition?

4. How quickly can we embrace change within our organisation and execute on opportunities that we have spotted?

5. How can we leverage innovation from our customers and partners as well as from the vast armies of open source, SaaS, web and app developers who are either looking to build upon the dominant platforms of today or trying to create the platforms of tomorrow?

6. What are the foundation elements that enable us to become more agile? How can we embrace and integrate (again and again) to new devices, new services, new apps, new networks etc.?

Without doubt these are difficult questions to answer. They are cross functional in nature and they force you to address some basic, foundation issues. As a starting point, many of the questions stem from your attitudes and mindset towards customers. They involve a shift towards outside-in thinking and the adoption of service dominant logic; thinking about the way in which you are constantly monitoring the jobs customers are trying to do and how you can help your customers create value. From a technology perspective the questions should prompt discussion around your core delivery approach (agile vs. waterfall), your information architecture, attitudes towards open standards / service integration, master data management, business process integration etc. Not to mention your attitudes to employees connecting their own devices to corporate systems and engaging on behalf of your brand on social networking sites. The questions challenge the way in which IT and the business work together (left brain and right brain need to be in alignment), the breaking down of internal silos, the way customer-facing staff are empowered to collaborate, fix issues and take action.

However, at the heart of the challenge is the focus on agility. There is a well-worn cliché in business circles, which is "skate to where the puck is going to be". The reality is that few of us are like ice hockey legend Wayne Gretsky and can predict where the puck will be 100% of the time. We can see megatrends and we can align around those, but we can’t predict the future. The majority of organisations would gain greater benefit from improving their core customer relationships and their speed and agility so that they can take advantage of changes faster than their competitors, rather than trying to predict what will come next after Facebook and Twitter. To use another well worn business cliché, as Jack Welch, the former CEO of General Electric, once said “we only have two sources of competitive advantage; the ability to learn more about our customers faster than the competition, and the ability to turn that learning into action faster than the competition”. One of the key advantages of doing business in a digital age is data – there really is no excuse these days for not having insight into customers or markets. The challenge is what you do with the insight and the speed at which you can execute.

Quick fixes and shortcuts in the Social Enterprise

I despair when I hear people trying to “schedule a viral marketing campaign” into their marketing calendar, “build a community site in order to deflect calls from the contact center” or “do a bit of co-creation” to improve their products. Of course, marketing campaigns can go viral and of course online support forums can reduce customer service costs; but you can’t take the company benefits without giving customers the benefits that they want. You can’t have your social media and community cake and eat it.

The most dangerous use of social media & community is that which tries to apply old thinking to a new technology. It’s very easy to look at the benefits of social media and community from the company’s perspective and try and implement product reviews and ratings to generate “positive buzz” or an ideas site to generate customer-driven ideas. The temptation is to then believe that somehow implementing these capabilities alone makes the organization social, customer-centric and capable of driving long-term relationships.

Implementing social and community capabilities comes at a price. If you give customers the ability to review your products (which, by the way, they will do anyway on another platform) then you must allow them to say both positive and negative things about you. If they say negative things, you must listen, acknowledge and respond. Similarly, if you expect customers to spend time creating product or service ideas for you, then you must at a minimum acknowledge and respond to those ideas in a transparent way.

Better still you should provide customers with the tools then need to create value for themselves. Customers, after all, do not visit your site to try and help you cut costs from your call centre! They visit you site to do a do a job – whether that be fixing a problem, finding information or building up their own profile or status within a community – their community.

Gamification is often presented as an easy fix and a short cut to creating a healthy community. Let me be clear, I do view gamification as proven technique that can produce amazing results (I would encourage anyone to watch Jane McGonigal’s TED talk, read any of Michael Wu’s posts or read Gabe Zichermann’s book “Gamification by design”). But, viewing points, badges and leaderboards as an easy shortcut to creating long-term relationships is at best a dangerous strategy. As many Groupon merchants have found, one off bribes produce one off customers. When the points, vouchers or one off deals disappear, so do the customers.

If you’re looking to social media and community for quick fixes and short cuts, the chances are you will find many different options but none that actually work long term without a corresponding investment in complimentary capabilities and a fundamental mindset change. There can be no half measures or insincere tactics; change needs to be embraced both at the top and at the front line. Take a look at the terrific presentation from Angela Ahrendts, CEO of Burberry (disclosure – Burberry are a client), speaking at Dreamforce a few weeks ago. I was amazed to see a large enterprise CEO speak so enthusiastically and knowledgably about the social enterprise, its importance and more importantly its challenges.

Left Brain and Right Brain must work together to deliver success in Digital Transformation

The words “but of course CRM is not a technology” prompted a collective sigh of relief from the audience. The speaker hadn’t fallen into the trap of committing the ultimate CRM sin and assuming that CRM technology could fix a business problem. The room was wise to mistakes of first generation CRM.
I remember many moments like this, listening to vendors speak at conferences for example, pitching their products before inserting the appropriate “CRM is not a technology” caveat. Over the years I’d like to think I’ve had a fairly balanced view of what CRM technology can deliver and the importance of investing in complimentary capabilities like customer vision & strategy, people & change etc. (see my posts on “Software doesn’t build relationships, people do” or “the emperor’s new social CRM clothes”).
10 or so years ago I used to recite stories of organizations who “did” CRM without technology – the clichéd local store manager who remembered his customers individually, understood their needs and tailored his offering to suit. This sort of story was a reaction against technology-centric CRM. It translated into the importance of thinking from the customer’s perspective and defining a customer proposition before looking at technology and other enabling capabilities.
However, sometimes I think the backlash against CRM/ Social CRM technology (whatever you want to call it) has gone too far. I see organizations that totally separate their business function from their technology department. The business defines its vision, its requirements, its priorities and its timescales and then throws them over the fence for the IT department to interpret and deliver.
As digital has swept through our lives I no longer believe it’s possible for the vast majority of organizations to deliver on their customer proposition without technology (even my local independent corner shop has a Facebook page where they promote special offers and promotions from other local businesses!). Customers are interacting with organizations and with each other online, through smartphones & tablet PCs, through social networking sites, apps, consumer review sites and group purchasing sites; not forgetting of course, all the traditional channels. Moreover, technology has now become an enabler to create a differentiated customer proposition not just enable a set of requirements. Technology can help identify customer needs the business was not previously aware of and create new ways to help customers complete the jobs they are trying to do when they interact with an organization.
To take advantage of digital and not get out-maneuvered by smaller, more nimble start-ups, left brain and right brain must work together as one. The silo that we built up as a backlash against first generation, technology-centric (failed) CRM, must now be broken down. Of course this doesn’t mean jumping to technology for the sake of technology. Of course this doesn’t mean that technology is a silver bullet that magically improve customer relationships. But if you don’t have people in the same room who understand both the customer experience / proposition / creative etc AND the latest technology / integration / security etc then success is much more difficult to achieve.