June 19, 2013

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Enterprise Software Chronicles: A synthesis of the rapidly evolving customer technology landscape

June 5, 2013 by Leave a Comment
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Over the past several weeks, I’ve had the privilege to have hundreds of conversations with technology vendor executives, resellers and system integrators, consultants and companies of all sizes (enterprise, mid-sized, and SMBs) across a variety of industries; high tech, professional services, retail, manufacturing, financial services, biotech, etc.

The common thread is that organizations of all sizes are building and evolving in order to adapt for the next era of commerce. Smaller technology vendors are racing to build point technology solutions that are easily consumable, deployable, and integratable, while major enterprise vendors are racing to add capabilities to provide a one stop shop for business applications.

Salesforce buys ExactTarget (not Marketo)

Yesterday, Salesforce.com shared that it intends to purchase ExactTarget for $2.5 Billion. It took about 18 months longer than expected, but Salesforce finally filled a hole in its marketing cloud with marketing automation capabilities. I didn’t necessarily see ExactTarget coming as Marketo was the obvious choice to fill the hole, especially since Oracle scooped up Eloqua last December.

ExactTarget brings with it a long history in email management, and the marketing automation capabilities of Pardot, which will need to be retrenched to enable its capabilities to be leveraged by enterprise customers, following the up-market path that Salesforce has already been on for the last several years.

With ExactTarget, Salesforce picks up a company with a large install base with at least twice the revenue of Marketo and for likely less than twice the multiple of trailing twelve months revenue. In short, it was simply a better deal.

The ExactTarget install base also likely leads to more new business opportunities as their customer mix is more diversified from a CRM perspective than Marketo is. A disproportionally large percentage of Marketo customers are also Salesforce customers. Marketo CEO Phil Fernandez wrote this response to the announced ExactTarget acquisition today.

The messaging from Marketo at its recent Marketo Summit seemed to be well positioned to make a run as an independent software vendor as they began to expand their messaging from being just a marketing automation vendor towards a complete marketing platform. They now own mindshare as the leading independent marketing automation vendor, and there is certainly market opportunity to create a more robust and integrated platform for marketers to manage their activities, especially if the forecasts that the CMO will control more technology budget than CIOs actually comes true in coming years. It will be interesting to see how Marketo competes with the larger vendors and more integrated platforms.

For more on the acquisition, Craig Rosenberg has collected some great input from the community over on the funnelholic blog.

Speaking of Oracle…

In late April, I spent some time with Oracle at Oracle Analyst World and heard and observed how they are working towards integrating their entire stack of offerings. It’s a herculean effort, and they are making progress across a number of fronts.

Oracle is very uniquely positioned. They have nearly 4,000 software products and introduced more than 270 new ones during the last 4 quarters alone. They’re breadth of coverage and depth across the entire technology stack is impressive and mind blowing. Their market cap is in excess of $160 Billion.

Oracle_Stack_2013

This creates a number of challenges: The technology challenge is a large enough one. Messaging internally and to the marketplace is still clearly a work in process, and held hostage to an identity that is simultaneous beholden to a large install base of enterprise customers that are 10 years behind and cloud innovators that require agile and hyperspeed change. A massive sales force who has predominantly sold “On Premise” software is having to be retrenched to speak the language of the cloud, and product domain expertise is still undergoing a large transformation, and is likely in the midst of a multi-year effort.

As deep as Oracle’s coverage is, they’ve been on a heavy acquisition spree in emerging spaces where they want to rapidly fill emerging capabilities holes. The following applications have been acquired in recent years to fill the functional requirements in a rapidly evolving business landscape that places a higher focus on data & analytics, social, and customer experience, respectively:

  • RightNow – Customer Service
  • Taleo – Recruiting and Learning Mgmt
  • Eloqua – Marketing Automation
  • Collective Intellect, Involver, and Vitrue – Social (trying to position the collective capabilities of each of these products as the only end to end digital marketing platform. Salesforce sort of just blew that up a bit.)
  • InQuira and Endeca – Knowledge Management, Big Data & Analytics

Often, as these emerging technology companies get acquired into the massive technology behemoth, talent from the acquired organizations quickly leaves. We’ve seen this with the recent departures of former RightNow CEO, Greg Gianforte, Eloqua’s CEO Joe Payne. Several folks from Endeca have also left post-acquisition. Oracle also recently lost Anthony Lye, a polished leader who was leading Oracle’s positioning as a customer experience leader. The hole left is apparent. However, conversations with folks from Involver earlier in the year indicated that the opportunity to leverage the talents and expertise of Oracle, and the opportunity to sell in to the massive and well respected client base was a dream come true.

Oracle also continues to make slow but steady progress with their Fusion applications deployments, primarily in the world of CRM and HCM, acquiring over 100 new customers last quarter, the vast majority opting for SaaS deployments.

Lithium

While Oracle races to develop and integrate an entire portfolio of offerings, other players race to develop core competencies in emergent white spaces. Lithium is one such company. At their Linc conference, Lithium highlighted customer stories of the emerging digital peer to peer economy. Lithium recently positioned themselves as leading providers of social software that powers the social customer experience. Essentially, what this means is that they help power customer community platforms that enable brands to provide savings in customer support, crowd powered innovations, digital word of mouth marketing, and in some cases, even enable new business models to be pioneered. At Linc, Lithium did a great job of highlighting customer stories like Barclay’s Ring Credit Card and Australia’s Commonwealth Bankfinancial services innovation products, as well as customer support innovations from organizations like Time Warner Cable. They also announced forthcoming innovations in data analytics and insights that enable organizations to sense, respond, and share with greater effectiveness. While Lithium executives shared that they intend to go IPO in the near future, they appear to be a good acquisition target for a certain German enterprise giant who is also racing to fill in holes in its offering.

Speaking of analytics

SAS Institute held their Global Forum in San Francisco. SAS Institute has an impressive resume. They are repeatedly mentioned as one of the top places in the world to work. They have increased their revenue for 37 consecutive years. They have a dominant market position when it comes to analytics and a customer base that would be enviable to anyone. SAS highlighted their continued foray into predictive analytics, and the capabilities they have to process huge amounts of data in record speed. By the way, they also hold top notch events. As great as SAS is, while I don’t have any hard data that I can present here, I get a sense that SAS can be disrupted by analytics vendors who can provide a cleaner, more user friendly interface that is quickly deployable.

SAP also filling in Holes

SAP announced today their intent to acquire e-commerce player Hybris, further adding to their commercial offering. SAP has a ton of innovative initiatives at present and is betting big on HANA in memory database as a unifying layer to speed transactions and access to information. SAP’s answer to the social collaboration question is SAP Jam, which is making steady progress and is being positioned not as a standalone product, but as a communication layer that intersects more common functional systems. SAP is touting 360 customer, but still has a ways to go in creating clear differentiation to the markets of which products or mix of products fits for certain use cases and scenarios.

SAP is a constant competitive target for Oracle, and has been for a long time, but I was surprised at the frequency and depth of attacks that SAP received at SuiteWorld in San Jose just a few weeks ago.

NetSuite

Rising from the Mid-Market is NetSuite, who continues its desired ascent into the enterprise. NetSuite founder Evan Goldberg left Oracle about the same time as Marc Benioff, with a fundamental belief that organizations should run their entire infrastructure in the cloud, not just their sales organization. As Salesforce continues to build their platform to meet the needs of CMOs and customer facing personnel, NetSuite continues to build an integrated platform to meet the needs of fast growing organizations.

NetSuite has a deep history working with small to mid sized enterprises and they’ve carved out a niche without many competitors. Evident at SuiteWorld 2013 was their attempt to continue to move upstream as multi-billion dollar global customers Qualcomm and Williams-Sonoma talked about how they had leveraged NetSuite to rapidly evolve their businesses in the cloud.

New partnerships with AutoDesk and CapGemini also help to add validity to their Enterprise capabilities.

The addition of greater e-commerce capabilities, improved customization and development tools, discreet manufacturing capabilities, and deeper vertical offerings will continue to make them a viable contender for both fast growing SMBs and divisions of large global enterprises.

As an 8 year NetSuite customer told me yesterday, however, “NetSuite is not necessarily best of breed at any one function. However, they are best of breed as an integrated platform to run your business on.” That’s a compelling value proposition for many organizations and is a clue why NetSuite continues to grow at a healthy pace.

In Summary

While the technology vendors were highlighted in this post, companies in all industries are trying to adapt to a new speed of business and are looking for answers on how to prepare their organizations to compete and win in an environment that is increasingly digital.

Trials and experiments are slowly paving the way for emerging best practices, but the paths to a common destination are still being defined in a race towards relevance and market leadership.

To discuss the right strategies for your organization moving forward, please drop me a note.

Disclosure: My travel expenses and conference registrations were paid for by Oracle, Marketo, NetSuite, Lithium, and SAS, respectfully. I have received no request or remuneration for this post and these are my candid views based on my research, observations, and personal experience.

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IBM Watson enters the realm of customer engagement

May 21, 2013 by Leave a Comment

While I get to see and hear about hundreds of product announcements, this one is particularly interesting. The race to leverage computing power to synthesize incredibly huge amounts of disparate data in real time to meet the needs of customer demands is the next frontier of customer relations.

Today at the IBM Smarter Commerce Global Summit in Nashville, Tennessee, IBM plans to launch the Watson Engagement Advisor, aimed at helping organizations provide better customer service and product recommendations in real time at scale. The same technology that once outsmarted humans to win Jeopardy and has recently been used to diagnose cancer will now be used to help organizations sense and respond in real time.

From CNBC:

Big Blue announced five new clients working on using Watson’s cognitive computing and ability to crunch so-called big data, to help enhance service to their customers. The companies include Malaysia telecom provider Celcom, financial firms Royal Bank of Canada and ANZ Banking Group, IT services provider IHS, and the consumer research firm Nielsen.

“We’ll be exploring ways to use Watson for helping our agencies and their client brands engage more effectively with consumers across all devices—from TV to tablet to smartphone,” wrote Randall Beard, chief of Advertiser Solutions at Nielsen.

While it still seems early, this area is certainly something to watch.

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Is the customer always right?

February 12, 2013 by Leave a Comment

If we truly believe in customer “relationships”, then the concept that the customer is always right is unfortunately flawed, because very few people are ALWAYS right. Customers can be irrational, selfish, irresponsible, and even unprofitable.

As in any relationship, sometimes there is mis-alignment of expectations and lack of a compelling value proposition for both sides. The opportunity for value exchange changes and evolves over time. The duty of an organization is to continually listen, show empathy, gain a deeper understanding of needs and jobs, and provide a product or service offering that provides significant value for their customers, or better yet, provide a platform for customers to co-create their own products and services, and support each other in their mutual journeys and jobs to be done.

To fail to recognize that some customers are simply unprofitable is to deny the truth. In some cases, it may make sense for the organization, in their best interest and in duty to their shareholders to first attempt to re-establish relational guidelines in order to achieve a better balance for both parties, or in some cases, even “fire customers”.

Understand that the context I am speaking of is one of an endless and tireless pursuit to create value, to delight customers, and to create a community of engaged, happy, and enthusiastic customers. The reality is that each of our respective organizations won’t be a fit for some customers.

In service to those who are engaged, it may make sense to re-allocate human capital away from those who are unprofitable for the organization towards better servicing those who are.

Before anyone screams at me about how customers are about more than profits for the organization, I agree. The challenge is that profits today are only measured in monetary currency. These current limitations ignore things like referral value, or recommendation value.

In short, it’s important to listen, serve, and respect customers. However, not all relationships are equal nor mutually beneficial.

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Everybody’s talking about Customer Experience. Customers still not getting what they need.

January 31, 2013 by 1 Comment
Performance_Gap

Lots of executives, marketers, customer service folks say they work for a customer focused organization. They say they care about the customer experience. According to a myriad of research reports, blogs, tweets, podcasts, and whitepapers, I see an increased focused on customer focus, customer experience, customer engagement, customer intimacy, etc. etc.

This is undoubtedly the right direction, and frankly the only direction for corporate survival and growth, in my opinion. A key and often underrepresented component of developing meaningful and profitable customer relationships is TRUST. I’ve written more about that here.

So how are we collectively doing being customer focused? Do “what we say” and “what we do” actually line up?

According to the latest edition of the Edelman Trust Barometer, the Top 5 Trust Building Attributes between companies and customers are:

1. Offers high quality products and services
2. Listens to customer needs and feedback
3. Treats employees well
4. Places customers ahead of profits
5. Takes responsible actions to address an issue or a crisis.

In the latest CEO Survey by PriceWaterhouseCoopers, 82% of the CEOs in the survey said they were going to spend time changing their customer strategies in 2013.

That’s good, because below is a chart from the Edelman Trust Barometer showing that the drivers of trust and the perceived performance of businesses to achieve that trust are miles apart.

Performance_Gap

Imagine that you walked into your individual performance review and you got 3s 4s, and 5s on a 10 point scale across the board. That’s essentially what we collectively just received from our customers.

Are you shocked? Surprised? Upset? Ready to take action? Perhaps you’re saying that “that doesn’t apply to us”.

Many of you are probably moving into action as you read this. “We’ve got to do better. We’ve got to ask our customers what we can do better!” Great. But before you build and send out that next customer survey, please consider reading the following from a recent article in the Harvard Business Review (emphasis added is mine):

The great majority of the decisions we make in our information-overloaded, distraction-heavy lives are made outside our conscious awareness, driven more by contexts than cognitions. As a result, asking someone to pinpoint what will influence them in the future is a bit like saying, “tell me how you will behave in the future when you are not thinking about what I have just asked you about?”

Behavioural scientists Wes Schultz and Robert Cialdini provide compelling evidence of why asking people to predict what will influence their future decisions and behaviors is so often ineffective. In one set of studies, they asked several hundred homeowners in California to predict which of four messages would be most successful at persuading them to take steps to conserve energy and reduce their overall consumption. The four messages were 1) conserving energy helps the environment; 2) conserving energy protects future societies; 3) conserving energy saves you money; 4) many of your neighbors are already conserving energy.

Those shown the message about what their neighbors were doing rated it as the least likely to influence their behaviours. Yet when meter readings were taken, the researchers discovered that this was the most effective message when it came to changing behavior even though this same message was rejected by most as having any sway. Even though most will deny its effect, our desire to keep up with the Joneses is both universal and automatic. For example, recent studies have shown that compared to the usual approach of threatening those who fail to pay their taxes on time with fines, it is far more effective to inform them that the majority of people in their neighborhood already have paid. By doing so, governments can realize many more millions in revenues.

Not only are we pretty poor at recognizing what will influence our future behavior, we’re not that great at recognizing what persuaded us after the event either. In one well-known study conducted at a busy New York City subway station, after counting the percentage of commuters who donated to a street musician as they walked past him, researchers made one small change to the situation: Immediately before an approaching commuter reached the musician, another person (who was in on the act) would drop a few coins into the musician’s hat. The result? An eight-fold increase in donations. When interviewed afterwards, those who donated universally failed to attribute their actions to the fact they had seen someone else give money first, preferring instead to provide alternate (and incorrect) justification for their actions. “I liked the song he was playing”; “I’m a generous person”; and “I felt sorry for the guy.”

Aside from showing the tremendous power of social proof, the above also provides a solid argument that understanding what will resonate most with a customer may often not be provided by the customer. There’s a great dialogue about this on Wim Rampen’s outstanding and thoughtful blog post titled “The Customer is Always Wrong”.

Cracking the code on your customer’s jobs to be done, their (intrinsic and extrinsic) motivations, their behaviors and habits have the potential to provide the real clues that we need to develop ongoing relationships of increasing value exchange.

So, how will we get better at serving our customers more effectively and building more trust?

The detailed answers to this are highly contextual and we don’t quite have time or room in today’s post. Many of us are indeed overwhelmed by the inertia of our own embedded behaviors, assumptions, and drivers, which by the way is one reason I would propose that we see such a significant disconnect in the chart above. But one often overlooked consideration I’d like to offer is to include the core motivators of all humans when considering what products and services to offer, and more importantly how we communicate with them.

Referencing the research done and presented by Australian psychologist, social researcher and novelist, Hugh Mackay, Naomi Simson offers the following as the core motivators for our (customer’s) decision making:

The desire to be taken seriously. We need to know we exist, that we’re valued, that we’re being listened to. This desire is why good listeners are so valued in the workplace. And why when you feel so bad when you realise someone is looking over your shoulder when you’re talking to them, rather than listening to what you have to say.

The desire for ‘my place’. We all need places that feel like ours, places that symbolise who we are. This is why, for some people, hot desks and open plan offices create a certain amount of disconnect and dissatisfaction at work.



The desire for something to believe in. We all desire a framework of values in our lives, values we can live by. If the organisation we work for has integrity, it can form an important part of our value set.

The desire to connect. Not only do we feel connected to people around us at work through everyday interactions, we also use work to connect deeper to ourselves. For some people their work is an expression of their self. 


The desire to feel useful. The one thing we least want to hear ourselves described as is ‘useless’. Wanting to be useful is fundamental to being part of society. This is the reason that people pull together in times of disaster to help complete strangers… to feel they are doing something useful.

The desire to belong. According to Hugh, we are both ‘herd animals’, and ‘tribal creatures’. We like to feel part of a group, as well as part of something bigger. The best workplace contains rich gratification through both a small herd (work group) and the sense of being a part of the company, the tribe.

The desire for control. Hugh believes this desire is the one most likely to get us into trouble. Humans are by nature uncontrollable. The only person we can control is ourselves.

Three Questions until next time

  • Are you REALLY investing in the customer experience, or does this just seem to be the next best wave to get what you want from customers?
  • How are you aligning your products, services, and customer communications with these core human motivators?
  • How are you weaving offerings and communication into the customer journey that help meet these desires?

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What REALLY Matters Now? Beware of “Outlier Amplifiers”

January 10, 2013 by 1 Comment
WhichChoice

WhichChoice

Social Media, Big Data, Marketing Automation, and Mobile are the only things that matter now, and all the “cool kids” are heavily investing in gamification and customer experience initiatives.

Of course none of the above are true, but if we are to believe the media around us, you’d think that if you’re not doing all or most of the above, you’re going out of business next year.

It brings to mind the ridiculous valuations of the dot com bubble, or the real estate boom, or those that invested millions in CRM or ERP, only to see a negative return. Fueled by craze and hype, we see valuable resources misallocated, resulting in personal and organizational demise.

As I’ve traveled around the globe, I’ve realized that most people are relatively similar. They work. They eat. They play. They spend time with family and friends and they generally just want to be loved and respected. Whether we’re in Switzerland or Bolivia or Thailand, we all do and want similar things, although these often manifest themselves in slightly different ways. These differences are more pronounced on the edges and that’s where we seem to focus our attention. Everyone in California surfs. Everyone in Texas is a cowboy. Everyone in Manhattan works on Wall Street. We amplify differences because they are…interesting, and attempt to make sense of the world around us.

Highlighted in several past studies, the media effect amplifies the spread and perception of these differences, while influencing where many of us spend our attention.

Images, videos, infographics, blogs, and tweets spreading quickly via network messengers have the propensity to create their own reality as they spread. Many of these Ideaviruses are more potent than they’ve ever been, influencing their recipients in new and different ways that the average citizen can’t quite put their finger on yet.

For creators of ideas, digital content or products, the potential to leverage the effects of emerging digital networks holds tremendous promise. We’ve never experienced a world where billions of people can connect to billions of people instantly. Conversely, as a recipient, the amount of information racing through our streams can be daunting.

Business leaders have the unenviable position of trying separate the signals from the noise, which is increasingly easier said than done.

In an era where the impact and exposure to digital objects, ideas, and content can be exponentially amplified in near real time, how can we know which reverberations will continue to grow louder and more important, and which echoes will simply come and go as quickly as they came, replaced by the next reverberation of the times?

The irony and convincing truth is that some of the things bubbling up from the edges actually matter a lot. In fact, all of the things listed in the opening of this post ARE very important, which is why I spend so much time studying, sharing, and consulting in each of those domains. The people who recognize them first are usually able to capitalize on them the most. One could argue that the only places ripe for innovation in the coming era are indeed the edges, since we continue to normalize innovations with increasing efficiency.

A significant challenge, then, is not whether to recognize or not, or to adopt or not. Those options are too rudimentary and crude. The real issue is how much weight to apply to each of these new technologies and opportunities that present themselves. Not enough, and you will indeed likely fall behind. Overweight the shiny new objects and your core will suffer, and perhaps terminally. The answer to this, my friends, is highly contextual.

On one end of the continuum are the uber-pragmatists who ignore everything new, holding tightly to the traditional until overwhelmingly proven otherwise. On the other end are those who see promise in everything, chasing trends, and bouncing from one idea to another without ever focusing on what really matters. The herd of echo chamber enthusiasts bounce from idea to idea, trumpeting to each other and dancing to the beat of the next new thing.

As we strive for balance between focusing on what matters most while simultaneously keeping a keen eye fixed on emerging opportunities, here are some guidelines that might be helpful:

  • (1) Remind yourself that the fundamentals of business likely won’t change. It’s almost never “different this time”.
  • (2) If you don’t have a solid use case or two, the latest shiny gadget likely isn’t likely for you (at least not yet).
  • (3) Recognize that the “Outlier Amplifier” effect is alive and well. The fringes are repeatedly over-exaggerated to satisfy the media’s gluttonous quest for eyeballs (every company is a media company). In the race for attention, those seeking it will often exaggerate for effect. It’s also important to note that there are no qualifications required to setup a blog, twitter, or youtube account. :) Sift shrewdly.
  • (4) No one knows your business as well as you do. Seek to continually understand your prospects and customers better, and systematically build and align your capabilities to create and provide more value for them. This guiding principle will help stay focused on what matters most for you and your organization now and for the foreseeable future.

What else would you add to this list?

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A year in review: Top 12 Posts of 2012

December 31, 2012 by 1 Comment
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Happy New Year! Thanks for taking the time to visit, read, comment on, and share some of my thoughts from the last year.

2012 was a great year and I look forward to building on it 2013. Below are the Top 12 posts from 2012, measured by direct traffic to this blog (not counting syndicated links and traffic).

I look forward to continuing to learn and share with each of you in the next 12 months.


(1) Toothpaste, toilet paper, white matter, and jam: Clues for better decision making

(2) Six Things Customers Want

(3) Trust: It Matters (More than you Think)

(4) The Digitization of Everything: From Long Tail to Mass Disruption

(5) Which CRM Software Is Best?

(6) How Social Technologies contribute to a Better Customer Experience

(7) Creating Measurable Business Value through Social Collaboration

(8) Optimizing the Full Spectrum Of Customer Interactions

(9) Leveraging Social Business Gamification for Organizational Flow

(10) Movements, Mashups, and Metamorphosis: The Rewiring of Institutions

(11) Exploring new frontiers of real time customer feedback

(12) Global CEOs chart the course into unchartered waters for the Next Generation Enterprise

What’s your favorite or most popular post from this past year (from this blog or anywhere)? What would you like to see more of in 2013?

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Rapid digital innovation fueling vast complexity and opportunity for customer experience executives

November 15, 2012 by 5 Comments
EmergingFrontiers

I was recently invited to keynote a series of executive events hosted by NICE Systems. For those unaware, NICE serves over 25,000 organizations in the enterprise and security sectors, representing a variety of sizes and industries in more than 150 countries, and including over 80 of the Fortune 100 companies.

At the start of each session, I encouraged contact center and customer experience executives from American Express, Disney, Coca-Cola, Staples, eBay, JP Morgan Chase, Citi, Discover, and several other organizations to commit with me to ask great questions together for the balance of the afternoon.

We are in an era where asking great questions, and collectively pursuing answers together is a necessity. The accelerating pace of technological innovation is disrupting every industry, every best practice, and democratizing opportunity across the globe. The concepts of the learning organization continue to gain traction and has fueled much of the Enterprise 2.0 / Social Business movement over the past decade.

I asked the respective audience(s) in Orlando, Austin, and Salt Lake City to consider the following:

From there, we discussed two major trends:

1. Greater Connectedness

Fundamentally, the reasons that humans connect haven’t changed in millennia. We still share our names, where we’re from, what we do, our interests, preferences, who we know, what we like to do. We form communities of interest, or passion, or purpose. What has changed is that for the first time in the history of the world, billions of people can connect with billions of people.

  • Connections between humans are becoming smarter and faster
  • Interactions are on a stage for the world to see and respond to
  • Digital interactions can now be analyzed for a deeper understanding of the impact of communications between neighbors, brands, enemies, peers, competitors, etc.

According to Peter Diamandis

Right now, a Maasai warrior(a semi-nomadic people from Kenya) on mobile phone has better mobile communications than President Reagan did 25 years ago; And if that same Maasai were on Google, he would have access to more information than President Clinton did just 15 years ago.

.

2. The Digitization of Everything

More and more of our world is being absorbed into a digital format. What we do, where we go, what we learn, what we buy is moving rapidly into the digital realm. From the annihilation of music and print media industries to implanted chips in the military, to smart devices and cars, to “humans on a chip”, and tracking entire ecological systems at a micro or nano level.

What is the impact? Chris Anderson once said, “Every industry that becomes digital eventually becomes FREE”.

If every industry is indeed moving into the digital realm, is every industry indeed moving towards free? Perhaps the better question is “Are your products and services being rapidly commoditized?”

This week I just read how a company is India is working towards distributing a fully functioning tablet computer for $20.

Where Customer Experience Fits

The imaginary world discussed at the beginning of the presentation is the real world of the near future.

In an era where anyone has access to nearly everyone or anything from anywhere, how will you compete? How will you differentiate? How will you create value?

If this line of thinking isn’t on your radar, it should be. It’s critical.

In an era of rapid commoditization, the customer experience is one of the most difficult things to duplicate. Your customers really only want two things from you:

1. Help them accomplish what they’re trying to do, and/or
2. Help them to “feel good”

(I guess I could add a few more through a slightly different lens, like the “Six Things Customers Want”)

These both require an increasingly intimate knowledge of who your customers are, and what they’re trying to accomplish. While traditional products and services are indeed being commoditized, the ability to harness, capture, and utilize unprecedented access to information gives those who are able to identify customer behaviors, needs, preferences, jobs, decision drivers, creatively problem solve, and harness capabilities to create products and services that are simple to understand and consume will win.

Some of the emerging frontiers and opportunities are in the slide below.

In Summary

The two major trends highlighted above are converging to put pressure on nearly every institution, especially for-profit corporations. Customer experience is continuing to move towards the forefront of differentiation capabilities in an increasingly connected, fast paced, digital world. Ironically, the distribution of channels and interactions is simultaneously adding significant complexity to defining and understanding customer journeys, and the impact of a myriad of interactions across that journey.

I’ve included a copy of the entire deck below. I look forward to your thoughts and comments.

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How Social Technologies Contribute to a Better Customer Experience

June 13, 2012 by 9 Comments
CustomerExperience_WatermarkConsulting

This post is on behalf of the CIO Collaboration Network and Avaya

During each interaction with a brand, organization, or institution, the person on the other end of the interaction has a perception of how things went. Over time, the accumulation of these touch points deepen the customer’s perception of the organization. These perceptions influence actions (to engage, to buy, to defect, to complain, to share the experience with others…). These actions and interactions establish the long term relational value between organizations and their customers.

For these reasons, a growing focus amongst companies of all sizes is being placed on enhancing customer experience. The argument is that in a world where the journey towards products and services commoditization is brief, one of the last remaining competitive advantages is the customer experience. It is the one thing that is nearly impossible to duplicate.

Customers have confirmed its importance in multiple surveys.

A recent study by RightNow concluded that 86% of consumers would pay more for a better customer experience, and 89% of consumers began doing business with a competitor following a poor customer experience.

Each year, Forrester Research compiles their Customer Experience Index, where consumers are asked about their preferences and experiences with brands. Companies are then ranked and categorized. Over the past several years, Customer Experience consulting firm, Watermark Consulting has been comparing the financial performance of the Leaders and Laggards from the Customer Experience Index. The results make a strong case that a better customer experience leads to better performance and profitability of organizations.

Customer Experience Leaders outperform by 22.5% while laggards underperform by 46.3%.

However, it’s important to remember that correlation is not always causation. It’s a data point, and a potentially valuable one.

Other research suggests that growing numbers of senior executives and boards are placing customer experience as a top strategic priority. According to surveys done by customer experience firm Beyond Philosophy:

  • 95% of senior business leaders say that the Customer Experience is the next competitive battle ground.
  • 85% of senior business leaders say that differentiating on traditional dimensions is no longer a sustainable competitive strategy.

Gartner, in its latest CIO survey, found that:

CIOs ranked customer relationship management (CRM) as their No. 8 technology priority for 2012, according to a global survey of CIOs by Gartner, Inc.’s Executive Programs. CRM moved up from the No. 18-ranked technology in 2011.

Additionally, Gartner’s 2012 CEO Survey found that CEOs cited CRM as their most important area of investment to improve their business over the next five years.

Customer Experience vendors are benefiting from the increased mandate to improve the customer experience. In a recent survey by the Temkin group, more than eight out of 10 vendors expect their 2012 revenues to outpace 2011 by at least 25% and one-fifth of the vendors expect an increase of more than 75%.

An Explosion of Channels, Interactions, and Touchpoints

Complicating matters of orchestrating improved customer experiences is the proliferation of channels and digital interactions. Not only do customers now interact with organizations on many more channels than they did a decade ago, they also interact with peers, industry analysts, mainstream media, and citizen journalists on multiple channels as well. Each of these interactions contribute to the perception of the company or brand in the mind of the customer.

Customers are increasingly expecting organizations to respond quickly on their preferred channel in alignment with their increasing expectations. At each stage of their journey, there is a certain set of expectations. Depending on the stage in the customer’s journey, expectations might include more information, a resolved customer service issue, a technical problem solved, a purchase transaction, and then everything that happens while the product or service is put to use.

At the simplest level, a study by Bain & Co., found that customers who engage with companies over social media spend 20% to 40% more money with those companies than other customers.

There’s more to social than just gathering likes and follows.

As the interactions between organizations and their customers become more fragmented and dynamic, Social and Collaborative technologies can play a key role in helping organizations differentiate themselves.

(1) Listen across a wide spectrum of digital channels –> Deeper customer insights – enhanced Voice of the Customer (VOC) feedback
(2) Offer a wide array of preferred channels for customers to choose from, including real time unified communications –> Customer preference wins
(3) Creating and cultivating customer communities to foster interaction, and engagement through depth of resources –> Customer self service, value co-creation, open innovation
(4) Cultivating internal collaboration facilitates more nimble and accurate customer responses. –> Speedy access to people and information who can serve customer needs best
(5) Analytics across digital channels provides clues for customer journeys and expectations at each stage –> Deeper customer understanding paves the way for better product and service design, better marketing messaging and segmentation, and the crafting of a better customer experience.

How are you using or planning to use social and collaborative technology to enhance your customers’ experience? Would love to feature your stories here.

This post is on behalf of the CIO Collaboration Network and Avaya

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Global CEOs chart the course into unchartered waters for the Next Generation Enterprise

May 30, 2012 by 6 Comments
Outperformers Managing Change

Courtesy of Jay Cross http://www.flickr.com/photos/jaycross/6951344609/

The average time that a company spends in the S&P 500 is 15 years, continuously trending downward over the past 80 years. In fact, as recent as 10 years ago, the average lifespan was 25 years. Perhaps a decade from now, the average lifespan could be as short as 10 or maybe even 5 years. Change is swift. Cycle times are shortening. We are seeing this play out across industries and institutions.

These realities highlight an entirely new landscape which requires new methods of operation and engagement.

How are global CEO’s attempting to respond to this emerging reality?

In the recently published IBM Global Chief Executive Officer Study “Leading Through Connections”, some key insights emerged about where 1,700+ leaders from the worlds largest organizations intend to lead their organizations over the next few years.

Organizations of all sizes would benefit from taking note of these insights, primarily because the new era of connectedness enables any individual or organization in the global network to sense, analyze, and respond to create value, and exploit untapped opportunities.

Perhaps one of the most interesting findings of the study is that of all of the external forces that could impact their organization over the next 3 to 5 years, CEOs now see technology change as the most critical.

But the technology is simply an enabler and disruptor of the status quo. How CEOs envision leveraging and responding to emerging technology is where things get interesting.

Enabling and Extending Collaboration

In a fast moving world, fraught with uncertainty, four key traits stand out as critical for employee’s future success. Collaboration is the number-one trait CEOs are seeking in their employees, with 75 percent of CEOs calling it critical. People who are communicative, creative, and flexible will also find their skills in demand.

However placing these collaborative and creative folks into a rigid environment will likely lead to impeded growth and frustration. While hiring those with the key traits described above, CEO’s are simultaneously focused on building core organizational attributes. Placing a focus on ethics and values, and establishing a clear purpose and mission while evolving to a more collaborative environment are the primary hallmarks of the next generation enterprise, according to the survey.

The emphasis on openness and collaboration is even higher among outperforming organizations, and according to the study, they also have the change-management capabilities to make things happen.

Extending collaboration beyond traditional boundaries is a fast growing trend with more and more companies adopting the model that AG Lafley and Proctor & Gamble pioneered about a decade ago, leveraging the intelligence of a partnership community for innovation. Outperformers are more adept at leveraging the skllis and talents of folks outside of the organization. This is lending itself to the creation of new value chains, new revenue models, and in some cases, new industries.

Organizations that are building a collaborative culture internally and extending collaboration beyond organizational boundaries find themselves more nimble and able to change in a more dynamic world.

Increased Focus on the Customer

Throughout the report, there were several data points highlighting an even greater focus on understanding the customer.

When asked about key sources of sustained economic value, 66% of CEO’s highlighted customer relationships, finishing only to access to human capital.

When rating their own critical capabilities to lead their organization, guess what CEOs ranked as the most critical trait? “Customer Obsession”.

In addition, more than 7 out of 10 CEO’s are driving change within their respective organizations to “deepen the understanding of individual customer needs.“

Big Data, Analytics, and Insights

I recently highlighted the importance of the data in this short little riff titled “What do you mean you don’t have the data?!?!?”

The data exhaust of digital interactions provides the framework to translate these growing mounds of raw data into meaningful insights, and ultimately translate those insights into action. This appears to be an increasingly important differentiator between organizations that thrive, and those that don’t. According to the data in the survey, insight driven organizations are about twice as competent than their underperforming peers at leveraging data.

Analytics investments are finding a sweet spot tying the increased focus on customers to the ability to harness insights from data. Smart organizations are doubling down on both trends as customer focused insights lead the way by a dramatic margin.

A recent study by McKinsey & Company had similar findings, heavily weighting the importance of customer insights.

Do CEO’s care about Social Media?

In what may have been the most surprising finding for me personally, when asked what they believe will be the top customer interaction methods within the next five years, CEO’s believe that social media will be second only to Face to Face. You’ll see in the chart below that digital interactions are the only customer interaction methods that are expected to grow. I wrote more about that topic here in a post titled “The Digitization of Human Interactions: From Long Tail to Mass Disruption”

Key challenges moving forward

Reality prevails. While frameworks, ideas, vision, and potential is being more widely grasped and understood, the task of redirecting generations of inertia and existing structures is more easily said than done. Below are some quoted sections from the report.

Globalization and increased connectedness have fundamentally changed how the world works. Like the rest of society, organizations are moving into an era of openness, characterized by individual empowerment, operational transparency and decentralized communications. For CEOs, it’s no longer a question of should the organization become more open and collaborative? But rather, it’s how do I run an open organization?

A few years into this journey, we’re collectively landing on similar whats. The most important question now is “How”?

As they do with most technology trends, CEOs are working to sift the social media hype from real opportunity. And skepticism is often intensified by fear. “We’re not yet comfortable that social media has matured to the point we’ll benefit more than we’ll suffer,” explained an industrial products industry CEO from the United States. In a social media world, CEOs realize their brands are in the hands of customers and employees. Control is shifting from institutions to individuals.

When we can confidently prove that social has actually matured to the point where benefit clearly outweighs costs and/or risks, I believe progress will be achieved much faster. This is a great point. I know some of my readers have strong opinions on either side of this fence. I’d love to discuss this more in the comments below.

Believers are even unsure where to start. In the words of one Australian healthcare industry CEO, “Social media has grown faster than industry knowledge on how to use it.” And a life sciences industry CEO from Switzerland frankly admitted, “We are all scared to death about social media within our industry. We want to start with it. But we’re all just looking at each other, and nothing material is happening.”

This is consistent with my experience. How do we get from here to there with these resources, these systems, and these processes? The present and future states are still largely incongruent for many organizations.

The issue of change management takes a more primary role at this stage, not only to get from here to there, but actually in building a new and sustained core competency to constantly reinvent the organization in an environment that never stops changing, and likely will change at a more dramatic pace in the future.

In the IBM CEO study, 73% more outperformers demonstrated a successful track record of managing change.

This reality is also highlighted by the aforementioned McKinsey & Company research.

In summary, CEOs across the globe are both responding to and charting the course towards a more open and collaborative business environment.

The core competencies for individuals and organizations are the ability to sense, analyze, and respond in record time. Cultivating an open, dynamic and evolving culture, learning how to embrace change, an intense customer focus and a reliance on data driven insights are megathemes for the next several years. Survival of the fittest has never been more relevant.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

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Toothpaste, toilet paper, white matter, and jam: Clues for better decision making

April 17, 2012 by 17 Comments
toothpaste

Several years ago, my wife and I ran out of toothpaste in a remote part of small Southeast Asian country. We spent half the day trying to find a place that carried a halfway recognizable form of packaged toothpaste. It was more of an adventure than you might imagine. We ultimately found one unopened Colgate toothpaste box covered in dust in a small bazaar kiosk. In that case, we were excited and thankful. It didn’t matter much that the box was a bit dusty, nor that it wasn’t our typical preferred choice of toothpaste.

I remember coming back to the United States several months later, and going shopping for toothpaste once again. I found myself paralyzed in the aisle as I tried to make sense of shelf space that looked similar to this:

Img Source http://throwyourselflikeseed.blogspot.com/

Too many choices

I remember hearing a story about an elderly woman in post communist USSR who stood crying in the aisle because she couldn’t choose the right kind of toilet paper. (Much of her previous life was spent often waiting in long lines for just one roll of the only toilet paper she had ever known). The sudden presentation of varying sizes, patterns, colors, and prices were overwhelming the underdeveloped analytical part of her brain.

In the era of Big Data, I believe that we all represent that woman to a certain extent. How many times, from a personal or corporate perspective, have you experienced some level of stress or anxiety because of the amount of information you have to sift through in order to make the right decision?

We’re increasingly overwhelmed. When we type something into Google, we don’t want 4,456,761 results.

When we are making purchasing decisions, Google found in 2011 that the average shopper uses 10.4 sources of information to make a purchasing decision (nearly double the number of sources they used in 2010).

To illustrate the point, Sheena Iyengar of Columbia University, who has dedicated much of her life to analyzing the concept of making choices, ran a study by placing a free tasting booth in a grocery store.

First they offered 6 different jams. 40% of the customers stopped to taste. 30% of those bought some.

A week later, they set up the same booth in the same store, but this time with 24 different jams. 60% of the customers stopped to taste. But only 3% bought some.

*** Having too many choices made them 10 times less likely to buy. ***

To complicate matters even further, we now can get this information from a variety of screens, and devices. A recent study of a small sample of 20 somethings found that they switched media screens 27 times in an hour!

How many choices do we want?

According to Iyengar, “when humans are given 10 or more choices, they make bad decisions”.

Perhaps that’s why marketers have been trying for so long to get on the first page of search engines. Jeff Bullas shared the following results from an AOL study on search.

The first ranking position in the search results receives 42.25% of all click-through traffic
The second position receives 11.94%
Third position on the first page obtains 8.47%
The fourth placed position on page one receives 6.05%
The others on the first page are under 5% of click through traffic
The first ten results (page one ) received 89.71% of all click-through traffic.

Writers, content producers, and other media have long known that “Top 10″ lists attract eyeballs and attention. People crave simplicity they can digest and manage from an authoritative source.

The typical American makes about 70 decisions per day. 50% of CEO decisions are made in 9 minutes or less, and less than 12% take more than an hour to make.

We collectively spend a alot of time not just trying to gather and analyze information to help inform the decisions we are making, but trying to absorb the information that comes at us unexpectedly, where we are not directing the stream of content.

But, this is taking its toll.

ForensicPsychology.net found that “heavy internet users are 2.5 times more likely to be depressed and that they also suffer from a reduction in white matter in their brains (goo that transmits signals around the cerebrum) in the emotion, memory, sensory, and speech centers by 20%”

Enabling better decision making

Big Data brings with it a whole set of opportunities, but also challenges. According to IBM, 90% of the data in human history was created in the last 2 years. According to McKinsey&Company, that pace will be accelerating at a pace of 40% per year.

Design and creativity take an increasingly important role in the process.

From the hyperlinked article above:

Advances in technology – faster, more powerful,less expensive – are concrete and visible. Design is subtle, more subjective, more open to human interpretation. But, as our increasingly advanced technologies enable us to build larger, more capable, more complex systems, the role of design becomes ever more important. It is the only way to ensure that our technologies will help us deal with our increasingly hectic lives.

The challenge then for marketers, product managers, salespeople, customer service, consultants, advisors, designers of products, services, and experiences, and anyone else who is initiating or sustaining progress is to take all of this data and information, and translate it into a digestible, understandable, and insightful menu of choices for their audience.

Regardless of your industry, your customers (along with your executives, your partners, and other stakeholders) will likely resonate with the following statement.

“Help me make sense of everything that is happening. Help me know what to pay attention to. Surface a narrowly defined selection of the things that most closely align with my needs, desires, and jobs to be done. Help me evaluate quickly pros and cons of each decision, and then help me make the best decision.”

Organizations of all sizes that are able to center their focus on answering that call from their customers will thrive.

So, then, let’s get to work. But I know..it’s much easier said than done.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

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