Monday, June 30, 2008

Mini-podcast: Listrak's Ross Kramer on not investing in sales and marketing

An audio story from The Mistake Bank.

When Ross Kramer started his first technology business, he focused on the technical side to the exclusion of sales and marketing. In retrospect, that was a mistake.

You can download the story here.

Ross Kramer started his first company, a web hosting firm named Vertex Internet, in his Penn State dorm room in 1997. He quickly noticed the struggles his customers were having in communicating with their customers efficiently and effectively, so he started Listrak to help with their email marketing needs. Under Ross’ direction, both companies have grown into technologically-advanced companies that are leaders in their industries.

Listrak services clients such as Daimler Chrysler, Motorola, L’Oreal and the Islands of the Bahamas from its Lititz, PA headquarters. Listrak is a two-time winner of the Central Penn Business Journal’s Top Fifty Fastest Growing Companies and the 2005 Growth Company of the Year by the Technology Council of Central PA.

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Saturday, June 28, 2008

Food doesn't only have to be fresh, it needs a story as well

This from today's New York Times ("Food-Shopping Tips Direct From the Manager," by Ron Leiber):

Not every grocery store bothers to highlight local products. So you may need to ask what comes from nearby and who grew or made it. “One of the things Whole Foods taught us is the need to tell stories” about our products, Mr. Heinen said. In fact, Heinen’s has 50 stories that it trains employees to tell customers about its meat, produce, baked goods and other items.

I guess it's not surprising, in the wake of salmonella scares on tomatoes and spinach, that the dominant narrative for food products is becoming, "where did this come from, and how did it get here?"

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Friday, June 27, 2008

Roughnecks learn to learn from mistakes

"Unmasking Manly Men" in the July-August Harvard Business Review Forethought section had a grabby title and a thesis puncturing a resilient stereotype: one of the roughest, most macho, most dangerous industries in the world--offshore oil drilling--has developed a new work culture where workers support each other, where they are open and candid with their feelings, favorite topic...where they admit mistakes and seek to learn from them.

The piece, written by professors Robin Ely of Harvard Business School and Debra Meyerson of Stanford University states that the culture change was led from above, primarily as a way to improve safety and reduce accidents. And that worked--on-the-job accidents declined 84% over a fifteen-year period. Efficiency and productivity improved as well.

This culture of candor had at least on beneficial side effect--the company developed a new assessment of leadership potential based on ability to listen and learn rather than excellence as a roughneck. [A lesson to the many many professions out there that still select new leaders based on skill in the old job vs. capability for the new one.]

I'm learning that developing a culture of destigmatizing mistakes, discussing them and learning from them makes the whole organization a lot more human, caring and fun. Oh, yeah, innovative, too.

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Thursday, June 26, 2008

Jill Konrath Mistake Story #3 - 5 minutes to engage a prospect, and nothing to losing your cool

From The Mistake Bank, our final sales mistake story from "Selling to Big Companies" author Jill Konrath.

When I walked in the front door of The Kaplan Company, there were at least 30 desks filled with women who were busy doing order entry and handling customer service issues.

I told the receptionist that I wanted to speak to the person who made copier decisions. After a quick check with the boss, she escorted me past all those working women into his office.
"Sit down," he said gruffly. "You've got 5 minutes. Talk."

"If you're busy, I'll come back later," I said, trying to be gracious.

"Nope," he stated. " 5 minutes. Tell me why I should buy your product. Your 5 minutes is starting now."

I mumbled. I stumbled. I tried to engage him in conversation. I tried to explain that I needed more time. He wasn't one bit interested. After 5 minutes, he arose and said, "Your time is up. You can leave now."

That ticked me off. I told him he was rude and obnoxious. Then I turned and stormed out of his office past all those women, shouting back at him, "I'll never sell you a Xerox machine. You don't deserve to work with Xerox."

I know it's hard to believe, but I really did lose my cool. And I'm also sure that guy never wanted to work with Xerox again. But he had a point. I couldn't concisely state why he should listen to me.

I wanted to build a relationship and warm up the call. That made me feel better. He was a busy man who chose to use his time judiciously. I didn't respect his needs. After that cold-calling disaster, I learned to net it out. That lesson is even more important today than it was years ago....

The hardest thing in the world is to look at your own complicity in the situation, yet that's where the maximum growth is for you and ultimately, the key to your long-term sales success.

Related Posts:
Jill Konrath Mistake Story #1
Jill Konrath Mistake Story #2

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Shop Talk Podcast #12 - Listrak's Ross Kramer on common mistakes made in email marketing

The latest edition of the podcast includes an interview with Listrak Founder and CEO Ross Kramer. Ross discusses the ins and outs of communicating customer via e-mail, including the definition of the term "house file." (I didn't know what it meant either.) It was a fun and frank discussion, and I learned a lot.

You can download the podcast here.

Disclosure: I use Listrak's email marketing platform.

Related links:
Ross Kramer's blog

(Theme music: "Up the Coast," from West Indian Girl's latest album 4th and Wall.)

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Wednesday, June 25, 2008

M&T Bank - piling on the fees, it's a company easy to hate

A funny thing happened to me at the end of April. While I was on a business trip, our personal checking account with M&T Bank dipped below zero. I didn't get back from the trip till late Friday, then the weekend came. At any rate I didn't find out about the problem till Monday, when I checked the balance on line.

During the time we were below zero, Ten checks and auto withdrawals came in, totalling about $500. On my online statement were ten insufficient funds notifications (NSFs). The first charge was $18. The second through tenth NSFs were $32.


[I have a business account with Graystone Bank. When this same situation happened a few months ago, they called me immediately and alerted me that I didn't have enough in the account to cover a check that had come in. They offered to hold the check till I made a deposit. Which I did. That day. No NSF fee, and my undying gratitude.]

As soon as I learned that our M&T account had dipped below zero, I rushed to the bank with a check. I told the teller my situation, and she saw that it was a very unusual case for us. I asked if they ever forgive NSFs for customer goodwill purposes. She said I had to call the manager of the branch where I opened the account in order to discuss any credits.

It took me a while to think about which branch we opened the account at, since we have been customers of M&T for almost eight years and have visited many local branches in that time.

When I finally remembered which branch, I called and spoke to the manager. He told me company policy is to forgive the first NSF. The others would stay. I told him how displeased I was with this, especially since M&T hadn't bothered to give me any notification of the low balance (as Graystone had) so I could have made the deposit before more checks came in.

The manager said: we are a big company, and that is the policy.

Here's how that response sounded in my ears: "F--- you. Go somewhere else if you don't like it."

This episode reminded me of the great article in the June 2007 Harvard Business Review: "Companies and the Customers Who Hate Them," by Gail McGovern and Youngme Moon of Harvard Business School. The article begins:

One of the most influential propositions in marketing is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by finding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays.

Regarding my experience with M&T, here's a most salient excerpt:

Companies can also profit from customers' bad decisions by overrelying on penalties and fees. Such charges may have been conceived as a way to deter undesirable customer behavior and offset the costs that businesses incur as a result of that behavior. Penalties for bouncing a check, for example, were originally designed to discourage banking customer from spending more than they had and to recoup adminstrative costs. The practice was thus fair to company and customer alike. But many firms have discovered just how profitable penalties can be; as a result, they have an incentive to encourage customers to incur them - or, at least, not to discourage them from doing so.

Which is my perspective in a nutshell. Shame on you, M&T. You have earned the hate of at least one customer.

Related posts:
Companies that profit from customers' mistakes--watch out
Things customers hate companies for

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Tuesday, June 24, 2008

"Brain Rules" rules

I'm happy to use my sons' favorite expression to headline today's post. If something is really, really good, it "rules." I guess kids wish for monarchy (or feel as if they live under one). For example:

"Spongebob rules."
"Indiana Jones rules."
"Swim team rules."

And, similarly, John Medina's "Brain Rules" rules. (And I'm not the first to say so.) It performs an amazing trick--besides being informative and's also a delight to read.

The book sets out twelve rules about how our brains work (#1: Exercise boosts brain power; #8: Stressed brains don't learn the same way), cites study after study to back up the rules, and demonstrates how our current lifestyles often aren't particularly good for our brains. Mixed in is advice for students, parents, presenters, executives, drivers--everybody--about how to act more in support of your brain rather than in opposition to its needs.

I gravitated to the section about attention (#4: We don't pay attention to boring things), especially his description of the 10-minute rule for his university lectures:

I decided that every lecture I'd ever give would come in discrete modules. Since the 10-minute rule had been known for many years, I decided the modules would last only 10 minutes. Each segment would cover a single core concept--always large, always general, always filled with "gist," and always explainable in one minute. Each class was 50 minutes, so I could easily burn through five large concepts in a single period. I would use the other 9 minutes in the segment to provide a detailed descrtiption of that single general concept. The trick was to ensure that each detail could be easily traced back to the general concept with minimum intellectual effort. I regularly took time out from content to explain the relationship betwen the detail and the core concept in clear and explicit terms. (p.89)

The book is full of stories, blessedly, and also demonstrates Medina's innate grasp of rule #4 by creating suspense in passage after passage, for example:

To explain how timing issues figure into memory formation, I want to stop for a moment and tell you about how I met my wife. (p.133)

How could anyone close the book there? Devices like these (used seamlessly and delivered in a deadpan voice) propel you through the book, so that at times it feels like you're reading a thriller, not a book about neurology.

Enough said. Great book. Read it. Do something nice for your brain.

Related posts:
The first great business book of 2008
A must-read for people who present

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Monday, June 23, 2008

Michael Dell on generating sales leads

I found this great Michael Dell story in "Lessons Learned: Starting a Business." In case you thought his success with Dell Computers was a complete accident, read this:

The first job I got when I could actually drive...was with the Houston Post newspaper. My job was to call people on the telephone and convince them to buy the newspaper. The first partial month I worked there, I figured out that when people wanted to buy the newspaper, either they were moving into a new house or an apartment, or they had just gotten married.

The way to find people who'd just gotten married was to go to the county courthouse. They have the applications for marriage licenses, which are a matter of public record in the state of Texas. And there is a place on the application form where you could request the license be sent. So that turned out to be a really good place to find people to whom I could send an offer to get the newspaper.

The other thing I found was that you could actually get lists of people who had applied for and received mortgages. And that was another great list of people. My first full month at the paper, I was the top salesperson of newspapers, and I had a great time. This was a summer job. I started hiring my friends and sending them out to all the surrounding counties to collect all these lists of people who had applied for marriage licenses and just had a blast. I was sixteen years old. I saved my money and bought a BMW.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Starting a Business. Copyright (c) 2008 Fifty Lessons Limited; All Rights Reserved.

For more information about the "Lessons Learned" series, including a showcase of 50 Lessons video stories, please follow this link.

Related Posts:
The value of not caring in the workplace
A new midlife crisis story from Williams-Sonoma
Be careful using other people's money to make acquisitions
Bosses, choose your words carefully

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Sunday, June 22, 2008

Friday, June 20, 2008

Fran Ten mini-podcast: the impact of filesharing on musicians

The recent post on giving away digital creative works has gotten some attention, not least because of the link from the New York Times' David Pogue on his blog. One of the inspirations for the post was my talk with Fran Ten of the great LA band West Indian Girl--specifically when he spoke eloquently and from the heart about the issue of filesharing and its impact on music and musicians.

I've extracted that piece of the podcast into a mini-podcast (5min30 seconds long). You can download it here.

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Thursday, June 19, 2008

A Shop Talk word cloud

A Shop Talk "word cloud" courtesy of the very cool application Wordle. (Hat tip to the TED blog.)

"Three-Story Laurie" and remembering to repeat

I'm having fun reading "Brain Rules" by John Medina. It's interesting, funny and--unexpectedly--not the least bit dry. I'll write more about it in the next few days. But for now, one of the rules, #6 (Long-Term Memory: Remember to Repeat) made me recall someone named Three-Story Laurie.

It was one of my favorite nicknames ever, because while it sounded like it might have referred to an apartment building, Three-Story Laurie referred to her tendency to repeat the same few stories again and again. She showed up at various gatherings of my college friends over the years, and always had a collection of three new stories that she'd tell and retell over the course of the weekend. By repeating the stories, she made sure she remembered them. In doing so, Laurie was employing this advice from "Brain Rules":

...The relationship between repetition and memory is clear. Deliberately re-expose yourself to the information if you want to retrieve it later. Deliberately re-expose yourself to the information more elaborately if you want the retrieval to be of higher quality. Deliberately re-expose yourself to the information more elaborately, and in fixed, spaced intervals, if you want the retrieval to be the most vivid it can be. (p. 133)

This idea of remembering via repetition has a lot of uses. I've found, when recording stories for the Mistake Bank, that a second or third retelling is better, tighter and richer than the first.

And, oftentimes, I write in this space about something I've read, in order to understand it and remember it better.

Sort of like now.

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Wednesday, June 18, 2008

Good news: The WSJ is back to being a great business paper (for now)

I wasn't alone in complaining about the Wall Street Journal's decline in the quality and quantity of its business news articles. Thankfully, as Slate's Jack Shafer points out, the Journal has improved markedly in this area recently.

I'd point to this article on Dell's embrace of web2.0, this one on new business gurus (but no women) and this on municipal broadband as recent standouts. Each of which has reconfirmed why I like the paper. I've also noticed that the wonderfully silly page-1 articles (I still remember the 30-year-old one on Meat Loaf) have returned.

Related post:
Wall Street Journal is discarding its identity as a business newspaper

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Elevator pitches--simple, concrete, memorable

Ford Harding discussed how to create a good elevator pitch recently on his blog. Summarizing what you do in a few words--simple, concrete and memorable enough to leave an impression on someone you've just met--is not easy. [Ford's suggestions are useful and easy to apply.]

I'm finding it especially difficult now, as I'm beginning a transition from the "legacy" business I've done historically to the next specialty I'm trying to establish. When I've tried to talk about both sides of my business I succeed mainly in drawing quizzical looks and encouraging people to go back to the bar for another drink. What I've concluded is that I need two elevator pitches. One is for people I meet who are connected to the legacy business. The other is for everyone else.

Needing to create an elevator pitch for the new business area is helping me understand what I need to work on building next.

Which is, not surprisingly, a base of references.

Related Post:
Why you need an elevator pitch
Five principles of new B2B product marketing

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Tuesday, June 17, 2008

More insight on the Honda Fuel Cell vehicle

If you read today about Honda's new fuel cell car (here or here), you may be interested in a fuller discussion we had on a recent podcast.

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Shop Talk Podcast #11 - (not) raising prices: a mistake

From The Mistake Bank:
The following story discusses how something as well-meaning as holding off on price increases until there's no other option often backfires.

Click here to access the podcast.

Related Posts:
Business as usual costs you money
The sneaky price increase

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Monday, June 16, 2008

Jill Konrath Sales Mistake Story #2 - How NOT to get to higher-level decisionmakers

From The Mistake Bank, another sales mistake story from "Selling to Big Companies" author Jill Konrath.

One of the prospects I uncovered while cold-calling was Trussbilt, a company directly across Como Avenue from Quality Products....

Back then, I was working with Tinsey, a very articulate woman who told me she was in charge of the copier decision. Shortly after our first meeting, I read a book that said salespeople should only work with the top dogs - not their underlings.

Since my contact was an administrative assistant, I realized I needed to rectify the situation immediately. I called Mr. Big directly and set up a time to meet. Then I prepared like crazy to ensure I did a great job.

Unfortunately, I never had a chance to capitalize on this opportunity. Tinsey came to the lobby to escort her boss's visitor to his office. When saw me, she demanded to know why I was there.

"I'm here to see Mr. Big," I replied, suddenly not so sure if the tactic I'd taken was appropriate. I was right. She proceeded to yell at me like I've never been yelled at before.

I was appalled. Mortified. And suddenly very light-headed and shaky. I fainted dead away right there in the middle of the lobby.

As you can imagine, I never did business with Tinsey or Trussbilt. But I sure did learn that once you're working with someone it's never appropriate to go around them without their knowledge. They'll get mad. Furious. It's a normal human reaction.

Today, to ensure my ability to work with whomever I want in an account, I always tell prospects, "Usually when I'm working with clients, I need to talk with the VP of Sales, Regional Sales Directors and sometimes even Marketing." Doing it this way prevents the people problems that can derail your sales efforts.

Related Post:
Jill Konrath Mistake Story #1

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Friday, June 13, 2008

Stories that people tell about products are invaluable

I was listening to a Dave Snowden talk today, and this bit jumped out:

We're capturing 150,000 stories a week from people as they consume a product. Because the stories that people tell as they have an experience are far more significant than customer satisfaction surveys.

Also this:

What people love... is numbers backed up by stories--numbers on their own, stories on their own have deficiencies. But numbers backed up by stories is quite powerful.

This idea--capturing & sorting stories from users to see how products are doing and how they can be improved--is something I've been messing with a bit, and it's good to hear that this isn't brand-new.

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Posts with legs

As I scan Google Analytics to see how people use this blog, I find some of the same posts being read again and again, despite being months or years old. Here are the posts with the most "legs."

1. On Gary Hamel's "The Future of Management." People are interested in the book, and search for information about it, nearly every day.

2. Jellyfish. It's the picture. Honest.

3. Top 5 Business Books of the Year. I think Shenhar and Dvir liked being on the list.

4. A brief history of wheeled luggage. For some strange reason, the topic of suitcases with wheels continues to fascinate us.

Wednesday, June 11, 2008

Must we give away digital creative works?

I've been thinking about this a lot recently, spurred on by the recent Fran Ten podcast, this David Pogue post, and most recently a thoughtful post by Scott Goodson based on this column by economist Paul Krugman.

The upshot of Krugman's argument, referencing Esther Dyson's prediction from the early '90's, is that digital creative works will become free, and creative artists will have to make their money from "ancillary" projects, such as touring, personal appearances, licensing, etc.

If this turns out to be true (and the music industry is approaching this state right now), then it has a lot of negative ramifications for the future of creativity.

First off is the fairness question. Here is a simplified digital media value chain:

  • Digital distributors (i.e., ISPs like Comcast) make money through subscriptions
  • Directories and aggregators (like Google) make money through advertising
  • Creators make... nothing?

While the structure of technology allows this to happen, it's hard to look at this picture and see it as fair. I agree that DRM sucks, but is the solution "pay what you want"--a virtual tip jar?

Furthermore, if creating a work of art cannot in itself make money, it will then be difficult to invest much in that creation. While that may allow bloggers to continue (though I wouldn't turn down a few bucks for my work if that were possible), it doesn't bode well for musicians or moviemakers, and, soon, book authors.

If I can make money in personal appearances but not by writing, I will have to limit my writing time in order to, you know, pay the mortgage.

If a band can make money touring but not through selling CDs, they will be unlikely to spend much time in the recording studio, or to spend money on studio effects or gear. Perhaps they will instead simply tape their concerts and compile albums from the live sessions.

If a moviemaker cannot make money from her films because they are freely available on the web, she will have difficulty using any approach other than Dogme 95 in order to reduce costs. And do we want to see Dogme 95-style movies all the time?

The irony is that time put into making money takes away from time to create. Therefore, the output from our best artists is less. Is that progress?

Perhaps this is offset somewhat by the "long tail" of creators enabled by new technology. But I would trade 1000 bad "Nude" remixes for one new album by an artist I really like.

(Photo: pro-copying logo from

Related Posts:
Shop Talk Podcast #9 - Fran Ten of West Indian Girl on today's music business
How will musicians get paid in the 21st century?

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Tuesday, June 10, 2008

There's a web2.0 hammer for lots of business nails

I was talking to a prospect today and they mentioned that their recent expansion had created an entire new level of people involved in their business. In other words, their staff now was communicating with end-clients through an array of agents and contractors, which had not been the case as much in the past. This raised the concern with them that they would not hear stories, both good and bad, from the front lines, and that they would struggle to communicate out to those end-clients.

After they finished speaking, I offhandedly said, "Have you thought of starting a social network where your clients, agents and contractors could all contribute?" Their kind of business has some strong unifying factors and a social network, to me, was a natural step to aid in the kind of communication they wanted.

They grabbed right onto the idea. It brought to mind Josh Bernoff's ("Groundswell") recent statement that few will make a business out of providing web2.0 tools to consumers, but many companies will thrive if they can create tools for use inside businesses.

And in today's business world, there are opportunities to use these tools to greatly improve information flow, collaboration and idea generation. Here are some thoughts:

wikis...for group collaboration
social networks...for communicating with customers/partners
blogs and RSS...for communicating and listening to the broader industry or world at large
social bookmarking...for sharing interesting ideas create a feeling of a virtual workspace

There are countless other possible examples. Andrew McAfee has an interesting take, where he assigns tools based on the strength of people's ties. He also usefully points out that these tools work best when structures are allowed to emerge from the interaction of the participants, rather than being imposed by some authority.

(Picture by gerard79 via stock.xchng)

Related post:
Dell's web2.0 efforts pay off

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Monday, June 09, 2008

Jill Konrath Sales Mistake Story #1 - When paralyzed by fear, get moving

Mistake Bank member Jill Konrath has written about a few of her selling mistakes on her blog, Selling to Big Companies. She's kindly allowed us to post them here. The first story follows:

After finishing the Xerox training program, I was assigned to follow Jim Farrell for several weeks to learn the ropes. But finally the day came when I was sent out on my own.

At 9 a.m., I pulled up in front of Quality Products to begin my cold calls. But I couldn't get out. I was terrified and tongue-tied, convinced that my sales career was over before it even began.

After nearly 30 minutes of being paralyzed in my seat, a song wiggled its way into my mind: "I Have Confidence" from the movie, The Sound of Music.

I started singing to myself, quietly at first, then louder and louder. I was particularly enamored with the refrain, "I have confidence in confidence alone, and as you can see, I have confidence in me."

I really didn't believe the words, but they got me moving off my "stuckness." I pulled out my cold call plan that I'd studiously prepared the night before and reviewed it. I practiced my opening lines again and again.

Then I got out of the car and went in. By the end of the day, I'd made over 20 cold calls and uncovered some potential prospects.

Over the years, I've been confronted with many tough situations that I didn't know how to handle because I lacked the requisite knowledge or experience. I've learned that you can't know everything before you start. And I've also learned that "movement" is key to discovering the answers.

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Saturday, June 07, 2008

An important definition of sensemaking

In trying to talk to companies about using narrative techniques and other ways to mine the non-quantitative data they have but never make use of, especially for strategy and innovation, this post from Dave Snowden will be a significant asset.

Sensemaking is the alchemical step where the mess is sorted through and the themes, threads and weak signals are detected and clarified. From there, people can make decisions and act.

In other words, it's the most important step.

Related post:
HBR article demonstrates that leaders need to manage complexity

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Friday, June 06, 2008

Mistake Bank featured in the Ning blog

Ning is the platform that hosts The Mistake Bank and more than 300,000 other social networks (!). In the Ning blog, they feature a few networks each day that use Ning. And last night, they posted a nice writeup of The Mistake Bank. Did you ever notice this: when others discuss an idea you have, they often explain it more clearly than you can! Please check it out.

And if you're interested in starting a social network, for a class reunion (like my wife did) or any other purpose, I'd highly recommend Ning. It's highly functional and exceptionally easy to set up, maintain and customize. (Note: I have no connection with Ning other than as a user of their software.)

Ning was founded by Gina Bianchini and Marc Andreesen. Andreesen previously had founded Netscape and Opsware, two highly successful startups. I think he knows something about growing successful companies.

Related Post:
"The Breakthrough Company": wise advice for the emerging entity

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Thursday, June 05, 2008

Green is now a cliche´

I agree with Tim Berry--the term "green" has been overused to the point of meaninglessness. Here's the latest example I've seen:

Perhaps devoting one channel to "green" content allows the other channels not to pay attention to the environment?

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Wednesday, June 04, 2008

Shop Talk Podcast #10 - John Quelch on Democracy and Marketing

This time we talk with Harvard Business School Professor John Quelch, co-author with Katherine Jocz of "Greater Good: How Good Marketing Makes For Better Democracy" (Harvard Business Press, 2008).

John talks about how marketing and democracy share many goals, and how each can learn from the strengths of the other--including how democracy's lessons on acting based on altruism rather than self-interest has echoes in the corporate social responsibility movement.

One of John's welcome themes is that marketing on the whole benefits society greatly--which leads into a detour about why people--even marketers themselves--often view the profession as unseemly.

It was a fun discussion. I learned a lot, and I hope you like it.

The podcast is here (right-click to download).

You can learn more about John Quelch's research and thinking on his blog.

Other resources:
Interview with John Quelch from Personal Branding Blog
My review of "Greater Good"

(Theme music: "Up the Coast," from West Indian Girl's latest album 4th and Wall.)

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Tuesday, June 03, 2008

Dell's web2.0 efforts pay off

Dell has taken a beating in the marketplace (both the commercial marketplace and the reputation marketplace) over the past few years. When founder Michael Dell took the reins again, you had to wonder whether his presence back in the CEO chair would really mean something, or would Dell slip into permanent stall mode like so many PC makers of the past (remember Gateway?).

So it's notable that Dell has distinguished itself among consumer electronics companies for embracing the capabilities of web 2.0 to engage with customers and influencers. According to the excellent new book "Groundswell," by Charlene Li and Josh Bernoff, Dell used a PR crisis created by a blogger to jump-start its participation in social media, by 2006 was monitoring blog posts on the company, proactively seeking out problems and responding to posts, if necessary reaching out to users with technical support.

That effort has expanded to include sensing problems by monitoring Twitter (as well as using Twitter to communicate with end-users and others).

Today's Wall Street Journal points out that Dell has mastered the art of energizing the "groundswell" to build publicity for its products:

Dell Inc. hit a viral-PR home run last week when photos of a not-yet-released computer -- a candy-red miniature laptop -- swept across the Internet, creating excitement in advance of the release.

The buzz wasn't an accident: It was the payoff from a year-long effort by Dell to engage more directly with bloggers and others who write about the company online....

Engaging with blogs isn't just a defensive move. It has also changed the way the company promotes its products. Chief Executive Michael Dell brought the buzz-generating candy-red computer to The Wall Street Journal's D: All Things Digital conference with the goal of showing it off to some of the bloggers in attendance.

A writer from Gizmodo, a popular gadget blog, saw the new computer and snapped a few pictures, which he posted on the Internet. The company then posted some official pictures on its own blog, and the story took on a life of its own. Dell's blog post says Gizmodo "caught" Michael Dell with the new computer.

I own a Dell computer, a beige minitower from the old days. It's a nice, boring computer. Dell's efforts in web 2.0, however, are the opposite of boring.

Related posts:
Is your marketing department confused about web 2.0? ("Groundswell")
Twitter and "Every Minute Accounted For"
Companies stall because they don't listen to customers

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Monday, June 02, 2008

What in hell is Service-Oriented Architecture?

A hint--it does not describe the new headquarters building for the International Red Cross. Rather, it is either the newest empty IT buzzword or the most important innovation in corporate computing since that Internet thing.

First, let's describe the problem. Companies still do most of their business functions in-house. To support those functions, they have over the years developed customized IT systems. Through growth and acquisition, these same companies have ended up with multiple instances of very similar processes supported by very different systems. This duplication is wasteful both in IT costs (maintaining redundant systems) and in operating costs (doing the same thing in different ways).

Employing an ERP system like SAP or Peoplesoft can address part of the problem--through brute force, a successful SAP implementation requires a company to adopt one way to process, say, employee expense reports. Yet that leaves lots of room for improvement. For the Fortune 1000, are there really 1000 uniquely valuable ways to process expense reports?

And that's where Service-Oriented Architecture (SOA) comes in. SOA specifies IT systems as loosely coupled sets of services. Processing an employee expense report is one such service. Different front-ends, say web vs. mobile, are different services. A system architect then would combine these services into applications--plugging the web front end on for a desktop expense-report application, plugging the mobile front end on for a mobile app.

This was some of the thinking behind object-oriented programming since the 1970's, but services are much larger than objects, they are completely self-contained, and the "orchestration" required to assemble them does not require programming. What makes this possible is the internet and programming tools like Java, SOAP, XML, etc. A chunk of code receives a request for services over the net, processes it, and returns results to the calling process.

A company, were it to organize itself around a service-oriented architecture, could easily select systems to implement a standard expense reporting process, or outsource the process. If a better system or outsourcing partner emerged, the company could adopt it easily. And so on across all its processes. The promise would be a company that executes commodity processes very efficiently, and that is able to truly differentiate its most value-adding processes.

But it's a daunting change. The article "The Next Revolution in Productivity," by Ric Merrifield, Jack Calhoun and Dennis Stevens, in the June Harvard Business Review addresses this question. It also provides a detailed overview of SOA and the implications of this model for companies.

Which are: the potential of SOA is almost limitless, yet implementing it will be very difficult. It might be more expensive than those terribly costly SAP implementations you read about in the paper. In fact, startups who adopt this type of methodology from the outset may be creating a long-term competitive advantage against the dinosaurs.

Further reading on SOA:
An SOA overview from
IBM resources on SOA
The same from Microsoft
A nice one-page diagram

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