Wednesday, March 04, 2009

We have moved

Shop Talk has moved to our new location.
There won't be any new posts here after that. The older archives will remain, however.

Please head over to our new home, which also contains the complete archive of posts.

If you'd like to update your RSS reader, here's the feed for the new place.

Thanks for reading us here. See you at the new place.


Saturday, February 28, 2009

Customers are talking - candid customers won't give you 100%

Two things happened to me recently that got me thinking about online product forums.

In the first instance, I was looking for an inexpensive hotel in Las Vegas. Deals abounded, but complications arose when I looked into the customer comments published for each hotel. Here's an extreme example:

Room was not in the main tower, it was right by the parking lot and the tunnel you had to walk through to get to the room smelled like puke and urine, also very hot. The door to the room beside us looked like it was ajar so I gave a little push, on the bed was a naked man laying there. Looked like he was waiting for someone to come into the room. I quickly closed the door and retreated back to our room. A few minutes later I looked back out and the door was ajar again. I think he was for hire. Was very scared because there was an adjoining door. It was very late and were very tired so tried to get some sleep. NOT! So much noise. Twice that night someone tried to open our door. Very scary. Cockroaches in bathroom in morning. Also very squeeky bed springs in room above that continued sqeeking for a long time (must be Viagra) Funny coincidence the room number was 169. This hotel is the seediest most unsafe disgusting place I have ever had to stay in. Never ever would go back.

Needless to say, I stopped looking for the lowest-cost deals after reading stuff like this.

Soon thereafter, I was one of a number of folks who received the same email from a friend, who had just opened a new business in town. She felt that a user review in, which had some criticisms, needed to be countered. To my friend, the negative statements were damaging. To me, as someone who works with helping companies listen to customers, the feedback was valuable and could be useful to her.

These two examples underline that even if you're the Ritz-Carlton (never mind the hotel with the naked man on the bed), you will not get a perfect score from your clients. Not if they're being candid with you. They will point out things that bothered them, that didn't go perfectly, that are chronic weaknesses. Ignoring these forums or getting defensive is not only unwise, it's self-defeating.

I wrote to my friend who has opened the local business. I told her that the Yelp review, while not 100% positive, did say many positive things (among which was that the reviewer had visited several times and planned to go back again--a strong testament). The negative things were accurate and, happily, could be easily addressed.

I recommended to her rather than try to debate the reviewer, take her comments to heart, act on them, and invite her back for another look.

I don't know what to say to the owner of the hotel described above. Suffice it to say I won't be staying anywhere near it.

Friday, February 27, 2009

Facebook, smacked down again, invites customer input

Facebook always does the right thing by their customers... once their customers have beaten them up for a wrong first step. A year and a half ago they stirred up the wrath of their community by proposing an ad-targeting system leveraging its users' profile data, then backed down.

Now they've done it again. Facebook changed their terms of service, igniting another storm of outrage on blogs, Twitter and, yes, Facebook. They relented, returning to their prior terms of service, and yesterday announced that they will be seeking user input on community questions such as terms of service, and be more transparent, including this statement:

Transparent Process: “Facebook should publicly make available information about its purpose, plans, policies, and operations. Facebook should have a town hall process of notice and comment and a system of voting to encourage input and discourse on amendments to these Principles or to the Rights and Responsibilities.”

It's easy to make fun of Facebook for their public embarrassments, but they do get the message their users are sending. Furthermore, they are pioneers in engaging with their users. There is no template they can follow. Facebook's users, because they give personal and sensitive information to the service, is very sensitive to its use, and the web2.0 nature of Facebook means that its users are comfortable using web2.0 means to communicate. Quiet they are not.

It will be fascinating to see how more traditional companies deal with assertive user bases. As consumers find their voices on line (and efforts like VRM give users powerful tools to manage and communicate with their vendors), we'll be reading more stories like this one. Will other companies learn from Facebook's painful lessons?

Related post:
Zuckerberg learns

Wednesday, February 25, 2009

P&G, in moving into services, can learn lessons from Disney

NOTE: We will stop posting new material to this blog location as of Friday, Feb 27. Please visit our new home, which also contains the complete archive of posts. If you'd like to update your RSS reader, here's the feed for the new place.

I read with interest the recent HBR Editors' Blog posting speculating on the difficulties Procter & Gamble might run into in its effort to create a chain of car wash franchises, called Mr. Clean Performance Car Wash.

When I read the post, written by marketing professors Neeli Bendapudi, Randle D. Raggio and Tassu Shervani, we were in the midst of a vacation in Orlando, Florida, at the various Disney parks. So, the connection between what P&G is trying to do now and what Walt Disney kicked off some fifty years ago came to me instantly.

The upshot of the HBR post is that product and services businesses are dramatically different, in particular the need for a service business to deliver an experience over and over again, consistently and of high quality, despite the innate variability of people, locations and customers.

With this in mind I monitored my Disney experience for the rest of the week for lessons that could help P&G.

  1. Brand gets people to try your service; blocking and tackling gets them to return. The Disney properties flaunt the characters, movies and TV shows at every turn. Yet after an hour at the park, you notice that trash cans are always close by, so that if you have an empty cup or candy wrapper, you don't end up holding it for more than a few seconds before finding a place to discard it. As a result, the park is exceptionally clean for a place holding tens of thousands of guests.

  2. No detail is too small. Kids are royalty at Disney (a significant differentiator compared to most places where they are seen as messy, noisy attention-seekers--which, of course, they are). The bag checkers, waitresses, salespeople--in short, every "cast member" we encountered--took special care of our kids.

  3. Consistency reduces stress. Each of the four Disney parks we visited had a similar parking scheme, shuttle bus protocal, and entry design. Which meant there was very little standing around head-scratching and wondering which gate to go through or which bus to board.

  4. Customer recognition builds loyalty. Everywhere in the parks I saw guests wearing buttons saying "My First Time!" or "It's My Birthday Today!" These simple gestures to recognize guests made their experiences special, built warm memories, and encouraged them to return.

I'm rooting for P&G in their Mr. Clean car wash project. The above lessons are like much good advice--easy to understand, hard to implement. Whether P&G can execute, and the marketplace and the economy cooperate, only time will tell.

Tuesday, February 24, 2009

Customers are talking - Tropicana hears feedback, brings back old carton

Sometimes the roar of customer feedback can force a multi-million dollar capitulation. Today, the New York Times reported that Tropicana, a unit of PepsiCo, was responding to a wave of negative customer feedback to its recent change in packaging. The Times writes:

Redesigned packaging that was introduced in early January is being discontinued, executives plan to announce on Monday, and the previous version will be brought back in the next month.

Also returning will be the longtime Tropicana brand symbol, an orange from which a straw protrudes. The symbol, meant to evoke fresh taste, had been supplanted on the new packages by a glass of orange juice.

The about-face comes after consumers complained about the makeover in letters, e-mail messages and telephone calls and clamored for a return of the original look.

Some online reaction to the new Tropicana package is here and here. (And, to be sure we stay fair and balanced, here is a rave review of the new package.)

One wonders what kind of testing process Tropicana used for the new packaging. I would hope that they used the approach that online services use today--which is to roll out new looks to a limited audience and listen carefully to the feedback before rolling things out across their base. But if so, they would have gotten this feedback far faster and before it became a national news item.

Packaged-goods companies tend to be secretive with their makeovers, often keeping details hidden until a widely publicized, nationwide rollout. The result of this strategy, though, is not hearing feedback, positive or negative, until a great deal of investment has been committed. Meaning a rollback, like Tropicana's doing, is terribly expensive (and highly-publicized).

I wonder how Tropicana will handle their next packaging change?

Monday, February 23, 2009

Last Week for Shop Talk at this address!

Shop Talk is moving to a new location at the end of this week.

We'll be closing the doors on this location on Friday. There won't be any new posts after that. The older archives will remain, however.

Please head over to our new home, which also contains the complete archive of posts.

If you'd like to update your RSS reader, here's the feed for the new place.


Time for a humbler, more focused, wireless wholesale market

The US MVNO market is the greatest missed opportunity I've seen in my wireless career, stretching back almost 20 years. Through carrier resistance and MVNO hubris, a business model that works very well in Europe and Asia has floundered here. Strong, focused MVNOs, which manage their costs and market excellently, improve services and value for wireless users in many places outside the US.

Yet there may be a light flickering in the US market. It's been several years since the meltdowns of Amp'd, Disney Mobile, ESPN and other high-profile players. The iPhone and its imitators have demonstrated the value of a (relatively) open architecture and application environment. And the carriers are still no better at rolling out truly innovative services than they have been.

Plus, nationwide carriers #3 & 4 (Sprint & T-Mobile) trail far behind the leaders in market share. This creates a strategic scenario where a customer acquired by a Sprint or T-Mobile reseller is relatively unlikely to poach the direct business of the wholesaler (and in Sprint's case, they should welcome retaining customers by any means, even if they are transferred to an affiliated wholesaler). Therefore, the perceived opportunity cost of a full-on push into wholesale by these carriers is lower.

Who will be tomorrow's resellers? Those that are laser-focused on markets unserved by the carriers. They will be smaller but profitable, with excellent, low-cost distribution channels. They will be true innovators, bringing high-value applications to their customers. They will have customer bases who purchase phones without subsidies. They will be able to create win-win agreements with the wholesalers.

In a perfect world, a Sprint & T-Mobile push will force AT&T and Verizon to re-enter the wholesale market. Then there will be a strong, vibrant, competitive market where resellers will have some control of their destiny.

And the biggest winner of all will be... the customer. You and I.

Thursday, February 19, 2009

Ten Bucks

When I was a teenager, the stores in our town stayed open late on Thursday nights between Thanksgiving and Christmas. In 1978 I worked at one of the local hardware stores and I was on duty one of those Thursdays. I had earlier that day cashed my paycheck. Around seven or so, business was slow and I asked the manager if I could take 15 minutes and walk up to The Gramophone Shop. I went in and bought a record I had had my eyes on for a number of weeks: Dire Straits' first album. It cost, by my recollection, $8.98 plus tax.

Was that album worth ten bucks? It's a stupid question. That album was part of the soundtrack of my late high school years. It was probably worth $100 to me.

Now it seems that people who spend ten bucks on music are stupid. Free mp3's are everywhere, legitimately or otherwise. Subscription services and internet radio stations offer everything at the touch of a browser button. There's a sea of music out there, just waiting for a listen.

But paying ten bucks for an album caused you to make a decision. (Not that those decisions always worked out. For example: the Knack's second album.) You had to hear enough songs to get a good assurance that the album was decent, or take a risk that the one great song you heard was a pattern for the rest of the album. (Also not foolproof; see Sniff 'n' the Tears.)

Carrie Brownstein's recent post on NPR Monitor Mix brought this to mind. Carrie lamented the decline of the record label, in this case the decision by Touch & Go Records to stop distributing the work of smaller labels. Wrote Carrie:

We are careening toward a paucity of experience and a paucity of means with which to evaluate music. I mean, can we really engage with art on a Web site and in a vacuum, without ever bothering to contextualize it or make it coherent with our lives or form a community around the work? If we never move beyond the ephemeral and facile nature of music Web sites -- and let's not lie to ourselves, that's where it ends for a lot of us these days -- then that makes us worse than blind consumers; it makes us dabblers. We have become musical tourists. And tourism is the laziest form of experience, because it is spoonfed and sold to us. Tourism cannot and should not replace the physical energy, the critical thinking and the tiresome but ultimately edifying road of adventure, and thus also of life.

To me, the process of getting recommendations, listening to a friend's record, hearing something great on the radio (or a podcast), then making the decision to plunk down real money is, in Carrie's words, an adventure--and one of the great pleasures in enjoying music. If everything's at your fingertips, undifferentiated, you can sample, skip and flit around. You're, as Carrie said, a tourist.

And to me that's a bad thing. Free music isn't only bad for musicians, it seems. It's also bad for the audience.

Wednesday, February 18, 2009

Guest post by Denise Lee Yohn - The Economy Made Us Do It

I'm delighted to present today a guest post by Denise Lee Yohn. This is the first time we've done a guest post. I'm curious about people's thoughts on this--if you have an opinion, leave it in the comments. regards, John

It seems today's tough economic climate has become the ultimate scapegoat for pretty much everything.

This past week's New York Times Sunday Styles section included a piece describing the cleverness with which people have used the economy to get out of social obligations. From firing the nanny to avoiding a dreaded family reunion, the recession, it seems, provides a convenient excuse for folks who can't bring themselves to deliver an honest, yet unpleasant message.

And Business Week just ran an article about how companies are trying to get out of contracts by arguing that the economic crisis should void legal obligations. Although the troubled economy isn't technically addressed by force majeure clauses, companies in tight situations aren't letting technicalities stop them from trying to pull one over their creditors and business partners.

Such behavior seemed somewhat comical to me until I found myself on the receiving end of a similar excuse yesterday. It came from a service rep who relayed a change in the company's policy by saying, “We've been hit hard by the economy so we had to cut some of our services and that was one of them.” The momentary sympathy I felt for the company was quickly replaced by indignation against it for trying to excuse the change by blaming the recession. And my questioning of the wisdom of such a tack soon followed.

Now, I understand that economic pressures have forced companies to change the way they do business. They're cutting back and by definition that involves tough decisions. I get that. What I find curious is executing the changes in a way that smacks of a“victim mentality.” Why would any business want to give the impression they’re helpless and desperate?! Companies weaken their brand perceptions with a thoughtless --sorry, it's the economy -- excuse.

If companies want to retain any measure of respect and trust with their customers (respect and trust being key drivers of brand equity), they should assume responsibility for the decisions they make and use these tough economic times as an opportunity to reinforce their relationships with customers. A message along the lines of the following would be a good first step in taking a proactive, brand-building stance: “Please accept our sincere apologies for making a change that we know adversely affects you. We are diligently working on ways to improve and will resume the suspended service as soon as possible.

Communicating this type of message -- and delivering a customer experience consistent with it -- has the power to transform brand perceptions. Instead of being perceived as a weak player that’s relinquished control of its destiny, the business is portrayed as a brand with the integrity and customer commitment to come out of this economic storm even stronger.

With excuses to be found everywhere these days, I certainly hope we're not seeing the beginning of a trend that makes adopting an excuse culture”-- an acceptable way companies do business --– but I fear it may be. After all there's an excuse, it seems, for everything from criminal acts to indiscretions by politicians. But business leaders should realize excuses erode brand credibility and equity.

Simply put, excuses are bad for business.

Denise Lee Yohn is an independent brand as businessTM consulting partner who inspires and teaches companies how to operationalize their brands to grow their businesses. World-class brands including Sony, Frito-Lay, Burger King, and Nautica have called on Denise to maximize brand impact. She can be reached through her blog, brand as business bitesTM.

Monday, February 16, 2009

From "Think Again," a book about decisionmaking gone wrong - Marc's mistake story

"Think Again" is a great new business book in which authors Sydney Finkelstein of Dartmouth University and Jo Whitehead and Andrew Campbell of Ashbridge Business School describe research in cognitive science and behavioral economics to explain how the decisionmaking process goes awry and, even more importantly, how our minds obscure the mistakes we make and keep us from understanding the weaknesses in our decision processes. [The authors also have a website for the book, including pointers to some of the underlying research and other goodies.]

The book is full of great storytelling, and this one in particular, about an executive named Marc, seemed very appropriate for the Mistake Bank:

Marc was the managing director of the French subsidiary of an international manufacturer of packaging machinery. He was considering whether or not to acquire a company that had a near-monopoly on manufacturing a specialized type of food packaging machine. While the company had a strong position in the market, there were several warning signs that it was a risky investment. The business was highly dependent on sales to one large meat processing company. Because the machinery was a form of capital investment, sales tended to be highly cyclical. The management team had recently lost some of its more talented designers and marketers, and performance was flagging. The current owners of the business were keen to sell.

These risks were particularly an issue because Marc had committed to his head office that he would deliver relatively stable performance. The previous year, Marc had personally persuaded the head office to provide additional investment to his subsidiary for low-risk acquisitions, and so his reputation was at stake.

As the transaction progressed, some members of Marc's supervisory board voiced their concerns about the proposed acquisition. Despte this, Marc went ahead. A few months later, following the discovery of bovine spongiform encephalopathy (BSE), or mad cow disease, in French cattle, the meat-processing customer announced that it was putting discretionary capital expenditure, including the packaging machines manufactured by Marc's company, on hold. The management team was unable to deal with the dramatic drop-off in demand. Profits plunged into the red. Marc's superiors were shocked, and Marc's career received a large black mark.

Marc described why he thought he had made a flawed decision. "I was under pressure to do this deal for my own interest. If I went ahead, then the costs incurred in auditing and due diligence of the company would be capitalized and added to the cost of the investment. If I backed out, then they would all be charged to my office as an expense. Because we had been pursuing this company for a while, those costs were quite significant--and I guess I was influenced by that. I had an annual target to hit--and the charge-off would occur at the end of the financial year, leaving me no time to find a way to avoid a big loss. Of course, in the end, doing a bad deal was much worse for my position. I guess self-interest clouded my judgment."

Reprinted with permission from Harvard Business Press. Copyright 2008 Sydney Finkelstein, Jo Whitehead, and Andrew Campbell. All Rights Reserved.

Wednesday, February 11, 2009

Shop Talk relocating! Everything must go!

As I mentioned last week, Shop Talk is moving to a new location at the end of the month.

In the meantime, we've sold our entire stock to a liquidator, so expect deep discounts, especially on 2006 and 2007 posts, which have been languishing in the warehouse for quite some time.

Please head over to our new home and stay awhile, and if you'd like to update your RSS reader, here's the feed for the new place.


Frontiers of innovation - Netflix demolishes own business model

We've been Netflix customers for several years, and generally like the service. But we're like a lot of their busy customers. We don't turn DVDs over fast enough and end up having months go by with the same two movies sitting on the television.

But last week we bought the Roku box and now use it to view Netflix movies streaming over the web on our flat-screen TV. It's cool, easy, the quality is good and it's a great antidote for our laziness with the movies. Plus, you don't have to wait for the DVD to arrive in the post.

It's not perfect--there aren't enough titles yet. But it's a product that will only get better and more useful. And put Netflix in place as a contender to lead the integration of TV and the internet.

[Aside: I drove through Cerritos, California, today. In 1987 GTE, my former employer, trialed interactive television in Cerritos. Needless to say, they were too early--bandwidth issues, lack of content, and, frankly, the lack of a powerful vision of sharing and openness a la Tim Berners-Lee, doomed the project.]

What's so impressive to me about this is that Netflix is investing in technology and partnerships expressly designed to make their old business model obsolete. When I think about how much they have spent, in dollars and time and thought, on the sending-videos-through the mail model, I wonder how they were able to make the leap to say, "We have this process optimized, but it's not the future. Time to build a new model"--meaning internet streaming.

There's a word for this kind of behavior, and it's not a nice word: cannibalization.

One of the most repugnant terms in the language--referring to one of the greatest human taboos--is used when a company's new products take sales away from its older products. Perhaps this helps explain why companies go to such great lengths--even imperiling their long-term success--to avoid it.

The problem is, the marketplace is a bit like the jungle. If you don't eat your own, someone will eat them for you. And this has happened again and again. One example: GM's abandonment of the EV1 electric car just a few years before Toyota introduced the Prius. To survive, companies will have to get rid of that taboo against cannibalization and act more like Netflix.

[Another aside. I keep wondering if the Kindle is a similar eating-your-own innovation. But something tells me Bezos always knew he was going to get deep into distribution of electronic content, even back when he was just selling books.]

I have a suggestion for marketers. If you want to get approval to introduce a better product, instead of referring to "cannibalization," call it "upselling."

(Photo: crushed EV1s courtesy of EcoBlog)

Tuesday, February 10, 2009

Customers are talking: is a customer-service dialogue a story?

Some of my work recently has been applying narrative-sensemaking techniques to customer service dialogues (typically recorded phone calls), which is a fancy way of saying helping companies find patterns in what customers are saying about their products and services, and to use these patterns to drive changes that will help them sell more products and/or make their existing customers more satisfied.

This is a little different from the more traditional approach of eliciting stories via interviews, anecdote circles or web forms. In those circumstances, carefully-crafted questions help generate stories ("this happened, then this, and then this"). Customer-service calls are not elicited--they are spontaneous expressions--and don't follow the story format. They are simply two people talking.

So a question is, I guess, can you get useful stories out of mere dialogue?

In thinking about this question, I've been reflecting on the novels of William Gaddis, an American writer who published only a handful of books from the 1950's to the 1990's. I've read two of them, "JR" and "A Frolic of His Own," and both have barely any exposition at all. 90+% of the text is dialogue, barely puncutated, overlapping, and often confusing.

"JR" is a very forward-looking book about a junior-high-school student who speculates his way into a multi-million dollar fortune (on paper). Given that it takes place in the mid-70's, JR does his trading via the payphone in the school hallway. Today, he'd be on TD Ameritrade.

"A Frolic of His Own," written in the 1990's, takes issue with the (again very present-day) issues of litigiousness and intellectual property. In addition to dialogue, hilariously-deadpan legal briefs help move the story along.

Reading Gaddis' books is a lot like listening to those customer service calls. A bit disorienting or hard to understand, often touching, sometimes funny. Always humanizing. And always stories.

Monday, February 09, 2009

A music affinity group emerges on Twitter

One of the most fun things about messing around with Twitter is to see interesting things emerge. It's such a general tool that it's a lot like those college greens that architects leave without pathways, allowing students to develop their own patterns over time.

I've recently started seeing the emergence of a music affinity group on Twitter (one of many, probably). It occurred to me this is happening yesterday, when I got a follow from @peteyorn, a musician that I like but didn't even know was on Twitter.

How he found me, I don't know (perhaps Mr. Tweet does). Maybe it's my connection with @francisten from West Indian Girl, or @kmueller62 of WXPN (or even @fotteson, a local bass player). Maybe it's that I write about music a fair amount (including live Tweeting the My Morning Jacket New Year's Eve concert or my musical crush on NOMO).

At any rate, I've gotten follows now from @madalynsklar, @talkmusicnow and @sxsw. You can see the pattern emerging. And I like it. I want to know what musicians and music fans are tweeting about. I'll learn about new music & perhaps see a bit of the faces behind the records. It'll be fun to see how this group evolves over time. (And if you're a musician or music lover, give us a follow at @jmcaddell and I'll follow back. You can join the conversation then.)

Just another way @twitter is changing how we interact and learn.

Friday, February 06, 2009

Creative Destruction? #3

This series of posts began in September when I photographed a couple of recently-vacated retail spaces. I've returned a couple of times since, most recently this week, to see how/if reuse of the sites is progressing. As you'll see, not much change yet. Here's Joseph Schumpeter's famous "creative destruction" quote from Capitalism, Socialism and Democracy:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

32nd and Market Streets, Camp Hill, PA, 3 Feb 2009

There have been recent newspaper reports that there will be a Rite Aid drugstore built on the above site. And there is a construction sign posted out front (not pictured).

Carlisle Pike, Silver Spring Township, PA, 3 Feb 2009

The lease sign is the biggest change here. Otherwise, no activity.

Other posts in this series:
Creative Destruction? Sep 2008
Creative Destruction? Nov 2008

Thursday, February 05, 2009

"Goals Gone Wild" - a bracing indictment of the business objectives culture

"What's your MBO?"

That was a frequent question at one of my past companies. MBO meant management by objective, and was a way of asking someone what their goals were for that year. It's funny, thinking back on it, that the goals culture was so strong that we never gave MBOs a second thought. And who doesn't sit down with her manager at the beginning of each year to set out objectives?

In a new working paper by Max Bazerman, Lisa Ordonez, Maurice Schweitzer, and Adam Galinsky of Harvard Business School ("Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting"), the authors take a fresh look at the goals culture and see that, rather than be a driver of effective performance, "goals gone wild" have caused much damage in the business world. Here are a few examples:

Enron's growth objectives created an out-of-control culture inspiring market manipulation and outright fraud.

Ford's goal to build a small car weighing less than 2000 pounds and costing under $2000 by 1970 caused the Pinto to be rushed to market, with safety checks unperformed or ignored. The car's gas tank was prone to rupture in an accident and, as was learned, the car tended to explode on impact from the rear.

Sears' goal to increase auto service sales in the early 1990's to $147/manhour resulted in overcharging and unnecessary repairs.

Bazerman's work on behavioral effects in negotiation (including one of my favorite books of 2007) and decisionmaking is uniformly excellent and insightful. In this paper, he and his co-authors survey research showing how challenging goals, while creating a powerful incentive, also create significant negative side effects, including:

- focus on short-term results over long-term benefit
- favoring the easy-to-measure over the difficult to measure, independent of importance
- goals creating performance ceilings (e.g., the salesperson who stops selling after reaching her quota)
- reduction in cooperative behavior
- reduction in learning
- unwillingness to experiment and innovate
- decrease in intrinsic motivation ("Show me the money!")

It's not a pretty picture. I doubt after reading this that anyone would be more eager to set goals for their employees. It does a great job in laying out the risks of overreliance on goals. There's more work needed on how to deploy goals effectively, because that's the question that we're left with at the end.

Wednesday, February 04, 2009

Customers are talking - Apple hangs up on the wrong customer

It's getting harder and harder to get telephone support, especially with online products, but there are some times you need to talk to a person--you can't find what you're looking for in the forum, for example, or your question doesn't fit neatly into a category.

Cluetrain Manifesto
co-author Doc Searls called Apple to get support for MobileMe (a paid service, by the way), and a synthesized voice summarily directed him to the website. Then, "click."

The irony is that Searls heads a grass-roots effort called VRM, Vendor Relationship Management. Requiring adequate support for paying customers seems like a basic tenet of VRM.

So Searls blogged about it, including a recording of the Apple call. Check it out here.

A Business Owner's Novel Response to the Financial Crisis

A local entrepreneur who's in the physical therapy/rehabilitation business told me about his approach to dealing with the financial crisis:

First, he gave up his lease on a large office and moved into a smaller one, cutting his overhead substantially. That's a tactic that would be at the top of anyone's list.

Then, he did something unexpected... he raised his prices. As a result, he lost some clients. But because of the lower overhead, and the higher contribution margin of the remaining customers, he's making more money.

As he said, "Basically, people who weren't valuing the service don't come anymore. The clients who are left really care about their health and are willing to invest in it. For them, the price is reasonable."

Anyone can cut costs. But cutting costs and raising prices? That's an innovative prescription.

Related post:
If you can raise prices, don't hesitate

Tuesday, February 03, 2009

Shop Talk is moving!

Hi, all,

We've loved being here at Blogspot for the past three years, but it's time to move on. Given the economic situation, the landlord over at gave us a great deal to consolidate our space over there, so off we go.

We'll keep adding new posts here for the next couple of weeks, but after March 1, we won't be posting new material to this space any more.

Please head over to our new home and stay awhile, and if you'd like to update your RSS reader, here's the feed for the new place.

Thanks for shopping!


Customers are talking: @comcastcares - not just conversation

I recently spent some time with Frank Eliason, known to the Twitter community as @comcastcares. Frank has become a minor internet celebrity in the last year because of the work he and his team do resolving problems for unhappy Comcast customers who tweet or blog their frustration with Comcast.

His work is fascinating to me because Comcast is a gigantic, engineering-driven company and one which you wouldn't have expected to embrace a "customers are talking" approach.

I think there are two reasons Frank and his team stand out. One is novelty. There aren't a lot of companies who have prominent profiles on Twitter (Dell and Zappos are two others). That won't last, of course, as more and more companies jump on board.

The second reason is more sustainable. The term "conversation" is everywhere in social media. It's all about the conversation. Not for users of products and services. When they talk about products and services and companies on Twitter, it's not just to have a conversation. In many cases, it is to highlight a problem.

The Comcastcares team doesn't just engage in conversation. They solve problems. Here's an example (for readability, these tweets are ordered from earliest to latest--the opposite of how you would read them on Twitter):

The biggest reason for me Frank and his team succeed is that they are customer-service and tech-support people, not PR people. Frank in particular has years of call-center experience, and therefore is able to skillfully engage with unhappy customers, listen, and, best of all, get them a quick resolution. In other words, your company can say it's serious about social media, but actually using it to help people is better than the best messaging in the world.

Did you see from the example above that this problem was reported in the hour before the Super Bowl and was resolved before kickoff?

Monday, February 02, 2009

Customers are talking: turning points in telephone sales calls

I'm working on a project to listen to telephone sales calls and help the client find patterns explaining why some calls end up in a sale and others don't. Each call is a story, complete with emotion, conflict, and turning points. Listening to dozens of these, pictures begin to emerge of how people buy, and how, even when they like the product and may want to buy, don't. And it has nothing to do with logic.

One turning point I've experienced is the moment when a call turns from being headed to a close, to not. On the calls, it's very subtle: a pause, a change of subject, perhaps an additional question from the prospect. But afterward, a call that seemed to be heading toward a sale instead is, at best, a promise to call back.

The best way to explain it is to relate a personal story.

I've been a customer of Verizon Wireless for more than five years. I got a telemarketing call from them today, offering inducements to renew my service contract early. I've been evaluating this for a while now (this is a subtext of my posts on the Blackberry Storm), and after discussing it at some length with my wife, we're headed toward renewal.

This call, then, could have been Verizon's way of closing the deal. I was pretty ready, although I was thinking of doing this in March. If the deal was good enough, perhaps I would pull the trigger today. The call went something like this:

"Mr. Caddell," the rep said, "we are offering some extras today if you want to renew your contract early. You might be able to get a discount on a new phone."

"When does my contract expire?"

"The end of July."

"I thought it was the end of March."

(turning point 1) "That's the time when you are eligible for an early equipment upgrade. Your contract expires in July."

"OK, what are you offering?"

(turning point 2) "100 extra minutes per month." (This wasn't attractive to me at all. We don't use the minutes we have now.)

"How much off the phone?"

(turning point 3) "Well, you'll be eligible for that at the end of March."

"Earlier you said I could get a discount off a phone." (I didn't tell her that Verizon had already sent me two mailings offering me phone discounts for renewing now.)

"I said you might be."

There was no way was I going to renew then. At each turning point, in fact, I became farther from renewing than I had been before the call. Instead of feeling happy, encouraged, eager to get a new phone, I felt frustrated, annoyed, and that I had wasted time even picking up the phone.

It wasn't the rep's fault. She was given a difficult product to sell (competing, in fact, with the company's own mailings). When I began to ask pointed questions, the pitch fell apart. There was probably no rep on earth who could have closed me with that offer.

Which is a significant learning from this project for me. Selecting and training reps is only a part of the formula for success in telesales. The product must be useful, and the offer must be made attractive. And that work happens far outside the call center.

Friday, January 30, 2009

One of the world's most dangerous jobs: change agent

This article (registration required, sorry) from Booz & Co's "Strategy and Business" will send a chill up your spine. The article, "Stand by Your Change Agent," by Stratford Sherman and Marisa Faccio, describes the results of a survey of 84 change initiatives between 1995 and 2005.

The initiatives themselves were successful, in the main: 85% met or exceeded the goals set out for them.

The leaders, though, didn't fare as well. Sherman and Faccio write: "Some 70% of the executives who led these major transformations went unrewarded, or were sidelined, fired, or spurred to leave."

The authors go on to describe types of companies at different levels of performance and how the change agent role is very risky in all but the very strongest companies. My take: large-scale changes disrupt the organization, stir up resistance, much of which gets focused on the change leader. If the change fails, the consequences are self-evident. If it succeeds, however, the pain endured in achieving it takes a toll on the person running the initiative.

If you're considering taking this role on, do it for the experience, the resume fodder, and the feeling of accomplishment if you're successful. Don't do it, however, for the recognition of your peers and leaders. Chances are, that won't be coming your way.

Wednesday, January 28, 2009

Business Book Hall of Fame: "War & Peace"

Heard of it?

Read it? Probably not. It's the dictionary example of a long book. And it is long. Based on some indirect prodding from Dave Snowden and Jochum Stienstra, I finally picked it up, determined to read the whole thing, in November 2008. It is now the end of January 2009, and that'll tell you what a commitment is required to finish it. (The pile of unread books by my desk is now immense.) I can also heartily recommend the new English translation by Pevear and Volokhonsky; the writing was easy to understand and felt modern and fresh.

Was it worth nearly three months of effort? Hell, yes. "War & Peace" is an amazing work for our time (or any time). There are great love stories and domestic dramas in the book as well, but for the purposes of this post I'm going to focus on how the book tackles leadership, strategy, complexity and chance.

Perhaps most amazing is how Tolstoy shoots down the historian's view of the power of individuals to shape history. Here he is explaining Napoleon's rise to power:

Chance, millions of chances, give him power, and all people, as if by arrangement, contribute to the strengthening of that power. Chance makes the characters of the then rulers of France submissive to him; chance makes the character of Paul I, who recognizes his power; chance makes a conspiracy against him which not only does not harm him, but strengthens his power. Chance sends d'Enghien into his hands and accidentally forces him to kill him, thereby convincing the mob more forcefully than by any other means that he has the right, because he has the power. Chance makes it so that he strains all his forces towards an expedition to England, which obviously would have destroyed him, and never carries out his intention, but instead unexpectedly runs into Mack and his Austrians, who surrender without a battle. Chance and genius give him the victory at Austerlitz, and by chance all people, not only the French, but all of Europe as well, with the exception of England, which does not participate in the events about to take place, all people, despite their former horror and loathing for his crimes, now recognize his power, the title he has given himself, and his ideal of greatness and glory, which to all of them seems something beautiful and reasonable. (pp 1134-1135)

Of course, when the chances turn against him, starting with the invasion of Russia, he quickly becomes a fool and a failure. Was he a genius, or an idiot? Neither, of course. He was participant in a sequence of events over which he had little control, according to Tolstoy. This is a humbling lesson for leaders of all types, who operate in the complex domain--whether that be warfare, business or politics. Events will define you far more than you define yourself. Your actions, to a large extent, will be overwhelmed by forces outside of your control.

Does this then mean that generalship doesn't matter? Tolstoy would say yes. Throughout the book he writes that the most carefully-created war plans go off the rails immediately after the battle begins, while a single junior officer, deciding on his own to attack the French flank, can have an immense impact on winning or losing. And that the passions of the soldiers have much more effect on the outcome than the best leadership and training.

In my times working at very large companies, this seemed true to me. The accomplishments of the company were the agglomeration of thousands of small efforts on behalf of the rank and file. [You could argue that company failures--Enron, AIG, for example--also work this way.] First-line managers had a big impact. Directors, somewhat. But the plans and strategies of the C-level executives, sitting in the God Pod, at the end of the day, didn't mean much at all.

Monday, January 26, 2009

Customers are talking: the Blackberry Storm/Twitter project

Like a lot of people, I've been trying to get a handle on what Twitter means for businesses. My professional interest is in finding unsolicited customer stories and making sense of them--wherever they are. In this, Twitter has a lot of promise. It's easy to use, brief and spontaneous. So are customers using this forum to talk about products? I decided to find out.

My test case was the Blackberry Storm. It received an absolutely terrible review from David Pogue, the New York Times' consumer-electronics columnist. It also had very good early sales numbers--500,000 units the first month of its release, according to the Wall Street Journal. The combination of these made it an irresistible subject to study: would the Twittersphere be flooded with posts from enraged buyers?

The project was made more interesting today, when the Wall Street Journal published an article entitled, "Bumpy Start for Blackberry Storm," which referred to complaints of early Storm users (but not Pogue's review), including this vibrant quote: "I found myself wanting to throw it in the ocean due to my frustration with its overall usability." The article also referred to a release of firmware soon after launch intended to address some of the early complaints, particularly response time.

I used Twitter Search to look for messages containing "Blackberry Storm" and a happy or sad emoticon (there's a button on the advanced search page that enables you to restrict searches this way). I looked at 88 English-language tweets going back to December 27. Here's what I found:

The biggest surprise to me was: where were the complaints from users? While half the Tweets were from Storm users, as opposed to people commenting on the Storm, or thinking about it, only 4 out of 44 (9%) of the users' tweets were negative, while 23 (52%) were positive.

(If you want to check out the searches I created for this project, they are here: happy search, sad search. Twitter Search has been acting funny the past few days--I'm only able to get one page of recent results, and can't search farther back. I used an RSS feed of the search over a period of weeks to gather the entire list of 88,)

From a customers are talking perspective, this isn't a terrible outcome at all for the Storm. Whether the firmware change made that much difference, or the Blackberry brand loyalists are immune to hardware glitches, or simply that devices like this aren't perfect and users expect that--they are not saying this is a terrible device. Many are saying that they like it. If I'm Blackberry and Verizon, I'm not discouraged by the Storm's initial reception.

By the way, the WSJ has already started to backtrack. On the web site, the article is now entitled, "Blackberry Storm Is Off To A Bit of a Bumpy Start."

(Disclosure, I am a Verizon customer and a Blackberry 8830 user. If you think I am a shill for Verizon, please don't make up your mind until you read this post, or this one.)

"Underground" as an example of narrative sensemaking

Over the last couple of years, I've gotten more involved with collecting and sorting through multiple narratives to help businesses understand and deal with difficult problems. (Difficult, meaning the normal tools such as numerical analysis, process mapping, etc., are insufficient to understanding the issue.) This has become a cornerstone of my professional life, and it's been a rewarding and at times thrilling undertaking.

Shawn Callahan at Anecdote introduced me to this area, and then I learned about the work of Dave Snowden at Cognitive Edge. I met Cynthia Kurtz, who was an early collaborator with Dave Snowden, and have learned a lot from her as well. To the extent that the work I do is valuable to my clients, these folks deserve much credit.

Yet one of the best teachers I have had here (and I'm still a rank beginner) is the book "Underground" by Haruki Murakami. He's one of my favorite novelists, and this is one of his few nonfiction books. I read it years ago, long before I'd learned the terms "story listening," "mass narrative capture," or "sensemaking." But when I began learning from Shawn, Dave, Cynthia and others, it immediately came to mind.

In "Underground" Murakami seeks to understand and to help readers understand one of the most terrifying episodes in recent history--the sarin gas attack on the Tokyo subway system perpetrated by members of the Aum Shinrikyo movement in 1995.

Except for a brief author's preface, the book consists of the stories of survivors of the attack. Murakami interviewed everyone he could find from the list of victims, and presented their stories, unadorned, one after the other. He then interviewed a number of members of Aum Shinrikyo, and presented their stories, as well (a decision that is aligned with goals of narrative learning to take in multiple perspectives of a situation).

The result is a chilling, relentless book, that nonetheless does what no news report, CNN story or even historical chronicle could do--shows the impact of the attack and its aftermath on the real people who were caught up in it; and illuminates the puzzling (to outsiders) behavior of the Aum Shinrikyo members. It's a fully-realized, three-dimensional picture of a disaster, and goes a long way to explaining the unexplainable. In this way it's like an extended version of John Hersey's great "Hiroshima," though shorn of the authorial voice.

When you read this book, the stories layer and layer; you see the event from a deeper and deeper perspective, till you almost feel like you're there, inside the attack, experiencing it with the victims. And then you read the Aum Shinrikyo stories, and somehow you see that their world has its own internal logic. You finish the book, and you're exhausted, but you know deeply about this terrible event, how it happened and what it did to people. Your brain is working hard throughout--you're sensemaking.

If you're interested in narrative sensemaking, or you just want to learn the full story of a human disaster, you must read "Underground."

(Here's a much earlier reference to "Underground" and the subject of story-listening.)

Saturday, January 24, 2009

Customers are talking: the empathetic company

The New York Times today features an interview with Dev Patnaik, a consultant specializing in helping companies to develop growth strategies and the author of a new book, "Wired to Care: How Companies Prosper When They Create Widespread Empathy," which claims that a missing ingredient in recipes for corporate success is the human train of empathy:

[Patnaik] argues in the book that it is not the lack of innovation that hampers companies, but the “empathy gap” — the chasm between employees in organizations and the people that they serve. Companies, he said, “do a good job of stamping empathy out of employees, then are surprised when employees make poor decisions or try to sell things that people don’t need.”

In a way this reflects the "bringing the outside in" concept from Kotter's "A Sense of Urgency." Patnaik gives the example of the auto managers who never experienced the car business from a customer's point of view--buying a car, financing it, servicing it, etc.--and thereby lost touch with the consumer and the marketplace.

Part of this "empathy gap" is the distancing of management from the customer and the customer experience--where dashboards and status reports have crowded out anecdotal information and real human experience. This is what the "customers are talking" initiative is attempting to do--to connect managers and leaders with the ground-level experience of their customers and by so doing to equip them to make better decisions about their products and services.

Here's an interesting observation from Patnaik about one of the big problems with marketing:

The companies are trying to get the customers to identify with their product rather than getting their own employees to identify with their customers.

In other words, companies are trying to make up for their lack of customer insight with messaging. These marketers believe that if they create a powerful, resonant message, it will draw people to their products. But if the product is not created with a deep sense of the customer in mind, the message won't work.

I'll have to pick up a copy of "Wired to Care" and see what else the book has to say about this important subject.

Related posts:
A Competitive Advantage: Employees who spend most of their time talking to customers
Time to start listening to front-line employees

Friday, January 23, 2009

3rd Annual Top 5 HBR Breakthrough ideas

... in which we winnow down Harvard Business Review's yearly list of 20 breakthrough ideas to a manageable 5.

1. The Business of Biomimicry, by Janine M. Benyus and Gunter A.M. Pauli. Many of the most important new innovations we'll see in 2009 and beyond will involve borrowing and inspiration from nature's processes.

2. Institutional Memory Goes Digital, by Gurdeep Singh Pall and Rita Gunther McGrath. What will happen when every word, gesture, etc., of business interactions are recorded and stored? [I'm most interested in the subset of this involving intentionally captured and signified narrative information for knowledge sharing. The Mistake Bank is an early stab at this idea.]

3. How Social Networks Work Best, by Alex Pentland. New research shows that collaborations work best when social networks are used differently for discovery and integration activities.

4. The Ikea Factor, by Michael I. Norton. Having a hand in building a product leads to a stronger emotional connection with it. [Does this say anything about self-service gas stations and supermarkets?]

5. Forget Citibank, Borrow From Bob, by John Sviokla, and Consumer Safety For Consumer Credit, by Elizabeth Warren and Amelia Tyagi. It's inevitable that the fallout of our financial crisis will be a radical restructuring and reinvention of the financial industry. And it's about time.

Related posts:
2008 Top 5 Breakthrough Ideas
2007 Top 5 Breakthrough Ideas

Wednesday, January 21, 2009

Customers are talking: The Eureka Button

I was talking to Cynthia Kurtz once and she mentioned, "If I were developing a piece of software I would always want to put a Eureka Button on every page."

A Eureka button is this: if while using the system a user just figured something out that others might benefit from, he/she would click the button and be presented with a page where she could enter:

What Happened?

Where does this apply?

When should people read this story?

This input and information about where they were in the system (page & data) would be uploaded to a database. The database can be searched for patterns or browsed periodically, looking for bugs or unexpected uses of the system.

It's easiest for me to think about the Eureka Button in the context of enterprise software. Having worked a lot with CRM systems for telephony, I know that these systems have hundreds of user pages, with a virtually infinite number of paths through the system.

In these environments, product managers may know in theory how people should use the system. But their knowledge is quickly overtaken by experienced users, who learn how to apply the system to their jobs, often finding tricks or shortcuts to make the system work better for them. ("Eureka! I just figured out that if I dummy out some data items, I can capture information & save information from a prospect before they decide to make a product purchase. If they call back, I can look them up by their phone # and I don't have to start all over again.")

In this situation, a Eureka Button has great value for the product manager and the users. Product managers can learn about difficulties users have and how they overcome them. The tricks can be incorporated into the product, or deficiencies addressed. Users can learn from each other--perhaps Eureka Button entries can be blogged automatically and read by other users, dispersing tips and tricks and encouraging others to share their stories.

I can't even begin to catalog how a Eureka Button could benefit consumer sites, where (especially recent) products follow an emergent, iterative development approach and patterns of usage can affect the entire purpose of the product (e.g., Twitter). There are people much better suited than I to discuss some of these implications. If you're one of them, please let us know in the comments how the Eureka button could be used with these products.

(In searching for prior references to a "Eureka Button," I discovered this NY Times article from 2004. The article mentions that "'It's amazing how many people there are who find pleasure in sharing the little discoveries they make.'" The article focuses on undocumented features in PC software and in consumer electronics. The article references a site that publishes user stories of hidden Windows features.)

Tuesday, January 20, 2009

Customers are talking: using reverse logistics to improve products

As part of our regular Tuesday series on finding and acting on customer use stories, let's talk about reverse logistics. This is the process by which retailers and manufacturers deal with customer returns.

This article (hat tip Colin Shaw) discusses how companies can examine and make changes to their reverse logistics procedures to reduce costs and streamline the process. This is good advice as far as it goes.

But like many "customers are talking" topics, companies need to take an additional step in order to really utilize the reverse logistics process to its utmost.

Each customer return is a story. Capturing and collecting those stories, and regularly examining them for patterns, can yield important information about how the product is designed, communicated and supported. For example, consumer electronics are notorious for their returns frequency, and the reason for these returns often is that the product is difficult to use or its documentation is poorly written or inadequate (multi-language manuals introduce another set of obstacles for customers).

A company can work with its retailers, as part of the overall design of the reverse logistics process, to capture important information about why the product was returned. Ideally, the verbatim customer story is captured--which is easy to do with online returns.

The collection, of course, is the simple part of the equation. The more complex task is the sensemaking of the numerous narratives captured. This sensemaking, more of a collaborative thinking process than an analytical one, can be accomplished with training and skilled mentoring.

The potential payoff is large: marketing managers who are made of aware of why returns happen can make (often simple) changes to packaging, design, channel strategy or documentation to improve initial customer satisfaction. Not only does this reduce returns, it also increases the likelihood that more people buy the product in the first place.

A friend owns a company that manages reverse logistics for name-brand consumer electronics manufacturers. I asked him if he knew why a certain product was often returned and he said, "Yes, always." I asked him if he had a way of letting the marketing folks at his client know these reasons. And he shook his head.

Given that many companies are outsourcing their reverse logistics operations to third parties, they need to take care that they keep the channel of communication open to learn why items are returned, and what can be changed about the product, its support documentation or its point of sale in order to make more initial purchases successful ones.

Saturday, January 17, 2009

Sometimes crowds aren't wise

I like Surowiecki's book, a lot, and I have experienced many instances where the collective judgment of a group was far better than even an informed individual. But the "wisdom of crowds" catchphrase is dangerous--oftentimes crowds are not wise at all.

We are experiencing right now an era in which crowds are really dumb. I'm referring to the financial markets and the related economic recession. The financial markets and news affecting the financial markets have merged into a massive echo chamber, wherein bad news begets pessimism which keeps prices down which begets another cycle of bad news.

We've seen this in reverse, of course. Do you remember 1998-1999, during which time everyone was watching CNBC or checking Yahoo Finance all day long, in real time assessing the value of their stock portfolios? Oversubscribed IPOs begat good news, which kept prices high, which begat more buying, etc., until it all came crashing down.

I thought it was clear to everyone that market groupthink, which afflicts us in good times and bad, obscured the true value of securities, and therefore paying close attention to news items in order to make sense of the markets and our economy was, at best, a waste of time.

But no. Felix Salmon, in his Portfolio Market Movers blog, points to a Financial Times article introducing us to a service from Reuters that collects news items and alerts traders when news trends indicate potential market movements.

In other words, lean into the echo chamber, and listen real hard for signals you can use to make decisions. Um, it's only January, but I will bet there's not a stupider product idea introduced for the rest of 2009.

Thursday, January 15, 2009

Grounded qualification corollary #1 - don't companies know why they win or lose?

Yesterday's post spurred some interesting comments, including Dave Stein's observation that "80% of B2B deals are lost for one of two reasons: inadequate (or no) qualification or inadequate (or no) planning."

I wanted to elaborate on one point, which is that grounded qualification is built on a deep understanding of why a company won and lost each opportunity, both in the past and going forward.

Which begs a question: "Don't companies already know why they win or lose?"

This question has two answers: sometimes they don't know at all, and sometimes they think they know the reasons but are wrong. Let's take each of these in turn.

We don't know why we won or lost.
This situation is influenced by many factors in today's working world. First, there is little time for reflection built into sales professionals' (or sales managers') days. Everyone carries long to-do lists, attends too many meetings and is measured to death. (See this post for the implications of this culture on innovation and creative thinking.) There is also a culture of looking ahead: "let's not rehash the past," especially if it the outcome was negative.

We think we know why, but we are wrong. This point gets to a cognitive bias called the "actor-observer bias." According to the Wikipedia definition, this means people "tend to attribute their own behavior to their circumstances (i.e., situation causes), but tend to attribute the behaviors of those [they] observe to their dispositions (i.e., person causes)." In sales campaigns we will attribute a successful outcome to our superior strategies or tactics (rarely luck), and blame failures on ignorant or biased prospects or factors out of our control (product was deficient, price was too high, etc.). We are so satisfied with these rote explanations that we don't probe deeply into the reasons, nor do we ask the prospects to explain their actions.

If we recognize that (1) we need to reflect on and learn from each deal we pursue, and (2) question our assumptions and dig for the deeper reasons we won or lost, we are on the way to understanding our position in the marketplace--a tool we can use to be more selective in our pursuits, address our weaknesses, and generate more business at lower sales costs.

Wednesday, January 14, 2009

Grounded qualification: an emergent approach to assessing sales positioning

For the past eight years, I've worked with helping midsized IT companies sell their products into a maturing telecom market. This is so different from the earlier times of unbounded growth that it doesn't even feel like the same industry anymore.

In the old days (i.e., before 2000), there were so many new telecom companies sprouting up that a company did not have to be a leader to be successful. They just had to be good enough.

Today, telecom vendors circle prospects like hungry dogs around a restaurant dumpster. The biggest and strongest elbow their way to the front, and the midsize guys try to keep from starving.

Some midsize guys do survive, though. They have enough of the right kind of customers, and gain enough new customers to keep making profits. How? The only way is to be very careful in planning and deploying their limited sales resources. Which gets down to a question of qualification.

In a B2B world, companies narrow down their range of prospects by deciding which sales opportunities they wish to pursue and which they don't. This process is called qualification. Strong sales organizations that I've seen are really good at qualification, and poor ones are really bad at it. Successful midsized companies have to be good at it, because they don't have enough resources to compete on all fronts and win. Stretching out their resources by definition is a failing strategy.

Good qualification means that you deploy your sales resources on opportunities that are large enough, profitable enough and winnable enough. In a virtuous circle, deploying lots of resources on good opportunities means that you have more likelihood of winning those opportunities compared to a company that spreads its resources over both good and "bad" opportunities.

One sales qualification methodology I'm familiar with segments the process into the following categories: "is there an opportunity?" "is it worth pursuing?" "can we compete?" and "can we win?" The first two categories are based on objective data--i.e., the company size, defined project budget, identified executive sponsor, etc. The final two are almost entirely subjective--are we positioned well? are our allies powerful? etc.

The challenge for midsized companies is that the subjective answers to the final two categories can make the difference between an opportunity worth pursuing and one to no-bid. Most salespeople, in my experience, hate turning down opportunities and so have an unconscious bias toward over-rating the subjective categories, resulting in lots of weak pursuits rather than a few, well-chosen, strong pursuits.

As a different approach, is it possible to create some criteria that are more observable and objective that nonetheless help answer the "can we compete?" and "can we win?" questions?

I propose the answer is yes, and we can call these items "grounded" qualification criteria. (Grounded theory, from the Wikipedia definition, is "a systematic qualitative research methodology in the social sciences emphasizing generation of theory from data in the process of conducting research.")

What I'm trying to say is this: when a company wins an opportunity, there are reasons why--they may be emotional, logical, cultural. Similarly in a loss. The company can use grounded theory methods to gather winning and losing examples, to sort them out and generate from them several insights as to signals of potential wins and losses. Those signals can then be used as part of the qualification of new opportunities.

By way of example, a former employer of mine had a product that was functionally adequate but which was built on a technology architecture that had fallen out of fashion. It had few references. Not surprisingly, most of our sales pursuits were failures. Yet the company made several strategic sales of this product. (As a middle manager, I was surprised by these wins.) If we'd deeply examined those wins and compared them to our losses, grounded theory would have helped us understand that the company's executives were very well connected to certain telecom ventures, and those connections were vital to our winning that business. Knowing this, we could have planned and evaluated opportunities based on our executives' connections, and possibly found more strategic wins (at minimum, we could have spent less time on sure losers).

Doing a grounded theory assessment means deeply understanding why companies that bought your product did so, and why those that didn't made that decision. (See an earlier post on the value of detailed prospect loss reviews.)

It's important to point out that competitive and market positioning is a complex system (per the Cynefin Framework), and therefore a company's position and qualification rules will shift over time. The grounded evaluation is therefore something that needs to be updated continuously.

One of the benefits of grounded theory is that it can generate new and unexpected areas of opportunity and unveil hidden dangers. Midsized companies need to "rifle shoot" opportunities and put sufficient resources into the very best opportunities in order to be successful. Grounded qualification is a potentially important tool in these companies' arsenals.

(Acknowledgement to Cynthia Kurtz for first exposing me to grounded theory.)

Tuesday, January 13, 2009

Customers Are Talking: Reading Between The Lines

One of the important insights in looking for meaningful stories in customer interactions is the following: you can't read a story by looking at metrics. That is to say, how long someone talked, what time of day it occurred, etc., has no relationship to the content itself. In my work, I listen to lots and lots of customer stories, and I have experienced this very thing. If you want to understand the story, you have to read, or listen to, the whole thing.

It's unfortunate that this is so, because the quickest way to absorb information is to read it in summary. It's also the easiest way for computers to process information. Computers are excellent at counting, measuring, etc., but terrible at reading and interpreting.

I hear you already: what about semantic analysis? Good: doable by computers. Bad: doesn't provide much insight. Here's an example: evaluate all customer service calls longer than 8 minutes and containing the word "unhappy." Let the computer pull out two sentences before and after that word. Won't that sort out all the unhappy customer calls and allow us to analyze a manageable data set? [If you think this is difficult to do, I can point you to a slew of vendors who are dying to talk to you about their products.]

The problem is, "unhappy" is context-dependent. The caller may be unhappy with the quality of her service. She may also be unhappy she forgot to pack her son's lunch that morning, Someone else may be unhappy for a completely unrelated event.

[As an experiment, I've been monitoring Tweets referring to the Blackberry Storm using the happy :) or unhappy :( emoticons--easy to do with Twitter Search. With more than 100 tweets examined, very few of the emoticons represented satisfaction or dissatisfaction with the device itself--they were related to wanting the device and not getting it, or hoping to get it, for example.]

In a recent discussion, a friend talked about word clouds as very useful summaries of social media data. I pointed out to him that the appearance of a word in a story doesn't create significance. Similarly, the absence of a word doesn't mean that word is insignificant. (What's unsaid may, in fact, be the most important words in the entire dialogue. Harold Pinter won a Nobel Prize for his mastery of this truism.)

In sum, at present, the intervention of a person close to the customer interaction at the time it occurs is the best way to determine if a communication is significant or not. If it's someone looking at it after the fact, that person will have to read the entire story, not a summary. I wish there were a shortcut, but there's not.

Are keyword searches or word clouds useless? No. If you are a cable company, searching for specific, unambiguous words like "DVR" in your customer communication is likely to be useful. Searching for context-dependent items like "unhappy" or "delighted" is not.

Monday, January 12, 2009

Learn from your predecessors--the only way, if you're a CEO or President

Imagine that you have a job that's so exclusive that not only could you not find a book teaching you how to do it, you'd be hard-pressed to find anyone in your town, or state, who could give you much help.

The job of corporate CEO is like that. So is President of the United States. In each of these positions, learning on the fly seems costly. Is there an alternative?

Yes there is. If only it were used more often.

This question was taken up in two recent articles. In the January Harvard Business Review, Thomas Friel and Robert Duboff discuss "The Last Act of a Great CEO." The last act being an outgoing CEO's sharing knowledge, experience, and perspectives on the job with her successor.

And an opinion piece by Sheryl Gay Stolberg in yesterday's New York Times remarked on the rarity of gatherings like Pres-elect Obama's recent lunch with four other living presidents ("The Very Elite Club that Never Meets").

Friel and Duboff write this about new CEOs learning from their predecessors:

It is difficult to imagine a richer source of information and advice for a new CEO, even on a purely personal level. Being successful as the chief executive of a major enterprise is hardly a straightforward matter; the right combination of style, skill, and focus can vary dramatically depending on the context. One CEO we interviewed put it simply: “You can’t really understand this position until you’re in it.” At the very least, the departing executive has a unique and relevant point of view on the dynamics of the board of directors and the executive team. Often he or she has the most strategic and current understanding of the issues the company faces.

Stolberg's article hits the same theme:

“One thing historians have talked about for years is that there should be a better way for sitting presidents to use the experience of former presidents, and it doesn’t happen enough,” said the presidential historian Michael Beschloss. “The reasons are varied: sometimes personal antagonisms, shyness, the feeling that the former president is too removed from today’s politics to know very much. The result is that there is a reservoir of wisdom and experience that is not relied upon.”

I have an idea that might help. Or, rather, my wife Maura had the idea and she let me borrow it. Companies, and the executive branch, need to create narrative repositories like The Mistake Bank. A repository would be a place for presidents or CEOs to recount events. (Especially mistakes, since we learn very well from mistakes.) and what they learned from them. The repository would be available only to successors. New CEOs and presidents, or experienced ones, could dip into the repository when they had a question or issue they wanted some perspective on.

I've done this, and I know how to set them up, and how to make use of them. CEOs, Pres.-elect Obama, it's time to put this into action. You know where to reach me.

Saturday, January 10, 2009

Studying what customers do, and acting on it: marketing as an "art form"

There's a great op-ed piece by Judith Flanders in today's New York Times, covering the recent bankruptcy filing of Waterford Wedgwood and recounting how the company has lost its way, especially in comparison to the marketing genius of its 18th centry founder, Josiah Wedgwood.

According to the article, two innovations catapulted the pottery company from humble origins to leadership. One was a technological breakthrough, "creamware," a process that created high-quality earthenware nearly indistinguishable from porcelain.

The other was marketing acumen that would impress Steve Jobs. I love this quote, discussing Josiah's focus on learning from buyers and leveraging that knowledge to improve his product and its marketing:

In a letter to his business partner, he marveled at “how rapidly the use of [creamware] has spread” and “how universally it is liked,” and tried to balance how much this had to do with its royal “introduction” versus “its utility and beauty.”

That is the true Wedgwood. It wasn’t pleasure at past achievement, but instead determination to understand why success had come about, so he could build on it. Selling was an intellectual pleasure, an art form.

What a refreshing viewpoint, during these days when selling and marketing are portrayed (often by people in those professions) as a grind, perhaps even dishonorable.

Thursday, January 08, 2009

Female guru alert

The members of our list of overlooked female business gurus continue to spread their important ideas:

- Herminia Ibarra of INSEAD has published an article in the January Harvard Business Review ("Women and the Vision Thing") asserting that peers, subordinates & bosses see female leaders as equal to or superior to their male counterparts in every area except one--creating and articulating a strong vision.

- I just got in my hot little hands an advance copy of the new book by Rita Gunther McGrath (& collaborator Ian MacMillan), "Discovery-Driven Growth," which I'm very much looking forward to reading. (I've got to finish "War & Peace" soon!)

As a reminder, the rest of the list includes Amy Edmondson of Harvard Business School, Deborah Ancona of MIT, Traci Fenton of WorldBlu and Rosabeth Moss Kanter, also of HBS. Be sure to check out their work.

Wednesday, January 07, 2009

You can learn a lot about market psychology at the craps table

You think I'm kidding, right? Let me tell you a story.

My friend Tom and I took the occasional trip to Las Vegas in our single days, and after I got tired of trying to count cards in blackjack, he convinced me to try craps.

In craps, you can bet with the shooter ("pass" and "come" bets) or against ("don't pass" and "don't come"). The same bets are possible, and the payoffs are proportional to the odds of each occurrence. In other words, it's the same game either way.

Given all that, you'd imagine that as many people would bet the don't pass and don't come as the pass and come lines. But they don't. My unscientific observation is that 90% of craps players play with the shooter, not against.

I noticed something else. When I played "don't pass" and "don't come," people gave me dirty looks. They completely forgot that the dice have no emotion; they come up seven or eleven or eight or whatever and the game pays out or takes your money accordingly. After a while, it just seemed easier to play with the shooter. I could then be part of the crowd.

I sense a similar psychology at work in the markets. Shorting stocks is more complicated than playing the "don't pass" line, but there's no significant impediment to doing so. But not only is shorting much less common than going long, there's also a stigma against doing so.

Companies whose stocks are shorted scream that the short-sellers are generating and amplifying negative news to influence the direction of prices. You'll never see even the world's most successful short-seller compared to Warren Buffett or Peter Lynch. Analysts (perhaps till recently) rarely trotted out "sell" recommendations.

This wouldn't be a problem except the goal of an efficient market is to price a security properly. This requires downward pressure when things aren't as they should be. If there aren't enough short sellers, there won't be a counterbalance to ebullient buying. Momentum kicks in, and a bubble ensues.

I don't know how much this had to do with our current problems, but I bet it was a contributor.

(For those wanting to read interesting perspectives on the financial crisis, I'd recommend Felix Salmon's blog on Portfolio, James Surowiecki's blog, and the Economist's Free Exchange blog.)

Photo by runneralan2004 via Flickr Creative Commons