Archive for the ‘Social networking’ Category

CRM vendors that have wondered about the necessity of porting their applications to the small screen (i.e. mobile) should take note of last week’s acquisition of Instagram by Facebook.

Instagram is the tip of a big iceberg and is perhaps a signal of yet another disruption in a disruption prone industry.  It represents a big trend by emerging companies to build their applications first for the handheld device market and later for larger environments like laptops and conventional desktops.  Remember when the laptop was a “small” device?

Mobile device uptake is driving demand for applications more suited to business like a flock of Angry Birds.  And vendors that build first for the small platform find there are advantages to this.

I think this provides an interesting correlation with early PC era when mini-computer software companies moved their products to PCs.  The ports were largely successful but they made the PC run like a mini-computer.  But when we all saw the kinds of applications, the performance and the intuitiveness of PC native applications we all knew that ported solutions were merely a weigh station.  I think the same thing is happening with the new generation of small and very powerful devices.

According to a story in the New York Times, it’s not only the companies themselves that are ushering in this phenomenon but venture capital firms are also fanning the flames.

As a technology decision, going small makes perfect sense.  Small means small in most conceivable ways.  So why architect an app for a larger computer when you know you will be reducing its footprint when you attempt to cram it onto pocket devices?  In many cases apps that are hits on the handheld will transition to the larger formats of more traditional devices and they can easily grow in the transition once the developers have a clearer understanding of customer likes.

Of course, a growing percentage of device centric applications have no real analog on larger devices.  For instance, Foursquare, an app that enables people to let their social followers know where they are and what they are doing, absolutely requires a mobile device to give it context.  Foursquare for the desktop would barely make sense and have to be re-imagined.

So a billion dollars for Instagram not only highlights the importance of mobile devices but it reveals many new niches.  For example, the already mentioned venture capitalists already have another technology area to analyze and invest in.  And device makers have greater incentive to be first to offer specific applications running on their infrastructures.  Where it was once enough to offer internet access for first generation social networks like Twitter and Facebook, device vendors now need to ensure that these third party apps look completely at home on their platforms.

But there’s more.  Tool vendors who offer cheap, fast ways to develop, deploy and ultimately port applications from device to device become essential to this play.  That means, the VC’s will quickly need to zero in on the infrastructure that supports device app building.

And what does this mean for CRM?  A year or two ago vendors realized they needed to scramble to get their applications running well on portable devices because users were demanding it.  The mobile sales person is ditching the laptop or at least leaving it at the hotel and managing the day to day with a smartphone or tablet.  The better networks and more affordable communications plans, longer battery life (compared to most laptops) open new application areas too.

I am told that one of the favorite tablet applications on the iPad for pharmaceutical sales people is YouTube.  That’s right, because instead of trying to ramble through a 30 second pitch, the rep simply asks permission to show a short video.  Video packs more information and holds attention.  It’s also more passive for the viewer so it has a future in CRM and thus so do smart and inexpensive devices.

The only yellow flag I see is the monetization issue.  How do you make money at this?  With many applications available for free and most costing under five bucks, it’s hard, if you are a VC, to see how these emerging vendors might become the billion dollar success stories of the next decade.  Facebook can only buy so many companies.

Finally, for a long time we’ve been attributing the success of Arab Spring and Occupy Wall Street to social media.  And while there is no doubt that social was a big component of the success, we’ve overlooked mobile devices, which are inseparable.  Increasingly, as social media spreads around the world, it is being driven by the affordability of mobile technology.  Mobile might be just another form of computing we all use, but for a growing segment of the global population, it is the computer.

In a world of Big Data, you don’t need to fret about CRM going away.  The back end becomes more, not less, important as analytics surges.  Big Data is surging too because social networks and by extension the mobile devices that inhabit them are generating the avalanche of data that must be processed.

And here we can see the most efficient model taking shape.  The mobile device is rather dumb compared to the big CRM system, but it is a vital link.  It sends data to the mother ship and expects information back fast so that the user can leverage the knowledge it contains and drive faster decisions.  Time to invest in faster networks.

Thanks for the overwhelming response to last week’s post, “Why CRM Works.”  It was surprising and gratifying that so many people read and tweeted about it given its length — almost double my usual contribution.  Since it was based on Daniel Kahneman’s groundbreaking work, I give all the credit to him and his great career in trying to understand how we think.

One comment came in that I thought would make a good jumping off point for this week.  Barry Dalton wrote:

“I’m confused as to how the Sales VP involvement metric is a System 1 decision point. If it is based on quantifiable evidence, derived through an analytical method, wouldn’t that be a system 2 decision? Or, is it the fact that, once the analytics proves the assumption to be true, it no longer requires analysis at each decision point, so therefore moves from system 2 to system 1 because you’re now accepting it as fact without additional analysis?”

Dalton answered his own question in his second interpretation.  Once the thinking has already occurred, the result is a real metric that with use becomes a KPI or key performance indicator.  In my response to him I said that the great thing about KPIs is that they cross over from System 2 into System 1 land.  Everyone doesn’t have to do the same thinking and re-discovery, they only need to use the KPI as a valid new measure.

The best analogy I can come up with for KPIs like this is of an enzyme, a biological catalyst that makes reactions happen faster or require less energy than the reaction would require under un-catalyzed conditions.  Ultimately that’s what we all want — ways to do the right thing without having to cogitate over it incessantly.

System 1 and System 2 are really just the beginning of the story though and the value of understanding Kahneman’s work is that it helps us identify when we might be slipping into System 1 thinking even when our limited System 1’s might be out of their depth.  According to Kahneman, System 2 is powerful but “lazy” in that our brains would prefer to rely on a more or less automatic System 1 response than engage System 2.

You can see this in real life.  System 1 is rarely stumped for an answer and often when confronted by a System 2 problem we might simply opt to change the subject.  So, for instance, you might find yourself or someone you are speaking with answering the question they wish they’d been asked rather than the one they don’t have an adequate answer for.  This happens all the time.  No wonder we can sometimes seem to be talking at cross-purposes!

There is a practical CRM application here too and I’ve been waiting for weeks to set it up.  So much of conventional sales and marketing is mired in System 1 activity.  Customers have short attention spans and we have relatively small windows to try to get a new idea (our products and services) into them.  If an idea seems the least bit foreign there is a good chance it will be rejected by System 1.

The solution is to attempt to reach a customer’s System 2 thinking apparatus.  That’s what we do in a conventional sales process in which a sales person builds up credibility and trust with a customer so that he or she can educate the customer through System 2.  It’s often said in sales that people make logical decisions (System 2) for emotional reasons (System 1) and this is my interpretation of how and why.

But how do you achieve this today?  Companies trying to cut costs put products into other channels, for example or they develop freemium models that enable customers to educate themselves.  Unfortunately, the revenue potential of a freemium is often bupkus.  That’s where social media is so valuable.

If we believe the research, then people have greater trust in “someone like me” when it comes to understanding a product or service.  Social networks and communities are places where people feel secure enough to expose the System 2 side of their thinking and to receive other people’s ideas.  And that’s why social media is so important to the future of business.  If you can use social techniques to reach System 2 you can catalyze your business processes.  But there’s a cost associated with this.

The new role of the enterprise is to ensure that in its social space people are respected for their ideas and that only truth is allowed to be broadcast.  That’s also why potentially embarrassing or negative information about the vendor is allowed to circulate.  Nobody’s perfect and trying to suppress truth is how to engender dis-trust.

This is all very interesting to me and another question worth exploring is how social media can really succeed inside the enterprise.  Consider this: if social media has the potential to make us work or work harder and our brains love to be in System 1 mode, how do we use social constructs to get people to willingly engage their System 2’s inside the enterprise?

That’s not an idle question as many organizations are attempting to cross a chasm right now from old style thinking (and business) to become new and modern social enterprises.  Let’s tackle that one next time.

I have great admiration for the work of Daniel Kahneman.  He’s an Israeli psychologist whose work with the late Amos Tversky won the Nobel Prize in Economics in 2002 even though neither was obviously an economist.  The pair built the foundation for behavioral economics and did early work on framing, or how we perceive issues based on what other information surrounds them.

Kahneman’s work — the part I am most fascinated with — focuses on how we think and his new book Thinking Fast and Slow summarizes his work and that of others in the field and it has significant implications for our daily lives as well as many applications within CRM.

Kahneman postulates two systems, or ways of thinking, which he calls System 1 and System 2.  The systems are really metaphors for how the brain works — they don’t show up on an MRI.  System 1 supports thinking quickly, reflexively and in the moment.  It is the snap judgment or gut instinct that evolved to keep us safe from hungry lions and we rely on it still.  System 2 is what many people would call “real” thinking.  It supports the number crunching we do to get quantitative answers, and other deliberate work we do whether or not it involves algebra.

Both systems likely evolved on the savannah.  When confronted by a predator System 1 was most responsible for fleeing the scene.  System 2 would have been more useful for an individual trying to find the best place to cross a river — not too deep and no crocodiles, please.  You get the idea.

Kahneman shows through experimentation how the systems work and how we may prefer to let System 1 do the heavy lifting even when it is out of its depth because System 2 involves real work and the brain would rather not engage.  Here’s an example.  A bat and a ball cost $1.10 as a set.  Individually the bat costs $1 more than the ball, what does each cost?

According to Kahneman for most people System 1 springs into action concluding that the bat costs $1 and the ball $0.10.  Did you get this answer?  It happens to be wrong because $1 is only ninety cents more than ten cents.  If the ball costs ten cents then the bat would have to cost $1.10 which would make the set $1.20 not $1.10.  If you do a little algebra you discover that the bat costs $1.05 and the ball can be bought for a nickel thus conforming to both conditions.

For many situations the difference between an answer of ninety cents and $1.05 is a difference without a distinction.  But a willingness to accept the wrong answer tells a lot about our brains and CRM use too and the propensity some of us still have to blow off CRM as too much work.  How many times have you heard this regarding SFA, “It doesn’t do me any good.  It’s just extra work because I’m just collecting data for my boss.”?

I hear it often.  In fact some emerging companies use this as a reason that their products are superior to what’s on the market right now.  Their products are easier to use, less invasive they say.  But forecasting results tell a very different story.  These new vendors claim to be better because they, in effect, don’t ask the user to think and in the process they perpetuate wrong answers.  Thus the road to CRM enlightenment is pockmarked with potholes of ignorance.

Part of each one of us prefers the ignorance of the wrong answer because System 1 took care of it and we didn’t have to engage System 2.  The ninety-cent answer gets us close enough — that is until we go to the store and discover that we don’t have enough money.

For a long time there’s been anecdotal information about CRM’s benefits, which has been unconvincing to at least some people.  A diminishing number of System 1 types assume it’s too much work while others might see it as the path of least resistance — two valid System 1 responses.  At the same time though, some System 2 types think there isn’t enough proof and want clear ROI numbers, which are hard to get.  Actually the System 2 types are really just engaging System 1 by expecting someone else to do the work.  It can get complicated.

The advent of analytics as a part of the CRM suite was supposed to shed new light on CRM’s efficacy and some clear information is now coming to the fore.  Last week I spoke with Swayne Hill a founder of Cloud9 Analytics and the SVP, Global Field Operations.  He’s started blogging about his experience using analytics in selling and the findings are very interesting.

From his writings I can say that one of the knocks against CRM is valid, it is used to capture data for future analysis, but for a long time that analysis was performed by many managers operating in System 1 mode.  They took the forecast and added their gut feel for the data often promoting some deals and de-emphasizing others.  Despite this effort though, our data suggests that most sales forecasts are profoundly unreliable.

To take a System 2 approach with a sales forecast almost demands analytics because there is simply too much data for a human brain to crunch in a timely way.  So using his own analytics including a new forecasting tool, Hill began analyzing his company’s performance.  He freely admits in one post that the company missed its forecast a couple of months running which got him and his peers very interested in figuring out why.  Indeed, a company that specializes in sales forecasting has to both eat its own dog food and benefit from it.

In short order Hill discovered that his sales reps were three times more likely to win a deal when the VP of sales for the prospect was involved in the decision.  That sounds like a no-brainer but it isn’t.  Lots of large organizations have sales operations groups and often they can make the purchase decision for a product like this, especially if it can be shown to save money (that’s the emphasis in operations).  That’s basically a System 1 decision.

But it’s the sales VPs who can drive a decision if they think it really will boost sales.  So while the operations side of the house might not buy if the ROI isn’t great enough, the VP of sales might be more willing to make the purchase if a vendor can show a modest performance improvement over time and that is a System 2 decision.

Hill’s discovery led to a metric, a sales milestone that is now built into the Cloud9 internal sales process.  If for some reason a deal gets to forecast stage without the customer’s sales VP being involved the forecast it is marked down for that reason.  So ironically, and very interestingly, this new milestone has become a System 1 decision point.

Hill’s blog is full of observations like this and I think he’s right to focus on ensuring data collection in sales.  I think every sales organization can go through an exercise like Cloud9 and come out the other end with valuable new insights into how and why it is successful.  But that analysis is a System 2 activity that will ultimately drive System 1 activity.  We need to challenge ourselves to not take the easy route of what’s been done before, to fully engage our minds.

Finally — and I know I’ve said this before — as important as data is, it is useless without analytics to turn it into real information.  Hill had plenty of data about the importance of the VP of sales but sitting in the database it was diffuse and useless.  When it was organized by analytics it became information, which was, in turn, converted into knowledge that future System 1 types can leverage.

CRM works and it is worth doing because it gives us the tools to engage in System 2 work to make ourselves more productive.  If we’re simply relying on data capture and System 1 cogitation, our results will be mediocre.  But there’s nothing wrong with using a System 1 shortcut once you know it’s based on knowledge.

Systems 1 and 2 play into social CRM strategies as well and I will be writing more on the subject soon.

I was surprised and delighted to be invited to chair the Sales and Marketing track at the upcoming Enterprise 2.0 conference in Boston, at the Hynes Convention Center, June 18 to 21.  I will be working with a great bunch of people and look forward to putting together some top notch thought leadership for the track.  Please check out the website and plan to attend some of the sessions.  They’ll be worth your time and I’ll plan some nice weather for you.

Note to self: Write something nice about Microsoft Convergence 2012.  They did a great job in Houston and most importantly you can really see the CRM focus coming together with social, mobile, analytics, back office and a lot more.  It’s taken a long time because there are a lot of moving parts for Microsoft but Convergence was impressive.

To get a sense of all the wonderfulness surrounding Convergence you need only glance at some of the many observations made by the likes of Paul Greenberg, Brent Leary, Dennis Howlett, Josh Greenbaum and many others.  So Kudos to Microsoft.

My observations will be somewhat different.  While I also think Microsoft has made important strides and I applaud their CRM team, I want to focus on what’s around the bend.  First there’s the new CRM GM, Dennis Michalis who took over from Brad Wilson after Wilson turned Microsoft into a CRM power almost by sheer force of will.

Michalis is a find, the kind of acquisition that, if he was a stock, would have been overlooked by everyone but Warren Buffet.  From what I can tell, Michalis has spent most of his career in Europe or the Far East and did well in those market; however, he was somewhat off the radar when Microsoft saw his talent and scooped him up.  Michalis has been with the company only a few months so this year’s Convergence was still mostly the result of Wilson’s efforts.  Michalis will have to stand on some big shoulders to do better and I think he can.

For starters, he will need to flesh out the social, and to a lesser degree, mobile strategies and product lines to be truly competitive.  Microsoft is not a social powerhouse and trails in the mobility wars, at least on the mobile operating system side (and that’s a lot).  But they have a strategy to offer their CRM on multiple browsers and in fact, demoed a mobile application for the iPad, which was impressive.  Their analytics package for sales, form what I saw, is powerful and sports a nice and intuitive interface though overall the product still has a straight from the software lab look to it.

The company’s biggest advances were, in my opinion, not software related though — they more clearly relate to the company evolving from an ERP company to more of a CRM company.  This needs some explaining.

First, it was nice to see Kirill Tatarinov speak about the drivers that his organization takes into account when trying to figure out product direction.  He said they include economics, geopolitics, people and technology, and I think that’s hugely important, though I don’t think it has been the case in the past.

The business climate, the cost of fuel and raw materials, the stability of the local political regime including personal freedom and free markets, all go into what will drive demand as well as the nature and character of demand.  They drive what people will buy and the style of the technologies they will use in their personal and professional lives.  All this might seem to affect ERP more than CRM but I think the distribution of influence is roughly equal.

But those are high level ideas and truth be told, it’s an ongoing effort to get them down to street level and there are some key things that I think Microsoft can do better in that regard.  For starters, the company culture is one of a vendor selling through distribution to others who will produce a final full product.  In ERP they’ve been successful at imagining customer business practices and driving solutions to market in some key areas, especially manufacturing.  This hasn’t been the case, to the same degree in CRM and it needs to be.

Microsoft needs to do a better job now of connecting its many dots.  For example, it is still at the point where it is hitting checklist items like social — so that it can compete with the likes of Salesforce — but without offering a compelling story of how a business progresses because it adopts new technology.  Salesforce calls it the social enterprise and Microsoft has no counter.  It is still selling components, modules, and it needs to elevate its game.

Also, too frequently for my taste, Microsoft likes to show off customers who have heavily customized their CRM instance, especially non-profits.  It’s nice to see non-profits in the mix, but the focus needs to be on for profit business.  Also, this makes points for their XRM strategy which goes against Salesforce’s platform, but it is wide of the mark for a customer that wants out of the box functionality that works the way its business works and drives improvement.

Cloud computing is another area for tightening up.  Here Microsoft joins the rest of the market excepting Salesforce, in highlighting the benefits of a go-it-yourself, roll-your-own strategy of hybrid clouds in which customers get to decide where their data resides.  I don’t think this is the right strategy for any vendor and here’s why.  We see too many examples of companies who manage their own data being hacked and increasingly the hackers are not individuals with an ax to grind but nations like China stealing IP or radicals like Anonymous aiming for industrial scale mayhem.

In this world, the strategy shouldn’t be building your own bomb shelter.  Microsoft and the other vendors have a credible case to make that they can and do perform a superior job of keeping data safe and that the time for going it alone is rapidly ending.  A more credible and strategic program might be for all vendors to say, “Hey, we’re the pros at this, let us handle it.”  If I ruled the world (hahaha!) that’s the tactic I would take.  It will take some years to accomplish this education but we need to start now.  And we need to quit deluding ourselves with a cowboy ethos that individuals can do a better job of data security than an organization dedicated to the task because the evidence shows this is just paranoia.

Ok, back to Convergence.  My last point — that Microsoft needs to do a better job connecting the dots has another element.  I am sorry to keep comparing Microsoft to Salesforce, because I think the two are more different than similar, but in the area of philanthropy I think Microsoft is trailing Salesforce when it could be leading.

You know that Salesforce has this 1:1:1 model in which it donates one percent of its equity, time and product to a 501 (3) (c) charity, the Salesforce Foundation.  At major events like Dreamforce, they have charitable activities in which customers can easily donate an hour of their time to do some public good.  All this activity is always tied back to the charity.

At Convergence Microsoft tried to do the same thing and the effort was inspiring but it wasn’t tied back to anything in particular.  Volunteers worked with Habitat for Humanity to renovate a house and when attendees filled out evaluation forms, Microsoft donated a dollar to a Houston charity, which was great.  But without some over-arching program I think Microsoft misses getting credit for its largess and also for its community outreach, which is important.

Last point.  Microsoft has not been a leader in any aspect of CRM.  It has taken a less risky fast-follower approach and it has breathed in other peoples’ exhaust as a result.  It’s time for the company to take a leadership position in something if it expects to reach the highest plateau in the business.  That plateau is unified communications (UCS).

Microsoft has Lync, a UCS that it offers and also uses in-house; Microsoft people tell me it works well.  UCS is, I think, potentially the next iteration of social networking.  It has enormous potential to save companies money and improve the links with customers.  To say the least, it would be smart of the company to step up its emphasis on UCS.  The window of opportunity is closing and I hope the company takes advantage of it.

If this sounds too critical, let me end on a more positive note.  Microsoft is a rising star in CRM and Convergence polished its reputation.  It has end-to-end technology from the back office to the front and from landlines to airwaves.  It is making headway in social, mobile and analytics — the next wave.  It has a good handle on at least some of the critical business processes that its customers depend on.  Like any software company, it will always be building out functionality, but its focus now must include, to a greater degree, all the many things that go into making a whole product in the social age.

Doubtless you have heard of the social enterprise by now.  It is Marc Benioff’s leading salient in a world he is convinced needs his solution to modern business.  But you also know that, like many other trends, this one is a work in progress.  For every Kimberly-Clark, Burberry’s and NBC Universal there are, what?  Banks!

No, not the banks that ran fast, free and loose with investor’s money or made up mortgage backed securities and cleverly also invented derivative insurance at the same time on the theory that every boat needs a lifeboat.  No, those were investment banks.  Regular old banks that do the mundane tasks of balancing the books, offering free checking, loans and credit cards are among the late adopters of the social enterprise or so says an article in today’s Ne York Times.

According to the Times article, most banks are slow on the uptake of social technologies.  While many have social outposts like Facebook pages these banks do a minimal job of patrolling social media for customer comments and other signals that something might need doing.  Experts quoted in the article used words like “hibernating,” and “amateurish,” to describe banks’ efforts along with, “displaying tokenism attitudes.”  Ouch!

Let’s call them “Social In Name Only” or SINOs after RINOs, a group of upstanding and principled people the Republican Party apparently no longer has room for.  I’d say that SINOs are different in many ways.  For starters, they haven’t abandoned anything or been abandoned by the society at large.  They simply are late to the party.

A better question to ask about SINOs is why they are late.  Is it that they are organized top down and the message simply has not gotten up to the head cheese?  Or is it possible the intense regulatory climate that they live in (which investment banking cousins somehow evaded) has not caught up with the social tsunami due to older customer demographics?  Or is it possible that a certain amount of risk aversion keeps banks from dealing with their customers on their own terms?  The article suggests that high net worth customers under 50 might be about to lead a charge to social.

I don’t know but I expect some combine of forces is at work.  I also smell a business opportunity and it’s bi-directional.  We can figure out the upside pretty easily — better customer outreach and interaction resulting in more banking activity.  But the bigger win for banks might actually be on the cost avoidance side.  If you’ve ever tried to understand a statement or get a question answered about that check you bounced you know that many banks are still mired in phone hell caused by call center business processes that were engineered during the very first Bush administration.

Seems to me that your average bank could ramp up service AND cut costs significantly if it paid attention to social media and leveraged it like any other social enterprise would.  But then what would we call them?  Having just invented SINOs I am fatigued from my creative efforts and don’t want to think about it.  Look at how short the idea cycle has become.

Here’s a quick shout out to Jobscience, one of my clients, for winning a AppExchange Best of ’11 Award for Human Resources and Recruiting.  What’s especially sweet about this award is that it is crowd sourced form Salesforce customers.  That’s right.  The people who buy and use the stuff said this is the best on the AppExchange.

As you know there’s been a goodly amount of M&A activity in HR lately with Oracle buying Taleo and SAP buying Success Factors.  That’s because HR is an important new frontier for companies who are often competing on the talent they attract as much as they are competing with other forms of capital like VC money and IP.

At least out in the Valley, there are more job openings than there are people to fill them.  The talent drought has made recruiting and holding on to people a more serious thing.  And with this comes the realization that old style HR systems that are attached to the ERP side of the house have a distinct disadvantage.

In his biography, Steve Jobs talked about the importance of hiring the right people and it has made a strong impression on me.  He said,

“…I realized that A players like to work with A players, they just didn’t like working with C players.  At Pixar, it was a whole company of A players.  When I got back to Apple, that’s what I decided to try to do.  You need to have a collaborative hiring process [my emphasis added].  When we hire someone, even if they’re going to be in marketing, I will have them talk to the design folks and the engineers.

In this environment, with a plethora of unqualified applicants trying for advanced jobs and a regulatory environment that sees to it that everyone gets a fair shot, the pressure on companies to conduct those collaborative hiring processes quickly so that they can put out offers ahead of the competition is intense.  Jobscience takes a front office approach to the HR challenge and the people who know best, have said that it’s got the right stuff.

Equally important, Salesforce didn’t have to spend a billion bucks to get Jobscience.  This is just another example of the power of real cloud computing.