Archive for the ‘Opinion’ Category

Snow in October, and other impossibilities

by Bruce Kasanoff

“Son, I’ve lived here since 1958, and I’m here to tell you it just doesn’t snow in Connecticut in October,” said the man next to me at the soccer field, as we shivered Saturday morning and pondered the approaching storm. It was so cold, my seventh grade son was wearing a florescent green felt hat as he played.

The man was right, sort of. The last appreciable snowfall was in 1952. But he was confusing personal experience with fact. As any Red Sox fan knows, even longstanding patterns shift. If you wait long enough, it will happen. The question is: how long will you have to wait?

In our case, it was about 90 minutes. At noon the ground was clear. At 12:15, it was covered with snow. By 2:30, tree limbs were crashing to the ground. My driveway was blocked until Sunday morning; I started clearing the fallen limbs, but looked up and decided too many weakened limbs remained directly over my head.

As I write this, you can drive the entire length of the Massachusetts/Connecticut border and virtually every town has very little or no electric power. This is two months after a hurricane (okay, near-hurricane) struck Connecticut, another thing that doesn’t happen here.

It probably wouldn’t hurt if we all tried to be a little more open-minded. Lots more things are possible than we think.

Is marketing dead?

by Bruce Kasanoff

I’m wondering whether marketing will still exist in five years. Nearly all customers will carry smart devices, and it’s possible that smart customers will only interact with smart companies.

No technology in human history has been adopted faster than wireless devices like smartphones and iPads. Tens of millions of these devices are spurring countless developers to innovate.

Customers are able to act smarter, because they have far better access to information and empowering capabilities. Traditional marketing tools like advertising and outbound solicitations look dumb by comparison, and will soon be ineffective and irrelevant.

Many marketing professionals don’t recognize the degree to which this sea change is the result of a perfect storm of four disruptive forces that are just now bearing down on us: Digital Sensors, Social Influence, Pervasive Memory and the Physical Web.

A very quick primer on the four forces that may kill advertising.

Digital Sensors are being embedded everywhere, transforming everything from your car to your toaster into a smart device.

Social Influence means that increasingly other people are influencing transactions or even preventing transactions between companies and customers. Imagine a crowd of your customer’s friends shouting, “Stop!” just as your salesperson is about to close a big deal, and you get the idea.

Pervasive Memory highlights the fact that every interaction via a digital device leaves a record in databases. When you make an error, everyone will know it. When your prices, quality levels or satisfaction ratings lag competitors, it will be obvious.

The rise of the Physical Web means that we will soon be surfing and bookmarking the real world like we do the Web. The sort of consumer tracking practices that have emerged online – following individuals and recording their actions – won’t be tolerated in the real world. Expect a flood of new privacy laws, and much stricter restrictions on the practice of advertising.

Om Malik, writing at GigaOm, today noted that Apple sold four million iPhone 4S devices in its first weekend, and observed that such devices are “in competition with the old way. Thanks to new chip technologies, cheap sensors and fast growing networks, the idea of what is a phone has changed. This is leading to behavior changes and new interactions. They are behaviors of a new connected life. These new behaviors will change many different parts of society and business.”

Disruption always comes from the edges of your industry.

Source: Clayton Christensen

Marketers at established firms often misjudge the pace of change, because they focus on their biggest competitors. But your biggest competitor is less likely to change your industry than a new start-up. Disruption comes from the edges, not the center, of an industry.

The only way to compete successfully in the years ahead is to be smarter than both your customers and your competitors.

By smart, I don’t mean that you hire smart executives, although that might help. I mean that the systems in your company act smart, and that all customer touchpoints act smart.

Unless you work at a disruptive start-up, Google, Facebook, Amazon or Apple… your company is almost certainly not prepared for the storm ahead. This does not mean that established companies are doomed, but it does mean that they’ll need to look at their business and their customers in ways that run counter to established channels and structures.

That’s why many of the incumbents who succeed at innovating do so with a bit of outside help to help them recognize and respond appropriately. So if you work for an established firm, learn what it means to “Act Smart” in this rapidly changing environment. Then look to intrapreneurship, skunkworks, your customers, independent developers and other sources of inspiration, and be prepared to go outside your comfort zone (and give up some control.)

Where will marketing dollars – and talent – go?

Most of the creativity and money poured until now into advertising, positioning and promotion will end up in the products themselves.

Instead of making a product look cool in an ad, companies will make the product actually be cool to find, learn, use, enjoy and share.

Customer experience will be the new marketing. Today, “customer experience” is a vague term. Soon, it will be the driver. Customer experience will be the main way to not only set your product apart, but to also gain attention. It will be about substance and style, functionality and form.

This is not just a business crossroads. It is a career crossroads.

Maybe the sky is not falling. Perhaps I am overstating the scope of change. But if I am even partially correct, these changes will impact the course of your career as well as the success of your business.

It is far better to lead a change than fall victim to it.

Mozilla hints at the end of offline

by Bruce Kasanoff

We are headed towards a world in which “offline” doesn’t exist.

In a blog post introducing Mozilla’s 2010 financial reports – Mozilla is the nonprofit behind the Firefox browser – Chair Mitchell Baker shared these words:

Internet life is changing. We are connecting through more devices. We are living in apps as well as browsers. We are interacting with friends and followers and acquaintances. We can experience the Web through a highly personal, highly customized lens.

The challenges ahead of us are very real. Mobile platforms are more closed and more centralized than we have seen in decades. As individuals, we are losing the ability to act on the Web without permission from large, centralized gatekeepers. We are all being tracked, logged, cataloged, monetized and turned into products to be sold. We’re seeing the universal platform of the Web fragmenting back into multiple different worlds.

Her point, of course, is that Mozilla is open, making it an excellent alternative to so many closed platforms and interfaces.

I want to emphasize the “tracked, logged, catalogued…” part. Yes, this is happening. It will get far worse as the Physical Web rises, and the whole concept of “offline” disappears.

Let me say that again: soon, there will be no such thing as offline.

When you make decisions about which companies you support, how you manage your personal data, and what you reveal online, please bear in mind that we are headed towards a world in which offline doesn’t exist.

Click to see 2010 report

How to make Steve Jobs immortal

by Bruce Kasanoff

Steve Jobs by Jim George

In the spirit of thinking differently, I’d like to suggest that Steve Jobs was not a person, but a way of thinking. As long as others emulate his approach to “thinking,” he will never die.

From what I can piece together from afar, Jobs crossed boundaries that few dare cross. Not because they are difficult or dangerous, but because so many of us prefer to live in comfortable boxes.

Why is it that engineers don’t sometimes stare for hours at a flower, marveling at its beauty? Why don’t accountants write an occasional screenplay? What stops many doctors from treating patients instead of conditions?

I feel uncomfortable in boxes, but have often lacked the discipline to stay in one box long enough to make tangible progress. I know firsthand the challenge isn’t simply to get out of your box, but also to combine varied perspectives and activities into one mashup that makes a difference.

For all of Jobs’ willingness to think differently, he was able to muster a laserlike focus on excellence and execution. There are people who turn to drugs or New Age ideas just to escape responsibility, but a few turn there for inspiration that they bring back to the other side.

This is what so many of us fear: crossing to the other side, and then coming back with something tangible. By other side, I don’t mean death. I mean a Democrat hanging out with Republicans, a Rabbi going to church, an artist studying engineering.

If you stumble upon this piece, you are likely to read it and change nothing. But think about this: we don’t need more Steve Jobs. We just need more people to think, live and work like he did. Don’t think about it. Just do.

Is your company heartless?

by Bruce Kasanoff

Free enterprise works beautifully when leaders feel rooted in their communities, beholden to their employees and answerable to their customers. But when these connections fray, the free market slides out of balance and the result is dangerously heartless behavior.

Heartless is laying off thousands of employees when your company has record amounts of cash on hand. American firms are holding $2 trillion in cash, up from $1.39 trillion in 2008. Since 2008, Siemens has fired 12,000 workers and increased its cash holdings from $9.4 billion to $16.4 billion.

Heartless is caring more about a concentrated group of investors than you do your customers.

Heartless is running a company with no loyalty whatsoever, without regard for longstanding, hardworking and effective employees.

Heartless is being willing to abandon a community because one 30 miles down the road offers better tax breaks.

To the degree they have a defined focus, Occupy Wall Street is addressing banks, but the problem is far more widespread than that. Large companies in numerous industries are hoarding cash while they fire workers. It is heartless to have record profits and record layoffs at the same time.

Me first, you last

Many politicians have become heartless, too. They care first about getting re-elected, and second about paying back the party and supporters that keep them in power. Most do not care nearly as much about the citizens they represent or about our country as a whole. I say this because unprecedented numbers of Americans are disenchanted with their politicians.

Heartless politicians are willing to shut down our government and default on our obligations, just because the party line says don’t compromise. Meanwhile, millions of Americans are suffering. That’s heartless.

Globalization has lessened the value of community. Instead of local merchants, we have chain stores that hire sales help for minimum wage. Instead of business leaders rooted in our communities, we have leaders who live far away and who often have never even seen the store that serves your area.

Occupy Wall Street, and then?

Instead of local community, we now have social media communities that have given rise to the Tea Party and now Occupy Wall Street. But for all the media coverage these new communities attract, they fail to root our business and political leaders in anything that touches their hearts. Social media can react to heartless behavior, but does not prevent it.

The only solution I can see to heartless behavior is selfishness.

Yes, selfishness.

Be selfish. Be very selfish

Despite the disappearance of real communities, despite globalization, our leaders need to realize that purely on a selfish level, acting heartless is a deadly and dangerous strategy. Vast numbers of people are suffering, scared and suspicious. They are ready to go out into the streets, to make everyone feel their pain. Occupy Wall Street is a Sunday church social compared to what’s brewing.

I pray that our leaders recognize the desperation that is building, before it explodes. It is in our leaders’ selfish interests to do so. It is in their selfish interests to stop acting heartless, because the alternative is something close to anarchy.

If this sounds extreme, you probably still have your job.

Groupon IPO like investing in British phone-hacking scandal

by Bruce Kasanoff

Many weeks after the scandal broke that British tabloids were hacking into the voicemail boxes of others, would you invest your money in a phone-hacking company? If not, then you shouldn’t invest in Groupon.

I’ve written previously about Groupon here and there. Since then, Groupon’s IPO hopes have dimmed but not disappeared. Not to overstate my non-existent influence, but perhaps the third time will be the charm.

Groupon may not be doing anything illegal, but they are doing plenty that borders on the unethical: pressuring merchants to practically give away merchandise to attract customers, inflating their revenues with bizarre and unprecedented accounting practices, and stretching the boundaries of “quiet periods” before stock offerings.

If you believe that after decades of bringing IT innovations into companies, the best use we have for technology is to discount merchandise by 75%, invest in Groupon.

If you think that merchants will be loyal to Groupon, despite the fact that Groupon offers seem to attract customers looking for a bargain and nothing more, invest in Groupon.

If you think that any company can make money on an ongoing basis by selling products for less than its cost of goods sold, invest in Groupon.

But if you decide to do so, recognize the risk not only of losing your money, but also of having to explain why you invested in a scheme that many consider to be barely better than hacking into someone else’s phone.

Stocks dive. Europe’s banks weaken. (Time to be optimistic.)

by Bruce Kasanoff

Banks have record amounts of cash, but they won’t lend.

Companies have record amounts of cash, but they won’t hire.

Both have circled their wagons, and are protecting… whom? Certainly not employees, many of whom are now on the streets after years of loyal service. Certainly not customers, with whom these institutions play a zero-sum game in which only one side can win.

I hate the suffering that so many people are experiencing, but I am thrilled to witness the last moments of an economic system that has outlived its usefulness.

Our mass production economy is all but dead. We just haven’t buried it yet. What’s worse, our politicians and bankers haven’t yet realized the system will never come back. Propping it up is like endorsing as policy a goofy movie in which teenagers carry around a dead body to parties and classes.

What we need is an economy based on information, a personal economy in which people value most highly the solutions and services that are tailored to their needs. In such an economy, we don’t endlessly need to consume physical goods; people will pay for information, for customized services, and for special experiences.

Once you realize that our whole economic system is being replaced with a new one, things don’t look so bad. Don’t get me wrong – my stomach lurches when the market plunges 400 points – but it doesn’t feel like the end of the world. It feels like a new, better beginning.

I’m hopeful that we are headed towards an economy built on a foundation of common sense, logic, compassion and loyalty.

Common sense, for reasons I have explained previously in my Common Sensor post.

Logic, because we will have much better access to actual data about our world and how it works.

Compassion, because when companies and governments recognize that they add value by addressing the unique needs of individuals, they must learn to accomodate what each person needs.

Loyalty, because throwing employees and customers overboard in a crisis is not a sound long-term strategy. Contrary to what some think, people remember the institutions that forced them to spend 18, 24 or more months without income.

It’s understandable to be worried. But there’s also good reason to be optimistic.

If you appreciated this post, please consider sharing it with a few others.

Netflix should rename Qwikster to Trickster

by Bruce Kasanoff

Lots of other people woke up this morning, saw the new Netflix video apology, and were surprised that the firm’s leaders never realized that Qwikster makes us think of Trickster… especially given the firm’s recent actions.

The firms’ CEOs (yep, there are now two) announced that they are separating the Netflix physical DVD business from its streaming operations, and naming the DVD business Qwikster. Each business will have separate websites, separate fees, and even separate rating systems.

I’m a Netflix subscriber, and my family would love to love the service. But as others have noted, the online streaming selection is actually getting worse, not better, as Netflix faces pushback from content providers.

Double the work. Half the movies. Great customer experience strategy.

Will having me pay bills twice and rate movies twice make me feel better about the service? Does paying twice make you happier?

If this trend catches on, we could expect to see:

- Citibank separate its checking, savings and credit card operations. You will now need to carry three cards: Citibank Checking, Prettibank Savings, and KnittingBank Credit.

- AT&T charge separately for email, text messages and phone calls. You will get three separate bills. Since text messaging is so different from email (they are shorter, for one thing), this change will enable all the services to thrive. (I’m joking.)

- McDonald’s spin off its french fry business, renaming them Death-DeFrying, which more accurately reflects one of the central “benefits” to consumers.

Since Netflix apparently needs some marketing help, it would be great if you could take our poll and help them out…


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A better jobs program: invest in entrepreneurs

by Bruce Kasanoff

Let’s dream big for a few minutes. Imagine if the United States invested $50 billion in entrepreneurs, instead of fiddling with minor changes in payroll taxes and more construction projects that don’t create long-term jobs.

In 20 years, I’ve never heard an entrepreneur say she decided to hire more people because of a tax change. But I see incredible amounts of energy devoted to securing funding, finding more customers, and even chasing awards.

What if the government…

  • Matched the amount of money an entrepreneur’s friends and family invest in their company?
  • Provided two-year zero interest-free loans to any company with at least five employees willing to double the number of employees?
  • Provided interest-free loans to small companies who need to invest in technology to make their products and services smarter?
  • Funded innovation awards in every major industry? Such competitions might be open to any company with less than 250 employees, and the awards would recognize firms whose solutions solved chronic or pressing problems. To learn more about this approach, visit Innocentive.

In real life, government programs for small businesses are often underfunded. Also, “small business” is a deceptive term. Our economy is not going to be recharged by small companies. It’s going to be saved by entrepreneurial companies, some of which have one employee, while others have 5,000 or more.

I’m not arguing for $500 million grants to a single company, but rather for thousands of smaller investments in entrepreneurial firms. Such investments can not only save our economy, but also provide a real return back to taxpayers like you and me.

Can large asset managers provide superb customer experience?

by Bruce Kasanoff 1 Comment

Customer experience management is changing the standards of excellence in dozens of industries, and today let’s focus on one of the toughest industries of all: global asset managers, the firms that manage billions or trillions of dollars. Just to be specific, this post focuses on the largest players in this industry, those who sell a full range of products to a wide span of clients.

To be fair, large asset managers are bound by regulations, internal restrictions and security concerns far beyond those of other industries. Complicating the matter, their clients span a broad range from institutional investors – which can include corporations, government institutions, pension plans, and endowments – to high net worth individuals and the general public.

What these firms call “marketing” is a different animal than what most industries practice. To promote their products, they aren’t inventing Nike swooshes or timing tennis serves like IBM does at the US Open. For an asset manager, sophisticated marketing is more like disciplined use of CRM software, consistent look and feel of corporate materials, and a professional sales force.

Disciplined asset managers meet disruptive forces

Despite the above, the disruptive forces changing other industries are going to change the asset management industry, too. Client expectations are going to change because the way they access information, communicate, organize their thoughts and make decisions are all changing.

So here are some very basic ways asset managers can react, right now:

1.) Segment clients by needs

To generalize a bit, the largest asset managers still tend to segment their efforts by the products they sell, rather than the clients they serve. Or, even worse, they organize their sales forces by geography.

The result always – always – shortchanges clients. Instead of getting access to the best talent and most relevant information, clients get access to the person who fought hardest for the account, or the product the asset manager is most eager to sell.

A better alternative is to segment clients by needs, which then makes it far easier to deliver information and services that are tailored to client needs. How do client needs differ? Well, imagine that one client is a government agency in the State of Missouri, and another is the endowment of Harvard University. The level of sophistication of each group, their practices and restrictions, their investment goals, and their cultures are dramatically different.

Many asset managers segment in a crude manner. For example, they group all endowments and pensions together. This is a start, but not enough.

The lesson from other industries is clear: the deeper you take segments, the more responsive you can be to client needs. So, for example, you could make endowments a segment, but then divide that segment again. All endowments are not alike. Figure out the critical differences.

2.) Create modular capabilities, to better meet the needs of each segment

Segmenting is worthless if you can’t treat different segments differently. So firms need modular, mix-and-match capabilities that client service teams and portfolio managers can utilize to serve their clients. Such tools ought to span product offerings, reporting options, decision-making tools, and educational/outreach efforts – just to name a few.

The more flexible such capabilities, the more responsive an asset manager can be to its clients.

I suspect that most asset managers remain fairly inflexible. They aren’t even able to generate sophisticated reports that “slice and dice” accounts across product lines or sales groups. Yes, some of these limitations might be due to regulations or restrictions, but most are due to the same inertia and silos that plague other industries.

3. Anticipate client – and segment – needs

One of the largest benefits of segmenting your clients is that doing so allows your firm to anticipate what clients will need. If you place your most aggressive large institutional investors together under one group, that group will have the time and resources to master all of your firm’s best offerings for clients like these. It will be able to describe in great detail services and reporting options that may be missing. so your product development teams will be able to fill the gaps. It will see changes coming before most of your competitors do.

At Smart Customers – Stupid Companies, we see industry after industry fall behind their customers. This is because smartphones, innovative apps, and wireless access to information are all giving customers unprecedented flexibility and knowledge – while many companies still struggle with their own silos and outdated databases.

Some lessons will come not from the segments themselves, but from other industries. Will the asset management industry be selling iPad games? No. But will it be forced to deliver iPad apps? Yes.

4.) Reward employees for delivering what clients need

The reward systems at most asset management firms are badly out of skew. Professionals get paid for protecting their turf, pushing certain products, and appearing smart. These practices prevent firms from segmenting clients properly, delivering them options that best suit their needs, and maintaining a comprehensive perspective across all of the client’s activities.

If you don’t pay an employee to be a team player, he won’t be a team player. If you don’t pay groups to work together, they won’t work together.

Large asset managers are wrong-headedly looking at each other as competitive threats. Disruptive change doesn’t come from the center of an industry – where the dominant players live – it comes from the edges. Much of the asset management industry has been commoditized. Few, if any, managers can maintain a consistent performance level that exceeds market averages. There are thousands of choices in each category, mostly indistinguishable.

The industry ought to be motivated by the threat of completely innovative new competitors. Ask yourself: if I was a well-funded maverick who wanted to completely shift the balance of power in this industry, what would I do? How could such a player design a process that is 100% built around the best interests of sophisticated clients? How would I compensate people to serve clients, not just push products?

(Want a glimpse of a possible scenario? Check out yesterday’s post on BankSimple, which is designing a better interface than any bank has been able to build, but is using actual banks to manage deposits. In other words, BankSimple will own the customer relationship, instead of the bank that holds the customer’s money.)

5.) Manage client touchpoints in a far more sensitive and sophisticated manner.

Touchpoints are all the places where your firm touches its clients: sales calls, performance reviews, actual reports, pitches, your web site, etc.

There are three basic types of touchpoints:

- Human: a portfolio manager or marketing professional, for example
- Dumb: a touchpoint that can’t change or respond, such as a printed report or presentation
- Smart: a touchpoint that the company or the client can use to share or get information, such as a reporting web site or app

The biggest shift in business today involves replacing dumb touchpoints with smart ones. The era of dumb is dead. Everything is turning smart, from your refrigerator to the way you serve clients who give you $10 billion to invest. Any other path is suicide.

In every single industry, companies are figuring out how to make their (broom/car engine/fire extinguisher/newspaper/pen/spray cleaner/_________) smart. The asset management industry is not immune to this trend. In fact, it offers products and services ideally suited to such a shift, because financial transactions and their associated data are already conducted through digital means.

The largest asset managers face the same disruptive forces impacting other industries, and these forces are shifting power and control towards clients. It’s time to rethink the way that these manager best serve their clients.

Bruce Kasanoff is a customer experience strategist and co-founder of Smart Customers – Stupid Companies.