• July 28, 2016
  • netsuiteYou had to believe this day was inevitable. Oracle announced it was buying NetSuite a cloud ERP provider with over 30,000 customers worldwide for about $9.3 billion. Oracle founder, Larry Ellison also had a large part in founding NetSuite including being one of its top investors. I have always looked at it as Larry’s experiment in cloud computing and I think that is key.

    Eighteen years ago, when NetSuite got going, Oracle was already a very big company dominating the relational database market as well as the market for enterprise business applications. Oracle’s challenge then was best summed up in Clay Christensen’s book, “The Innovator’s Dilemma,” though it never mentioned Oracle or NetSuite explicitly. The dilemma being when should a successful company consider cannibalizing its own business to avoid enabling new entrants to the market to do the honors.

    The dilemma stems from the fact that successful companies had, until the last 20 years, been loath to change their secret sauce, the thing that made them successful. But a series of disruptions initiated by cloud computing pioneers like Salesforce, showed that standing pat was as dangerous as playing with matches around your balance sheet.

    So that was Oracle’s dilemma and you could see it unfolding as then CEO and founder Larry Ellison carefully launched what was then called NetLedger under the leadership of trusted lieutenants Evan Goldberg, CTO and founder, and Zach Nelson, CEO. NetSuite was a lifeboat strategy intended to provide a safe place to pour customers, cash, and expertise if the need ever arose.

    As a startup NetLedger morphed into NetSuite and had far less overhead and bureaucracy to contend with than an established company like Oracle and so its innovation cycles were quick and nimble. Taking no chances, Oracle plunged ahead into cloud computing building its own platform and applications, which would eventually displace its traditional products. It also bought a slew of other cloud companies too because buying companies is less risky than trying to fund a similar amount of development in house.

    So in this regard, buying NetSuite can be seen as just another cloud company acquisition by Oracle but it’s much more than that. It’s the culmination of long-game thinking—precisely the kind that few public companies can invest in today given the short time horizons of quarterly earnings reporting.

    This long game approach is what critics lament is no longer practiced in the Fortune 500. But today, one of the founders of a Fortune 500 company (#77 if you are counting), a brash, fast talking, America’s Cup winning, technology industry showman, pulled a rabbit out of his hat. This shows that planning and execution still count for a lot in business if you know how to adapt.

     

     

     

    Published: 2 days ago


    This is the first of four posts on modern approaches to customer loyalty aimed at improving it through customer engagement. A fuller discussion is available in my new book, You Can’t Buy Customer Loyalty, But You Can Earn It.

     

    YouCantBuyCustomerLoyalty_BOOKCOVER_smallAs I see it there are four basic capabilities or attributes to building better customer loyalty that I learned about in an article from two McKinsey researchers David C. Edelman and Marc Singer in a 2015 Article in Harvard Business Review, Competing on Customer Journeys. Edelman and Singer say (and I agree) that they are,

    1. Automation
    2. Proactive personalization
    3. Contextual interaction, and
    4. Journey Mapping

    What strikes me immediately is that only two of these attributes are purely or largely technological (1 and 4) while the others are decidedly organized as human mediated processes . This strongly suggests that we can’t simply throw technology at the problem to make it go away. Moreover, the human mediated parts require a good deal of high-level thought to pull off. But this is getting too far ahead. The first item is automation and it deserves full examination.

    Automation

    Most thought leaders on customer loyalty will acknowledge the importance of automation but few get us to the point of understanding that even here, each business’ automation will be vastly different from any other’s. Why? Because circumstances such as products, business models, employees, and many other attributes form unique offers that have to be handled as one of a kind ideas.

    The purpose of automation has always been to reduce labor input to derive greater throughput from business processes, maximizing the utility of the resources we invest. On the employer side, this is usually called productivity but automation can have the same impact on the customer side. Simply because a customer isn’t on the payroll doesn’t negate the importance of respecting a customer’s time and effort; thus, automation is a great way to take some friction out of a business process on behalf of a customer—and it works.

    Often (but far from always) automation comes down to mobile apps so they’re a good place to start. In my book I look at two very different mobile apps, the Starbucks mobile app and the Hilton Honors (HHonors) app and, as I mentioned, they couldn’t be more different.

    Starbucks

    The Starbucks mobile app encompasses the company’s revamped loyalty program. It was so successful that it left executives with the happy problem of having to explain a huge revenue bump in an earnings call last year. With the app in place, year-over-year revenues for the company jumped by 17.8%, an unheard of amount. The new automation carved a good deal of friction out of the customer experience for its users by letting them order and pay with their mobile devices rather than waiting in lines. They showed their appreciation with more business.

    Of course there was a strong dose of the other three attributes in these results. For instance, the app incorporated the customer journey to a high degree affording the ability to proactively personalize the Starbucks experience and we’ll explore these ideas more in a future post. For now, it’s exciting to see such powerful results from the app’s deployment.

    Hilton

    About the only thing that Starbucks and Hilton apps have in common is that they run on iOS and Android. But more importantly, each does a great job of anticipating customer needs, too. For Hilton this means that the app helps people reserve rooms and also lets them check in without standing in line at the front desk. Not only that but with the app customers can select a room on the property, order room service or a morning paper, and the app even enables the phone to function as a room key.

    What’s powerful about both apps, and what’s often overlooked, is that they are additive. For example, turning a smartphone into a room key as Hilton has done is not as complex painting Cubism, but few businesses would go out of their way to build just that functionality. The Hilton app’s hidden benefit is that it acts as a platform on which the company can build all manner of solutions for customer outreach. When I wrote the book more than a million people per month were using the Hilton app to check in and that number is likely growing. The same is true for the Starbucks app, which is also functioning as a platform.

    Customer engagement

    We’ll revisit the idea of customer engagement again and again, and it’s worth pointing out that the best automation is designed to make it easy for customers to reach out to vendors. Customer initiated engagement is more valuable than almost anything for developing relationships that lead to customer bonding and loyalty. The secret to developing apps that support customer loyalty is to focus on being present in customers’ moments of truth—the times when they need you most. For Starbucks this meant ordering and payment, remembering favorites, and identifying new locations among other things. For Hilton, it meant reducing friction in the hotel stay.

    If you’re looking for commonality between the apps that’s it—being in customer moments of truth. And if you look at your own business you’ll find unique moments that you can take advantage of in the same way.

    Published: 2 weeks ago


    types-of-innovationA couple of weeks ago Allison Arieff wrote a piece in the New York Times titled “Solving All the Wrong Problems” that gets to the heart of the technical times we live in and its focus is not what you might think. She includes a long list of things we can buy or subscribe to such as:

    A service that sends someone to fill your car with gas.

    A service that sends a valet on a scooter to you, wherever you are, to park your car.

    An app that analyzes the quality of your French kissing.

    A “smart” button and zipper that alerts you if your fly is down.

    A sensor placed in your child’s diaper that sends you an alert when the diaper needs changing.

    It goes on but you get the idea and you can always read the article here.

    All of these things have in common the idea that just because we have the ability to make them doesn’t mean we should. Presumably the ones that got venture capital financing had someone asking, how does this make money and receiving an acceptable answer.

    At about the same time this article ran, I needed a water heater so I went to a big box store and searched for—wait for it—someone to wait on me, to answer a few questions in other words. There were three models on display but in a perversion of good, better, best, there was standard, deluxe, and WiFi. The top of the line water heater could send information to my smartphone about, oh, I don’t know what really.

    In my long life I’ve noticed that water heaters either work or they don’t. When they don’t work, I take a cold shower and summon a plumber to rectify the situation. The idea of having a water heater that I could interrogate through my smartphone seemed importantly like a moment in history when a new neurosis is proclaimed—hydrothermia gondii, perhaps.

    But I have an explanation or actually two that seem to pacify my mind. The first harkens back to Linus Pauling, a two time Nobel Prize winner who once famously said that if you want to have good ideas, you need to have a lot of ideas. Translation, it’s a numbers game and most inventions don’t make the cut. Of the long list in the Times article, most if not all but the one that evaluates the quality your French kissing, are bound for history’s ash heap.

    But Pauling’s point was that you never know what’s going to hit so you take the risk of ridicule and ruin for the chance of success and all that attends it. Still, some of these inventions up to an including the WiFi water heater strike me as over the top science fair faire.

    The other reason in my mind might be closer to the truth. It’s that we’ve reached the end of the current paradigm. By paradigm, I mean the thing that frames our economic and social lives, the technology boom. According to the late Russian economist, Nicolai Kondratiev, a paradigm animates our economic lives and lasts between 50 and 60 years before another replaces it. Within a paradigm you can have trends and business cycles but the paradigm is ascendant.

    You can know when the end is nigh because it gets really, really hard to innovate around the core tenets of the paradigm without bumping into something else that does pretty much the same thing. In other words, all of the niches are full. When that happens people try to invent niches which is why you get online water heaters and French kissing apps.

    Eventually Kondratiev’s wheel turns again and we start anew with a different paradigm. But new paradigms are expensive; they result in what another economist, Joseph Schumpeter, called creative destruction in which some of the earlier and perfectly good established economic order is trashed. So, not surprisingly, the establishment will resist change which brings on a period of stasis.

    You know you’re there when someone invents something equivalent to a sensor placed in your child’s diaper that sends you an alert when the diaper needs changing. Come to think of it, that’s a perfect metaphor for the times we live in. We’re waiting for change.

     

    Published: 2 weeks ago


    Denis-PombriantThe American sociologist Robert K. Merton popularized the idea of unforeseen consequences, so says Wikipedia. An unforeseen consequence (UC) is simply what happens when you get a result that’s different from what you expected or planned for. You can break this down into three buckets—good, bad, and perverse.

    A good UC looks a lot like luck and we know what that is. A bad UC is what happens when something negative tags along for a ride with the good consequence, or the one we expect. The operation was a success but the patient died. Finally, perverse UC’s are what happens when you plan left and everything goes right. A UC that is unforeseen and makes a problem worse is perverse. For Prime Minister David Cameron, the Brexit vote is perverse.

    Cameron went into the situation expecting an easy win but found himself campaigning for his political life just to get the polling too close to call, but it wasn’t. When the results came in Cameron and the UK were holding the short stick. The perverse consequences are numerous. For instance, despite the non-binding nature of the referendum, Cameron now sees it as his duty to carry out the will of the people. But I wonder how many people didn’t vote because the whole Brexit nonsense was non-binding.

    At any rate the larger and more perverse outcome of the vote might be either the final death of much that’s now classified as journalism, or the emergence of CRM as a necessity of government. Here’s my thinking.

    The government-constituent relationship may be the last one governed almost exclusively by broadcast media including print and electronic media such as radio and TV but not exclusively including the Internet. Independent news organizations scour their geographies looking for news as they define it to report. But all of the traditional approaches at best represent half of a loop. How do constituents return questions, comments, or corrections? Usually they don’t and government misses key feedback.

    The focus group has been a favorite of the political class for a long time, even now after business has conspicuously moved on to social media. Politicians have social media of course; one need only search for their Twitter feeds to confirm this. But as is usually the case with new technologies, the politicians are using social incorrectly in this case as if it were a less expensive broadcast megaphone and not a two-way communicator. The problem with all this is that politicians and businesses before them can and do say pretty much anything they please in all of their broadcast outlets including social.

    If you look at the Brexit campaign or the US presidential contest, you can see that all parties treat the truth as a quaint artifact and plunge ahead saying anything they please. Actually, for any given issue one party is telling the truth more or less while the other is promising the repeal the law of gravity. This sets up an unequal dichotomy since repealing gravity with all the associated chaos it would bring is much, much sexier than most forms of truth telling.

    All of this has a point. Not long ago the vendor community was dealing with the difficulties of retail marketing—attempting the one-to-one model on a huge scale without benefit of technology. It can’t be done. The best a vendor can hope for in such a situation is to broadcast some bland ad and hope for the best. In the world of markets this worked reasonably well in that most vendors managed to get a respectable slice of their markets.

    But government is way, way, way different. Where markets are pluralistic, government, especially winning power, is binary. You can have a nice life with say, 30 percent of your market but in politics and government generally you need half plus one vote to control things. Hence the 48 percent voting against Brexit are plain old out of luck. It doesn’t matter that the UK just officially voted to effectively repeal gravity, it’s that 52 percent said, sure, I wonder what my gas mileage will be like now.

    So the point is this: If business can’t be satisfied with the hit or miss marketing it was used to, can government be different? Can government be complacent with letting a third party intermediate the news? The problem is that too much news coverage has become little more than chasing the controversy and not the story. Since the last election there’s been a noble attempt to fact check political statements but fact checking is after the fact.

    The last 50 years have given us ample examples of why after the fact checking is no good. In the 1970’s and 80’s we discovered that quality manufacturing needed to be built in not added on at final inspection. In the CRM era we learned much the same lesson about customer-facing business processes. Now we face the same basic problem in the last bastion of old style broadcast media, government.

    People used to consume broadcast media for things like classified, personal, and help wanted ads as well as the news. But those media cash cows are gone to the Internet and are largely free today. So understandably to retain eyeballs the media tried to make their remaining products sexier by chasing controversy rather than the source stories. It’s not working as the hyper-expensive hyperbole around any democratic election shows.

    Journalism won’t die but in the face of the frenzy around every bright and shiny object dangled before the public by any citizen with a Twitter account, every democratic government now has to ask if there are better ways for communicating. We need more reliable ways to understand people’s needs and we need better ways to communicate solutions to them, that’s why CRM as a government function is no longer a pipe dream, it’s a necessity.

    Vendors discovered a long time ago that they had to be able to communicate through any channel that customers happened to use. The same thing is true for governments and citizens. Social media and CRM have trained the electorate to form communities and socialize ideas. Perhaps your 70-year-old aunt isn’t going to use a smartphone, that’s okay, perhaps she still goes into the bank lobby too. But we can’t expect to run modern governments only with the tools that will appeal to that aunt.

    Right now it appears that government is being disrupted but really it’s a communications revolution that’s forming and the only reason the disruptors are winning is that there’s little opposition. It’s time to level the playing field by introducing CRM tools for government functions.

     

     

    Published: 4 weeks ago


    Denis-PombriantThe great thing about the software world that I spend so much time in is that it is very much a meritocracy, imperfect to be sure, but a place where merit is usually rewarded. That’s why the controversy over the Brits voting to leave the European Union seems so strange.

    In CRM terms, the decision to leave the EU looks a lot like dissatisfied customers taking a walk. I just wrote a book about customer loyalty and the whole Brexit looks like a riff on the movie, “How to lose a guy in ten days” with Kate Hudson and Matthew McConaughey. Everything looked so good at the beginning and watching it all go south was sometimes funny but also sad.

    If the EU could manage to find ways to alienate its constituents it didn’t miss many opportunities. In the vendor world could you imagine the same kinds of behavior? Over controlling, micro-managing, killing economies for the sin of over-spending, enabling chaotic borders, ignoring people’s feelings, and many other things drove the voting. At the end of the day, the vote wasn’t even close.

    CRM was developed precisely to help businesses to avoid the beaucratization that can leave customers out in the cold. Its many modules are designed to capture customer data, analyze it, and help vendors to make important decisions about what to do next—all in an effort to retain customers and keep them engaged. CRM is about proactive personalization and contextual interaction, two things in short supply in the EU.

    The Britons who voted to leave the union were not engaged in the European project. They’d spent the quarter century after the Maastricht Treaty absorbing the almost daily reality of big brother decision-making that too many didn’t think benefitted them.

    Unfortunately, another aspect of life with CRM might have contributed in some small way to the vote to leave. I am referring to the understanding, honed by increasing reliance on subscriptions, that one can unsubscribe from a vendor and move on whenever the mood strikes whether or not the mood is justified. No muss, no fuss, no need to consider the aftershocks to the vendor. Unfortunately, we’ve increasingly become accustomed to chasing the newest thing that coruscates with effulgence.

    But what works at a micro-economic level can be absolutely toxic when attempted on the macro plane. Governments are supposed to last and treaties are assumed to as well; they are the foundational elements on which we base decisions about the rest of our lives. They are never written in such stark terms as the GAAP accounting standards but those standards are a good example.*

    What’s most frustrating about the Brexit is that so much has gone on for so long and the channels of redress are so narrow that the only seeming solution was the vote that occurred last week. But as I’ve written before it seems there is, or should be, a pony in that pile of manure and there is.

    The EU was best when it did least. It was an economic union, a trading paradigm that enabled small countries to bypass the red tape inherent in national currencies and far too many border crossings each with their own rules. Computers can handle that work today and as for the rest of the EU? It would be nice if the EU members accepted that they’d overbuilt their union edifice, that what’s needed is less political union and simply more friction free commerce.

    On another level, I sense a business opportunity for CRM that dwarfs anything yet seen. For several years, the vendor community has been heads-down focusing on the consumerization of its software. Making the software that mediates relationships with customers as intuitive and friendly as possible is part of what drives the digitization wave.

    But a criticism of digitization has always been, for what purpose? The answer that is coming into view seems to be CRM for constituents rather than customers. Government outreach to citizens is too often bare-bones and decrepit. But what if we applied CRM ideas and technologies to government? No doubt there would be naysayers but I think their foot dragging would be in the service of a status quo that benefits too few and no longer works. It would be obvious and these naysayers could be discounted.

    A CRM approach to government means incorporating all of the social, mobile, and analytic capacities we now have but on a grander scale. It means asking for more citizen participation in communities while promising better response and outreach. Importantly people could vote with CRM raising participation rates. I know this would scare a lot of politicians who depend on low turnout and sometimes even suppression, but there it is.

    This political season is full of charlatans who are too in a hurry to knock things down and who haven’t a clue what to replace the old structures with. This is it: bring government into the 21st century using CRM technologies and ideas so that we never have a Brexit situation ever again.

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    • The Four Basic Assumptions of Accounting
    • Economic or Separate Entity: The company is treated as a separate economic entity for accounting purposes, even if it isn’t a separate legal entity.
    • Monetary Unit: The only business transactions recorded are those in financial terms (dollars and cents in the U.S.).
    • Time Period: Financial reports cover a specific period of time.
    • Going concern: Financial reporting assumes, unless otherwise known, that the business will continue operating indefinitely.

    Thanks to Carol Wiley, Accountingedu contributing writer http://www.accountingedu.org/gaap.html

     

    Published: 1 month ago