So far, Satya Nadella’s moves as head of Microsoft echo the teachings of Jim Collins’ 2001 best seller, Good to Great. It’s a book about how and why some companies wallow in mediocrity and others operate at several levels of magnitude higher than their peers — think Apple for one and Salesforce for another.
Nadella has done a good job of articulating a vision for Microsoft — a Collins fundamental — and now he’s on to getting the right people on the bus and getting the wrong ones off. By wrong we should be clear that wrong isn’t bad, it’s just not in the direction of the future.
A clear example would be hardware. Microsoft added 25,000 people when it acquired Nokia and about 12,500 of the announced layoffs are scheduled to come from that workforce. These are good people, mostly, who make things that under, Nadella, Microsoft would prefer not to make though Steve Ballmer thought otherwise. To be fair to both people, there are a lot of things that Nokia had to do as an independent company that can now be rolled into Microsoft’s operations. Acquisitions always find these kinds of economies.
In this process, Nadella is articulating his vision more deeply because his actions are telling everyone this is what we do well and what we need to do more of. This is our future. At the same time, Nadella is, perhaps confronting some brutal truths, for instance, that Microsoft will not unseat either Apple or Google in the device and probably tablet arenas. Google’s Android OS is ubiquitous and free — not simply cheap — so it’s hard to compete. Also, vendors of devices that use Android are selling at cost (of the hardware that is) so it’s easy to see that if you want to make a lot of money in devices, you should stay out of the way and count the money you didn’t waste.
Next steps in this rolling reorg should be hiring and expansion in the areas where Microsoft can compete strongly. That should mean cloud computing in all its forms and possibly some really focused vertical market strategy for the Surface. Microsoft has some great technology and patents in Surface as well as in patents for sensor technologies. You don’t play three dimensionally exacting games like golf on XBox without some dandy sensing technology and that same stuff should find its way into myriad small devices that compete in the IoT bubble that’s rapidly ramping up.
If I had to guess, I’d say that Microsoft’s biggest next opportunity would be IoT and supporting the new business processes that it will spawn and Nadella has already made reference to processes several times.
At the same time, there is work to be done in Microsoft’s more traditional products. Things like Windows are unacceptably hard to install and use and that beast needs to be tamed once and for all. The company has a proud tradition of engineering and technical excellence around the OS but, let’s face it, today the OS is meant to be seen and not heard. Also, Apple announced almost a year ago that OSX would henceforth be free. It’s a simple download and at a cost of zero, there are shades of Android all over the place.
So Microsoft’s sweet spot seems to be in its server software, database, and Office, which should be all over Android, iOS and the Web as it is on OSX, and future IoT strategies. If you put that together there’s more than enough to occupy the company and to boost its revenues. That includes CRM and back office ERP systems. But while Microsoft prides itself on offering an integrated suite of front to back office solutions it’s going to need to decouple them and make all its solutions better able to work with other products like NetSuite, Salesforce, Oracle, SAP, and other apps that exist in other ecosystems.
In that vein, consider that last week, Apple and IBM announced a partnership that bypasses the things that made these companies competitors and focuses more on what they can do together. It’s a sign to me that we are changing paradigms again. Platforms used to mean operating systems, compilers and databases and while they’re all still vitally important, they’ve been commoditized to the point that they are increasingly homogeneous.
The new platform battleground will be in apps, their development and maintenance. A great example of all this is Salesforce which, I believe, uses the Oracle database, along with some lesser known products as well as Linux. What’s behind the Salesforce screen is largely taken for granted these days and the emphasis there is on apps and business processes, as it should be.
If that’s true, and I think it is, then that’s what Nadella is pushing his company towards. It might still require more cutting and reforming but that’s business and for Microsoft this change was overdue, but at least the company is now on the move.
Ray Donovan was US Labor Secretary under Ronald Reagan and a colorful figure. During his tenure he was indicted by a Bronx, NY grand jury on corruption charges stemming from a contract to build a subway line. The trial involved unions and the mob and was automatically sensational and the verdict turned on whether or not a minority owned construction company that Donovan was a part owner of was really certified for the contract it got or if there was mob influence. Donovan and his co-defendants eventually got off and when they did Donovan uttered a quip for the ages saying, “Which office do I go to to get my reputation back?”
Almost thirty years later Donovan may have at least a partial answer to the question. According to this article in the New York Times, the European Union is finally implementing a privacy law that allows people to petition Google and others to delete links to news stories and other things that might have once been true but that are no longer.
The battle between the EU and Google has been ongoing and hardly a soul that reads this will need much explanation to get up to speed on the issue. So Donovan can have references to his trial removed, at least in Europe.
This is not to say that the offending articles go away. As the Times story notes, although the Google links go, news stories still live on the sites of the organizations that first reported them. So this approach does not amount to a complete deletion but is more in line with what the Europeans call “the right to be forgotten” and in my mind that’s all that is necessary.
Last year I wrote an article for Computer-law Review International, a journal focused on all things computer-law related, in which I tried to tease apart some of the major threads of the argument and here’s a short synopsis of my findings.
First, the existence of search engines presents us with a problem that’s never existed before which can be summarized as, the past is always present. Anything that happened to or by you that was reported or posted has become immortal. You’ll be dead and those pictures of you skinny-dipping at president’s club in 2004 will be as fresh as the day they were posted.
Second, nobody wants to take responsibility for managing the links. The Markkula Center for Applied Ethics at Santa Clara University has posted a series of monologues about some of the ethical considerations posed by Internet data storage and information access. The series, “Internet Ethics: Views from Silicon Valley” consists of short videos on the school’s YouTube channel by ethicists and leaders of major software companies with relevant positions.
The leaders in the technology space pointed out reasons for not taking down data about individuals but all of it boiled down to two issues. Nobody wanted to take responsibility for failing to take something down and once you have a responsibility for doing just that, there is a natural question about penalties for failure to do so. No one wanted to go there. But also, the question of who pays for this service can become contentious rather quickly.
Third, information reported as true at some point in the past can become false. Take the case of a nurse reported in the Times last year in which she was caught along with her grown kids with a small amount of pot. In Connecticut, where the infraction occurred (and many other states), there are expungement laws on the books that say that for any person whose record is erased the person “shall be deemed to have never been arrested” and “may swear so under oath.”
For example, if you were indicted but never brought to trial the state doesn’t want to saddle you with a non-record record. Also, in some situations if you do community service prescribed by the court and remain in the law’s good graces your record can be expunged. In the nurse’s case, she did community service and her record was expunged but the original news story remained on a paper’s hard drive available to anyone who wanted to do a search on the nurse’s name. So, although the court had expunged her record, the news item persisted and the nurse found she was unemployable because prospective employers could easily find the article. So this was clearly a case of the past being ever present in ways that were never anticipated.
Not that long ago, if you wanted to really research a person or an issue, you’d have to visit the basement of a good library or other institution that keeps microfiche or microfilm of old newspapers. A lot of great investigative journalism and historical research has been done just this way over the years with this technique and even before this, researchers could access original sources at libraries through tedious effort. There was nothing like today’s technology with which anyone could punch in a few letters and presto, find out something that time had obscured.
So, in my view, the Europeans have it about right. The right to be forgotten is not exactly that; to me it is more like resuming a natural archiving process that gives people, over time, the benefit of the doubt. This is not a perfect system, it is overly manual and time consuming, but it is a start. I do believe though that the companies that are making money on search are the right ones to foot the bill for removing links.
Current research suggests that younger people today have less concern about what’s on the Internet about them. Some people hope that their attitudes will age into the population and the right to be forgotten will become an anachronism. But when you have nothing to lose things like this don’t garner a lot of your attention. As younger people — digital natives — age into adult life, they’ll find a system geared to finding this kind of information and using it against them as circumstances demand. So I am not betting on the EU’s approach to be a flash in the pan. More likely it’s the shape of things to come.
It always happens this way. A market erupts or transitions to something new or it goes the way of the Dodo and you miss the key turning point. But looking back you can always spot the telltale signs of disruption. People like me, who try to forecast these great events, have the reliability of a dartboard. Nonetheless, I feel like doing it again.
I think, and am declaring, that CRM is in the early phases of a major transition because business is making that transition and CRM has to keep up. The change I am watching moves CRM from supporting transactions to supporting business processes. Now, reasonable people can disagree on this and many will say what about the Sales Process or the Marketing Process, and the Service Process we already have. Transaction, Transaction, Transaction, I say.
Vendor supported processes all focus on the transactions at the end of the real processes that can involve many steps and require interaction between vendor and customer. My rule of thumb is, not surprisingly that vendors think about transactions but customers think about processes. True! Nobody woke up this morning saying, “I have to buy this or that today” unless they woke up yesterday or last month thinking, “I have this problem or this need, how am I going to solve it?”
We’ve been up and down the customer experience tree for more than a decade now figuring it was going to be the answer to how we get along with customers but we still have a hard time defining it. I think that’s because too often we imagine the experience ending in a transaction for goods, services, money, or information. And why not? That’s the way CRM has always worked but there’s a crucial point we have ignored — an experience orientation implies something customer driven. As I said last time, vendors have had no problem interrupting customers with offers for a very long time. But the era ahead will be all about customers interrupting vendors with the consequence that process will be paramount.
CRM was born at an unusual time when markets were exploding and everybody needed to get their first — you can fill in the blank here — mobile phone, computer, personal electronic gadget, software system, and on and on. You and I know those times as exponential growth and they are times when vendors take orders and engage in transactions as fast as possible, hence CRM’s transactional bias. But exponential growth is rare and short in duration.
Take a look at the exponential growth curves of the last few decades and you see that many have long since keeled over from their vertical rises and look suspiciously S-shaped today. Some, for instance PC’s, look like ballistic missiles returning to earth. In this environment, vendors chase very picky customers who need to be courted in processes.
So look at the marketplace right now. Amazon really nailed the transition, probably unintentionally, when it introduced the Mayday button for Kindle Fire help. The Mayday button is the tacit admission that, for now at least, we’ve made our products as simple and intuitive as we can and that henceforth there will be a growing need for good old hands-on, in the moment, no waiting around, customer service. As the Amazon site says:
“When you tap the Mayday button from Quick Settings, you can connect to an Amazon Tech advisor who can guide you through any feature on your Kindle Fire by drawing on your screen, walking you through how to do something for yourself, or doing it for you—whatever works best.
That, my friends, is a blooming process. It is also not unique.
Not to be outdone, Salesforce.com this week announced a private beta for its SOS button/functionality for its mobile product. Now, through functionality built into the Salesforce1 Platform, developers can embed service into, wait for it, business processes mediated by tablets and smartphones.
Interestingly, these business processes will be primarily business-to-business in orientation and not Amazon’s B2C approach. Look for lines to blur quickly though. This is by far not the first example of embedding service. I wrote a story a few years ago about EA Games embedding service into their massive online games so that people could get assistance without getting out of the game experience, for instance.
But the Mayday and SOS buttons are something different. If you begin assembling all of the parts and pieces of modern CRM you quickly realize that well beyond data integration within the traditional silos, there are capabilities like content management, analytics, workflow, collaboration, and social that add up to a facility for updating CRM to support almost any business process — as a process and not a transaction — that you can name.
So from my observation point, customers are demanding more process orientation in their vendor relationships and the CRM vendors like Salesforce are providing the tools to make all this happen. It’s now up to the business community to accurately interpret the writing on the wall and move briskly into a new era.
Will it happen? Yup. Will it be brisk? Hard to say.
For many businesses this change might require a significant CRM replacement at a time when ERP systems are looking a bit dowdy and competent cloud based replacements are showing they have significant chops. But the good news is that platform-based ERP and CRM solutions offer tremendous flexibility to enable businesses to stage a rolling replacement using best of breed solutions for the front and back office all plugged together through the platform. The idea of a major rip and replace a la 1999 is not on the cards this time.
Instead, market share is up for grabs and the winners will be the businesses that can best deploy customer focused business processes that are customer-interrupt driven. The old notion of a vendor driven transaction process is sun-setting.
I like everything about Mayday and SOS buttons but their names. The monikers imply a panicked reaction to a disaster — after all, SOS was coined as an abbreviation for “Save Our Ship,” as in, “We’re going swimming with extreme prejudice. Help!” That’s not the case here and if I were a software vendor I would prefer to accentuate the positive using the word, “Concierge” to describe the button. That’s more like what this functionality is all about. A concierge is someone who steps in to provide expert assistance only when asked, leaving the customer with an elevated feeling of success and gratitude. If you are building customer centered business process support that seems like the goal, to me at least. Let’s wait a year and see if I’m right.
Platform is changing everything
If you think that cloud platforms are simply a nice alternative to software licenses, you should think again. It’s human nature to apply new technologies to old problems and that’s what such an approach really does. But sooner or later, and that means now in this case, the market figures out the true impact of new technology and things change in significant ways. Platform is like this. For almost 15 years we’ve seen SaaS and its variants taking up space in the market and picking off niches that were less desirable to the big license software vendors. That idea crossed the chasm just before the Great Recession, which muffled the impact for a few years but today, subscriptions are back with a vengeance. All of the shows I’ve been to lately are put on by cloud vendors and all either have platforms or want to convince you that they are well behaved citizens in almost any major platform ecosystem. So cloud computing + subscriptions = massive change, but…
Subscriptions are the tip of the iceberg
Subscriptions are the first of a long line of new business models that will disrupt business as we know it. The world doesn’t need to move completely to a subscription economy or even a majority subscription economy before subscriptions and other models will have a significant impact on the vendor customer relationship — hint, it’s already happening. I got this from my own observations but they were crystallized by Jeremy Rifkin through his book, The Zero Marginal Cost Society which I read on airplanes, mostly. Rifkin’s thesis is simple. If you can subscribe, rent, borrow or, even better share, something (possibly even make it with your handy dandy 3D printer), the marginal cost to the consumer becomes something close to zero. Ditto for home generated electricity from roof to solar panels and greatly reduced logistics needed. The implications are significant because an economy with even 20 percent of its commerce done through subscriptions, exchanges, and sharing makes it very difficult for a conventional company to show growth and profits. So what happens to Capitalism? Thomas Piketty is fascinated by…
Capital in the Twenty-first Century
Piketty’s book, which I also read on airplanes and, which at 577 pages gives you some idea of the amount of travel I have been doing, sees the twentieth century with its wars and economic disruptions as an outlier to history. Piketty thinks the average growth rate of the global economy will settle back into a long term range of 1 to 1.5 percent (from a Chinese high of up to ten percent per annum) in this century but that capital growth will maintain an average between 4 and 5 percent resulting in continued and exacerbated inequality. According to Piketty, the top percentiles in Europe own the equivalent of 6 to 7 times GDP as wealth while in the US the number is more like 5 to 6 times. Piketty’s point is that this kind of wealth accumulation could go on for a long time.
But Rifkin already sees a zero marginal cost society reaction to Piketty in which capital might become irrelevant. The two books should be read together as they form a big picture story. But all of this means that…
We will need to deal with the IoT soon
The Internet of Things (IoT) is growing out of the above-mentioned trends. Subscriptions and platforms including an Energy Internet and a Logistics Internet that together with the Communications Internet are pushing hard on the zero marginal cost accelerator, drive this. It makes sense to me that in a free market where the individual is free to pursue enlightened self-interest, that zero marginal cost models will become a norm. IoT will be the near zero cost approach to understanding customers in an attempt to eek out profit when capital becomes mostly irrelevant. If that all happens, it will be the first time the 99 percent had a revolution that didn’t involve blood shed a la French Revolution or the American one for that matter. All of this suggests that sales is no longer the effective end of the CRM stick and that…
Marketing is leading CRM
Zero marginal costs imply no margin to be dedicated to sales activities or people so it is very interesting to see the leaps that marketing automation is making. From Eloqua to Marketo to the Marketing Cloud and more, marketing, with its superior analytics (compared to sales) is sitting in the catbird seat. Sales and SFA aren’t about to go away but all of the above puts more pressure on sales people to come in from the cold and accept modern techniques without the complaints about SFA or CRM that it’s hard to use or that it detracts from selling time. Those arguments simply don’t hold water any more. I pity vendors using them to sell their favorite sales automation strategies. Interestingly, this affects how we engage because I think…
Customer engagement is wide of the mark
As customers we may not want an interrupt driven, broadcast advertising model for relating to vendors but neither do we want a neurotic relationship with any vendor that is always asking “How do you like me now?” Who are these guys, Ed Koch? In a country that highly prizes independence and a go-it-alone mentality (not saying it’s healthy, BTW) the neurotics won’t prevail. What we’ve been iterating towards all these years, and I suspect what vendors develop a rash to whenever they think about it, is an interrupt model driven by the customer. I really think that’s it. The vendors best positioned in this economy that seems to be determined to re-invent itself yet again, are the ones that can best prepare to be interrupted and not be surprised when it comes. All this suggests greater reliance on platform supported IoT and sensing customer relationships, so here’s a simple question…
Can we please be done trying to accelerate the sales process?
Enough. Done. Finito. Havlicek stole the ball. It’s all over. Railroads accelerated the sales process. So did telegraphs, telephones, automobiles, and maybe fax machines. Everything else is anti-climax. Why? If you follow the train (no pun) of the last few sentences, over the last couple of centuries we’ve been reducing the lag time between sales touches, which has arguably reduced the sales process time. Trouble is we’re now down to nearly instant communication so where do we go from here? If you’re a high-speed trader like in Michael Lewis’ new book Flash Boys you need to work in nanoseconds to affect outcomes. My bet? Not gonna happen in everyday selling in a zero marginal cost world. The key point is that people playing the customer role still make decisions the way they did before railroads. They think about the decision, weigh the pros and cons, sleep on it, or ask a trusted friend. All of this takes time. If your business really, really needs to accelerate selling then refer to the point about marketing above. The way to make it appear that selling is accelerating is to stuff more quality leads and deals into the pipeline and to use good metrics to verify that you aren’t back-sliding.
The end game (for now)
All this adds up to increased emphasis on the customer buying process but we also now have to add in the sharing, networking, community oriented processes too. I still see plenty of daylight for CRM to prosper but the relative mix is definitely skewing towards service and marketing as customers continue to pursue their idiosyncratic needs based on logic they alone fully comprehend. Meanwhile he who has the best platform, one that supports incredibly agile business processes and their constant reformation might not win but certainly will survive. That’s my view from seat 16B.