Coming in 2012 or Not, Predictions for the New Year
There was an interesting article in the January 2012 edition of Vanity Fair a magazine I’ve come to enjoy though for many years regarded as another of those things my wife would like more than me. But VF carries an interesting blend of current events and politics as well as the glossy pictures and stories of pop culture icons that seem to be necessary to sell a magazine these days.
I say necessary but for the exception of the New Yorker. How those people continuously pump out the level of quality journalism that they do, on a weekly basis, always amazes me. Malcolm Gladwell and James Surowiecki write for the New Yorker even after several books each and strong public speaking careers. That magazine has a formula that is no longer being emulated, I fear.
At any rate, the VF article is from the issue with Lady Gaga on the cover, and is titled “You Say You Want a Devolution?” It’s about the apparent ossification of American culture over the last couple of decades or a bit more — roughly the span of time that I have tried to be an adult. The article’s main point is that we’ve made precious little progress in style, design and culture in that time. One hypothesis is that our creative juices have been consumed by the tech revolution.
Internet, WiFi, social media, video, audio, telephony all running through the gadget plus DVDs and a long list of other inventions that weren’t readily available or even invented two or three decades ago have consumed that part of our waking hours that other generations dedicated to style and culture. For emphasis, the article asks us to ponder pictures of street scenes from various decades. If you did this you could easily discern the difference between the 1960s and, say, the 40’s, but the 90’s and today? Not so much.
Not long ago I suggested that straight-line extrapolation from the present to some point in the future is not very good but it is what we often settle for when forecasting. VF seems to be telling us that lately the straight line is fine. But here’s the kicker, straight lines work best within a paradigm. If you can identify the paradigm then maybe you can reconnoiter and find your place a few pages forward. If you are transitioning paradigms all bets are off.
I don’t think 2012 will be like what came before. I think ’12 will be the beginning of a new paradigm and I have no data to support this idea other than the knowledge that paradigm shifts, like unexpected guests for the holidays, don’t warn you that they’re coming.
So, what’s in store for ’12? Well, we’ve been in a quasi recession for almost four years, unemployment is stubbornly high and in case you’ve been napping all this time, ’12 is a leap year, I mean, an election year. If there’s one thing that galvanizes politicos of all stripes it’s an election and while everyone in Washington might hate everyone else’s guts, there will be enough collaboration to cobble together enough votes to do something about the economy. That means a few more jobs and more meaningful growth than has been the norm lately. Perhaps there will even be an extra bowel of gruel for us ninety-niners.
So I look for a bounce in economic activity, that’s the easy part. What’s harder is figuring out where the bounce happens. I watch fuel prices and note the relationship between them and economic activity. Low prices correlate with slack demand but goose the economy and watch the price of benchmark crudes like West Texas Intermediate and Brent go north.
Note: I am not advising you to buy or trade crude oil or to do anything else investment wise with this analysis.
But if crude does go north companies that want to catch the economic rise will need to be smart about keeping carbon out of their business processes. That means conventional business — Dare we say business as usual? — breaks down and that is where the new paradigm comes in. Smart companies will be cranking up all the front office tools and social ideas they’ve accumulated over the last five or ten years and realize that a lot of it fits together and changes life as they know it.
The fit drives more frictionless business that naturally reduces reliance on face-to-face meetings and all the travel and expense that goes along with it. I am not simply saying that we’ll simply substitute a social encounter for the physical equivalent and be done, though we will. But the actual need for some of those more elaborate interactions will simply evaporate as we use social and other technologies to know more in the first place.
Marc Benioff is fond of quoting some of his company’s data concerning Chatter, one of its social media tools, and I don’t remember the exact numbers but they include categories like reductions in email, meetings, phone calls and more and the reductions are significant. The information people need and that they’ve historically received through these older sources has been rendered in a more available and efficient format through social media. This has yielded a new term in the industry, the social enterprise, and it typifies the paradigm shift that I am talking about.
The social enterprise is not limited to a few startups at Routes 92 and 101 south of San Francisco. We saw companies like GE Capital, Burberry and Toyota drinking the lemonade in 2011 and ’12 will be the year they start to show results. 2012 will also be the year that middle adopters and laggards in general wonder why they aren’t feeling the warmth of the recovery and this will be their answer and motivation.
We’re fond of saying that the economy turns about every ten years and we are also fond of remembering that the year of the network actually took a decade to be realized. These are not contradictory. Networking’s early adopters got value right away from their investments but the economy made a dramatic turn once networking got to critical mass and I think we’re in an analogous situation with social technologies.
We’ve been messing around with social for a long time but two important threads are being woven together. Technological dispersal and personal understanding of the technologies is meeting economic demand for better, faster and cheaper ways to do business in an era of limits. That is what’s driving the new paradigm.
We might have to wait a bit longer to get new hairstyles, music genres and fashions but I think the thing that’s driven us in the tech era (innovation) is a live and well and we’ll see plenty of it in the new year. Who knows? I could even be right.
Reconsidering the front office suite
I hate to sound like Dr. Doom and Gloom but have you paid attention to the cost of gasoline lately? Of course you have. It’s sickening to watch as prices resume their inexorable climb. The last time we saw prices spike was the last time the economy was in decent shape — right before the wheels fell off in 2008.
The global economy is based on the assumption that transportation and raw materials are cheap and will remain so. Petroleum is our dominant fuel source and it doubles as a raw material for plastics, rubber, fertilizer cement and many other materials that make the world run.
The price rise is no surprise. As the global economy began to feel better we all began to use more petroleum and electricity. The authoritative IEA (International Energy Agency, based in Paris) pegs global demand at 90 million barrels per day (mbd) while supply has never gotten above 88 mbd. The small difference for all of you supply and demand types drives the higher cost of driving.
While you might see this as a catastrophe, I smell an opportunity. This is a disruptive moment and whenever a situation like this arrives, it usually means there’s an imbalance opening a niche for a new solution. Frequently, though not always that means a technological solution.
Historically CRM fit that description. On-demand computing, embedded analytics, social media and an array of sales, marketing and service applications followed CRM’s debut. The universe is still resonating from that big bang and we are now at the start or the middle of another. High transportation costs open the door to a variety of solutions that help organizations to reduce their traveling while maintaining their business agility.
Consider unified communications systems (UCS), which bring together voice, mobile, calendars, chat and video conferencing. UCS has two jobs in a high cost transportation environment. First, leveraging UCS can mean less travel for anyone who currently commutes to an office to work on a computer. Much of that work could be done remotely if we have good communication between the hub and spoke. That works for people in call centers — which have leveraged Internet technologies for a long time to do this — as well as sales and other business people as well as for creative types.
For customers, a video chat or conference might speed solutions and reduce the need for all parties to converge in a conference room saving everyone travel costs but also time, which is even more valuable.
At a macro level the days of the ten- or twenty-thousand attendee (or more) conference might be ending. Vendors and their customers spend huge sums annually to attend user groups and similar meetings. Visionary vendors are already taking advantage of Internet conferencing technologies to get the job done with much less travel and cost.
The savings might go back into the corporate pocket but some of those dollars could also be recirculated to support more frequent Web conferences. Think about it — we have cloud computing with multiple releases per year yet the user conference is so expensive to put on that we only see one per year. That could change with on-line conferences and that would speed up the cadence of change in many companies.
Personally, I would miss visiting some of the cities I visit each year and many attendees might miss the travel perks. But that might simply be the symptom of another opportunity to fulfill.
The important point to keep in mind is that no change of this type is total and complete change is not even what’s required. If we start a process that enables us to get energy supply and demand back in synch then we will see reductions in other costs. This can also mean that the economy whipsaws for a while with prices and economic activity moving in opposite directions. To avoid this we will need to pick new directions and stay with them.
There are other good reasons to consider these and other additions to the CRM suite. In a global economy customers are everywhere and many potential new customers are too far away to seriously contemplate face-to-face interactions. The traditional answer has been to open offices in other countries but that’s expensive. More importantly, many of the things we sell on line, are delivered at price points that will not support that kind of expansion. All of this makes the case for expanding an increasingly sophisticated communications footprint.
The high cost of transportation might be the proximate cause of this expansion, but as this short examination shows, the downstream benefits can be big. If the future works out as I think it will, it makes sense for all of us to consider again how we can best build out the front office suite.
Transportation is your new challenge
The cost of business travel is going up and up and up and, oh yeah, Happy New Year.
Forget all the CRM prognostications you’ve been reading over the holidays, the only one of significance to your business and to CRM is what you’ll be paying to get in front of customers. Last week a former Shell Oil President, John Hofmeister, gave an interview on CNN Money in which he forecasted $5 per gallon gasoline by 2012.
With the national average for unleaded regular at $3.07 last week—a rise of 42 cents over the course of 2010, prices are as high as they’ve been in a couple of years. This would be good news for an ailing economy because increased energy use goes hand in hand with increasing economic activity. But at the same time, runaway fuel prices have the potential to shred your SG&A line and tank the economy once again.
This kind of cyclical boom and bust is in the offing unless we get a handle on the transportation costs that are such a big part of front office business processes. You don’t need to be told this but gas prices, diesel and jet fuel prices move in parallel, which just about defines the travel part of a company’s front office business processes.
The reasons for the rise are well known and follow a classical economic supply and demand curve. The difference now is that in previous booms you could simply call West Texas, Oklahoma, California, Alaska, Mexico, Norway, Scotland and oh yes, the Middle East and ask them to open the spigots a bit more and all would be well. Today you can’t do that because supply is at peak and the developing world—China and India but also places like Brazil—all want more energy. When supply is stagnant and demand rises, so do prices so here we are.
If you’re not a Peak Oil fan, think in these terms—there hasn’t been a new refinery built in the US since the mid-1970’s and refinery capacity is maxed out creating another supply bottleneck. Also, the cost of drilling in deep water can be as high as a hundred million dollars per well (whether not you discover oil). That is not the same as the cost of drilling in the bad lands and those costs need to be passed on to the consumer. You can pick your storyline but it all comes down to the same conclusion. Travel is becoming more expensive so this is the year to anticipate changing your front office business processes and begin to do something about it.
What’s to do? Well, much of it comes back to the technologies that mediate front office business processes. The front office technologies that have been developed over the last decade—and especially the last five years—will come front and center as we craft new and better ways to interact with customers.
Chief among these technologies will be analytics. You thought I’d say social media or perhaps online conferences, videos or something else? I will but they aren’t first on the list. Analytics is first because analytics is the killer application for everything else. Analytics gives you the ability to make sense of all the data that social media churns up and informs your decisions about which video content to develop and deploy. It also helps you make rational decisions about which customers to get in front of and when. So if you haven’t begun dabbling in analytics I’d say yesterday was a good time to start, today is pretty good too. Tomorrow is iffy.
Next on the list is everything else. Once you know much more about your customers and, really, demand, you can make intelligent decisions about crafting your messages and putting them into videos and developing online conferences. None of this is hard to do but it will make your life different. It will take you off the road and put you on the phone and on the web.
Anneke Seley, co-author with Brent Holloway of Sales 2.0, tells me that some of the most successful companies using new technology are finding ways for marketing and sales to work more closely, breaking down barriers between inside and field sales and developing web and phone strategies where direct field sales was once the order of the day. I’ll post an interview with Seley shortly.
Thinking differently about front office processes is not hard but implementing new ideas might be. While we all want to save a buck, investing in new technologies that help do this is a tough call at the tail end of a recession. Part of Seley’s advice to me is to start with a pilot project to see if a new approach will work in your company with your staff and products. If success is elusive, think hard about people, process and technology. Five-dollar gasoline and jet fuel spell a turning point and you simply have to get around that corner.
Out of the ashes, new ideas
There are numerous signs that the economy is strengthening and that the recession may be ending. The markets are doing better, failed banks are no longer failing and some have even paid back the funds they borrowed from the federal government when they were under water. Unemployment is still stubbornly high but it is trending down and as a lagging indicator of recovery this indicator is behaving as one might expect. If all this is true and not some mirage then the year-end and the year ahead could hold some upside surprises and that will be a welcome change.
For some time now I have been thinking about the recovery — what it might look like and what new ideas might come through the wringer of recession to help drive it. In the recession that followed the dot com bust some powerful ideas emerged that subsequently shaped the business world. They included on-demand computing and Web meetings.
Prior to the recession on-demand computing was something that a few hardy souls tried because they were fed up with the high cost of software and implementation. On-demand technology proved to be an important way to tame those costs and in the recovery users at every level discovered its benefits.
The same is largely true for Web meetings. In my experience, prior to the recession vendors engaged in elaborate press and analyst tours to conduct face-to-face meetings that involved weeks on the road. I would routinely take two or three briefings in my office daily but all that has largely been replaced by Web briefings. Vendors still go on the road but much less frequently and I wear fewer professionally laundered shirts as a result. That’s the funny thing about innovation, you never know what all of the downstream effects will be — and they can be surprising.
So, coming out of this recession I have to ask what technologies or business ideas will emerge and I have my eye on two. The first is Web based conferences. Like a Web meeting a Web conference can save a ton of money on travel costs as well as wear and tear on the attendees. The technology may still have some kinks to work out but I suspect that as vendors and other organizations look for ways to improve communications the demand for Web conferences will grow and the solutions will become more robust.
The second idea that I see percolating is the enhanced use of video in marketing and sales. Video has the ability to engage customers in ways that product brochures and white papers can’t. And with tiny URLs or “turls” they can become powerful viral tools. The technology for creating, editing and distributing video with decent quality is available on the desktop at reasonable cost or even free.
The key to high volume corporate video will be achieving the right production values. No company that wants to develop video will be eager to shoulder the high costs of hiring actors, voice talent, camera operators, editors and all the rest. For video to take off we will need to develop skills at documentary filmmaking. That’s not as hard as it sounds and Ken Burns, the producer of such classics as The Civil War, Jazz and Baseball, has developed a style that can be easily imitated. I expect that given the constraints of video development in a marketing department, Burns will become even more of a recognized name.
But there’s another reason to consider these and probably other innovations coming out of the recession. These new ideas also have the advantage of helping to save a great deal of energy, especially energy involved in transportation. Just before the economy went into the tank last year, we got a glimpse of the energy future with gasoline exceeding four dollars per gallon.
That wasn’t a fluke, it is likely to be a sign of the times for the foreseeable future because global demand for fuel is rising at a two percent annual rate while supply is remaining constant or falling slightly. So we are faced with an interesting problem. Fuels are becoming increasingly expensive and the need for Green approaches to modern life are apparent and all around us. It would make a great deal of sense then for business to engage CRM solutions that reduce the impact of escalating energy costs. Web conferences do that and video — done well — may be able to help.
So for all those reasons I can easily see the CRM suite expanding again to include these technologies. Interestingly, even though Green approaches may be desirable for many ecological reasons, it is still economics acting as the driving force for change.
