Forbes has an interesting post by Tien Tzuo, CEO of Zuora and one of the leaders of the subscription revolution in which he discusses the coming of age of the subscription economy. Coming of age might sound like a contradiction to say the least—where has everyone been for the last couple of decades? Subscriptions are down and in a curious way, this is the point.
You ought to read the post almost as an echo of Mark Twain’s “Innocents Abroad” because it discusses Tzuo’s first encounter with international governmental organizations through his recent participation in the G20 meeting. To be very brief, the G20 is the group of the largest countries by economic output and its finance and political leaders gather annually to discuss where this planet and its economy are going. You might have also heard of the G7 or G8 (depending on whether or not Russia is misbehaving), which is an even more exclusive group.
So Tzuo was invited to participate in some sub-group meetings for business and technology in Antalya, Turkey, site of the recent confab. Now you have context. Tzuo is happy to report that the word “Internet” broke into the collective consciousness in the form of a communiqué from the recent meeting with an assist from him. That’s how long it can take for an idea that we have regarded as foundational for over two decades to become so mainstream that it gets included in the thinking of the G20.
This should surprise no one. When you are dealing with the planet’s economy and the 20 largest players in it, then it’s reasonable that only the biggest ideas bubble up and the Internet (specifically subscriptions) is finally breaking the surface. But the fact of this emergence suggests that the Internet and even subscriptions are no longer the disruptive innovation we’ve nurtured for much of our working lives.
The technology revolution ushered in a world of data driven business processes, information sharing, social media, big data, analytics, tiny computers now called devices, and use of the word “online” as a prefix as in online shopping. It is now so integral to what we do that it is its own paradigm, rapidly replacing older structures and business models like face-to-face commerce, print media, and (gulp!) customer loyalty. Online everything is having enormous impacts on how we live and travel and it is now safe to say that the revolution is over.
To be clear, we will not retreat into some dark age and technology will continue to drive the global economy for quite some time. But when you think of the power that you can hold in your hand in the form of a device today, you can see that it’s getting rather hard to make a technology product at a profit and there is an important lesson. Technology and information are commoditizing the way that everything else from textiles, to cars, to TV did. They are all important parts of the global economy today but none drives it.
We shouldn’t mourn information technology’s passing and as I said, technology is with us now for better or worse. Interestingly another disruption that’s been on the horizon for decades got a major boost over the weekend when the global community ratified an agreement summarizing individual nations’ efforts to stem carbon pollution and save the planet from overheating.
From here on the technologies that will have venture capitalists’ greatest attention will be those that reduce emissions, generate clean electricity, and even take carbon out of the atmosphere. This new paradigm will be the work of a generation and people in the job market today will increasingly feel the gravitational pull of energy and environment in information, finance, product development, sales and marketing, and much, much more.
The new paradigm will be heavily dependent on the information management structures and tools that the current generation—all of us—have wrought. It is a worthy legacy.
The Forbes website posted a very short story about Angela Ahrendts, exiting as the CEO of Burberry to head up Apple’s retail operations. If you thought Apple had broken a lot of ground in technology retailing already, hang on.
You might remember Ahrendts as the pretty, stylish, and all business-gravelly voiced guest on stage with Marc Benioff during recent Dreamforce extravaganzas. Her face was plastered on a wall of the Moscone Center too. Ahrendts took on Salesforce and its social approaches to all things related to customers and transformed Burberry stores around the world to the point that the iconic fashion brand also became the hip tech retailer inserting technology and information into the customer experience.
The result has been a shopping experience that puts the customer into a mindset that envisions the experience of ownership and that’s a long way from simply having a great shopping experience. Hey, if you’re shopping at Burberry’s you are going to spoil yourself so the shopping part of the experience hardly needs work.
So, Ahrendts will presumably bring her avant guard retailing savvy to Apple and perhaps help transform it further from purveyor of consumer technology to one that helps customers make a statement about themselves through their technology choices. Maybe she’ll even upgrade the geeky T-shirts the staff wear.
That’s a smart move for Apple. Given the recent activity in wearable technology such as the watch (for which Apple owns the trademark on iWatch) fashion might be the next tech battleground. The only question in my mind is what role Salesforce might play in this configuration.
Salesforce.com is riding the crest of wave after wave of good news as it starts Dreamforce, its annual convocation for customers, prospects, the press and analyst communities. Forty thousand people are expected in San Francisco for the event at some point in the week.
In a sign of how big this event has become, last night I saw work crews closing down Howard Street by the Moscone Center. They were erecting what looked like a structure on the street to turn it into some kind of pedestrian area. Only Oracle, one of Salesforce’s biggest competitors (and curiously Salesforce is among Oracle’s largest database customers) ever does this when they attract similarly sized crowds to their annual meeting, Oracle OpenWorld. If you need symbolism for how large Dreamforce has become, you can’t do better than that.
But back to Salesforce.
The company is riding high after reporting strong revenue numbers and that it is on track to generate well over two billion dollars in business in its current fiscal year. The company has raised its guidance to financial analysts.
Salesforce CEO, Marc Benioff, is on the cover of Forbes magazine, which announces a cover story on the “Fifty Best Companies Of Tomorrow”. Salesforce has the number one spot and the ranking was done by none other than Clayton Christensen, the Harvard Business School professor, who coined the term “innovator’s dilemma” in a series of books by that title.
Forbes is the same magazine that once ran a cover story on Tom Siebel with the headline “The Man Who Can See Around Corners”. It was about how Siebel and his customers, using analytics software, were able to spot a slowdown in the economy and adjust their businesses well ahead of their competition.
But Benioff took a page from Christensen’s book and completely disrupted Siebel and he is well on the way to disrupting the whole software industry and beyond. Salesforce is in the process of doing nothing less than introducing a new paradigm for the way that companies do business, deal with customers and fit into the world.
Remarkably Salesforce’s competition is comparatively stuck in the mud trying to figure out how to move beyond traditional enterprise computing with its high costs and long delivery cycles. Salesforce has forced them to take a fresh look at computing and customers and they have largely responded with bandages for their legacy products. They’ve adopted what is easiest about software as a service (SaaS) and borrowed the term “cloud computing” to lend it the cache of relevance. But while that might be enough to continue making money on legacy software, it’s a dead end and other CEOs — notably Tien Tzuo of Zuora, a billing and payments solution for subscription economy companies — are making bold predictions. For example, earlier this week Tzuo predicted the death of conventional ERP software. Tzuo had a single digit employee number at Salesforce before he started Zuora, by the way.
So if you are Salesforce and Benioff, what better day is there for Cornell University to come out with a new study on creativity — “The bias against creativity: Why people desire but reject creative ideas.”
According to Jack Goncalo, assistant professor of organizational behavior at the Cornell University ILR School and the co-author of the research, which will be published in an upcoming issue of the journal Psychological Science people love creative ideas but they reject them because we all have a bias for certainty and creative ideas raise uncertainty.
That is in microcosm what the software industry has been going through for the last decade. Many of the people who sell and buy legacy software might be afraid of change for the disruption it may cause. But if you read Christensen you understand that disruption is the key to innovation and profits. It’s an idea Benioff and his tribe have no trouble dealing with and they have no trouble dealing with the rewards either.
Over the last decade you could have discovered what the Cornell researchers discovered just by watching Salesforce. Today you can read the Cornell study or just buy a copy of Forbes.
The social media market reached a kind of saturation point yesterday when Mark Zuckerberg, CEO of Facebook, announced a new service that is not email but that looks suspiciously like it.
According to various reports, the new service assigns an email address to each Facebook user which provides a consolidated look at all of a user’s email, Facebook messages and SMS and chat as well. The service can sort incoming messages into three groupings—all messages, full conversation history (regardless of medium) and messages you want. Inside the inbox messages are sorted into “Messages” i.e. the good stuff, “Others” or the things you might get to and “Junk” where offers for cheap Viagra, timeshares and letters from foreign widows with millions of dollars to launder and bad spelling will be shunted.
This may represent the social media market’s saturation, a kind of shark jumping, because it breaks no new ground, adds no new media or communication channels. It simply consolidates digital/social communication and perhaps makes using it a bit faster. Previously, if I received a new message on Facebook I would get an email. I hope that doesn’t change because I don’t live on the service and I need another email address like I need another credit card whose offers fill up my snail mailbox.
Mike Isaac covered the announcement for Forbes. Isaac’s blog post describes Zuckerberg as follows:
“Whenever I get the chance to talk to high schoolers, I always ask them what they’re using” to communicate with one another. But it was the type of messaging they weren’t using that caught Zuckerberg’s attention.
“‘We don’t really use email. It’s too slow,’ they told me.” Zuckerberg found the statement “completely boggling.”
But most of us aren’t in high school and Zuckerberg’s attempt at high school relevance does nothing to help me see how this innovation can be germane to the business world. As another form of email it is at best redundant and some of its deletions or “improvements” over email, such as not having a standard subject line, make me wonder how applicable it will be in a broader context. I know there are several levels of sort within the messages folder but I worry that something might be incorrectly sorted like an order or an order cancellation. Then how do you find it?
If I take my curmudgeon hat off for a moment, it’s just possible that this innovation in social media is simply a new solution looking for a problem to solve. That happens all the time. The early adopters, in this case kids, take it on and in a year or two you have something that hundreds of millions of people can make use of. Facebook and Zuckerberg have proven adept at this so it’s likely prudent to reserve judgment.