January, 2012

  • January 25, 2012
  • My Aussie friends have an interesting saying that seems part complement and part benediction.  Good on you.  They pronounce it with an accent on the second word so that the phrase becomes a single word in the mouth, more like goo-don you.  At any rate, good on you.

    Last week’s smack down of the PIPA and SOPA legislation designed to build a back door to controlling the Internet was both instructive and fun to watch.  It showed the power of social media and of regular people coming together to let their voices be heard.  As the New York Times reported, it was something of a coming out party for the technology community both the new corporations and us users.  It was amusing to see the Tweets and posts from heretofore sponsors of the legislation that said, just kidding, never mind or “I was against it before I was for it…” and the like.

    Last week was also a clear power shift from the paradigm of entrenched corporate interests to the commonwealth.  How long it lasts is anyone’s guess.  It didn’t hurt that the bad guys in all this were seen as the big media corporations in film and music especially.

    I love music and movies and most forms of entertainment and as a rational economic actor I want those who produce these things to make a decent profit — why else would they work so hard?  But it says a lot that the industry’s preferred method for solving a serious problem like piracy was legislation and not some more typical response like engineering.

    If this were the biological world, pirates would be equivalent to invading microorganisms like bacteria and viruses.  An organism’s typical answer to such an invasion is to mount an immune response.  That means building elaborate safeguards like antibodies and strategies to thwart the invaders.  The media corporations thought they had a better idea, which was to get someone else to fix the problem for them.  They enlisted congress in a vain effort to make Internet companies handle the problem and you know what happened.

    The media companies have always had a business model problem and last week simply accentuated it.  Forever they’ve been selling a scarce commodity as a product that was nonetheless was consumed as a service.  They sold recorded media and tickets to shows and the public accepted it as a more or less fair bargain.  This partly explains the record industry’s eagerness to bring suits against individuals calibrated in units stolen.

    Artists put up with the status quo because it was the only game in town even though the corporations ran their businesses more like plantations than as entities with any modicum of respect for artists.  So in a real sense, The corporations have always been the bad guys.

    In those times packaging was sufficient for media companies to protect their assets but it is no longer.  Strategies beyond packaging have to be built and implemented.  What are the solutions?  Not my job.  You figure it out.  Just leave the internet alone.

    In 1960, when Frank Sinatra finally completed his studio recording contracts, he started a record company, Reprise Records, owned by Warner Brothers today.  If you doubt my labeling of the corporations as bad guys, look up the meaning of “reprise” and you will know everything you need.

    According to Wikipedia, which was not doing business in English last Wednesday,

    “Reprise (pronounced rih-PREEZ) was formed in 1960[1] by Frank Sinatra in order to allow more artistic freedom for his own recordings. Hence, he garnered the nickname “The Chairman of the Board.”… “One of the label’s founding principles under Sinatra’s leadership was that each artist would have full creative freedom, and at some point complete ownership of their work; including publishing rights.”

    Publishing rights were a big deal because they were tightly held by the record labels so Reprise’s approach caused an earthquake in the industry.  So from the IP ownership perspective last week’s action by some of the biggest names on the Internet was something that several generations could identify with.

    But the greater impact is what will inevitably come next.  First, the Internet community, aided and abetted by the social media community, has proven that the public can have great impact not only on brands but also on the nation’s public life.  In doing this, we may have reawakened some civic impulses that have been dormant for several decades as we have narrowly focused on technology as something that only makes life faster and cheaper.

    Last week, we rediscovered the commons, a place where people from all walks of life, not just the young, hip and technologically savvy, can meet, empathize and support each other.  Everyone in the CRM and social media communities should take pride in this accomplishment because this is where everything started.  But we ought not rest on our laurels because the next challenge is just around the corner.

    Published: 12 years ago

    I have always admired SAS, the analytics company in North Carolina.  It’s not simply because they are a venerable 30+ year old company in the tech space, but because they do many things very well.  Today they announced a couple of bright spots on their horizon that I thought would be worth sharing.

    1.  Did I mention they are a privately held company still run by their founder?  Today this private company announced record revenue of $2.725 billion in 2011 and increase of 12% over the year before.

    2.  SAS is also one of the best places on the planet to work.  I’ve been there and I drank the lemonade.  Today I learned that SAS is ranked #3 on 2012 Fortune 100 Best Companies to Work For list in the US. You have to understand what a disappointment this is because SAS has been number one twice.  All I can say is that it must be hard to be a judge.

    Anyway, if you want more news go here www.sas.com/results12.
    Congrats to SAS!
    Published: 12 years ago

    When the French have a problem with particularly egregious government regulation or sometimes even when one is proposed, they call a general strike or perhaps just a slow down.  Farmers have been known to drive their tractors to Paris to parade them down the Champs Elysees to protest farm policies.  I was there nearly a decade ago when a strike shut down the airports on the day I was to fly home.  It was mildly inconvenient causing me to use a bit more French and to sample some more of its wonderful food and wine.  Hard duty to be sure.

    In America, few things unite us enough to spawn a strike, it’s not our style.  At least that’s been the case until now.  Today many Web destinations like Wikipedia (24 hour English language shut down) are staging some form of protest to air their displeasure with proposed legislation — the Stop Online Piracy Act in the House and the Protect IP Act in the Senate — that would crack down on piracy while only damaging personal rights a little bit.  Hey this is war time, right?  Welcome to strike Wednesday.

    The sides have been chosen pretty much like you might expect with big business — major media companies — mostly supporting and the Internet community in uproar.  There are many reasons to be on either side of the issue and there is enough material out there to inform you of each side’s ideological purity.  I want to skip that and look at this from a business and economics perspective.

    The media industry including the major studios, record labels and TV networks have taken it on the chin in the last couple of decades.  Good, fast and cheap computing power and the Internet have made it nearly impossible to protect intellectual property from being massively and freely distributed without the copyright owners’ consent — at least given the current approaches to protection.  That’s what this legislation is all about.

    The choice that the media companies have is to figure out solutions to protect themselves or to use their muscle to lobby congress to make law.  The legislative approach is much easier because the politicians are so much more cost effective than technology development.

    Sidebar: I am continually amazed that politicians can get hundreds of millions of dollars or more set aside in earmarks or other gimmicks for their supporters and when it’s revealed we find that their campaign coffers have swelled only by tens of thousands of dollars.  But I digress.

    Here’s my economic analysis.  The media have for a long time had a cushy ride.  They own the means of distribution, which enables them to cut outrageous deals with artists and others.  For example, a typical book contract is an 85/15 split with the lion’s share going to the publisher.  Record labels aren’t much different.  The media houses cite high costs of production and marketing but when you see what they’re willing to do to actually earn the split through marketing and promotion, you become jaded.

    The media companies don’t have a copyright problem per se, they have a business model problem.  Their model is based on selling product in an era where the economy is moving rapidly towards subscriptions.  Subscriptions provide a relative drip of revenue rather than a torrent.  There are so many drips as to create a different kind of torrent but all of those drips must be collected through technology and there is the rub.  It’s a tough problem.  The media companies would rather foist the problem on others than either create a solution of their own or collaborate to create one.

    But now the technology giants are correctly saying, that’s not exactly our problem either and we’re not going to do your bidding.  If anything the current controversy is the result of a completely uncreative approach to a problem.  In a situation where any number of solutions could be discussed, tested and tried out, one side has decided to dig in its heels and legislate.  That’s sad.

    I am going to brush up on my French because I think I’ll be reading Wikipedia in another language soon.

    Published: 12 years ago

    There is an interesting discussion brewing about the nature of Silicon Valley companies.  Are they “tech” companies as Zuora CEO, Tien Tzuo asserts, or are they “…companies in other industries that happen to make heavy use of technology” as CBS Money Watch blogger Erik Sherman says?

    The gentlemanly disagreement started over the appointment of PayPal President Scott Thompson as the next CEO of Yahoo.  Many people have questioned Thompson’s selection for lack of direct experience in content or media.  But as Sherman accurately points out, “If exact industry experience were a requirement for chief executive success, Lou Gerstner would have taken IBM right down the tubes.”  There is gold in that observation.

    Thompson has been on Tzuo’s board of directors and it says something that Tzuo is willing to be so public about Thompson’s qualities and qualifications.  For his part, Tzuo believes that the key to success is to remember that Yahoo and the highly successful and iconic brands from the valley like Apple, Google, Salesforce and Facebook are all tech companies.  But I think the meaning of “tech companies” gets lost between Tzuo and Sherman.

    For Tzuo and for me, a tech company is less about being a technology user or developer and much more about being an innovator.  The companies he and Sherman agree are iconic (and someday we’ll have to add Zuora to the group too) are leaders precisely because they are innovators and because they were first in their fields.  But even more important they have been successful because each in its own way was founded and led by a person who is what I will call a crisis leader.

    I make the distinction between a crisis leader and someone who can lead and manage when the sun is shining, the birds are singing and all is well with creation.  At times like that everyone looks good.  A fence post can lead an organization because there is relatively little to do.  A crisis leader is someone who thinks outside of the box or better yet does not see the box at all.  I can’t think of a more crisis oriented situation than running a start up.

    I bring you these findings not from my head but from the mind of a very perceptive professor of psychiatry at Tufts University School of Medicine, Nassir Ghaemi and his new book, “A First-Rate Madness — Uncovering the Links between Leadership and Mental Illness.”  Just to set your perspective, mental illness doesn’t mean totally out of control and in desperate need of rubber walls.  Think instead of the phrase “crazy like a fox” and you get much closer to the meaning.

    The book focuses on leaders in political settings and is most revealing, and entertaining in my opinion, in comparing Civil War generals William T. Sherman (Sherman’s march to the sea) and George McClellan, who may have coined the phrase “snatching defeat from the jaws of victory.”  Sherman was crazy now and then, McClellan was the poster boy for a successful general — at least in peace time.

    What does this all mean?  Well, for starters, if this is interesting read the book.  But related to the Thompson as CEO question, I’d say that as president of PayPal helping to significantly grow that company’s business in a new market that has required great insight and innovation that Thompson might have the crazy-like-a-fox idea well in hand.  His first job is or ought to be trying to figure out, as Erik Sherman suggests, what business Yahoo is in today, not where it started, and what business niches Yahoo can invent using its innovation and technology chops.

    Over time and in other contexts I have been fond of surprising people by telling them that Edison was not an engineer and neither was Jobs, that Gates didn’t graduate college, that Zuckerberg is sometimes portrayed as a social misfit and that the Wright Brothers were, in fact, bicycle mechanics.  Each was technical enough but not so much that their training blinded them to new possibilities.  And each possessed a spark of creative craziness that is what I believe Silicon Valley is all about.

    Scott Thompson, CEO of Yahoo.  Why not?

    Published: 12 years ago

    It’s the beginning of the year, time for sales kickoff meetings and presidents’ clubs at some location within ten degrees of the equator.  These signal events will reward those diligent and fortunate enough to have made or exceeded quota while focusing the attention of everyone on this year’s mission.  Typically that includes higher quotas and some new faces determined to ramp up before their draw runs out.

    Things have changed somewhat in the last decades but the focus of most sales organizations is still on acquiring enough leads to fill the funnels to fuel their sales processes.  Marketing departments and software vendors have done a great job of improving marketing so that they deliver better quality leads to sales teams than ever.  Not long ago marketing programs consisted of gathering little more than basic contact information and coordinating trade show appearances.  But today’s marketing effort is all about drip campaigns, analytics and social outreach, which accounts for most of the improvement in lead quality.

    I am not sure sales has changed as much as marketing though and maybe it’s time for a shift.  Selling is still largely a game of numbers, of following a process and shots on goal.  The sales process has a lot in common with baking a cake though the real baking process often has more predictable results.

    No matter how much technology sales people adopt it seems there is always too much work to do, too many meetings — too many balls to keep in the air.  The journey through a typical quarter starts out with a big pipeline that winnows down to a select group to close at the end.

    Very often the decision whether to forecast a deal or not is based on gut instinct — how long the sales process has been going on and even the need to beef up the numbers.  It would be better if sales could, like marketing before it, apply specific technologies to improve the processes most important to the mission.  Today we have an assortment of SFA reports, spreadsheets and even some BI tools to provide insight into the sales process but the results are uneven.

    One of the main issues with these solutions is that they are data centric; they focus on the mountain of data generated by the sales process but they are nonetheless short on information.  How does that happen?

    We tend to act like data and information are the same things but they are very different.  Data is fact but information is a conclusion drawn from data.  A customer is in stage two of a five step sales process — that’s data.  But information is knowing that a typical customer who makes a purchase stays in stage two for one week AND that this particular customer has been in stage two for twice that time.

    Having sales information requires capturing more data than a typical CRM/SFA/contact management system typically captures.  Think about it, when the customer moved from stage one to stage two, the rep probably just updated a field in a database erasing what was there before.  That makes it hard to do any kind of comparison either between the customer and the vendor’s experience or even within the sales process.  For sales people stuck in a data centric paradigm, every day is Groundhog Day.

    We’re always erasing data in our sales systems whether it’s quantity, close date, price, or who’s in charge.  Most of the time there’s one field per item and no way to capture change over the history of a deal.  That’s important because without history we don’t really know how or if the deal is progressing, only the status as defined by the current data and that makes sales forecasting and pipeline management very imprecise.

    You might say that historic data is what notes are for and every SFA system in the world has a place to enter notes.  But notes are not machine-readable.  It is no simple task to cull through the notes of every deal to find the nuggets.  Imagine you are a sales rep working fifty deals.  Do you know the status of each deal all the time?  What about your manager who has many other reps like you to look after.  How does the manager keep up on all this?  There is no way the manager can and that’s why as the quarter rolls along, the number of deals to really pay attention to dwindles.

    But imagine you have something more than spreadsheets or simple reports — imagine you have a real forecasting system that captures historic data and uses analytics to deliver information about all the deals in the pipeline.  Imagine further that because you have this system that you don’t need to remember all the details because the system will remind you of the differences.  If you do this you change your process from one that is essentially reactive to one that is proactive.  You do for sales what has already been done for marketing.

    Modern technology has enabled marketing to be more reactive — after all a drip campaign is predicated on responding to a customer’s action.  But marketing was once (and still has aspects of being) much more proactive.  The shift to more reactivity has enabled marketing to focus on deals where there is real interest.

    Likewise, sales has always been proactive — we make cold calls, get customers to agree to meetings and hope to qualify along the way.  But if sales could learn to be just a bit more reactive, by better understanding customer signals that are reflected in changes within the pipeline and forecast, we might get better results.

    There is a great irony here — marketing and sales become more reactive and results improve.  It’s another way of saying we need to listen better by capturing all of the information given off in a sales process.

    Finally, this sort of approach will enable the productivity increase that you want for sales.  It might even eliminate or at least reduce the need to add headcount every time you want to increase revenue.

    Published: 12 years ago