Race Against the Machine
Erik Brynjolfsson and Andrew McAfee of the MIT Center for Digital Business and the Sloan School of Management have written an interesting book for our times — our economic times — with an appealing metaphor that any technologist will appreciate. Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, is short and to the point and it ought to be required reading.
The subject matter is employment growth or its lack in this rather austere recovery and the effect on future employment and growth. More specifically, it is about the changing relationship between humans and their creation, the computer — the almost-thinking-machine — and how it can out-compete its masters not only in routine manufacturing tasks but, increasingly, in jobs that were once thought to be the exclusive province of human thinking.
The metaphor, from futurist Ray Kurzweil, holds the narrative together and is worth pondering before we continue. It is told in the form of a story about the invention of chess. The emperor, the story goes, was so delighted with the game that he gave its inventor a wish. The sly inventor asked for a grain of rice to be placed on one square of the chessboard two on the second and double the prior square’s total on each succeeding square.
It is the story of exponential growth. Accumulating the sums of rice on the first half of the chessboard was manageable but the second half totals were truly significant, from small beginnings arose a mountain of rice that would dwarf Mr. Everest. McAfee and Brynjolfsson apply Kurzweil’s story to another runaway exponential progression, Moore’s Law. You may not need to be reminded that Moore suggested that computing power would double and its cost halve every 12 months or so. With some fine-tuning the period was raised to 18 months and has continued for virtually the lives of all people in the technology industry today.
But that’s not the crucial part of the story or the book. The authors calculate that we have only recently (in the last few years) crossed over from the first 32 squares of the chessboard into the second half where a metaphorical Everest awaits us. The gains in the second half of the chessboard will likely come from advanced software and algorithms and not hardware per se. They point out that while computing power has increased one thousand fold on the first half of the chessboard, the power and quality of our algorithms has increased 43,000 fold.
The chessboard’s second half is already giving us systems that can diagnose better than doctors, out lawyer lawyers and, of course, kick booty in Jeopardy!. So what will happen next? McAfee and Brynjolfsson are quick to point out that the thinking that machines do is not the thinking of humans. It is often the lightening brute force effort of crunching a great deal of data to ferret out an answer. Also, training a machine to pick up a pencil from a random table top, let alone use it, is still elusive.
The major point of The Race Against the Machine, is that there really is no race, or if you think there is be prepared to lose. But this book is fundamentally hopeful because it suggests that machines are tools that ought to off load people from their rote tasks to concentrate on the creative, entrepreneurial and innovative endeavors that only humans can engage in.
What’s powerful about this argument is that it offers a prescription for a solution: Leverage the machine rather than fight it. Crunch big data in every way you can imagine, ask “What if” questions ad nauseam and above all, innovate.
As I look at CRM and the broader technology world, it seems to me that the subdivided chessboard is visible everywhere. What we once called innovation was surely innovative but it was really no more than automation of what existed before. True innovation starts on square 33 when we realize that all the automation is mostly behind us and innovation means making totally new concepts.
McAfee and Brynjolfsson speculate that we reached square 33 in the middle of the last decade. If true, one of the first true innovations we all witnessed was the social media revolution. Combined with the mobile revolution and today’s quest to master Big Data, we have a potent nucleus on which to invent new businesses, models, and processes.
And if we combine what we know about the chessboard and where we are on it with what we know about our industry we can clearly see that some vendors are simply automating on the first half of the board while others are innovating on the second half.
Let’s not fool ourselves though, simply innovating on the second half of the chessboard is no guarantee of success, just as always, bad ideas will still yield bad results. But it is also true that failing to try, to enter the second half is a sure route to oblivion. This is not simply a matter for the tech sector or even the nation. It’s a large scale economic issue that will affect our species.
Historians and others often debate when specific eras start, because they don’t often follow calendars and precise dates. Some people say that the twentieth century started in 1890 with the closing of the American frontier, for instance. With this as a guide and McAfee and Brynjolfsson’s fine and short book as context, I’d say the twenty-first century started in about 2006.
Microsoft Convergence 2013
For years Microsoft has been telling us that they have great new products in the pipeline that were competitive and an approach that was social and customer centric. But for the last couple years, we had to watch the slow maturation of that vision. First there was Windows 7, which was pretty good, and then Windows 8, Windows 8 Phone, the Surface tablet and new Microsoft retail stores followed it last year. The last step has been getting new enterprise products into the hands of users and giving them the time to come up to speed and finally be able to tell a success story.
We have had glimpses of success and the customers I have spoken with were interesting though a bit out of the mainstream and many have been too small to qualify for the “enterprise” label. I once had a valuable conversation about CRM with a company in the aggregate industry for instance. If you aren’t sure what aggregates are, think about the stones embedded in asphalt and concrete and you’ll have the picture.
Finally, at this year’s Convergence held in New Orleans last week, Microsoft was able to take the wraps off the whole analyst experience, or at least they tried. Scheduling conflicts kept me from one or more valuable sessions that would explain the new CRM orientation in greater detail than Kirill Tatarinov’s keynote. But the keynote was good in its own right. I saw technology, happy customers and user stories that drew me in.
Corporate vice president Kirill Tatarinov had a parade of customers on stage including companies with names like Chobani, the world’s best yogurt IMHO, beauty products powerhouse, Revlon, Shock Doctor, and Weight Watchers — all users of Microsoft applications and all using ERP and some using CRM.
Now, at this time of year I am painfully aware of the saying that one swallow does not a spring make, or even four. Nonetheless for me the importance of this parade lies in the big names as well as the reality that multiple companies can say roughly the same kinds of things about their front to back office experiences. There are more than these four and that’s what is interesting. In most ways it looks to me like Microsoft has delivered a product set that can compete with any other vendor in the enterprise.
That’s all good. But I have to say that for all of Microsoft’s success there is still more to aspire to. That’s not a bad thing, when there’s nothing left to aspire to the market is over. That said, for all the progress, and it has been substantial, it still looks to me like Microsoft is still transitioning from a company whose software supported manufacturing age business processes to one that supports the social business.
The really good news is that all of the executives I spoke with understand this and the transition required or more precisely, they understood that a transition is required and maybe that’s the point. There is an element of thought leadership that is still not quite there. You see it in the Herculean or possibly Sisyphean need to transition the bulk of the business partners from software vendors to solutions providers. But at the same time I attended a panel discussion of premiere partners who were well versed in the need for and application of social technologies, cloud computing and the like. They were also very ERP centric which is OK but I wish Microsoft would convene a similar session on just CRM.
On the CRM side Microsoft announced acquisition of Netbreeze, a solution that offers natural language processing and sentiment analytics. Combined with the last marketing acquisition, Marketing Pilot, these products should form the basis of an expanded marketing offering. Job #1 will be expanding the kinds of analysis Netbreeze can perform such as influence and intent. Also, predictive modeling needs to take a more prominent position.
The marketing messaging though is still raw though. For instance, while Marketing Pilot has a spiffy new UI and is well integrated into Dynamics CRM it carries baggage from its earlier incarnation of a “CRM connector” to ferry data between the two supposedly integrated parts of Dynamics.
That’s a cosmetic issue and a happy problem given that solving it takes nothing more than revised messaging and no new coding. Indeed Microsoft has many similar happy problems that involve messaging and positioning for its Dynamics CRM offering. For instance, there wasn’t enough talk about bringing the package together with better messaging around platform, social, marketing and cloud. It will happen though it’s a shame there wasn’t greater emphasis on those finer points in New Orleans.
So with all that Microsoft continues to make progress in delivering a credible front to back office integrated solution that can support large companies like Revlon and Chobani. But it’s important to make the point that all this brings Microsoft to parity with its rivals and the name of the game today is leapfrog. There are a lot of ways that Dynamics can jump and it will be interesting to watch.
MPM — Track Data, Do Some Math
Marketing Performance Management Isn’t Hard, It’s Good Business
Sales has always enjoyed a quantitative edge over marketing but today that’s changing. Sales managers measure many things like sales calls per rep per week, forecasted revenue, the time a deal stays in the pipeline or in a particular deal stage and much more. Forecasts are often tallied in spreadsheets and they always involve an impressive array of revenue numbers and probabilities of close.
Pity the poor marketer. Marketing has been at a quantitative disadvantage because they have tracked response rates, click-through rates and many other qualitative measures of interest that can be as reliable as fickle customers. Worse still, the rest of the C-suite speaks the language of costs and profits while the CMO talks about things that don’t directly result in revenue. It doesn’t matter that some sales numbers, like probability of close, are just as qualitative.
In the past all marketers could do to arrive at “serious” numbers was to add up marketing campaign expenses and divide them by the number of leads and revenue that came in. This macro approach didn’t take into account which campaigns did the best job of attracting the customer initially or which one pushed the deal over the top. As a consequence, marketers couldn’t tell if one campaign or style of campaign was better or worse at doing a specific job and resource allocation was hit or miss.
But what if there was a way to define and track marketing metrics that more closely track revenue? For many years marketers couldn’t hope to track those metrics but thanks to the confluence of big data, analytics, social techniques and CRM, marketers can track the data their campaigns give off and make measurements that can stand on an equal footing with sales metrics. This reality has made the marketing funnel a real and important part of the overall sales process and spawned the discipline of Marketing Performance Management of MPM. Full Circle CRM provides a good example of an MPM solution.
A marketing department that tracks data on its activities can put itself and its company on a path to having greater certainty about its pipeline and revenue forecasts and greater influence in the C-suite. Every marketing campaign generates valuable data from the raw number of prospects it attracts to the time it takes to close a lead and even to knowing how many prospects with initial interest make it all the way to closure. So the issue for marketers no longer revolves around which data to collect or how to do it. Instead emphasis has shifted to which calculations to make and which metrics to apply.
If a marketing department tracks spending, dates of transition through the steps in the marketing funnel and number of leads generated — by each campaign — it can calculate many meaningful measures of performance that will make anyone in the C-suite smile. Here are some metrics that every marketer who is intent on improving MPM should consider.
- Immediately, the cost of marketing becomes clear with simple metrics like cost per lead, cost per revenue dollar and conversion rates by each campaign.
- A slightly more sophisticated measure can calculate cost per lead based on campaign type — trade show, direct mail, social campaigns — whatever. This can tell you the best sources of leads by volume and it can identify the best mix of campaigns by cost per lead and quality of lead.
- Capturing the date when a customer first raised a hand and date of close (from the SFA system) averaged over a number of leads in a specific time range gives the average sales cycle. It also gives the overall velocity of the sales funnel — the speed from first contact to closed deal. Further identifying leads by campaign type will also show which campaigns produce the most sales ready leads.
- You can use the deal velocity calculation on leads from specific campaigns too. This will tell you which deals might be accelerated to help ensure sales plans are met.
- By capturing dates for transition from one funnel or pipeline stage to another marketers can tell conversion rates by stage and, most importantly, if and where deals get stuck. This will naturally also show the kinds of campaigns that might be most effective at getting the funnel flowing again.
All of this data can be captured and stored in the CRM system. Many of these metrics depend on establishing historical norms or averages but that’s easy to do and the norms get refined over a short time.
So, tracking data on a relatively small number of attributes and applying the right math can significantly improve marketing’s visibility into the funnel — that’s what sales does and marketing can do the same. Of course, plenty of consideration ought to be given to the vagaries of each marketing department including overall budgets, product type and customer types. Marketing organizations therefore need ways to customize weightings for various programs and scores for resulting leads.
So when shopping for modern marketing automation solutions, keep an eye out for the performance management side of the equation and include marketing performance management as part of your shopping list. It can easily mean the difference between success in your new approach to marketing and remaining at a quantitative disadvantage to sales.
Chatter to Become the Primary Salesforce Interface
I flew home from Microsoft Convergence in New Orleans arriving back in Boston around 9:00 PM last Thursday. I was tired from capturing a week’s worth of information from the Microsoft fire hose for the previous four days. But on Friday a Tsunami named Salesforce.com blew into town to inaugurate a world tour trumpeting the company’s new messaging centered on enabling enterprises to become “customer companies”.
The tour and the messaging was field tested in New York last month and refined over the past few weeks to produce the Boston show and if Salesforce and its CEO Marc Benioff run true to form, the message will continue being refined throughout the spring and summer and delivered in final form at Dreamforce to be held this year in December in Salesforce’s home town of San Francisco.
The big news coming out of Boston, if I understand it right, is that Chatter will become Salesforce’s primary interface. Prognosticators peeling that onion got immediately weepy eyed citing the risks involved. Surely, the logic went, when you change sales people’s UI you are asking for trouble. These people are not happy change agents after all — look what happened when SFA came onto the scene, they opined, look how poor adoption was and how passively aggressively sales people didn’t adopt.
Yadda, yadda. Have they forgotten that early SFA sucked? But look how they took to Salesforce like ducks in your swimming pool.
That was then and then was different or as Mark Twain liked to say history doesn’t repeat itself but it rhymes. So what’s the rhyme? Actually, it comes from two sources as I see it.
First, we need to Segway to Peter Coffee, Director of Platform Research at Salesforce, and this is not a non sequitur; it has a purpose, I promise. If you’ve been to a Salesforce event in the last five years or so you know that Coffee does a pre-show to warm up the audience. Coffee is not an entertainer happy to give away prizes or perform skits the way others do at conferences. Coffee’s orientation is news. It’s focused on the matter at hand so that his effort bridges nicely into Benioff’s main event.
So, one of Coffee’s interview guests last Friday was MIT professor, Andrew McAfee who, along with fellow prof, Erik Brynjolfsson just published Race Against the Machine a short book about the ways we will work in the future. The subtitle provides the Cliff’s Notes: “How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy”. Got it? No? I will post a review of this fine work (which I am not sure I agree with in all its particulars) soon. My point here, and I guess it was Coffee’s point too, is that technology is racing ahead and changing how we work and that people who don’t adapt and adopt will be left in the dust. That’s point one.
Point two is the long evolution of CRM, SFA and mobility. For many years we have been touting mobile SFA applications as tools that sales representatives can use to report to their bosses upon leaving the big sales call. But now imagine if during the sales call, the rep had the ability to reach out through the mobile umbilicus to get help on any subject.
Sure, the mobile phone has always been available to do the same but few of us took advantage of it because its use was so disruptive in a meeting setting. But a collaboration feed is more discrete so that not only could a rep report back after the meeting but he or she can now reach out through a collaboration product like Chatter rather than saying those dreadful words, “I’ll have to get back to you on that.”
Put the two ideas together and making Chatter the primary interface for CRM or SFA makes all the sense in the world. Also, you need to consider that just as we can dream up a realistic use case for selling, the same is true for service and support or even marketing. Quick aside, CMO, Kendall Collins, who was also at the event told me, “There’s only one sin we won’t forgive inside Salesforce and that’s losing alone. If you’re going to lose, lose with all the support you need.” In other words go down swinging and in other, other words, business is now, more than ever, a team sport.
So I am more sanguine about the move to make Chatter the primary interface for Salesforce. It’s a natural evolution, something whose time has come. Cue the music.
I am also skeptical that the big news coming out of Boston was this Chatter tidbit. The discussion involved people from not only MIT but Harvard Business School and Yale as well as representatives from the private sector like the electronics giant Phillips and Stratus the fault tolerant computing company and they are all and already moving the collaboration needle.
Salesforce, as usual, is on to something. The messaging about becoming a customer company is almost right and will improve over time. And if Coffee’s intuition about having Andrew McAfee in the pre-show is right (and I think it is) then in a couple of years we’ll see other vendors ponying up with their own similar messaging just as sure as today they are (finally) “all in”, as someone once said, about the cloud.
Microsoft Convergence 2013 and Marketing
Marketing is for many CRM vendors the last frontier and many are integrating what had been a stand alone function into their solution sets. Marketing requires a different mind set and can deliver significant value as this report points out.
Fred Studer is the new GM, Microsoft Dynamics Product Marketing. He’s been on this job for about a month and I think he’s a good pick given his experience and background — Studer has a lot of tools to work with professionally and from the product side.
He’s been in the business for over two decades at companies like Oracle and Microsoft and most importantly he comes to Dynamics CRM at a point when the product set is hitting its stride. Last week at Convergence 2013 in New Orleans, Studer ran a general session (among other things) that highlighted Microsoft’s two marketing acquisitions including Netbreeze, a sentiment analysis and natural language processing engine from Switzerland, that will help power Microsoft’s foray into marketing. Also, he managed a discussion with analysts about Marketing Pilot, an earlier acquisition that forms the foundation of Microsoft’s marketing approach.
Marketing Pilot does the marketing blocking and tackling enabling marketers to build, manage and deploy digital content and programs through multiple channels. You could say the two products will form the yin and yang of Microsoft’s marketing products for the foreseeable future. Think of it as Marketing Pilot for outbound marketing and Netbreeze for inbound customer data capture and analysis.
So is Microsoft done with marketing? Far from it. Netbreeze and Marketing Pilot are only the beginning and on this framework you can expect to see many more ways to analyze customer data beyond sentiment which is a Netbreeze specialty along with natural language processing (NLP) in multiple languages. As valuable as sentiment analysis is, there are other things like intent, leadership and influence and more that analytics will be assumed to have in the near future. Netbreeze provides the basics and a roadmap and for now that’s fine.
So, back to Studer. He has a great combination of experience in product and corporate marketing, understands the enterprise, and is deep in back office and front office.
There were a few rough edges apparent in the Convergence messaging that I expect will quickly be polished away now thanks to Mr. Studer. For instance, there is the redundant and incorrect idea of a marketing connector to move data from Marketing Pilot to Dynamics CRM. It is a remnant from Marketing Pilot’s history as a private company. The product underwent some significant improvements between acquisition and Convergence — for instance, it got a new and simpler interface and many internal changes that make it a good fit within the Dynamics product set. By virtue of these changes, Marketing Pilot needs a connector the way my cats need my dog.
But old habits die hard I guess. One thing that impressed me about Microsoft Dynamics CRM messaging last week was how many things like the connector issue there are. They aren’t bad things and this is not a knock at Microsoft. Just the opposite. Issues like this take no coding to fix, they are messaging and positioning related and are easily addressed once you focus on them, so pay attention as Microsoft comes on strong in the months ahead.
Another thing I saw in the General Session video was a good presentation by the Illinois Department of Corrections. You might wonder what the connection between corrections and CRM ought to be — Corrections Relationship Management? It was not adequately explained. Of course, the right answer is Microsoft’s XRM solution, which might be referred to as the platform in other schemas. Microsoft has capable tools for building whole new applications on a CRM or XRM foundation or for extensively modifying CRM to fit a specific need.
The Illinois Corrections story is about XRM but the messaging around it was strained to say the least. It’s another example of how Microsoft has product but is not optimizing the way it brings the solution to market. Again, this is a happy problem because it takes marketing and not software development to fix.
Sometimes we take marketing for granted thinking instead that great products sell themselves but that’s not often true. Great products are great because someone saw the connection between what the product does and a market need and figured out how to explain it to buyers in concrete ways with simple language. As Microsoft itself becomes a vendor of marketing solutions I expect that people like Studer and Corporate VP and industry veteran Bob Stutz will help school the company in the finer points of product marketing in a social world. Microsoft has always been a good engineering company, they aren’t moving away from this but they are, I hope, bringing a heightened marketing sensibility to the party.
