The end of marketing
This is going to be political but you won’t be able to tell which side I’m on (if you choose to read on). You might ask, why on earth would I get involved even tangentially in politics right now and the simple answer is that it impacts CRM and I have a viewpoint. But as I say I’m not picking or revealing a side.
I’ve been doing research in business agility lately—a fascinating area that I believe will definitely impact CRM soon—and that brought me here. Business agility is the opposite of what we’ve been practicing for my adult lifetime and even before. The old paradigm consists of the belief that you establish an unassailable position in the market and then dominate by defining all of the world’s problems as your nail for which only your hammer will suffice. It’s admittedly crude and a holdover from analog days when we couldn’t hope to collect and analyze enough data to support better decision-making.
As I say, the idea is old and I can easily trace it to the Rolling Stones’ “Satisfaction” but of course it’s older,
“When I’m watchin’ my TV
And a man comes on to tell me
How white my shirts can be
Well he can’t be a man ‘cause he doesn’t smoke
The same cigarettes as me”
I love the line “Well he can’t be a man ‘cause he doesn’t smoke/The same cigarettes as me.” Sure the logic is tortured by a non sequitur but that’s part of the song’s charm because it reflects the pre-digital disruption times in which it was written. It’s also a case in point that tells me we’re at the end of the paradigm of establishing an unassailable market position and all the rest.
In an agile world we acknowledge that there are a lot of competent products and vendors out there and that the most we can hope for is to gain temporary advantage. When the advantage evaporates or the market moves on to the next bright, shiny object, an agile company shifts too. In this we realize that just as there are no longer sustainable advantages, there will no longer be subject matter experts who know and understand every nuance of a version, for instance.
Instead we’ll field platoons of knowledgeable problem solvers adept at synthesizing knowledge of business problems and of a vendor’s capabilities. In this way we arrive at solutions rather than one-size fits all products.
The move in this direction has been ongoing for some time. I deem the rise of the subscription economy as the starting point for the transition. With subscriptions, of course, you deliver a continuing service not a static product and you constantly take the temperature of your customer base identifying situations where evidence suggests customers are confused/unhappy/ broke/or in need of something that doesn’t exist yet. Most of this is less than good and if a subscription vendor can insert itself into these situations just in time, there’s always a chance of saving a client and selling more even if this only means that all they’ll buy are more seats.
So what’s the political connection? Very gingerly I say this. One side is marketing a problem that only it can fix while the other is marketing raw competency in an agile framework. I won’t argue about either side’s negatives or anything else. But I will say that to me one side is looking in the rearview mirror and adding a non sequitur while the other is looking through the windshield at the changing tableau ahead. In this formulation I think of one as embodying the aspects of an agile business while the other is trying for a sustainable advantage that might no longer be available.
I won’t venture a guess about how the election will turn out but in a funny way I think life is imitating business right now, or at least marketing, and agility could be about to make a star turn.
Microsoft rebrands Dynamics
Microsoft recently rebranded its business software offerings and the effect is largely positive though it must be emphasized that in performing the exercise, deck chairs moved though the cumulative effect remains to be seen. One of the effects is surely that the ERP and CRM solutions are now all offered online as the Dynamics 365 moniker implies.
Straight off, the re-branding takes Microsoft somewhat away from directly competing in CRM or ERP with the likes of Salesforce, Oracle, and SAP. But as a practical matter this hasn’t changed except that they can now absent themselves from some of the chest pounding these vendors have occasionally engaged in. The new bundling comes in two flavors—Business Edition with financials, sales, and marketing, and Enterprise Edition with operations, sales, marketing, customer service, field service, project service, something called power apps, and [work]flow.
This new packaging appears to be aimed at Salesforce because the other vendors Microsoft is likely to be compared with all have conventional ERP solutions as well. So with this move, Microsoft highlights the distinction between Salesforce and the rest of the industry.
But this only goes so far. As a practical matter Salesforce has the largest and most robust ecosystem in the business with a raft of ERP providers including Financial Force, IntAcct, Kenandy, and others like Sage, which offers a hybrid solution for small business. NetSuite is also well integrated with Salesforce and with Oracle so the rebranding might be most effective as an internal approach to streamlining offerings. It might also suggest the company sees good opportunity selling CRM to its ERP base and vice versa.
Regardless, the increased emphasis on AI and machine learning industry-wide may be more telling. The last few years have seen a quiet move from transaction orientation in business to more agile relationship building. To be effective at this you need two things. First, and most obviously, you need an integrated solution set that can easily share process data across a range of platforms including desktops, tablets, and hand-held devices. Second, the applications need to do some of the work identifying opportunities once left only to people.
For instance, apps that can understand email well enough to schedule an appointment, send information, or take a next step in a process are being highly prized for good reasons. All major vendors are making strides in this direction so Microsoft’s direction is congruent.
In an October 10 posting on his site, CRM Search, old friend Chuck Schaeffer observes,
At this point Dynamics 365 is little more than a change in branding, bundling and roadmap. Microsoft is making a [conscious] decision to do away with the ERP and CRM monikers in favor of business process labeling. While the messaging is understandable, the industry at large has tried multiple times over to do away with the three letter acronyms. Yet decades later we still identify these business applications as ERP, CRM, SCM, HCM, MRP, MEP and so on. Maybe this time will be different. But I doubt it.
It’s the idea of process that has my attention. We live in a process centric world and as I’ve written in my books vendors might want transactions but they’ve come around to the idea that transactions come at the end of well-designed processes. So we might want to still consider discrete blocks of functionality like ERP and CRM but at the end of the day, their value is directly proportional to the value they deliver to the customer.
And guess what? The game is about to change again from uni-dimensional process orientation to something more dynamic called Business Agility. Watch this space.
AI and customer loyalty
Artificial Intelligence and Machine Learning (AI and ML) have taken the industry by storm with some saying they will usher in a new age of better business processes and customer orientation while others fret that automation will kill jobs. Both might be true.
There will definitely be jobs that no longer make sense for humans to do thanks to automation. Generally they’re entry level and not much fun but this begs the question of what, then, becomes an entry-level job. I took a briefing last week with, Conversica, a company that uses AI to do general-purpose triage for early stage sales leads. I am not affiliated with Conversica and I am simply reporting, but the technology seems pretty cool.
Conversica is essentially a bot that responds to things like email with appropriate information and then follows up. When a customer indicates a need to interact with a human, the bot makes the transfer. The bot is tireless and can work 24/7 so there’s a lot to like. This is a good example of automation replacing a human but I am told the bot simply makes it possible to redeploy the human to another job that requires real human thinking. I am sure it can.
Often when I see something like this it’s a new technology applied to an old problem and truth be told, that’s generally how new technology gets disseminated. For example, it has taken a long time for social media to establish a niche different from being a cheaper email platform. Some people haven’t made the leap in understanding but generally we’re there. So I fully understand employing modern AI technology to support the sales effort; sales is one of the first stops for new technologies.
But I’d like to divert your attention for a moment to some business processes that are nearly neglected where AI and ML could make real contributions. They would likely not replace anyone because a job isn’t being done in many cases. Customer loyalty is an area that could use some help, even the help of bots. Loyalty has always been a passive thing in which customers are expected to do something that demonstrates loyalty in the moment, rather than an active thing that businesses pursue.
We expect customers to do something loyal, usually making another purchase, for which we then give out rewards. That’s okay but it misses the point. Rewards are by their nature backward looking and loyalty ought to be something of the present and future. Say I advocate on behalf of a favorite product that may drive future business for the company. Often that’s not part of a business’ idea of loyalty and so it goes unrewarded even though it is a good loyalty indicator. Too bad.
Now imagine if you tuned some of your AI muscles toward loyalty. What if you had a bot that caught customers doing good things for which you rewarded that behavior? The reward, not associated with a purchase, might inspire more loyal conduct and all this could be done without human intervention. So this little exercise just 1) invented a job for a bot, 2) replaced no humans, but it did 3) improve business performance.
My point is that there are lots of incremental improvements like this example waiting to be discovered as we contemplate using AI. Many of AI’s early deployments will be like this, not very sexy but useful. That’s what happens on the far side of the hype cycle, after everyone’s tried applying the hot new technology to the oldest of problems. It’s maybe even after a lot of people have become mildly disenchanted with the failed promises that the new category couldn’t deliver.
I’ve seen this hype cycle movie before and I am wondering if we might be able to speed up the process. It’s really nothing more than imagining new processes rather than being happy pursuing a well-worn path.
The future of work in an automation era
Automation has a habit of killing jobs and this has been true since the Industrial Revolution though it seems like we’re discovering this truth all over again. We easily forget when we only focus on the job creation aspects of automation and that usually gets us in trouble.
Since the IR there have been five distinct economic waves lasting between 50 and 60 years. These waves have been named after the late Russian economist Nicolai Kondratiev and are now referred to as K-waves or the Kondratiev Cycle. With an economic cycle this long very few people alive and working remember the last transition so of course it feels new.
The first Industrial Revolution revolved around water wheels and later steam power, iron, and textiles; it gave way to an age of steel and heavy engineering; then petroleum, electricity, cars, and mass production; today we live in an era of information and telecommunications. I estimate this era began around 1970 so it’s getting long in the tooth.
The first half of a wave is wonderful. A new technology takes hold and drives the economy, jobs are abundant even for the unskilled, inflation kicks up a notch or two and things seem pretty good. Inevitably though the second half kicks in and some of the earlier gains evaporate. The focus now is on gaining efficiencies from earlier innovations and product line extensions.
In the second half over-qualified people have a hard time finding a job, wages are flat, and capital reaps significant returns on investments made much earlier in the cycle. Sound familiar? But the good news is that if you know where and how to look you can see the next wave forming just as sure as a surfer can spot the next big one. That’s the nexus on my friend Vinnie Mirchandani’s new book, Silicon Collar—Dear reader please be aware that I am quoted extensively in the book but that I’d be writing this piece regardless.
In Silicon Collar, Mirchandani gives us a surfer’s-eye view of the next wave or at least the candidates for next wave. At this point there are many pretenders competing for the mantle and often the winner is hard to predict. Our current era, Information and Telecommunications has roots in the Space Program and the race to the moon. If you were alive then you would have bet anything that the next big K-wave would have had something to do with flying cars and many people predicted this but they were wrong.
IT and Telco were still embryonic in the 1960s and nothing like what they’ve become. Telco was a sleepy oligopoly, a regulated monopoly, printing money and delivering so-so service. Computers were things that required climate controlled rooms and lots of paper to perform really trivial tasks. Few people predicted that the miniaturization required to place a guidance computer on a space ship would have such far reaching effects, but it did.
That’s my look backward but Mirchandani tries to peer into the future. In this meticulously researched and reported book, he interviews leaders in about 50 new companies/industries and lets them tell their tales of the future. It’s an optimistic look at a future that far too many have glanced at with fear and suspicion rather than optimism and curiosity. You can’t blame them for their insecurities. We do live in interesting times. But our strength and the strength of Silicon Collar is its hopefulness and inquisitive nature. It’s worth reading even if you think you already know what the future will look like.
It might surprise you because you might find some backwater idea that only has a low power proof of concept that you think couldn’t possibly go anywhere.
If you are reading this…
If you’re reading this, then thanks for coming to my site. FYI, this is not the only place to find my writing. Sure there are books like Solve for the Customer and You Can’t Buy Customer Loyalty (But You Can Earn It) but there are also magazines like CRM Magazine, and plenty of sites such as Enterprise Irregulars and CRM Buyer where my stuff is posted and published. Some but not all of that content gets put here too.
Recently I’ve started posting at Diginomica too. I’m writing a bit longer there and the subject matter is a bit different. For example I have stories on K-wave economics and job growth here and here, AI, and the rapidly evolving medical software industry
I hope you’ll have a look.
