Future of Work Interview: John Kennedy, SVP of Corporate Communications, IBM

Some shy away from IBM, but throughout my Internet career, I have found them to be a loyal business partner. In 1996, for example, I partnered with “Big Blue” to create the first multimedia backend database used on the Internet. At Borders.com, we used the IBM’s infrastructure to sell books, music and video. For our site, IBM leveraged their earlier work with Vatican Library, which houses some of Western civilization’s most ancient and precious documents. IBM technology has helped them dramatically extend library use to scholars around the globe. At the time, this collaboration was unprecedented and helped make a precious collection of medieval manuscripts accessible via the Internet

I like the fact that IBM has been using culturally significant projects to stretch the boundaries of technology for generations. My Future of Work research is as much a cultural project as it is an exercise in individuals every day experiences from from the digital trenches ™.

With this in mind, I reached out to John Kennedy, IBM’s VP of Corporate Marketing. John oversees IBMs global branding and marketing programs. He has some good insights on the major transformation going on in the world of C-Suite members.

CMO’s: the new C-Suite leaders with a new set of challenges

Kennedy explains that CMOs increasingly find themselves the C-Suite leader as they are expected to convert mountains of social data into valuable information for their companies in order to create new relationships or enhance existing ones. This places the CMO in a different role with new set of challenges. Kennedy listed the top four:

  1. Managing the explosion of an overwhelming amount of data
  2. Navigating Social media/ Making Social Media compatible with existing technologies
  3. Standardizing/ Simplifying/ Managing/ Facilitating proliferation of channels and devices
  4. Marketing to individuals, not to broad demographics

This requires CMO teams to have better analytical and technical skills, especially when it comes to defining something as important as customer lifetime value. Companies that are in more transactional-based industries, such as banking, airlines, and retail, have historically done a better job in these areas.

CMO’s can use analytics to reach customers

Today’s marketers are just beginning to use analytics to answer customer specific questions while harnessing insights to drive better results. Kennedy states:

“Marketing departments put a much bigger premium and emphasis on marketers who are comfortable with data…and can use data as a way to make decisions about reaching their customers.  Analytics can bring a greater degree of discipline and rigor to marketing.”

As Big Data emerges as a prized asset for organizations, corporate marketing is suddenly becoming the wealthiest and perhaps the most influential part of the C-Suite. According to Kennedy, “Big Data, led by the CMO, is not only driving marketing activities, but also increasingly influencing product development, supply chain, and virtually every strategic area of an organization.” Historically, some of these areas are part of the CIO’s bailiwick. We’ll discuss the significance of this below.

Kennedy has seen his clients participate more and more in content, application, and software development, leading to the rapid transfer of company’s budgets to marketing departments. Ironically, this infusion of dollars has not made it any easier to determine ROI. Roughly half of the 1,700 CMOs surveyed in an IBM study felt insufficiently prepared to provide real ROI numbers. They admitted the difficulty of proving value.

By 2017, a CMO will influence IT spending more than the CIO.

As a recent Gartner report points out, this transformation will mean that by 2017 the CMO will have greater control of the IT budget than the CIO. Marketing budgets will grow 7-8% over the next 12 months, which is 2-3 times that of IT budgets. Despite this increased power, CMOs readily admit they lack IT skills. While 79% of CMOs expect high or very high levels of complexity in their jobs over the next five years, only 48% feel prepared to deal with it.

CIOs know their role is changing and this transformation goes beyond surrendering  influence to their marketing counterparts. Kennedy states that CIOs are also “breaking through the firewall mentality of a slow approval process and realizing that securing all aspects of technology can’t keep up with the world of Facebook and Twitter.” Their priorities are changing too. According to a Fall 2011 IBM CIO Study, their main focus is business intelligence and analytics followed by mobile solutions.

Just as IBM practically invented the discipline of the CIO in the 1950s, “Big Blue” is now helping IT move from the back office to the front office.

CIO + CMO = the new C-Suite power team

Given this new realignment for both the CMO and CIO, Kennedy warns that neither can afford to go it alone or operate in separate silos. To succeed, they’ll have to forge an alliance as a new C-Suite power team, who can deliver business results through innovation and efficiency. Unfortunately, this type of collaboration is still the exception and not the rule. CMOs can re-imagine their roles with next-generation skills, expanded peer networks, and transformative tools and technologies, while CIOs can lend their expertise in enterprise IT integration and expand their horizons further outside the firewall.

The link between a company’s culture and its brand

My discussion with Kennedy also focused on how companies need to change their approach to branding. He emphasized, “Every employee impacts that brand and every action communicates something about the brand. Consumers are not making a distinction between what marketers are saying, what the brand represents to them, and what their actual experience is with a product. In the same way that marketers have more transparency and visibility to the person, markets and audiences have more transparency and visibility to the company.That’s to say, markets, audiences, and customers can quickly see when there are gaps between what a company may promise in its brand and what they actually deliver.  There can no longer be any daylight between what a brand promises and the reality becomes behind the firewall.  Customers want to know how the company really operates, what the company’s practices are, and what the brand stands for.

Since customers track organizational behavior more closely than ever before, marketers realize that a brand’s image comes not only from its products or reputation but also from the culture of the company itself. Companies need to recognize the profound influence that employees have on their own brands as part of their marketing portfolio. As a result, marketers are now discussing more how a company should shape its own culture. They are leading these discussions and playing a more collaborative role in the C-Suite meetings.

Kennedy points out, “It’s important that <a company’s> character and brand come together. If there are any gaps, they will come out in the social sphere because the brand is a culmination of everyone’s behavior online–especially in social networks. Each process of delivering a product, such as supply chain activity or how someone answers the phone at the call center, really matters.” Kennedy astutely points out that when there are gaps or inconsistencies (e.g., how people talk about the company or dissatisfied employees), this will find its way into the social sphere.

The Influence of Social Media: Customers speak and marketers listen

Kennedy says social media have become a testing ground for whether marketers are keeping their promises. People turn to their Facebook friends, price-scanning apps and video downloads to voice their opinions about brands within their own groups and to the world at large. In essence, social media has become a new channel between brands and their customers—but one where the customers are broadcasting and the marketers are listening. In turn, brands are using social media and Big Data analytics technology to better comprehend their markets and understand customers as individuals.

Here are Kennedy’s recommendations for creating an authentic and consistent brand and culture:

  • Develop an acute understanding of your company’s reputation by actively listening and engaging in social media
  • Systematically close the gaps between your company’s unique character and its reality—in all critical interactions.
  • Champion tools that connect the organization and implement platforms that enable employees to delight customers.
  • Ensure that systems are in place to manage the risks of being a social business.

Kennedy ended our discussion with some specific recommendations for CMOs, such as:

  • Marketers need to develop greater technical expertise and analytic skills
  • Marketers need to partner with CIOs who are moving from the back office to the front office. This shift is being influenced by marketers’ increased control of budget and decisions.
  • Marketers need to include CMOs in their discussions and planning to ensure consistency across the organization
  • CMOs convert mountains of data on a company’s culture. Since this can directly impact the brand, a well thought out plan needs to be in place  (for building the brand).

Transcript for John Kennedy Interview

 

 

 

 

 

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Thought of the Day (Saturday):

I just realized how much my weekend mornings have changed. I no longer subscribe to any newspapers (print or digital!)Hard to believe for a newspaper man like me. I am not your typical newspaper man. I am neither a journalist or a writer, rather I am someone who has worked in a few newspaper trenches. In an earlier blog, I talked about handling the type setting of  a newspaper I started in college. During those years, I also worked at a small paper called the Cape Codder, (which has been bought by a company that has a weird name, wickedlocal.com, and just a website) where I hand-collated newspapers. (Hand collating is the lost art of getting paper cuts and is such a lost art that there’s no Youtube video demonstrating how to do it. The closes I came was finding this video on hand collating post cards on basketball players and teams)

This was before big machines could do some of the heavy lifting and integrating of newspaper sections. But those days are long gone, and soon publications will probably disappear.

I am reminded of publishers and printers fear of the future and their desperate behavior each day. Especially  whenever it becomes time to renew. I usually wait until they have contacted me four or five times because by then, they only charge $10 for a year subscription. This morning it was Time magazine’s turn. Last week it was Popular Science, one of my favorite magazines. As David Carr, a well known writer for the New York Times pointed out a few months ago “There are smart people trying to innovate, and tons of great journalism is published daily, but the financial distress is more visible by the week.” This problem exists for both newspapers and magazines.  Some savvy traditional printers, such as RR Donnelly, however, realize that the need to expand into other types of publishing businesses. They have purchased a self-publishing website and a technology that has an online payment systems for publishers.

While I am clearly not the first person to write about this phenomenon, I am amazed about how many people in the business seem to be fighting this trend. And by the lack innovativeness. Most magazines on the iPad look like the editors can’t think out of the box and are literally taking the same things that worked in the old days and trying to repurpose their content for a new medium. And then there’s the pricing issue. Some are keeping the same price for print and just throwing in ‘digital platforms’ as freebees for their users. Where’s the creative thinking here? We seem to be grasping for old straws.

As Barron’s Online columnist Howard R. Gold recently explained: “A crisis of confidence has combined with a technological revolution and structural economic change to create what can only be described as a perfect storm… [P]rint’s business model is imploding as younger readers turn toward free tabloids and electronic media to get news.”

This trend is also being seen with radio and television news. What gives?

Maybe there’s a bigger issue here. And that’s the skepticism of the 21st Century. The ink is really drying up for ‘print.’ A recent study of the news industry by the Annenberg Center for the Digital Future at the Southern California found that most internet users have limited trust in the information they find online and the sources that provide that information. “Only 40% of users said that most or all of the information on the Internet is reliable – a decline from 55% in 2000.”

Ah, that trust word again. How do you build trust?

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Research: New CMO Study from Duke and the AMA

In a new CMO study by Duke University and Marketing Association of America, Marketers were asked about their spending plans in the next 12 months.

Here’s the PowerPoint summary:

 

Here are some key highlights:

Biggest change in spending will be in new service introductions, which echoes what our Future of Work experts have discussed. New services — whether they are focused on enhancing a physical product or service – will be a a major area of focus. Spending in this area is expected to increase 52%.

  • Social Media spending as a percentage of the overall marketing budget is expected to increase from 7% to 12% in the next twelve months (Word of caution: It’s always good to figure out what’s really making up that 12%)
  • 20-40% of marketers surveyed don’t believe that social media is really integrated into companies’ overall marketing plan or budget. Some of the causes of this include:
    • Many companies split up Corporate Communications and Marketing, and sometimes the two groups don’t always work together. This is especially true when social media marketing is driven in a business unit or product group that often is not integrated with central marketing or corporate communications overall plan
    • There still digital cowboys out there who tend do implement their own programs. Sometimes this is the result of them being the only early adopters of social media technology, sometimes it is the result of just ‘cowboy behavior. (Social Media training is one way to get everyone on the same page)

I just highlighted a small sample of all the great data from the Duke University survey. Check out and read more.

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Before you leave, one more thing

I am always reminded of the importance of being inquisitive vs. advocating something. This approach has helped me get to the root cause of issues. For example, I have written here before about the 5 Whys, which is a question-asking technique used to explore the cause-and-effect relationships underlying a particular problem.The primary goal of the technique is to determine the root cause of a defect or problem.– . And everyday my son reminds me of the power of the 5 whys when he askes several times in a row “Why Ba-Ba.” (He calls me Ba Ba).

Asking questions also leads to some really interesting innovations. Here’s an old story that I recent found while surfing the web (Since Hotmail is going away and being replaced by Outlook.com, I thought I would go back into the archives and read about the services history):

Hotmail originally approached us as JavaSoft, Inc., a web database tools company, and, as Business Week recounted: Sabeer and Jack went to see “Draper Fisher Jurvetson, but the investor was unimpressed by their idea for database software for the Net. As they were packing up to leave, [the VCs] asked: ‘Do you have any other ideas?’ Sabeer said they’d noodled over a scheme to offer free, advertising-supported E-mail over the Web. A week and a half later, the venture capitalists ponied up $300,000, and Hotmail was born.” (Business Week, August 25, 1997)

And recently, an insider told me a similar story about the service ClearSlide, a great sales tools that enables teams to easily share and give presentations. Sometimes a simple questions such as ‘what else have you been thinking about’ or ‘what else do you have in your bag of tricks’ can help a management team do a successful pivot and try a new approach to their business.

When I managed communities and social networks for Intuit, I used to love questions (I still do) and how they forced me to share crazy ideas, figure out some unconventional solutions and solve customers questions. So to innovate, collaborate and generate, ask the simple questions.

I know that I am mixing together two different ideas here: one about asking questions to getting to the root cause of a problem and one about asking questions to generate another idea. However, ‘asking questions’ is the common thread that’s most important.

So before you leave the room (or the social network or discussion forum), please tell me ‘one more thing..”

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Crisis Planning for the Web and Mobile

In 1996, I managed the Borders.com team that launched the first ecommerce site that directly sold more than one type of media. We sold books, music and video, and when we launched; a little ecommerce company in Seattle that sold only books seemed to be paranoid about us (But as Andy Grove said, “only the paranoid survice“).

The minute we launched Borders.com, traffic from Amazon.com bombarded and pinged our site.

We had actually planned for this. Rick Vanzura, who was brought in to get our technology and back-end infrastructure house in order, asked an important question before we launched: “can we handle a lot of traffic, especially if it is from a company trying to bring us down.’ He trained the team think about our technological contingency plans, something few of the experienced members of our team even considered.” He was convinced that Amazon and Barnes & Noble would visit our site to conduct a cyber-intelligence operation that centered on learning from our years of merchandising.  

{At that time in 1996, we had some of IBM’s leading scientists work on our merchandise database and search technology, leveraging their previous experience in developing the Vatican Library, an extraordinary repository of rare books and manuscripts)

Ricks question enabled me to leverage some of experience at The Johns Hopins University’s School of Advanced International, where I often participated in Crisis Simulation and Conflict Management / War Game excercises.

Today, most discussions related to crisis simulation and planning involves the military and the government, but companies need to start playing in this arena. It still amazes me how many sites do not even do load testing or even hire hackers to try and ‘crack their code’ before launching a high volume website. This will increasingly become a problem especially as more of a companies place their assets in the cloud..

So if you manage a website, a mobile application or touch any interactive platform (i.e. the Electronic Power Grid), you need to ask yourself ‘are we ready’ and if so ‘what is our game plan.’ It seems that only the guys in IT Security and Risk Managers really stay awake at night asking themselves these questions. According to a recent McKinsey report (God, I love their research), stated that only 3% of companies have conducted cyberwar games to help ensure they are ready to defend against cyber-attack. In fact, many corporate cyberwar-gaming efforts have been directly inspired by national-defense-oriented cyberwar games.

I will be the first to admit that Cyberattacks are different than a company trying to DNS Attack. (In computing, a denial-of-service attack (DoS attack) or distributed denial-of-service attack (DDoS attack) is an attempt to make a machine or network resource unavailable to its intended users. Although the means to carry out, motives for, and targets of a DoS attack may vary, it generally consists of the efforts of one or more people to temporarily or indefinitely interrupt or suspend services of a host connected to the Internet.).

Companies need to prepare for the worst. In fact, it is more important than figuring out and developing a social media plan or Big Data strategy, who areas that attract the most attention in the press.

Here’s some simple suggestions:

  • Set aside 2-3 months to plan weeks, with a manageable impact on security, technology, and business managers’ time.
  • Constantly ask themselves what type of attack they could be susceptible to and what their game plan is
  • Initiate a constant review of the types of attacks others in the industry are suffering and update their own contingency plans
  • Include all functional areas (Legal, Marketing, Privacy, etc.) of the company in discussions (and scenario discussions) about potential threats
  • Identify desired outcomes when there’s an issue
  • Dedicate time each quarter to review plans and work through real scenarios
  • Play the Crisis Simulation Game which requires prioritizing potential threats and then doing scenarios around the top ones (Start simple and focus on a few to start with)
  • Have representatives from different groups design this requires.
  • Document issues and work out different scenarios
  • (IMPORTANT): Assign owners 24*7 to different areas. Often companies have scenarios worked out and then don’t know whow the owners are.

As Mckinsey highlights, a cyberwar game tests for flaws in a company’s ability to react to an attack by answering key questions about the capabilities required for a successful response:

  • Will the security team identify and assess the breach quickly? One organization found that the processes its security team used to address a breach were entirely dependent on e-mail and instant messaging; the organization would have limited ability to respond to an attack that compromised those systems.
  • Will the team make effective decisions in containing the breach? One corporation discovered that it did not have functional guidelines for deciding when to shut down parts of its technology environment. It found that senior executives would have ordered the technology team to sever external connectivity unnecessarily, thereby preventing customers from accessing their accounts.
  • Will the team effectively communicate the breach to the full set of stakeholders? At one financial institution, a war game demonstrated that guidelines had not been differentiated for communicating with customers whose data had been breached. As a result, high-net-worth customers would have received an impersonal e-mail.
  • Can the company adjust business strategies and tactics in the wake of a breach? At one manufacturer, a war game revealed that business managers had never thought through what they would do if competitors or counterparties gained access to sensitive information, and so would be unable to change negotiation strategies quickly after the disclosure of proprietary information about their cost structure.

Similar to the wargames I played at SAIS, scenario playing and crisis simulation can highlight some key gaps that need to be addressed, and how to address these outages.

Sometimes, it is too difficult to predict the type of attacks your site might suffer. In these cases, it’s good to look outside the company. No, I am not talking about consultants. I am talking about hiring or rewarding Hackers to ‘crack the code.’ That’s what company’s like Facebook’s, Microsoft’s and Google’s do where they rewared people for hacking into their sites.

Stay tuned for more Digital Risk thoughts.

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Guest Post: Nicco Mele: The Future of Collaboraiton

Reposted from Collaborative Innovation, a site sponsored by Dassault Systemes and developed by Human 1.0

Article by by  on 

Nicco Mele, 2009 Distinguished Lecturer and adjunct faculty at Harvard’s Kennedy School, has been breaking new ground in web strategies for more than a decade.

In 2004, while webmaster for Vermont Governor Howard Dean’s run for the presidential nomination, Mele invented the landscape for integrating technology and social media into political communications.  He went on to found Echo Ditto, through which he works with Fortune 500 companies and non-profits around the globe developing effective web strategies.

Open innovation and crowdsourcing have become part of Mele’s DNA.  He co-founded Genius Rocket, an advertising agency that pioneered the framework that joins hundreds of well- respected creative professionals by crowdsourcing. The marriage of the open innovation and crowdsourcing models has proven to leverage top talent while delivering affordability and speed to market for clients.

I was excited to catch up with Mele at the Vermont Digital Future Conference held at Champlain College. He graciously shared his unique blend of thinking in explaining why social collaboration continues to grow as a viable resource for innovation, and how he believes funding sources like KickStarter are opening doors previously padlocked to many start-ups.

 

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Future of Work: Interview with Anthony Goldbloom, Founder and CEO of Kaggle.com

As someone whose career in the 21st Century has focused mainly on user contribution systems and user created content, I leverage several crowd-sourcing sites on the Web. One of my favorites is Kaggle.com, which according to its Australian CEO, Anthony Goldbloom, whom I recently spoke to, enables people to outsource big data questions. Every predictive modeling problem is framed with a competition where the person who builds the most accurate model gives that model to the company and in exchange the company gives them a prize. Kaggle is a powerful way to build predictive modeling algorithms. Why is this important? Imagine a bank being able to predict who will default on a loan. (Note: Predictive Models are created or chosen to try to best predict the probability of an outcome. In many cases the model is chosen on the basis of detection theory to try to guess the probability of an outcome given a set amount of input data, for example given an email determining how likely that it is spam (definition from Wikipedia)

Andrew Goldbloom, CEO Kaggle

Goldbloom came up with the idea for Kaggle, while working at The Economist. He worked on an article on big data and data science, although as Anthony reminds me, ‘It wasn’t called that at the time”. While talking to CIOs who were struggling to get value from their data, he knew he could solve them and could “put up those problems (on the web)” and people could kind of prove their mettle by actually solving them.

During our discussion, Goldbloom mentioned two competitions:

  1. The William and Flora Hewlett foundation (Hewlett) reached out to Kaggle’s data scientists and machine learning specialists to develop an affordable solution for automated grading of student written essays. (Not sure my wife, who is a high school teacher will like this). The Hewlett foundation ended up collecting 24,000 graded essays written by high school students. In the end, a British hedge fund trader (trained as a physicist), a software developer at the national weather service and a German grad student created the winning solution, which can help schools assess students’ writing. The Foundation sponsored the contest and awarded $100,000 to the top three research teams. In the end, 250 teams participated and there were 2,500 submissions. (Note: None of the winners had a data science background).
  2. The Wikipedia Challenge focused on getting data-mining experts to build a model that predicts the number of edits an editor would make. Wikipedia wanted to understand what factors determine editing behavior. Contestants were expected to build a predictive model that can be reused by the Wikimedia Foundation to forecast long term trends in the number of edits that we can expect. There were 94 Teams with 115 players and 1024 entries. Here’s a page describing the challenge:

Kaggle combines many of the popular current trends in the industry: gamification, crowdsourcing, virtual workforce, and, of course, Big Data. (Venture Capitalists must love this company).

Companies can build models in house or hire a consulting firm like Accenture. Kaggle’s crowdsourcing solution is a new third option. As Goldbloom points out, “Companies are beginning to see Kaggle as a leveraged arm of their own business.” How does it work? Companies and researchers post their data. Statisticians and data miners from all over the world compete to produce the best models. Companies identify a problem and then leverage Kaggle’s active community to solve it. This crowdsourcing approach relies on the fact that there are countless strategies that can be applied to any predictive modeling task, and it is impossible to know at the outset which technique or analyst will be most effective.

Kaggle’s secret sauce is that there’s lots and lots of data out there, and a strong desire to play with this data.

In particular, Kaggle is gaining the most traction in financial services, in the technology sector, and in life sciences. Competitions filter talent and also let the best data solutions float to the top of the pack while people are giving objective feedback along the way.

As Goldbloom points out “The really nice thing about these predictive modeling tasks is you can back test people’s algorithms on historical data and get a sense for which algorithms perform well and which algorithms don’t perform so well.”

Most of the 45,o00 members on Kaggle call themselves data scientists, which is one of the hottest professions in Silicon Valley. Most of them, however, have an engineer or computer science degrees.  Here’s a breakdown of their professions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kaggle has several public offerings:

Kaggle Prospect (in beta now), which Practice Fusion (another favorite company of mine), a vendor of electronic records, used by opting up their data to determine what types of problems could be solved, such as predicting who will develop diabetes.

Kaggle In-Class is another product, predicting the past or the future requires students to build models
that are evaluated against past outcomes. For example, an instructor might host a predicting-the-past competition that requires students to build models to predict wine prices based on country of origin, vintage, and other factors. The winning model would then be that which most accurately predicts actual prices from a set of historical price outcomes (hidden from the students).

Kaggle has a great business model, one that should be considered by other crowdsourcing companies. As Goldbloom explains:

“Competitions are open to everybody. The sole purpose of these competitions is to qualify talent. So you if you finish in the top ten percent of two public competitions, we’ll label you as qualified talent.” Most of Kaggle’s commercial work, such as banks trying to predict who’s going to default on a loan is conducted via a private competition. “For private competitions we basically invite 15 of our strongest members. Each of them compete behind the scenes and the prize money is consistently – it’s a six figure sum and we also take a large fee on those private competitions.”

The private competitions require large data sets, and an invitation only crowd-sourcing process, both of which are kept private. All the participants received some sort of monetary reward.

Here are some examples on potential ROI vs. Realized ROI.

Transactional Fraud: A large credit card issuer.

Assuming the issuers has 50MM credit cards with their customers spending on average $500 per month. Based on current industry estimates, let’s assume the issuer experiences 10 basis points (1 basis point is 1/100th of 1%) in current fraud losses, will put total fraud losses per year in the neighborhood at $300MM / year (50MM * 500 * 12 * 10 basis points). Just a mere 5% reduction in fraud losses with a better model will generate an incremental return of $15MM / year.  This can easily put the ROI in the double digits, especially when you can think about much time and how many people you would need to resolve these issues.

Retail consumer marketing: A large retailer

A big box retailer, with over 20MM customers, sends product promotions to their customers on a monthly basis. Typically the number of customers who respond to these offers is less than 1%. Assuming, each customer spends $200 on average because of the marketing offer, the retailer probably sees $40MM (20MM * 1% * 200) in incremental sales. A better predictive model through Kaggle can easily double or triple the response rates to these marketing offers, there by leading to $80MM to $120MM in incremental sales!

Goldbloom’s team’s grand vision is to create a Meritocracy, a labor market where the best people rise to the top, both in perms of skill and value.” (Meritocratic is a system where appointments and responsibilities are objectively assigned to individuals based upon their “merits,” namely intelligence, credentials, and education)

Goldbloom provides an example: “Roger Federer is ranked number one in the world because he wins more tennis matches than other tennis players. I would very much like to see us create the world’s first meritocratic valuable labor market. So, you know, I mount the argument that, Roger Federer is a phenomenal athlete, but he doesn’t generate, you know, a lot of value.” (most people in the audience, for example)

I highly recommend that you check out Kaggle.com!

ROI (Real Overall Impact!)

  1. Use a public area to identify potential leaders to participate in a private area
  2. Leverage a real time leaderboard which motivates people
  3. Enable the community to determine the content – what problem will be resolved.
  4. Check out Hacker News for a good implementation of the Thumbs up / Thumbs down process
  5. The platform for uniting free agents is important.
  6. People learn more by doing vs. sitting in a class or reading a user manual

Transcript of Interview:

What is Anthony reading?

Interview was recorded on June 20th, 2012 and written up in Boston at the Trident Bookstore in Boston, while watching another competition: Women’s Gymnastics at the London Olympics!

Thank you Nation!

 

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Mind the Gap

Once a month, I take a peak in my ‘to read’ folder in my Google Drive and catch up on some reading.

One almost-forgotten article written by MarketingProfs.com highlighted some research showing big measurement gap between ‘what’s important to management’ and ‘what can actually be measured.‘ (see chart way below). According to the research, marketers seem to focus on data that is least important to management; they tend to focus on likes, clicks, downloads, etc. Unfortunately only a small percentage are starting to focus on key areas such as customer lifetime value:

In an earlier interview here, Gary Angel, CEO of Semphonic highlighted this points:

They are (beginning to) look at customer segmentation and lifetime value, and building predictive models that help you understand which customers might attrite or which are the best candidates for retention- models and analysis that really help you understand which of your operational and marketing efforts drive incremental lift and change customer behavior.

Financial institutions, airlines and others with affinity type of programs have been some of the few industries to understand their various customers from a financial perspective. When I worked at American Express back in the late 1900s (1989-1992), all members were placed in deciles (In descriptive statistics, any of the nine values that divide the sorted data into ten equal parts, so that each part represents 1/10 of the sample or population). Companies, especially those on the web or on mobile platforms, need to start approaching their customer base in this manner so they can understand their most valuable customers (not always the ones spending the most), their least valuable customers, and those with high probability to move up to one of these important segments. 

Some important items to consider when looking at the value of a customer:

  • Determine how much it cost to engage with them and drive them to a transaction
  • Break this information down by channel (Google, social network, email, etc.)
  • Subtract your costs (decide if you want to make these costs fully-loaded included the costs of employees)
  • Ensure that you can track each individual, their original channel, etc. over time

Tracking true ROI and lifetime value requires a real metamorphic change in some organizations. It requires a lot of data crunching, strong analytic skills (something that is in high demand), and is intellectually challenging. As Gary Angel points out it’s a challenge “to balance the long-term impact on retention with a short-term monetization opportunity around display than to simply “optimize” your revenue, that the two tasks can hardly be compared.”

The research also touched upon the discrepancy between what is being tracked and what managements wants to track were highlighted in the reports, such as brand awarenes: 78% of marketers said it is important to executive leadership, but just 32% of them feel they can actually assess this. This is nothing new. For decades, brand (only) marketers have fought to prove their value because so much of awareness advertising is untrackable.

Today, though, marketers finally realize that building brand encompasses a great deal more than a nice logo or tag line. The complete customer experience impacts the awareness and impact of a brand. (See my Hugh Dubberly interview). 

One area marketers seem to be doing a good job is in driving traffic to the site. The problem, however, is that driving traffic to the site is kind of an older paradigm (unless you want to own all the transactions). I would recommend to ‘fish where the fish are,’ and conduct your marketing efforts and engage with customers where they spend their time.

NOTE: MarketingProfs.com customer base was used for this research. It’s site states that it’s user base consists of 449,000 entrepreneurs, small-business owners, and professional marketers at the world’s largest corporations. This leads me to believe that not many executives were included their research. Most of these people (at least ones I work with and some of my big data research has shown) believe management can not clearly articulate its KPI’s for success. Lets just say there’s a healthy tension between the two groups. 

It’s important to really (gently) force management to clearly articulate its quantitative criteria for success, and if you don’t have the means to get to those numbers yourself, then seek outside assistance. I can recommend some firms, if you would like (and not promote myself).  

 

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Thought of the Day: The modern assembly line: Starbucks!

With the service sector’s share making up 80% of the US economy. I have focused some of my recent interviews on service design and delivery. Namely, how companies plan and organize people to provide better services around its products for its customers. 

One of the first companies that came to mind in the service economy is Starbucks, especially after they recently purchased my favorite bread place in San Francisco: Le Boulanger 

(When I tell people that Starbucks is a good indicator of the economy, they often comment on the number of unemployed people or consultants who spend their day working out their Starbucks office. This is especially the case, if they know that I do some of my best writing at the Starbucks in the San Francisco Presidio area.)

So, last night I did a Google search on Starbucks and came across an August 4, 2009 Wall Street Journal Article entitled Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques.  The article discusses how the company wanted to be more lean and agile in order to improve its ability to service customers faster and more efficiently without sacrificing excellent customer service. 

When I go into a Starbucks, however, it often reminds me more of a traditional assembly line. An assembly line that is similar to the one that Henry Ford developed for automobiles by leveraging blue-collar workers. These people rolled up their sleeves, focused on a single task and helped kick the country into high gear growth. While they made up a large percentage of the population, I would hardly call them participants in a lean and agile process.

Ford reinvented how factories were designed and how work was conducted. One of the main principles of the Henry Ford assembly line was: “to place the tools and the men in the sequence of the operation so that each component part shall travel the least possible distance while in the process of finishing.”(Source: Wikipedia) 

Doesn’t this sound a bit like Starbucks? Interestingly, though, many of today’s service oriented companies’ look like assembly lines. And while this might have been true for most fast food establishments, Starbucks seems to be establishing a new trend by having it’s front line workers be college educated workers.

Recently, I walked into a Starbucks on Cape Cod and did a little research. I sat down with the manager who told me that 80% of her employees are college educated and 20% are currently working on a college diploma. She also told me that 100 people apply for every open position. These numbers reinforce the challenges our economy faces. There are many well-educated college students who are now Barista Assembly Line Workers. 

I have done this research at 10 Starbucks so far, and so far the numbers above seem slightly skewed towards more educated workers. However, this does seem to be the trend  – there are many smart, energetic and ambitious people behind the counter wearing green and white.

During my online research, I also discovered that Starbucks has actually asked its employees to slow down their service (or as we say in California ‘take a deep breath first’) so as not to mimic a fast food assembly line image. Seems like that’s quite a challenge. Even though the customer service is usually great, many of the baristas seem to be repeating a similar process over and over.

Is this a good thing? Let me know at scott@starbucksgeneration.com

 

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Future of Work: Interview with Per Kris Halvorsen, Chief Innovation Officer at Intuit, Inc.

My former employer, Intuit, has always been considered a thought leader in the area of product innovation. Even with this reputation, however, the company realized in 2006 that it needed to become more nimble and innovative to compete. To accomplish this, Intuit had a number of key hires including Per Kris Halvorsen, Chief Innovation Officer at Intuit, who held senior research positions at the Sloan Center for Cognitive Science, HP, Symantec, and Xerox. 

I recently reached out to Kris because I witnessed first hand at Intuit his ability to influence change and successfully motivate employees to think about innovation in new ways.  There was another reason too: Norwegians like Kris have always had a big influence on me. I was raised by a Norwegian up until I was four years old.

At Xerox, Kris worked with some real thought leaders such as Brewster Kahle, who created Alexa, and John Seely Brown, who currently heads up Deloitte Center for the Edge. Kris brought to Intuit the thought process that in order to make digital technologies successful, you need first to address cultural issues. I asked Kris about what was in fact the secret sauce? He provided some very specific insights into how organizations can become more innovative.

Moving from the desktop to the cloud

This change was a big challenge for Intuit. Historically, Intuit had been successful in the desktop space, mastering such tasks as making it easy for small business owners to master tax filings, bookkeeping, etc. As Kris explained, “It became like fine art – entering data using a keyboard and mouse.” However, then people started to leverage other devices, such as smart phones and other technologies such as voice interaction. So, the company identified five key areas of focus: User contribution systems (see Scott Cook’s Harvard Business Review article on this), Data analytics, Voice interaction, Touch interaction, and Image processing.

We are really about democratizing innovation!

Intuit believed that mastering these five areas would lead to a better customer experience, which is something they are fanatical about. The challenge, however, was also to build a simple framework to explain their approach and disseminate this information throughout the company. Kris believes, “You need to make innovation everyone’s business. It is not something that is reserved for a small team of researchers in the laboratory.”  His team’s job was to create the right environment for this democratic laboratory. Intuit leveraged three main levers to accomplish this: Internal mechanisms (processes), culture, and technology.

1. New and existing internal mechanisms (or processes): To start with, Kris leveraged the companies existing leadership model. He decided to get in front of senior management at the company’s bi-yearly leadership conference where directors and above share updates on their business with their company , so that they could cascade his recommendations to their teams.

This also enabled Kris to address, up-front, any potential resistance from middle management. After all, Intuit already had a successful formula that catapulted it to market leaders in several categories. Certain leaders in the company knew it didn’t want to be caught off guard like Netscape was in the browser war with Microsoft. It was also to reduce internal obstacles so that people can get to market faster. Kris recommends, “You will be more effective if you can make innovation happen faster, iterate faster, get feedback, and make progress without waiting for that one brilliant insight.” My experience is that many product managers want a game changing insight to happen before taking action and changing their product.

Intuit also implemented the Design for Delight (D4D) approach, or as it is referred to in other companies, Design Thinking. D4D consists of giving some basic tools for brainstorming, making sure that you don’t lockdown on a single solution before you’ve considered a number of them. Kris stated, “One of its key principles is helping people develop customer empathy and deep customer insights and then rapidly iterating on the hypothesis and experiments that they had and doing that with customers. It’s important to give all employees the freedom to develop new and innovative solutions.” Kris explained, “We turned then our intent to be an innovative growth company into simple steps and initiatives, concrete ones, along these three different dimensions.”

2. Culture: To implement D4D, it’s imperative that there’s a company wide understanding that the path to business success is to solve customer problems well.  Product managers are trained to go beyond quantitative findings and focus on the true pain points or jobs (task) a small business owner wants to achieve. To help change how the company thought about innovation, it created Innovation Catalysts to shepherd the process along. These coaches focused on whether the software solved the user’s problem in a delightful way by talking to users and solving problems with colleagues rather than depending solely on their own genius.

For Intuit, a strong customer focus does not mean just listening to customer, but rather observing them by developing empathy and insight. Kris points out that someone at one point said, maybe somewhat flippantly, that some companies hire anthropologists for this purpose, and Intuit has 8,000 of those amateur anthropologist.”

A key cultural aspect was giving employees 20% free time to innovate. With the rise of Google, no single tactic comes up more in innovation circles than their concept of 20% time. Even though this amount of time is not tracked, I would venture to bet that a small percentage of employees actually take advantage of it. 3M actually developed a 15% time rule in the 1950s with the same exact intentions and basic philosophy. (For more about this read Wired’s article: The 15 Percent Solution.)  Kris emphasized, “If you plan everybody’s time 100% and then ask them to be innovative and experimental, you’re really not setting yourself or them up for success, but you’re setting the whole organization up for frustrations.”

Intuit’s matrix organization has always emphasized teamwork, so it leveraged again the “learn-teach-learn” approach and encouraged employees to share their learnings with others. One way to accomplish this is to bring people together from different groups, so they can learn from each other and then bring their learnings back to their respective groups.

Finally, the company held three types of Jam Sessions. First, it started with “painstorms” in which employees detect customer pain points or problems that should be address and alleviated. After identifying the relevant “outages,” customer issues, a “sol-jam” session is held where the company challenges the employees to identify solutions that address consumer pain points. Once the solutions are discussed and narrowed down to a relevant few, the company then embarks on the third step in the process called “code-jam,” which consists of quickly developing and sharing a simple product or service with a customer and measuring whether or not it has successfully addressed their pain

Kris also stressed his own journey in working more with smaller teams and organizations that are more manageable. “It’s easier to understand them and you can wrap your arms around it in a way that allows you to just play out your program more effectively and maybe be a more effective contributor to the organization’s success.” Intuit has adopted this approach and focuses on smaller teams to develop products. Scott Cook summed up this approach in a Harvard Business Review article entitled The Contribution Revolution: Letting Volunteers Build Your Business.

The lesson is big organizations get committed to the way things were. The power is in small entrepreneurial teams.  It’s the small team led by an entrepreneur that can invent the way things will be. So, a team of initially two and then three people did SnapTax. Similarly, our online-payroll service was done by a small team as well. Each one solves a problem that nobody else has solved and that’s what keeps the company on the cutting edge of change, whether it’s on mobile phones or web services.

3. Technology This is the third pillar in Intuit’s Innovation model. Like most companies, Intuit recognized the rapid emerging popularity of mobile. Kris states, “It’s important to say, hiring some experts that were not just good, but also inclined to share their knowledge with others, building libraries, setting up shared services, SMS messaging buses, and aggregations that people could get their notifications out in both the time to pay and arm and a leg for it.  So, you have to build the capabilities internally to use the technology.”

Kris believes that if companies truly understand the Process, Culture and Technology levers, they can accomplish great things. “If you can’t get your hands on those levers, you’re not going to have any positive effect and you just end up being frustrated.  So, spending time figuring out what levers you have to move by studying people who are successful at it in particular is very worthwhile.”

Transcript of Interview

People and Companies mentioned during discussion

Intuit and Intuit Innovation Lab

PARC  (Palo Alto Research Center Incorporated), formerly Xerox PARC, is a research and development company in Palo Alto, California, with a distinguished reputation for its contributions to information technology and hardware systems.

Ronald M. Kaplan is a Senior Director and Distinguished Scientist at Nuance Communications. Prior to that he served as Chief Scientist and a Principal Researcher at the Powerset division of Microsoft Bing. He is also a Consulting Professor in the Linguistics Department at Stanford University and a Principal of Stanford’s Center for the Study of Language and Information (CSLI). He was previously a Research Fellow at the Palo Alto Research Center (formerly the Xerox Palo Alto Research Center), where he was the manager of research in Natural Language Theory and Technology.

Brewster Kahle is a computer engineerInternet entrepreneur, internet activist, advocate of universal access to knowledge, and digital librarian.

John Seely Brown is John Seely Brown is a researcher who specializes in organizational studies with a particular bent towards the organizational implications of computer-supported activities.

Steven Berlin Johnson is the best-selling author of six books on the intersection of science, technology and personal experience.

Recorded on the phone on June 20, 2012. Written up the week of July 18th in Cape Cod, Massachusetts.

Thank you Nation!


 

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