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General David Petraeus on sense and respond

One side effect of the recent headlines about our various generals is that they led me back to remarks General Petraeus made in March to the In-Q-Tel CEO Summit. Here are a few excerpts:

“In the digital world, data is everywhere, as you all know well. Data is created constantly, often unknowingly and without permission. Every byte left behind reveals information about location, habits, and, by extrapolation, intent and probable behavior…”

“The current “Internet of PCs” will move, of course, toward an “Internet of Things”—of devices of all types—50 to 100 billion of which will be connected to the Internet by 2020. As you know, whereas machines in the 19th century learned to do, and those in the 20th century learned to think at a rudimentary level, in the 21st century, they are learning to perceive—to actually sense and respond…”

“Items of interest will be located, identified, monitored, and remotely controlled through technologies such as radio-frequency identification, sensor networks, tiny embedded servers, and energy harvesters—all connected to the next-generation Internet using abundant, low cost, and high-power computing—the latter now going to cloud computing, in many areas greater and greater supercomputing.”

He sounds like us, or we sound like him. Take your pick, we are all talking about the inevitable rise of sense and respond strategies.

Anticipate Customer Needs

Why CRM Hasn’t Helped

Hint: R really does stand for relationship

Customer Relationship Management (CRM) was originally developed as a way to improve customer experience, under the banner of an “IT-enabled business strategy focused on the development and maintenance of mutually beneficial relationships between the seller and his buyers.”

But it hasn’t improved the customer experience much at all. The issue is simple: CRM doesn’t actually track relationships or experiences, it tracks transactions. As a result, CRM doesn’t take into account the customers’ views of the company, and doesn’t capture how these interactions make customers feel, much less what they want or need.

Yes, CRM does a great job tracking company perceptions of value, and tracking those interactions that are important to the company – sales, marketing, service, etc. – but it fundamentally misses what customers think, feel, and want as a result.

It delivers an inside-out perspective that means the conclusions reached by companies about customer relationships are skewed, based on the interactions that occurred rather than the customer perceptions that resulted.

While CRM can tell the company that two customers have the same set of interactions, it can’t tell which customer is delighted, and which feels trapped, upset, and may be actively bad-mouthing the company online. This is important information.

Billions of dollars were invested in technology to deliver better customer experiences. So what happened?

Today, most CRM implementations are simply data stores of the company’s view of the customer, corralling and distributing what a company knows about its customers while capturing – in some cases – individual customer interactions.

So you’d think that the billions of dollars invested in CRM each year would help companies avoid being so stupid. Add billions more in sales force automation (SFA), business intelligence (BI) and other enterprise-wide technologies to the mix, and you’d expect customer satisfaction and customer intelligence to skyrocket.

After all, in theory the combination of these technologies gives companies the ability to remember everything about their customers and their interactions, and give customers what they really need. Well, not really.

Why not? The answer is simple. Just because a company can remember “everything” by collecting more data doesn’t mean they bother to use it.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Pervasive Memory Physical Web Transform Touchpoints

The (Smart) Customer as a God

Customers will send “intentcasts” out to the marketplace, revealing only what’s required to attract offers.

Our friend Doc Searls carried the flag this weekend in a major piece he wrote for the WSJ. We loved this passage:

“Big business continues to believe that a free market is one in which customers get to choose their captors. Choosing among AT&T, Sprint, T-Mobile and Verizon for your new smartphone is like choosing where you’d like to live under house arrest. It’s why marketers still talk about customers as “targets” they can “acquire,” “control,” “manage” and “lock in,” as if they were cattle. And it’s why big business thinks that the best way to get personal with customers on the Internet is with “big data,” gathered by placing tracking files in people’s browsers and smartphone apps without their knowledge—so they can be stalked wherever they go, with their “experiences” on commercial websites “personalized” for them.

It is not yet clear to the perpetrators of this practice that it is actually insane. Think about it. Nobody from a store on Main Street would follow you around with a hand in your pocket and tell you ‘I’m only doing this so I can give you a better shopping experience. But that is exactly what happens online (as The Wall Street Journal has shown at length in its investigative series ‘What They Know‘).”

One Smart Page

The most disruptive page on the Web.

We believe in fewer words, more action. But we also know that the flood of innovation – and change – all around us can be overwhelming. It’s nearly impossible to keep up, or to focus intently on one idea.

To help you spot opportunities, we offer One Smart Page. Think Drudge Report meets Fast Company, and you get the idea. Click on over and see for yourself.

You’ll find hundreds of links to innovators, disruptors, researchers and entrepreneurs. The links will keep changing, because we want this page to represent the most promising initiatives in the race to make everything smart.

The Disruptive Innovation Machine

Identify, Differentiate & Interact with… Everything

Look out your window. Thanks to four disruptive forces, everything you see has the potential to be a business opportunity, if you keep three words in mind: Identify, Differentiate, and Interact.

The Disruptive Innovation machine lists these four disruptive forces around the edges (not coincidentally where disruption happens first) and has three empty boxes for you to add a phrase to correspond with each essential word.

That is, what can disruptive innovation help your customers IDENTIFY? How can it help them DIFFERENTIATE this person… place… thing… idea… event from all else? What options can it offer them to INTERACT with it?

Let’s walk through an example of how you might use the Machine.

You could start by thinking of a specific segment of customers. For this example, let’s imagine you run a busy doctor’s office and the segment you are targeting is busy tech-savvy patients.

The Machine will help you figure out how your office could leverage wireless devices and one or all of the disruptive forces that are starting to rip apart existing business models. These forces (Digital Sensors, etc.) are shown at the outer edges of the Machine.

Write a noun in the first box, which stands for Identify. You are trying to combine three words to describe an innovative new service you could provide to your patients. Let’s use “DIET.” This means your service will be identifying proper diets for patients.

Now, we need an adjective for the Differentiate box, which means on what basis will you be helping patients differentiate between diet options? We could write easiest or cheapest, but for now we will write “HEALTHIEST”.

Finally, we need a verb for the Interact space, which represents how patients will access the results. You could write demonstrate (for video demonstrations by a nurse). Let’s stick with “DEMONSTRATE”.

As you use this tool, try various combinations, and try to include the disruptive forces in your answers. For example, a doctor’s office could list different ways to use Digital Sensors (noun, in the Identify box) to better serve patients. It could encourage certain patients to wear a wristband or other device that monitors the patient’s health and reports any anomalies to the healthcare provider.

Likewise, the physician could leverage Pervasive Memory to utilize patient’s sensors data over a period of months and years. This doesn’t have to involve more work for the doctor; numerous apps are flooding the market that accomplish such feats. The trick is mostly for healthcare providers to recognize these disruptive forces and incorporate the best of them into interactions with patients.

The Digital Innovation Machine can produce countless possible innovations, and many of them will generate millions or billions in profits over the next few years. At first glance, you might underestimate the power of this tool. We’d be happy to discuss it, if you like. This sort of thinking is also described in detail in our book.

Reward Employees

Does Your CEO Want to Be Smart?


Outsmart your competitors. Buy the book


In the interest of efficiency, predictability and cost savings, CEOs have allowed the mind-numbingly frustrating treatment of customers to continue unabated. Whenever we mention the title of our book – Smart Customers, Stupid Companies – heads immediately nod. Everyone knows that companies act stupidly.

Smart wireless devices could change this, but haven’t. Why? Because such devices have been embraced by customers but resisted by companies. They’re not uniform, not bulletproof, not officially approved by IT.

Plus, smart wireless devices alone can’t change the archaic compensation systems that reward division managers for competing against each other rather than cooperating to best serve customers. They can’t communicate with company databases that live in silos, or that are hamstrung by outdated software and/or design.

We could go on, but here’s the point. Unless and until your CEO says, “Acting smart is our #1 priority,” it won’t happen. This is not something that can be achieved by mid-level managers lacking a mandate or a budget.

Acting smart will require massive changes. It will require your firm, no matter how large, to act like a startup.

But if your CEO isn’t on board, you’re just going to have to get used to the Land of Stupid.

Disruptive innovation

Is Your Firm Ready for Simultaneous Change?


Outsmart your competitors. Buy the book


One of the biggest challenges in looking forward two, five, or more years into the future is that everything changes at the same time, not just the elements on which you are presently focused. Social media experts think social media will change everything. App developers think apps will change everything. But in reality, everything is changing at once.

Here’s the safest prediction we can make: Everything will get smarter.

How you react depends on your industry and your company. If you wish to compete on price and sell low-quality commodity products, then you can safely ignore much of what we have written in Smart Customers, Stupid Companies. If you wish to maintain your margins and be a market leader, you will need to act smart, to leverage sensors, to support the emerging Physical Web, and to develop a strategy for interacting with customers while they simultaneously interact with everyone else.

You will need to replace your dumb touchpoints with smart ones. You will need to become obsessed with saving your customers time, money, and effort. You will need to provide customized services. You will need to do all these things, most likely in a radically different way.

Most importantly, you will need to focus with laser-like intensity on the intersection of initiatives that benefit your customers and benefit your firm.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Disruptive innovation Modularize Products and Services Pervasive Memory

7 Ways to Tell If Your Company Is Stupid


Outsmart your competitors. Buy the book


For our new book, Smart Customers, Stupid Companies, we spent eighteen months studying the growing chasm between smart customers and stupid companies. The former are increasingly empowered by wireless technologies, computers and sensors that are, well, everywhere. The latter mistakenly think they can get away with the same old sullen and slow approach.

Truth is, our whole economy is changing radically because of disruptive forces like digital sensors and the spread of the Web from computer screens to the physical world.

Here are seven tip-offs that your company is acting stupidly:

1.) Two employees in a row ask the same customer for his or her account number. Any company that can’t figure out how to pass an account number from one representative to another won’t be able to deliver innovative service.

2.) Your company can’t record or remember what a customer says. Customers tell us how often they get the sense that the customer service rep or sales clerk is only listening to them with one ear. They notice that she has no way to record or share your comments. Why would a customer waste their breath talking to a firm that’s too stupid to remember what they say?

3.) Your company spends more money selling than serving. Do you spend more money on advertising than service innovation? In today’s era of radically higher customer expectations, that’s stupid.

4.) Your products come with instructions longer than a postcard. Sufficiently advanced technology is indistinguishable from magic, said science fiction writer Arthur C. Clarke. A toddler can figure out how to use an iPad, because doing so is intuitive. A product that needs lengthy instructions isn’t worth money.

5.) Your company closes, ever. We are not talking about a cute little standalone gift shop. But if a 5,000-person company can’t figure out how to help a customer solve a problem at 2 a.m., you don’t understand that 24/7 wireless access means “always open.”

6.) You hunt customers like prey. Pretty soon, companies will be able to track customers everywhere, even inside their own homes. With great power comes great responsibility; a smart firm remembers information for customers, not about them.

7.) Your team doesn’t even know how to spell “personalization,” never mind practice it. Smart companies have figured out how to deliver personal service for the same price as mass-produced products. By the way, personalization is the reason you won’t give your wife your cell phone when she loses hers.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Anticipate Customer Needs Disruptive innovation

Don’t Close, Unless You Want to Close Forever


Outsmart your competitors. Buy the book


There are still many businesses where customer service and support is provided only during certain hours: if you call after, say, 7 p.m. Pacific Time, technical support is closed. Seriously? Does the firm really expect that none of their products are installed or used after 7 p.m.?

“CHANGE IS THE LAW OF LIFE. AND THOSE WHO LOOK ONLY TO THE PAST OR PRESENT ARE CERTAIN TO MISS THE FUTURE.”
— PRESIDENT JOHN F. KENNEDY

These sort of time-based restrictions are going to disappear for companies that successfully embrace the changed notion of customer service and customer experience.

Not because it suddenly becomes profitable to stay open 24/7. But because when you compete with firms like Zappos, which operates their warehouse 24/7 even though it’s not the most efficient way to do so, the notion of being “closed” will become suicidal from a competitive perspective.

Competitors like Zappos recognize that the value of delighting customers who order after midnight with a shipment that shows up on their doorsteps literally hours after being ordered can’t be measured by “maximized picking efficiency.”

They’re measuring the value of providing “a wow experience, which (their) customers remember for a very long time and tell their friends and family about.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

7 Ways to Radically Improve Customer Service


Outsmart your competitors. Buy the book


What if …

1. Your customers booked customer service time through an online calendar, and reps contacted the customer at the scheduled time?

2. When customers opted to leave a message rather than wait on hold, they could choose a specific call back time (and actually get called back)?

3. You connected each product customers used to an analytical service at the company, so that reps could more quickly diagnose problems and offer customers relevant guidance?

4. Using such a service, you solved customer problems remotely, minimizing or eliminating the need for a call? Even better, you solved problems before customers were aware of them.

5. You could eliminate data silos, so that all customer information is instantly accessible to any rep?

6. Ratings and specialties of specific service reps were posted online, allowing customers to choose (and rate) who serves them? What if rep compensation was tied to these ratings?

7. Voicemail trees were posted online, and you allowed customers to click at a specific point in the tree to initiate the call, thus skipping the entire navigation process?

Of course this list could be much longer, but this gives you the basic idea. Now that you have a starting point and a roadmap, where can you disrupt your industry?

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]