business today & tomorrow

Did you ever read the book ‘Paying it forward’, or watch the movie with the same title? The premise of the story is that someone does a good deed for three people, and in exchange ask each of them to ‘pay the good deed forward’ to three more. So the nine people that get help have to do twenty-seven good deeds between them…. and this goes on.

This is not so different from the ‘viral expansion loop’, which is how many on-line businesses are created today. To achieve a ‘viral expansion loop’, according to howstuffworks.com, a site would first need to attract an initial group of users. The site would need to offer a compelling experience — one so interesting that the users feel the need to convince others to join. As the new group of users join, they too find the experience compelling and will tell more friends. Each incoming group of people is larger than the one before, and the site experiences an explosion of growth.

Hotmail was created using a ‘viral loop strategy’, and Facebook grew using a ‘viral network’ strategy.

Despite the fact that only a few of these organisations have a revenue model embedded in their core business, (Jonathan MacDonald, my business partner and co-founder of this fluid world, raised this issue in his recent blog Twitter Value) the founders still seem to be making money. This either by being auctioned off (such as YouTube bought by Google for $1.65 billion), or by monetising their audiences through on-line advertising (easier said than done but still happening).

It does however raise the question of why the people who played such a key role in building and growing these businesses, i.e. the users, are never rewarded for their effort (outside of the pleasure of using the service), and why a slice of the revenue attached to them as ‘part of an audience’ is never funnelled back?

‘Paying it forward’ is a concept driven by the idea of doing something good for people so it was with great interest I read Adam L. Penenberg’s article ‘Loop de Loop’*, where he describes the viral-loop application he has created (thank you MZ for the find ).

This is how it works. When the app is installed on Facebook, or any other social network, it assigns a viral quotient to the user, telling him how much he’s worth, in dollars/pounds, to that social network. This is based on an algorithm that takes into account such variables as the company’s current valuation and the user’s level of activity, the level of activity of all his ‘friends’, and his influence, expressed, in large part, by his ability to persuade others to download the widget.

Mr. Penenberg raises an interesting issue when he finishes the article by stating the following “Once you find out what you’re worth, feel free to ask Mark Zuckerberg** for your fair share. After all, without you — and all your friends — there wouldn’t be a Facebook. So if he wants to make money off you, maybe it’s time you got in on the action.”

I’m liking the idea of organisations having to ‘pay it forward’ to the people, not only as a profit sharing exercise but as a Return On the Time and Effort (Jonathan refers to it as ‘advocurrency’) the users put into making the Internet the vibrant and useful place that it is today – so go on find out what you are worth and monetise away!

*Published in the October 2009 issue of Fast Company

**Mark Elliot Zuckerberg created Facebook with fellow computer science major students and his roommates Dustin Moskovitz, Eduardo Saverin and Chris Hughes., and also serves as CEO.

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I’m in the US at the moment, and every time I come here the same old question of customer service is raised in my head.

Ok, I know it’s slightly annoying when you sit in a restaurant and Melanie tells you “she’s going to be your waitress for the day”, I also know it’s quite annoying when Melanie, in a very over excited voice, tells you that their “pecan pie “is mmmmmm better than her grandma’s”, and yes it’s incredibly annoying when Melanie comes up to your table every nano second to ask “how y’all doing there?”.

However it’s a lot less annoying when you call the car rental company because you can’t find their offices and they ask you if you would like them to call a cab for you.

It’s not annoying at all when you get a major up-grade on your car, and the go ahead to bring it back late on the return date, just because it’s your birthday in a week.

And it’s everything but annoying when you stop at a petrol station to buy some cream cheese (not realising that American petrol stations are all about junk and nothing about food), and the guy behind the counters runs across the highway to some random diner to get cream cheese for you (free may I add).

So how did they get to this level of customer service in the US?

Well the truth is that Melanie understands what job she’s in, she’s in the job of serving customers, and making them happy (unlike us Europeans who define our jobs not according to how we do it, but what we do…we work in a restaurant, we work in a bank, we run a major corporation).

It’s also true that Melanie does not resent the fact that her job is to serve customers, she works in a culture where there is no shame in being in the service industry  (unlike us Europeans who more times than not refuse to accept that we are all in the job of serving customers in some form or another, or at least we should be).

In addition, Melanie works in a system that ensures she is rewarded up to 25% of the bill for a job well done, but only IF she does it well, and if not, she may find herself without a job (no automatic 12.5% service charge no matter how many times you’re ignored, served cold food, or refused to replace one dressing for another).

And lastly, how is a job well done defined in the US? Well the same as Wikipedia’s definition of customer service ‘it’s a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation’. That’s right, in the US I, the customer, decide what is good service! (and not, as it’s mostly the case in Europe, the company or person delivering the service).

So what does a chihuahua have to do with customer service? Well we decided to put American customer service to the test by asking the concierge at the Bellagio if she had seen my chihuahua.

For you who have not been to the Bellagio, it’s a maze of over designed décor, people, slot machines, and shops, basically total stimuli overdose. There is as much chance of finding a chihuahua in the Bellagio as me washing my hands next to Dolly Parton in the hotel’s ladies room (ah but wait, that did actually happen!). Well I can tell you the Concierge passed with flying colours. She looked incredibly concerned, she asked everyone behind the desk if they had seen a chihuahua, she called security, and finally she took my number explaining that they would call me when they had had a thorough look, and you know what, she did, and all this without laughing! Martha and I score Bellagio’s customer service douze points!

So maybe next time we go to work, we should all bring a small piece of Melanie with us!

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Who are the lowest class citizens in business? That’s an easy one, CUSTOMERS!!!

The minute you commit to a company, the second you say “I do” and sign on the dotted line you are on a downward spiral!!!

A few weeks in my life as a customer looked as follows.

“Hi Vodafone I got my phone stolen”. “OK you have to pay 25 pounds for a replacement (despite having paid insurance for three years)”. “For what”? No answer. “Where in my insurance contract does it say that I have to pay 25 pounds?” “Nowhere” I’m told. “Are you aware that I’m not contractually bound to pay the 25 pounds as it’s not mentioned in the insurance contract I signed?’. “Ok”, they say, “but we will not send you a replacement phone if you don’t”. Ahhhh I’m not just a second-class citizen, I’m a hostage!

“Hi Citibank, I want to open a second account”. “Sure no problem, we do have a really good interest rate available right now but you can’t have it because you’re already a customer” (I promise you this is a direct quote!). Great, treating me as a second-class citizen behind my back is not enough, you have to rub my face in it!

The good news is I know how you can be promoted to ‘persona grata’ and be treated with respect by organisations who are very happy to take your money! The bad news is it will require you to move once a year in order to change service provider, or alternatively to renew your contracts on a yearly basis.

Why is that? Because doing this will move you from the retention box, to customer Nirvana…the acquisition box!!!

You don’t believe me? I left a message on the Virgin answering machine one Sunday evening telling them I was moving and was looking for a broadband package. At 8.30 the next morning my mobile rang and a very pleasant Paul from Virgin said “Hello Miss Acquisition, how can I help you today!?”.

On the opposite spectrum I rang Sky to let them know I was no longer receiving e-mails and Beth announced “No problem Miss Retention, you can expect a call within 48 hours at which point we will see what we can do”. No promise of any solution any time soon. And even if they manage to solve the problem 48 hours later when they eventually do call, well we all know that 48 hours in no e-mail land is a lifetime!

If you are reading this and you’re a company, you will have seen all the stats telling you how much cheaper it is to retain a customer than to acquire a new one. They have been around since I graduated. So how about accepting that the grass may not be greener on the other side and start taking care of what you have? Trust me the ROI makes sense.

And if you are reading this and you’re ‘just a customer’, I don’t know about you but I think dealing with estate agents, packing boxes, lifting heavy items up and down stairs, and paying whatever it costs to move to a new place is a cheap price to pay to avoid being a second class citizen!

My lease is coming to an end in a few weeks so that’s me off flat hunting, feel free to join me!

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‘The what’ I hear you say…

I’m referring to the problem every business has (and if they think they don’t, they are wrong). I’m talking about needing to change, and yet at the same time needing to stay the same.

Let me explain…

Every business has to exploit the present (make money today), but due to the unpredictable world we live in all businesses also have to explore, and subsequently evolve or change, in order to capitalize on opportunities brought by the changing environment (or avoid the threats). The first usually involves an organisation’s core business (basically doing every day business), and the second involves activities such as innovation, NPD, entering new markets, potential disruption, etc.

One demands stability… and the other demands fluidity (constant change or evolution). As we know change is the enemy of stability…and there will always be tension (and not of the good kind) in an environment where stability and change have to co-habitate.

Despite this challenge both exploitation and exploration are needed to ensure the survival of a business, today and tomorrow – hence the paradox!

So how do you deal with this as a business, how do you run an organisation in this paradoxal context?

In the early 90’s Barry Johnson developed the concept of Polarity Management in an attempt to answer different paradoxical questions such as work life balance. The idea is that a great many (not all) of the issues we define as problems to be solved are actually polarities to be managed.

Mr. Johnson’s theory is that by definition a “problem” is an issue which requires a solution. The goal of a problem is to find a fix to the current situation and move forward to a new reality without being required to ever look back. However, a “polarity” is an issue that needs to be addressed, but the “solution” is not one that can survive independently, and will actually still require continuous support.

By that rational the solution to the “exploiting and exploring paradox” is to continuously manage the situation by putting the right mechanisms and processes in place to ensure everyday business continues, while the necessary activities related to exploration are encouraged and supported.

This could for example be warning mechanisms such as the old 3M principle of 20% of sales having to come from new products. If an organisation goes below the magic 20% they know that “every day business” has taken over on the expense of needed innovation.

I have for a long time been promoting the value of encouraging both exploitation and exploration as it means a balance between continuity, consistency, clear direction and new opportunities, progress, creativity. However, identifying, and putting the right mechanisms in place to ensure this balance is maintained is crucial, but also extremely difficult. I know this because it’s a challenge faced by many of my clients over the last 15 years, and it has become a crucial part of the solutions we propose to the clients we are interacting with through the company I recently founded with Jonathan MacDonald, this fluid world.

We have found that creating “solutions that can survive independently” in order to manage the “exploring, exploitation paradox” is not something an organisation should do in isolation, or leave up to chance. Why?  Because organisations often have a myopic view of the business they are in, but also because getting through the business day, and reaching sales targets, will always be prioritised, especially in these difficult times.

This is, as we know, very much a short-term solution, and one that may ensure the success of an organisation today, but not one that will lead to a bright future tomorrow.

If you don’t believe me ask yourself what happened to gas light companies, and many after them…

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In 1995 I learned a very important lesson about customers, and about not assuming anything about them.

I was setting up the international arm of Research International, RI World Service (part of the WPP Group, and at the time one of the largest ad hoc research firms in the world).

We had just won 3M as a client. The project was an NPD and new design project, part of which was to test (with consumers) some of the new designs for their Post-It custom cubes (you know these square cubes of paper with designs on the side – not sure anyone even buys them anymore).

But that’s neither here nor there.

I had decided that the design with the massive strawberries on the side was obviously a loosing one, and that there was therefore no point in including it in the research…on the other hand the classy Inca design was clearly a winner. Basically, I could not understand why we were even bothering with the research, a waste of valuable marketing resources!

Well I’ll tell you why…because the strawberry design came 1st, and the Inca design came last of 20! I remember the project manager from 3M looking at me with a smile and telling me

“We are simply not an average consumer Liri, we are better travelled, educated, have more experience, we are in the industry so we have seen a lot, and we should therefore never ever base decisions about consumer around ourselves.”

I never forgot those words, and the lesson I learned that day. I have never since made any assumptions about what consumers will think, feel, like or want.

But if I ever was about to forget, I have l’Entrecôte (a French restaurant on Marylebone lane) to remind me. I walk passed it most days on my way to, or home, from meetings…every evening there is a massive queue of people waiting to get in.

And every evening I wonder WHY?!!!!

I have eaten there once, and trust me I will never go back! The décor is mediocre, the food is mediocre, the service is, well mediocre…there is only one dish one the menu (steak frites…all you can eat), and there is a £19 minimum spend.

I know a lot of places where you can get a much better steak, cooked like they actually would cook it in France, in a great environment with FAB atmosphere, for a lot less than £19!!! And these places are by no stretch of the imagination as popular as l’Entrecôte!

But there is clearly something about that experience that makes sense to the people queuing…because not only are the queuing to get in (in rain too may I add), they are doing a hell of a lot of talking about it…they don’t not really do advertising, it’s all WOM.

So as I said… walking passed l’Entrecôte I remind myself on a daily basis that the next time I do a social media, mobile, or a go to market strategy, I’m not for a second to imagine, or assume, that I have a clue what will make sense to consumers out there. And that the only way I will ever know the answer to that question is by observing, talking to people, listening, testing…being constantly switched on, every day, everywhere I go (basically perpetual curiosity)!

However, when I go to bed…sometimes, just sometimes, those giant strawberries, and the fact that they made it to the market place, haunts me!

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