Technological Progress and Business Innovation

#SMiCS2011
@DonPeppers
COPYRIGHT © 2011. ALL RIGHTS PROTECTED AND RESERVED. 1

Big data:
1 billion+ Google
searches every day


Big Data: Amount of information
doubles every two years. By 2015 it
will be doubling every 72 hours


By 2015, game credits will
make Facebook the


Generation Y
already considers
email old-fashioned


In the U.S., 1 out of every 8
couples getting married
met each other online


No, it is not your
Accelerate
Natural Dietary Supplement

ENERGY BOOST
imagination
Impact Guaranteed

Technological progress is accelerating


driving faster and faster economic growth


By 1960, growth had increased
again, to about 2.3% p.a.

By 1900, the rate of growth
had climbed to 1.5% p.a.

growth started, at about 0.75% p.a.

For 100,000 years, the average human being
lived on the equivalent of $400 to $600 p.a.


Business innovation takes an
evolutionary path

Organizations compete to survive in

Over time, as in life, business models
evolve into more complex

COPYRIGHT © 2011PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 10

Like evolution, innovation
proceeds by trial and

Apple Macintosh succeeded

But remember the Lisa?

iPod succeeded magnificently

But who remembers Newton?

comes to iPhone is a big success
those who
But an earlier phone failed
COPYRIGHT © 2011PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 11

...so progress is collectively predictable
but locally random


Technology now gives business a new Strategy. Execution. Results.

dimension for competition
Customer Creating the most possible
Needs value from each customer
Satisfied

Customer Centricity
Share of
customer

Creating the most possible
value from each product

Product Centricity
Market share

Customers Reached


Technology now gives business a new Strategy. Execution. Results.

dimension for competition
Customer CRM: Treating different
Needs
Satisfied
customers differently

Customer Centricity
Share of
customer

Product Centricity
Market share

Customers Reached


Customers remember you, whether
you remember them or not

How you treat products today will have no
effect on their price tomorrow

But how you treat customers today has
everything to do with their value tomorrow


What does a relationship involve? Strategy. Execution. Results.

Interaction occurs, both ways between two parties
Relationships are iterative by nature
A context develops over time

Every relationship is different
Successful relationships generate trust


Managing customer relationships

Identify Differentiate Interact Customize

-
unique addressable behavior and efficiently and
individuals needs effectively behavior, offerings,
or communications

Customer Insight Customer Experience


Two Strategy. Execution. Results.

requirements
for earning a

Good intentions

Competence


Good intentions require you to Strategy. Execution. Results.

would want to be treated if you

best
indicator -

Firms that score
considered the most for future

COPYRIGHT ©© 2011. ALL RIGHTS PROTECTED AND RESERVED.
COPYRIGHT 2011 ALL RIGHTS PROTECTED AND RESERVED. 19

Incompetence also destroys trust

Making the customer tell you
personal details over and over

Customer calls the IVR, punches in
his account number,

Giving customer reps no authority

Treating all customers the same


96% of Gen Y consumers
belong to a social network
Generation Gap?
Average time spent per day: >1 hour


Or technology gap? increases 1000 X every decade

will exchange 1000 X as much
information with each other


William Gibson


Strategy. Execution. Results.

Trust gains importance as interactions
increase in speed and volume

1. Interaction generates transparency

2. Trust makes interactions more efficient

3. Proliferation of messages leads everyone to
screen information for its trustworthiness



Extreme Trust
Our standards for what constitutes trustworthy
behavior are going up

A new, more demanding set of expectations:

Trustability
Proactive trustworthiness



Trustworthiness
compared to

Trustability



Trustability
Many previously acceptable marketing

x Profiting from customer error
x Benefiting from asymmetric information
x Failing to notify
x All



Product centric business models
Customer are often inherently untrustable!
Needs
Satisfied

Product Centricity
Market share

Customers Reached


Screw up today, and the Strategy. Execution. Results.

un-Google
Linda Kaplan Thaler, CEO, Kaplan Thaler Group


Screw up today, and the Strategy. Execution. Results.

Grant Robertson, blog post, May 1, 2007



Box office receipts down
40% the day after release!


Welcome to

The Age of Transparency

83% of consumers trust the
recommendations of their friends

>50% trust online recommendations from
complete strangers

Just 14% of consumers trust advertising



Do you allow reviews on your site?

Radical idea: Everyone here should allow
customers to review products and services

The technology is inevitable


Sockpuppets beware!

Internet chat: No one knows

Social media: Everyone



Actual note,
handed to a
Qantas flight
attendant



Human beings are creatures of context

Cnotxet alolws evreynoe to raed lgnehty
strigns of scarmlbed wrods prefcelty wlel

with others, giving strength to relationships



Save me
time
Customer tells you what he
wants, or how he wants it

You tailor your product, service, or
elements associated with it

The more effort the customer invests, the greater
their stake in making the relationship work.

Now the customer finds it more convenient to remain
loyal, rather than re-teach a competitor

38

Social media is like a cocktail party

-9-

Some of the guests initiate most discussion
1%

9%

Still90%
others just listen

still enjoy the party!


Social networks evolve, by

Preferential attachment
can create a



Cascading is
Unpredictable



Netscape had a
million collaborating
members

postings were done
by a single user

Cascading is
Unpredictable



Netscape had a
million collaborating
members

900,000 registered
users on Digg, but
postings were done one third of all
by a single user home-page
postings come from
just 30 users

Cascading is
Unpredictable



900,000 registered
users on Digg, but
one third of all
home-page
postings come from
just 30 users most
widely read user,
Cascading is Adam Fuhrer, had
millions of page
Unpredictable views, including MS
Vista reviews



most
widely read user,
Cascading is Adam Fuhrer, had
millions of page
Unpredictable views, including MS
Vista reviews

Adam
Fuhrer was
12 years old!



Cascading is
Unpredictable

Adam
Fuhrer is 12
years old!


Path dependent local randomness

Collectively predictable emergent behavior

NETWORKS


Just 15% of viral initiatives
show positive results!

Therefore: Word of mouth is also
inherently unpredictable


So be careful with

Despite its customer-friendly architecture, the press
portrayed Speak Easy as sneaky and manipulative


Control is Not an Option

2010: Greenpeace campaigns on


Control is Not an Option

They tried to get You Tube to take the video
down because of trademark violations

They deleted critical comments on their
Facebook fan page

They corrected the spelling errors in their


Tools for making sense of social
network communications

Network analysis: To identify and quantify the
influencers and the influenced

Sentiment analysis: To understand conversations,
attitudes and dominant opinions in social media


DoubleClick
identified
Quantitative network
survey of 6,000
Web users influencers
1,000 influencers with certain traits

Use the Web more than twice as much

Pay more attention to online ads, and
want more relevance

But also more likely to clear their cookies
regularly, as well as fast forwarding
through video commercials
COPYRIGHT © 2011. ALL RIGHTS PROTECTED AND RESERVED. 53 53

Within Social Networks
The only way to
succeed in a
networked world

Build and
influencers maintain a
and reputation for
connectors
are curious trustability
and
inquisitive
people.
COPYRIGHT © 2011. ALL RIGHTS PROTECTED AND RESERVED. 54 54

Sentiment analysis: Making sense
of written and spoken language

Analyzing attitudinal information requires

versus


Michael Jackson dies
Heath Ledger dies

Gross National Happiness Index


Why the sudden surge of negative blog
sentiment after rain-delayed game?

Stadium officials mistakenly told hundreds of fans the game
had been canceled
But StubHub denied requests for refunds, because the game
had actually been played
Sentiment analysis tool spotted trouble brewing online. Soon
the company offered discounts and credits to affected fans


How to choose
new products

Large consumer products company monitors product
reviews, social media, and other unstructured data

Information is clustered to facilitate identification of
problems, needs and new product opportunities

Consumer sentiment drives product development as
well as providing real-time feedback on new products


Tweeps are from Mars

Fans are from Venus
Different social networks or search terms
can generate highly different outcomes

will affect the feedback you detect

And the commercial domain is
different from the social domain


Learning their lessons
the hard way

2006: Introduced News Feed

2007: Launched Beacon shopping updates


What should Staples
have done differently?

What could they have learned from

Recruit high-influence customers to
help design the Speak Easy program

But did Staples enjoy
enough trustability?


Building trustability
in advance

Office supply management guidance and tips
Incentivized customer reviews of competitive
products in all categories
Discussion groups for small businesses, large
enterprise office managers, government, non-profits
Office supply inventory management tools and other
applications designed to reduce costs


Was there a better
policy for Nestle?
What would USAA or Amazon have done?

What Nestle could have done:
1. Temporary moratorium on palm oil
2. Reach out to the most involved customers
3. Solicit opinions and viewpoints, publicize

But again: Did Nestle have
enough trustability?

Building trustability
in advance
Calorie and diet guidelines, objectively comparing
Nestle products with other brands as well
Recipes, cooking guides, how-to pages, with
customer contributions incentivized
Chocolate stories and videos, with contests for most
creative or entertaining
Social responsibility discussion groups,
emphasizing environmental issues in advance


Avoiding death by tweet

Recognize the inherent unpredictability of
social networks and cascades of opinion

WARNING:
Avoid the impulse to try to control social
media
Build your TRUSTABILITY in advance!
Forgive mistakes and ask forgiveness


Trustability works both ways
USAA sent unsolicited
First Persian Gulf War (1991) refunds for time spent
abroad by members

2500+ members
mailed their
refunds back!

66

Integrity is not elastic

If your company is designed for trustability
with customers, then
Trustability is more likely to characterize
other relationships as well
Workers trusting each other

Vendors, stakeholders, investors


Trustability
profitable company,

It will make you a better company


@DonPeppers

Peppers & Rogers Group
Management consultants in
customer strategy issues
Magazines, newsletters,
research white papers

Offices and clients around the world

dpeppers@1to1.com


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