Ondrejka Sapient MC2 09.16.09

8/14/2019 Ondrejka Sapient MC2 09.16.09

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multi channeltechnologies

2009 sapient executive summit

cory ondrejka [email protected] http://ondrejka.net
http://ondrejka.net/http://ondrejka.net/mailto:[email protected]:[email protected]


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or, how I learned to stopworrying and love change


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90 minutes, 202 slides

techcustomersmarketing

change


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story time


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an interactive story in 6 parts

prologue

act 1: technology act 2: customers act 3: product development and marketing

act 4: changeepilogue


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(interactive and fast)


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prologue


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or,why the hell is a programmertalking to us about marketing?


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long ago(the stuff I cant talk about)

US NavyLockheed Martin


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(I mention these to establish my

non-hippy cred before talkingabout communities and

collaboration)


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recent history

arcade and video games Second Life Annenberg School for Communication, USC EMI Music

consulting, advising, speaking


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common themes

creating products loved by customers technology invention, development, deployment cultural transformation

communication


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product


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all linked to creatingsomething people will love


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some assertions

marketing != buzz

marketing != promotion marketing != communications

marketing isnt any one thing, it is the entireprocess of understanding and influencing


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marketing = product development


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to a programmer

product development is all about creatingsomething customers will love

to do that, you had better

understand your market and customers be able to acquire/design/create products

leveraging what you know continuously improve products as a result of

customer use and feedback


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to a programmer

product development is all about creatingsomething customers will love

to do that, you had better

understand your market and customers be able to acquire/design/create products

leveraging what you know continuously improve products as a result of

customer use and feedback

marketermarketing


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productcreation

marketing customers

salespromotion

communications

market understandingcustomer needs

analytics


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productcreation

marketing customers

and bringing agility to this cycle


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productcreation

marketing customers

particularly when customersbecome a moving target


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act 1: technology


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or,but we were really good

at this 10 years ago!


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something to keep in mind:

is your company a technology companyor

one that needs to understands technology?


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technology changes behaviorand opportunity space


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(usually by radically changingcosts to do something)


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3 trends that matter

Moores Law channel diversity radical changes in cost structure


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Moores Law


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18-month doubling ismore than you might expect


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5-10 years means 3-6 doublings


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so 8-64times

cheaper, faster, longer lasting


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1-2 orders of magnitude


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25x is hard to imagine


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25x mips,

same size


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25x mips,

same size


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25x smaller,

same perf


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25x more storage is nearly a terrabyte25x battery life is 8 months of standby,

8 continuous days of talking


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leads directly to channel diversity

all those mobilecomputers are

connected andalways available


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also leads to radical cost reductions

25x cheaper is $10


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more broadly, anything with acomputational cost constraint,

i.e.storagedata transmission

CPU processing time


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is gettingmuch cheaper,much fasterthan you (probably) think

practically free in many cases


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driving additional trends


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it is unlikely to ever be harder/moreexpensive than it is today...

to move or store information for customers to shape messages for customers, partners, or

competitors to create new channels


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which takes the impact of Mooreslaw far beyond IT:

mediabiotechcustomer service

market analysis


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discussion

who does (or should)understand and watch

technology trends that willchange your business?


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brief aside to the music business


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music industry in 60 seconds


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revenues peaked in 2000,generally declined since


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pre 2000


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post 2000


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direct result of Moores lawdriving decreased costs andincreased connectivity

this is a new world

but change is hard to manage

CD revenues skyrocketing new technology teams


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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CD revenues skyrocketing, new technology teamswithin major labels largely ignored

(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away(David Bowies Hours via download from EMI)

Revenues peak

NapsterRecession beginsRevenues decline

iTunes

EMI goes DRM free

Rock Band/iPhone Games as music drivers

iTunes rich digital packages

Guitar Hero

CD revenues skyrocketing new technology teams


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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

CD revenues skyrocketing, new technology teamswithin major labels largely ignored

(EMI Massive Attack album delivered via stream)

Internet bubble pulls tech talent and knowledge away(David Bowies Hours via download from EMI)

Revenues peak

NapsterRecession beginsRevenues decline

iTunes

EMI goes DRM free

Rock Band/iPhone Games as music drivers

iTunes rich digital packages

Guitar Hero


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gaps, especially during technological

discontinuities, are very difficult todiscover internally


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both internal and external

resources can help you find gaps

(gaps in core IP/business shouldultimately be filled internally)


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discussion

for your sector, who will first know if the rules change:customers, partners, or employees?

who is responsible forcapturing this knowledge?

how will you collect it?


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act 2: customers


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or,

there seems to be someone atthe gates...


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the two questions that matter

where are your customers?what are they doing?


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(with some details)


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where

buying?

discovering?using?talking about?

complaining?finding competitors?


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doing

what you think they are doingwhat you want them to be doing

what they think they are doingwhat they want to be doing

what they are really doing


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thanks to technology trends, customers

can be more engaged, connected, andpowerful than ever before


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and the impacts can be rapid and far-reaching


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see, e.g.

Spanish Presidential elections and SMSIranian election and TwitterApple and bloggers

Whole Foods and bloggers


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it gets even more interestingif your customers

are also involved in production


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and this applies to media as well


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(I suspect you all know this story,but think it is illustrative)

( d i i )


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(advertising)

image cc by:nc 2007 esther dyson

h l d


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the gray lady

th l d


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the gray lady

d hi t


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and some history

1851101 pulitzers

1.5m circulation

$4b advertising(1999)

C i


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versus Craig

d f t ff


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and some free stuff

19950 pulitzers

sf classifieds

incorporated(1999)

thi h ld b


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this should be easy

C i th t i


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Craigs as threatening


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and seal problemsare easy to solve

s ed e ect


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so wed expect


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Craig NYT


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what really happened?


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NYT Craig


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2008

#1 classified ad service30 million ads/month

2008advertising down 63%

and today


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and today

little interest inmaximizing profits Despite $500mfrom nyt.com


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please do not view this as history

the next moment of creativedestruction is coming


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discussion

how are motivated customersimpacting your business?


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customers are doing and telling you more


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but a word of warning:

both of the following statements are100%, completely, incontrovertibly true


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customers know exactly what they want

customers dont have a clue what they want


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customers know exactly what they want

customers dont have a clue what they want

know and want could mean


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know and want could mean

they can tell you

they can show youthey are complainingthey are choosing a competitor

they are talking about yourproduct on Facebook or Twitter


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but it is very hard to know you want

something when its an unknownor youve never had it before


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discussion

who is responsible forunderstanding what your

customers want?


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act 3: product development and marketing

or, h t th bi fl i


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rawr, what are those big flaming

rocks falling from the sky?


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nobody wants to be a dinosaur


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(how many people still print out email?)

so recall this diagram


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productcreation marketing customers

so, recall this diagram

whether you call this product


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development or marketing, youre

doing the same thing

creating something that amazes your

customers, generated demand, keepsthem engaged, and differentiates you

from your competition

and doing it with an engaged,


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active, changing customer

which means you had better be


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yable to detect the changes and

respond quicker than competitors

first kill all the silos


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first, kill all the silos

if product developers need permission to seecustomer data or talk to marketing you are


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customer data or talk to marketing, you areintroducing delays you cant afford

think about how to blend


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traditionally separate services

community

managementmarketing

customersupport

(or mc marketing + mc commerce)


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(or mc marketing + mc commerce)

community

managementmarketing

customersupport


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expect that in a Twitter/Wikipedia/

Second Life world of radically decliningcosts and increased communication,you can do the impossible


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negatively costed sales/support teams?

crowdsourced product design?customer pr?

its just a matter of boundaries


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it s just a matter of boundaries

product sales customers


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edge ofcompany?

its just a matter of boundaries


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it s just a matter of boundaries


edge ofcompany?


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edge ofcompany?



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and if you dont, your customers will

in second life, they do


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, y

a moment about second life


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a user-generated, virtual world game-like technology but not a game 3D, persistent web significant scale


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what happens when your

community has the keysto the kingdom?

user generated content


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user generated content

almost unheard of in 2000, now well demonstrated in SLs case, drove economic and customer growth produced enormously beneficial/long-lasting press

evergreen pr


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evergreen pr

evergreen pr


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eve g ee p

evergreen pr


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g p

unexpected consequences


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p q


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discussion

can your customers control your

messaging/pr? do you want toallow it?

do you have a choice?


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reduced costs, increased capabilities

lead to my favorite non-wordnichification


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nichificationthe act of creating multiple $0 billionmarkets from few multi-billion dollar

markets

starts from long tail


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g

this is usually a searchand inventory discussion


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and inventory discussion

especially in hit driven industries


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Hits

Everything else


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but, the basic power-lawcurve applies elsewhere

long tail communities


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sorted by size of community


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mass market

niche

or by targeting requirements


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untargeted

highly targeted


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niche communities

(due to lack of scale and need for targeting)are rarely well served


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so in our Moores law world,whats a niche to do?


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they can serve themselves


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fragmenting/ignoring

the mass marketalong the way


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to take advantage of theseopportunities, you need to be agile


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agile development come from the

software world, but the ideas arebroadly applicable

agile development means


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fail cheaply, fast, and publicly regularly release to customers for feedback build in testing and metrics


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its all about staying out of the weeds,

having the flexibility to try new things,and managing changing requirements


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1n =chance of building

the right piece ofsoftware

(where n is estimate time in weeks)


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failure is a necessary partof an experimental culture


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(nota bene: experimental culture does not

mean just try stuff, experiments needexpectations, reporting, and measured

outcomes to avoid burning a lot of money)

and a willingness to be afraid of words like


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and a willingness to be afraid of words like

expect, believe


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never been more opportunity to know


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it also requires understanding the oftenuncomfortable difference between vanitymetrics and those actually tied to the business


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should Facebook friends matter to you?YouTube views?

Twitter mentions?Google search count?

average customer support wait time?

revenues?


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revenues?

sexy, but maybe not important...

(imho, social media alone not that interesting,i l di + i i i )


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revenues?

social media + action very interesting)


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especially important around ads

recall problems visualizing orders of magnitude?ads run $0.01 cpm to $50 cpm

thats a 3 order of magnitude range!


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similarly, beware of myths

around digital natives

(less generational than any of us expect)


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but, if your customers are sharing behavior,make sure you know what you want them doing


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the good (and bad) thing is that nearly every

online/digital activity leaves some record

are you ready for terabytes a week of data?


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discussion

who is allowed to experiment

at your companies?(allowed?!)

who owns experimentation?how is failure treated?


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act 4: change


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or,

were going to be just like Apple


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briefly, some companiesthat do it right

apple


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< 10% of overall PC market, 91% of premium

market 70% of mp3 player market largest music retailer in the world

rabid user community

pixar


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10 for 10 on major features

critical and financial success every movie breaks new technology ground,

but that technology is never what sells it 4 Oscars

zappos


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$0 - $1 billion in shoe sales in 10 years focus on service as key differentiator,

recognized fears blocking online shoe sales understood where technology helped use of service to augment sales, staffing, and

generate marketing/PR being acquired by Amazon for $1 billion

common elements


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maniacal focus on products that delight

deep understanding of how to integratemarketing, buzz, support with productdevelopment

fearless


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fearless is the hardest one


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particularly when itcomes to leadership


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there is no description of

cultural transformation thatcaptures how difficult it is


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at a guess,big change arrives every 7-10 years

problems with 10 years of latency

t d t b ild th i t ti b f th


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experts and stars build their reputation before the

change but need to operate in the next sometimes, experts are surfing a larger trend, and arent

actually rockstars or, the world is different, so expertise no longer applies


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was this growth due toskill or an externalities?


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does prior performancehelp you now?

driving transformation


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focus on business goals

admit realitycommunicationfind internal leaders

embrace agility


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discussion

(this will seem like a non sequiturbut it isnt)

how much time do your executives spend onemail? on the phone? in meetings?

(change management will make this worse)


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epilogue


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or,the future aint what it used to be


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first, beware predictions

of the future

its hard and were wired wrong


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we predict linearly


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reality is exponential

innovation creates


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innovation creates

exponentials

thus,


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we overestimate short-term change,underestimate long-term change

and our errors compound


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actual error

di t d


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but we can be fairly sure

computation, storage, andbandwidth trends will continue


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so, expect engaged customers,more data about them, more

diversity of channels, andthe need for more agility


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(diversity of channels means I dont

like portals, but thats another talk)


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second, allow technology

to help you


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if social networks are proliferating...


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when top level domains expand...


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when customers are using dozens of different

blogging and microblogging services...


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when you need to reach customers on the

social networks they already use...


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when you need to analyze multi-terabyte

datasets in realtime...


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third, address business needs, not TLAs


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businessesnever

need CRM or CMS


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never


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businesses need to reach customersmanage and publish information

effectively communicateetc


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decide on these good business needs first,then choose technology to solve them

dont pick the technology just cause


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beyond that, know whereyour IP needs to be

be careful about building fromscratch if you dont need to


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finally


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build for change rather than chasing it


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because change is accelerating


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discussion

any final questions or thoughts?

Ondrejka Sapient MC2 09.16.09

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