Strategy and Tactics – Page 177 – IS Survivor Publishing

Lessons from ABCCo, Part I (first appeared in InfoWorld)

Note from Bob: I bugged the CIO of the Amazingly Bright Colors Corporation (yes, the ABC Corporation you see in software demos). ABCCo is about to launch its new business strategy, which is fully buzzword compliant, but still pretty good. We’re going to listen in to the IS planning meeting. If you haven’t participated in a meeting like this one, chances are you will.

I think you’ll find the ABCCo experience instructive.

CIO: Okay, kids, let’s get started. I just got back from the executive retreat and we have a major change in direction to deal with.

Application Development Manager (ADM): Again? I thought that’s what we got last year. (Snorts and chuckles from around the room.)

CIO: I understand your skepticism, but I think they’re serious this time.

Operations Manager (OM): I’ll believe it when we see the money.

CIO: They’ve budgeted $20 million a year for the next three years.

ADM: Do we get any of it?

CIO: About a third.

(Whistles, grunts, throat-clearing.)

Database Administration Manager (DBA): Are we finally getting into eCommerce?

CIO: Yes, in a way, but let’s keep things straight. eCommerce isn’t a business strategy. It’s an enabler. Let me take five minutes to lay out the new strategy for you. Then we need to map out a plan.

First, let me give you some background: We’re crashing.

Process Redesign Manager (PRM): Crashing? We had record profits last year!

CIO: Profits are a rear-view mirror. Our leading indicators are all trending down. Our markets are fragmenting, our products are turning into commodities, and two whole industries we used to ignore compete with us in our best growth areas. If we don’t make some major changes in the next couple of years, all we’ll be is someone else’s subsidiary.

ADM: And the strategy is?

CIO: Depending on your guru, it’s called one-to-one or customer relationship management.

ADM: That’s it? Big deal — we’ll choose one of the big CRM packages and we’re done. I was hoping for something more substantial.

PRM: Don’t be a putz. It isn’t just software. We win by treating our customers better. That means process redesign and culture change programs, not just a software package.

DBA: And why do you want to buy a package, anyway? Every time we buy a package we have more problems with integration.

OM: Maybe, but every time we try to build something, the project ends up costing twice as much and taking twice as long as we thought … and all of the features we promised end up going into the “next release”.

CIO: Okay, stow it. You’re shooting at the wrong target anyway. It’s more than customer service enhancement. Marketing is going to redesign the way we relate to our customers. The CMO will join us later so everyone hears it the same way. To give you a hint of what we’re in for, his favorite saying is, “From now on, we’re Cheers, and every customer is Norm.”

We’re going to take a multi-pronged approach to this. Marketing and customer service are going to put together the customer relationship design. I wouldn’t be surprised if the two merged into one organization within a few months, by the way, but don’t spread that around.

Once they’ve put some shape to the new customer relationship, we’re going to figure out how our internal processes will have to change so the new relationship design isn’t built on a lot of empty promises.

That’s when we find out exactly what we have to do here in IS.

Here’s what we know for sure — we’re going to personalize customer interactions, we’re going to customize our products and services, we’re going to be working in marketing time, and our job is to stay off the critical path — nobody waits for us.

OM: Wait a minute. Marketing time?

CIO: Yes, marketing time. Have you heard of Internet time?

OM: Sure.

CIO: This is faster. Okay, let’s start planning …

That’s all we have time for this week. Stay tuned — next week, we overhear The Plan.

The Jackie Chan of business (first appeared in InfoWorld)

Fistfights sure have changed.

John Wayne only needed one good punch to win a fight, and he was able to take some time to set it up. Thirty years later we have Jackie Chan, who delivers as many as 10 punches (and other blows) per second.

Let’s do some metrics.

The Duke was the clear winner in productivity, achieving a UO-per-punch rate (Unconscious Opponent) of between 1:1 and 1:3 as compared with Chan’s rate of between 1:12 and 1:100. He wins when it comes to efficiency, too – our contender from Hong Kong burns far more calories per UO.

Effectiveness, though, is different from productivity and efficiency. In hand-to-hand combat with a dozen simultaneous opponents, the Duke would have been overwhelmed, while Jackie Chan regularly emerges victorious from duodecimal combatant situations.

Business competition in the Duke’s day looked a lot like his fistfights – fairly slow, deliberate, each move carefully calculated. Today it’s more like Jackie Chan – speed rules.

We all know this. We’ve heard about the acceleration of business cycles until we’re tired of hearing about it. “Internet time” is yesterday’s cliche.

Two other trends — molecularization and service/cost convergence — aren’t yet cliches. Molecularization is the growing need to customize marketing, service, and product delivery — in other words, every interaction — to each individual customer. Service/cost convergence means that customers no longer accept the classic trade-off between quality of service and product price. Combine these two trends with time compression, and every measure of effectiveness changes.

In the old days, companies worried most about measures such as capital utilization ratios, manufacturing output, and defect rates. Their goal was to produce the most products with the fewest defects using the least equipment.

What matters more and more are customer-focused measures such as product utilization (number of products owned per customer), customer loyalty (the likelihood of a customer patronizing your company first), and customer affinity (a customer’s emotional attachment to your company). Other measures, such as shipping service levels — the delay between receiving an order and shipping the product – are equally important.

While the Internet is the most visible driver of this dramatic change in business, the reality is that call centers are still more important in improving these new measures of success.

For companies to succeed in this new world, information technology must permeate every process and activity. It’s possible to “pop” customer information, such as recent purchases and the 10 most recent customer interactions, on the screen of any employee interacting with a customer automatically at the start of any call — inbound or outbound. It’s possible, and your chief marketing officer knows it. When are you going to deliver the capability?

Unfortunately, many IS departments are still mired in the old business model, failing to understand that “late” is just as bad as “buggy” … perhaps worse … when judging the quality of software.

Why? Although some bugs are fatal, others are merely inconvenient. The business will still run while you track them down and fix them. Software you haven’t delivered yet is completely inferior.

It doesn’t run at all.

Correction:

Never confuse a spreadsheet with reality.

As evidence: A few weeks ago I discussed storage options for the 6 billion people now on earth. If you put us end-to-end, we’d only go around the world about 260 times, not the 2,600 times I claimed. I lost a decimal point due to bad parentheses. And a swimming pool big enough to hold all of humanity would have to be about 15 miles per side, not the quarter-mile I stated. One-quarter of a mile is the edge-length of a cube big enough to hold a “Homo sapiens puree.”

Thanks to all who wrote. And no, there’s no ironic tension between these mistakes and my suggestion that “fast” is more important than “bug-free.” These mistakes weren’t the result of haste — I made them quite slowly, in fact. I was just having a bad math day.