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|In: Strategy and Tactics|Last Updated:

Five or six years ago, I talked about using telecommunications for direct marketing at the Direct Marketing to Business conference.

Since I knew less than my audience about direct marketing to business, I chose the only sensible alternative: I talked about what I did know – in this case, the role of telecommunications in customer service.

The tricky part in a presentation like this is convincing the audience your subject and their interests coincide. “Think of marketing as the top of a funnel,” I told them. “Product quality and customer service are the other end. So long as sales and marketing pour new customers into the top faster than the rest of your company lets them drain out, your business will grow.”

The rest of the speech talked about giving customers direct dial-up access to order-entry and order-status systems, Electronic Data Interchange, fax-on-demand, and enhancing call centers with Computer Telephone Integration. The overall message: providing these exceptional service offerings adds an edge to a company’s customer retention efforts, and since your most likely next sale comes from the customer who just bought from you, marketing needs to get heavily involved in service.

Five or six years ago these ideas were new enough that I wasn’t entirely sure they were anything more than podiumware. Now they’re not just commonplace, they’re yesterday’s news. Everyone knows the importance of service, and the value of retention has been quantified: typically, preserving a current customer has five times the value of acquiring a new one.

Some highly oversimplified history. In about the mid-’70s product was king, American product quality was awful, and Japan, having adopted Total Quality Management (TQM) practices, kicked America’s economic rear-end.

It took a decade, but America eventually improved its product quality to a point where quality no longer won the pot – it was just the ante that let you play. Service became the new differentiator – hence my speech.

You can use a differentiator to gain marketshare or support higher margins. The Japanese used quality at a competitive price to gain marketshare in every industry it attacked. The old WordPerfect used service for the same purpose. Audi now touts both product quality and service as part of its premium image, supporting higher prices.

(The technology industry is something of a paradox in this respect – we pay ever-higher fees for ever-poorer levels of service. Disagree if you like, but first consider that this one subject keeps Ed Foster busy full-time … and his Gripe Line feature elsewhere in these pages doesn’t suffer from repetition.)

To stay ahead of the pack when it comes to providing service, companies have invested heavily in technology. In addition to EDI and fax-on-demand, we’ve pressed imaging, workflow, computer telephone integration into use, along with the World Wide Web which has superseded more primitive means for providing direct access to our systems. Has the investment paid off?

Interesting question. Since our competitors have made the same investments we have, we may all have wasted our money. More likely, our measure of success is keeping our heads above water in the ocean of competition in which we’re all immersed. Such are the hazards of finding suitable performance measures.

As happened to quality, service has reached a point of diminishing returns as a differentiator, becoming just another part of the ante. The ante, of course, is important and the systems you provide that support your company’s TQM and service efforts remain vital to your company’s future.

They’re vital. They just aren’t going to be enough anymore.

As CIO, (or future CIO) you need to stay ahead of the rest of the company in thinking how to apply technology to reshape your company’s strategy. Since it’s the nature of technology to provide or enhance capabilities, you need to anticipate the capabilities your company will need to lead the pack. After you’ve perfected product quality and surrounded your products with high-quality service, what do you do next? Look for another differentiator, of course.

That’s what we’re going to explore next week.

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|In: Career Management|Last Updated:

Whenever I take a personality profile I ask myself a Microsoft-like question: “Who do you want to be today?”

The technique is simple: Just choose a self-image and role-play as you fill out the personality assessment survey. I once got myself into considerable trouble this way: As the facilitator reviewed our team results he looked at my profile and said, “You have a classic entrepreneur’s profile!” He waxed ecstatic over my alleged entrepreneurial tendencies for the next 10 minutes, before moving on to wax ecstatic over the entirely different character traits of a peer.

Both my boss and my employer had recently asserted the desirability of being more entrepreneurial, so I’d decided to be an entrepreneur for this exercise. It was a poor choice. Infused with one too many Tom Peters videos, I’d understood them to value entrepreneurship on the part of their employees. Nope. As I later pieced it together, they wanted the company and its leadership to be more entrepreneurial, not its middle managers and employees.

Oops.

American business is in love with entrepreneurship – the word, if not the reality – so “entrepreneurial” now means “good.” And that’s just plain silly, because entrepreneurship is a constellation of traits. Some you probably value; others have no place in your organization. Be smart: Pick and choose from this, my personal list of entrepreneurial character traits.

Decision-making: Entrepreneurs decide quickly, because an unmade decision, like a hungry child, stares at you demanding attention. Entrepreneurs feel stress as unmade decisions accumulate.

Corporate managers, on the other hand, delay decisions as long as possible. Decision means risk – you may be wrong – so made decisions are like ticking time bombs. Requests for more information and analysis, in contrast, can always be defended as reasonable and prudent.

More than any other entrepreneurial trait, decision-making is the one companies want. Ask if there is any good reason to delay each decision rather than asking whether that decision’s deadline has arrived. (Sometimes, by the way, delay is good. For example, defer technology decisions until the last possible moment, given technology’s pace of change.)

Opportunism: Entrepreneurs are deal-driven critters. Strategy? That’s for other people. I can make money today.

The entrepreneurial upside? Quick, low-risk profit. The downside: It’s easy to lose focus, dissipating the energy needed to implement strategy in the pursuit of tactical opportunities.

Should you adopt this trait? Only if your company has a stable business model and hasn’t defined a program of strategic change. Otherwise you’ll establish yourself as a fringe player and a distraction.

Encourage or discourage it in your employees for equivalent reasons.

Product focus: Entrepreneurs do care about customers – that’s where the money comes from – but they focus on creating products. Having a product focus is good because it enforces mental discipline. Vague ideas don’t survive translation into tangible products and services.

The downside? It’s easy to get caught in the “cool” trap – you do things because they’d be really nifty, not because anyone actually needs them. * Sales ability: Entrepreneurs are good at selling or they aren’t entrepreneurs. End of story. As an employee trait, sales ability has the advantage of encouraging enthusiasm. It also has a huge disadvantage – it emphasizes surface over depth. Lots of companies unintentionally reward their good internal sellers.

Risk-taking: Successful entrepreneurs aren’t foolhardy. They do, however, know when to take a chance. So should you, and so should your employees. Before you start to glorify risk-taking, though, make sure everyone knows exactly what kinds of risks you’re willing to take, under what conditions, and both the rewards for success and consequences for failure. Yes, even when you encourage risk-taking you don’t want to reward failure. Just don’t punish it unless it resulted from stupidity or laziness.

Entrepreneurship, like so many words applied as metaphors inside the organization, blurs meaning rather than clarifying it. As with “internal customer” – another misapplied metaphor – you should avoid the meaningless label and instead communicate the behaviors and attitudes you value.

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