Category: Four pillars

I was born in 1957. A long time ago. And that meant I grew up in the Sixties and early Seventies, in an India that was teenage in its independence. [In fact, when I was born, Goa still belonged to Portugal, albeit only since its annexation over four hundred years earlier.]

They were times of tumult and of transformation, of triumph as well as tragedy. Change everywhere. Change at incredible speed. Change with long-lasting consequences. Women entering parliament and even becoming heads of state; racism being tackled head-on for the first time; valves being replaced by transistors; man going into space; man landing on the moon; computers beginning to be exploited commercially, the mouse and the pointer being invented, personal computing becoming a possibility, the internet beginning to take shape. Mobile phones entering the fray; e-mail rearing its ugly head. Protest movements everywhere, people fighting to be heard, people fighting for their rights. Fighting against colour prejudice, against gender inequality. Fighting for the right to choose and for the right to live. Affordable international travel, leading to greater mobility across the world. Assassinations, hijackings, the beginnings of modern terrorism. Entire countries dying, and new ones coming up, as the last vestiges of five hundred years of European colonialism came to an end. War. And peace. And some of the finest music ever produced.

By the time I was 14 years old change, and rapid transformational change at that, was a constant in my life.

I’ve spent the next 40-odd years observing change, being part of that change, changing myself. And sometimes even trying to change some of the world around me.

For some reason, quite early on, I began perceiving each wave of change, regardless of its locus and coverage, as something separate in itself. Compartmentalising the change in order to make sense of it. Seeing each change as an individual thing, with something I could identify as a start, something I could identify as an end, some people involved in making the change happen, some people involved in leading that change. Starts and ends, reasons and goals, resources and costs and times and outcomes.

Yes. I confess. I viewed much of the change around me as a set of projects, sometimes interwoven, sometimes overlapping, sometimes gloriously isolated.

All projects involve change. All change meets inertia. And there’s always some risk as a result. A lot of the time, changes begin without everyone really knowing what the desired end-state is. Which means you have the skills and knowledge for the start of the project and, in all likelihood, you have to figure things out as you go along. Discover stuff. Learn, usually from mistakes. Adjust, refine. Move on. Sense and learn and respond. Again and again. Iterating until you reach where you need to be. The persistence of Robert the Bruce. The perspiration that lubricates inspiration. If you keep on at it, learning as you go, then, in Yoda fashion, you get to there-is-no-try-only-do.

That’s what projects are. Each project is a try that becomes a do as you iterate and refine and adjust and learn. Most of the time, change takes you to a place where you’ve never been; sometimes, it takes you to a place that nobody’s ever been. So discovery and learning and iteration become critical.

As you scale from one-person projects to larger ones, some sort of governance model becomes necessary. A process for agreeing priorities, for allocating resources to the tasks, for monitoring progress and getting feedback, and for intervention in the event of problem or conflict. [I chose not to use the word “failure” in that set. I have not failed, I have found ten thousand ways that do not work…]

Most projects start with constrained resources. Anecdotally speaking, the projects I’ve enjoyed the most have been those with hard constraints. Such projects tend to attract people-who-want-to-govern-inspect-or-otherwise-give-their-opinion in droves. Droves and droves. Advice and support and help are always useful,  provided you know how to use them. There’s a serenity prayer in there somewhere.

Some people may come to praise the “project”, some to bury it. You can’t do anything about it, it’s a hazard of business. But what you can do is this: you can figure out whether the person in question could help you decide on the right thing to do, or about doing things the right way.

In my own experience, there are many many people who can tell you how to do things the right way.

But a rare few who can help you work out the right thing to do. They’re keepers.

George Gilder used to say that every economic era is characterised by its unique abundances and scarcities, and that a successful business is one that makes use of both the abundances as well as the scarcities.

So that’s what I’ve tried to do in projects. Corral together the people who can help me do things the right way, convert their energy into repeatable process, build bureaucracies around them as and when needed, just to contain the sheer numbers and make things efficient. A QWERTY keyboard approach to prevent logjam.

And then I’ve tried to spend as much time as possible identifying, nurturing, developing the people who can tell me the right thing to do. The rare and the scarce. The keepers.

Which is why, when I look at governance models in companies, sometimes I have to smile wryly.

Startups tend to be hungrily looking for people who can help them ensure the right things are done. And they call them mentors and coaches and advisors.

Established companies tend to be looking, somewhat less hungrily, for people who can help them ensure that things are done the right way. And they call them NEDs.

Abundances and scarcities. It’s important to know which is which.

 

 

Have you ever been put off shopping by an over-zealous assistant? If you have, then have you considered how you feel when that over-zealous assistant is not flesh-and-bone but instead only in digital form? Some people find the analogue version an irritant; yet others groan at the digital equivalent. And so that brings me to Customer Rule #1: Don’t hassle me while I’m just looking; not unless I ask you for help.

 

 

This does not mean that store assistants are unwanted. In fact they provide a really worthwhile function, as long as they know useful stuff about the store: where you go to find stuff; where you can try stuff, test stuff, compare stuff; how you buy; how you pay; how you take delivery; anything and everything. But only when you want it. I think of store assistants as analogue equivalents of search boxes, and often nicer to deal with. But I wouldn’t want the search engine in my face except at my behest. And this brings me to Customer Rule #2: When I ask for help, please make sure you’re in a position to help. Especially if you’re a search box. Too often I visit the search function of a site and it can’t find zip. Even though what I’m looking for is on the site.

 

 

If you’re in the business of selling stuff, then people who come and browse till the cows come home and never buy anything can be the bane of your life. And so there are a bunch of ways you can get your own back on the customer. You can leave fragile things in easy-to-knock-into places, under a big sign that says if you break it you pay for it. You can seal things so that they’re hard to inspect. You can place them “behind glass”. You can even try and get people to pay for browsing, with a “just looking” fee. These are all excellent techniques to use … if your goal is to frustrate the customer. We’ve all felt this pain in the real world: the harder you make it for me to find something, to get to something, the less likely it is that I’ll buy something. And so we have Customer Rule #3: Make sure there is a good reason for putting your products and services “behind glass”.

 

It’s not just the products and services that get put behind glass. Sometimes it’s the doors and entryways. Businesses love their customers so much that they put them through some sort of benighted IQ test before they can buy stuff. Want to enter our site? Prove you’re not a machine. [Alan Turing would have found that interesting, the idea of a human having to prove he’s human via a test]. I love the way Randall Munroe makes that point in his excellent xkcd webcomic:

 

 

Think about this: how many telephone numbers do you remember “by heart” right now? And how many did you know twenty years ago? We used to have to memorise lots of numbers at one time; now we don’t have to any more. When we want someone’s number, we look up the person’s name. Nothing complicated about it. And, most of the time, we don’t even need to see that number, we just click and away we go. That’s what we started doing when mobile devices started getting smarter.

So the next time you ask a customer to remember twelve or sixteen digits as a prerequisite for her doing business with you, think about what you’re doing. Why not ask them to recite pi to 16 digits before she is “allowed” to buy something from you, or, heaven forfend, try and pay a bill….. try and pay you some money? Which leads me to Customer Rule #4: Try not asking customers to memorise stuff about you; instead, try to remember stuff about them.

 

I can’t remember the number of times I’ve walked in to a shop, both online as well as off-, only to be put off by all the stuff I have to do before I can actually buy something. Most of the time I’ve had one reaction. A predictable reaction. I’ve just walked away and found somewhere else to go about my business. Registration should be something lightweight and simple. Time for Customer Rule #5: If you make it hard for customers to do business with you, don’t be surprised if they fail in the attempt.
People have done business with each other for centuries, even millennia. They buy from each other, they sell to each other. They do so principally because they trust each other, because they’ve bothered to invest in a relationship between each other, because they have some understanding and some respect for each other.

Over those millennia, they’ve evolved ways of doing this simply and effectively. For some reason, we seem to think we can treat people differently in digital space.

Maybe we can. Maybe for some people it doesn’t matter. For me it matters. I want people to make it simple and convenient for me to do business with them. And if they don’t, I will find people who do.

How about you? Do you agree with what I’ve said? Does it match with your experience and expectation? Let me know. Your comments will determine whether I write a follow-up post on queueing time and baskets and trolleys and payment and delivery and all that….. or not, as the case may be.

 

Ronald Coase died earlier this month. He’d had a good innings, he was 102 when he passed away. I never met him; I never saw him speak. But he influenced me greatly nevertheless, an influence that continues to this day and is the reason for this post. Thank you Ronald Coase.

Coase, together with Peter Drucker and Jerome Garcia, formed an unlikely triumvirate in my (then) teenage head. Drucker helped me understand what the purpose of business was and what management meant. Coase let me see how and why firms organised and operated. And Garcia showed me what it meant to bring the customer into the equation. Between them they set the basis of how I approached business life, a basis that itself was founded on the accidents of my birth and upbringing: born in an India just ten years into independent existence, growing up in a libertarian closely-knit loosely-Hindu journalist family and home, educated by Jesuits over the best part of fifteen years, all in a Calcutta that could at best be described as a democratically elected communist city with an imperial past and an imperious present.

You can see why I found the stuff people like Stewart Brand, Larry Brilliant, Howard Rheingold and Kevin Kelly were doing heady and exciting. Of particular interest to me was how they took the empowerment of the individual and made it both individual as well as collective, something that sat well with my roots. You can see why I found The Cluetrain Manifesto unputdownable.

Ah, Cluetrain. That brings me nicely round to why I wrote this post, the topic of the “constant customer”.

The constant customer is a theme that’s been running through my mind for some decades now. Coase’s work helped me understand why a firm formed, how firms could lower transaction costs, what those transaction costs were. Drucker, with his purpose-of-business-is-to-create-a-customer approach, made sure I realised that without the customer, the firm meant nothing. And Garcia et al came along and showed me that in days to come, there would be no such thing as customer lock-in. That they would be free to leave. That they could and would choose to stay, if the circumstances were right. Cluetrain then reminded me that it wasn’t happening, and that it would.

And it is.

Now. Finally.

When I watched Marc Benioff talking about the Customer Company, he spoke about customers being connected in whole new ways, and about companies needing to “pivot” to the customer. And it made me think even harder about the “constant customer” theme. [Disclosure: As most of you know by now, I work for salesforce.com; this is just in case you didn’t].

When customers have neither choice nor mobility, they can, to a large extent, be ignored. And so they were ignored. Focus was placed instead on optimising products, on reducing transaction costs associated with products. Companies that built experience in a particular product set could then scale up both volume as well as reach, and everyone was happy. Model T happy. Any colour you like as long as it’s black. Focus on the product, not the customer.

Being a product company made sense. Products didn’t complain or talk back. And customers had nowhere else to go anyway.

I’d been a keen follower of John Hagel and John Seely Brown for some years when I came across their “Big Shift” work, which later culminated in the publication of The Power of Pull.

In it, they spoke about a number of key shifts; here I focus on two: from stocks to flows, from experience curves to learning curves. When trying to understand what they meant, I found myself going back to the theme of the constant customer. A “stocks” world was one where you worked on optimising products, occasionally (hallelujah!) changing them, staying incremental as much as possible, looking hard at reducing unit costs. The market moved slowly, the customer couldn’t move anyway. And so in a stocks world it was natural that companies that could scale experience did so and did so successfully.

In a “flows” world, the market is no longer static, and the customer is free to move. There is no “constant customer” any more. Keeping unit costs down is important, but not as important as reducing the cost of change. Because change you must. That’s what pivoting to the customer requires. That’s what is implied in moving from the experience curve to the learning curve.

In a stocks world you can focus on the product and not care about the customer; the skills that matter are principally related to engaging with the product. You worried about what the product “wanted”, you “listened” to the product, you “related” to the product. And all your communications were product-centric.

In a flows world, the skills that matter are radically different, they’re now about engaging with the customer. Flesh-and-blood people. You now have to care about what customers want, you have to learn to listen to them, you need to understand how to relate to them. And your communications need to become customer-centric.

This movement from stocks to flows, from experience to learning, it’s not easy. For one thing you have to value different things. You have to learn how to value the cost of change, not just unit costs. For decades we’ve been building monolithic systems — people, process and technology — that had as their prime objective reducing unit costs. Standardise the hell out of everything. Tariff up the cost of change. And throw volume at it until blood emerges from stones. At a level of abstraction, that’s what the outsourcing model was, that’s why private equity likes stable-market cash cows.

If products can’t adapt at the speed demanded by customers, they will die. From a customer’s perspective, their transaction costs have gone down rapidly with the advent of the web, and, more recently, their costs of change have zoomed downwards as well. They can find what they want more easily, whenever, wherever. They can discover the price to pay, quickly, easily. And they can move away with ease. Lock-ins get scarcer every day.

So when the customer’s cost of change is low, the company needs to adapt and learn. Companies need to move from monolithic architectures to platforms and ecosystems, so that they can begin to move at the pace of the customer and the market.

When companies move at customer speed, when companies are aware of customer needs, when companies listen to customers, when companies value the relationship with a customer, the customer becomes a constant. Again.

The constant customer existed once. Because she had nowhere else to go.

The constant customer can exist again. Because she chooses to stay.

But this requires a “flows” mind, a “learning” approach, adaptive platforms and ecosystems, an ability to listen to the customer, an ability to respond.

An ability to pivot to the customer, perhaps.

 

 

 

Institutions will try to preserve the problem to which they are the solution.

One of my favourite Clay Shirky sayings. As Kevin Kelly remarked a few years ago, we should all be referring to it as the Shirky Principle.

I’d spent decades involved in financial technology, but it was only in early 1997 that I crossed the divide and actually started working for a bank. I was still there a decade later, but that’s another story. That decade at Dresdner Kleinwort Wasserstein was an incredible learning curve, I was privileged to work with many really talented people, and I’m delighted that so many of them have remained in touch. Wonderful times.

As with any other place I worked at, the first thing I did was to spend time quietly picking up the “carpet tiles” and observing what was happening below the surface. What were the creepy-crawlies that were peculiar to that institution, needing radically different approaches and attitude? I remember picking my jaw gently off the carpet when I was told that until a few weeks earlier, IT costs were allocated on the basis of floor area used. It’s important to do this, to check out the creepy-crawlies, because you then get the chance to figure out some parts of the form and shape of the organisational immune system. Immune to what? Immune to change. Any change.

Sometimes the creepy-crawly is somewhat larger than the metaphorical carpet tile. At least that’s how I felt when I began to understand the size and shape of the teams working on reference data. It just didn’t make sense to me. [My brain was going: let me understand this: low-volatility data, data that does not undergo much change; data that relates to things outside the firm, data that is used by all participants in the market; data that does not have any competitive value except by being timely and accurate and thereby reducing process breaks; and this required veritable armies?].

I’d just about got my head around the veritable army piece when I realised that there were many veritable armies, that every market participant had replicated what I’d just seen. Years later, I could put a label on such things. Shirky Principle.

It made my life a lot easier. When my plane is coming in to land and the pilot says the usual “There’s a lot of congestion around Heathrow so we’ve been asked to hold our pattern for another 20 minutes” I think to myself : air traffic controllers, Shirky Principle, and my head stops hurting.

In fact my head stopped hurting so often that I began to start looking actively for Shirky Principle in action, underneath the carpet tiles.

And after a while I saw a pattern emerge. The naysayers begin by pretending you don’t exist, that the change you are seeking to wreak is a figment of your personal imagination. Once that ploy fails, the enterprise immune system kicks into gear, and reports, presentations, spreadsheets and white papers begin to wend their weary way around the place. Take open source as an example. The immune system response starts with Open source is unAmerican, Steve Ballmer said so. The hidden costs of open source far outweigh the benefits. Open source was the reason Apollo 1 killed the three astronauts. And so on and so forth. Soon it switches to full-frontal attack. The CIO has a big short position on Microsoft. His sister owns the world’s biggest open source company.

I then saw the same process with Skype. It’s a joke. It doesn’t work. It’s a toy. Kill it. Years later, I see that sequence being repeated with discussions about the cloud. Same sequence. Cloud? What cloud? It’s just a marketing buzzword, just hype. Oh yeah, it exists, but all you can do is make illegal downloads, you couldn’t do real work using it. Where’s the performance? It’s insecure, it’s unAmerican, it’s downright communist.

Mobility. Open source. VoIP. Cloud. Same story.

Same beginning. Same ending.

It made me realise something else, something I’ve written about before. That the problem-preserving Shirky-Principle institutions are following a sequence that has been noticed in society many times before, whenever radical change is sought.

First they ignore you. Then they ridicule you. Then they fight you.

And then you win.

So (apparently) said Mahatma Gandhi. I never bothered to go to Snopes.com and dig into every line of debate on this. Suffice it to say that there are many reasons to believe he said it. Whoever said it, what really matters is what was said.

Ignore. Ridicule. Fight. Lose. That’s what happens to the institutions that seek to preserve the problems for which they were created.

So it is with collaboration. We’ve heard the word many times. And we’ve seen it paid lip service many times. But so long as it was not centre-stage, the immune system didn’t care.

Now things are changing. Studies are coming out indicating that networked organisations don’t work, that command and control is needed. That open-plan doesn’t work, we need cubicles with high walls. That too much collaboration can cause problems.

All that says to me is that the immune system is switching from ignore and ridicule to fight.

Which means that not collaborating will soon come to an end.

 

 

 

I seem to move house every ten years or so. I keep telling myself “This is the last time”; my appetite for the wholesale upheaval that a house move represents has waned somewhat. There was a time when people didn’t move much, they tended to live and die close to where they were born. I have a brother-in-law, about the same age as me, and he continues to live in the house he was born in. Rare today, but commonplace not that long ago.

I left India in 1980. At that time I knew one divorced person, and knew of just one other within my parents’ circle of friends. Now I hear of people getting divorced after 10, 20, 25 years. When I was at the cricket last week, there was a couple behind me celebrating their 49th, and a couple next to me whose parents had  just celebrated their 50th. Very rare today, but commonplace not that long ago.

Names and professions have been closely linked ever since men had professions; if you weren’t named after your lineage or your environment, then your line of work sufficed. So we had people with surnames like Carpenter and Fletcher and Butcher and Baker here in England; the Parsees in India had comparable equivalents, calling themselves Contractor and Doctor and Palkhivala and the legendary SodaBottleOpenerWallah (I confess I’ve never met one). It made sense, at a time when people didn’t change jobs often, when your occupation came with security of tenure. In fact this created an enjoyable variant during my formative years: people were differentiated by corporate label. If you had two Subramaniams in your social network, one would be “named” Reserve Bank and the other Steel Balls (since he worked for a ball bearing company). And yes, I have known a Steel Balls Subramaniam.

Migrations have been happening since the dawn of mankind. We’re learning more about human migration every day, as we begin to piece together what our neanderthal and Denisovan antecedents were up to, and as we try and make sense of where to fit Flores Man in. When I was growing up, there was little such evidence in my social circle. Some of my Anglo-Indian friends went to Australia or Canada; one of my uncles did a stint in the UK, another settled in Chicago (he’s still there). Such migrations were few and far between. And yet today my wife and I have siblings in all five continents, and I’ve met classmates who have settled in eight countries (I think the real count is 19, but I can’t be sure. We move around).

There was a time when we didn’t change where we lived, who we lived with, what we did, where we did it. Changing such things wasn’t easy, the “cost of change” was high. Sometimes the cost was an economic one, sometimes it was a social one, sometimes it just couldn’t be done.

Some things used to be really hard to change. I was born black-haired. Pretty early on, using my childhood powers of observation, I worked out that in years to come, my hair could take one or more of three colours, in a series of combinations: black, the original; black-and-white, the transition style; white, with the expectation of a distinguished look; or scalp-coloured, where you don’t see the hair because it’s no longer there. Nowadays I see even black-haired people change their hair to a plethora of shades, mostly from the purple family. I’ve never been tempted to change my hair colour, and my teenage plans to grow my hair long stayed, like most other things, in the Vegas of life where teenagers hang out.

As a teenager I read Gore Vidal’s Myra Breckinridge, and it opened my eyes to all the transgender possibilities the world was then conceiving of. It was no longer a certainty that the gender you were born with was the gender you would die with. I’ve never been tempted to change, but I was old enough to recognise that the cost of change of something so basic and “permanent” also appeared to be dropping.

I understood that people could and did change nationality. As a cricket fan, I was aware of a number of Indians who had played for England before modern India existed, and it made me think. Did my grandfather have a British passport? An Indian one? Both? Yet, while I knew that nationality could be changed, it wasn’t something I saw often. And now I regularly meet people who’ve changed nationality; some have taken this further, and started collecting multiple nationalities rather than just changing them one for another.

In the 23 years I lived in India, I can only remember going to two barbershops. There were probably more, but for sure between 1966 and 1980 I frequented just two. I went to a nursery (Hindusthan Park School); a primary school (Miss P Hartley) and then, from 1966 to 1979, I was with the Jesuits at St Xavier’s. To all intents and purposes I went to one school. Nowadays parents move their children to what they consider the best school in the area, sometimes even moving areas to achieve their goals.

Names. Addresses. Gender. Marital status. Nationality. Occupation. Place of work. Country of residence. Things that are easy to change now, things that were hard to change in times past. It is not just the ability to change that has itself changed, the ability to afford that change has also changed.

An affordable freedom of choice, touching on areas where there was no such choice historically.

We all need to understand what this freedom of choice represents, what this affordable right to change represents, in all these forms and shapes. Each of us will have formed views as to whether this freedom to change is good or bad; that is not what I write about here; I’m concentrating on the fact of change, of the freedom of choice in that change, and not making any value judgments.

Some changes are less affordable, but the choice remains. Companies can now decide to incorporate themselves somewhere else in order to take advantage of the tax structures. And it’s not just companies, individual citizens also exercise their freedom of choice and move their tax domicile. These changes tend to be expensive and complex to carry out; as a result, it’s only the large company and the high-net-worth individual that are able to exercise choices such as these. In other words, these choices are only available to the high end of the taxpayer spectrum, and therefore can really affect the countries they leave.

And so we come to the customer. A customer who has more choice than he or she has ever had before, and who can exercise that choice more easily than has ever been the case. We get to choose what we buy, where we buy it from, how we pay for it, how we get the goods/services.

When customers have that freedom of choice, many things influence that choice. What they know and like/dislike about the company making the product or service, the “brand” and reputation and values. What they know about the product or service from past experience, either directly or vicariously, sometimes through their friend network, sometimes beyond even that. The softer “sustainable” elements related to the product or service: origin, transport costs, carbon footprint, ease of replenishment, additives and subtractives. If you make it through all that, then you may just get to traditional discriminators like price or availability.

When it comes to the customer, everything’s changed. Everything.

Which is why it’s really important for companies to have relationships with their customers. If their customers will let them. Not everyone wants to have a relationship with the companies they deal with, often because they’ve been let down time after time. So it’s hard going.

There was a time when a commodity was defined as something that is standardised, fungible, provided without differentiation. And companies moved heaven and earth to try and find a way to differentiate.

There’s a new definition of commodity emerging: a product or service where there is no relationship between customer and company. Companies in that position will go the way of all flesh.

Many years ago, I wrote:

We need to be in the business of providing the customer what she wants when she wants it, where she wants it, how she wants it. We need to focus on making things that the customer wants to buy, rather than trying to get customers to pay for things they neither want nor need.

There was a time when we could decide for the customer. There was a time when we could constrain the customer’s voice and choice. There was a time when dinosaurs ruled the earth.

Now is not that time. Now is the time for faster horses.

 

I was reminded of that post when I watched Kevin Spacey’s excellent talk on what’s happening with Netflix, House of Cards and customer choice. If you haven’t seen it, you must.