Change How You Do Market Research – New Book “Remote Research”

Paralysis from analysis is all too common.  Why? Because for the longest time people have assumed that it's possible to predict the future by studying history.  And there has been ample belief that if you ask customers questions, they will give you the answers which will guide your future.  Further, people want to believe that it was possible to find hidden meaning via discovering previously unseen correlations — even though almost all these sorts of low-score correlations turn out to be spurious, merely mathematical artifacts. 

Readers of this blog know that when we investigated The Phoenix Principle we learned that  traditional market research rarely improves understanding of customers or markets.  And we learned that customers are incredibly unreliable at telling you what they really want, or what they are likely to do next.

Nate Bolt of market research firm Bolt Peters now confirms this.  His recent column at Venturebeat.com "Stop Listening to Your Customers" is an indictment of traditional market research observed through his 9 years working with clients in the field.

  • "A common assumption… is that listening to
    potential customers is the best way to find out whether your product or
    idea will succeed in the market. Honestly — don’t bother."
  • "Opinions are often inconsistent with behaviors or other attitudes,
    especially when discussing hypotheticals."
  • "Remember 'Clippy" the little character that appeared in Microsoft Word years ago? That
    little bastard arose, in part, from Microsoft asking users if they
    wanted help working on their documents — everyone said, “Sure, sounds
    great.” But once people started actually using it in the real world,
    they hated it
    — it might be one of the most hated features in the
    history of computing."
  • "Never ask people what they think of your product or idea."
  • "Test ideas early by watching behavior. It’s fine if you
    don’t have a 100 percent functional interface — having eight people
    interact with a prototype or even wireframes or design mockups can be
    incredibly useful. Even recruiting strangers from the street to use your
    prototype is better than nothing."
  • "Use unorthodox methods. Companies like Apple and
    37signals make a big deal about never conducting user research. They lie… Releasing products in generations, like Apple does, provides them with
    mountains of reviews, task-specific complaints, crash reports, customer
    support issues, and Genius Bar feedback
    "

Too much money is spent on research that can never, by it's design and method, tell the business what it needs to know.  The only way to know how to compete is to get into the market.  Quit trying to analyze – go do it!  An ounce of  "doing it" is worth a kilogram of research and analysis.  Get out of the office, out of the conference room, and into the market.  Set up a White Space team and make them responsible for launching, learning, reporting and figuring out what customers want that you can sell at a profit.  That feedback is the research which is really worthwhile.  It's faster, easier to get and more accurate than anything you'll get from a market study or focus group!

Nate Bolt's new book is "Remote Research."  The link I found to the book was at RosenfeldMedia.com.

Participate, don’t Spectate – Google uses White Space

Lots of new things are happening with technology.  Everyone knows that.  We see the emergence of new communication vehicles like Facebook, and  new ways to exchange data – like Apple's iPhone and RIM's BlackberrySkype replaces the telephone and in-person meetings.  iTunes replaced CDs. The list is pretty long.  But how much of these new technologies do you use regularly, how many do you use in your business, and how many do you use in "mission critical" applications of things you do? 

Most of us watch new markets develop.  Many even think the smart thing to do is to wait, let things evolve, see what happens.  Be a late adopter when technology is "stabilized" and prices are lower.  These are spectators to the world of innovation, doing what they've always done and waiting for some future time when it will seem better to switch.

Then there are participants.  The participants are learning.  While others  watch, they actually learn how to get new customers, how to sell more product, how to apply technology to lower cost while improving the solution, how to be more competitive, how to read market shifts (and prepare) – how to make more money.  Like Google.

Google just launched Buzz ("Google Betting on Mo Better Buzz" at Mediapost.com.  Buzz is a new product that links up to social media sites for a variety of functions – one of which is its ability to deliver ads (imagine that) while also adding benefits to users like location tagging and enhancing email.  It does new things, and some things already available via Facebook or Yelp.  That it's market position, or even its functional position in the technology environment, isn't clear is not terribly important to Google management.  In "A Buzz and A Shrug: Why Should Google Kill Anything?" MediaPost.com goes on to describe that at the launch meeting management went out of its way refusing to declare a specific position, or competitive plan, for Buzz.  Google is in the market, trying something, learning and participating – being part of making Disruptions happen and seeing if it can find a way to create sales and profits.

And that's what White Space, and participation, is all about.  While spectators watch and get left behind, participants are in the market.  Spectators fall off the S-curve, as their capabilities fall away from market needs they become less relevant, sell less and profits fall.  Participants use White Space to jump the curve – to move from an old product/market S curve to a new one.  They are in the market learning, and adapting, and moving toward that point where the technologies and solutions collide – thus they are ready and able to move to the next new thing.  While spectators are stuck, doing the same old thing, falling farther behind.

Being a participant isn't hard, nor is it all that expensive.  It requires the willingness to get in the game.  To start.  To do less "planning" and instead get in there and do it – like the NIke ad recommends.  Instead of devoting all your money to defending and extending what you know, take some and invest in the places where growth is rampant.  The learning will pay for itself as it allows your business to move into new markets and generate new revenues.  You will have to Disrupt your thinking and processes to do this, but the payoff is it could save your company!

Long ago business education started with a lot of focus on industrial engineering.  Improving operations to get more stuff out the door.  This was augmented by sales and marketing, to help sell stuff so we could get more out the door.  And finance was added as a way to understand cash flow and funding in order to get more stuff out the door.  All of that was predicated on endless demand for the stuff.  But today, it's not about making lots of your stuff and cramming it down customer throats.  Instead, winners have to be adaptable to market needs – to be part of creating new solutions that generate more revenues and higher profit rates.

You don't need all the answers.  White Space is about having a plan, and goals, based upon scenarios.  But then avoiding analytical paralysis and getting into the market.  Google is phenomenal at this.  Not everything Google launches is a big hit.  Google Wave appears to be struggling.  But that's OK.  If you don't put all your eggs in one basket, because you get into markets earlier and faster, you can afford to have misses.  You still get the benefits of market learning – and move forward to possibly jumping the next S curve.  Google's Buzz is another stereotypical White Space entry into the market.  A product with a lot of possibilities, looking for how to fit into a quickly shifting market, teaching Google more about the marketplace and aiding the company toward maintaining its torrid growth pace.

Does your business Facebook?

I had two more Facebook ignorers this week.  First was an old friend who didn't use Facebook, and could not imagine how it would be beneficial to his business.  I responded with "that's kind of like the folks who didn't use a telephone saying that they didn't see any value in it for business."  When you don't use a tool, it's easy to pretend it isn't valuable.  Makes life easy on your competitors who do give it a try.

The second was a business that recruits people under 30.  The top marketers at this company are still doing all their efforts with newspapers, radio and typical broadcast forms of media.  They said they couldn't use social media to reach their base "because you can't control the message on Facebook."  OK, so  they don't use social media, and their focus is on message control so they don't intend to use social media.  But their target is a population that every month uses less traditional media, and more social media.  And these folks are wondering why media costs are up, and their success is way, way down.  Uh huh.

At MediaPost.com "Avoiding Social Media Malpractice" Chad Cappellman tells the story of a hospital division that gets more people coming for insight through Facebook than come through the highlighted links on the hospital's own web site!  People use Facebook today – a lot.  We all would prefer a personal referral when we have a question.  Often, a referral is better than 10 Google search hits at pointing you to the service provider or product which really fits your needs.  And Facebook is a fast way to generate referrals.  As is Twitter.  So when you want potential customers referred your way, why wouldn't you try to maximize the use of social media?  As the story above discusses, people would rather get info about a hospital (an example) from friends than from about any other source.

As for implementation, social media is part of the more sweeping market shift affecting all businesses.  Historically, business people thought in terms of "control."  The business had communication walls, internally and externally.  More time was spent making sure information wasn't passed around than making sure communication was fluid and accurate.  But in another MediaPost.com article "Twitter and Facebook Could Get You Fired" we see that approach simply won't work any more.  We live in a "connected" and "networked" world today.  There are precious few secrets when everyone has a mobile phone, and most of those have cameras, and texting is ubiquitous, and the vast majority of people under 35 have multiple social network locations. 

Today, you can't win by limiting communications.  That is a failed approach.  Nor is it possible to "control" what is said about your business or its products and services.  What you can, and increasingly must, do is monitor the chatter and be part of it.  Of course some things will be inaccurate, so its now your role to help move the message in the right direction.  Don't think about control, think about helping the message move toward accuracy.  And leverage all the chatter to help you sell more stuff!

We live in a fast shifting world.  That is not going to change.  Slow moving traditional media is gradually dying.  No competitor can succeed by avoiding the shifts.  Those competitors that win will use scenario planning to help anticipate the shifts, and focus on fringe competitors to learn how to do new things which can create advantage.  Success isn't going to come from trying to Defend & Extend the "core" – but rather by rapidly adapting to new market needs even if it means changing your "core."  And the best way to stay connected to shifting markets today is through social media.  It not only gives great, and timely, feedback but offers everyone the chance to enter into a dialogue with potential new customers at remarkably low cost.  And in remarkably powerful ways.

Be Flexible, and Forward Thinking – Office Depot, Apple

"Strategic Plans Lose Favor" is a recent Wall Street Journal headline.  Seems like some big companies, and big consulting firms like Accenture, McKinsey and the Boston Consulting Group are rapidly learning what this blog has been pushing for a few years.  That flexibility trumps traditional approaches to strategic planning.

  • When Office Depot's strategic plan was leading to revenue struggles, the company set up a situation room to track key indicators and adjust to market shifts much quicker.
  • "Strategy as we know it is dead" according to Walt Shill, head of strategic planning at Accenture. "increased flexibility and accelerated decision making are much more
    important than simply predicting the future
    ."  (Do you think he's been reading this blog and my book?)
  • "business leaders will start to rely less on static five-year strategic
    plans and more on rough "adaptive" strategies that consider multiple
    scenarios
    "  according to Martin Reeves, Senior Partner at BCG.  (Where'd he read that – on this site?)
  • ""The rate of change and width of volatility is much wider and faster
    than what we would have assumed
    coming into this," Jeff Fettig, CEO at Whirlpool
  • McKkinsey has opened a "Center for Managing Uncertainty."  Really.

As this recession has come on, and lingered, businesses are clearly starting to realize that market shifts happen fast, and businesses cannot be slow to change.  Adaptability is one of the most important capabilities to compete in the post-2000 business world.

And the real market leaders are incorporating this kind of thinking into their organizations.  While the earlier quotes show how, caught on the defensive, organizations are finding new ways to react, the best performing organizations are taking market leadership by being Disruptive.  Like Apple.  In a Harvard Business Review blog Roberto Verganti, professor at Politecnico di Milano tells us "Apple's Secret:  It tells us what we should love." 

The good professor of design and management points out that Apple does not ask customers what they want.  Instead the company designs products which take customers to new levels of performance beyond what they imagined.  Instead of being reactive, Apple uses scenario planning to understand future market needs and create shifts with its products.  This approach leads to breakthrough performance, such as the success of Nintendo and its Wii product line.

To be successful businesses can no longer try to Defend & Extend their old strategies.  They have to be market focused, and flexible to manage through market shifts.  And to earn superior rates of return they have to be market leaders that use scenario planning and White Space to launch new solutions meeting emerging needs which attract customers and grow sales.

Winners and Losers from Shifts – Apple, Amazon, Microsoft

One of the biggest business news items this week was the launch of Apple's iPad for $499.  Although perhaps overlooked by many big companies, and several IT departments.  To some businesspeople, the iPad seems another consumer toy, thus not terribly noteworthy.  Some see it as a small-market share sort of oversized iPhone for mobile telephony/data use.  One executive commented to me this week "I don't understand why anyone cares, I don't own an iPhone and cannot imagine why I would ever want to download an app,"  He has a huge investment in Microsoft technology, has never used an iPhone or Palm Treo or even a Blackberry.  Hes' never seen an iPhone app, and was amazed when I told him 1 billion had been downloaded.  He's comfortable in his traditional IT solution, and doesn't see the importance of iPad.

But the iPad is another step demonstrating a big market shift is happening.  With Apple's announcement, Amazon announced that it's sales of Kindle are about twice what most analysts had expected – see "During Apple Week Google and Amazon try to Remind You They Exist" at Fast Company.  Further, it appears now that for every 10 books Amazon sells, it sells 6 Kindle books — a substantial number and indications of serious market change.  The iPad is half the price most people expected, and now rumors are Kindle's will drop to $100 as competition heats up.  It rapidly appears that while there is an emerging battle between Amazon and Apple, the biggest insight is that the market for BOTH is growing a whole lot faster than anyone expected.  As are iPhone sales.  These devices, and the technology solution embedded within them, are grabbing a lot of buyers, and quickly.  The sales, in units and dollars, are growing much faster than anticipated.  And new users are flocking toward this technology platform.

Thus, the iPad is likely to be a big winner for Amazon and Kindle – as well as Google.  It is expanding the application base, and use patterns, for mobile devices.  It is expanding the product breadth and price points.  Quite simply, it is helping people do new things they couldn't do before – especially when mobile – that they could not do before.  As a result, apps will grow and sales of both hardware and software will grow.  And early adopters will gain an advantage as they use this new technology to create advantages for their customers.  Apple and Amazon are both "winners" who are driving revenue and profit growth.

And Microsoft loses.  Microsoft has never changed its Success Formula.  Its Identity, Strategy and Tactics remain as they've been for three decades – to provide a one-stop near monopolistic, integrated (mainframe style – and certainly monolithic) solution.  As the market has been shifting, however, this has been less and less successful.

Chart-of-the-day-microsoft-stock-during-steve-ballmers-leadership
Source:  Silicon Alley Insider

As the chart shows, Microsoft's product strategies, product introductions, acquisitions and management changes have done nothing for growth – or valuation.  Microsoft keeps trying to do what made it great in the late 80s and early 90s.  But since then, the market has shifted dramatically and the sustaining innovations Microsoft has offered, while meeting customer requests for improvement, haven't really helped growth. 

The cost of this Lock-in has been horrific.

Chart-of-the-day-microsoft-operating-income
Source:  Silican Alley Insider

Microsoft has poured billions of dollars into a failed approach intended to Defend & Extend its Success Formula – but to no avail.  The market is going a different direction – toward cloud computing with its distributed data, extremely small apps at very low (disposable) prices, easy to use interfaces and greatly lower device cost.

Even as large and cash rich as Microsoft was in 2000, it cannot stop a market shift.  And even though this shift has been predictable, with competitors from the fringe like Google, Amazon and Apple bringing to market new products, Microsoft has chosen to try Defending & Extending its Success Formula rather than Disrupt and use White Space to develop new solutions.  What can we expect from Microsoft in the future?  Unfortunately, more of the same and most likely a dramatically deteriorating value.  When the market's shift to these thin devices with a different architecture becomes clear, the inability of System 7 and Bing to make any difference in Microsoft results will be clear.  And investors are likely to run for the proverbial hills – letting the stock price drop along with new users.  Microsoft will increasingly be dependent upon legacy applications and maintenance – markets with little/no growth.  Microsoft could soon be the next Unisys (remember that company?)

So, what is your company doing?  Are you moving forward with new apps which will grow your revenues and profits?  Are you looking for ways to use these devices, and the underlying mobile computing architectures, to offer your customers better solutions?  Are you bringing out new approaches that are potential game changers, bringing new customers to you and accelerating growth?  Or are you trying to Defend & Extend your old processes, approaches and products?  Are you planning a future that will be PC/laptop centric, and delivering traditional web pages?  Are you following the laggard, Microsoft, or are you Disrupting your business, and market, with White Space projects that will change market behaviors using these new technologies and positioning you as the market leader?  In 2015, will you look like Microsoft – frozen in place as the market shifts – or will you look more like Google, Amazon and Apple with new solutions that create excitement and new sales?

Have you tried a Kindle yet?  iPad?  iPhone?  Do you have any White Space wher
e you are trying these new things?  Have you Disrupted any of your organization and challenged them to apply this technology?  Exactly what are you waiting on?

Data is overrated – Scenario planning and global warming

Most businesses have multiple analysts who spend day after day accumulating, analyzing and displaying data.  Financial analysts, marketing analysts, IT analysts – they are all over the place.  Then businesses will hire consultants who bring their own analysts to further find and review data – then present yet more charts and data summaries.  When I worked for The Boston Consulting Group we used to say "the data will set you free!" And we believed that if we dug up more data and did more analysis than anyone else we would offer insight to change businesses everywhere.

Yet, more of our clients didn't take action than did.  When I moved on to other firms, the results weren't really different.  And when I was in corporate America at huge companies, like PepsiCo and DuPont I found that the army of analysts and mounds of data really had almost no impact on how decisions were made. or what decisions were made..  

Once a business is prosperous, its Success Formula drives behavior.  Its Identity is set, its strategy is in place and tactics are predetermined.  Things don't change just because someone shows the leadership data.  No matter how synthesized or analyzed or elegant, the data really makes little (if any) difference.  It's easy for leaders to simply ignore data that is troubling, and highlight data which confirms previously held beliefs.  And even if insight is created, insight has nothing to do with what people will do next.  Insight doesn't change the decision-making processes, or any of the other Lock-ins keeping the Success Formula in place.  Even though managers claim that they want to see "the data," in reality the data makes no difference.

Last night the U.S. President Barack Obama referred in his State of the Union address to the data which confirms global warming.  This drew significant snarky laughter from some of the joint congressional attendees.  And even though there are regular reports, like the recent New York Times article "Past Decade Warmest on Record, NASA Data Shows," there are regular polls showing an enormous amount of the population, at all income levels, who simply don't believe the earth is warming.  The data, in the end, is ignored or discounted.  It simply doesn't matter.  And no one is going to change the opinions of anyone who doesn't think the earth is warming by trying to show more data.

Data leads to debates.  Who's answer is right?  Who's forecast is more likely?  Debates about data can go on forever.  An old business joke says if you strong all the econometric modelers together end to end they'd still never reach a conclusion.  But you'd get a lot of debate.  

Instead of data and debate, realize the limitations and move on.  If we spent 1/10th the time digging for and analyzing data, we'd do just fine.  Rather, we should spend the other 9/10th of the time building scenarios.  Instead of debating a topic like global warming, we could build scenarios that ranged from global cooling by 5, 3, 2 or 1 degree to no change to warming by 1, 2, 3 or 5 degrees.  The issues isn't which is most likely – but rather that we think through the implications of ALL, and prepare What strategies would allow for success given that any of these are possible

Business analysts, strategists and leaders spend a lot of time trying to guess the future.  But their crystal ball is just as foggy as everyone else's.  Their guesses are mostly wrong, because a dynamic marketplace is very hard to predict.  So they plan to do something, but then shifts make the returns lower because the world/market didn't turn out as planned.  Given that we KNOW that we're more likely to be wrong than right, why the fascination with trying to pick the future?

Those who win more than they lose develop a lot of scenarios.  They don't try to pick a scenario.  They try to think through the many possibilities and prepare for as many as possible.  And they develop mechanisms to track the market so they can keep an eye on the multiple scenarios and anticipate things as time passes.  It's never the things you expect that really hurt you, it's the one you didn't think about.  To be prosperous for a long time you have to build the ability to think very broadly about the scenarios that can happen, and prepare.

So the next time you feel the urge to "get more data" think about global warming.  Has all this data changed the debate?  Has it helped any country to better prepare?  Has anything really happened, as the mountains of data on the topic have been assembled, analyzed and distributed?  Does anyone think the data will cause a change in policy, or behavior?  If not, then maybe you can start to spend more time creating multiple, wide scenarios that will help you prepare – and possibly help you to develop new behaviors to protect your business from a range of potential outcomes.

New Solutions Emerge – Apple, Amazon, Netflix, YouTube, Hulu

Most people misunderstand evolution.  They think that changes happen slowly.  Imagine an animal with a 12 inch tail.  Every generation or so it's imagined that the tail gets a little shorter, then a little shorter, then a little shorter until after some very long time it simply disappears.  But that's not at all how evolution works.

Instead, most of the animals have a long tail.  Some small number of animals are born each year with very short or no tails.  For the most part, this matters little.  If the tail is valuable – say for warding off parasites – those without tails may suffer and die off quickly.  And that's the way things are, largely unchanged, for decades.  But then, something happens in the environment.  Perhaps the emergence of a predator able to catch these animals by the tail and hold them in place to let the pack kill it.  Within one generation almost all of the tailed animals are killed by the predator, and only the no-tail animals survive.  Some of these have developed an immunity to the parasite.  So then this "evolved" animal becomes dominant.  No-tail animals replace the tailed animals.  That's how evolution really works.  It happens fast, with drastic change (and this time of change is referred to as a punctuated equilibrium.)

Once we know how evolution really works, we can start to better understand business competition.  A Success Formula works for a really long time, until something changes in the marketplace.  Suddenly, the old Success Formula has far poorer results.  And a replacement takes over.

Consider newspapers.  They played a very important role in society for at least 100 years (maybe 200 or 300 hundred years.)  But with the advent of the internet, their role is no longer viable.  Printing and delivering a daily paper is too expensive for the value it can provide.  So think of newspapers as the long-tail animal.  And digital news delivery is a short-tail animal.  The internet is the attack pack that kills the newspapers.  And within short order, the world is a different place – in a new equilibrium.  And everything about the surrounding environment is shifted.  Regardless of how much you enjoyed newspapers, they simply cannot compete and new competitors are a better fit in the new marketplace.

Now consider Netflix.  Netflix played a major influence in obsoleting traditional movie rental shops – like Blockbuster.  Netflix was a winner.  But markets – new attack packs – keep emerging.  And the latest shift are products like the Kindle and Apple Tablet (as well as other tablet PCs.)  These products make Hulu and YouTube a lot more viableSuddenly, Netflix is the long-tail animal, and the short-tail animals are doing relatively better. 

According to The Wall Street Journal, in "Apple Sees New Money in Old Media" Apple is close to a deal with several newspapers to deliver their content to readers via their internet device.  They also are negotiating rights to deliver movies and television (small format) entertainment.  Simultaneously, Amazon keeps marching forward as MediaPost.com reports in "Take That Apple: Kindle Introduces Apps."  We see that there are a LOT of potential different versions of the short-tail animal.  Tablets, phones, netbooks, etc.  Which will be the biggest winners?  Not clear.  But what is clear is that the old long-tail competitors (newspapers, print magazines, network television, traditional PCs) are not going to flourish as they once did.  The market has permanently shifted.  Those competitors are in the back end of their lifecycle.

Simultaneously, this market shift causes ripple effects through the environment.  The market shift affects ALL players – not just the one most visibly being attacked.  So, as SiliconBeat.com reports in "Looks Like Netflix is Dead, Again" this change suddenly imperils Netflix which has mostly counted on postal delivery rather than digital.  And it provides a boost to short-tail players like Hulu and YouTube which could see much larger revenue given their digital-based delivery models.

And this affects you.  What do you print, or say, that could be better handled on a mobile device?  Could you deliver user instructions via an iPhone or Kindle app?  If so, why aren't you doing it?  Are you still working on traditional web pages, with embedded text in graphics that can't be seen by a mobile phone, when most people are likely to find you first on their mobile device?  Are you busy working on your web site, while ignoring having a Linked-in or Facebook account?  Are you advertising on television, or in newspapers, and ignoring Facebook ads – or YouTube links?  Do you have a YouTube channel with short clips to instruct users on your product, or how to install an upgrade, or even why to buy?  Are you still competing with a long tail, while the pack is rapidly killing off the long-tail species?

Market shifts are happening fast today.  If you don't react, you just may find yourself deep into the pack with declining results.  Or you can shift with the market to keep your business competitive.

Listen to Competitors Rather than Customers – Google, IBM, Tribune, Cisco

Leadership

Listen To Competitors–Not Customers

01.06.10, 03:10 PM EST

The accepted wisdom that the customer is king is all wrong.

That's the start to my latest Forbes column (Read here.)  Think about it.  What would Apple be if it had listened to its customers?  An out of business niche PC company by now.  What about Google?  A narrow search engine company – anyone remember Alta Vista or Ask Jeeves or the other early search engine companies?  No customer was telling Apple or Google to get into all the businesses they are in now – and making impressive rates of return while others languish.

But today Google launched Nexus One (read about it on Mobile Marketing Daily here) – a product the company developed by watching its competitors – Apple and Microsoft – rather than asking its customers.  In the last year "smartphones" went to 17% of the market – from only 7% in 2007 according to Forrester Research.  There's nothing any more "natural" about Google – ostensibly a search engine company – making smartphones (or even operating systems for phones like Android) than for GE to get into this business.  But Google did because it's paying attention to competitors, not what customers tell it to do. 

No customers told Google to develop a new browser – or operating system – which is what Chrome is about.  In fact, IT departments wanted Microsoft to develop a better operating system and largely never thought of Google in the space.  And no IT department asked Google to develop Google Wave – a new enterprise application which will connect users to their applications and data across the "cloud" allowing for more capability at a fraction of the cost.  But Google is watching competitors, and letting them tell Google where the market is heading.  Long before customers ask for these products, Google is entering the market with new solutions – the output of White Space that is disrupting existing markets.

Far too many companies spend too much time asking customers what to do.  In an earlier era, IBM almost went bankrupt by listening to customers tell them to abandon PCs and stay in the mainframe business —– but that's taking the thunder away from the Forbes article.  Give it a read, there's lots of good stuff about how people who listen to customers jam themselves up – and how smarter ones listen to competitors instead.  (Ford, Tribune Corporation, eBay, Cisco, Dell, Salesforce.com, CSC, EDS, PWC, Dell, Sun Microsystems, Silicon Graphics and HP.)

New Decade – New Normal

HAPPY NEW YEAR!

We end the first decade in 2000 with another first.  In ReutersBreakingViews.com "Don't Diss the Dividend" we learn 2000-2009 is the first time in modern stock markets when U.S. investors made no money for a decade.  Right.  Worse performance than the 1930s Great Depression.  Over the last decade, the S&P 500 had a net loss of about 1%/year.  After dividends a gain of 1% – less than half the average inflation rate of 2.5%. 

Things have shifted.  We ended the last millenium with a shift from an industrial economy to an information economy.  And the tools for success in earlier times no longer work.  Scale economies and entry barriers are elusive, and unable to produce "sustainable competitive advantage."  Over the last decade shifts in business have bankrupted GM, Circuit City and Tribune Corporation – while gutting other major companies like Sears.  Simultaneously these changes brought huge growth and success to Google, Apple, Hewlett Packard, Virgin and small companies like Louis Glunz Beer, Foulds Pasta and Tasty Catering.

Even the erudite McKinsey Quarterly is now trumpeting the new requirements for business success in "Competing through Organizational Agility."  Using academic research from the London Business School, author Donald Sull points out that market turbulence increased 2 to 4 times between the 1970s and 1990s – and is continuing to increase.  More market change is happening, and market changes are happening faster.  Thus, creating strategies and organizations that are able to adjust to shifting market requirements creates higher revenue and improved operational efficiency.  Globally agility is creating better returns than any other business approach. 

A McKinsey Quarterly on-line video "Navigating the New Normal:  A Conversation with 4 Chief Strategy Officers," discusses changes in business requirements for 2010 and beyond.  All 4 of these big company strategists agree that success now requires far shorter planning cycles, abandoning efforts to predict markets that change too quickly, and recognizing that historically indisputable assumptions are rapidly becoming obsolete.  What used to work at creating competitive advantage no longer works.  Monolothic strategies developed every few years, with organizations focused on "execution," are simply uncompetitive in a rapidly shifting world.

And "the old boys club" of white men in top business leadership roles is quickly going to change dramatically.  In the Economist article "We Did It" we learn that in 2010 the American workforce will shift to more than 50% women.  If current leaders continue following old approaches – and generating anemic returns – they will rapidly be replaced by leaders willing to do what has to be done to succeed in today's marketplace.  Like Indra Nooyi of PepsiCo, women will take on more top positions as investors and employees demand changes to improve performance.   Leaders will have to be flexible and adaptive or they, and their organizations, will not survive.

Additionally, the information technology products which unleashed this new era will change, and become unavoidable.  In Forbes "Using the Cloud for Business" one of the creators of modern ERP (enterprise resource planning) systems (like SAP and Oracle) Jan Baan discusses how cloud computing changes business.  ERP systems were all about data, and the applications were stovepiped – like the industrial enterprises they were designed for.  Unfortunately, they were expensive to buy and very expensive to install and even more expensive to maintain.  Simultaneously they had all the flexibility of cement.  ERP systems, which proliferate in large companies today, were control products intended to keep the organization from doing anything beyond its historical Success Formula.

But cloud computing is infinitely flexible.  Compare Facebook to Lotus Notes and you start understanding the difference between cloud computing and large systems.  Anyone can connect, share links, share files and even applications on Facebook at almost no cost.  Lotus Notes is an expensive enterprise application that costs a lot to buy, to operate, to maintain and has significantly less flexibility.  Notes is about control.  Facebook is about productivity.

Cloud computing is 1/10th the cost of monolithic owned/internal IT systems.  Cloud computing offers small and mid-sized companies all the computing opportunity of big companies – and big advantages to new competitors if CIOs at big companies hold onto their "investments" in IT systems too long.  Businesses that use cloud architectures can rearrange their supply chain immediately – and daily.  Flexibility, and adaptability, grows exponentially.  And EVERYONE can use it.  Where mainframes were the tool for software engineers (and untouchable by everyone else), the PC made it possible for individuals to have their own applications.  Cloud computing democratizes computing so everyone with a smartphone has access and use.  With practically no training.

As we leave the worst business environment in modern times, we enter a new normal.  Those who try to defend & extend old business practices will continue to suffer  declining returns, poor performance and failure – like the last decade.  But those who embrace "the new normal" can grow and prosper.  It takes a willingness to let scenarios about the future drive your behavior, a keen focus on competitors to understand market needs, a willingness to disrupt old Lock-ins and implement White Space so you can constantly test opportunities for defining new, flexible and higher returning Success Formulas.

Here's to 2010 and the new normal!  Happy New Year!

Planning for the future – 2010 – Facebook, Linked-in, MySpace, Pepsi

As we enter 2010, is your business expecting a very different future – and have you started planning to implement new approaches based upon a different future?  For example, how do you plan to acquire new customers, employees and vendors in 2010 and beyond?  Do you still rely on traditional advertising?  Do you use a web site?  Is most of your on-line IT budget still dedicated to web site development?  How much of your plans for 2010 are extensions of what you've been doing on 2009 – or maybe an ongoing trend from much earlier in the decade?

According to the Wall Street Journal in "Linked In Wants Users to Connect More," the number of Linked in users almost doubled in 2009, from 31.5M to 53.6M.  And to drive additional user traffic the site is working hard to add applications which can help companies with recruiting, marketing and other business functions.  With users jumping, and time on site increasing, is your company blocking access?  Or is it figuring out how to leverage this leading web site to find new customers, recruit aggressive new employees and build a stronger business? 

But Linked-in is considerably less successful than Facebook.  Do you still think of Facebook as a site for college kids to plan drinking parties?  If so, you've missed a tsunami in the making.  Facebook's user base, at 350 million, is over 6 times Linked-in.  According to ReadWriteWeb.com "It was a Facebook Christmas; Site Hits #1 in U.S. for First Time."  On 2 days Facebook actually had more site hits than search giant Google!  And Facebook was the #1 Google search in 2009.  Facebook use is exploding.  The average Facebook user spends over 3.5 hours in a sessionMany Facebook users log in daily to keep up with their network and what's happening in markets of interest to them.

Increasingly, people don't do web searches to find out about restaurants, movies, products, services – or even jobs.  They go to social media sites like Linked-In, Facebook and Twitter.  If you depend on people to use your web site to learn about your business – that may be too late.  When referred by a friend, what is the first impression a potential customer (or recruit) gets when reaching out to your LInked-in, MySpace or Facebook page?  What applications or groups do you support to demonstrate your business and your ability to grow?  How are you reaching out through these environments to meet the people who should be a customer, employee or vendor? 

Increasingly, people don't even make their first touch with your business via your web site.  iPhone users, and the soon-to-explode Android phone users, as well as all the other "smartphone" (or mobile device) users learn about your business from a very small screen that brings in small bits of information that is largely text.  They often go to a PC and search a traditional web site only every few days.  So how is your information presented?  Is it largely graphical, with embedded objects that don't show up well (or at all) on a mobile device?  Is it lengthy HTML pages that requires scrolling on a phone? 

Increasingly, people looking for you will blow off traditional web pages in favor of easier to access and read information.  You may hate the 140 character Twitter limit – but it's becoming a standard (the new "elevator pitch.") So is your on-line impression being driven by web developers, or by mobile device developers?  Is your on-line environment all about driving people to your web site – which may never happen – or are you effectively connecting with them via Facebook, et.al. and informing them without asking them to go to your environment?  Are you letting users control their access to your information, making it easy for them, or are you trying to control their behavior — and putting off many?

There are many reasons to think that in 2010 how people acquire business information will shift from traditional web sites to social media sites.  First impressions, and a lot of the decision making process, will come from Facebook, Linked-in and Twitter.  Is your business positioned for this shift?

Pepsi recently made a decision that appears forward-focused rather than following tradition.  Pepsi is abandoning Super Bowl ads in favor of spending more on-line.  MarketingDaily.com reports in "Compete:  Pepsi's On-line Push a Smart Play" that Pepsi is reaching more people at a lower cost by investing in on-line marketing.  Despite the historical role Super Bowl ads have played for big consumer products companies, Pepsi's decision is positioning the company to better connect with more users and drive more sales.  Coke's decision to remain with traditional advertising looks increasingly expensive – and out of step with how people really make purchase decisions today.

Smart companies are already making changes to reach the tidal wave of people relying on social media.  They are building a strong impression, and business applications, that help them grow using environments like Linked-in, MySpace and Facebook.  And they employ people to keep their Twitter communications clear and strong. 

So is your business taking actions – making implementations – that will support where the market is headed in 2010?  Are you putting yourself where the customers and recruiting targets are?  Or are you trying to do more of the same better, faster and cheaper?