Sanders Says

The End of Empowerment & The Return of Prescription

Yesterday I attended the first day of CEB's annual Sales & Marketing Summit.  It's a must-attend for all B2B sales and marketing leaders, offering the most current view into the buyer's world and the best practices that come from following hard data.  The opening keynote by CEB's Brent Adamson blew my mind as he revealed a plot twist in the B2B buyer's journey.  

The customer's age of empowerment was short lived.  The tipping point has been passed, where today, the customer wants less information and fewer choices.  Like they were in 1990 ... simple prescriptions by suppliers will win the day.  To quote Yogi Berra: "It's like Deja Vu all over again!" 

Making matters worse, the rise in decision-makers (The 5.4 Problem) and the diversity of perspectives and agendas make the buying process "landmindish" -- cause Brent to wonder how companies buy anything or for that matter, get anything done!  Between the landmines and the overwhelming amount of info and options, he declared that the seller's #1 competition is now ... The Status Quo.  

Back to empowerment: Brent asks, "When you visit the grocery store today and there are 50 kinds of mustard on the shelf, do you feel empowered?"  This is a good point as we marvel as shopping sites like Amazon, Expedia for travel, TrueCar for auto purchase, etc.  While they put is in charge at some point, being in charge loses its luster.  The CEB data confirms that the modern B2B buyer is as overwhelmed as today's consumer...but the implications are far worse for suppliers.  

When the buying experience is overwhelmingly complex, the buyer usually regrets their decision later.  Think about the last car you bought: If you were swimming in information, with endless cars to choose from and myriad options to pile on ... do you still feel like you made the right decision today?  According to CEB research, the B2B buyer is more likely to regret their decision when the purchase journey was complex.  

At this point, Brent raises the stakes for suppliers: "It's no longer about whether you win or lose, but now, it's about how the buyer feels about it later."  To support this (very Lovecat way) of thinking, he offered this stunning chart, which proves that regrettable purchases are BAD for sellers.  

Pay particular decision to the bars on the right: When the buyer regrets their purchase decision they actively advocate against the supplier!  This isn't a Net Promoter Score dip, Brent points out, they are telling other people inside their company or out in the market not to buy from you! 

The conclusion of Brent's keynote outlines a new selling approach: Prescription to drive ease-in-buying.  "Put all your sales and marketing strategy through the Easeometer," he advises.  In other words, to capture the essence of Bill Jensen's classic book Simplicity: Reduce the stuff, the steps and make the process simple.  Brent defines prescription as "a credible and influential set of do this/don't do that recommendations, provided to customers across the purchase process, deliberately intended to ease the customer's movement toward purchase." This includes how the buyer should prioritize the problem, who they should involve in the purchase process and how they should arrive at supplier decisions.  CEB research indicates that the Prescriptive Process will dramatically outperform the Responsive Process in terms of sales cycle & overall satisfaction.  

He closed the keynote with a salient example of the Rise of Prescription: The comeback of travel agencies.  Over the last few years, travel consultants have picked up a lot of harried consumers or business travelers who were overwhelmed with information and options about their upcoming trip. In a world of always-on smartphone powered buyers ... these travelers just wanted to "call someone and have them figure out the best way to book the trip."  As I've learned in my research for my next book (Dealstorming), B2C trends like this are the Canary In the Coal Mine for B2B sellers.  Which means that you might want to have a meeting today between sales and marketing and figure out how you can make the leap from responsive to prescriptive approaches.  

For more on the psychological impacts of information overload, check out the 2004 research I conducted with Heartmath Institute, predicting the rise of New Economy Depression Syndrome. 

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Making the Leap From Disrupted to Adaptive

Regardless of what business you are in, likely, you will face business model disruption in the coming years. According to authors Robert Tercek, Jay Samit or Bill Jensen, digital technology and the ongoing expansion of the World Wide Web are driving new value propositions and annihilating legacy companies.  

Over the last 20 years, I've witnessed disruption in multiple industries, which ushered in new leaders or defined incumbents as agile and adaptive.  What's interesting is that adaptation didn't rely on physical intelligence or capital stockpiles.  It was pure psychology.  Take Blockbuster and Kodak.  Both of them could have pivoted earlier into new business models such as subscription (Netflix) or digital photography (Kodak).  They had the resources, the customer base and the brand.  But they didn't.  Why?  

These leaders, along with the rest of those who's companies ended up in the scrap heap of the Disrupted, made a bad choice when faced with the first credible signs of pain.  They rejected the innovation, labeling it as a passing fad that would fade soon enough. As time went by, and the bleeding continued, they entered the resistance phase, where they stockpiled negative emotions towards the disruptors, their customers and in some cases the government for standing by and not rushing in to protect them.  Take the current case of Uber.  Taxi cab companies are clearly stuck in the rut of resistance right now, tick-tock-tick-tock. 

Sure, it's a roller coaster ride...but that's the nature of being in any industry where Moore's Law continues to hold true.  Things will change quickly.  But some companies have figured out how to make the leap from being disrupted to becoming adaptive.  Walmart (responding to eCommerce), Gillette (responding to disposable razors) and CareerBuilder (responding to social hiring by adding SaaS services) are three examples of leadership success in psychology.   

In each case there was a fundamental decision by senior leadership that made the organization respond with agility:  They replaced fear with curiosity.  It's a decision, really.  As Norman Vincent Peale once wrote, "If you can worry, you can dream!"  His point is that our mental models can either lead us OR we can lead them.  When you face hard data suggesting that your customers are responding to a new offer in the market, you either choose to reject-then-resist it to defend the Status Quo OR you double check the data, then move across the dip into the exploration phase.  You do research that helps you understand, "What if we tried..."  Like Proctor & Gamble, you stage hackathons, empowering your youngest talent to try way-outside-the-box ideas and then test them for scalability. 

This is your challenge if you are facing disruption.  So far, I've focused on technology as the change-maker, but in industries such as insurance or telco, it's generational shift that brings the pain.  In health care or financial services, it's regulatory developments.  Whatever.  It's all the same in that you as a leader must make the decision to leap from shock to exploration faster than your competitors and certainly fast enough to retain your core customer base.  The article Surviving Disruption in Harvard Business Review puts a process around the exploration and response phase.  

Recently, I subscribed to Adobe's Creative Cloud services. I pay a monthly fee to have a suite of creative tools available to me, constantly updated to keep up with the pace of change.  I never thought I'd subscribe to software, but in fact, it's the new way of harnessing technology innovations without getting caught in legacy-land.  Many people wrote Adobe off for dead when Steve Jobs famously banished Flash to the software scrap heap.  But Adobe's leadership responded by exploring how their best customers (creatives) would use their tools in the future ... and they made the leap.  And now I'll spend $500.00 a year with them instead of using their technology for free.

(The above image was created by Coverdale, an organization founded by agility-leadership expert Ralph Coverdale.)

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The Secret To Moving On Up At Your Organization

I've been thinking lately about how one really moves up inside an organization. 

Many might think it's about performance or schmoozing.  The former is hard, because not everyone gets an opportunity to produce measureable results.  The latter isn't really true, except for those rare situations where the leadership cares more about being popular than organizational success. 

Recently, I discovered for myself the best three steps.  They account for my rise at broadcast.com, then later again at Yahoo.  Recently, a good friend of mine (in his 20's) was leaving for his first corporate conference.  He was excited about the trip, the food, the chance to socialize and all the parties likely to happen.  Why not? 

I gave him this advice: Leverage the conference to move up in your organization.  Many will have your POV, and goof off publicly there or worse.  Let them eat cake and guzzle beer while you move up.  He asked me, "what then should I do?"  The advice I gave him is the same advice I'd give anyone, whether you are just starting out at a company or participating in a training program/conference. 

1. Learn - Open your ears and eyes to take in all the data, stories and advice you can. Attend everything you can, take notes like an A student, and ask questions until you 'get it'.  Do your homework and then do some extra credit work on your break.  

2. Demonstrate Learning - For many leaders, this is how they spot real team players.  It's one thing to know-it-all, it's another to put it into practice.  Find ways to apply your learning in real-world situations, and don't be afraid to take your mentor with you on your journey or report the results to them later.  

3. Lead Others To Learn - As you succeed with your new found learning, leverage your success to convince others to become students and not just workers.  Challenge them from your position of strength to give more of their mind to grow.  Offer to mentor those who are struggling and reward their attention with praise (and more time).  Offer to teach a class or gather students for one. Nothing encourages your leadership more than this behavior, as it's the way to creating organizational bench strength. 

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Do you really want to bet your business on Facebook?

Today's article (Facebook: Zynga's #1 Frenemie) prompted this blog post. 

While Zynga stands as a multi-billion dollar example of the dangers of platform squatting, many of you might be doing in a smaller but still deadly way.  Examples: you don't have a website anymore, you build a big Facebook Page following instead.  You don't build a web property to sell your products (see this a lot now in books), you rely on Facebook instead - thinking, "everyone is here, why not build it into their stream?  You base your real estate, insurance or home repair sales on your Page, leaving your older properties abandoned to wither.

Startups from Color to Spotify bet-the-farm on a long and cozy relationship with Facebook - who could turn all of them off with the flip of a switch.  Retailers, small business owners and even public figures are all provisioning the Facebook closed platform (emphasis on closed) to reduce costs and presumably fish where the fish are hooked.  

But here's the rub: Facebook will eventually have to eat their babies to grow into their valuation. Still private, Zuckerberg gets to report vanity numbers only, playing with Eric Ries calls "success theatre" with it's investors and employees.  Time spent, number of active users, etc., all dominate the Facebook story.  That will change quickly when they go public and New York analysts descend on them to question their revenue-valuation multiple.  If the social-bubble breaks (and it's being poked right now in the cases of LinkedIn and Groupon), who knows what Facebook's leadership team will resort to?

Look at Google, seven years post-IPO. Steve Jobs can testify: You can't trust a company that's on fire to triple their top line quickly.  Thus andriod.  Now, Google+ is tied to employee compensation and the sacred search algorithm, protected for users, is now biased to reward websites that include +, Places or Circles. Anyone in the valley will warn to avoid getting close to them early, because big and hungry companies "may accidently kill you." 

Back to Facebook.  If you are using a Page to market your products or services, it's pretty clunky to say the least.  You can't conduct giveaways or polls, lest they shut down your account (which is based on your personal account, which also goes away).  The apps they require you to use require too many steps and in our privacy-centric world, result in less conversion.  So now, you lose all the web-innovations that power super sites like Zappos, Amazon, etc.  

At Yahoo, I've seen this first hand.  When I joined, we had dozens of dotcom partners in areas where eventually we decided to 'get into their space' to justify our lofty valuation.  We were, by 2004, competitors with everyone who made money.  Facebook will be the same.  

I understand the business logic of being in the app business, making your ultimate bet on Apple. As a mature company, they aren't likely to flip a swtich and get into the app development game, killing all the Fred-In-the-Sheds to make a few more bucks.  But, Facebook is likely doing skunkworkss right now to build their own social games, daily deals redux, publicity services, banking and loan services, mobile devices and for all we now VOIP telco services.  If you currently make money via them, exclusively, you want want to diversify your business web outreach.  What if they turn on a pay-for service for Page owners who want to have ANY links to purchase or generate leads?  

Consider what happens when you rely on Google, yet somehow are in their business development plans.  When they tweak their search formulas, big changes happen to your business. What if they tweak search to devalue links to Facebook pages, like they've toyed with in the case of Wikipedia and Flickr? Ask LA startup Mahalo, where they had to layoff employees after a regular Google update.  First they were a human-search company, then after the Google thrashing of their business, they settled into a video-help resrouce.  They didn't have an option.  Keep your options open begins to make sense again - instead of cozying up exclusively with a cub company that's got paws bigger than Alaska. 

 

A Platformized Product Will Always Win

Yesterday, I had the blessing of reading an essay by Steve Yegge, a long time Google Engineer.

The essay will surprise, inform and likely inspire you.  Read: Steve Yegge's Platform Rant.

Between Amazon and Google, he's got about thirteen years of in-the-trenches experiences working on services based platforms that we use on a routine business.  The essay uncovers previously unknown details about the two company's technology, internal policies and culture.  There are some true gold nuggets in his writing such as: 

1. The Secret for Amazon was Bezos' edict in 2002 that the entire company go on a SOA (Services Oriented Architecture) ASAP or get fired.  You were required to use the services system to ask for ANYTHING, no more emails and handshake services deals.  With that, came the discipline they needed to win or as Steve writes, "SOA-oriented design enbales Platforms." (Yes, he capitalizes Platform like Bezos capitalizes Customers in his essays.) 

2. Accessibility is the #1 user-value.  Steve puts it like this: "I'm not really sure how Bezos came to this realization -- the insight that he can't build one product and have it be right for everyone. But it doesn't matter, because he gets it. There's actually a formal name for this phenomenon. It's called Accessibility, and it's the most important thing in the computing world. The. Most. Important. Thing." (Love this style, like Justin Halperin uses for emphasis in Shit My Dad Says.)

He goes on to make a brilliant point about Access VS Security: "Like anything else big and important in life, Accessibility has an evil twin who, jilted by the unbalanced affection displayed by their parents in their youth, has grown into an equally powerful Arch-Nemesis (yes, there's more than one nemesis to accessibility) named Security. And boy howdy are the two ever at odds. But I'll argue that Accessibility is actually more important than Security because dialing Accessibility to zero means you have no product at all, whereas dialing Security to zero can still get you a reasonably successful product such as the Playstation Network." (Nice dig dude.  You could write for HuffPo with that attitude.)

3. [Services] products need platforms to scale and succeed. This is Web 3.0 thinking, and he couldn't be more spot on.  Here's how he explained it: "A product is useless without a platform, or more precisely and accurately, a platform-less product will always be replaced by an equivalent platform-ized product." He continues, and this is where it gets juicy: "Google+ is a prime example of our complete failure to understand platforms from the very highest levels of executive leadership (hi Larry, Sergey, Eric, Vic, howdy howdy) down to the very lowest leaf workers (hey yo). We all don't get it. The Golden Rule of platforms is that you Eat Your Own Dogfood. The Google+ platform is a pathetic afterthought."

If you aren't already compelled to stop, read this article and learn a lot about what's coming next, you aren't serious about the web/tech/mobile/social game.  One other note: This entire rant is still up on Google+, and the host (Steve already took the post down) claims he'd remove it with ONE request - which still hasn't come from Google Legal.  That speaks volumes about the open culture of spirited debate at Google.  

This is the best thing I've seen leaked since the Peanut Butter Manifesto went viral in Yahoo-lore.  

Now is the time to make your bold move!

Today, I challenged my audience to embrace the opportunity that a recession offers us all. 

Whoa!??? That was their first response.  They were used to hearing this spin from politicians, trying to deflect blame for misery by uttering the O-Word.  But not from a leadership coach, who argues that our role is to define reality then give hope. 

But the research is on my side.  Take the article Hanging Tough, which I've been touting for two years now. It reviews research on every recession since 1901 and reveals some of the boldest moves ever made in US Business History: The launch of Rice Krispies, Miracle Whip and Chevy (all in the 30's). The launch of the iPod in Oct 2001 (the double whammy of the dotcom bust and 9/11).  The rise of Hyndai in 2009 and 2010, doubling down with new products and aggressive advertising. 

Why were all these moves prescient? Because, as Mark Cuban once said, "Recessions are the great equalizer.  Everyone is a genius in a Bull Market."  He's right too.  Recessions usually start because of a technical breakdown in an industry (tech in 2011, mortgage/stocks in 2008, so on).  Then the impact ALWAYS spreads to every industry and no company is immune to the shrinkage.  

Too often, though, we have blinders on - thinking that we are alone in our misery.  The fact is that your competition is hurting too, and likely, they are in survial mode.  Cutting budgets, waiting to see if there's a double dip coming, laughing at you when you introduce a disruptive produce or launch a startup.  The point is, they are watching you, not responding to you like they did in better times.

And that's why the time is now.  You have a chance to try someone 'under the radar' - and perhaps leapfrog your bigger competitors with more to lose.  Try this in a few years when the economy is humming again and watch your innovations get copied, scaled faster via deep pockets and pummeled.  

Here's the way to balance it all: Form a mastermind group of trusted sources of financial and technical market strength.  Bootstrap everything you can, and execute-learn-improve your new ideas as publicly as possible to steal mindshare.  Harness collective fear as your shield, and take advantage of today - because today you are rich in opportunity to be the Phoenix and not the Fodder. 

 

Stop calling it social media if you want to get buy-in

Today I gave a talk to a group of Corporate Communication execs interested in 'social-media.'  

They are trying to harness it's listening and engagement power, and distribute it around their companies (from customer service to investor relations).  To a person, they tell me the biggest task isn't figuring out how to use social tools, surprisingly. 

Their biggest challenge is selling their senior leaders and CEOs on the concept.  To the average (older or non-tech) exec, social media is a fad that's led by propellerheads and amateur mavens.  In their view, it's a fad (like CB Radios) that they hope will soon pass.  Sure, they've heard the United Breaks Guitars story, but it likely doesn't apply to them - and when you use words like Twitter, they scrunch up their face in disbelief.  

For several of my consulting clients, though, we've found a breakthrough - the secret sauce to selling social into the enterprise.  Stop using words that sound silly (Twitter) or irrelevent to business (social).  Stop calling this social media!

Instead, call it 'Interactive Media'.  It's the online conversation, to be paired with the offline one, for better business intelligence, marketing and service.  That's a familiar and business centric way to talk about it, and likely no CEO will tell you that "interactive is a pssing fad." 

At one company, the re-branding efforts has led a huge turnaround, and now the CEO has his own Hoot Suite account, to watch the "interactive conversation" as it unfolds.  He isn't writing blank checks against the opportunity, but he no longer has the noise in his head. 

Many internet startups like to use cute, irreverent and fun names: Yahoo!, Twitter, Google, etc. They are likely offputting, though, when it's time to sell stuff to the dinosaurs.  When I was at Yahoo, in several situations, our ad agency partners stopped telling their Fortune 100 clients about the ad opportunity on Yahoo - instead, they just called it 'online marketing' - and it worked then too! 

 

The Significance Of Apple Going Out Of The Box With Lion

MIT prof Nicholas Negroponte once said, "Anything that can be digitized will be." 

The first industry that realized this in earnest was music.  The MP3 was a breakthrough for consumer convenience and continues to redefine the industry today.  The USPS is going broke, because 90% or more of all 'letters' are now digitized into emails. 

Apple's historic decision to sell its new operating system (Lion) via download only is a game changer for the software business.  For decades, software was sold in box form (usually 4-10 times thicker than the actual disk product - to make it look expensive).  Customers liked this, because they had a handy disk around if they needed to reinstall the program later.   The physical product was a 'safety net.' 

With the acceptance of cloud computing, the box seems silly at this point.  You can re-download anything you need from any software vendor.  The box just adds waiting time and shipping costs. By going 100% digital, Apple eliminates the retail function from the release and redefines an industry. (For those with awful download speeds, Apple offers a reuseable thumb drive with the software on it.  Note:  I wrote REUSABLE.)

This is a good thing too.  Boxed media (of any kind) is environmentally and economically wasteful - an artifact from a bygone era of perceived scarcity.  Lion runs under $30 downloaded, which is a far cry from needing-a-weight-belt boxed editions of Windows in bygone eras.

Even in my startup (not ready to divulge all the details), we are forgoing any physical product and focusing 100% of our efforts on eReaders.  It's the same idea: The physical piece of the business is its biggest drag.  

Physical products, sold through stores add layers of cost and hassle throughout a value chain.  In my industry, publishing, it's the biggest problem.  You need to have money to manufacture the book, ship them to storage, move them to distribution, hire sales people to convince brick-and-mortar stores to stock them, pay for their returns to your warehouse, then remainder (burn) the unsold units at some point.  Silly.  

I know that in Love Is The Killer App, I professed my undying love for physical books - well, I'm changing my tune.  Digital products are efficient, can be highly social and will always replace their analog/physical competitors over time.  

What can you digitize at work?  What unecessary physicalities still exist around your business?  I'll jump into your comments to stir this up.  Music-books-software-movies ... what will be next?

 

 

The DNA of the Solutions Centric company

In the world of services you must sell solutions and not just products. 

For example: In radio, the new mantra is to sell "solutions, not spot advertisements." Why? Spot ads are bought on price (cost per thousand), while solutions are paid for based on value-generated (savings, incremental sales).  The difference is like Calamari VS Squid - commodity versus premium. 

This is more true than ever, given the business cycle.  In my experience, during the long-drawn-out recovery phase ("Is the recession over?), the good money flows to companies that are in the solutions business - providing measurable outcomes instead of 'inventory'.  

NOTE: This is not a packaging issue - where you start calling your services solutions (eg., it's not a banner ad campaign, it's a launch solution package!).  You are not in the features business, and it's not up to your customer to translate the delivery of your services into value - the solutions centric company does this organically, based on good sales discovery processes and judicious use of metrics on the back end to deliver CFO-friendly results. 

While working at Yahoo as it's Chief Solutions Officer, I put together a crack team of solutions-centric sales engineers that participated in some of the biggest marketing deals in the company's history at the time.  We went beyond the banner ad biz and entered into data driven efficiency, optimization and analystics work for movie studios, CPG companies, tech companies and retail. 

Here's the DNA of a true solutions provider, be it a team member or a company culture:

1 - Curiousity:  You must truly care about how your customer's business model works, how it comes to market and how the playing field has changed in the last few years.  You should be as educated about these things as your customer, relentlessly investigating and probing for more information. Great solutions providers are first and foremost, problem finders (yeah, tweet that via @sanderssays)

2 - Agility: Once you uncover a problem, it's likely your products don't squarely address it off-the-shelf. Throw out the rate card, roll up your sleeves and build a new solution, even if it's not on the product roadmap.  At Yahoo, we discovered that some of our customers needed better insight into purchase intention (to shore up their supply chain), so we got into the Search-Analytics business, leveraging our buzz index to help movie studio buy TV ads or gaming companies to optimize store inventory. 

3 - Accountability: Measure the business impact of the solution, and not just how much product you shipped or hours you logged in.  It's not a solution unless the client's finance leads say so! Compensate the team, in part, based on value-delivered and not just sales.  

Yesterday I gave a talk to finance professionals about this concept, and you could hear the gears turning in the collective mind of the audience. There's real money in solutions-ville, but it will require a willingness to do some custom work and then figure out how it can scale.  But if you get there, you'll be able to sell on value and not on price.  And you'll respect yourself more too. 

 

Why Groupon is smarter than you think

Over the last few months, it's easy to get on the what-was-Groupon-thinking? train. 

First, they walked away from a six billion dollar buyout offer from Google.  That's like Mark Cuban walking away from Yahoo in 2000.  Or Yahoo walking away from Microsoft a decade or so later. When Groupon politely declined Google's overtures, countless people  wondered, "what were they thinking!?"

Second, Groupon produced a Super Bowl spot that made light of the Tibet issue and endangered whales! The ensuing backlash led to a sacking of the TV ad and a buzz in social media.  

Believe it or not, in the end, Groupon may emerge stronger for both decisions.  First - If Groupon took Google's offer, a CNN report wonders if they would have settled for too little vs a potential IPO that would value the company at FIFTEEN billion.  But more importantly, I've found out from insiders there that the Google acquisition would have never cleared in Europe - the most important revenue territory for Groupon.  The EU isn't keen on Google, and would have held up the purchase for months or perhaps years.  Meanwhile, Groupon would be stuck in a getting-bought holding pattern, allowing Google to catch up with its own product (which they launched just recently).  The Business Insider has their own views too (Why Groupon Said No To Google).

Regarding the Super Bowl ad: Sometimes buzz trumps form.  One ad agency insider in Chicago (not working for Groupon) tells me that marketing wonderkinds had predicted a backlash, tons of social media mentions, and a windfall of PR around the spots.  They knew that the replays and extra mentions to follow in the days ahead would increase the ROI of the ad buy way beyond more socially acceptable spectacles such as Budweiser, Kia or Pepsi would produce.  In other words, by ticking us off, Groupon likely got the most bang for their super-bowl-ad buck...as dotcom ads in this venue are more about awareness than esteem or relevance.  A recent Marketwatch article makes the same suggestion. 

What's the takeaway?  Smart comes in many flavors, especially in hot-industry startup world.  What looks insane to us may actually be calculated and on-the-money when you are in a race to get big fast.  For all we know, Groupon may end up being the next Facebook in investor world and Andrew Mason may emerge as a more social, savvy and hip version of either of the Marks or either pairs of the Stanford Twins.