Engage Me

 Uncategorized  Comments Off
Aug 282007
 

My Clients and Why They Engage Me

My clients are primarily involved in information-, knowledge- and technology-intensive industries, including media, content development, telecommunications, software development, and applied R&D.

The common theme is that they are experiencing ‘pain’: the pain may be significant and obvious, or emerging; that is, there is an awareness of potential problem that can be avoided via proactive measures.

The problem will likely be caused by:

- A new initiative launched by an existing competitor.

- An emerging competitor who has entered the market by using newer technologies to offer an innovative alternative.

- Migration of formerly loyal customers to a substitutable product delivered using newer technologies, often by a non-traditional competitor.

- Customers becoming more demanding as to how the product/service is made available to them.

- Changes in market demographics that require a repositioning of the product/service set to a different audience.

In short, they find that addressing the pain requires a change in the way they do business, and to do this, they need to change their understanding of, and approach to, their market and their customers.

I help my clients:

- Recognise, respond to and profit from transformational change.
- Make sense of growing complexity in their industry by identifying the most important underlying themes.
- Achieve significant growth by redefining their understanding of their market, business and customer.
- Implement change within their organisation and develop an internal culture of adaptability and agility.

If you would like more information, pleasecontact me.

Aug 272007
 

Social networking sites will shortly face a crisis of their own creation, as consumers question the returns they achieve from the time invested in staying on top of their bourgeoning networks of friends and pseduo-friends.

In the past few months, Facebook appears to have hit a tipping point. It has quickly moved away from its college student origins to become a global platform, attracting both social and business users. It is roughly in the same position MySpace was approximately 12 months ago, with both a soaring profile in mainstream media and, as a consequence, a dramatic spike in new user registrations.

Both sites have experienced a minor backlash. While MySpace had to grapple with the presence of ‘child predators’, Facebook is increasingly finding its way onto the list of sites blocked by corporate networks, in response to the amount of time employees are spending updating their profiles and following those of others.

While troubling, these setbacks are largely minor, and can be adequately addressed through a combination of improvements to both policy and technology.

There is a much larger danger lurking ahead for these and other social networking sites. Three issues in particular are a cause for concern:

1. Dunbar Number – Anthropologist Robin Dunbar has theorised that there is a natural limit to the number of people individuals can call ‘friends’. There is, he believes, a “cognitive limit to the number of individuals with whom any one person can maintain stable relationships.” Put simply, there are limits to the number of people you are able to know and relate to at a level that could be legitimately described as friendship.

The upper limit is 150 people, and even then, social groups only tend to cluster in that number when there is a very good incentive to do so (e.g. due to external economic or social pressures). Most social groupings tend to be much smaller, and experience dysfunction should they grow to a number beyond double digits. 

Nearly all social networks have succumbed to a level of pseudo-friendship, in which most professed ‘relationships’ lack authenticity and are driven more by narcissism and competitive one-upmanship. If such activities come to dominate the social network, it can quickly and irreversibly erode the foundations of the social structure.

2. Social Networks have multiple dimensions – As observed in an earlier post, social networking tools fail to recognise the most basic tenet of social networks; they exist at multiple levels, and occupy different aspects of our lives. We have social groupings based upon different types of relationships: family, friends, work, community, sporting and others. No social networking site that I am aware of provides a facility for separating and managing relationships at multiple levels.

3. Time Sink – A commonly accepted wisdom for building successful online communities is to have visitors ‘invest’ time on the site. The more time they invest, the more ‘sticky’ the site becomes; that is, the less likely they will move to a competing site offering similar functionality. The developers of social networking sites have embraced this notion, offering an array of tools and widgets for building your profile and adding a personal touch. This is fine when you only belong to one or two social networking sites. However, reflecting the fact that we have more than one social network, a growing number of individuals are members of multiple social networking sites. This creates significant scaling issues, as creating, publishing and managing social profiles can become a time-intensive task – and that is before you look at what your friends have been up to.

The confluence of these three factors will inevitably result in a potentially more damaging backlash against social networking sites, as consumers seek to reduce the amount of time and effort required for “social grooming” (that is, maintaining profiles and responding to invites and profile updates by friends).

At its core, this is a technology problem rather than a social problem, in that the underlying social drivers are readily identifiable and comparatively easy to address. The problem stems from both the original assumptions made by social networking site founders, and the mismatch between their original technology designs and their final commercial model.

It is inevitable that there will be market pressure to decentralise personal profile data. Consumers will eventually demand tools that allow them to better manage their profile and network data, in a manner that is not tied to a particular service. Specifically, they will demand tools that allow them to maintain either a single source of profile data that is automatically published to their preferred social networking platforms or, alternatively, a single tool for managing and maintaining multiple profiles across multiple sites.

If such tools are now forthcoming, social networking services may find that they are unable to build upon their current market penetration, and fail to become an entrenched, mainstream resource.

Aug 272007
 

I noticed an interesting job advertisement in the papers over the weekend. The job title – Online Communications Manager – caught my eye, as I had recently been wondering when we will see organisations  invest the same levels of resources into managing their relationships and interactions with customers over digital channels as they do, say, in-store.

I read the advert expecting to catch a glimpse of a ‘weak signal’ indicator of maturation in organisational stewardship of digital channels. Instead, I was rather appalled by what I read.

The advert, placed by a “Top 10 ASX” financial services company, describes the position and role criteria in these terms:

[Y]ou will be responsible for developing and implementing the overall online strategic framework and business rules around our front line customer websites. Acting as business consultant around web usage and measurement, you will be considered the online expect. The ability to manage key stakeholder relationships, facilitate web-based enhancements and ensure all content is succinct, thereby increasing audience cut through, is what makes you outstanding.To be considered you will have a demonstrated background in managing websites and an online channel with a good grasp of html coding.

The organisation clearly believes their online channel is important (they speak of it requiring a ‘strategic framework’), and their sites would appear to play a role affecting several ‘key stakeholders’ in the business. Yet, the primary criteria for the role seems to be technical, rather than strategic or commercial.

Let’s recast this example into a retail context. Imagine a major retailer advertising the role of manager of a department store. This person would be responsible for ‘implementing the overall strategic framework and business rules around our front line customer sales’. S/he would act ‘as a business consultant around floor space usage and sales measurement’ and have responsibility for managing ‘key stakeholder relationships’. The person would be considered the ‘retail expert’.

Do you think the role criteria would read: ‘To be considered you will have a demonstrated background in managing a sales counter with a good grasp of retail displays’?

Not likely.

Most companies still do not believe that their digital channels warrant significant senior management oversight or leadership. Implicit in job advertisements such as this is the view that digital channels are an addendum rather than a core aspect of business operations.

Far too many CEOs still speak of developing a ‘digital business strategy’. This is a telling misnomer.

Aug 242007
 

A recently published paper – Why We Twitter: Understanding Microblogging Usage and Communities – presents a theory on the role services like Twitter, Jaiku and Pownce plays in our social interaction with others.

The primary differentiation between blogging and ‘microblogging’  (according to the authors) is that the latter encourages shorter posts, which, in turn, creates two important features of services like Twitter et al.:

- It lowers ‘time’ and ‘thought’ investments required by users; and

- It increases the frequency of updates

The authors found that Twitter messages fell into one of four broad categories:

- Daily chatter: Posts about each users’ daily routine and current status (majority of posts)

- Conversations: Comments or replies to other users’ posts (~13% of posts)

- Sharing URLs/Information:  ~13% of posts contained URLs.

- Reporting news: Posts about latest news or comments on current events

Users themselves fall into 3 broad categories:

- Information source: May post frequently or infrequently, but have a large number of followers due to the value of the information contained in their posts.

- Information seekers: Post infrequently, but follow other users regularly

- Friends: Friends can represent many relationship types (co-workers, family, social etc.)

While presenting some fairly interesting data about post volumes, content and the role of ‘small world’ theory in services like Twitter and others, the conclusions proffered by the authors raised more questions than they answer:

Our study has revealed different motivations and utilities of microblogging platforms. A single user may have multiple intentions or may even serve different roles in different communities. For example, there may be posts meant to update your personal network on a holiday plan or a post to share an interesting link with co-workers. Multiple user intentions have led to some users feeling overwhelmed by microblogging services. Based on our analysis of user intentions, we believe that the ability to categorize friends into groups (e.g. family, co-workers) would greatly benefit the adoption of microblogging platforms. In addition features that could help facilitate conversations and sharing news would be beneficial.

Aug 232007
 

IBM Institute for Business Value has released its findings in a new survey of consumer digital media usage in the U.S., U.K, Germany, Japan and Australia.

It contains some very useful data about the current and future demand for non-broadcast media viewing, especially PC- and mobile-based video consumption.

The study found that Australian consumers spend more time online for personal use (that is, non-work and non-task related activity) than watching television; 75% of users spend 4 hours or more online, compared to 59% of users watching the same amount of television.

 

Internet vs TV Consumption

 

The report also highlights the growing demand for access to video-based entertainment products via PC or portable/mobile devices.

 

Non-TV video consumption

Despite some reports in the press proclaiming the research showed the end of advertising as we know it (hence the title of this post), the data around consumer expectations and preference for ad-supported media was not surprising.

Banner and contextual ads were the least annoying form of advertising, while video adverts (including video ads inserted in video content) were the most annoying. The majority confirmed their acceptance of watching advertising as a suitable trade-off for access to content – providing the content was both free and high quality (68% in the online environment, 54% in the mobile environment). Still, a significant portion indicated they would pay subscription fees to be able to access content in an ad-free environment (26% in the online environment, 8% in the mobile environment).

My initial read of the differences with respect to willingness to pay for ad-free content in the online and mobile spaces is that mobile consumers believe that mobile service providers extract enough value from their customers (in the form of monthly service fees and data tariffs) to underwrite the provision of content, and object to paying further fees to provide additional underwriting of content offerings.

Aug 202007
 

Henry Blodget recently posted some eye-opening data about the ‘big picture’ shift of advertising budgets from traditional media companies to online media in the US.

US advertising revenue at Google, Yahoo, AOL, and MSN grew by $1.3 billion in Q2, or 42%

US advertising revenue at 15 big television, newspaper, magazine, radio, and outdoor companies  shrank by $280 million in Q2, or 3%.

Blodget draws two obvious conclusions from the data:

These trends are secular, not cyclical: TV networks, radio networks, and newspaper companies won’t suddenly wake up one morning and find themselves back in charge.  Individual Internet companies may screw up (see Yahoo/AOL), but if they do, others will rise to take their place (Google).

Traditional media executives are doing a superb job of milking cash flow out of shrinking businesses, but you can’t save your way to prosperity.  The smartest companies acknowledge this and are 1) returning cash flow to shareholders, 2) diversifying via M&A (as the Washington Post has done), and/or investing in or buying promising interactive businesses.

He provides his full data and analysis via Google Spreadsheets.

 

Aug 152007
 

All too many would-be entrepreneurs engage in ‘me too’ entrepreneurship. They see that one or more companies are experiencing success with a specific product or service, and quickly enter the market with a similar offering. This “fast follower” strategy can in some instances lead to triumph. However, in many cases it leads entrepreneurs down the market equivalent of a cul-de-sac.

Wayne Gretzky is regarded as one of the all-time great hockey champions. When asked the secret to his success, his response was “Some people skate to the puck. I skate to where the puck is going to be.”

While most sporting metaphors are overused in the business context, this is a very powerful insight. There are two reasons why adopting a fast follower strategy is dangerous. First, markets are dynamic and constantly moving. In the time it takes you to develop a similar offering, the market may well have moved on (that is, the puck is no longer there).

Second, initial market leaders rarely secure sustainable market positions. Search engine pioneers, like Alta Vista, now stand in Google’s shadow. Early leaders in the social networking space, like Friendster, are losing market share, while late-to-market MySpace and Facebook achieved billion dollar valuations.

Continue reading »

Aug 142007
 

I have been asked to author two articles for a forthcoming edition of Marketing Magazine that is focusing on ‘new media’.

In one of the articles, I expand on a theme I recently covered here – that Web 2.0 does not exist - so I thought I’d share a snippet:

 

At its core, the Internet (and thus the Web) is a medium for communicating information (I use the word “information” in the broadest sense.) As a communications medium, it has no implicit value and does not exist as a ‘thing’ – much less a thing that requires version numbering.

O’Reilly’s Web 2.0 definition, and the others, is actually describing a change in our experience of the Web as a communications medium.

Put simply, the technological underpinnings of the Web are improving contemporaneously with our understanding of the role and benefits of the Web. The technology has finally caught up with the promise, at roughly the same time as we have started to treat the Web as a communications medium in its own right.

As we have witnessed time and again, whenever a new medium emerges, its proponents imbue it with the same thinking, practices and business models of the old, and in so doing retard its initial growth.

What we are seeing today is the result of 10 years cumulative experience with using the Internet for business, personal, social and other objectives. Individuals and companies are starting to get a true sense of the relative merits and advantages of the Internet (and the Web in particular) as a communications medium, and the new practices, business models, products, services and activities it enables.

 …