Legacy effects

Earlier this week Seth Godin blogged about legacy issues. He stated that “The faster your industry moves, the more likely others are willing to live without the legacy stuff and create a solution that’s going to eclipse what you’ve got, legacies and all.”

That might be true, but legacy effects are just as prevalent on the consumer side as the production side, and they should be recognised and incorporated as far as possible.

For instance, early digital cameras didn’t contain a shutter sound. After all, it doesn’t need one – the noise was merely a byproduct of the analogue mechanism. Nevertheless, early users felt a disconnect – the noise had let them know when their photo had been taken. Hence digital cameras all now have the option for the shutter sound to be incorporated.

Legacy effects are also present in our naming conventions – records, films and so on. I suspect this may also soon apply to the device we carry around in our pockets and handbags.

Our contracts and pay as you go credits are currently with phone companies, and so the “mobile phone” name still makes sense, even when on smartphones the phone is “just another app” (and not a regularly used one at that). But with Google looking at unlocked handsets, and the introduction of cashless payments through NFC, the business models may soon be changing. I suspect that if Visa starts selling devices that allow you to make payments as well as contact people, they will initially call it a “mobile phone” rather than a “mobile wallet”.

Behaviours are also subject to legacy effects – our habitual purchases that we continue to make without consideration. Some companies (like AOL) benefit from it, while others can suffer. For instance, I have only recently purchased a Spotify subscription and am considering a Love Film trial. From a purely economic standpoint I should have done this a long time ago, but I’ve been wedded to the idea of needing to own something tangible. Digital distribution means this isn’t necessarily the best option anymore (I type this as I look at shelves full of DVDs that I will need to transport when moving flat).

Consumers on the business-to-business side aren’t immune from this either – witness the continued reliance on focus groups or a thirty-second spot. These are undoubtedly still effective in the right circumstances, but some budget holders can be extremely reticent to leave traditional tried and trusted methods even when faced with reliable evidence than an alternative could prove more effective.

So while some companies can benefit from removing their legacy attributes early, doing so too early may be counterproductive. The comfort of sticking with what one knows can be very powerful, no matter how irrational it can seem.

sk

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The importance of evaluation

The control element is a vital stage in project management, occupying a core position in frameworks such as APIC (analysis, planning, implementation, control). Broadly, it covers two distinct elements – monitoring and evaluation. From my perspective, the latter of these has been grossly overlooked.

To some extent, monitoring is the easiest of the two as it focuses a project manager on visible outcomes that link to key performance indicators. At the basic level, assets (principally time and money) are monitored, and performance (output, sales etc) is assessed to ensure a project is on track, and that the iron triangle is in balance.

So far, so good.

A project evaluation should cover not only this but far more. Unfortunately, it seems that they rarely go beyond the additional measure of some outcomes or intangibles (satisfaction, brand reputation etc).

A proper evaluation should not only measure the what, but strive to understand the why.

Specifically, project managers need to go beyond the self-serving bias. A project manager shouldn’t take the credit for all the success, and attribute the blame externally in the case of failure.

A full project evaluation is crucial irrespective of the outcome, whether success, failure or indeterminable (and the latter shouldn’t exist).

If a project is a success, laurels shouldn’t be rested upon. The recent HBR article on Why Leaders don’t learn from success is fascinating in this regard. All aspects of a project should be critically assessed – was success down to luck, competitor failure/inaction, or were the critical success factors actually internal? Furthermore, a project will never be without issue – these should be identified and remedies to mitigate them reoccurring installed.

Likewise, failure shouldn’t be a blame game. A project is a rarely an unmitigated failure. As Seth Godin writes in Poke The Box, failure should be celebrated at some level – it’s better to attempt a risk than to do nothing. After all, you can only win the lottery by playing it.

Obviously, celebrating success is a morale booster and this should continue. But a bit of critical thinking is vital to long-term development. By learning as much from the past as we can, we can better reshape the future.

sk

Image credit: http://www.flickr.com/photos/paulk/5131407407

Recommended Reading – 8th September 2010

Below is the second part of my series of links, which I strongly suggest you consider reading

sk

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Recommended Reading – 7th September 2010

As mentioned in my previous post, my link updates have returned after a six week gap. Inevitably, there is a backlog of great stuff I’d like to share. Putting them all in a single post would be unwieldy and, to an extent, commoditise the links. As such, I have split them over three posts.

The first set of links I would recommend you check out

  • I really liked this article from Robert Bain in Research Magazine, showing his experiences of being a “fake” respondent in a series of online surveys. Sadly, the quality control at the panel management end is pretty weak – there needs to be greater measures to ensure the respondent experience is, at minimum, not dismal
  • Richard Huntingdon has a really interesting post on the marketing around nostalgia brands
  • Tim Ferriss gives a pragmatic, balanced view on Seth Godin’s decision to no longer publish books in the traditional sense, and how unique his situation is
  • I’m not planning on dropping the subject any time soon, so I suggest you check out this introduction to sabermetrics, and some of the interesting things it can produce

sk

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Customer retention shouldn’t be inferior to business development

New business development is obviously an important part of business.

But client retention is integral.

It is far more important than new business development in terms of sustainable growth, yet doesn’t always have the prominence necessary to achieve this.

In some respects, it is a false comparison since client retention is a form of business development. Sales and revenues can increase from existing customers – increasing volumes, increasing margins or benefiting from advocacy and referrals.

And this is what the core focus of a business should be – servicing and delighting its core customers.

A successful business doesn’t need the most customers in its category, but it helps to have the happiest and most loyal segment (or “tribe”, to insinuate some of Seth Godin‘s beliefs).

This shouldn’t be sacrificed for the sake of bringing in more customers.

It leads to overpromising and underdelivering, causing problems for both current and new customers. I’ve witnessed a couple of examples of each

1. Making unsustainable promises: New customers may receive incentives to convert – a discount price or an extra level of service. Sometimes this is made clear, but often it isn’t. At work we were initially happy with a new supplier, but gradually the price rose and the quality of service deteriorated. It is understandable that quality of delivery varies by employee, but companies should ensure the bare minimum is of acceptable quality. This wasn’t.

2. Misselling a service: I find this issue more prevalent when the person/department for business development is different to that for ongoing account management. The sales peoples’ bonuses are short-term and based on bringing customers i; this incentivises them to oversell and make unsustainable promises. The project team then have an impossible task to live up to. And so it proved.

The above two examples highlight the problem of churn. There will always be some level of churn but a high level of departing (unsatisfied) customers completely counteracts the work that has gone into developing new business. Eventually the opportunities dry up, and the company retreats to its core.

If that core remains

3. Alienating the core audience: Moving into new markets or new segments risks alienating the core audience, if the messages used to entice the potentials aren’t consistent with what attracts the core audience. A couple of years ago ITV1 spent a lot of money on contemporary drama to try and bring in a more upmarket audience. Unfortunately, the programmes weren’t received well by the core audience and viewing figures were dismal.

4. Offering sub-standard products or services: Reaching out to new audiences may divert resources away from maintaining the quality of a core product or its associated service. I’ve seen this with MLB.tv. I’m a casual fan living in a timezone where most games don’t start until after midnight. I’ve found the archive service perfectly fine. But the core product – live games in HD and with DTR functionality have developed several faults. Not only are the core fans being deprived of their need to support their team, but the online customer support has been completely inept. Two examples of this are (you may need to click on them to enlarge and make them readable):

Crappy mlb.tv customer supportCrappy mlb.tv support

When this happens, the company ends up as a doughnut – it has some mass at the edges, but no centre.

Business development might make some short-term gains, but losing sight of customer retention will only hurt in the long run. An organisation needs to ensure it delivers on the factors that causes its core to be loyal advocates – whether uniqueness, timeliness, durability or aspiration. It’s brand promise, essentially.

Customer lifetime value might be factored into business development strategies. But without adequate support across the organisation, it remains unfulfilled as core customers depart and new customers reject the offer.

Companies need to avoid turning into doughnuts. Well, the ring kind anyway. They would want to be the other type of doughnut – with all the good stuff in the centre.

The mantra that Rob Campbell gives in this short interview sums it up better than my terrible analogy*

“We treat all clients like they’re new clients – it’s the lifeblood of our survival.”

sk

Image credit: http://www.flickr.com/photos/hackett/159428076/

* I’d even rejected another analogy; one inspired by X-men. Wolverine and his adamantium skeleton is good. Penance and his empty body is bad

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Recommended Reading – 10th April 2010

A few things to read over your Saturday morning coffee (or a coffee at another time. Or a different drink. You get the idea)

Chris Heathcote has transcribed a lovely little piece about Londoners queuing, originally written in 1951

Graeme Wood has a thought-provoking piece on artificial scarcity, with regard to both music and the Digital Economy Bill

Scott Anthony uses the example of the MLB At-Bat application to highlight why releasing “good enough” stuff early is the best strategy

The iPad launch has led to a lot of blog commentary. Two of the better ones are Seth Godin’s take on why its launch was successful (I’d say that while the launch was successful, the product at an overall level may still not be) and Dave Winer questioning whether it can be more than just a toy.

And for those that want to exercise their brains, Stowe Boyd outlines his concept of new spatialism with regard to social structures and Tim O’Reilly has a detailed look at the state of internet operating systems and how the move to cloud computing is affecting them.

sk

Links – 22nd February 2009

Some of the things I’ve read over the past week and would recommend:

  • A thought-provoking article in the Atlantic on the future of TV. It argues that TV’s USP is immediacy. While there are still cultural reference points via TV, scripted shows will increasingly see TV as just another distribution pattern. TV will therefore move to concentrate on news, current affairs, live reality shows and sport. This makes sense to me given my research – TV excels at events which are essentially DTR-proof, and the most popular shows online are dramas and comedies that can be viewed at leisure and shared/discussed asynchronously. However, I would argue that successful scripted shows still need TV as that anchor point for mainstream cultural crossover.
  • Ana Andjelic has a great post on our general failure to accurately predict the future. Not only does she argue that a lot of campaigns will fail, but also that our limited perspective means we will often follow the same patterns (potentially of failure)

sk

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