John Porcaro Consulting

Corporations and Web 2.0 Adoption

I just added CRM for Xbox and Games for Windows to my responsibilities (in addition to Online Community), so I'm in the mode of catching up--it's been a while!

Everyone I talk to about my new role as Director of Customer and Community Relationship Management (that's a mouthful, tell me if you think of something better!) is intrigued by the idea that social networking, blogging, influencer marketing, WOM can actually live side by side with CRM and "traditional" Marcom.  I've been describing it as the infusion of targeted content and the machine of CRM.  The biggest challenge in WOM is distribution and reach (especially when most corporations are using the toolkit of traditional advertising), and the biggest challenge of good customer messaging is targeted, relevant content.

One of the few newsletters I allow through my mile-wide firewall at work is the Harvard Business Publishing's email update.  Josh Bernoff published something I've been talking about with co-workers on our Global Marketing team--Why Web 2.0 Is No Bubble: Corporations Are Willing to Pay for It. 

I am talking about companies that serve corporate social application needs. ...in many of these companies, the technology itself is positively mundane. But the startups grow because they deliver value for which they can charge a premium and get customer loyalty. The customers of these companies don't defect when something shiny and new comes along, because they like the service they're getting."

Jeff also outlines a handful of companies that are building tools to help push-start efforts, and prove the ROI.  It includes my friend Sam Decker's company, Bazaarvoice, and others that are helping companies get their arms around making sense of this new space. 

Every company is--or should be--grappling with making sense of what this all means to their Integrated Marketing efforts.  Some will approach it using existing strategies and tools, with limited results.  Others will ignore it, to their peril.  Hopefully your company is going to stay ahead of the wave.  My prediction is that it's only going to be possible if you're paying attention to what's going on, hiring the right people, partnering with the right firms, and investing appropriately.

Six Sigma for Public Relations

Mark Weiner, CEO of Delahaye Medialink Worldwide wrote an article in Communications World called Six Sigma: Applied Research for Improved Public Relations. It offers a great overview of how Six Sigma can be used in nearly any business, and demonstrates how small, measurable things (and plans to improve them) can yeild dramatic results. The article includes this list:

Six Sigma Project Ideas for PR:
Reduce time for press release approval
Improve media targeting (identify media that have proven reach among your target audience).
Assess journalists' preferences and satisfaction with current PR initiatives
Assess “internal client” preferences and satisfaction with current PR initiatives
Improve the ratio of releases sent versus releases used
Improve the ratio of placements featuring critical messages
Improve the ratio of placements featuring a company spokesperson
Improve the ratio of stories featuring visuals or graphics
Improve the ratio of stories that are either exclusives or feature-length
Improve the ROI of event sand event sponsorships
For agencies, improve percentage of billable hours

Rather than tackling "improve our reach" or "cutting costs," measures like these seem a lot easier to tackle. I bet you can think of ways to improve these measures off the top of your head.

Six Sigma for Marketing

I've been watching a new blog by a senior marketer at Dell, Sam Decker. He posts a lot about marketing, ebusiness, management, and life, and I feel like linking to nearly every post.

The other day, he and I had a conversation about using the principles of Six Sigma in marketing, and I had to agree with almost everything he said. I was pretty impressed with this quick overview of Six Sigma:

I think 80% of Six Sigma/BPI value in marketing is simply understanding what you do in marketing, and executing continuous improvement of those processes with measured results.

Here are four principles to apply Six Sigma, or business process improvement, to the marketing organization:

1. First, realize there are three sources of revenue for your company: a. Adding new customers b. Getting existing customers buying more. c. Getting existing customers buying more frequently

2. Identify the processes you do within your company to effect each of the above sources of revenue. Keep an eye out... every day employees make a choice to start a new process vs. improve an existing one.

3. Break down these processes into steps. (See Workback Waterfall). Identify the variables that effect the quality (output) of each step. In marketing, sometime quality is a subjective thing…but if you’re measuring your marketing results for each step and the end result (ex: response rate), than quality can be quantified.

4. Now, choose a problem or process to improve and go at it using the DMAICR framework. “Define” and “Measure” the problem or process, “Analyze” why it’s performing poorly, “Improve” it based on your analysis, and “Control” the process to sustain results.

There's lots written about the DMAIC process (you can find the basics at iSixSigma.com), but the basics are pretty simple. The most complicated part is actually stepping back to do the "Defining" and "Measuring", rather than launching into the "Improving" right away. A lot of marketers, especially action-oriented types, will quickly come up with ideas to solve a problem, then jump right into implementhing the ideas without measurement, analysis, or strategic thought. In some cases that can be good, but in a lot of cases, it can lead to disaster.

I find the principles of Six Sigma to be most effective in solving problems that at first glance seem overwhelming. And in almost every case I've seen, the problem isn't exactly what everyone thought it was--it was something different. For example, it's easy to blame a tool when it doesn't give you what you need. Sometimes the problem is that we've designed a process that relies on too many "touches", or that those responsible for posting assets don't get them from vendors on time, or we've put steps in place that are no longer needed.

I think the thing Six Sigma is best at is getting to the root of the problem, finding something that could be improved, and building a fix that can be specifically measured. The downside is that it's often a bit counter-intuitive (especially to marketers) to spend so much energy finding and fixing something so specific in such a detailed way. But the results are often breathtaking. Therein lies the beauty.

Budgeting

Since our fiscal year starts in July, April is the time of year for budget planning. I've been in several meetings now, with management and my own team, to plan for FY05 budgets.

I'm amazed at how much brainpower goes into deciding what we're going to spend. We always start with some basic assumptions (what'd we spend last year, what's the scope, what are our financial projections?), but the numbers we're working with now look radically different than they did a few weeks ago.

You might think budgeting meetings are the most mundane, tedious, and lifeless meetings that could be held. But when the group is engaged (indeed fighting for their fiscal lives in some cases), the discussions can be pointed, interesting, controversial, and fruitful.

Someone today pointed out that by being forced to justify spends (indeed start with the expectation of deep cuts), everyone can be more creative and make better decisions. We spent an hour talking about combining two tools we're producing, and saving tons of money and developer time, plus having more of an integrated, extensible solution. Win-win.

My advice: Go into EVERY meeting ready to speak up, offer ideas, question assumptions, and adding value. The meetings that end up being a waste of time are the ones that don't drive towards making better decisions--if you're not contributing your viewpoint based on your experience (or at least not learning something that helps you do your job better), you might consider skipping the meeting.

Getting Things Done!

Thanks largely in part to fellow blogger Robert Scoble, David Allen (along with his associates Eric Mack and Jason Womak) has a blog! I'm looking forward to supplanting one of the only newsletters I actually read with a daily RSS dose of GTD goodness.

I'll start this post by crying HELP! I've managed to (once again) dig myself into a 544-email deep Inbox hole, but I'm determined to process everything by the end of the day!

In the David Allen Productivity Principles newsletter I just got, I read with fascination an article written by Julie Daniel, called "Keeping Your Inbox Real". She outlines six common types of email she sees in her client's Inboxes:

"First of all there is the e-mail that they’ve read and there’s no action associated with it and they don’t need to keep it for reference. It shouldn’t really be in there any more because it’s finished with and it should have been deleted. But… they haven’t got round to deleting it yet. So, for now, it’s just sitting there…

Second is the e-mail that they’ve read and there’s no action associated with it but they think they may need to refer back to it at some later date. That one really shouldn’t be in there any more either because it should be filed away somewhere. But…they haven’t got around to filing it away yet. So, for now, just sitting there…

Third is the e-mail that they’ve read and they’ve decided there is an action on it but they haven’t quite decided what that action is yet. The e-mail is parked there as a reminder that they need to do something about it… once they figure out just exactly what it is that they want to do. So, for now, it’s just sitting there…

Fourth is the e-mail that they’ve read and they’ve decided that there is an action on it and they have actually decided what it is that they want to do but they just haven’t quite got round to doing that action yet. The e-mail is parked there as a reminder that, when they get some time in between all those meetings that they have to go to, they really need to do that action that they’ve decided to do. So, for now, it’s just sitting there…

Fifth is the e-mail that they’ve read and they’ve figured out what it was that they needed to do about it AND they’ve actually done that action. But now someone owes them a reply and so the e-mail is parked there as a reminder that they have done something but the game isn’t over yet because somebody owes them something back and they might need to chase it. And if they lose sight of the e-mail they might forget that the thing isn’t finished yet. So, for now, it’s just sitting there…

Sixth – and this is the only type of e-mail that really belongs in an in-box – is the one they haven’t read yet.

WOW! No wonder most people’s brains hurt when they look at their in-box."

Simplification Can Be Complicated

Simplification of complexity requires a system equivalent in complexity.

I couldn't agree more. In a newsletter (remember those?), David Allen, author of Ready For Anything and Getting Things Done, writes about a subject I'm a bit obsessed about recently.

"Controlling something with lots of variables, details, and horizons requires a matching number of parts and processes to control the whole. If you try to manage something complex with too simple a system, you will do nothing but add to the complexity. An elegant dinner requires multiple tools (pots, pans, plates, utensils) and procedures (recipes, cooking, serving) for its preparation and enjoyment. Trying to cook a six-course dinner with nothing but one pot and a spoon would get quickly out of control. Having all the tools, content, and processes that map to all the moving parts of an event, and having them at the ready, as needed, is critical for elegant simplicity with an experience."

Over the past few days, we've been dealing with some problems with a couple of our information systems. And on four separate occasions, I've had to give the "you can solve this problem with a bandaid, or you can overhaul the system" speech. I've been struggling with how to put into words what David Allen did so succinctly.

I'll leave you with a few quotes from the newsletter. I'm inspired...

I would not give a fig for the simplicity on this side of complexity, but I would give my life for the simplicity on the other side of complexity. - Oliver Wendell Holmes

Organizational progress parallels that in science and technology, permitting ultimate simplicity through intermediate complexity.
- Thomas Sowell

Only great minds can afford a simple style.
- Stendahl

Your Economics Professor Was Wrong

Seth Godin has an interesting article in Fast Company this month called "The Scarcity Shortage."

"Scarcity, after all, is the cornerstone of our economy. The only way to make a profit is by trading in something that's scarce. This is why the music and movie industries are so terrified by the millions of people who download entertainment from the Internet every day. Downloading threatens to make supply virtually unlimited, and that could make their offerings about as valuable as those of some kids down my street who recently tried to run a stand selling freshly made mud.

The same thing is true for doctors, Web sites, T-shirt shops, sushi restaurants, thumbtack manufacturers, and brands of blank CD-ROM disks. There are 100 major brands of bottled water. Someone opened a fancy ice-cream parlor in Manhattan, and then there were six.

If it's remotely digital (like music), then it's easy to mimic. And if it's easy to mimic, someone wins if they can knock off the original--the sooner the better. "

Of course this topic is covered in business school, since it's the basis of the "demand curve" and the foundation of Macroeconomics. But what it doesn't take into account is technology.

Land is the classic example of scarcity: once it's gone, it's gone. But what if houses could be built five to an acre because of better water and sewer systems? Of what if farms can yield three times the crops due to better pesticides and lower fertilizer costs? What if land that was once useless could be used due to better water management, better irrigation?

Technology will always progress, allowing us to do more with less--breaking the laws of scarcity. And with the rapid adoption of technology, it's happening even faster.

So Seth's right: it's going to take smarter, more dedicated people to make real money, and the rest of the world is going to resort to operating on the razor-thin lines of zero profit due to perfect competition. What's really scarce? Wisdom. Courage. Honor. Relationships.

The Fifth Discipline

I just started listening to The Fifth Discipline by Peter Senge. I've had this one on my bookshelf for a year or two, but once I found it on Audible.com, I was able to burn it to audio CD and listen on my way to work.

While the book is 13 years old, the concepts are just as relevant today. Organizational Learning is important, especially for large organizations. Systems will adapt, and applying discipline to leading it in effective ways is what the book is about.

The Fifth Discipline is "Systems Thinking," which acts as a unifier for the other four disciplines: 1) Building Shared Vision to build a common commitment to long term results. 2) Creating Mental Models will foster creativity as prepare the organization for change. 3) Fostering Team Learning assures learning is passed on from the individuals to teams. 4) Personal Mastery is the individual's motivation to learn and become better. 5) The Fifth Discipline is Systems Thinking, seeing a holistic systemic view of the organization as a function of its environment.

I've always been a proponent of "Systems Thinking." I think effective marketers need to clearly understand their role in a more complex system, and think about the part they play, and the effects individual actions take on the whole system.

I'm just into the first part of the book, but I'm impressed that what I'm hearing describes in detail much of what I'm struggling with at work. In the role of "Corporate Communications," our team plays a service role for a much larger system. We provide the communications tools and processes used by marketing, PR, advertising, packaging, sales, and business management. When our tools don't work as expected, serious pain can result.

Sometimes the problems that occur are very small: someone posts the wrong file to the wrong database, or network authentication doesn't work for one of our business partners, or someone improperly tags a file. Often, we don't know about a problem until it blows up into something big. Just recently, we dealt with a problem with one of our tools that became visible with our executive teams.

Peter Senge gave the analogy of a very complex system, the traffic system. Made up of millions of parts (including roads, cars, drivers, laws, training, and a lot more). In fact, whenever we get in our cars, we put our lives in the hands of complete strangers every day. The "system" works nearly perfectly, but every now and then, accidents happen. In fact, only when there is an accident, or a traffic jam, or a storm, do we notice the system. But just because a storm makes a bridge impassable doesn't mean the whole system doesn't work--it just means one part is temporarily down. I think I told this story three times today.

Having the wrong box shot show up in a website might be "an accident," but the system is working pretty well. Of course, it's up to my team not only to fix the fender, but put new processes in place to mitigate further problems (and "cite" those that don't follow the rules, like tagging things properly).

The point of the first part of the book is that in organizations without systems thinking discipline, processes can be put in place that solve short-term, individual problems, but cause bigger problems somewhere else in the system. When individuals ignore the bigger picture (or just aren't aware of it), they can go merrily along while leaving a trail of disaster in their wake. It's up to leaders of the organization to instill all five disciplines to make the system as strong and flexible as possible.

What does my team do that helps prepare everything to think about the entire system? How do our tools make it easier for the organization, not just for our "clients"? How do the tools our team builds affect all our stakeholders: employees, partners, customers, and clients?

The Folly of Forced Ranking

Navid Nazemian of Waterproof Concepts sent me an article called the Folly of Forced Ranking, by Edward E. Lawler III, from Strategy & Business. Lawler also wrote "Let's Hear It for B Players" recently published in Harvard Business Review. I blogged about a while back.

Diana Robinson summarized the article pretty well, in her article "The Top 10 Reasons Why 'Forced ranking' Quota Systems Don't Work"

1. Legal problems
The system invites legal challenges, and many courts have supported these challenges. Few companies are able to prove to the satisfaction of the courts that their quota systems accurately identify poor performers.

2. The statistics don't work
The theory assumes a normal curve (large numbers of individuals around the middle, flanked by a few "top" and "bottom" performers on either side). In fact statistics relating to normal curves are usually attained only with thousands of individuals, and assume random placement. Few teams or departments have so many members, and one hopes that none place their employees randomly.

3. Inequity across departments
Some teams or departments may consist entirely of superlative performers, yet in this system the bottom 10% will still be cut, whereas another team may be composed largely of poor performers, 90% of whom will be retained.

4. Inequity within departments
Some teams may have many individuals with almost no differences in performance between them, yet supervisors are still forced to identify 10% for elimination. This can lead to charges of unfair treatment, and to lower morale.

5. Long-term damage to morale
If continued year after year, once the initially identified poor performers have been eliminated, who is to be eliminated next? Those who were previously identified as satisfactory? New hires who have not yet had time to get up to speed? When employees are in a state of constant fear they rarely do their best work.

6. Reduced teamwork
The system encourages an 'each person for him/herself' attitude, and discourages teamwork. It also discourages people from asking others for help or for needed training, for fear that this will make them vulnerable to being identified as poor performers.

7. High cost of turnover
Some or all of the employees who are eliminated will have to be replaced, with the resulting costs and uncertainties of hiring and training replacements, and lower productivity in their early months. In addition, employees who are eliminated must have benefits continued, and may bring lawsuits.

8. No incentive to encourage growth in employees
Although intended to encourage improved performance, an arbitrary ranking system provides little chance or time for workers to improve, or for managers to find another job or department in which an employee may fit, and therefore perform, better. The incentive is to retain them so that they may be fodder for the next 10% elimination process.

9. Delays in needed firings
Managers who know that they will need to identify employees for elimination in a few months may deliberately not fire individuals who should be fired immediately, just in order to fill their quota during the elimination period. This can be destructive to the organization and to the morale of other employees.

10. The rich get rich...
Managers do not want to invest time and effort in the development of poor performers who are likely to be eliminated in the near future. Therefore, instead of helping them to develop their skills they may often spend their time working with the better performers who actually need less help."

I haven't run across all this as a manager, but they're certainly things to be aware of. And to be clear, I don't speak for Microsoft, represent the views of those managing our performance measurement system, or make my own management decision based on "fitting to a curve." I should also point out that in my experience, Microsoft DOES NOT have a company policy of eliminating a set percentage of employees annually, or even assigning a quota or set percentage of anything less than a "meeting expectations" score (though many do get such scores).

Spiritual Six Sigma

Brian Miller wonders if Six Sigma can be used in a non-traditional setting, like a church. I'm not any kind of expert here, but it was a fun exercise to see how flexible the concepts could be. The reason I think they're so relevant to marketing is that the underlying concepts are pretty simple.

Now remember, I'm not a Six Sigma expert, but here's what I remember off the top of my head.

Using the DMAIC process, we can go through the basic steps:

DEFINE: Start with really defining a problem (attendance, spirituality, contributions, obedience, engagement with scriptures, etc.). Is it a real problem? What would success look like? What's critical to the customer about what you're trying to improve?

MEASURE: Could you put it into a goal that's attainable but challenging? Make it something that can be measured, very exactly. Number of members attending 3x a month, or donation per member, or number of pages of scripture read by member per month?

ANALYZE: Why is the problem occurring? Use "5 why's" to get to the real root of the problem. Again, what's critical to the customer? If it's attendance, why are people staying home? Because they have better things to do on a Sunday? Why? Because watching baseball is more exciting than sitting in a sermon? Why? Because baseball provides social stimulation? It's exciting? Folks don't have to dress up? Etc. Get to the root of the customer expectations.

IMPROVE: The easy part, once you've really found the problem. Map out the process to find out every relevant step taken in the existing process. What one thing could you do to solve the underlying problem?

CONTROL: Continue to measure, to see if the steps you've taken are working. Stay in tune with the customer to see if they percieve the problem improving. Control the improvements, and continue tweaking. Now, move on to the next problem.

Sounds pretty simple, and in some ways, it is. Biggest "aha!" for me was taking the time to really break apart the problem into bite-size chunks.