We’ve always used the term innovation to describe the cool new companies coming online with products we never really knew we needed. Clearly, these people are just smarter than everyone else because we never thought to tell them we needed this product, right? In fact, they may not be smarter, but simply view the world differently than many of us. Understanding this difference is critical if you wish to continually create value (customer value, shareholder value, whatever). To identify better features, to design better service delivery, to enhance the customer experience well into the consumption chain of product usage, to market from a pull perspective, and/or to identify new markets requiring new business models requires a consistent, repeatable framework for understanding one thing…

What Customers Need

And if there was ever anything important to concepts of CRM and customer-centricity, the customer need is it. Unfortunately, piecing the entire puzzle together requires much more effort than simply focusing on some of the latest buzz-careers, like customer experience management. It’s not that simple, except that the need is central to everything you do. There are many disciplines, and tools, revolving around this concept that may seem daunting. But you don’t need to master them all yourself. You do, however, need to understand how they work together to achieve the goals of long term value creation as you oversee this change in organizational DNA. There are capabilities your business will need to develop in order to follow this path of continual learning and innovation. You can’t simply rely on software, it’s just a lever. These capabilities are your competitive difference and will change the way you create value around the true needs of your customer beyond the foreseeable future.

In the CRM space, we have historically accepted that customers wanted CRM software; each for their own reasons. We’ve differentiated ourselves with a combination of the features our chosen software package brought to the table and our own creative skills that make functionality requests happen. Do we ever ask how that functionality creates value?

Goods dominant logic, prevalent in marketing today, reflects our need to sell what we’ve got, and not ask the questions that could disrupt that process. At best, lip service has been paid to the concept of delivering what the customer needs. But ask those on the front end of CRM implementations what their customers need and all you’ll hear is features, benefits, processes, forms, buttons – and amazingly, only the ones that their technology can deliver! If you’re lucky, you’ll hear terms like efficiency and cost effectiveness – things that are valuable, but can only take you so far.

What Is Your Market?

To many, the market is their product and the competing brands. That’s certainly appears to be the case with CRM software, and it’s also the case with many customers I’ve worked with over the years. It’s fair to say that the vast majority of all companies tend to think this way. And when you think this way, the only thing you can possibly do is push information and promotions (about your product) to the customer. Maybe you’ll get lucky for awhile. But, wouldn’t it be better if you had a complete understanding of what a customer needed to hear, and when they needed to hear it – instead of what you wanted to say, every Tuesday at 8:30 AM? It doesn’t matter if you push it, or if they seek it. It’s about need. Their need. But how do you know what they need? Do we just sit back and listen?

Products and services are hired to help get jobs done – people’s jobs. Each job has steps, and the outcome of each step (the level of success with which it gets done) is defined by a set of needs. When you begin analyzing these needs, you will find clusters that begin to slice cross traditional market segments. The story of the Milkshake is a great example. While many in the retail fast food industry tried to find ways to make their milkshake better than the others in their industry, they didn’t realize that the milkshake was being hired to get a job done, and the competition was not other milkshakes at all. Once the market was defined around the job it was being hired to do, a much clearer path to gaining market share presented itself. It involved changes to the milkshake, but more importantly the entire experience – from obtaining it right on through it’s consumption.

What job, or jobs, is CRM software being hired to help companies do (or do better)? This sounds like such a simple question. In fact, it’s far more complicated than you might think. “We hire it to help us sell more”, I hear you saying. True. But, why do you need to sell more (on one hand) and what drivers should you be managing that will guarantee continuing growth (on the other hand)? I said guarantee!

Have we really looked at the dozens/scores/hundreds of CRM related jobs real people do to contribute to that outcome? Can you name them all? Do we know the needs required by each of them? Back to the milkshakes – I’m sure they thought they would sell more milkshakes if they just made it thicker, creamier and chocolaty-er just like their customers told them to do (when they asked the wrong people the wrong questions). But they didn’t sell more. In fact, they found that milkshakes, while a simple product, were actually being hired to do more than one job.

Everything is Driven by Need

Innovation can really sum up all the things you need to do better than the other guy. Marketing certainly needs to be innovative and simply cannot be until they understand customer needs (not there own). Service delivery cannot be innovative until you understand the customers need at each touch point. Products (productized services) create value during the lifetime of use – and why would it be used if it does not fulfill a need better than the alternative? Everything is focused around needs and if you define them properly, they become a central pillar of your business…everyone on the same page, customer-centered, agile, value-creating, continually learning and adapting. Yes, adapting, which takes me back to so many companies I’ve seen sailing into the sunset…and thinking that the easy thing to do is to buy some CRM software to placate the new sales manager, or marketing manager.

What is your CRM software competing with? The easy answer is other CRM software. But are they competing with broad but shallow CRM suites, deep but targeted functional tools, or are they really competing with something else all together? Do we look to the self-described disruptors in the cloud? Do they have a clue beyond a basic grasp of innovation along the dimensions of convenience, price and just good enough? Are they targeting the true non-consumers, not just the non-consumers of software? Does the tool, all by itself, create the lion share of the value sought by companies? Is the tool really even the market, as so many marketers & analysts will have you believe? Can you just turn it on and fire everyone? If not, what else can we be doing to help companies get CRM-related jobs done better than they can today? Perhaps we can teach them how to understand their customers’ needs and see where that goes. But first, let’s learn how to do it ourselves. Maybe then, we can begin to help our customers do the same. Maybe this service will become an integral part of the next evolution of CRM products.

I don’t make it my job tracking trends in the CRM software market, Paul Greenberg already does this here http://www.zdnet.com/blog/crm/crm-watchlist-2012-the-winners-list/3966. After reading his post today, though, I decided to circle back to a quick and dirty analysis I did the other week after hearing that Google Insights actually had a strong correlation to related economic data (the economic data typically lags by a few months). Does the success and revenue of a CRM software company related closely to trends in search activity? I don’t work with all of the vendors, so I can’t answer that question. But, based on those I do work with, and the hype I see in the market relative to others, I can make some pretty good guesses. Let me know what you think after I’ve laid it all out.

SalesLogix vs Microsoft CRM Dynamics

I threw in two terms for Microsoft since the search volume for both was well above SalesLogix. What we see here is that since 2004 (the earliest data available) SalesLogix has been on a steady decline. Microsoft, on the other hand, surpassed them back in 2006 and continued to climb until last year, when it seems to have flattened out.

While it appears that Microsoft is just killing it when compared to SalesLogix, look what happens when we compare it to Salesforce.com.

Salesforce is clearly way ahead of Microsoft  CRM and unlike MSCRM, it is exhibiting hockey stick growth. I have, perhaps, made the mistake of assuming that the days of Salesforce.com disrupting CRM vendors to be over; as it became bloated and expensive. However, there are those, like Clayton Christensen (who’s hedge fund is betting that SFDC is a disruptor), who believe that Salesforce.com is building a platform for a new phase of disruption. Looking at the growth in search, it’s hard to argue that this is the CRM vendor that the marketplace is enamored with.

SalesLogix vs SugarCRM vs Zoho

I thought I would finish by taking a looking at SalesLogix versus one of the follow-on cloud offerings, SugarCRM. It seems like a lot of consultants are giving it a try as an alternative to on-premise. It’s been around for awhile. But, how is it doing? Given Salesforce’s meteoric growth, has it taken it’s toll? And one other thing. Paul Greenberg threw Zoho in as one to watch. Is it a potential disruptor; an offering that maybe even SFDC needs to keep on their defense radar? Let’s see how search is treating them…

It’s obvious from this chart that SugarCRM has seen better days (the search for SurgarCRM vs Sugar CRM returned nearly identical results).  While it is still more popular than SalesLogix, which is still trending down, it is also trending down at a good clip itself. But look, Zoho CRM surpassed SalesLogix back in 2009 and is likely going to leap past SugarCRM next year.

Is there a correlation between search interest and how well these product lines are doing? I would argue that sales are still being made because there are active partner channels out there maintaining awareness of these declining brands. However, customers are relying less and less on sales and marketing (push) to research brands that may help them solve problems. This work is clearly being done on the web more and more. In fact, I always do it on the web, and I’m taking a wild guess that many other technology savvy folks (the ones focused on CRM software) are doing the same. Will better SEO help these brands? No. These are direct recall searches and it’s unlikely that one brand paying to rank higher for a competitor will change anything.

Does this jive with what you are seeing in the market?

The authors, Stan Maklan, Simon Knox and Joe Peppard point out that "marketers have bet the family silver" on these investments with nothing much to show for it. We can debate CRM definitions or how many cool features Salesforce.com is adding, but until we understand the true under-pinnings of success in the world CRM and social CRM, definitions will be off-target and features will simply make a business more expensive.

Capabilities

"The problem is more fundamental: Most senior management teams have an unbalanced approach to managing marketing investments, and this is particularly evident in the case of CRM. They focus on the key resources in which they invest capital, such as technology, location and advertising, but ignore the commensurate investment of time, energy and talent to develop the capabilities required to leverage those investments. Of course, this approach to marketing investment is risky. It generates excessive investment before the organization is capable of leveraging it profitably."

Customer Needs

What Comes Next

There are consultants on the leading edge of this thinking that are doing incredible work with their customers. Unfortunately for the mid-market, this type of consulting appears to be too expensive, too complicated and not easily accessible; at least that’s the way they would look at it, if they were looking for it. The fact is, we need to make a much better effort at communicating this thinking to our clients, and not taking the path of least resistance…and least value.  We need to understand, and explain, how investing in the appropriate strategy and capabilities will facilitate a more valuable relationship with their customers throughout its course. We need to lead our customers on this front. Most companies naively view technology as a loyalty builder, but it’s the few companies that do the hard work up front, that will stand out and continually take that next competitive step forward. They may find that they can actually spend less on technology because, after all, they only need what they need. Can you know what you need if you don’t do the hard work?

Defining CRM

"(s)CRM is about building organizational capabilities that effectively react to the change in customers’ unmet needs, re-configuring resources and leveraging the appropriate technology to create value for companies -  by creating value for (and with) their customers over the entire life of their relationship together”

This reality, amongst other things, is what drives most businesses to mediocrity over time – from above and below (h/t @GrahamHill). It also explains why they have been so susceptible to the notion that CRM technology is the core component used in attracting and keeping customers. The vendors have taken advantage of this over the years and continued to tack on features that lift their marketing literature to the top, while weighing down the organizations they claim to be helping.

The first wave of CRM disruption began, in my mind, the day one of my employees informed me about a new hosted sales automation tool called Salesforce.com. It was cheap to sign-up, and you didn’t have any upfront capital outlays. I poo poo’d it as did my vendors at the time. After all, I had a vertical client base and SFDC was a one size fits all player, and on a platform few trusted at the time. It made no sense for me to add it to the mix. We all know how that turned out, don’t we? By the way, we were charging hourly rates back then that resellers only dream about today. 

Here Comes The New Disruption

It’s fairly clear, from a technology standpoint, that a new round of low end entrants are the real threat over the long haul. While the granddaddies are quickly painting a web application face on an old, bloated and expensive user experience, it’s clear that not only are they reacting too late, they are missing the true current disruption. They view the answer through the prism of their current product, and their glorious past. This will be a fatal mistake, and the sort of mistake that happens over and over again across all industries. In this case the technological innovations will accelerate the process because deployment is becoming as simple as self-serve.

So, is the disruption coming from products like Highrise and Nimble? To a degree, yes. They target non-consumers at the low end of the market that SFDC abandoned years ago. Their products will evolve through co-creation with business partners since they provide the same API to developers that they build their products with. This could quickly take them up-market as features and capabilities are created by a community that needs to get jobs done. As non-consumers, who looking to become customers, are able to enhance their experience by adding only what they need, this notion will quickly catch on to customers of expensive, bloated platforms of days gone by as well. Why? Probably, and sadly, because it will cost them less to do what they are doing today.

So, Back to Mediocrity

While there will be a clear short term benefit in doing so, that benefit will make itself available to all players. So where is the true innovation? As always the handful of businesses and consultants on the leading edge of customer-centric innovation will identify their customers true needs; and it won’t be just about product sales. These will be the companies that understand that value is not something that is simply transacted when money changes hands; but is created with the customer (co-created) repeatedly at each touchpoint over the life of the relationship.

These companies will strive to understand the capabilities they require to ensure that value is created continually, and not destroyed through purposeless internal or external activities. They will know exactly which activities these are, as well. Only when they’ve defined and built these capabilities will the risk be low enough that an investment in technology makes sense. These few companies will hire technology to help them execute this new plan, and only the technology they need. This demand has rarely been made because the technology did not exist (it’s all bloated), they could not articulate the need (they didn’t develop the capabilities required), and most companies will continue to lack this insight. But those that do will find it much easier to hire, or build, only what they need to get the job done.

First, a little transparency. I consider myself fairly conservative; mostly from a fiscal point of view. I’m pragmatic about things, I like to think. The social welfare stuff always gets put through my fiscal soundness and human behavior prisms. They simply are not separate issues in my mind. I recognize that money does not grow on trees and that some folks can have their bad behavior reinforced by a smart politician. It’s just the way the landscape is laid out for us these days. In simple terms, I don’t select the ends and then justify the means by which I get there. I chuck all my emotion out the window and determine are we capable of sustaining this path? Isn’t that what we do in business?

I’m not the smartest guy in the world. But, I’m not stupid either – and I won’t call you stupid if you don’t call me stupid. It’s why I would never go into politics, because I would immediately be labeled as such. Isn’t that funny? Many of my friends disagree with me vehemently on politics, but I don’t believe they think I’m stupid. Yet, if we continue to seek solutions in the midst of all of this emotionally charged rhetoric, do you think we will succeed? Is it how you would develop a strategy for your business, or for a client?

If you define your solution first, you must select any means to get there – legal, illegal, immoral – or you will fail. And politicians don’t like to fail, since it is now a career path – which I don’t believe was the original intent of serving. That’s simply not how even my most left leaning friends and colleagues choose to guide businesses, so why is it good to guide countries this way. It’s time for that debate. I may be swimming alone here, but I’m tired of sitting on the sidelines.

Jobs to Be Done

We have to begin this discussion with the understanding that there are jobs to be done. The question is whether we are going to require people to do them, but I digress. We have many jobs to do, a few of which we hire our officials to help us do better. But, by making up jobs for them, and reinforcing bad behavior (yes, bad and value destroying), we can only expect things to get worse. Who was it that said if you teach a man to fish he will feed himself?

I’m going to talk in terms of the US, because we don’t have Dictators, Kings, Monarchs or Committees. We freely elect our government, as many other countries now do, and it should be fair to suggest that we hire them to help us get jobs done: specific jobs. In fact, our Founding Fathers were pretty clear on what those jobs were, and nothing more. Here are a couple of examples that we may be able to agree on:

• Provide infrastructure for intrastate (State Government) and interstate (Fed Government) commerce
• Provide for the safety and liberty of its citizens.

There may be a couple more, but please don’t make any up just because you feel a certain way.  There is nothing about our government, as proposed by the Founding Fathers, that would suggest the job of Government is to feed people, or give them jobs. If you believe that, you are probably from a different country…just sayin…and I can understand your confusion since you were indoctrinated under a different philosophy and political system. There, I said it. Philosophy (you thought I meant indoctrination). It has nothing to do with business. And it’s very closely tied to Ideology, and that is where people begin focusing on the ends, instead of the means.  OK, I’ll admit, our kids have been indoctrinated over the past 40 years too. Thank you progressives!

Outcomes

Let’s define Outcomes as the measuring stick for how well we are getting our jobs done (no, these are not ends, they are needs). Let’s look at that first job and come up with a few needs relative to getting it done well. I’m not going to map the job out here, let’s just keep it simple for argument’s sake:

• Minimize the wear and tear on transporting vehicles (e.g., maintaining roadways)
• Maximize the number of trips a vehicle can make
• Maximize the load that can be carried by a vehicle
• Maximize the number of destinations that can be reached

These make sense right? For the most part, they are all important outcomes and fairly well satisfied given the technology we have available today. You could make the argument that the wear and tear outcome’s satisfaction will vary regionally and possibly cyclically or seasonally. But, if you look at it through the lens of a maintenance solution, it very well could be fully satisfied. Again, given our capabilities today.

When new technologies surface, maximizing the number of trips may become underserved if we continue to use trucks and roads. Maybe we’ll have a teleportation system like Star Trek. But, to throw R&D dollars at teleportation systems today is a high risk venture, and therefore a waste of resources. In fact, we may miss an even better solution by doing so. It’s better to focus on the job or outcome. Innovating the wrong way wastes money that can be better invested elsewhere. Do you consider your politician to be an innovator? Do you advise your clients or companies to eliminate as much risk as possible when making investment decisions?

Opportunity/Target

You can make a case, today, due to government interference and mismanagement, that any of these could also be underserved. Government tends to sell solutions, and ends up introducing value destroying requirements, when they are supposed to be enabling commerce. For instance, while a well maintained vehicle can make a lot of trips, the introduction of excessive tariffs, and other expenses, which are not a natural part of the transaction (and add no value) can actually inhibit the number of times someone is able, or willing, to make the trip (whether it be commercial or personal). Therefore, this becomes an opportunity for improvement since value is being destroyed with this intrusion. When you take value away from something, you are not necessary re-distributing it elsewhere. That’s philosophical pablum and another waste of time and resources.

We all agree (don’t we?) that taxpayers need to support the infrastructure in order for these jobs to take place at a high satisfaction level. Yet, these funds seem to be redirected for other purposes, at times, and infrastructure begins to erode. Is this a value creating, or value destroying activity by the government? Please try to focus on this specific job and outcome, not an end that you may have in mind (the redirection)

When we look at CRM, don’t we prioritize our work and capital investments based on the customer’s needs; the underserved outcomes they seek? How about their capabilities? If that’s true, and the people I follow believe it is, then shouldn’t we prioritize our efforts in government in the same manner? After all, we hire our politicians to help us get jobs done. And I’m sorry, you don’t get to make jobs up just because you want to.

Capability

Now, let’s talk about the jobs you reflexively want to make up. I know someone is doing that, otherwise our government wouldn’t be in such a mess. Let’s face it, they contributed to the pain we are all feeling today by enabling us to behave badly. They have been behaving even worse (both sides). Is the government capable of guaranteeing that every citizen can own a home? Obviously not. Why? Because they are not capable of sustaining this. It’s akin to a kiting, or Ponzi scheme, and they each eventually collapse in on themselves. It’s funny that people offering common sense are called stupid, primarily because they are threatening the addiction to some new right, or they are threatening those who got elected by promising it.

Let’s be honest, if we did a capability assessment on everything people say they want, we would find we are not capable. So, shouldn’t we, instead, focus on what they really need? The basics? I’d like to hear your honest assessment of that.

Sustainability

Something like 56% of the people in this country (US) receive more from the government than they put in today. In other words, we are leveraged…heavily; and the investment is in votes. Is that sustainable? Look at Greece. Look at it in terms of your business! I’m not sure even the politics of it are sustainable. Put in personal terms, how long can you keep borrowing to pay for a lifestyle you feel you deserve, but haven’t earned? Is this emotional job a proper solution for the government to take on? Have you looked at the homes your grandparents grew up in? When the interest rates go up on your credit cards, do you get a new credit card to pay the difference? Earlier generations never lived like this. Are we so much greater than they were? Or smarter?

I had an interesting conversation about investing with borrowed money yesterday. I asked if this was wise. The logical answers like borrowing to pay for a home surfaced. OK. You are borrowing long term money to finance a long term asset. There’s nothing wrong with that until the rules of capability are changed to allow people who were incapable of qualifying to now purchase a home, that we know deep down they can’t afford. We are seeing that right now, aren’t we? And when the government makes that guarantee with other people’s money (your money and my money) they do unsustainable things like fund these long term commitments with short term debt that re-prices every 90 days. Is that smart? Or is that, in fact, stupid.

Then you get the arguments that you are investing in intangibles; like your children. My son is part of my budget for daily investment and it comes in the form of time and money. I don’t’ borrow for it. In fact, his college education, if he chooses it, will be paid for in cash, because I’m planning well in advance. Borrowing for such an intangible return is risky. When we put things off, like saving for college, how many of us will then be inclined to think a college education is a suddenly a right, and demand that the government pay for it. I hear it every day. It’s simply not sustainable, nor is it a job we should be hiring our politicians to do. The reality is that you may not be able to borrow that money either. Are you finding credit highly available today? I didn’t think so. What will you do then?

It’ll be interesting to see if this post is left completely alone, shunned, since I run in left leaning circles. Or, will it be debated. And if so, will it be done with facts found outside your belief system, as we ask companies to get their facts outside the building, and solutions put together with a framework you would use to maximize the success of your business? I’m already wondering if someone will point out that I excluded the emotional and social jobs to be done. Frankly, those are not the governments job, those are your jobs. When the government makes one person feel good, they are making another person feel bad. Think Robin Hood, except that he is taking from good people to give to good people. Someone is not going to be cool with that.  Successful people are not evil and regardless of your socio-economic rung on the ladder, there is always someone more successful, or wealthier than your are. Isn’t one of the rules of innovation not to design solutions that reduce the value of other solutions (or features)? Yes, it is. Why would you support that in your political belief system?

Cover via Amazon

I operate in and around the constant drone of attribute based customer segmentation. There is a prevailing thought that organizing your product or service design, as well as  marketing, around demographics or behaviors is the best way to develop and maintain highly loyal and valuable customers. In many places, behaviors are not even analyzed, so we’re left with simple segmentation based on products used, geographic region, industry, or annual revenue.  If you believe that this is working out for you, here are some statistics that might make you feel a bit uncomfortable.

I’ve been doing a lot of reading lately, and one of the handful of people I’ve gained a great deal of insight from is Clayton Christensen. In his book, The Innovator’s Solution, he begins by talking about the growth imperative. He highlights a The Corporate Strategy Board, who published a study called Stall Points in 1998 that looked at companies which occupied a position on Fortune’s list of the top 50 companies at some point from 1955 to 1995 (40 years).  It found that only 5% of the 172 companies studied were able to “sustain a real, inflation-adjusted growth rate of more than 6 percent across the entire tenure of this group.” The rest of the group ultimately reached a point where their growth stalled to rates less than or equal to the GNP growth rate.

What is scary is that of all these companies whose growth had stalled, only 4 percent were able to successfully reignite their growth even to a rate of 1 percent above GNP growth. Once growth had stalled, in other words, it proved nearly impossible to restart it. – (p. 5)

Without going into great depth on this topic (it’s an interesting topic, though), I’m going to operate under the premise that we all agree that this is not what 95% of the companies out there are trying to achieve. So, what are they doing wrong? The short answer is they don’t know how to innovate, and they don’t know which disruptions in the market should be defended against and which ones they should ignore. And all of this comes back to one of the bad inputs (there are more) into the process…attribute based customer segmentation.

Why do we use attribute based customer segmentation?

Our CRM systems have touted the ability to collect attribute based information, giving us a 360° view of the customer, for the past 15 years. Our accounting systems, especially if integrated, also give us clear visibility into the buying behaviors of our customers.  But is this 360° view really what we were looking for? A bucket which is convenient to the company does not necessarily equate to an actual need of a customer. This approach leads to a one-size-fits-all product strategy which doesn’t incorporate the fact that people hire products to do jobs for them.  These jobs, or circumstances, are completely ignored by most modern day product & service development teams and by modern day marketers. The attribute approach really only conforms to the needs of internal company managers who, even if they get it, have to deal with the following realities.

Fear of Focus

Why don’t companies create products and marketing messages that target the jobs people are trying to do better? The answer is pretty simple, they fear that talking about what a product should be hired to do highlights what it shouldn’t be hired to do. Unfortunately, the negative focus is the one that comes to the surface more often than not. Of course, the problem with not following the jobs-to-be-done approach means you will follow a path to markets you cannot penetrate and miss opportunities in new markets where you will have a much greater chance at success.

Executive Demands for Quantification

Executives all too often look for, or hire, market research that helps them define the size of the opportunity.  This is done at the expense of understanding how customers and markets really work.  If you talk to people about this, they get it, but the resource allocation process they operate in still requires them to define a market in terms of the data which is currently available. As I mentioned above, this is the data we’ve collected in the 360° view. In order to re-work  this to a jobs-based view of the market, a completely different research and data collection framework is required with a completely different method of measurement. I’m sure this already sounds like hard work to you, so why would anyone else what to do it?

The Structure of Current Channels

Another problem faced by innovators using a jobs-to-be-done segmentation approach are the channels of distribution required to get them to market. Channels are often segmented by the very attributes we use in CRM (e.g. product categories). This makes it difficult for channel partners to accept an innovative product focused on jobs, when what they are allocating space to is product brands and categories – the space is already taken. The other thing to consider is that anything other than a sustaining innovation may make it impossible for them to profit from it. Think of traditional CRM VARs who could never work in a model where there is very little integration capability or customization capability. Low end disruptors are going after non-consumers who’ve only entered the market because the price was right, and are willing to accept fewer features. These products succeed, and will rise in the market over time as they add features, because they are implemented over disruptive channels, like the web.

Advertising Economics

Marketing is just simpler and cheaper if you organize it by traditional segments like demographics. Doing this makes a product more likely to do several jobs poorly as opposed to one job perfectly. Why is this done? The easy answer is that communicating the job, or circumstance, within the brand leads some executives to worry that this could harm their core brand. The solution to this is to use what Christensen calls a purpose brand which ensures consumers hire the product to help the correct job get done better. Think of Kodak Funsaver or Courtyard by Marriott as examples of purpose brands that actually strengthen the core brand. These are brands oriented around jobs and circumstances, and not traditional CRM attributes.

What Does Getting it Mean?

When it comes to customer segmentation, the successful companies, the ones that are able to sustain growth over a long period of time, orient their sustaining and disruptive product & service innovations around the jobs customers hire products and services help get done better. While this may not be convenient to most executives and managers out there, it’s clear that this is the best way to grow your business over time.

If you’re wondering why your margins are eroding, it’s probably time to begin looking at your customers from a circumstance-based view point. Which jobs do they consider important in their daily lives, and what outcomes do they seek to get those jobs done better. And most importantly, which of these are under-served in the market? This thinking can lead you to a better understanding of not only your existing market and threats from competitors, but it will also introduce you to opportunities that no one else sees, which can lead to new markets of opportunity for your business.

Is your company in the 5%, or the 95%?

Something I find interesting is how many companies invest time and money in endeavors that are not based on facts. They assume that one of hundreds of ideas will work, but also assume that it will take many attempts before an idea hits the mark; if it hits at all. There is an inherent risk in guessing, and coming from a background in banking, where at least on the surface risk is addressed through an underwriting process, I’ve found this lack of factual understanding to be something that has niggled away at my core for the 16 years – since I left the financial industry. While they didn’t get it right 100% of the time, at least they talked about risk. We give our product / service designers and marketers budgets based on what? I don’t know, do you?

As Steve Blank says, the facts are not inside the building, and I was also reminded of this by Graham Hill recently.

Can You Articulate Your Framework for Eliciting Customer Needs?

How many people in your company know all of the desired outcomes that your customers are trying to achieve? If anyone in your company can answer that question (which I doubt) ask them if they know which of those outcomes are most underserved by products and services currently available to them. Don’t be surprised if you hear crickets. This is not the sort of information you get from Voice of the Customer initiatives. Customers speak in a language that is convenient to them, not in the language you need to understand outcomes they use to measure how well you help them get their jobs done. They will use terms like needs, specifications, wants and solutions.

Which Job or Jobs Are Your Services Being Hired to Help Complete?

This is a critical question that must be answered if you are to begin working with facts. There is not just one job, there are many jobs to be done, especially in my world of CRM. Too many jobs to list here. And each of these jobs involves numerous steps before, during and after the job in order for it to be completed successfully. Each of these steps is where lay hidden the many desired outcomes that your customers use to measure how well they get the job done – using your product or service, or doing it on their own.

Knowing how to contruct an outcome statement, measure it’s importance and its level of satisfaction, provide you the means to determine the opportunity you have to solve a currently underserved outcome; for your customer or in the marketplace. This is the heart of outcome-driven innovation, and should be the heart of any consulting engagement as well. We should be co-creating broad statements with our customers which will always be true over time, such as minimize the time it takes to qualify a lead, for example. You will need, and find many such outcomes, some satisfactorily served by current solutions, some overserved and the gems that are underserved.

Once you know these things as facts, you’ll be able to…

• Help Get a Job Done Better
• Help Get More Jobs Done
• Help New Customers Do a Job That Others are Already Doing (e.g. enter an existing market innovatively)
• Help New Customers Do a Job that Nobody is Doing Yet (e.g. create a new market)

You will also…

• Stop improving areas that are already satisfied
• Stop making improvements that satisfy unimportant outcomes
• Stop making improvements that negatively affect other outcomes
• Prioritize opportunities to easily identify underserved and overserved markets
• Predict where value is migrating over time
• Identify competitors strenghts and weaknesses, know which to emulate and know which ones to wish them success with (with a wry smile)

This level of understanding can also be highly valuable to a CRM consultant as each engagement should be designed to deliver the most value to the area of most need. How are you capturing customer requirements today?

Customer Requirements That Mean Something

The emerging thinking on this subject is based on outcome-driven innovation. The success rates of this methodology are far greater than the customer-driven methodologies of the past. Don’t be confused because I said customer-driven, because the outcome-driven approach co-creates value with the customer at every point in the value-chain. This is what customer-centricity is really about. Not just listening to them, but working together in a framework which enables each party to get what they really need for value generation…the facts.

Look at your current approach and try to find an output that provides clear and direct, quantified information that tells you exactly where to target your ideation, or consulting efforts. Does it tell you exactly how much value you will add to your customers for each targeted idea that you come up with? Does it help you decide what’s worth pursuing and what’s not? Ask yourself if that kind of information sounds valuable.

A business that wants to grow, as most do, must continually innovate. Innovation is the only undiluted way to grow your business. Consultants must be innovative, and they should enable innovation in their client companies. To innovate in a consistent and repeatable fashion, you need to understand your customers’ needs, which a customer cannot articulate if you simply ask them how to make your product or service better. The unit of analysis must be the job(s) they must accomplish and you must clearly understand the desired outcomes they use to measure the success.

If you feel your methodology for gathering customer requirements is satisfactory, let me leave you with some light reading shared with me and a few friends by Graham Hill the other day.

Interesting studies. This one looked at 97 companies and found CRM technology only has an indirect impact on business success (via people and analysis) http://bit.ly/gwuyLK Ths one looked at 345 companies and found that the choice of CRM technology vendor had little or no impact on the success of CRM projects http://bit.ly/hL62qz And this one looked at 211 companies and found that CRM technology had a negative impact on business performance http://bit.ly/dL57NM So does CRM technology influence success in CRM?

He leaves us with a good question. If it’s not about the technology, which so many of you out there are saying these days, what is it about? I’ve just shared what I think it’s about. I’d love to hear what you think.

There are a growing number of new platforms soon to come online that will potentially disrupt the traditional top-down approach to the Enterprise solution proposition. If you’re working somewhere like many places I’ve worked, then the only collaboration that takes place with regard to which software applications are selected is one way – use it! IT organizations have a lot invested in this model because it gives them control. However, with no definitive roles, in most organizations, to bridge the business-technology gap it’s generally naïve to assume that IT has your best interests in mind as business users. Sure, they have their Yammer network, but that’s because they’re just experimenting. Yea.

If You Boil A Frog Slowly

While the frog thing is bogus, this whole collaboration thing is beginning to take root and the Enterprise just may not notice (but let’s hope they do).  It started a long time ago with my generation, although mostly the ones involved in the tech world to some degree, but it’s quickly accelerating as the planet is being overtaken by the social network phenomenon.  People are glued to the Facebook walls, and other outlets of pseudo-engagement like Twitter. Mostly, these activity based platforms are distractions from what we are really trying to do each day, but it’s caught on and given some clever innovators some ideas that I feel have a great deal of promise. And I’m also excited about them

Attacking the Enterprise from Below

How much time and effort does it take to stalk an Enterprise, decapitate your competitors and gain acceptance from end users? How much does it cost and what percentage of the deals are you closing? Let’s face it, it’s a high-stakes game and you need a boat load of capital and/or critical mass to compete.  A compelling story helps too.  But, what if you were simply marketing to one end user at a time, and doing it primarily through social media, and more importantly, word of mouth. That wouldn’t cost very much, would it?

I know, I’m so naïve.  That would never work and you know that because…it’s never been done before? OK, how about if every user you were able to install on your cloud-based platform was able to connect with their co-workers to share tasks, or maybe even whole projects? Not every project or task, but just the ones you needed them for.  And what if your co-workers thought that was so cool, that they invited a few of their colleagues in?

What if someone were so bold to then invite a customer into a set of work items, and thereby infect another Enterprise altogether? And what if that customer invited one of it’s other vendors in? Anyone who grew up in the 70′s probably has a picture of that Breck/Faberge shampoo commercial in your head at this point. What we have is a loosely connected group of people from a variety of organizations which will continue to grow organically and probably exponentially. Of course, that’s if the platform is any good, and provides a framework for doing the things most of us need to do each day – whether personal or business.

Would there be a point where a smart Enterprise recognized that all of it’s employees, and maybe it’s customers, were using this platform to work collaboratively on personal and business projects? Would they then look for ways to bring those folks into their collaborative Enterprise so they could better understand what was going on? Adoption is not an issue, so why not, as long as the platform has thought about this eventuality in advance and provided the appropriate path?

There are a few products I’ve heard about over the past few months that are, at a minimum, marketing to the bottom and hoping to work their way across and up. Asana, the super secret platform recently unveiled.  This could be a platform for project management, or anything that requires you to manage anything, big or small. Podio, another platform that allows users to connect pieces of what they do with other users.  It’s easy to connect, it costs nothing in many, many scenarios, and it has a chance of gaining a foothold because it lets regular people craft their own solutions very easily. The framework remains unchanged, so it’s still easy to share pieces with colleagues, customer or friends.  Lastly, another product that is taking this approach, albeit from a contact management perspective, is VIPOrbit, which gives individuals the ability to share orbits with others. Imagine everyone in an enterprise eventually using this for their personal needs. It’s adopted, now you just have to figure out how to build a corporate Universe for it (pun intended).

Time will tell whether this is a viable disruption to traditional distribution methods for software, and whether my limited description of it will serve it well over time. I’m sure it won’t, because things change and this is a change that I predict will come to a collaborator near you.