Mark Raskino

I’ve noticed a distinct change of business attitudes to e-commerce in Europe this year. A lot more companies that didn’t take it seriously in the past are now making it key to their strategies. For example in September Inditex said it will be bringing its Zara brand into e-tail next year and H&M made a similar announcement soon afterwards (apparently, for H&M,  growing at a rate of one store a week isn’t enough!).

It’s hardly surprising. In a recession, consumers hunt hard on price and this is the first  recession in which the web is  ready for business prime-time. If you think back to the mini-recession of 2001/2 – most people weren’t on broadband and women were still underrepresented online in most countries.

But it is not just the intent to use e-commerce as a core part of business strategy that is changing.  Companies are a lot less coy about the channel proposition than they used to be.  In the UK,  DSG has been running some witty ‘in your face’ outdoor adverts recently, that really show the web’s time has come and the gloves are off.  The example below contains  a thinly veiled reference  to premier London department store Selfridges  (others in the series take on Harrods and John Lewis ).  As it says at the bottom of the poster – the website is the ‘last place you want to go’… because that’s where the sale is transacted.

Those who have attended a Gartner Symposium before will know that the analysts have many half-hour one-on-one meetings with clients (while we are not presenting and doing other duties). I have about 20 pre-booked into my calendar already and the topics create a little glimpse into the mood of this year’s event. To my eye it’s looking moderately upbeat and progressive. I can see planning for return to growth as an underlying theme.

I generated a topic word cloud so you can get a sense of the subject categories. Notice the word recession does not appear and cost, though still present, is not pronounced. Obviously this is Vox Pop fun – not research. A very small sample of the thousands of attendees – very selectively biased.

I can’t wait to get into the discussions though – this looks like it will be a great event.  I’m expecting it to be very intense, very tiring but totally inspiring.

A FastCompany magazine editorial a few years ago defined it’s forward thinking management demographic as those who “value values“.   I admired the way they conveyed a profound thought in two words. Under the very slowly tightening noose of information transparency, companies will eventually be compelled to say what they mean and mean what they say – though it will take another few decades to make the transition. Customers will increasingly take account of internal beliefs and mindsets when deciding who they prefer to do business with.  20th century macho management disdain for the ‘fluffy stuff’ of values will gradually ebb away.

This recession will help us take a step forward. It has caused us to pause for thought.  The unfettered and widely extended ‘greed is good’ Wall Street mentality is being gently questioned. A recent cohort of Harvard MBAs took it upon themselves to swear a new business oath of responsible value creation.  Yet we  have seen outbreaks of business humility before and they seldom last. It seems most likely 90% of the ‘old normal’ behaviours will eventually return. Ten steps forward, nine steps back.

For those who want to take a net step forward on this cycle, now would be a very good time to think hard about corporate values. What are your real (deep seated, unstated) values? Are they right for the coming era of information transparency, globalisation and online participation meritocracy? Should you ‘out’ what you really have, debate and revise it?

I have been impressed by the apparent results of IBM’s values exercise this decade. It does seem to have made a difference to their coherence, common purpose and the business outcomes. ‘Innovation that matters for our company and the World‘ may seem trite to some people  and yet its like a powerful DNA pattern for replicating culture – allowing each person and team to make the own, inspired, local interpretation.

Let me put it to you another way. Don’t you wish you worked for a company like the one I visited recently that actually believes THIS and displays it in the foyer:

Now – if you are part of a leadership team – isn’t it your right and responsibility to take your company on a journey towards something equally motivating?

Cannes is getting closer and it will be my ninth – boy how time flies by in this job! I have been watching the US event closely this week and staying in touch with my team colleagues over there  – getting feedback and thinking how I’ll deliver in Europe.

My main Monday presentation on CEO concerns (delivered by my team mate Jorge Lopez in Orlando) has been getting some really good feedback and you’ll see quite a lot of our analysis mentioned in some of the opening keynote speeches.  The trouble is there’s just so much to say about how business and economic conditions are going to impact the IT landscape and the demand pattern hitting the CIO’s desk.  Its hard to know what to leave out.

I’m really looking forward to my Wednesday mastermind interview, co-hosted with Linda Cohen, who will be over from the US.   I have mentioned the interviewee’s name to many people in the last few weeks – and it has sometimes drawn a blank look.  So perhaps we are interviewing the most important CIO you never heard of…  Alan Matula is Group CIO of the World’s biggest company.  In fact I’m typing this from Den Haag – where Shell has its international headquarters. 

  Those in the seated audience of 2000 or so, about half of them CIOs themselves, are in for a real treat. We’ll be getting IT management wisdom and insight from a very senior and experienced industry figure who has been in an internal IT role most of his career but rarely shares his views publicly. 

 A priviledge indeed – I’m looking forward to it!

I really enjoyed the privilege of presenting at Gartner South Africa Symposium this week – I think it was my 4th or 5th year of being invited. Interactions there are always stimulating and thought provoking. One issue in particular always makes itself noticeable one way or another – the matter of race.

So here’s what prompted me to think a little differently about that issue this time. When preparing one of my slide decks, I wanted some economic data and in particular I wanted to look at consumer confidence.  It took my breath away momentarily to see that one of the major economic information services, BER, in conjunction with a major bank,  still tracks black consumer confidence and white consumer confidence. They do produce a combined figure of course, but when I opened the .pdf, I wasn’t expecting to see this

My politically-corrected mostly-white western middle class liberal sensibilities were thrown off track for a moment. Surely it should just be ‘consumers’ in this day and age?  Well perhaps not.  A wise analyst colleague of mine once said – we must look at the world as it is, not only as we would wish it to be. This is a country that wants to face its differences and address them – it is profound and it is refreshing.  My first question should have been – how are these different and why?  It turns out that the two indexes are not in lock-step. At the moment black confidence is higher than white.

Each year I go to this event I also hear something about the progress of BEE (black economic empowerment). This is an important set of social policies which set out to correct the disparities between races in employment opportunities, career attainment and access to positions of professional power and authority.   Of course it creates tensions but of course it is necessary.

This year I had the opportunity to briefly meet and advise a smart CIO of a large and wealthy company I had not met before. She was black.  That isn’t common anywhere – for example even in core European countries the female percentage of the CIO population is 20% or lower. At the same event I met another CIO who told me he is proud to be a white African with roots going back to the 1600s.  These IT professionals are integrating, learning from each other and helping to make rapid economic progress for their nation together.

This business social progress may not be as visible as the new Green Point football stadium which is being prepared for the World Cup football in 2010..  but it is every bit as important and wonderful to behold. I don’t think it is overstating things to suggest that what’s happening in South Africa and being learned from its progress will change all our societies in the end.

My analyst colleague Simon Mingay is fond of saying that real green IT isn’t about the 2% it’s about the other 98%.  Focusing on the 2% or so of carbon dioxide emissions attributable to computing and telecoms misses a far bigger point. Applying the power of information technology to help reduce the other 98%,  via better management and efficiency controls on manufacturing, construction, transportation, energy distribution and other carbon heavy processes is the real prize.

This week Wal-Mart announced the big push back down the information value chain that will cause many thousands of companies to start that work … whether they like it or not. They intend to ask all their suppliers to calculate and disclose the full environmental costs of creating their products, so that Wal-Mart can label those with sustainability information for its customers. Consumer power is on the move. Wal-Mart’s customers want to make environmentally informed shopping choices and Wal-Mart intends to provide them that information.

The full story of Wal-Mart’s new mandate is in the Wall Street Journal. If the significance of this isn’t immediately obvious to you let me spell it out a little more. America’s largest company, an employer of over 2 million people which sells over 400 billion dollars worth of stuff each year, is going to require it’s 100,000 plus suppliers to start doing ‘carbon accounting’. They will probably be asking for other environmental criteria as well – but climate change is the lightening rod issue. When Wal-mart says ‘jump’ many companies – even Fortune 500 level – have no real choice but to ask ‘how high’ because of Wal-Mart’s simple arithmetic domination of the US consumer landscape. Many will recall the ‘forced ‘march’ of the Wal-Mart RFID mandate earlier this decade.

If you want to know precisely what data will be needed, in what format, according to what measurement methods and standards ….  you’ll have to wait. Standards in this area are nascent at best. We are all exploring the issues raised by climate change as quickly as we can – but there are no off-the-shelf answers. And though there is some pre-packaged software out there to help get people started its certainly not a mature category.

So the IT industry is facing both a grand challenge and a fantastic opportunity. To help evolve a whole new category of business applications, BI tools and management techniques. I think parallels will be drawn with Sarbanes Oxley, but in truth we probably haven’t seen anything quite like this since CRM.

We could debate whether concern for the environment is at the core of this strategy or whether cost cutting and market control motivators are higher. We might be concerned about whether Wal-Mart is trying to preempt regulation. We might mull whether consumers are leading Wal-Mart down the green path or the other way around. These will be interesting discussions but they won’t change one thing .. that the clock is ticking on real green IT and you don’t have time to waste – even if you never do business with Wal-Mart.

That’s because in order to really understand the carbon cost of production and distribution, those 100,000 suppliers will need to ask questions of their suppliers and that will be a big multiplier. If Wal-Mart sticks to this mandate other retailers will probably be drawn in to copy.

So here are the key issues. What’s the carbon cost of what your company makes or provides? How can you calculate that on an ongoing basis?  How can you do all this new business information management at reasonable cost?

And if you ever wondered why the cloud was really needed – other than for search – this could be its killer app.

This week the UK Superbrands consumer 500 list was published. Superbrands is an organisation which evaluates perceptions of brands on an annual basis. There are Superbrands councils of senior marketing professionals in many countries now and they usually publish the results in a book. There are separate B2B brand and consumer brand evaluation exercises which use large survey panels.  The scoring criteria consumers are asked to consider include market dominance, longevity, goodwill, customer loyalty and market acceptance. Results are published in rank order, with the scores.

So here are the three significant things I have noticed about IT in the UK consumer listing this time:

1) As usual IT brands are at the very top of ALL brands
For example, this year in the UK Microsoft is #1, Google is #3 – and they are separated by Rolex #2
(Apple is the only other top ten tech entry at  #9)

2) Mobile phone handset makers do a lot better than mobile telecoms service providers
So for example Nokia #59 and Sony Ericsson #115 beat Vodafone #151 and O2 #204.
I don’t keep track of the mobile and wireless industry myself, but I guess this gap is wider than I expected.

3) Some big business IT names don’t appear in the consumer list – but the cloud names do.
So SAP, Cisco and Oracle are not there- though some do appear in the separate B2B Superbrands list. This is because the branding experts who pre-select the list for the consumer panel to consider, did not see these as consumer facing. Typing this on my Lenovo Thinkpad – I wonder why they still include IBM, but that’s an aside. Most of the big names strongly associating themselves with the Cloud term are present. In addition to Microsoft and Google – IBM #61, HP #71 and Amazon #155 are included.  Other ‘cloud based’ brands are also visible:  Yahoo #140, You Tube #169 Facebook #248 and Ebay #322.

Why should you care?  Its all about the consumerization of IT.  There’s of a partial strategy split within the IT industry between those who see a consumer play as synergistic and those who would find it a distraction. Through the 1990s and into the early 2000’s this perhaps wasn’t so significant. Though large IT contract co-signatory business managers might be influenced by the consumer brand halo – that could be easily countered by the use of sales force in-person persuasion.  However the cloud might create a universe of many more individual business user ‘voting’ decisions, that sum to the corporate policy decision.  The wisdom of corporate professional crowds clicking towards one provider’s freemium enticement service or another’s, might become a bigger part of the overall provider contract decision forming process.

Anyhow – there are 10 business IT brands in the top 100, three of those are in the top 10 and for the third year in a row, a tech brand is #1. That has to be a cause for the IT industry to congratulate itself on its marketing capabilities, because in case you were wondering….   Coca Cola only managed 7th place.

[this post also appears in the Mastering the Hype Cycle Blog ]

I was asked recently by Economist correspondent Ludwig Siegele, whether Chris Anderson’s ‘Long Tail’ is following the Hype Cycle. This might sound like a contrived conjunction of two abstractions but actually, it is a very good question.  The Long Tail is a new management science idea, some might say ‘management tool’. If it is a powerful insight, it will be turned into business strategy method and applied to make money. It is therefore a management science innovation, which business managers can either choose to believe and adopt, or not. We think such things do follow the Hype Cycle.

For the Hype Cycle to be in play, two conditions must be met. First there must be a social excitement wave surrounding a new innovation that companies are considering adopting. Second, the innovation cannot simply work first time and every time ‘out of the box’ it must require evolution through application across markets, to reach its full potential efficacy. Both of these conditions do appear to be in place for the Long Tail.

Chris Anderson’s original insight and subsequent book created a surge of interest in this new way of looking at sales and inventory business model dimensions in the Internet era. His suggestion was that the value of the vast virtual-store inventory tail of e-commerce, would outweigh the head – those high volume products a store based retailer has shelf space to keep in stock. Many managers have been trying out the idea and researchers have been testing it. For example in 2006 a US retail CIO told me he thought the long tail effect was impacting his business. ‘Customers come in our stores expecting that we can stock every item in every size, because that’s what they are used to on the website – but there is no store format, no matter how large, that we could build to meet their expectation’. However in 2008 other researchers claimed that Anderson’s theory was disproved by e-commerce sales data and Chris has partly accepted their analysis. So the idea may be in the Trough of Disillusionment but it is not dead.

It’s bubble has been pricked, it is deflated but not done. The concept is now being refined by the market – as a big thought hits the reality of use. For example, in the original idea the long tail of inventory was more valuable than the short head. However data appears to suggest that is not the case for some of the online businesses that should clearly demonstrate it – particularly those in music and video retailing.  That does not remove all value from idea – it simply conditions it.

Perhaps the tail will never outweigh the head – that doesn’t matter if many more managers extract more business value by focusing some of their attention on that tail, as a result of bearing Anderson’s eloquent mnemonic insight in mind.  Perhaps there are secondary effects too – e.g. people attracted to the tail are cross-sold items from the popular head list, so both grow in proportion.

Why does it matter?  Because you need to understand how ideas move through the Trough of Disillusionment even better than you understand how to deal with the Peak of Inflated Expectations. Good new management idea viruses, apparently killed off by a few well aimed attacks, usually don’t die. They simply lay dormant for a while and morph. If your competitor is learning to adapt to them, you may suffer a nasty cold later on.

Chris Anderson has a new book out – its called Free: The Future of a Radical Price. This one is already creating some controversy and it has been attacked by Malcom Gladwell (of Tipping Point and Blink fame).  If you are a middle ranking leader in a large company, trying to decide which of these management ideas to apply and when to get serious about using them- it does make sense to scrutinize their progress with your ‘hype cycle eye’. Don’t jump in just because it’s ‘in’, but equally – don’t stay out just because it’s ‘out’.

Over the last couple of weeks 3 major value delivering uses of Twitter have been revealed.

Sales revenue

Dell has attributed significant sales to Twiiter

Scientific Research

An article in New Scientist describes a mass social experiment conducted quickly and cheaply

Democracy

The Iran elections aftermath.
Which reminds me of SMS text messaging importance during the terrorism-stressed Spanish elections of 2004.

These go a long way towards convincing me this innovation is high value in the mid to long term.  Its early use has been very news media centric and the discussion about it somewhat frothy.  Don’t let that allow you to dismiss its relevance and give up on it, as it descends into the trough of disillusionment.

Do you think the IT industry should fight its way out of this recession with nostalgia for the apparent certainties of the past, or a determination to progress into a new future?  It’s a reasonable question. In other domains, marketers are using nostalgia and innovation as strong alternative paths to appeal to customers.

Here are a couple of, examples of appealing to the comfort of the past.  Major UK supermarket chains Sainsbury and Marks & Spencer are exploiting their long heritage. By celebrating ‘anniversaries’ ( both rather artificial at 125 and 140 years) and using lots of old imagery, they are trying to reassure consumers. Tacit messages are things like: ‘remember your childhood – we were here then’ or ‘we helped people get through the thirties and the war’. A solid, dependable brand foundation is brought to the foreground.

By contrast this week I received some junk mail from Hertz, in which, Instead of harking back, they are looking forward. Introducing a new car club, hourly paid,  ‘pay-as-you-go’ model – their imagery is modern, green and implicitly electric (notice the prominence of the lamp post and the strong green lines reminiscent of power cables). They are appealing to your sense of progression and that the future will be a ‘better place’.

Their idea is not entirely new ( see here ) but they are bringing a novel consumption model to a wider audience at a time when customers are actively seeking better ways to manage consumption and costs.

So what would you prefer your favourite bank/airline/oil company  IT department to do next – seek refuge in nostalgia or move forward more quickly to innovations that will bring new progress? If we imagine IT following the patterns of the consumer marketers,  might see either of the following hypothetical press releases – each consistent with a different style of recession marketing.

XYZ bank celebrates the 50th anniversary of its core COBOL systems today.
For over half a century, our IT has been as dependable as our service.

( do you think this could not happen? read here and here )

or

XYZ bank announces a ‘cloud banking’ revolution.
Making the most of your money? There’s an app for that.

If you are an IT leader, influencing strategies and portfolios, choose between these paths wisely.  A moderately quick recovery might make the nostalgia play look like a sad move.

P.S.  Awww no – I’m not picking on COBOL, just using it as a proxy for our general legacy over reliance. I know sometimes it still makes sense. I was a professional programmer once and yes – I did COBOL.