Business Case Logistics “The burden of legacy”

General Description

A distribution company in the automotive industry has a product catalogue of over ninety thousand products for 18 car brands and all types over the last 30 years or so. They limit them selves to what they call GPS (Glass, Plastics and Steel), body parts. All items have a specific code widely used in the automotive industry. The code has intrinsic coding like car-type, front – rear, left – right, etc.

In the automotive industry the shop floor is dominated by craftsmanship and automotive technology. Once a damaged car is entered an assessment of the damage is made and after the required insurance inspection all necessary parts are ordered based on a paper catalogue every supplier distributes. Shop floors have a variety of these catalogues. The items are entered on a paper form and than faxed. The GPS Company receives the fax, retypes all listed numbers in their ERP-system and orders are picked and distributed. The communication around incoming faxes is very labour intensive and new management planned to improve their ordering process.

The inbound sales force made to many mistakes re processing the incoming faxes and the competition worked in the same fashion.

The catalogue had a newly born digital sister, a CD-ROM. They were produced on a quarterly basis to maintain information. During the process analysis we did we found out that there were two point of improvement that would generate profit.
1. Stop faxing
2. Reduce delivery failures

A light unit requires clamps and screws to be installed. These items are not included in the product package. With the introduction of father-son-grandson relationships between items flawless delivery could be created

Facts and figures

Fast Moving consumer Goods will spend 9,8% on online advertising in 2008.

Traffic is becoming increasingly safe. As a result the spare parts market has seen a decline in turnover of 15% annually over the last 6 years. A fundamental shake-out is taking place and now only 50% of the original players remain.

Strategic challenges

1. Be the number one order portal
2. Link items together
3. Facilitate shop floor with adequate information to be able to calculate up front
4. Get your legacy systems out of the line of fire

Probable solutions

1. Create a relational order portal - circumventing the legacy systems - where shop floor personnel can order by clicking on constructions drawings. Relations between items can be made by GPS staff.
2. Allow shop floor staff to track their order digitally

Implementation

We implemented a single page web site on top of the car industries standard parts database, enriched with relational information. Synchronisation with lagacy systems was done overnight .

This lead to spectacular results

1. Implementation was cheaper than CD-ROM and catalogue production costs for one year.
2. Internal sales force was reduced by 80%
3. Delivery failures were reduced from 8% to 0,5%
4. Paper catalogues and CR ROMs were no longer produced
5. Competition was forced to follow or join the initiative
6. Processor load on legacy computers fell from a dangerous 70% to 20%. No terminal sessions were open.

Business Case Telecom "Converge or Diversify"

General Description

The telecom world is changing rapidly. In the 80’s the market was dominated mainly by telephone companies, in the 90’s became ISP’s delivering internet connectivity and mobile phone services. In the first years of the new century they have become so called triple play suppliers delivering Telephone, Internet access and TV.

The major players have even invested in content, which implies that the telecom industry dreams of a position where they do more than just distribute the message which was their main goal since the beginning of postal distribution.

Recent initiatives incorporate the acquisition of TV rights, Disclosure of historical archives etc. This will slowly move towards dedicated channels based on common interest subjects. A trend that is already evident in the satellite TV channels, but will extend towards normal TV distribution as well. Music, Sports, Fashion, Nature, Science.

Telco’s are stepping into a media battlefield that is traditionally occupied by Cable companies and TV broadcasters on one side and newly introduced VOD-services and personal TV-production and cast services.

At the same time the value of the fixed network with which they distribute seems to be coming to and end with the introduction of wireless broadband technologies like WIMAX (although WIMAX is just first generation technology).

So were will the telecom’s business model move?
1. Distribution of information (main driver is the network dominance). Income is network usage.
2. Distribution of content (must own content and programming). Income is advertising and content usage
3. In portal distribution (must have in context pushing capabilities). Main income is service delivery.

Facts and figures

Programmed moving images (TV channels) are still very dominant. Customer behaviour still fancies this type of broadcasting. The content profile has changed dramatically over the last decade or two. Production cost per minute of TV has been cut in half due to diminishing advertising income.

The rapid introduction and market penetration of YouTube shows that infotainment, entertainment and news gathering can work without expensive editorial staff and distributions system.

New introductions like “tribler”, “Kyte.tv” and “Joost” spell a totally new future. Anyone can produce at any time. Smart programmers like the early internet structure sites will out smart traditional distributions systems. Will they win the battle for the living room?

Since customer behaviour is moving towards individual consumption of media the role of the “social” family screen is fading, is it? Other uses of large living room screen will be found. They will be social and interactive. Passive horizontal programming is out.

Strategic challenges

1. Enhance ROI time for the fixed networks
2. Roll out of wireless networks at arms length control
3. Start influencing / facilitating individual customers in creating own productions, but in traditional distribution models

Probable solutions

1. Buy new initiatives and control technology replacement
2. Innovate distribution models and create multi label small span publishing units
3. Market new introductions to come top of mind with all customers.

Implementation

Innovate outside standing organisation and buy. A simple external growth and strategy department will do.

Business Case Marketing Agency “Cross media or integrated concepts”

General Description

In general a customer marketing agency can be seen as a publisher. The main difference is that marketeers think of one-off events or campaigns to boost sales. They have no intrinsic bond with paper publishing and are therefore not tied to the paper advertising channel.

The marketeer’s are confronted with a range of advertising possibilities but are still strongly focussed on branding. Off course branding is and will main important. But online in context advertising is gaining force rapidly. This mechanism leaves out traditional advertising agencies. Or at least their role will be minimized. In the 4-step approach their specialism will be used for drawing attention only.

Consumer behaviour is increasingly based on on-the-spot decisions and consequently, so will in context advertising be. Companies will want to do this themselves. Based on intensive logging and tracking mechanisms companies will adjust their adds and products on the spot with no agency intervention

In context search marketing techniques will grow rapidly over the next years and challenge the traditional agency’s ability to generate sales conversion with all types of media.

Facts and figures

Forrester predicts a growth ratio of an average 23% in online add spending over the next 5 to 8 years.

Philips Sense and Simplicity Campaign announced to spend 10% of total campaign budget in online advertising.

Search Marketing takes about 30% of total online advertising spending. And will remain growing with about 15% per year

Strategic challenges

1. To offer both traditional and online marketing specialisms to customers.
2. Acquire technology for E-mail Marketing, Mobile Marketing, Search Marketing, In Context Advertising, etc.
3. Define on-the-spot campaigns for their customers.
4. Acquire valuable search terms for their prime customers and optimize search engine activity and website presence.

Implementation

To offer an integrated media approach agencies should ask themselves how to incorporate the desired knowledge. Cooperation with other agencies with different knowledge profiles in order to be able to integrally service the 4-step media cascade seems necessary.
Contract external resources that service digital campaign techniques (outbound SMS, e-mail, video stream, etc) in an ASP model (external services) and build internal knowledge how to optimize these services.

Every marketing effort should contain all 4-steps of the media cascade.
Contract a site/search optimalisation company to realise search terms and relevant content tags. Be aware that constant measuring of conversion ratios is of utmost importance. Those who neglect the power of number will eventually run into a high cost profile.

Business Case Publishing “Find media synergy or a fine niche”

General Description

A publishing company is confronted with decreasing income from advertising activities and at the same time the costs of operations increases due to macro economic developments like cost of labour, but also the rising cost of its prime medium – paper – rises year after year due to environmental influences. The publisher still makes a fine profit, but turn over developments are not as they used to be due to increasing competition of newly introduced media.

The publishing company scans the market constantly for new initiative that enables them to resist the competition. Their former success has made the company cash rich, so they can afford to buy new initiatives, rather then develop them themselves. Aside these acquisitions the individuals publishers innovate them selves and experiment with various initiatives like real live events, digital streams etc, but every publisher in his /hers own right. There is no joint approach due to the fact that publishers must freedom of operation and profit and loss responsibility.

This results in a governance model that is very agile on one hand, but its down side is that new initiatives are seldom adopted through out the company. This makes it hard to cut costs on a general level and at the same time makes innovation very expensive. I have referred to this as the publisher’s dilemma.

This mechanism is not only found with news paper and magazine publishers, but with all broadcast publishers (TV, Radio).

Facts and figures

Although online news paper advertising spending are still less than 5% of the total news paper advertising spending the differences are becoming evident. In 2005 print spending was flat, while online advertising grew 35% over the same period. Mind you, this is only news paper income. Online spendings in the rest of the market show different figures. (Source; NAA - Newspaper association of America, June 2006)

The sectors FMG (Fast Moving Consumer Goods) and Entertainment in Europe are said to be fastest growing over the next years. Companies expect to expand their online advertising efforts to 9,8% of their total spending in 2008, showing a 75% growth. The entertainment industry is expected to grow even faster to 11,2%. (Source; Annalise.svp)

Strategic challenges

There are many challenges that lay ahead. The most urgent are;
. Mobilise readers
. Define vision on future publishing
. Organise independent content and rights management
. Use still existing power of brands and profits to innovate

Probable solutions

Mobilise readers; the trusted relationship paper publishers have with their audience is a strong one. They should invest in the continuation of this relationship in the online environment. Before they can begin to implement the relationship on content basis publishers have to organise their backbone ICT processes to get the most out of these relationship. If this is neglected the relationship will be damaged due to pour process quality, resulting in weakened market position and competitive strength.

Publishing is changing. The content bundles will change due to mobile consumer behaviour. This results in fundamental changes in content distribution and advertising placement. Media buyers/sellers should develop cross media advertising offers tuned to consumer behaviour.

Independent content management should result in one content factory for many publishers. The entire content generating process should be taken into account. The content management machine should incorporate content sensitive advertising mechanisms to allow on the spot management of advertising mechanisms.

The make or buy decision is a difficult one and should be made per possibility. Many publishers have a general approach for external growth. Most of them buy. Publishers should build innovation units.

Implementation

The nature of a business process is dictated by the behaviour of its users. Since technical solutions made it possible to connect customers directly to business processes. Attracting attention and building a relationship require agile processes and data structures that are well protected and secured against malignant users. The entire infrastructure should be reviewed, starting the analysis with customer behaviour. This implies centralised IT and telecom operations.

Commercial staff should be organised in one strong team dealing with the integrated advertising portfolio. This implies central governance of commercial propositions.

Implement a media / publisher independent content management system. Starting with intake portals, templates, commercial tags etc. Service the publisher with process logistics and advertising mechanisms. This implies one centrally managed system.

Pick your best minds and ask them to invest 20% of their time in innovation practices. Organise an independent innovation unit. Your make or buy decision can always come later.

Moving forward

Until now I have presented my observations in various fields and placed them in an historic perspective. I tried to simplify matters and structure them in such a way that makes it easy to compare developments.

At the same time I introduced analysis tools to place developments of ICT, media and marketing techniques in perspective to enable you to determine their true nature based on the life cycle theory. All these ingredients should help you to analyse your companies current status; the power of your company’s digital relationships.

It seems impossible to give one recipe for all situations in all types of industry. Instead I will give you a few reference cases for which I will give you a global description of their current status, their strategic challenges and the way to choose and implement the chosen direction.

The examples I choose are generic and come from the field of Publishing, Consumer Marketing, Telecom, Service institutions (Banking, insurance , etc.) and Logistics

It may seem a mission impossible to you to start changing the way your company works right now, but everything starts with awareness. Once you see the challenges that lay ahead just beginning is the next step.

Keep the focus on customer relations. They will give you direction. Spread the word.

At the same time I have prepared a series of interview with leading marketing, publishing, e-commerce and ICT professionals. I will publish these interviews in due time.

Content production & Property rights

"The two main meanings of the word content have a strong relationship. That what is contained, and the feeling of satisfaction. The content must make us feel content "

With the rise of digital media the terms content management was introduced. Companies bought expensive so called content management systems. What is the reason behind this and which content is meant. At first simple internet sites where build. They were basically information hierarchical systems were you could zoom in on information by clicking. But there were complicating factors. Multi lingual sites for instance or rapid updates of the site by multiple personnel. Who was responsible for the content. The communications department or marketing / sales or even the ICT department, multiple sources so to speak. It's hard to manage the content production and maintenance and at the same time manage flawless publication or distribution.

Complex content management systems were introduced to manage these complex situations. As internet activity exploded and new media were added even media independency of content became an issue.

Con"tent (? ∨ ?; 277), n.; usually in pl., Contents.
1. That which is contained; the thing or things held by a receptacle or included within specified limits; as, the contents of a cask or bale or of a room; the contents of a book.
I shall prove these writings . . . authentic, and the contents true, and worthy of a divine original. Grew.
Con*tent" (?), v. t. [F. contenter, LL. contentare, fr. L. contentus, p.p. See

Content, a.]
1. To satisfy the desires of; to make easy in any situation; to appease or quiet; to gratify; to please.
Websters Dictionary, 1913

Content production

Usually content is produced by professionals. The copywriters, photographers, interviewers, journalists, artists and so on. They earn a living from it so intellectual property rights and content ownership is a big issue.

Digital media have made it possible for every individual to generate his or hers own content. The Digital camera is accessible for every individual. Anyone can make digital videos and show them to the world. This happens more and more. Meanwhile we are used to see events reported by mobile phone, made by accidental bystanders. I personally saw the 9/11 incident on the internet – I was in Amsterdam at the time - only 20 minutes after it happened.

The production of content is no longer the professional’s primate. Consumers are just as good a source. This applies to broadcast media but even more so to modern enterprise customer portals. Where experiences and information are exchanged. The fact remains that content intake and content distribution requires standards on a technical, but also on an editorial level.

Content intake portals will come alive over the next decade the content generated will be matched by smart matching protocols and semantically distributed to the appropriate channels and communities.

I see three types of content being produced and distributed
1. Editorial content generated by professionals (TV, Radio, Newspapers etc)
2. Open Source content generated by the blogging society (rapidly becoming the worlds most important source of information when disclosed properly)
3. Consumer driven content facilitated by companies that value their customer’s opinion and use it to their own advantage.

Content intake

The fact that every individual can generate content and publish it is an entirely new concept. The availability if huge amounts of content requires standardized content intake mechanisms. Portal technology has everything to create content intake portals. Available anytime, anywhere with the appropriate machines. A digital camera with UMTS connection for instance. The portal could even supply templates in which form, colour and shape are prescribed in order to prepare content in advance for media independent distribution.

Mind you content intake applies to all portals where multiple individuals create content. The 200 web masters that manage the content of your intranet, the customers that asks you questions and even the professional content intake in the publishing industry.

Content distribution

The infrastructure for content distribution is complete anyone in the world is able to connect to the infrastructure and is free to choose the preferred device (paper, screen, audio) to receive the required information. I stated earlier that every medium has its own characteristics. It’s very likely that you’ll stop reading an article on your computer screen when it takes you longer than 5 minutes, but you can read a book for hours.

The content generated must therefore be stored in such a form that it can be distributed automatically to the desired device.

Property Rights

New initiatives like web 2.0 give us a different angle. Users create their own content. And with that they are less willing to pay for it. Recent surveys pointed out that consumers are not willing to pay for information like news or entertainment. The discussion about property rights and copyright protection will continue until we find new ways to link creators of information to consumers of information other than through royalty constructions. Only recently Microsoft changed its opinion on copyright protection. Imagine the most powerful copyrights defender gives up the battle. What’s the rationale behind this. Competition? Better use my illegal software than someone else’s?

We have seen some interesting initiatives to change the income model. The first was David Bowie who issued stocks via the Internet. Effectively he sold all his royalty rights on his music and lyrics in one go. He reportedly cashed $ 54 million.

Free bonus download offers that are only accessible through a specific key available on an artists original CD.

There will be a lot of experimenting in this area until a dominant business model arises.

Independent content management

I see independent content engines in the future that hold all functions from intake through storage to distribution. They will act as an information exchange where content and commercial information is

Mixed is the best desirable fashion. I predict a strong future for the news agencies that have the vision to start acting like an information exchange, or can the webvertising agencies form themselves into digital information agencies. Time will tell.

Open source content creation

Many community environments are active in which content is created by contribution of individuals. Entertaining environments like You tube are well known, but when you realize that individuals are in the process of creating the largest knowledge base on the planet by writing blogs on all kinds of topics. Estimates show approximately 75 million blogs exist today. Wikipedia (Wiki = fast) is gathering knowledge with the speed of light ( it started I 1996). This illustrates the force of customer involvement

Meanwhile companies are building and maintaining their enterprise portals and web logs. They try to facilitate their customers by giving them an information platform to communicate on.

Companies should treat their internal process as they treat their external digital relationships. Eat what you sell. Every company a portal and an editorial staff.

Content and knowledge management is every companies biggest challenge

Summary

Means : The global IP network facilitates everything. Companies will see that there is no need to build their own infrastructure and networks anymore, but outsource their entire infrastructure. It is what Sun Microsystems said years ago. “The network is - and will remain – the computer”.

Message : Content has only value in the proper context so the context is in fact the message and content merely a driver to come back frequently. Communities drive the context trend

Media : The web will become ( if it is not already) the most important information source for mankind.

Stategic Life Cycle Management

“For every door that closes, ten other doors open. Just choose the right one”.

With the introduction of electricity, it took another 60 years to overtake the energy market. The introduction of hydraulics in the market of draglines generated a far more drastic effect. It took less than 20 years and all traditional dragline producers were no longer in existence. This happened to a lot of technologies. The type writer, hard disks, Photo cameras. The traditional players have a focus on their own “traditional” market and its needs.

Back in 1996 we tried to find an answer to large ICT investments. Since innovations followed each other in rapid succession it was hard to keep up with all changes in the market. Release management of software, doubling processor speed every 18 months, 40 percent of the software acquired was never used and shelved. It was time for a decision making framework.

We called it Strategic Life Cycle Management and studied many cases to find a similar development for all the cases we studied.

Many publications on life cycles I read I leave unreferenced but it comes down to a fairly simple mechanism that gives handles for strategy development, investment decisions and above all interpretation of the state of a company, it’s competition and the market it operates in.

life cy·cle (plural life cy·cles)
noun

Definition:

1. stages of development of living organism: the series of changes of form and activity that a living organism undergoes from its beginning through its development to sexual maturitythe life cycle of the snail
2. all stages of development: the complete process of change and development during somebody's lifetime or during the useful life of something such as an organization, institution, or manufactured product

Life cycle positions

A life cycle starts when a new technology or technique is introduced that replaces an old one like electricity replacing steam energy. The life cycle ends in the same fashion. The technology is been replaced by something radically different. Like the hard disk and the flash memory.

The introduction of a new technology triggers end of life innovation in the old technology, trying to fight off the inevitable. In this stage there is the fight for the customer and the primary driver is improvement off technology. Innovation goes in little steps that follow each other rapidly. Look for instance at mobile digital devices and their development over the past fifteen years. The old technology recedes and becomes oblivious.

There are many new players exploring the new possibilities. This stage ends when a dominant design emerges. Many players will merge into larger few companies and a shake out takes place leaving only the companies with the best accepted technology

In the second stage competition is not about technology but about functionality or image. Innovation takes larger steps and is about ease of use or consumer identification (fashion or emotion). Marketing is the main driver and there are fewer competitors. Extensive market research drives the developments and the output is a best of breed product. A second shake out takes place and only a few dominant players remain.

This starts the last stage of production innovation where price is the main driver. There is fierce competition and players will do anything to out smart the competition. The will automate production, reshuffle distribution. Organise market dominance etc.

At the end of this stage something new will happen. A replacing technology will arise forcing the remaining companies to do a last effort to keep up. Make or buy. Companies that are still financially healthy will buy new initiatives. Others will try to adopt the new technology and learn how to use it them selves. Both strategies hold dangers.

Buy and incorporate successful initiatives in the standing organisation often leads to a slow down in the necessary rapid innovation process.

Adoption of the new technology within the company often leads to a clash of cultures and political battlefield, resulting in the same slow down of innovation. Only companies with pockets deep enough to make a few mistakes will survive and participate in the life cycle that starts all over again

To find out where and what a company is, extensive analyses of its current status and products is necessary, as is a vision to the companies future. The gap this shows will be the framework for change and innovation. This can be as simple as the replacement of workstations for a large company. Replace now or wait another year. But it can be as complex a situation like the magazine publisher that is confronted with decreasing revenues I described in the publishing dilemma.

Summary

Means : The traditional value chain processes will largely remain monolithic systems as designed in the last decades. Changing them to an online environment would simply be too costly. Instead these systems will be circumvented by new interactive systems that facilitate e-commerce and customer service processes based on portal technology. Eventually the monolithic systems will be replaced by more network type solutions one step at a time.

Value chains

“The value of a company is the sum of all its customers, because at the end of the day they establish value by creating revenue, creating profit. Their involvement creates a reversed value chain”

It was Michal E. Porter – now a Harvard professor on strategy and competition – who introduced the idea of the value chain into business thinking.

The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organization. The organization is split into 'primary activities' and 'support activities.'
Primary Activities
· Inbound Logistics
· Operations
· Outbound Logistics,
· Marketing and Sales
· Service
Support Activities
· Procurement
· Technology
· Human Resource Management (HRM)
· Firm Infrastructure.

This of course is a company’s internal view. The introduction of companies ICT functionality outside the companies boundaries, stretched the idea of value chain to “chain integration” between companies. Thus creating integrated B2B or B2C value chains for the entire production chain better known as the supply chain. Or supply chain management. Production is a one-way-street, but with fully integrated processes information flows both ways.

The introduction of personal and trusted devices into the life of individuals stretches the value chain even further. Now the end of the chain (final delivery) can be included. Here something revolutionary happens. These trusted devices can talk back. The individual can react on the delivery immediately and add value in response.

The traditional production and value chain becomes a two way street, allowing customers to influence the addition of value and with that influence the process!!

Strong examples are off course YouTube where all content is created by its users. And there are many more in all types off industry like gaming, entertainment, finance, services etc.

The basic value chain theorem states that ‘margin’ is the created added value. This implies that a company’s main objective is profit. What is meant here is the difference between the total of sales income and the total of cost related. When customers start to add value by creating content or creating trusted relationships with other customers this may in the end result in increasing profit (or less cost of sales).

Two-way value chain

The traditional value chain can be seen as a fixed sequence of activities repeating itself in a predefined rhythm. The process can be planned in such a way that value output can be predicted based on productivity – effort = operating profit. This requires a strong regime because every hiccup in the production process leads to loss off value. This paradigm applies to production processes. Service processes are treated in the same fashion in many publications. Value chain thinking is very dominant.

In the digital world there are reasons to discuss the value chain approach. When customers can affect business processes they become less predictable resulting unpredictable forecasts. The processes are no longer standardized nor can the sequence or rhythm be influenced by the company itself, other than creating artificial thresholds. IVR (interactive Voice Response) Systems are companies’ favourites to manage down the unpredictability of input and effort instead of facilitating customers who take the effort of contacting them with a service that helps both customer and company.

It is necessary to scale the means behind processes to the maximum effort needed. Like the mobile network that must process all calls and SMS messages during the first hours of the New Year. Or what would happen to a banks payment system when all customers decided to submit their payments at exactly 8.00 pm? These processes actually behave like a network. Replicating relations and processes time and time again.

Change in management approach

Business processes that serve external digital relationships need to be managed differently. Processes are offered to customers in the context of business- or consumer portals. The whole complex of technology, media and content, business process etc must be managed integrally.
The days of the ICT dominated projects are over. Portal creation is a multi disciplinary activity, requiring different management styles and methods. Discussions of ownership and other issues related to change in processes needs to be the responsibility of the highest officer in rank. When processes are behaving like networks, the way they are managed will probably be by a network type of organization.

Responsibility and hierarchy become less important than contribution. Authority within a project team will be based on contributed value. Projects become more complex and more political. This endangers the possible project output.

Strong strategy frame works must be defined to keep all energy within the project targeted at the creation of value.

Companies ask frequently for PRINCE II certified management. The people responsible have to realize that these methods come from an ICT dominated age. In these multi discipline environments I’d rather only use the strategy and decision making frameworks provided.

Old and new

Many new initiatives in the digital world use a technology called web2.0. Not really a technology, but a set of web functions allowing individuals to create their own environment. They can manage their own information in the internet’s information overflow and share their profile, information and favourites with other individuals, thus creating a so-called “social network”.

The profiles created are used to target information that fits these profiles. Imagine what this does for marketers. Examples are for instance Google Adsense. The semantic (contextual) approach of information delivers a new range off communication possibilities mainly based on the content provided by the users.

These companies appear invisible to the outside world. They use digital strategies like e-mail cascades or blog buzzing, becoming popular in the internet community. They only become known when they succeed and then it’s too late to compete. These types of community initiatives cover almost every topic. Dating, gaming, finance, networking, sharing, info, news, etc.

Look at social or business networks like Hyves, XING or LinkedIn. You’ll see that just one single facility bring people together in a favourite environment. People are loyal.

Traditional companies have not yet discovered the impact of web2.0 type of solutions in their customer relationships. They are still using CRM and flat internet solutions. Although all of the Fortune 1000 use portal technology to service their customers only few succeed in creating a value added environment for their customers. Most end up with a costly internet site.

Companies should build customer portals that create value for all stakeholders instead of scaring IVR solutions that hold the mechanism of creating income by delivering pour quality and or service.
This shows that there is more than an outbound value chain. The inbound value chain will become more important as use of digital relationship platforms grows.

Some companies are already valued by the number of their customers. Mobile phone operators for instance. They have a business model that links customers and profit 1-on-1.

The reversed value chain consists of a different type of process. The first is facilitating the consumer / customer. Make life easy or entertaining in the digital environment. Second is content generation. Customers should be able to add content concerning the company or its products and services. They should be able to share experience and, in that capacity, act as either the vigilant consumer when service fails, or the companies ambassador when they are enthusiastic about it. Don’t forget to privilege or compensate them.

Customers should be able to contact other customers building a strong network. Customer’s interests can be dealt with in this manner. Proactive companies will deal with these challenges. The trusted relationship will win in the end.

Companies should facilitate the federation of its customers. They should not be afraid of customer power, but find ways to use it to their advantage. In the digital world knowledge is readily available and so is competition.

Summary

Means : A reversed value chain dealing with interactive customer contacts requires flexible process support and connectivity to primary processes and data structures. New multi disciplinary organisations and governance structures are required. Companies that are able to tune their organisation and infrastructure to the needs of tomorrow will profit from these new possibilities.

Message : Companies will aim at customer involvement, strengthening their marketing message. The trusted third party recommendation is invaluable and trusted digital media will become the prime instrument to achieve trusted digital relationships.

Media : Companies will start using web2.0 portal technology to facilitate customer participation for both PC and mobile devices, maybe even digital TV.

Portals

“Share off mind, share off experience are key. A trusted relationship is necessary, even in business portals”

Internet, Intranet, Extranet, Website, Portal? What is what actually? Different names for the same thing?

The difference between these terms is the focus of the owner. The technology is basically the same.

The Internet is the public environment where anybody can go and find info, contacts, bargains, etc.

An Intranet is a network structure in the same fashion as the internet with focus on company personnel only and has exactly the same functionality as the internet. Access is regulated with login facilities. The contents is always company related

An Extranet is focused on a companies customers. Access to the extranet is granted in exchange for contact information or subscription. The contents is company and service related.

A Website is a company’s presence on the Internet. Websites have evolved from static information provision to customers into dynamic points of sale directly connecting to internal business processes. This differentiated websites and the term Portal was introduced.

A Portal is something that gives access to …, is the only entrance to… and therefore allows only privileged access. It is the only access to all relevant resources. In case of an internal Portal this means that the portal gives access to all business processes, all applications, all employees, but only to those with the right privilege. A portal can be directed outward, to the customer’s side, or inward, to the employee side. I will treat these two types of portals as one.

por·tal (pôr'tl, pōr'-) Pronunciation Key n.
A doorway, entrance, or gate, especially one that is large and imposing.
An entrance or a means of entrance: the local library, a portal of knowledge.
The portal vein.
A website considered as an entry point to other websites, often by being or providing access to a search engine.

It is well known that the doctor’s children are usually ill as the shoemaker’s children wear the most worn shoes. Companies that excel in organizing their external processes and communication have to realize that this excellence has to be met with internal processes that facilitate service workers to intervene in those external processes.

There is a strange thing to companies. They are very interested in creating a relationship resulting in transactions. But when transactions fail, they tend to look a way or at least create thresholds with the aim to slow reclamation processes. In the Netherlands companies offer new customers a 0800 number to be able contact them. This number range is free of charge for the caller – because: future customer - . Once you are a customer, there is only one means of communications left. 0900 numbers costing between €0,10 and € 0.90 per minute. Cost for usage of the mobile phone is not included. In fact companies earn money by messing up.

The basic reason for this behaviour is the cost element of after sales service. To many people involved, outsourced call centre facilities causes high cost and loss of quality and involvement.

We have seen this in recent rapidly growing markets like web-hosting, mobile telephony etc. Fast in sales, slow in service!

Other types of companies will have to deal with these problems as soon as they start extending their processes outside the company’s borders for the simple reason that the company is no longer able to decide when a business process is to start. Customers will start the process. Resulting in unpredictable use of resources. To regulate this companies throw up thresholds minimizing effort but maximizing customer frustration.

The answer to this is a different way of designing business processes. Processes have always been designed by ICT specialists who were aware of the limitations of their machinery and software. Introduction of internet type technologies have opened a new range of possibilities to design and manage business processes.

As the outside world of individuals is slowly but steadily organizing itself in social networks, interest groups, ideology communities etc. Companies have to counter this by servicing the individuals in a manner that creates respect, or run the risk to be nailed to the wall by consumers in the same fashion someone can get world famous in 24 hours. Chat rooms, bulletin boards etc. There is a strong need for a long term strategy regarding redesign of business processes.

Portal Technology is readily available and proven technology, yet companies use it to share knowledge and call it a knowledge management environment. In fact it could be the mirror image of what is happening in the outside world. Faster information in the outside world requires faster and better information in business processes.

Digitals relationships between companies and their customers require adequate management tools. Not only standard CRM and ERP type solutions, but also Customer Self Care type solutions outbound AND inbound. Showing all relevant information at any point in time to anyone authorized.

This requires two basic conditions;
1. A central identification and authorization mechanism is in place.
2. All company resources are connected.

This implies that the portal is the employee’s window to the company and its customer’s. Business processes will be redesigned on this level creating a 3 tier process structure. People are allowed to work together in different settings. From simple production tasks to complex project teamrooms where all project info and resources are combined.

Companies will in the end have to manage their new digital environment consisting of three main areas of interest.

1. External portal with processes and interactivity
2. Internal portal with processes and information
3. Networked data structures

Only the third area is a typical technology issue. The first two are a combination of communication, commerce, organization and ICT. It is evident that new ways of managing these areas create a new challenge to companies. There will be a strong change in governance. Both decision making and project management need a different approach. Multi discipline projects ask for different ways to manage knowledge and skills. The old concept of project or process owner seizes to exist

All major companies in the world have a portal installed, still far from complete or effective but still.

Forrester stated three relevant issues to portals

1. “The portal becomes as essential as e-mail and telephony.”
2. “The allure of new features, combined with lessons learned (…) is an irresistible opportunity to give portals a second or third shot.”
3. “Ambitious firms extend portals to partners and customers.”

The first statement has all ready been proven true. Sales of portal technology is at the moment the fastest growing sector in software sales.

The second will prove itself shortly. When introducing new concepts like for instance VoIP (.. or rather Internet Telephony), no intensive implementation projects are needed. Simply add the function to the portal and it is available to all users.

Portals come in all sizes and shapes and they are not easy to compare. An easy way to categorize them is the ambition level in the portal.

Ambition levels

In recent studies of business cases we found three levels of ambition;
1. Function based, providing (personalized) information.
2. Activity based, providing (personalized) knowledge and communication facilities.
3. Task based, providing (personalized) guidance and prioritization.
Ultimately aligning activities with business objectives and goals.

A portal consists of a number of generic business functions – aside from identity management and authorization – that enable users to work with the resources or processes.

o Communication tools like mail, instant messaging, video conference, meeting maker, etc.
o Collaboration tools like, document sharing, discussion platform, knowledge finder etc.
o Content management systems using push and pull mechanisms supplying news and information.

o Clippings, RSS, Press Releases etc.
o Workflow management processing tasks, documents, etc.
o Personal space
o Business Intelligence
o Web-services
o Knowledge Management Facilities

Employees or customers will create their own way off working with these new environments. Many companies allow departments and individuals to create their own space and presence within the portal. New ways of exchanging information new way of planning a career, new ways of managing activities will arise from these portals.

There are all ready excellent examples in the area of open-source” collaboration. On the Geneva Car Show showed a new model of an environmental friendly vehicle was presented, entirely designed in an open portal environment by technicians and scientists all over the world.

In a large infrastructural project I have worked in myself teamrooms with project planning facilities, instant messaging and document sharing, resulting in perfect collaboration.

Portals have a lot of benefits coming with them. We already identified the ease of introduction of new technologies. Portals glue everything together thus creating a standardization of infrastructure, communications etc. The technology also enables benefits of a non financial character;
1. Save time, More time for value added activities like strategy development and innovation
2. Create flexibility. Easily implement new technologies. Portal platform can be used by internal AND external stakeholders at the same time.

3. Share Knowledge and

4. Increase productivity by implementing simple workflows, and give users their own digital space to have them come back regularly and work with the portal through natural motivation.
5. Improve decision making by creating best practices, business cases and benchmarks etc.

The financial benefits will differ per situation. Standard financial benefits how ever lie with standardization activities. The infrastructure (both hard and software) and supporting processes can be standardized easily. Simple cost saving can come from P&O processes like declarations, trips administration, easier communication facilities. Faster access to information, and so on.

The burden off legacy systems

All companies, large and small have a legacy of old systems. These systems are often of a design incapable of dealing with real-time processes the customer wants in interactive environments.

Getting your legacy systems web based is normally far to costly

Circumvention of legacy systems with a portal type layer is the only strategy that incorporates two ingredient for future success.

1. Modern interfaces for customers and customer service workers.
2. No des investment and loss of knowledge by forced replacement of legacy systems.

It is necessary to draw up a business case showing at least actual cost and predicted cost cuttings. Use this to evaluate final results and you will notice that portals make companies better.

Cases

Recently I initiated a program to realise an internal portal for an international media company. We researched best practices and came up with many interesting cases. They all showed the same pattern. Only from reorganising support processes an internal portal can be financed. ROI period lies regularly under 1 year. The real benefits in the area of knowledge management and flexible re-styling of business processes are difficult to calculate because many benefits are of a quality nature, so these cases may com in handy.


Summary

Means : Portal technology is the fastest growing ICT market world wide and this is only the beginning. Without portal technology companies are just not agile enough to keep u the pace of rapid changes in technology

Message : The single point of entry must be clear about what it stands for. It will be – in fact – your shop window, behind which your entire product catalogue will be available.

Media : Portals need to be tuned to portable devices and tuned to the context. Geographical context is key. “Sat-nav” suppliers have a great future.

Media charateristics

“Since media differ marketing specialists will have to learn to use them in their specific strength”

When the container term media is used people usually refer to broadcast media like radio, newspaper and TV as in the description below. In this article I treat anything that carries ‘information’ from a ‘sender’ to a ‘recipient’ as a medium. This can even be a piece of paper in the form of a postcard or a reply-form in a magazine. Marshal McLuhan describes a lot of other media distributing ‘signals’ like a light bulb or a copper wire. In his book “Understanding Media” (1962) he distinguished warm and cold media based on consumer participation.

Dictionary.com Unabridged (v 1.1)
me·di·a1 /ˈmi did ə/ Pronunciation Key - Show Spelled Pronunciation[mee-dee-uh] Pronunciation Key - Show IPA Pronunciation
–noun
1. a pl. of medium.

2. (usually used with a plural verb ) the means of communication, as radio and television, newspapers, and magazines, that reach or influence people widely: The media are covering the speech tonight.

McLuhan stated that a book is a warm medium because the reader must actively visualise the descriptions given, where as film and TV are cold, because they leave nothing to the imagination. In his age interactive media didn’t exist yet and interactivity is very important in user participation, because this activates the users senses keeping associations top-of-mind.

Although McLuhan’s ideas were revolutionary at the time, I think other ways to categorize media are necessary in order to understand their functionality and closeness to the user.

Convergence

There have been discussions lately on the convergence of media in three different fields;
1. Networks,
2. Services,
3. Applications and Devices.

Of course we see this convergence. TV over internet ad mobile devices, PDA that have the power of a small PC, etc. These developments are powered by the technological evolution of distribution networks and therefore a technological discussion, which I try to avoid here. The evolution of media in the future will be based on human metrics not technological ones.

I see various ways to categorise media. Let me give you an overview of possibilities

The human senses and abilities

Text; Written media leave a lot to the imagination. The reader is mentally involved in “painting” the descriptions given. Other simultaneous activities however are hardly possible, because reading uses almost all of the human abilities.

Audio; Sound media, like talk-radio or music broadcast, deliver intensive amounts of information in a manner that leaves people free of deploying other simultaneous activities. Although not very warm in McLuhan’s categorisation, I think listeners involvement is high, because of the freedom of choice they have they concentrate strongly on the message.

Video; The consumer medium “pur sang”. No imagination is necessary. McLuhan describes this as a cold medium. But attention span of film and TV are long and intense.

Type of distribution – connections

There exists a fine analogy between distribution of information and physical transportation. Let’s keep it simple and ask the question why cars are a more popular choice of transportation than trains. You could see the car as a 1-on-1 solution, delivering exactly the transport needed, whereas the train is a broadband (1-to-many) type off solution designed to service large numbers at the same time. This is both its strength (cheap and easy to maintain) and its weakness (it never services the total need.

You can categorize types of media in the way they distribute information and how it is delivered. Broadcast, narrow cast, point cast pod-cast, and even cell-cast. All very modern categories. Actually the last two (pod-cast and cell-cast) have developed with new technological possibilities and are just variations on a theme.. I would like to stick to the categories below.

1-on-1: Or personalised marketing was a hot topic in the nineties off last century. Nowadays it is referred to as peer to peer communications or point cast. Tailor made information for the individual consumer. It is an entire range of techniques more than a media solution. Play-on-demand, My-space etc are 1-to-1 solutions in a many-to-many environment.

1-to-many: Normally referred to as broadcast. Aimed at anyone that can receive information at a specific time with a specific medium.

A variety on broadcast type of communication is cell cast. This means one message for all present in a certain geographical area, limited by the strength of the distribution signal..

Many-to-many; Also referred to as net cast. This is a networking technology used in social networking. It is not truly all to all but the individual user can take it’s pick from all information offered an can comment on it or offer information back to the community

And then there is POD-cast. Play on demand as you please for audio and for video.

Controllability

The fact that a consumer / user can control what is happening in the media he or she uses has a direct influence on the user involvement and attention. Controllable media are therefore closer to the skin, closer to you.

Non-interactive: There are a lot of non interactive media. Radio, TV, news paper, Bill Board, etc. Non interactive means that a spontaneous reaction to the sender of the information is not possible. Although some TV and radio formats allow listeners and viewers to react. I categorise them as non-interactive because one way response mechanisms are used here

Semi-interactive; Newer media initiatives on the Internet can be regarded as semi interactive. Discussions are possible with a delay like e-mail forums, Blogs etc. Direct contact is not possible.

Fully-interactive: In social networks the newest type of communication is fully interactive, based on Instant Messaging. Examples of instant messaging are SMS, MMS, Chat, and Video Conference. Not many companies offer this kind of communication possibilities to their customers. Direct contact is a threat to the internal business processes.

Accessibility

From the human perspective media have different modes of access. This access is not always a freedom of choice, something all customers value very much.

To illustrate the accessibility paradox I give you the following. Internet Telephony is free. Skype and VoIP are developments that have been in the centre of attention over the last few years. VoIP is very successful within enterprises whereas Skype in the consumer world has lost its momentum. Why should we ask?.

The explanation is fairly simple. Accessibility. When working on your computer in the enterprises intranet VoIP is always accessible. In the private domain of the consumer the transfer to the PC is just one step too much, when an adequate alternative is readily available. In 2007 internet telephony receded. This process will not restart unless “always-on” devices start servicing this “Internet Telephony”.

Although media development can be placed in a historic perspective, which I will do in a later stage it has developed in three basic steps

Random: From clay tablets and other “one off” productions. Up to the modern billboard. You’ll never know when you’re going to see it.

Switch on; Like TV, radio, newspaper and even books. Etc.

Always on: Only personal mobile devices apply to this standard, which in terms off communication possibilities is the ultimate state.

Operating distance

The human measure applies to media too. Only if media find themselves between 3 feet and zero space from its user full control can be used. Farther away and remote controls are used, limiting the freedom of control. The closer to the skin, the more trusted media are. And the more private they become. I’m totally satisfied that friend come to my home and watch my TV. If they want to use my PC it feels like an intrusion. Let alone my cell phone. No one come within reach. It is mine.

The distance comes with two other aspects. First the context in which you use a medium and which people accompany you. Secondly the span of attention a medium generates. Communication professionals will always search for the optimal mix. Attention and context. This creates the media value.

Span of attention

Some media create other or longer spans of attention due to the nature of the medium. Since the message is more important in creating true attention I will leave this aspect out of the categorisation.
Media have to be categorised along two axes;
Span and or depth of attention
User involvement

The future of screens

Research labs of all consumer electronics producers have developed new materials that can act as a screen. These new materials are known as OLED (Organic Light Emitting Diode) and they come in the form of textile like fabrics. You cab wear your screen, or hang it on the wall- The size is limited to the size of you room. Screens will appear in sleeves and provide interactive possibilities. Can a medium get closer to your skin, can it get more “trusted”. The medium becomes personal space.

It will be a fine age for privacy lawyers and digital burglars!

Summary

Means : All types of media distribution will convert into one wireless technology. Cabling, Fixed Switch boards, and other networking components will come to an end. This development will only be slowed down by Telco’s that need to stretch the earn-back period of their investments in fixed network components

Message : The integrated approach in the 4-steps will be increasingly tuned to the environment customers find themselves in…..made by the environment

Media : PDA+. The revolution of personal devices has begun and the days of the personal computer as we know it are numbered. Ajax technology enables devices to be whatever you want with Ajax server based applications. Personal devices will become more than photographing telephones. They will be personal assistants, projectors, book, game console and ……everything. Where will Microsoft go?

Relationship building

“A trusted relationship is one that grows and adds value for both parties without obvious economical drivers,”

The first time a child wants something out of reach it has an automatic strategy, it can’t talk, but it can draw attention. It cries and will keep on doing so until its needs are satisfied. At a certain point in time this kind of relating becomes counter productive for two reasons. Just asking for something is more accurate and keep on crying generates anger and frustration. More importantly, it costs a lot of energy.

When the child becomes more grown up it is expected to start helping it’s parents with odd jobs, shopping, cleaning etc. and not only exchange love, warmth and food, but also services. Working together adds value to a relationship.

In real life and in business, building relationships is alike

Dictionary.com Unabridged (v 1.1) - Cite This Source
re·la·tion·ship /rɪˈleɪ ʃənˌʃɪp/ Pronunciation Key - Show Spelled Pronunciation[ri-ley-shuh n-ship] Pronunciation Key - Show IPA Pronunciation
–noun
1. a connection, association, or involvement.
2. connection between persons by blood or marriage.
3. an emotional or other connection between people: the relationship between teachers and students.
4. a sexual involvement; affair.
[Origin: 1735–45; relation + -ship ]
—Synonyms 1. dependence, alliance, kinship. 2. affinity, consanguinity. Relationship, kinship refer to connection with others by blood or by marriage. Relationship can be applied to connection either by birth or by marriage: relationship to a ruling family. Kinship generally denotes common descent and implies a more intimate connection than relationship: the ties and obligations of kinship.
Dictionary.com Unabridged (v 1.1)Based on the Random House Unabridged Dictionary, © Random House, Inc. 2006.

Early marketeers and sales people used the billboard type strategy of drawing attention, either they shouted their message out loud or painted it on a wall. The latter is more sophisticated because it is not limited their physical presence.

With modern digital media at our disposal we can make use of different types of communication in order to build relationships. We still use billboards, but also newspapers, magazines, mobile phones, you name it. I think it is important to note that all these different media are treated differently by its users, readers or viewers. Each medium plays a different role in their daily behaviour. For a detailed overview of media and their possible use I refer to “Media Characteristics”.

The 4-step program

There is only one approach towards building trusted relationships. This approach enfolds in 4 steps.

1. Make yourself known, draw attention, shout and in doing so trigger an interested response. Get the attention without scaring people away.
2. Cover the interested response by allowing interaction as much as possible. This is the information exchange phase building the relationship creating maximum trust
3. Create a transaction
4. Maintain the relationship

The results in customer response should be measured at all times to be able to tune the messages sent or products delivered, achieving maximum customer response and involvement.

One could choose for a “black-box” kind of approach. This measures input / output of the whole system. This is like comparing marketing budget against growth of market share.

In the 4-step program a more detailed “step-by-step” measuring system is required throughout the relationship building process. This allows for predictable results against predictable costs.

The 4-step approach should be part of a long term plan, including marketing issues, predicted traffic (eye-balls) per step, media conversion traps (when transferring from one medium to another), Measurement schemes and direct links to internal business processes

This of course is a very generic approach, but is applies to all kinds of relationships. Even inter human relations as love (flirt, opening line, talk and …. maybe a kiss?) often follow this pattern.

All types of marketing communication have the same objective; to create a transaction. In order to achieve that transaction all 4 steps have to be defined. For each step an other medium, in combination with an other “information package”, is used. It may be superfluous to state that an integrated media approach is preferable because discontinuous information between the various steps will probably not establish the desired relationship. Customers will be confused. I strongly advise to create an interaction chart helping you organise this. It is dealing with three aspects
1. The steps
2. Company initiated information flow
3. Customer response

The final objective – the trusted relationship – can be achieved through customer participation. Until now this was hardly ever the case. The producer produced and the customer consumed. The value chain ended when the consumer had bought and consumed the product or service. With new interactive media at hand we are able to go beyond that and build true participation.

You can treat these trusted relationships as an extension of the company’s assets. These relationships are actually the value of the company. To maintain these relationships a different communication approach is required. The orientation on markets, or even target groups needs to be more sophisticated, more tuned to the individual relationship.

The customer or the transaction is not the end of our efforts. It is in fact the beginning of a relationship every company should desire. Companies need to invest in these digital relationships in order to have customers participate in their activities. Mobilise the customers force, it is your best asset. It has been well known for ages that the cost of maintaining a relationship is far less than the establishment of a new one.

In reality most companies stop servicing after a transaction has been realized, because they feel after sales service is too expensive. We all have experienced how tourists are treated (they probably will come here only once….). But customers are here to stay. Recent studies in the Netherlands showed that only 25% of customers were satisfied with after sales service by call centres. For the majority it was reason enough to turn to the competition. The total sum of telephone sales is still growing faster then internet sales. How can that be? Do customers have the need to grant the privilege of a transaction to someone of flesh and blood instead of a machine or a software application?

The customers changing role

To give you an idea of the differences in approach I related three types of orientation; market, customer and participation and compared relationship building, type of communication and the instruments used and their effects.

The matrix below shows the characteristics of these types of approach. I gave them each a value for; final objective, commercial attitude, weighing of competition, type of communication used,
type of organisation needed and last but not least customer involvement.

Meanwhile it is common sense that customers are willing to share their experience. There are enough examples showing customer participation enabling buzz marketing, based on trusted mouth-to-mouth communication.

Once one hits the right button relationship building accelerates exponentially in the digital environment. Fine examples are found on Youtube – getting world famous over night.

An other strong example is the Dutch Socialist Party’s (SP) election campaign of late 2006. Within three weeks a cleverly designed low-cost e-mail / video concept reached almost 2 million voters. In TV GRPS that is over 12,5%. Trusted communication, the talk of the town. In old media value that’s worth a lot of money. The number of seats in the Dutch parliament rose from 9 to 25. Go relate !!

Commercial Strategies

Hook-line-sinker

The fisherman’s metaphor. It connects the fish and the fisherman. It enables a relationship in which a certain amount of control is used over the other. Movements are registered behaviour is influenced and a transaction is made. To make the metaphor complete one should add “the bait” to start the whole thing off and last but not least “the rod” in order to influence behaviour.

Because of the unequal position on the different sides of the hook it is not a preferred relationship model, but it holds all ingredients that digital marketing and sales strategies should have.
. Bait to attract attention
. The hook stands for loyalty
. The line stands for relationship
. The sinker stands for measuring consumer behaviour and..
. The rod stands for the amount of control, but remember this works as a two-edged sword.

All strategies should consist of at least these five elements. The rest is distribution of the message.

DM like e-mailings, viral explosions, SMS cell cast to attract immediate attention and media transfer. Remember that customers do not like unwanted info. Use privileged addresses only.

It could be an email blast with built-in “mail-a-friend” options. This is only effective during a limited period in time. It explodes and then collapses. As with all explosions it should have critical mass. Start with at least twenty thousand addresses. Remember to build a database and be accurate to add and remove addresses when requested.

Semantic (- in context -) advertising.
Research shows that pop-up type advertisements irritate to a high degree, closely followed by colourful and blinking banners. Still most of the marketers or add distributors move billions of banners a month. The new and proven better way of advertising is text only and tuned to the context the user is interested in. When an individual visits a garden site on the internet he or she is probably not interested in mortgages. Maybe advertisements for lawn mowers generate higher hit rates.

Search Marketing is a type of marketing that is triggered by the one top activity in the net, searching. People search in the invisible word of the internet with so called search terms. From the advertiser’s perspective it is of value to appear in the top 10 search results, otherwise hit rates fall progressively. There are different types of search marketing;

Paid listing; Marketeers pay for specific search terms and sentences to appear top of list. The highest bidder comes first and the search engine cashes per click.
Contextual search; marketeers pay for certain terms in theme websites. The search terms are then highlighted in the text and the website owner is paid per click
Paid inclusion: This technique is used by companies that have too many products to sell. It becomes too expensive to buy and maintain the number of search terms. They communicate product listings with the search engines instead. In terms of hierarchy paid listings come first in the list.
Site optimalisation: This technique is executed by companies themselves. Inclusion of frequently used search terms in the website content and creation of links to the website are most common.

Ambassador strategies are very powerful. The trusted relationship between the ambassador and customer is must a more trusted one than between supplier and customer. In the digital environment ambassadors could play an important role but be careful. If customers get the idea that ambassadors earn money in their role as ambassador the game is over. If I told you the pizza in the restaurant around the corner are of excellent quality, there’s no reason why you should doubt me, as long as my opinion comes to you as an independent third party.

There are many other “event-type” marketing possibilities with very military names. We use them in traditional sales too. Circumvention, Guerrilla, Underground etc.

In the digital environment new communication strategies become possible since customers gather indifferent fashions. They ICQ, MSN, SMS, Twitter, Google, Tube and Profile. These new environments hold strong marketing promises since the fact that customers give away a lot about their behaviour and interests. One should realize that the 4-step approach is always applied; Attention, Information, Trust & Transaction and Relationship. It could be wise to use a mix of different types of media to do the trick.

Social buzzing (spread the word) on the web is becoming an interesting phenomenon as in mobbing (events in the real world – be on…. Square tomorrow at 18.00 pm and wear an umbrella). It looks like an artistic type of performance but just these types of expressions explore the new possibilities of people and machines working together in a new type of society. Commercial initiatives will follow suit.
Summary

Means : The network to support all of these techniques is almost ready. The new IPv6 machine identification system will revolutionise the networks possibilities and its ease of connectivity

Message : Messages will be tuned strongly on the final goals, since context and trusted referral behave as image and brand marketing type of approaches

Media : The penetration of more and more sophisticated personal and mobile devices will boost personal marketing.

Innovation

"When I examine myself and my methods of thought, I come to the conclusion that the gift of fantasy meant more to me than my talent for absorbing positive knowledge. (Albert Einstein) "

Business Intelligence is usually the approach towards enhanced results. Normal logic and common sense will do the job. There are however situations that ask for a different approach. When the boundaries must be pushed, when something new must be introduced to solve the problem or out smart competition. We often refer to this as innovation, but what is innovation really.

The dictionary gives three possible interpretations;

Sense 1
invention, innovation -- (a creation (a new device or process) resulting from study and experimentation)
· creation -- (an artifact that has been brought into existence by someone)
Sense 2
invention, innovation, excogitation, conception, design -- (the creation of something in the mind)
· creativity, creativeness, creative thinking -- (the ability to create)
Sense 3
initiation, founding, foundation, institution, origination, creation, innovation, introduction, instauration -- (the act of starting something for the first time; introducing something new; ``she looked forward to her initiation as an adult"; "the foundation of a new scientific society'' )
· beginning, start, commencement -- (the act of starting something; ``he was responsible for the beginning of negotiations'' )

The first is the introduction of a radical new design mostly of a physical nature. The second refers to the creation of new concepts in thinking and the third to a change in appearance (age, organisation etc.) This is of course only part of what innovation is about.

There are situations where a status quo is reached and there is no need of radical change.

Is the renewal of a pricing schedule an innovation, is the change of packing material innovation or just a change in market approach. I would like to think differently.

Life Cycle Positions

Every product or service knows three lifecycle stages;
The technology stage ( based on the introduction of a radical new technology e.g. electricity vs. steam). At first small innovation steps leap-frog each other in rapid succession. Later on the dominant technical design arises and is no longer a competitive force.
The marketing stage (based on the company’s or product’s image). In this stage functional attributes are added and enhanced. They are competitive until even these enhancements die-out.
In the third stage it is all about production and distribution. The product price is the main driver so new production and distribution formulas will be developed.

In my perception innovation applies to the introduction of a radical new approach. At the end of a products life cycle when cost efficiency is the main driver companies have to find a way out of the snake pit. They are used to work with the dynamics of their own market and it is hard to think out of that box. Common sense is not sufficient to solve the cost/investment dilemma. It is time for creation. Time for something new.

It is well known that true innovations are seldom the result of activities of established companies. With the rise of new technologies the early adopters (often only one or two individuals) create the radical new design.

Can companies that are aware of their life cycle position create or facilitate an innovative environment? I truly think so!. But there are rules to follow.

Innovation process model

First of all you have to realize who you are and where you stand at any time so you will not be taken by surprise when your margins diminish. Secondly you have to have a vision of the future. A roadmap to achieve that future and a strategy framework that gives room and funding to move to forces within or without the company

When you plan to organize innovation you should apply a kind of innovation process model, in which you define steps, targets to achieve and parties to involve. You’ll have to be aware that internal sales of these activities and participation off key personnel are paramount. If you fail to install a mechanism that allows for participation and knowledge sharing you’ll probably end up spending money on a one off project instead of adding permanent value.

In my capacity as business development director for a Dutch based ICT company I had very good experience with my cooperation with communication and marketing staff. All innovations were presented both internally and externally, creating a sense of success with both customers and staff.

The figure above shows how a typical process model could look like. Every stage begins with the plan from the stage before and delivers intermediate management information and information exchange with the standing organisation.

Laws of innovation

I would like to add my laws of innovation in an arbitrary order. Of course this list is incomplete and does not apply to all circumstances. It is mainly meant as a source of inspiration;

Conceptualize ideas and then criticize them and put them to the test.
1. A launching customer is only the beginning
2. Human metrics dominate the success of new innovations
3. Adoption of new services / products do overthrow the market with the speed of human aging
4. Never innovate within the standing organisation, old and new will fade each other out, resulting in high costs and bruised egos.
5. Life cycle behaviour (innovate, optimize, consolidate, produce ) end of life cycle
6. Willingness of organisations to listen to its and other “consumers”
7. New innovations at the end of life cycle are almost always integrated value propositions, rarely created by the traditional market leaders

And specifically for media companies

8. The gravity of content reduces due to the introduction of newer / smaller and more divers carriers (Internet TV, digital TV are mainly theme targeted) e.g. content will circulate faster. BREAK UP THE CONTENT BUNDLES
9. Creator roles will be more distributed due to specific interest / target audiences

And what do you think of John Thackara’s laws posted at www.openingdoors.com . Innovation never sleeps!!
Power Law 1: Don’t think of a new product. - think social value.
Power Law 2: Think social value before tech.
Power Law 3: Enable human agency. Design people into situations, not out of them.
Power Law 4: Use, not own. Possession is old paradigm.
Power Law 5: Think P2P, not point-to-mass.
Power Law 6: Don’t think faster, think closer.
Power Law 7: Don’t start from zero. Re-mix what's already out there.
Power Law 8: Connect the big and the small.
Power Law 9: Think whole systems (and new business models, too).
Power Law 10: Think open systems, not closed ones.
Posted by John Thackara at July 18, 2006 02:54 PM

Open source innovation.

When radical new approaches are needed good logical thinking is normally not enough. New and creative angles have to be found. But how do you generate creativity. Can you stimulate people that run a ground in a complex situation to think differently about the challenges they are confronted with?

Of course you can, but I you need techniques and sources. Fresh views from outsiders, analogies from different markets, products, countries or, highly favoured in scientific circles find analogies in nature. The perception of someone confronted with a dilemma is usually limited to a small circle. Open source approaches can resolve this problem.

Workshops

When you know what or who you are you’ll probably know what to do. There remains one last question. How are we going to do it.

I advise companies to take time to think things over and work together on this issue. I have done many workshops with different types of companies in healthcare, finance, retail, publishing etc. We were well prepared sending questionnaires about the ten most relevant issues to key personnel. The results were always presented by the most senior officer at hand, preferably the CEO.

Although every company requires a different approach there are some issues that have a generic character.

When starting a workshop we always took time to change the group’s attitude, to have them think out of the box. We used poetry, arts, association techniques and made a lot of fun.

Secondly we established the rules of engagement.
o Everybody’s opinion counts .
o All participants are equal
o If you criticize you’ll have to bring in an alternative
And so on..

During the third stage of the workshop we went to the idea generating phase. Everything is possible and criticism is not allowed.

In the fourth stage we went through personal presentations of the current status and the personal views of all participants.

Finally we went back to the idea stage and projected the ideas on the current situation. This resulted in a vision of the future, priorities of change and in the end in a mini business case, which had to be enhanced after the workshop.

The business case was the framework for change and all participants had their share in creating it. All workshops came to the same conclusion.

o We whished we had done this before.
o Finally we had time for each other
o These were the perfect conditions to make us use our knowledge to our advantage
o Now we understand each others challenges
o This improves our team spirit

The execution of the business plan made is yet another issue. You’re your company must specialise in change management itself, because this is only the beginning. Be careful making your company dependent on other companies knowledge. We’ve all seen what the IT business is capable off

We stand at the beginning of an era in which customer relationships will be changing constantly. The company that stays closest to itself will have a competitive advantage

You must realise that these types of innovation are so important that you have to do it yourselves. Implement a change team, look at the governance issues and above all repeat the sessions on a regular basis and evaluate progress.

To address innovation inside a company key personnel must work closely together. In the last ten years I have facilitated workshops in various lines off business like: Health Care, Retail, Finance, Publishing, Logistics and Education.

Let me give you an example of the proceedings

Antwerp September 2003
Gathering of senior executives of a commercial bank.
Topic; Innovation

Quick Scan

We used a method that gives a brief overview of a company’s status regarding innovation. If you use this model, remember to ask your key personnel (ICT, Marketing, Communication, Strategy and Operations to fill out this form. When you aggregate the result into one form you can execute a gap analyses in the form of an open discussion with the professionals involved.

The quick scan addresses various fields like vision, strategy, goals, innovation process, knowledge, people and reward.

The results of the discussion will give insight in;
o Do we address innovation adequately on a strategic level
o What does my company think about its innovative performance?
o Do my people feel free enough to innovate
o What do we need to do next.

We had key personnel fill out the form for the current state and then repeat the same routine asking where the organisation should be.

The answers surprised us because the results differed. It was a fine start to creating the right conditions for innovation. We discussed the findings with the entire staff and drew up an action plan to increase the innovative capabilities of the organisation.

Once you have an idea on innovation organise it according to the two sets of laws I presented earlier.

Summary

Means : The true driver behind innovation is an open eye, an open mind and common sense. This implies the recognition that in certain situation common sense is not enough. Mobilise the right force within your reach.

Message : Innovation is a sign of strategic leadership. The why and how is the message to send. Include all stakeholders.

Media : The best way to facilitate innovation is to free the best minds available and resolve their possible financial worries.