Are Free Customers Better Than Captive Ones?

Doc Searls talked about two wrong things and one right thing.

Wrong Thing #1

A random startup founder: “Sales are great! We just closed our second round of financing for 25 million dollars”

Every business has two markets:

For goods and services (to your customers)
For itself (to investors)

During the tech boom number 2 was more important than 1. According to Searls we are in a tech boom now. The conceit of big data today is that the system understands better what you want than you do yourself. Searls deconstructed the concept of the loyalty card which started as a concept in the early nineties:

His main point: they don’t work are a bad idea and are just a retail fad. Read more here

Wrong Thing #2

Avoiding customers and treating them like cattle or worse. It is now standard practice to talk about “acquiring,” “capturing,” “locking in,” “owning” and “managing” customers. On the net we use the client/server metaphor a lot (that was chosen because slave/master didn’t sound good). The cookie is the main tool for the server to keep track what is happening with the client. Searls tells us how Phil Windley writes up the history of ecommerce:

1995: Invention of the Cookie.

The End.

The one right thing

Loving your customers and letting them leave. He uses Trader Joes as a an example:

No gimmicks
No advertising
No loyalty cards
No discounts
Don’t do retail trade shows
Never say “consumer” (always say “customer”)
Marketing = talking to customers

Vendor Relationship Management (VRM) Movement

Project VRM started in 1996. Its goal is to provide tools that make customers independent of vendors and better able to engage with vendors. Basically to create instruments of personal intentions. With VRM the customer drives. A couple of examples:

Run your own personal cloud. Examples include Mydex, Azigo and Trustfabric
Program the way your cloud interacts on the live web. An example is kynetx.
Set your own terms of service. It should be possible to say things like: “don’t track me outside your site or service”, “give me my data in a usable form that I specify”, “wipe my data when I say so”, “here is my fourth party who represents me” or “here is my trust network”.
Get full value from your digital assets. See pde.cc.
Personal Request for Proposals (RFP): “I have 200 dollars and need x and y”

Summary

Free customers will always create more value than captive ones. His new book The Intention Economy will be out in May 2012 and more information will soon be available on the Customer Commons website.

The Future of Work and the Free Radical

The following introduction sketches the problem that this panel tried to address:

How we work is changing. But where we work isn’t. Over the last ten years a new way of working has emerged, along with some people who live it every day. They’re available 24/7. They network endlessly, and then plug their skills into others’ in surprising combinations. They choose when and how they do what they do, on their terms. They don’t want job security – they want career fluidity. We call them free radicals. And they’re creating the future of work. But when they look for a place to do all that, the options are weirdly outdated: office, home, or on the go – say, a café. Those are actually poor choices. Offices mean fixed cost and daily routine. Home is isolated and full of distractions. And cafés get old after the second latté.

The speakers at this panel were from Grind (beautiful concept and beautiful website, check it out!), the Freelancers Union, Coolhunting and Behance.

[vimeo http://vimeo.com/28636306]

To connect somebody to the workspace now comes at the same costs and space requirements of a single laptop. This is happening in a time where there is a big amount of distrust towards big corporations. The space for free-radicals is growing fast (it will grow 25% in 2013). We seem to all become a little more selfish: we expect to be fully utilised, do what we love, work on our terms, we have little time for bureaucracy and want more meritocracy. If you are in a job that doesn’t give you these things, then because of the lack of fraction for doing something for yourself, you now have few excuses for going on working for large corporations. One excuse that is still there is the lack of economic security (things like health insurance). The infrastructure for creating that safety net is now being build around the power and resources of the group.

Scott Belsky talked about how we can create the feedback, refinement and discipline that comes with working in large organizations for free radicals too. Promotion doesn’t exist anymore as a way to gauge your progress. He expects to see meritocratic communities spring up to fulfil this need and co-working spaces to help this process.

It is now increasingly possible to be a free radical inside a company. It is possible to adopt this methodology of work within this corporate structure (to be honest: this is something that I am trying to do more and more myself). The more successful you are in doing this, the more likely you are to do your best work. There are two clear benefits for this for companies: the first one is the real estate costs going down, the second is the advantage to have a more fluid way of pulling together a bespoke team of expert free radicals and make proper use of talent. So it makes sense for organizations to try and reduce the friction to make free radicals succeed.

One problem is that our current education system doesn’t prepare us for this kind of life- and workstyle. High schools are trying to mimic the cubicle workplace (via Audrey Watters):

Highschool trying to mimic a cubicle farm

One thing that is enabling this free radical revolution is the democratization of professional tools. You used to have to “join the mothership” to be able to get access to the tools you need to do your job. Now you can get these tools for 99 bucks. The documentary PressPausePlay addresses this point:

[youtube=http://www.youtube.com/watch?v=MterbpYTyjM]

Personal marketing is very important. There is a little bit of a taboo around self-marketing in the creative world, but you have to spend some time making sure people can see the work that you have done. This led to a little bit of a discussion on whether free radicals need some sort of collective brand. The panel was divided on this: some thought it was a bit contrary to the point of being your own (wo)man. Others thought it was important to popularize the notion and one panelist even thought it was very important for the movement to put a proper label on it and create a group identity.

Get Lucky: Create Serendipity to Spur Innovation

This was a big panel (five people from IBM, Deloitte Center for the Edge, Dell and the Community Roundtable) talking about serendipity. The word serendipity was coined by Horace Walpole who formed it from the Persian fairy tale The three princes of Serendip. The session was introduced as follows:

Call it chance, luck, or juju, serendipity is the act of unexpectedly finding something of value. It is the muse of innovation and a silent driver of business; consider how Alexander Fleming’s accidental discovery of the antibiotic penicillin revolutionized medicine, reducing suffering across the entire world. From the world changing to the mundane task of finding relevant information on Google+ or Twitter, serendipity is the mysterious force that gives us the breaks that many of us seek. But what is serendipity? How do you encourage it? Is there a downside to it? How does it apply to work, art or play? Can you design for serendipity? We say you can and should. Whether you’re building the next super social network, doing scientific research, or building a community, there are steps you can take and skills you can develop to help you recognize and act on it. It is more than just naturally being fortuitous; rather, it takes practice to get lucky.

A very quick defition of serendipity would be: “the accidental discovery that leads to unexpected value”. How does innovation relate to serendipity? Innovation (unlike invention) needs to be accepted by society. There are things you can do to increase the chances of serendipity. One panel member calls that “facilitated creativity”. Interestingly this was the second time this week that I heard somebody recommending to have community management at the executive level. Why? Because facilitation is critical especially in virtual spaces. They then talked a lot about what kind of conscious design decisions you can make for your physical spaces when you want to encourage serendipity. These were a bit obvious (“obvious” would be my summary of the session): long lunch tables, open spaces and unconference type meetings, diversity in the room, introducing constraints, transparent glass walls, etc.

Kulasooriya made an interesting point: ambient location technologies (as discussed by Amber Case) will make cities even more important as “spiky places” for serendipitous connections. A term that relates to this is “coindensity”.

Developing for a Consumerized Enterprise World

George Ishii (founder of GENi which spun out Yammer and Sizhao Yang (one of the creators of the horrible but effective Farmville before it was sold to Zynga) both have a big history in the startup world and are now working on BetterWorks. They talked about the trends in business software.

When you think of enterprise software you think of big monolithic software like Oracle that costs multiple millions of dollars, you have an army of consultants implementing it (based on a series of requirements) and the implementation takes months. The price point of this software was high, because the only way to distribute this type of software was through an expensive sales force. The focus was on the decision maker, rather than on the user. The interface didn’t matter: who cares what the end-user sees? ssFrom around 2005 the consumer Internet started to create a whole new set of expectations from this type of technology. These expectations are created a shift in the type of enterprise software that gets created.

Ishii described five best practices for designing for consumer enterprise software:

Instant gratification. The first encounter with the software should create value for the user immediately. Two questions are important: What is the goal? How do we educate the user?
Focus on smaller workgroups. Allow managers of smaller groups in an organization to adopt the software at a local level. This means you could also create a first experience for the manager and that it should come with a low pricepoint. Virality in the distribution mechanism can only come from the small workgroup.
Design matters (he showed us the ultimate bad example: LingsCars. The age of boring interfaces is going away and we are getting a new fun and friendly visual design sensibility. Design is not just about being pretty, it is also about information architecture and how you deal with the cognitive load of the users (that is why you use round corners versus sharp corners).
Use before you buy. IF you allow the user to try the software then they will focus less on long feature lists. Again you should focus on activities that create value. You are bringing the tail end of the sales process into the decision making process.
Incentivize distribution. Adoption of enterprise software is really hard. One one of doing this is to make sure that people share. You can reward viral behaviour (compare how Dropbox gives out 500MB of space for a successful referal). Good designers will design “nudges” for reinvites. Another incentive you can use is privacy (SlideShare is doing this). The distribution should be an intergral part of the solution you are offering to the customer. The biggest thing you can do though is to create engagement.

There is a whole new category that is starting to transform different verticals like HR, PM, Storage, Communication, Collaboration.