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November 29, 2013

The Exciting Potential of Digital Finance

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 5:44 AM

Jeff Berwick on Fox Business: Is Bitcoin the currency of the future? [Source: http://www.youtube.com/watch?v=UC_s3sRZFFg]

When consultants and academics speak of a disruptive innovation, they usually mean that the new entrant disrupts a market. If we take a long, hard look at Bitcoin, however, we see that innovations can also disrupt the people who develop and use it.

For those unfamiliar with Bitcoin, it's digital currency. What drove its initial development was its proposition - that it exists solely in the digital world and away from the control of government regulators. The values of other currencies can rise and fall when a government's central bank decides to print more paper money. Because Bitcoin is digital and there is a finite number of them, the expectation is that it won't be prone to such devaluation.

Of course, the idea behind is different from how it's played out so far. Speculators have hoarded Bticoin just because there are a finite number of them. And when banks around the world decided to shun the currency, its value took a tumble. The people and businesses that make transactions using Bitcoin, therefore, have dealt with their share of disruption. It's a kind of disruption I'm sure they'd rather not have.

Whether you like it or not, the concept behind Bitcoin is fascinating. In the digital age, shouldn't we be able to pay for things and transfer money around in the flick of a switch? The promise of the Internet is that anyone, anywhere with an online connection can transmit a message to anyone else. Why can't the same be true about money? It's interesting that although the Internet has become another way of sending mail, the way we send money remains largely the same as it was a century ago.

Having a middleman - a financial clearinghouse, for example - is supposed to lend stability to cross-boarder monetary transactions. But detractors of that established model would say that in the digital age, where there are no boarders, no middleman is necessary. And therefore having one is a redundant and costly part of the financial process.

If a currency is regulated and doesn't allow its users to be anonymous (and to be without a national identity), then what's the point of a new digital currency? The term I've seen used to describe the promise of Bitcoin is "peer-to-peer." If a transaction involves only the buyer and the seller and not a middleman, then it becomes seamless - and less costly as well. That's not only the promise of digital finance; it's the promise of the entire digital world.

It's not surprising that Bitcoin has the potential to be disruptive. It arose out of the global economic crisis, when consumers became more skeptical of global financial institutions. Even one of its first and major online exchanges, Mt. Gox, was designed, they said, with the consumer in mind. True, the exchange is facing its share of issues. But the fundamental idea that digital consumers should be free to make transactions in such a way that they don't have to involve central bank-regulated currencies is bound to remain popular.

We are incredibly familiar with providing solutions to the financial services sector that help enterprises offer a more seamless experience to their customers. That's why I think the people behind Bitcoin, love them or hate them, are on to something. They're addressing the needs of modern, digital consumers who are seeking more efficient and effective methods to conduct transactions. For now, people blazing a trail in the world of digital currencies are experiencing a lot of growing pains. But so did pioneers in other industries. I predict that because the idea of a borderless, unregulated digital currency is a sound one, eventually there will be plenty of online exchanges and ways to conduct business in such a way. Getting to that point will be a rocky journey.

November 27, 2013

A 100-Year-Old Idea Is New Every Day

Posted by Rohit Kedia (View Profile | View All Posts) at 4:31 AM

How Ford's Assembly Line Has Changed Over 100 Years [Source: http://www.youtube.com/watch?v=cxjZ2VT9lFU]

One hundred years ago this month, the automaker Henry Ford stretched a 150-foot rope down the length of his manufacturing plant, attached it to a winch, and - voila - the moving assembly line was born.

Such an assembly line arose from the basic need to manufacture a product - in Ford's case, automobiles - fast enough to keep up with consumer demand. Up until 1913, the production of a car typically involved a team of skilled machinists who would build the model from the ground up.

The assembly line was innovative because it assigned a single task to each of the workers along the line. The workers repeated their tasks on each car that came down the assembly line. This format meant the worker didn't necessarily have to be a skilled machinist. Because the work often involved simply affixing a part to the body of the car, a worker with fewer skills could be hired.

In turn, more people could get employment and develop their skills on the job. In just a few weeks, the assembly line reduced the time it took to manufacture an automobile to three hours from 12. So why, you ask, am I dusting off this interesting piece of industrial history? Well, we live in the digital age, when bits and bytes of information can travel around global networks in seconds. Yet the moving assembly line, which is a century old, is nevertheless an innovation in progress.

The 100-year anniversary of this concept got me to thinking that innovations aren't static things. The best ones are constantly evolving in order to meet the latest needs and expectations of consumers and organizations. Think of how the assembly line has changed: It originally was well suited to manufacturing one model. Automakers cranked out what was essentially the same car time and again, even if it had slight modifications such as differently colored paint jobs.

Today the moving assembly line allows global companies to do just the opposite. They utilize what is a 100-year-old concept to differentiate their products. That's because assembly lines are automated and powered by high-tech computing platforms that can respond to requests from customers in the blink of an eye. Suppose a popular movie comes out that has as its penultimate scene a car chase in which the car driven by the hero is a distinctive shade of yellow. Overnight, car buyers flock to showrooms in search of a car in that color. There is no gradual ramp-up to producing enough yellow cars to meet that new level of demand - the assembly line's robotic painters spray the optimal number of frames to meet demand. What was once an innovation that mass-produced is now an innovation that customizes.

The moving assembly line also helps consolidate an organization's products or services. If, to use a different transportation industry example, an airplane manufacturer discovers that two of its five jet bodies are in much higher demand, it can make its assembly lines produce a greater variety of planes using the two most popular models instead of spreading them across five. In a cost-conscious market, companies can refine their manufacturing strategies to build more from less.

Therein lies the power of transformative innovations. When a fundamental technology is so profound that it disrupts the market, there's no reason to change the underlying concept. Sure, engineers, scientists, and even organizational experts can tweak the technology to be more applicable to the demands of the current marketplace, but the innovation in and of itself remains solid and unchanged.

Maybe when we make incremental improvements to innovations with which we are already familiar, we're becoming a more efficient part of the enterprise. The best of us can take an idea that's a century old and teach it new tricks.

November 25, 2013

How the Market Catches Up With Innovation

Posted by Ravi Kumar S. (View Profile | View All Posts) at 10:05 AM

Digital Innovation at IFA 2013 [Source: http://www.youtube.com/watch?v=wWuvYaMnlwo]

We are often very good at tackling whatever challenge lies ahead of us. But sometimes we lack the ability to step back and see the big picture. How is it that we can put a man on the moon but there isn't a gasket good enough to stop that pesky leak in my kitchen sink? Are basic plumbing fixtures beyond the reach of our prowess when we now we can accomplish so much more?

The answer is that the markets are curious things. And we consumers make them that way. What a company's consumer base wants can be different from what that company can provide. The keys to success are predicated on being able to discern how to meet the expectations of consumers.

When we first set about analyzing the responses of 5,000 digitally savvy consumers across Australia, France, Germany, the United Kingdom, and the United States, we were fascinated by the disconnect that can occur when enterprises set about on their innovation journeys without the customer in mind. They do so at their own peril. In the digital age, consumers will tell an organization quite a bit about their buying habits if that organization will simply calibrate its resources to listen.

Infosys followed its Engaging Digital Consumers survey with another piece of seminal research - the State of the Store survey. What we found is that retail customers overwhelmingly have a fairly good idea of what they want before they shop - especially if it's a bricks-and-mortar store. If they happen to make their decisions in the store, those purchases are usually about fresh food or snacks and confectionary items.

Here's where it gets even more interesting: Consumers say that they are unlikely to interact with brands and retailers through their digital channels. More than seven in ten consumers (72 percent for brands and 74 percent for retailers) do not use retailers' and brands' Facebook pages, Twitter profiles, Web sites, or news feeds. Some of these brands are part of influential Consumer Packaged Goods companies that are not at a loss for excellent Web sites and social media efforts. It's just that consumers are hard-wired to do their brick-and-mortar shopping like they used to in the days before digital communications.

So what's a global CPG company to do? Well, that's where the right retailing solution comes in. Shelf placement, in-store promotions, and ensuring an item is in stock are three critical aspects of global retailing. Enterprise can facilitate all three by using that same digital technology to make certain that shoppers have a seamless experience. Whereas retailers used to look at Web commerce as separate and distinct from the bricks-and-mortar experience, they're now using the same digital tools across platforms. The idea is that when a consumer enters a store, she might receive a targeted ad on her smart phone that alerts her to a special sale. Or she might even get directions as to where certain products are in the store.

If these features sound a bit like shopping on a Web site, then you're not alone. Increasingly it doesn't matter where the shopping takes place. What matters is if the experience is seamless for the consumer and targeted for the retailer and brand. Our research shows that over a quarter (27 percent) of consumers who shop online do so because of the ease of finding products. If that same principal translates to a bricks-and-mortar store, customers will be likely to try to new products and brands because they're essentially staring them in the face.

It turns out that the same drive and innovative spirit that does things like send a man to the moon is now being used to redefine age-old experiences such as a trip to the store. Although the store is closer and doesn't require a rocket, the journey is nevertheless one based on a sophisticated interplay of technology and analysis.

November 22, 2013

The Internet of Now Changes Our Definition of "Experience"

Posted by Mohit Joshi (View Profile | View All Posts) at 4:30 AM

Why we made a new browser for the iPad [Source: http://www.youtube.com/watch?v=PY23b1X9mAM]

The world becomes more palatable when we assign things numbers. We know the date and time by number. And everyone understands the development of the Web through its numerical sequences (1.0, 2.0, etc.) But what if we were to skip the numbers and simply refer to the online world as the "Internet of Now"? What would we discover?

For starters, we'd realize that numerical identifiers are a bit restrictive. The world of digital communications is always changing, so it's best not to limit the particular stage of its evolution by assigning it a number. If we really wanted to document that change, we'd find that every day we'd be experiencing a new Web (2.001, 2.002, and so on).

The Internet of Now, on the other hand, allows us to live in the moment and make innovations without being encumbered by monikers. A Scandinavian scientist uses the term to refer to the fact that Web sites are no longer the simplistic things they were when a URL address bar was all we needed to navigate the online universe. When you think about it, using a URL to negotiate the Web today is like taking to an expressway in a horse and carriage.

Today's smarter organizations are all about being conscious of their digital consumers. So much so that companies often learn more about their value propositions from the people who buy their products as they do from their internal strategists. Knowing the digital consumer begins with being able to meet his or her expectations. Part of that effort involves knowing to what extent the consumer will be engaged over a mobile device or on a laptop.

Think about the search engine you use every day. It's indispensable, right? Well, without even realizing it, chances are it serves you as more of a recommendation engine. In some ways, your computing platform is searching you. It comes up with recommendations for what to do, where to drive, and how to get there. Such a development changes the very essence of how we experience our lives. Indeed, as organizations become savvier as to how they engage digital consumers, they're coming to the realization that one size doe not fit all - especially when it comes to Web browsers. When a consumer is using a keyboard and mouse, an online shopping experience is far different than if she were to scroll down the screen of her smartphone.

That scientist I referred to has invented a new browser that, I think, stands as a wonderful example of disruptive innovation. For the better part of two decades, we've viewed the act of navigating the Web as an exercise in surfing. Instead, she looked at the activity of today's digital consumers as something a bit different. The term she uses to describe navigational activities in the Internet of Now is coasting.

Without getting into the minutia of this new Web browsing concept, a consumer can view sites on smartphones in a more mobile way. That is, she can view pages without a plethora of tabs that always seem to demand her attention. She can scroll up and down but also side to side and let whatever Web site she's on take her to new and unexpected places. A reviewer said that if the Web site were that of a news organization, he was likely to read more of the articles because of the way they were organized for the mobile site.

Great innovations don't have to be earth shattering. They can be subtle and change the way we look at the world in incremental but important ways. In the case of the new browser concept, people stepped back and asked why the basic structure of a Web browser hadn't changed in 20 years. By not being constrained by a Web 2.0 or 3.0 and instead living in the digital moment, we can take a fresh look at how we communicate and what moves us to do what we do online.

The markets are positioning themselves for new entrants who don't feel limited by Web sites that for a long time were structured in a traditional way. Just as our devices are changing, so, too, are the formats by which we connect to each other. And that changes the definition of experience for everyone.

November 21, 2013

Innovation Doesn't Always Mean Disruption

Posted by Simon Towers (View Profile | View All Posts) at 6:19 AM

Anke, Assistant Vice President for Research and Innovation - L'Oreal USA R&I [Source: http://www.youtube.com/watch?v=-BBBCubLltQ]

Part of any innovation journey is to create a major market disruption, right? Well, you don't have to be quite as dramatic as many of us have believed.

There's nothing wrong with redefining the marketplace and introducing new products and services. But the most effective and lasting innovations are relatively small and methodical over the long haul. A vast majority of us are people who constantly innovate but haven't necessarily developed earth-shattering ideas that redefine the market.

One of the statistical givens of the world of finance is that the greater risk you take, the greater the reward. It's why some huge financial institutions give great leeway to their proprietary trading desks. Those financiers are experts at trolling the capital markets for arbitrage opportunities. They can make enormous returns when they buy the right security or take the right position.

I use this example from the world of finance because there are parallels between financiers who work on prop trading desks and organizations whose mission it is to innovate. Sometimes an enterprise will make a huge bet that an invention will transform the market. They put a lot of funding and energy behind its development. If the idea catches on and succeeds, then the enterprise might have a lucrative, new business line on it hands. If it doesn't make a splash, however, the organization faces the reality that it spent a lot of money and time on something for which it might not see returns.

Looking at a large sample of publicly traded companies across major sectors and industries, it seems that the most successful enterprises are those that attain a certain percentage of big bets on innovation. Just as prop trading desks at banks might make several trades a day that are relatively safe and make them modest margins, companies are most successful when they allocate a fairly large share (about 70 percent) of their time and money to modest innovation initiatives.

These companies allocate about 20 percent of their energies toward more risky projects where the assumed payoff is larger. They only spend 10 percent on the big-ticket projects that are aimed at transforming or disrupting their market. It's a bit counterintuitive, isn't it? For some years now, management theorists have rallied around the belief that true innovation is more of an all-or-nothing scenario. The enterprise that moves mountains, so to speak, is the true innovator. Yet it's really those steady, smaller steps that pay off.

The modest innovation initiatives that account for 70 percent of a successful company's activities often involve looking at existing products or services from a fresh perspective. Think about the major fast food chains that sell pizza. A few years ago some of them introduced fresh breadsticks to their menus. Doing so wasn't a major market disruption. They merely took the pizza dough they were already making in their restaurants and packaged it into a different form for diners. These restaurant chains didn't reinvent the wheel (or in this case, the pizza!).

All industries have unique characteristics and challenges. But for the most part, successful enterprises innovate on the assumption that the financial return on riskier innovations is more lucrative. Again, it's not unlike high-profile traders at financial institutions. The ten percent of innovation activity that's allocated to the big-ticket, transformative items can result in 70 percent of a company's returns.

It stands to reason, then, that when the big-ticket items succeed and account for 70 percent of a company's total returns, then the modest initiatives account for only 10 percent of returns. But as we all know, those riskier projects don't always pan out. If they did, we'd all be throwing caution to the wind and actually discouraging modest improvements and ideas.

November 18, 2013

The New Value of Information

Posted by Sandeep Dadlani (View Profile | View All Posts) at 9:39 AM

Its all aboard for Twitter's IPO [Source: http://www.youtube.com/watch?v=jXNqG1YXbuI]

There's an old proverb that says: "May you live in interesting times." For those of us who are alive today - creature of the Information Age - it can't get more interesting.

Take the story of Twitter, for instance. The company recently made headlines all over the world because of its red-hot initial public offering. Essentially it was a Web-based service that offers micro-blogs to hundreds of millions of followers around the world. And when I say micro, I mean it: No tweet can be longer than 140 characters.

That said, Twitter arguably stands as the most interesting product of the Information Age. I propose this point because if we as a society value information, then it's certainly a feat for a company that delivers such small doses of it at a time to be valued so highly by the market. Twitter had a market capitalization of some $14 billion just a week after its IPO. If put in the context of one tweet, that's nearly $825 million per character! In fact, Twitter's stock price has never dipped below $39. With nearly 473 million outstanding shares, the company's market capitalization has never been less than $18 billion.

It's not just the usual suspects who utilize Twitter. Princes, popes, prime ministers, and presidents use it. We all seem to have a penchant for relaying, as succinctly as possible, the minutia of our daily lives to the rest of the world. Who would have thought the concept behind this company was even possible ten years ago?

The light-speed by which tweets entered the daily vernacular is a testament to how entrepreneurs can create a smarter organization. We often give lip service to market disruptors and creative destruction. Indeed, in the case of taking an existing technology and transforming it into something new, the Internet seemed to be played out. But then came social media. That, too, seemed destined for market saturation and maturation by some keen players (Facebook among them).

But what Twitter's founders did was to take a big picture view of that market and simplify things in a very elegant way. What the world had in 2006 - the year of the company's founding - were plenty of long- and medium-form information sources. What Twitter did was to tap into the desire for information presented in its most basic and elemental form.

During the past few months, Infosys has undertaken two notable surveys into 1.) the evolving nature of the digital consumer and 2.) how retailers can create ideal stores around them. Both surveys demonstrate the need for savvy enterprises to address the expectations of their consumer base. A digital customer is worth a lot more then the traditional kind, mostly because he or she can offer an organization a lot of information. To get that valuable information, organizations must give their customers something in return.

That return gesture might consist of something simple, like notice of a special sale or a rebate on certain pieces of merchandise. Those gestures go a long way, however, in cementing customer loyalty and creating more opportunities for the organization to grow. One of the reasons I watched the recent IPO of Twitter with keen interest was because of that company's value proposition - the value of information.

Information has such value because it's a two-way street. Because of innovative digital tools and solutions, parties on both ends of a relationship (in this case, a Web service and a micro-blogger) allow each other to get perspectives on what motivates them. In a bygone era, enterprises were in the position to tell consumers what they needed. Now they need their consumers. Enterprises recognize the power of the information that their consumers possess.

In the case of Twitter, we get insights in small nuggets. But because the digital marketplace is all about doing more with less, those small nuggets add up to something big. Think about this: Twitter has never turned a profit, yet investors value the company in the billions. They're putting a price on the potential of the organization. I have no doubt that a smart organization with the right digital solutions will live up to that potential.

November 15, 2013

Throwing Money Away Has Its Benefits

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 4:28 AM

The Future of Money: Todd Hirsch at TEDxEdmonton [Source: http://www.youtube.com/watch?v=K0n3BGId9nU]

Nothing catches a crowd's attention quite like telling them they're throwing money away. That was the subject of a recent report from a financial services company.

What it meant was that many countries are moving toward getting rid of their paper currencies in favor of other modes of payment. When you think about it, the exchanging of cash for services or merchandise is a pretty antiquated system. It's been around for eons. One of the reasons it's remained popular is that small businesses continue to accept bills and coins even though cashless payment systems abound.

Some economists say that a nation's dependence on cash can be symptomatic of both short- and long-range problems. In fact, the act of printing paper money and striking coins can account for as much as 1.5 percent of a country's gross domestic product. It's clear that as economies become more sophisticated, organizations will come to rely on cashless systems because of their efficiency and effectiveness.

It's hardly any wonder that economic powerhouses like Singapore are moving steadily toward being cashless societies. Nearly 70 percent of that country's transactions are electronic. The United Arab Emirates is another economic hotspot whose leaders are flirting with the idea of going cashless.

So how do we know if a society is ready, as it were, to throw money away? One factor is the access its citizens have to financial services. At Infosys, we know the importance of enabling banks around the world to help customers make seamless transactions. When the lion's share of a community utilizes bank accounts and electronic payment methods, it's a sign that its economy is firing on all cylinders.

Moving away from traditional paper money is also a sign of cultural change. It suggests that businesses are more comfortable accepting other methods of payment. The United Kingdom, whose subjects pride themselves on keeping up traditions of all kinds, is nevertheless closing its check clearing house in 2018. The shift is also indicative that businesses and infrastructure within a region are growing. A retail chain will more likely prefer non-cash payments than would mom & pop stores. Finally, say experts, a cashless society is one in which innovation and technology are in abundance.

A fascinating example of these economic advancements comes from Kenya. Citizens of all stripes - poor, middle class, and rich - are all embracing the M-Pesa, a payment method that utilizes the country's mobile telephone platforms. In frontier markets like Kenya, a bigger chunk of the population has access to a mobile telephone than a bank account. So the M-Pesa method actually bypasses the traditional way people in developed countries make payments. In the West, it's safe to say most people depend on landlines to ensure their cashless payments. Even though Kenya doesn't measure up to all of the standards that indicate the readiness of a country to go cashless, the power of mobile computing platforms is helping its people leapfrog past its peers. In fact, it's not a stretch to say that Western markets can learn from the success of mobile platforms in frontier economies like Kenya.

The path to cashless societies taken by Western markets has been a bit different. Because they began their journeys longer ago, they didn't have the advantage of mobile computing platforms to instantly put in pace cashless systems. Things happened more gradually, with market transparency and business-friendly environments allowing for alternative payment methods to take hold. One such method is the virtual currency. Bitcoin, a popular virtual currency, isn't attached to the central bank of any country, so therefore is unregulated. Depending on how you look at it, such a characteristic can be either an advantage or a flaw.

What's also interesting about the latest studies into the cashless societies is the function of the "plateau." Advanced economies like Japan and Germany have long had the right infrastructure in place to go completely cashless. But standing in its way are consumer perceptions. All the technology might be there, but if there's reticence on the part of consumers to embrace the system fully, an economy can instead experience a plateau. Maybe cold, hard cash will never completely disappear. Having a currency emblazoned with national figures makes any nation proud. But going forward, I suspect those types of paper notes will occupy a small, specialized niche in most countries. The global economy is ready to experience another growth spurt in the next few decades. For that to happen, it's just a matter of throwing certain money away.

November 11, 2013

How Boredom Can Impede Growth

Posted by Soundararajan S (View Profile | View All Posts) at 5:53 AM

Boredom, The Real Secret Behind Innovation [Source: http://www.youtube.com/watch?v=AFe4aPewV9c]

I continue to find a common thread running through the stories of the world's greatest entrepreneurs. Why is it that nearly every one of them has had a bout with boredom? That's the one trait you wouldn't associate with men and women who build companies from scratch, fend off competitors, and bring amazing products and services to market. How could classic Type A personalities bent on conquering a certain sector or industry experience boredom?

Many management gurus agree that boredom is a recurring problem among business leaders who are always trying to find their next business challenge. What I find fascinating is that most entrepreneurs become familiar with a new market and, just as they're about to blaze a new trail, decide to pull back for a while.

A friend of mine once shared with me the trials and tribulations of building a precision tools business. He operates in a very specialized sector. Large industrial companies rely on precision tool shops to do jobs like stamping or forming metal using a host of sophisticated techniques. My friend's company specializes in molding metal parts for automobiles by using water. The water is injected into a mold at such high pressure that the metal shapes itself into a specified form. For years my friend stayed on top of the latest technology and positioned his company as a supplier to some of the world's largest automakers. He was on the verge of expanding the company to other continents in order to fulfill growing demand from overseas markets. But then a curious thing happened: He got bored. His corporate officers and the board of directors were fairly confounded by his abrupt decision to hold off on an ambitious international expansion.

In hindsight, he can rattle off a number of lessons that he learned from the experience. But at the time, his lack of interest in the project did not make him many friends in the company.

It turns out that boredom is a form of burnout. It's one of several ways the mind tells executives who are otherwise driven and enthusiastic that they might be taking on too much at one time. In my friend's case, he had planned the international expansion to coincide with the introduction of new business lines as well as a sales campaign to push next-generation versions of the firm's stamping technology. When it came time to immerse himself into the 16-hour days that he would need to oversee the expansion, he recoiled from the task.

Now here's the good news. Because of hindsight he will tell you that this speed bump in his career served as a period during which he could develop more self-awareness. He was also able to step back and assess his relationship with his colleagues and where they fit in as the company began to change direction and meet with high levels of success. By focusing on only the most important activities in his company, he was able to make more of an impact. At the same time, the colleagues that picked up the extra work that he shed were able to bring themselves up on the learning curve.

Because he's a CEO, he's in a uniquely powerful position to help others in his organization who might feel overstretched and fatigued. He now serves as a mentor to up-and-coming executives whose jobs are to keep on innovating. Being charged with making significant (and frequent) market disruptions can take its toll on even the most driven and resilient among us.

Another way of looking at on-the-job boredom is that it's a sign that you should refine your innovation journey. Maybe your self-awareness isn't the problem so much as the direction your team is taking on a project. The onset of boredom might just be the ultimate red flag your team needs to retool itself and chart a new course on its innovation journey.

November 7, 2013

Should They Stay Or Should They Go?

Posted by Ravi Kumar S. (View Profile | View All Posts) at 10:16 AM

Richard Branson Reveals His Customer Service Secrets [Source: http://www.youtube.com/watch?v=Fy4lYDN1gz4]

Many of us would agree that the customer is always right. But which customer?

Recent academic research suggests that in a tight economy, organizations often have a difficult decision to make: to spend money on keeping current customers happy or to use those funds to acquire new ones. Sometimes the decision becomes clear if you're in a particular industry. Airlines, for example, are known for keeping loyal customers happy. Mobile telephone companies, however, sometimes look past their customers in an effort to sign up new people to their calling plans.

Things sure seemed a lot more apparent a half-century ago. Automobile companies had several brands, each aimed at a different demographic. The idea was that a loyal customer would "trade up" to a more expensive brand as he got older and earned a bigger salary. With customers becoming more discerning and the marketplace more competitive, I suppose today's automaker might choose, instead, to focus their marketing budget on attracting buyers who have never owned or considered one of their brands.

In the end, each company is different. So each one has a different set of considerations on which to base its consumer retention strategy. Big Data is obviously becoming a valuable part of these constructs. When an enterprise learns more about how its customers think and act, its leaders can decide how much weight they want to give the retention of old customers and the attraction of new ones.

There's another angle in this decision-making process that's vital to achieving the right mix: the trusty "80-20" rule. I recently came across an item that said it's a given that a small number of customers tend to account for the biggest amount of an organization's profits. But depending on the market, that concentration of value can vary widely. For instance, in retailing, the best customers out-spend the rest by 16 to 1. In the airline industry, they out-spend the rest by 12 to 1. And in the hospitality industry, it's 5 to 1.

Therefore, if you're a retailer, you're most likely going to choose rewarding your current customers - especially the very best ones. If they're outspending the rest of your consumer base by 16 to 1, you definitely want to keep them shopping in your stores. But what about a discount motel? If the very best patrons outspend the rest by 5 to 1, then maybe it's more cost-effective for your motel chain to concentrate its marketing efforts on attracting a steady stream of new customers.

The Engaging Digital Consumers survey by Infosys revealed just how discerning modern consumers can be. A large portion of the 5,000 people polled said, for example, that they'd consider switching banks if they knew another institution was better at keeping their deposits safe from things like cybercrime. It's interesting to consider a bank's point of view as well. It stands to reason that some of those customers have enormous bank accounts and are constantly using all sorts of the bank's services, which translate into lucrative fees. Yet other customers undoubtedly have small accounts and never utilize the bank's add-on services. The bank will want to concentrate its efforts on rewarding the high-value customers. If it tries to attract new customers, it will want to utilize as much technology as possible to find and market to the high-value crowd.

No business wants to spend money on retaining customers who serve as a drain on the organization's resources. If someone is constantly buying clothing from a retailer and returning it a few days later, does that clothing chain truly want to reward that person with perks and special promotions? Probably not. What about mail-order catalogues that offer free delivery? If a customer tends to order lots of cheaper items more often, then he's less valuable to the company than the customer who orders lots of big-ticket items at a time.

However, a retailer doesn't want to cut a customer loose and risk bad publicity. A few years ago a cellular phone service did just that: It weeded out the customers who were costing the company money. The company failed to account for the bad buzz that its "rejection" letters created in the marketplace. Maybe if that company had better data analytics, it could have figured out how to better monetize services for otherwise low-value customers. Indeed, today's savviest enterprises are using the power of Big Data to maximize both the effectiveness and efficiency by which they interact with all their customers.

How To Transform Your Organization When Times Are Good

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 5:55 AM

Lead and be the change: Mark Mueller-Eberstein at TEDxRainier [Source: http://www.youtube.com/watch?v=yv-QiSvuLLM]

Winston Churchill once said that you should never let a good crisis go to waste.

As business leaders we know exactly what he meant. It's often an imperative to transform your organization when times are tough. Outside challenges give you the excuses to act quickly and decisively. You can shake up the company without the board of directors of fellow executives questioning your every move.

In some respects it's more challenging to transform an organization during a period of relative calm. If the economy as well as your business is chugging along, then why rock the boat? Why bring unnecessary heartache into your life by hiring and firing and charting a new strategic course?

Yet transforming an enterprise during the good times is something management experts urge us to consider. When you're not making decisions under pressure and duress, you often have a more rational and longer-term view of the organization. One of the signs of an exceptional CEO is how he or she can maintain an organization's current success while doing what it takes to ensure it will succeed ten years from now.

We often lead from a relative position of comfort and familiarity. Who's to argue? That's what organizations hire its officers to do. Taking oneself out of familiar territory is a good test of how we'll perform when the market takes a turn for the worse. We have diagnostic tools to gauge the health of our various computer systems. It's not a bad thing to have a diagnostic that tests our resilience as business leaders.

There's a great story someone shared with me recently that puts this paradigm into context. A tale from ancient Greece goes something like this: After a long battle, sailors bring a ship into port and begin to replace its planks. Then they take the old planks that they have removed and use them to build another ship. The question posed by the ancient tale is which of the two ships is the one they sailed into port? If it is the latter ship, then when did it become that ship? In other words, was there a point at which a certain amount of old planks came together that it could truly be thought of as the original ship?

We should think of companies in much the same way. When our enterprise commands exceptional market share and is posting record profits, it's hard to justify replacing the planks and building a new ship. That's the right time to do so, however. Why not rebuild and refine an organization when it's sheltered in a safe port and surrounded by the best people? It stands to reason that replacing the planks when it's out at sea, in the middle of a storm no less, is fraught with problems.

Specifically, the planks of an effective organization are things like management, corporate culture, and market awareness. Too often an organization is forced to change its culture because it's facing setbacks in the marketplace. Or a company becomes so comfortable with dominating a certain sector that its leaders aren't mindful that start-ups might be redefining the market - or creating complexly new ones.

To be sure, it's easier to speak of change than actually implementing it. And I don't mean to suggest that organizations institute bold change simply for change's sake. Those types of moves don't address the core issues of a company. If a particular strategy is truly effective, there's no point in reinventing the wheel. It's just that many times organizations are lulled into complacency by long stretches of commercial success.

Using those successful periods to your advantage is the key to successful leadership. We all encounter storms every now and then. When we do, it pays to have a water-tight vessel that can brave the swells and bring you back into a safe harbor.

November 5, 2013

InfyTalk: How IT Creates An Enterprise Road Warrior

Posted by Puneet Gupta (View Profile | View All Posts) at 5:39 AM

A Lesson from Star Trek [Source: http://www.youtube.com/watch?v=E0beiXmlp_A]

Last week I was thrilled to learn that the Voyager spacecraft had traveled farther than any man-made object in history. After an 11 billion-mile, 36-year journey, it had passed out of our solar system and into interstellar space. Star Trek fans would say that Voyager is boldly going where no one has gone before.

The spacecraft's transmissions, which now take 17 hours to reach Earth, have given scientists valuable insights on our solar system. What's most amazing to many of us in the digital age is that the computer onboard Voyager was the finest of its kind when the probe left Earth in 1977, yet it's less powerful and makes fewer calculations than your average smartphone.

Voyager's latest feat got me to thinking about another kind of traveler. He or she is what I like to call the "enterprise road warrior." Like a spacecraft whose mission it is to provide scientific data, the road warrior is a corporate satellite of sorts. He provides valuable insights and data on the global markets to the organizations with which he partners. And he does so by using mobility to his advantage.

Monday is when our road warrior is at a defense & aerospace company. This particular firm needs to transition its physical server to a virtual one. On Tuesday, he goes to a retail company that wants to get a leg up on its competition. The solution? Our warrior suggests building a new data center with a full range of analytics that can gauge consumer attitudes about new offerings and retail trends.

Next up on Wednesday is a financial services firm. Besides a check of the computer system's security, he installs new software that manages the bank's growing roster of clients. All roads lead to a hospital system on Thursday. There's a good chance that hospital administrators have a laundry list of questions about the new healthcare act that's going to change the way they do business. Finally, on Friday, the trip involves a visit to a large government office. Our warrior consults with the agency on an ERP package that streamlines the way it processes and sends pension checks to elderly citizens.

Our road warrior is a composite character, of course. Chances are that no one person within an enterprise fulfills all these roles. The point, however, is that an enterprise road warrior is only as good as the Information Technology around him. When those IT solutions are mobile, a business has more capabilities to respond to existing and potential clients. It can offer solutions more rapidly and efficiently. That leaves more time for the company to innovate and plan ahead.

The technology that surrounds us becomes more mobile by the day. That's why our business models must keep up with those changes. The more nimble the employee, the greater the chance a company will find success.

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