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October 31, 2006

Customer communities do pay off!

collaboration.jpgThe most recent Harvard Business Review reports on a study (requires subscription) that was done on the impact of customer communities on customer behavior at eBay in Germany (disclosure - I have an active interest in this topic as I have agreed to chair a conference on the business of communities - Community 2.0 - but more on that later).

The numbers are quite interesting. The experiment involved 140,120 eBay customers who had bought or sold on eBay but who had not participated in the eBay customer communities before. 79.242 were invited to join the online customer community, while the remaining 60,878 were used as a control group. Of the people who were asked to join the community, 3,299 became active participants and 11,242 became lurkers. Over the course of a year they compared the behavior of the active participants and lurkers to that of the control group and found that:

  • Lurkers and active participants won up to 25% more auctions

  • Lurkers and participants paid prices that were as much as 24% higher

  • Lurkers and participants spent up to 54% more money in total

  • Active participants listed up to 4 times as many items

  • Active participants earned up up 6 times as much monthly sales revenue

  • For first time sellers who were lurkers and participants, 10 times as many of them started selling on eBay after joining the community

All in all the activities of the lurkers and participants resulted in 56% more sales during the year of the study - bringing in millions of additional dollars into eBay's bottom line.

So can the results of this experiment be replicated in more traditional businesses?

Some people clearly think so, while others who used to be very enthusiastic about the business of communities are starting to become very skeptical.

Communities require a certain critical mass to get going - and not all companies have a large enough customer base to get to that point. They also require a lot more work and resources than most companies are willing to invest - to set up the infrastructure, to nurture the communities, to acquire content, etc.

Active communities of employees, customers and partners are clearly powerful management instruments that can dramatically improve core business processes like innovation, product development and marketing & sales. They can also backfire and have very negative impact if they are not managed properly, or set up wrongly. Before embarking on this path, companies have to truly understand the dynamics as well as the pros and cons of communities. They also need to find out if they have the resources and wherewithal to create their own communities or whether they should play in someone else's sandbox.

Unfortunately, many will start the process by throwing technology at the problem - let's just hope that those ignorants won't destroy the market for the rest of us like email spammers destroyed email marketing and (un)ethical zealots are slowly destroying word of mouth marketing.

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October 30, 2006

The new GuruBBQ show

If you have not seen Tom Asacker's new weekly video show you have to check it out. It is a fun and witty show covering business news, marketing trends and other things that you absolutely don't need to know.

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October 27, 2006

Authority, popularity, expert-ness - how to set your filter to get the right content?

Marry Hodder, CEO at Dabble, made a good point yesterday at the business blogging summit here in Seattle when she said that the Technorati rankings for authority are not really a measure of authority but a measure of popularity - and that measuring authority is not something that should be conceded to a web service but something that gets determined by the end user.

At one point or another everyone is struggling with how to filter content to find the relevant pieces of information. Some people believe that popularity may be the right filter. Others believe that you can only trust "real" journalists and should use that as your filter to get the right content. Some others still cling to the belief that only academic credentials, with publications and peer review, can result in the "experts" worth listening to.

The reality is that no one filter can work for all topics and at any point in time. If I am looking for customer feedback on a new product, I may not want the voice of the expert, and certainly have learned not to trust the voice of the "journalist" reviewer. If I am looking for information on cutting edge cancer treatments on the other hand, I may only trust academic types. And if I need information on a more popular topic, then popularity may well be the right filter - or ratio of blog posts to comments and trackbacks, or some other metric that determine how well a person is read, quoted, etc.

Now, another person may look at this in a whole different way. The bottom line is that the "right" filter is content-specific as well as reader-specific.

Making things even more complicated - the right filter is also time sensitive. If I have time to cull through a large amount of information then my filter may not be set as narrowly as when I am in a time-crunch.

So in a way, everybody has a personal profile that determines the right filters based on subject and moment in time. If somehow we could have web services that would match their results to my personal profile, then we would have a real cool solution.

It's really simple when you think about it...well...maybe not :)

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October 26, 2006

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October 23, 2006

A new agency in town...

I got a message this weekend from Shel Holtz that he and Neville Hobson are joining Joe Jaffe to found a new type of marketing agency, called crayon. Their stated goal is to "integrate the best of the consulting, agency, advisory, thought leadership and education worlds."

The new gig will launch Thursday - with a press release and a party in their new offices - in 2nd Life!

Best of luck to you!

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Is global warming awareness reaching the tipping point?

the great warming.jpg

Right on the heels of Al Gore's fabulous "An Inconvenient Truth" movie on global warming, another documentary is scheduled to hit theaters in the next few weeks - Great Warming. This one is sponsored by various corporations who position themselves as "green" marketers. As part of the whole effort they also developed a free booklet on climate change for 13 year old kids which seems like a great little book.

If only they could distribute that in classrooms it would help reach parents through the kids.

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October 20, 2006

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October 19, 2006

Is this what brands are all about?

helpsm.jpgAdvertising Age just came out with their top 200 brands report - in which they measure brands by their ad spending on "measured' media. As can be expected when you measure brands by their ad spending, the top 25 list is littered with losers - including Verizon, in the top spot, Ford (#3), AT&T, Dell, etc.

Verizon spent almost $1B in "measured" media in the first half of 2006, while Ford, Chevrolet, and Dodge combined spent over $1.2B on "measured" media in the first six months. Ford spent 3X as much as General Motors Corp. on "measured" media. And when looking at the top 200 brand spending by media, they allocated a whopping 6.7% of their "measured" media spending on the Internet - with the rest spent on TV, Radio, Newspapers and Magazines.

What the heck are they thinking? And what are they "measuring"? Do you think that if Ford were to stop spending on traditional advertising for six month or even a year and instead invest $1 B in a clean energy research they would lose a ton of marketshare? And what if they were to spend their marketing dollars more wisely - like use the information that they already have about their existing customers to market more effectively to their existing base. If you have a Ford, how many times did you hear directly from the company since you purchased your car? Or what would happen if Verizon were to spent 1/2 as much as they did in the first six months - and by doing so still spend as much as their nearest competitors - and instead spend the other $1/2 B on customer service and customer retention programs?

Economist Steven Levitt - from Freakonomics fame - found that money spent by candidates in political races hardly mattered at all. In fact he found that a candidate could cut his spending in half and lose only 1% of the vote. The same research found that a losing candidate could double his spending and expect to shift the vote in his favor by only that same 1%.

Verizon - are you listening?

There is no question that advertising plays a role in marketing - but those numbers prove that a majority of ad dollars are being wasted and miss-prioritized!

First you need a product that will WOW your customers. And while Geoffrey Moore will tell you and Apple prove to you that you should not care about customer service while your product is in the Tornado, when you have mature products like Verizon and Ford, customer service and retention are key to your success. In fact, they can lead to a ton of free advertising - generated by your very own consumers and delivered with much higher precision than TV advertising!

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October 18, 2006

Confidential ethnographic research on YouTube

Here is a confidential video prepared for Google Internal Use only...fascinating research!

(via Grant McCracken)

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Online communities - the future has been here for 20 years

Imagine a community built "on top of an ordinary commercial online service and uses an inexpensive -- some would say "toy" -- home computer to support user interaction," and which can support "a population of thousands of users in a single shared cyberspace," and which "presents its users with a real-time animated view into an online simulated world in which users can communicate, play games, go on adventures, fall in love, get married, get divorced, start businesses, found religions, wage wars, protest against them, and experiment with self-government."

Well such a world was around 20 years ago - brought to you by the same people who built Pixar in the late 80's - LucasArts Entertainment. Check out this paper describing LucasFilm's Habitat back in 1990 at the First International Conference on Cyberspace - it is fascinating!

Like Larry Keeley said two weeks ago at the BIF conference, we always overestimate the amount of change in the short term and underestimate the amount of change in the long term!

(via wikisquared)

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October 17, 2006

The web numbers that count

Many people are confused about web metrics and especially blogging metrics - who's numbers can you trust, what is important, etc. The problem and the confusion become even bigger when you start using Ajax - which does not refresh the page when you request something -, and RSS - with most solutions not counting those readers unless they click through your article to come and read at least parts of it on your site.

Heather Green at Business Week spent some time looking at all those issues and wrote a great article on the subject - one that even non-geeks will be able to appreciate.

The bottom line is that we really need some new measurement sticks...

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October 16, 2006

Another interesting conference - Blog Business Summit

BBS<br />
06 Attendee Bug

While on a business trip to Seattle next week I will also be attending the Blog Business Summit - which has a great line-up of speakers as well as attendees. Should be great fun!

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October 14, 2006

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October 13, 2006

Science: new research shows US still in the lead - with Asian countries on exponential growth curves

sciencesm.jpgNew research from the Amsterdam School of Communications Research shows the US still in the lead with regards to scientific research. It also shows many Asian countries on exponential growth curves - which if continued will result in severely diminished competitive advantages for the US in the future.

Surprising? Not really. With this country's lack on focus on education, we have to rely on private citizens and entrepreneurs like Dean Kamen to make up the difference. And the fact that we are losing ground has been widely reported in the mainstream press...

If you missed it, you are not paying attention!

I can just see the headlines in the press 50 years from now - "US life expectancy now half the life expectancy of Chinese - new research links the differences in life expectancy to politically motivated ban on stem cell research and lack of educational funding in the US at the turn of the century..."

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October 12, 2006

[rant] Why are companies thinking that it's OK to trick their customers?

My PC has been sluggish lately. Since I do not have an IT department I looked for some online solutions to help me figure out what might be wrong with my system (I know that it is partly my fault as I keep downloading beta software that is really pre-alpha software)...

After (very little) research I decided to download the Uniblue Wintask Pro - which seemed to have received good reviews from sites that I trust (i.e., CNET). On top of that it came with free software that promised to speed up my PC - exactly what I was looking for. When I tried the Wintask Pro it did not seem to offer me much more than the Windows Task Manager - so I went for the free software that promised to solve my problem. The minute I launched the application it told me that there was an upgrade available, which I eagerly downloaded (yeah, yeah, in my multitasking way of doing things I am sure I missed some legal "fine print" in the process somewhere). After running the application's diagnostic it came back with a whole bunch of issues related to my computer that needed to be "optimized" - which of course resulted in much optimism on my part that I would finally be able to solve my problem...

...except...the new version can only do diagnostics. If I want a version that actually fixes the problem I need to buy that one too...

How is that for misleading a newly minted customer who just dropped $50 on your solution?

I may spend another nanosecond or so to see how I can get my money back - since they have a big sign on their site claiming a money back guarantee - but do you think that I would ever recommend this company or buy from them again?

Marketing and customer service is not so complicated - it starts with common sense!

  • Do not trick your customers

  • Do not lie to you customers

  • Do not mislead your customers

  • Do not blame your customers - even if it is their fault

  • Do not treat your customers as if they were stupid - even if they are

  • Don't assume that customers do not talk about their experiences with others

  • And please, do not assume that customers have no memory

Oh, one more thing - Everett Rogers laid out a scientific approach to the principles of adoption of innovations (same as new products) back 40 years ago - this is not rocket science - it's almost antique!


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Dealing with information overload...

information overloadsm.jpgMy friend Pito (from Blogbridge, where I am an advisor) muses about what next generation aggregators could look like (here and here)...a solution to deliver appropriate content to a person based on very minimal profile information.

This is indeed going to become one the biggest challenges in the near future - and not just for readers who are struggling to find the right content, but also for content publishers - including marketers, bloggers, reviewers, publishers, etc. - who are increasingly finding it harder to get their content in front of the right people (at the right time).

What makes this challenge especially complicated is that the information needs for people change over time. Some "information consumption" needs are episodic or one-time - like the need to find vacation-destination related information or college admission information. Sometimes, the "information delivery" or the "information packaging" needs also change over time - some days you might have a lot of time on your hands and be in the mood to read large amounts of detailed information while other days you are so busy that you can only consume headlines for those things that are most important for you at that particular point in time.

Another twist to this is that sometimes I may not even know what might interest me - especially when you are talking about the intersection of disciplines. I may have a high interest in social networking issues and not really know that there is a rich body of knowledge about that in the online gaming content providers, or in the systems-dynamic based learning community.

Pito thinks that the answer to this will not be a better aggregator, but something else. I tend to agree with that. But considering that the solution is probably one that combines human expert content filters with non-expert human tagging and automated technology based filtering and behavioral targeting solutions - what would it be?

...any ideas?

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October 10, 2006

Great list of quotes on Innovation

Lois Kelly captured a great list of quotes from last week's BIF innovation conference.

Here are a few more I found in my notes:

  • Creativity = take in info + process + recombine + spit out - Ivy Ross

  • You cannot understand the whole by looking at the parts - John Donoghue

  • A joke is the opposite of expectations - Richard Saul Wurman

  • We always overestimate the amount of change in the short term and we underestimate the amount of change in the long term - Larry Keeley

  • The space where innovation is possible is the space between people - Curt Columbus

  • Communities are not simple, they are complex - Michael Singer

  • You only live in this history - Gehry (ok he was not there but someone quoted him)

  • The people with the most stake in your company are your customers - Jeff Taylor

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CEO's with big egos are always bad news

office chimp.pngCEO's are supposed to be like conductors, impresarios, major league sport team coaches, or movie directors - you pick the analogy that works best for you. The bottom line is that they need to coordinate disparate and sometimes dysfunctional groups of people - including stars (who frequently have good-size egos all by themselves), connectors, and losers - into doing great things! And they cannot limit themselves to internal resources only. The good ones will do it with externalized communities of people that include employees, customers, suppliers, partners, and resellers. And the best ones will even integrate competitors into their cast of characters that they can influence to achieve their goals.

So what happens when a CEO has a big ego? The answer is simple - a CEO with a big ego cannot play that role!

CEO's with big egos will inevitably clash and compete with other egos in their ecosystem - be they stars in research, marketing, engineering, or other successful CEO's in their industry or region. Those people are their true competition. Big egos do not collaborate - they compete on the ego level. So what comes first in the case of a CEO with a big ego is not the company, the employees or the customers - it is their ego. What is important is how they will look in the eyes of constituents that they deem influential or important when it's all said and done?

At the extreme, the only way for CEO's with big egos to achieve their goals - come out ahead of other stars, or worse, eliminate the other stars while coming out ahead - is by weaving webs of deceit, building a protective cocoon around themselves, and by ensuring that there is a podium/pedestal for them to step on. They surround themselves and protect people who will foster their agenda blindly - in the process creating executive echo chambers and increasingly removing themselves from business realities.

Even though some are really good at hiding their true nature, there are so many tell-tale signs that can point to bad behavior and real bad news in the future. When a new CEO of a well known brand tries to inject himself in the brand by appearing in TV commercials - what do you really think the motivation is? Help change the appeal of the brand in the youth market? A subservient chicken or an office chimp seem to achieve that goal much better... And you know you're in trouble when your CEO tries to limit access to certain people - like the board. Or when she starts bad-mouthing other CEO's who happened to be ex-colleagues and who are now very successful and get a lot of credit for their achievements. And we can go on and on with early warning signs of leaders who can do more damage than good to their organization.

There are a lot of examples of companies with CEO's with big egos that ended up in disasters, and many others where ego-less CEO's are achieving beyond-great results. And as always, there are the exceptions - but we can not all aspire to be like Steve Jobs. But besides these extremes, and because of ego-centric leaders, there are too many companies who never achieve their true potential and too many reputations that get tarnished in the process for no good reason.

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October 9, 2006

Water and electricity do mix...

It just depends on your point of view...


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All kinds of minds

all kinds of minds.bmpRandy Antik told the moving story of how he was instrumental in the founding of All Kinds Of Minds with Dr. Mel Levine last week at the Businness Innovation Factory's 2nd annual Collaborative Innovation conference.

Every year thousands of kids, who often times are not less intelligent, but more intelligent than average, suffer unnecessarily in the traditional learning environments as they learn differently. All Kinds of Minds is a non-profit Institute "that helps students who struggle with learning measurably improve their success in school and life by providing programs that integrate educational, scientific, and clinical expertise." They achieve this by educating K-12 teachers about the science of learning and on how to provide a good learning environment for all students. So far the organization has trained over 30,000 teachers and they estimate that more than three-quarter-of-a-million kids have benefited from their program! One of the biggest coup for the organization came when Mayor Bloomberg announced that all NYC teachers would go through the program.

It is great to see how ordinary people with a passion can get involved and achieve success in providing for a good future for our kids - but where is our government in all of this? Other than trying to bring more faith into the classroom, or to try to confuse our kids about what constitutes science versus dogma...which of course we all know they are doing a good job at!

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October 8, 2006

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October 7, 2006

Bruegger's Wins Award for Worst Customer Service

[update 11/28/06] See also related article on how Bruegger's gets it and fixed the problem.

nobagels.pngFor awhile I was refraining myself from writing negative things about Bruegger's as my previous rants (here is one) got a pretty high ranking on Google. But the absurdness of their practices is so flagrant that is has become too hard not to write about it.

A few weeks back I went to Bruegger's only to find out that they had no bagels - you heard that right - on a Sunday at 8:30 am they had NO bagels. Apparently the baker had overslept. If you are a bagel shop and for some reason you have no bagels, why even bother to open up shop???

Then a week later I got a bagel with hair in it. We tried to convince ourselves that it was hair from a cleaning brush so that we could at least continue eating the others - but even that is unacceptable!

When I walked into the store last week, there was a huge line...and one very sloooow server. When a guy ordered 36 assorted bagels I thought I was going to die - the misunderstandings and the recounts that took place as part of that transaction were like a caricature on how to really piss off your customers. The thing is, even that server probably should not have been there. She most likely missed the memo that said that there was a team meeting on the back porch of the store. Indeed, after waiting in line for 15 minutes, a team of 4 Bruegger employees - including the top store manager (a very grumpy man), and the assistant manager (who clearly lacks respect for the top dog) - all came in chatting from the back porch - oblivious to the collective negative energy that was about to turn violent in their store.

And then there was this morning. I was early and there was only one server again, who evidently had forgotten (or never was given) the log-ins for the cash registers. She was using a little hand calculator to figure out how much customers should pay. I had three bagels and even though there is a special price for a three-pack, that little calculator did not have an option to enter a three-pack - the only option on that calculator was 3X the price of a single bagel. For awhile it thought it might be an operator error, but after a few minutes of arguments I realized that it must have been a calculator limitation (arrggghhhh!).

If you are in management at Bruegger's and happen to read this post (although I bet you nobody is listening) - the next time you are in my town, go take a look across the hall to Starbucks. The place is humming, employees add to the vibrancy of the atmosphere, I have never seen them run out of coffee, and I have never had hair in my coffee or in their pastries!

And if you are wondering why I continue to put up with this nonsense - you have just encountered a case where the buyer and the actual customer/consumer are two different people. I don't usually eat bagels - my son does. And yes, I have thought about taking him with me a few times so that he would get fed up with this whole thing and allow me to buy bagels elsewhere...

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October 6, 2006

This really sucks...

I just found out that if you Google "this really sucks" this site shows up #6 in the Google search results (click here to see the results if you happen to stumble upon this post 10 years later and Furl is still around).

I am not sure how to take this ranking :)

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Buyer expectations for a new water

Fiji.pngIt is funny to see how an 11 year old evaluates a new water. The following is a dialog I had with my son tonight in the supermarket:

my son: Daddy, can I try a bottle of Fiji Water
me: sure, take one
him: I want to find out why Fiji water is so famous (not sure where he got that)

(after evaluating the labels)
him: oh - it comes from the island of Fiji - do you know where that is?
me: sure
him: and it's artesian water, what does that mean?
me: it comes from artesian wells, which fill up with ground water
him: hmm...

(later in the car)
him: can I have my famous water
me: sure

(after taking the first sip)
him: wow - this is really watery
me: HAH - what did you expect from water
him: no, you don't understand - I mean it has absolutely no taste - it's like air. Poland Spring does not taste like air...
me: HAH
him: but that is GOOD - it means it is real pure water
me: I see...

Not sure what you are looking for when tasting a new water, but this was sort of enlightening to me...marketing water is obviously not something that comes natural to me :)

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When government and industry team together to make a better future for our kids

Kamen_Johanssen.jpgRhode Island congressman Jim Langevin opened the second day of the Business Innovation Factory's Collaborative Innovation conference yesterday with the announcement that the Business Innovation Factory, a non profit sponsored by the Governor's office, in partnership with Dean Kamen's FIRST Challenge, will now bring a robotics program to every high school in Rhode Island.

Through a series of robotics competitions, Dean Kamen's FIRST (For Inspiration and Recognition of Science and Technology) project brings together industry partners and schools to stimulate kids and instill in them a love for everything that is science and engineering related. Born out of the realization that we are losing our future competitive edge by not educating enough scientists and engineers, the program has been found to have a dramatic impact on science and engineering education. In fact, a study conducted by Brandeis University found that 59% of FIRST participants want to pursue careers in science and engineering. Not only that, the same study found that there is a 50% higher likelihood that students who participated in the FIRST program will go to college! FIRST participants are also 10X as likely to take on internships during their college Freshman year, and they are more than twice as likely to pursue a science and technology career.

This demonstrates how industry and government can team up together to truly deliver transformational projects in the area of education. Hopefully many other states will follow suit!

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October 5, 2006

Use sound to get your creative team on the same page

Ivy Ross, spoke yesterday at the Business Innovation Factory's second Collaborative Innovation Summit about some of the techniques she has used over the years to successfully stimulate innovation and creativity at companies like Mattel and Old Navy.

In one scenario she had music created that required both sides of the brain to work in order to interpret the scores. After her team members spent 20 minutes a day, three times a week for six weeks in specially designed musical chairs listening to the scores, she was able to demonstrate through standard creativity tests that the creativity of her team had increased by 18%!

It would be interesting to know if other activities that require both sides of the brain to work - like playing piano, or playing video games - would have the same effect on training the brain to use both sides.

In another experiment she improved the results of brainstorming sessions by finding the frequency ranges at which people "resonate." She then found the common frequency at which everyone on the team resonated, produced a CD with sound of that frequency and increased results of brainstorming sessions by playing the CD in the background during those sessions. So in effect she brought her team on the same page through sound.

She made another interesting point when she said that you cannot expect a team to innovate without feeding the team a lot information first. If there is no "input" in the innovation process - why would you expect good "output?"

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Why is nobody teaching people about service innovation?

If 80% or more of the GNP in the US and the EU comes from services, then why is it that there are only a handful of business schools offering courses in service innovation? And why aren't more service companies prototyping? And perhaps best of all, why are so many companies looking at innovating customer "transactions" instead of the whole "customer journey?"

Those were some of the questions raised by Jeneanne Ray from Peer Insight during her story-telling time at the Business Innovation Factory conference this week in Providence.

Come to think of it, even most product companies, who are familiar with product innovation, and with developing partnerships where needed to create "whole products," are too often forgetting what the "whole customer journey" or experience looks like - from product selection, to purchase, to unpacking, to post purchase customer support.

Apple could be the exception. From selection, to purchasing, to unpacking the experience is a true delight - elegant and powerful in its simplicity. They may be falling short in the post purchase support area as they demonstrated with their arrogance around the early iPod battery problems, or as they are demonstrating with a friend of mine who lost access to her hard drive while it was under warranty - offering only to rebuild the hard drive without offering any data recovery services and yet promising an almost 100% guarantee that all data would be lost.

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October 4, 2006

There is no room for two in a box....

tomb.jpgJim Lavoie and his partner Joe Marino from Rite Solutions presented at the Business Innovation Factory's second annual meeting today (which is being live blogged on the Corante Innovation Hub)and talked about how they were able to create a corporate environment which is totally project-based and where leadership "authority" is based on employees' "sphere of influence" at any point in time during a given project rather than on the results of more traditional "pyramid" based games.

To make new employees comfortable with the fact that pyramid-based schemes of career advancement are not the way to go and to constantly remind existing employees of that fact, both periodically put on skids to make fun of the more traditional antics of command and control/hierarchical organizations.

They performed one of their songs at the event and keep a web site - called tombtunes - with all their current executive musical productions. The first song is supposed to go up tomorrow - it's a an absolute "must hear" for everyone with experiences in corporate life, especially for those who might have become "unemployable" because they got disgusted with the way those corporate games work. If you are a "company-man," you will not enjoy it!

Note that both those guys acknowledged being really good at playing the pyramid game :)

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October 3, 2006

Live Blogjamming BIF on the Corante Innovation Hub

Tomorrow Wednesday and Thursday a few of us will be blogging the Business Innovation Factory event live on the Corante Innovation Hub, which was just mentioned in Business Week this past week.

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October 1, 2006

Dressed to kill

Wallis has a pretty interesting advertising campaign...called "Dress to Kill"



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