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The Rise of the CMO 2.0?

• Communities should be an important part of the CMO’s toolset (but for many large companies - there is an under-investment and scale problem)
• Companies should evolve the role of the CMO into Chief Community Officer (but that will require drastic changes in attitude and approach to marketing)
• If done properly, communities will transform the way marketing works (reduced costs, improved effectiveness, new opportunities)

The Need for New Management Thinking

• Mismatch between community goals and associated investments
• Major gaps between Community Goals and what is being measured
• Communities have yet to combine with major talent initiatives
• Communities will transform most business processes

The Worst Practices Enjoy Wide Adoption

• The “build it and they will come” fallacy
• The “let’s keep it small so it doesn’t move the needle” phenomenon

And quantitative Results are as follows

• 37% of the communities have been running for 6 months or less
• 27% of the communities have 101-500 members (37% have less than 100)
• 13% of the communities are run by 2-5 full-time managers
• 6% of the companies surveyed are spending more than $1 million annually
• 52% of the companies surveyed plan to increase spending on community

You will find more quantitative results are here(@ SlideShare.net). There is one slide that caught my attention.  I have shown that slide below.

As you can see these community/Web 2.0 initiative is mainly owned by Marketing Department. IT department is distant 4^th in the ranking. Shouldn’t IT be involved in these strategic initiatives? I think Marketing is a great organization to drive the ‘external facing’ community based initiative. But I strongly feel that it should be done in collaboration with IT department. These ‘Greenfield’ projects, are easy to start (they always are). But as the scope and scale of these applications begins to expand, entropy sets in and these applications begin to have high sustaining costs. The usability of that Web 2.0 application also begins to diminish. Also, myriads of these collaboration application initiative started by different organization needs to be consolidated over the period. No organization will take that lead other than IT. So, organizations need to collaborate with IT department in building these collaborative applications.

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Coco-Cola has been a leader in non-alcoholic beverage industry and has dominated that market over the past century. But due to globalization, the beverage market has become more volatile, where fickle customers constantly switch drinks. Global beverage market is also getting fragmented at a faster pace with new products being introduced by the emerging companies. These companies are creating niche products and are chipping away Coke’s market share. To preserve its leadership position, Coke needs to constantly innovate and introduce new products at a faster rate than its competitors. It has to understand the emerging taste and adapt to that on a global scale. Most importantly, it has to do all this without tarnishing its brand.

Obliviously, Coke is planning on using existing IT technology to collaborate–among employees, with bottlers, with consumers—and considers it as vital to remaking its business to chase fragmented and fast-moving global markets. IT initiatives is going to play a make-or-break role according to Information Week article “Coke Exploits Collaboration Technology To Keep Brand Relevant”

The article talks about Coke’s plan to tackle the collaboration strategy with a three pronged approach.

• For internal collaboration, Coke has implemented what it calls its Common Innovation Framework, a system that combines project management and business intelligence (BI) capabilities to give operating units in 50 countries the ability to search for and reapply concepts used in developing and marketing beverages produced by Coke. Common Innovation Framework provides a global view into the product pipeline, which lets, for example, one business unit mine for product ideas by searching beverage or brand concepts that worked well in other countries. The Innovation Framework also helps Coke recognize duplicate product ideas and helps the company to combine efforts.
• As for working with its extended family of bottlers, Coke is using SAP’s ERP software, delivered via Coke’s IBM hosted data centers to standardize business platform and streamline its supply chain. Improved communication and collaboration between Coke and its bottlers will enable Coke to smooth peaks and valleys in its demand forecasting. The rising costs of raw materials only make that close collaboration more important.
• Coke’s trying to cozy up to the kids through its www.mycokerewards.com Web site, which has 40 offshoot sites worldwide geared toward specific interests. The result is a social network built around Coke’s loyalty program that pulls people in by tapping their tastes in sports, music, and entertainment.

Coco-Cola’s investment in the collaboration IT software will help it in achieving two aspects of it’s marketing strategy.

Market Dominance Strategy: With the first and third approach, Coke will be able to continue its Market Dominance Strategy. These approaches will enable and strengthen Coke’s as a leader in non-alcoholic product. By keeping track on its effort to bring out new innovative product, Coke can streamline innovation and keep its competitors at bay. Collaboration with the customers will also enable it to exploit creative skills of its ‘prosumers’ who are willing to provide ideas for its product innovation. It can deepen the relation with it ever growing global consumers and enable Coke to continue to strengthen its brand.

Defensive Strategy: With the second approach mentioned above Coke will be able to create a good defensive strategy. Streamlining Supply Chain should allow Coke to continue to invest and strengthen its wide global distribution network thus increasing its market penetration. That should enable Coke to protect it turf before any potential competitive threats.

One thing to watch for is that Coke’s product proliferation (introducing multiple SKUs to target every fragmentation in market segment share) may undercut the ‘Coco-Cola’ brand’s halo effect. Collaboration technology or Enterprise Application may not be able to solve that problem.

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In an interview with published in Khowledge@Wharton, Bill McDermott CEO of SAP Americas talks about the future of Enterprise Application (you have to sign up to read the article). You can watch the entire interview below. But here are some of the experts from the interview. (Also read my previous blog Future of Enterprise Software)

This is what he thinks about today’s customers’ need: “The customer today wants a trusted innovator and they are standardizing their business processes on proven platforms — platforms that are well integrated and global. Any customer, whether small, mid-size or large, is thinking beyond their geographic boundaries, beyond their current markets. They have to innovate. They have to grow. So, the market is in favor of big, proven brands and it is not going to be nearly as friendly to small, riskier plays.”

About the push towards Business Intelligence, his comments are “There is a major gap between strategy and execution. If you talk to most CEOs today — and I do all the time — they have great strategies. You can look right behind their desk, on the credenza — three-ring-bound strategy documents galore, and they are great. The issue that they all have, though, is: How do you execute that strategy? So, the real art form is taking strategy to execution and then renewing that loop on a continuous basis. Business intelligence actually allows you to do that — how do you get the data, the information and the knowledge in the hands of the executive to make well-informed, real-time decisions.”

His views on Google “Google has done a great job of providing information to the casual user and the information worker and clearly the cloud computing concept is something that is here to stay. And therefore, Google has created great search, great cloud computing and, I think, it has forced everybody to think more productively about that user experience and how you can get that information into the users’ hands in highly productive, low-cost ways. So, credit to Google”

About the future of Enterprise 2.0: “… small companies that are innovating today to provide Facebook-like services to big corporations, and more and more they are trying to extract from the enterprise market pull to their sites because they think they can help businesses with things like advertising, affinity networking and marketing, etc. So that, too, is a trend that is here to stay”

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Microsoft announced its “Oslo” strategy last year as part of an overall service oriented architecture (SOA) initiative, but Oslo is about much more than SOA. It is Microsoft’s core modeling technology that will help take Microsoft deep into the cloud. This, according to eWeek’s article Oslo: Road to Microsoft’s Cloud.

Article quotes Steven Martin, senior director of product management in Microsoft’s Connected Systems Divisions (CSD) who says that “Modeling will get you to the cloud and the cloud will get you to the revenue”. Martin says that the future of application development at Microsoft involves modeling and services and will feature analysis and design tools, next-generation declarative languages, process-aware engines and platforms, and self-aware system management. The Microsoft products and tools involved in this will include BizTalk Server 5, BizTalk Services 1, Visual Studio 10, Microsoft System Center 5 and the .NET Framework 4 — all upcoming versions of core Microsoft technology. Martin also says the worlds of web services/SOA, modeling and the cloud are all “vectoring together… In a world where you’re going to have virtualization at the hardware layer and at the application layer, you’re going to have to model.” It sounds like Microsoft is making ‘cloud computing’ as its core growth strategy. In the past it’s used Software+Service as a differentiator from other existing SaaS or PaaS software and infrastructure delivery model.

Cloud computing appeals to the customers but they also recognize that executing that transformation of software architecture from a ‘customized to the internal infrastructure’ to the virtualized SOA is extremely challenging. Hence most of the customers right now are on the side lines when it comes to implementing changes. Microsoft is hoping to capitalize on that ambivalence. Hence, Microsoft intends to provide ‘hand holding’ services for the customers to migrate to ‘cloud’.

Here is the validation of that cloud strategy from Microsoft from the eWeek article - “When people think of services – either on premise or in the cloud – they often have an image in their mind of this very flexible and agile thing,” Martin said. Such as something that is always available and instantly reused by any new application you might want to develop, he said. “But it’s really just the tip of the iceberg,” he added. “Look underneath the waterline, and you will find all of the usual complexity of distributed software -– services are just software after all. They still run in datacenters, have to securely access and cross networks, and need sophisticated infrastructure and tools to manage them, etc.”

I think Microsoft is recognizing that the ‘cloud’ computing is the next phase in automation of enterprise applications and positioning itself to take advantage of this next wave of IT revolution.

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Forecasting has become more and more complex lately. Customers are less loyal to the brand and global competition has become fiercer, making it difficult to predict sales. Adding to the problem: Products, sales and distribution channels all have proliferated, and the life spans of products have gotten shorter. As a result, some companies are being forced to adopt new ways to improve forecasting and planning. And a common theme links them all: collaboration, according to the WSJ article Thinking about tomorrow – Seven tips for making forecasting more effective.

The article notes that cutting-edge companies take collaboration further, integrating operations with vendors and suppliers in ways that give each party access to data that helps keep the supply-chain flowing and inventories lean. Once such links are established, a manufacturer, for example, no longer has to guess at a vendor’s inventory or future promotional plans, hence forecasts — and sales — improve.

Here are the seven tips from the article to make forecasting more effective

1. Get Senior Executives Involved
2. Explain the Mutual Benefits
3. Clearly Define Goals and Agreements
4. Use the Best Technology
5. Focus Where Revenue and Profits Are Greatest
6. Link Incentives to Companywide Goals
7. Aim for Continuous Improvement

Of the seven important tips, I will focus on the 4^th – Use the Best Technology. The role of IT in making a successful forecasting is very critical. According to the article:

Companies should use state-of-the-art technology and standardized data if they’re going to get the most out of collaborative forecasting.

There needs to be a central database where different parties can easily store and view the latest sales, inventory and purchasing data. Historical data are important, too, to gauge forecast accuracy over time.

All such information should use language and formats that are easy to understand and use, and products themselves should be tagged with standardized labels, like universal product codes, so there is maximum transparency for everyone involved, including vendors and suppliers.

Demand planners need a system that gathers data from different departments and sources. They also need strong calculating tools that can run a lot of what-if simulations, such as what would happen to sales if the company lowers or raises the price, decreases or increases the advertising budget, introduces new products, enters a new market, or exits the old one.

Supply planners have similar data-gathering and calculation needs. For instance, if a product is expected to be short in supply, should the company put on an extra shift or outsource? Or if supply is expected to exceed demand, should it halt production or build inventory for future use?”

The article although points to the fact that the future of forecasting depends on the use of advanced technologies, does not talk about existing collaborative and interactive technologies and capabilities that can be exploited. Though the non IT executives are aware of advantages of ‘collaboration’ in improving the forecasting process they are not aware of Web 2.0 capabilities that can be exploited to improve the forecasting. The article also does not talk about another existing technology: Business Intelligence.  There are several Business Intelligence capabilities around the data that can be integrated to intelligently ‘feedforward’ relevant existing data into the next iteration of forecasting thus increasing accuracy.

This clearly indicates existing technological knowledge gap exists for the business strategist and non technical executives and is a great opportunity for the IT executives to bridge those gap. Several existing collaborative and business intelligence tools can streamline collaboration across the entire supply-chain. These collaborative Web 2.0 technologies can not only greatly minimize the bullwhip effect but can make the entire supply-chain agile for the demand changes. IT enabled collaboration and business intelligence capability is critical in tackling the increasing complexity and IT executives need to quickly integrate those technologies in the forecasting business process.

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Lean System in manufacturing focuses on reducing inefficiency by institutionalizing continuous improvement of process as well as the quality of the product. The Lean System characteristics have been applied in the software development with the framework known as Agile Software Development. It has a potential to have dramatic impact on the final software product and customer experience. Below are the comparisons on how the concepts of lean manufacturing are being used by Agile Software development.

Pull Method of Work Flow: Usual software development is ‘push method’ of workflow. The requirement gathering once completed is handed over to the development team. But ‘Agile’ methodology uses a ‘pull method’ where customer requirements are dynamically prioritized and the most important priority requirement at that period is ‘pulled’ by software developers.

Consistent Quality: Rework in form of ‘bug’ fixes are minimized by adhering to strict software design, coding standards, and full suite of automated tests. The development team using agile methodology is always encouraged to stop the development work and challenge usual assumptions, a practice similar to ‘Andon’ in Lean manufacturing.

Small Lot Size: Lean manufacturing uses small lots (quantity of items processed together) pass through the system faster. Similarly, Agile development cycle is sliced into small iteration of 2 - 3 weeks and every developer works on integrating the requirement into the application and testing it. Thus the scheduling and utilization of development resources will be maximized.

Uniform Workstation Loads: The Lean System’s uniform workstation load is achieved by ‘pulling’ in managed work load by the development team. The software developers are in charge of determining the ‘velocity’ of work flow.

Standardized component and work method: Reusable standardized components produced huge improvement in lean manufacturing process. In agile software development quality and efficiency is improved by automating and standardizing testing and release processes.

Close Customer ties: Close cooperation with the customer increases trust and with regular release planning meeting development team can build a close working relationship with the customers.

Flexible Workforce: In Lean Systems work force is trained to perform more than one job. Similarly, in Agile Development, the specialized functions of Database Admin., System Architect, and Tester for software development are eliminated. All software developers perform all job functions with a high emphasis on continual “on the job” training.

Line Flows: Uniform work flows through the process of agile software development and eliminate wasted developer time similar to Lean manufacturing.

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Organizations are looking for a well-rounded, enthusiastic people with tech ‘instinct’ to fill their IT department ranks according to Deb Perelman (read her blogs here) in the eWeek article dated June 16, 2008 page 37 (I could not find the link).

According to the article, the CIO and IT managers want to fill their IT department with people who are passionate about technology. Not only solid technical knowledge needed but more importantly what’s sought after is the ability to make that translate into business language. While CIOs understand that they cannot wave the magic wand and make their employees thrilled to be there, they are also hoping to find this energy among the employees. So, enthusiasm is another criterion that’s important to be successful IT employee. Interestingly, I discovered from the article that all the IT certifications don’t matter the way it used to. Experience and history of executing projects successfully ranks higher on a wish list of prospective employers than certification.

In conclusion, companies are looking for a blend of technical and business knowledge as well as soft skills to fill the IT ranks. Also check out my previous blog A New Breed of IT Workers.

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