Christopher Carfi

January 21, 2007November 27, 2011

VRM Scenarios

Been doing a lot of thinking about VRM (Vendor Relationship Management) in anticipation of this week’s developer’s meeting. It’s a potentially expansive, and extremely undefined, area.

One particular tactic I’ve found useful when dealing with uncertainty is scenario planning. There are many different implementations of scenario planning; the one I use is a modified version of the one described here and originally pioneered by Peter Schwartz at GBN.

So, the two big questions:

Q1: Who controls the interactions between vendor and customer?
Q2: Are the interactions focused on transactions or relationships?

This gives us a universe as follows:

It’s important to note that the object of this exercise is most emphatically NOT to “predict” which of these four areas will “win.” Instead, it’s to draw a vivid caricature of each world, and determine its key traits. Doing this allows us to better plan for, and recognize, instances of that particular scenario when we run across it in the future.

“Minority Report”
Vendors bring every resource to bear to extract the last bit of margin out of every customer. Targeted ads, served relentlessly and based on our past purchasing behavior, attempt to entice us to consume the next new thing. Friedman’s “Flat World” observation plays out to its logical conclusion, with manufacturing and marketing, sales and service taking place at whatever patch on the globe can deliver the product most cost-effectively. Since vendors use data mining of petabytes of customer data in order to predict the next hot trend, post-sale service becomes increasingly unimportant, since product lifecycles are measured in weeks. Customer data becomes a pure commodity, created, owned and traded by vendors in the way that carbon credits and pork bellies are traded today. Vendors with economies of scale rule the day. Customers get low prices, and limited choice.

“Me-Ville”
Cryptography, identity management and business processes have all converged, enabling customers to shop securely both online and off. Customers issue anonymous “personal requests” for goods and services, and vendors battle each other relentlessly in order to be selected. Prices are driven to just above cost for commodity items, and a cadre of flexible, “long tail” suppliers emerge to meet the non-commodity requests. eBay stumbles, and then launches a service that is the converse of its current offering. Reputation systems abound for both customers and vendors, leading to the creation of RepTorrent, an anonymous network for the trading of gray-market reputation identities.

“The Global Village”
The customer owns her own information, and does with it what she pleases. In some cases, anonymous transactions are conducted, but most interactions happen with trusted vendors with whom the customer has dealt over time. The customer chooses vendors based on interpersonal empathy and affinity, as well as technical capability. Relationships grow over time, and vendors evolve beyond being simple suppliers of goods and services and into confidants (and sometimes friends). Customers pay somewhat higher prices, but look at interactions with vendors holistically, feeling that price is only one aspect of the true cost of a good or service. Customers and vendors work together to come up with new products and services. Competent and personable vendors succeed, scam artists are quickly outed and ostracized. The same is true for customers, as both vendors and customers belong to interconnected offline and online communities.

“The Matrix (Blue Pill)”
Vendors control production, allocation and distribution, and at the same time understand that a connected customer is a lifetime customer. Supply chain models such as vendor managed inventory and consignments are used. The vendor controls what purchase options are given to the customer, and realizes that he must be equitable, or the customer will terminate the relationship. The vendor has perfect information on the behavior of his customers, including purchase history. Vendors use this information to continually refine and model the selection and quantity of goods and services made available to each customer not only to maximize profits, but also to ensure continued access to that customer. Customers select their vendors based on the belief that they will have an ongoing relationship with the vendors they choose, and give them feedback as to what they’d like to see.

So. These are just first thoughts. Would love to work on this together, both here in the comments and here on the wiki.

marrakech market: malyousif

January 21, 2007

Changing The Channel

Joe Andrieu, regarding the Shopatron:

“Their system is remarkably simple. They host an online store for a manufacturer, such as Callaway or Brooks. The store is branded 100% as the manufacturer’s and visitors to the manufacturer’s website are seemlessly directed to the store as a way to purchase products. Customer orders are placed on a retailers-only bulletin board, with a fixed price for retailers to “bid” on the right to fulfill that order. Retailers who bid essentially say “Yes, I have that product in inventory and I’ll ship it at that fixed price.”

Once each day, Shopatron resolves all of these bids, sending them to the nearest retailer. That retailer boxes up the product and send it to the customer. The customer gets the product with local support, quickly, and with minimal shipping costs. The retailer gets a new customer and the profit from the sale.

In cases where no retailers want the bid, the manufacturer ships the product themselves. And because nobody wanted it, there is no channel conflict, just higher margins.”

January 21, 2007

Writing Well Is The Best Revenge

From the “people I don’t link to nearly often enough” file…go read Eden Kennedy. Example:

“So, McDonalds! What’s up with this?

This bag contained a somewhat bland sandwich consisting primarily of ground-up cow.

You offer the cow flesh sandwich in a bag that has the image of a pretty American woman demonstrating yoga.

You believe that yoga is a healthy practice, and so you like to associate health with your cow flesh sandwiches.

Yoga is a practice that was developed in a country wherein cows are traditionally allowed to roam the streets and live their happy cow lives through to their natural ends, and not have their flesh end up between two bleached-flour buns and accompanied by fries and a Coke. Perhaps that, alongside the poses and postures, should be something that people keep practicing, rather than going to get themselves a burger.

It would feel a little more honest if it was, at the very least, encouraging the action. People, especially couples, could find it to be a unique bonding experience. But there’s another point to be made here. Consider, the pretty American woman doing vrksasana, the tree pose? On a paper bag made of? Trees!

I’M LOVIN’ IT, MCDONALD’S! A++ FOR IRONY!”

Bonus link: Yoga, as done by plastic action figures (n.b. the surgeon general advises that you finish consuming whatever beverage you have in front of you before clicking that link, lest you spew said beverage out your nose via spasmodic, very un-yogalike laughter)

Bonus link #2: Ooops, I wrong wrong. Apparently laughing yoga is ok.

January 18, 2007

From The Archives: Understanding The Future Of Social Networking

(Long time readers will recognize this as a piece that originally appeared in June, 2004 over on AlwaysOn, before the AO link structure went south after their relaunch. Reprinting it here for both posterity and because Christopher Koch at CIO and Nick Carr have revived the meme.)

—

June 15, 2004
Studying the flameout of “net markets” in 2000-2001 provides one piece of the puzzle.
by Christopher Carfi

“Yeah, I was on Friendster last week, and all I heard was the wind whistling..I actually think I saw a tumbleweed roll by. That place is empty.” – overheard

A current search of the phrase “social networking” returns over two hundred companies that are vying for various niches in the social networking space.

Most of them will fail.

Meta Group, a leading industry research firm, has written “Although executives in struggling [firms] may blame inertia…for the failure of their businesses, the real reason for that failure is that few of those markets have a solid business plan or opportunity to make money.” The interesting thing is that this insight from Meta Group was not written about social networks. It was written about the area of “net markets,” perhaps the most hyped area of all during the bubble years. According a various reports, net markets were going to grow from a $200 million market in 2001 to a $37 billion market in 2005. (note to self: get better drugs)

So, what happened with net markets? Why did they fail? And, more importantly for today, does the implosion of net markets in 2001 give us any indicators of the future path of social networking systems?

Similar to today’s buzz around social networking, net markets (aka “b2b exchanges”) were going to bring together formerly-unknown partners and provide the infrastructure and processes that allowed those partners to connect with each other quickly, easily, seamlessly, and inexpensively (says so right here on the label!). For buyers in net markets, aggregation of demand was going to allow them to achieve lower prices. For the sellers, net markets were going to give them access to a vast marketplace of buyers, and allow them to transact business globally for a fraction of their current costs. However, what actually happened was that the buyers who mattered actually preferred to build deeper relationships with a handful of key suppliers, instead of entering willy-nilly into transactions with the low-cost provider du jour. This is because a fundamental dichotomy lies between the desire of the net market (or social network) to increase the quantity of inter-connections between its members, and the trend of the individual members to instead prefer more quality relationships.

When these so-called “public” net markets failed, a switch was made to enable more “private” net markets. In contrast with the public net markets, private net markets provided the tools to build a market ecosystem around a few key players. Instead of providing the tools to find new partners, the private net markets provided the tools to enable richer and more productive interactions between partners who were already at least somewhat known to each other. We are now seeing a similar trend in the social networking space, with social networking tools moving from the “public” model and instead being used to provide the glue between individuals who are already part of a known community, rather than tools for search and discovery of the world at large. Social platforms are now becoming part of everyday life, especially for people who are using it to earn money and work. Making your social platforms public, or link in bio on instagram, can make your platforms visible to anyone, increasing your visibility and traffic.

For social networking, the reason the public-free-for-all type model isn’t going to work has to do with the asymmetric value of relationships. True, there are a few “super-connectors” who had rich offline networks prior to the social networking blitz who now have accepted many online social networking requests. But this type of individual seems to be the exception.

This is because, quite simply, most of the requesters of contact have less “relationship capital” to offer than those who are receiving the request, who quickly become deluged with requests and eventually drop out of the network or begin to only respond to requests from colleagues they already know through other channels. Relationship capital is by no means a commodity, and is not given up freely. All relationships are not created equal.

In reality, once one gets beyond two “degrees” in a public social network, the presumed “connection” between the requester and the requestee based on the strength of the intermediate relationships is tenuous at best. This is why public social networks are likely to fail. Instead, as we see the move from public social networks to private social networks, we will see individuals joining multiple private social networks for the various facets of their life — school, interests, various flavors of business networking, etc. Yes, there may be one eBay-sized “all purpose” public social network that comes out of the mix, but the vast majority of the social networks that we will see in the coming years will follow the path of the net markets, and be used to provide richer collaboration between individuals and companies that have existing commonality.

January 18, 2007

Got My Mojo Workin’

Tara Hunt, on some things that contribute to the intangible aspect of being “on” and having your mojo working:

“1. Have a higher purpose. I know I’ve said this before, but it’s essential to mojo to believe in something beyond your own needs.

2. Don’t be a commodity. Commodities don’t have mojo, they compete on price, efficiency and speed. Mojo is terribly inefficient.

3. Work as a team. If your employees aren’t feelin’ it, your customers won’t either. Treat your employees as members of a team. Reward passion.

4. Be part of the customer community you are serving. Use your own product, interact, use competitive products, work to further the industry you are in.

5. Operate on passion, not ambition. Ambition is great for making barrels of money on undercutting and destroying your competition, climbing to the top of the corporate ladder, etc. It ain’t mojo.

6. Give a damn. This is kind of tied to everything else, but people with mojo never have to have “because it’s the better thing to do” explained to them.

7. Commit to excellence. Obsess over details. Experience. Be bothered by one customer’s bad experience. Work hard to do better.

8. Get slow. Ever notice how people with mojo never seem to be rushed or distressed? They seem reflective, introspective, they take their time. Think slow food, slow marketing, etc.

9. Believe in your gut. Stop thinking 100% with your head. Fritz Lang once said, ‘The mediator between head and hands must be the heart!’”

Nice list, Miss Rogue. (Although I do think #5 can be an “and,” not just an “or”…it’s possible to have both passion and ambition simultaneously.)

January 18, 2007

Create-ivity Study

Microsoft’s Treb Gatte (blog#1 and blog#2-with-a-much-better-name) writes in…

“My personal friend, Dr. Amy Randel, is a Management Science professor at San Diego State University and is conducting research on creativity and drivers of creativity. She is looking for volunteer pairs in the technology industry to fill out a survey in January. Please note, a co-worker will also need to fill out a survey. I volunteered to help spread the word as I see this as an interesting study.

Creativity has not been well studied so you will be greatly expanding what is known about creativity and its contribution in the workplace.

If you are interested in this voluntary exercise, please send an email to the following address: [email protected] A email will be sent to you with the survey link information. This process is being done to validate who is filling in the survey.

Here’s the study overview from Amy.

‘We are conducting a study on types of creativity and drivers of creativity, including motivation and personality. As part of this study, we are looking for participants to complete an anonymous 20-30 minute on-line survey and to have a co-worker complete a short 5 minute on-line survey.

Participants can receive a summary of results (with confidentiality protected) upon request. Participants in this study also will receive the benefit of participating in research on creativity. As recent articles in Business Week and Fortune have described, creativity is an essential ingredient in the global economy. This study will contribute to the small, but building body of research on creativity in the workplace.

The two primary professors working on this study are Amy Randel, Ph.D. (San Diego State University) and Kim Jaussi, Ph.D. (SUNY Binghamton). Both professors regularly publish studies based on survey research in companies.

Data collection for this study is expected in Spring of 2007.

Amy’s bio can be found here: http://www-rohan.sdsu.edu/~cba/facdev/randel.html. Kim’s bio is here: http://som.binghamton.edu/faculty/jaussi.htm‘”

Treb, happy to help out.

Bonus create-ivity link: You Keep Using That Word…I Do Not Think It Means What You Think It Means

January 17, 2007

Bill Marriott Joins The Blogosphere

What do you do when you run one of the most-recognized hotel chains on planet Earth, and learn there’s a better way to connect with customers and employees? If you’re Bill Marriott, you start a blog. Marriott:

“I’m venturing into uncharted territory as I launch this blog. A year ago, I didn’t even know what a blog was — until my Communications team began telling me about all the blog traffic on travel and tourism. Now I know this is where the action is if you want to talk to your customers directly — and hear back from them. Soon we’ll add an audio version of the blog. That’s how I’m most comfortable: telling stories and listening.

Blogging will allow me to do what I’ve been doing for years — on a global scale. Talking to the customer comes easily to me. I visit 250 hotels around the world every year. This year I’ll be traveling once again to China where we have 27 hotels, 16 under construction and many more in our development pipeline. At every hotel, I talk to associates, from housekeepers to general managers, to get their feedback. I call it “management by walking around.” Like my parents, I value the input from our associates at all levels. I make lots of notes — and my best ideas almost always come from our people in the field.”

Right on.

(hat tip: david gammell)

January 17, 2007

Airline Customer Follies, Episode #7,325

United Airlines (via Joseph Jaffe):

“United – The Thinking Airline – has decided to drop snacks on flights less than 2 hours (which PS equals about 5 hours when you factor in travel and wait time)

According to the geniuses at United, they figure this move will save them $650,000 this year. I guarantee you they’ll LOSE more than $650,000 with passengers that choose alternative airlines in the process.”

American Airlines (via Mary Trigiani):

“Atlas Shrugged, by Ayn Rand, is a heavy piece of melodramatic fiction. Or so I thought. Then I was stranded two weeks ago in O’Hare Airport. I realized about six hours into my 18-hour ordeal that one of the themes of the book — the decline of the railroad industry — was coming to life before my very eyes. Only this time, it was an airline.”

On the other hand, Shel Holtz calls Southwest one of his favorites.