BankerVision

Is it really over for Microsoft?

It was with great interest - though not that much surprise - that I noted the news this morning that Apple has finally overtaken Microsoft in market cap. The market, clearly, thinks the future fortunes of the former are rather more steady than those of the latter.

Personally, I have to agree with the market. Not because I like all the Apple stuff I have, and not because I think Apple have better people or leadership than Microsoft. I am not one of those people who think  Steve Jobs is the lone force that drives the success of Apple, and in fact, I don't see how one man could ever have such influence over every detail in a company that large.

The problem for Microsoft is that it does not yet have its back against the wall, and in fact, has never done. It is not staring death in the face, not even nearly so. It has never even had a near death experience. And, consequently, it is not in a position where is has to do anything very much other than what it has always done: crank out new versions of its old hits.

If there is one thing that I've learned about the innovation process and in particular, radical innovation, it is that there must be a burning platform which forces senior leaders to do something different. Because of Office and Windows, Microsoft has no burning platform, and consequently won't do anything different no matter how hard it tries.

In fact, as we've seen from insiders accounts of life trying to be innovative at Microsoft, such efforts to be different will be killed off by political infighting and blatant defense of empires.

I always hate it, by the way, when everyone holds up Apple as an innovative company, and explains that it is innovation which has driven its present success. Same for Google. Neither organisation is especially innovative, at least when you take the conventional definition of the word. They come with interesting new ideas, of course, but their mastery is in seeking adjacent spaces for stuff that is largely working well and wrapping it in a way that disrupts whoever is there presently.

I don't need to bother with all the typical examples of this since they've all been written about countless times before.

My point is that Microsoft doesn't do this. Their strategy is to innovate in the truest sense of the word. They want to create brand new ideas that turn into hit products. When that doesn't work, they always seek to copy the way someone else has created a hit product, and win the war by attrition.

Microsoft think the product is important, not the business. Apple and Google start from the business and then come to the product. Consequently, they're always going into spaces which aren't always obvious but where they can leverage their capabilities from established hits. Microsoft, in contrast, goes to places where it has neither capabilities or hits.

I wasn't surprised to see one commenter on Mini-Microsoft exclaiming that Microsoft's main problem is its "terrible" marketing, and if it could just get better at that, all its new products would succeed. When you think product, as in "lets build the greatest product", it is tempting to imagine that success comes if you can just get the message out.

That has obviously not worked in the past for Microsoft, and is not the centerpiece of the success of Apple or Google now.

The real problems are twofold though. The first is that Microsoft has no culture of failure, because every failure it has ever had is overshadowed by the huge successes of its two main products. The second is those two main products are such successes that no-one in the company can believe that a product-centric strategy isn't the way forward.

So yes, I do think that Apple is more steady for the future. Its not too late for Microsoft to reverse its direction of travel, but I do have to wonder if that's going to be possible unless they have  a near-death experience.

The thing is, Windows and Office aren't going away, though they may be going into decline. That's a decline which will last years, and the incumbents in Microsoft will be able to dress it up as success for years. There's no burning platform at Microsoft, and there's not likely to be one.

The market has probably got its valuations right.

An excerpt from my latest book

As I said a week or so ago, I'm busily writing a manual for enterprise sales people. Here's another excerpt, this time from the Introduction.

If you are an Account Director that’s responsible for selling to large organizations, you’ll be well aware of the traditional challenges involved in closing a deal.

You have to build strong and lasting relationships so you can get meetings with the people who can make a buying decision. You need to do so in the face of what is ordinarily quite considerable disinterest, sometimes even open hostility.

You have to make sure you get enough things in front of your customer that your pipeline is deep. You need a deep pipeline to ensure you have enough headroom to allow for the inevitable collapse of most of what you propose.

When you have, finally, got a deal on the table, you have to negotiate shrewdly in order to make sure you maximize your margins and extract the most value possible from your customer.

And in the end, ultimately, you then have to supervise every aspect of delivery, making sure you balance your costs so you do the minimum amount of work possible. You do the minimum you can get away with because that makes economic sense and maximises your margin.

That you do all these things in spite  of the fact that they don’t help your customer makes the relationship part of what you do completely, utterly false.

Nonetheless, some of you do quite well. My observation is that only the cleverest, most charismatic, of enterprise salespeople fall into this category.  You are great actors, able to delude customers into thinking that you actually care about them. Whereas the reality is that you think firstly about your number and what you have to do to make sure you hit it.

Whether you are a good person or not, this sets you up to lie in every interaction with your customer. You don’t care about what they’re trying to achieve, you care about what you have to achieve.

I’m not critising you, mind. The way organisations are structured presently, both on sell and buy side, you are forced to behave this way because it makes the best economic sense.

But the question I’m asking is this: what if things were different. What if you truly made the customer the centre of your world? What if, actually, you stopped lying in your interactions with them?

The Great Lie of the Sales Relationship

“Lying?”, I hear you ask?

Yes, lying, and here is why I make the challenging proposition that most enterprise sales people are extremely skilled at acting out the lie of their work.

Consider again the list of things enterprise sales people do with which I opened this chapter, but this time do it in the context of a real relationship, lets say with a personal friend.

You have to build a strong and lasting bond so you can get the meetings you need to pitch in the face of disinterest. A real relationship is never founded on disinterest - it is based entirely on common interests. Your friend is a friend because of the commonality.

You have to get enough stuff in front of your customer to ensure you have a deep enough pipeline to sustain deals that don’t go anywhere. In a real relationship with a friend, you’d never do this. A real friend would come to a mutual agreement about some course of activity - just the one - and would follow it jointly with you to an outcome. Friends support each other, they don’t play a numbers game to ensure they get to a personal outcome.

You have to negotiate shrewdly to extract the maximum value from your customer. If your customer was a friend, you’d be more interested in giving away your stuff, because you know that your friend would return the value as a natural consequence of friendship.

And finally, doing the delivery, you spend all your time making sure you spend only that amount of money you need to keep things on the straight and narrow. That’s cheapness, in the context of friendship. Imagine telling your friend you’re going to spend as little on them as you can get away with! Doing the minimum possible is a long way from going the extra mile, which is what a true friend would do.

Of course, enterprise sales is not friendship, but you can see how the activities of the enterprise salesperson can easily get really false.

You can’t on the one hand say you are successful on the basis of the relationships you build, and then go on to do everything that would normally bring a relationship to its knees. That’s why the best enterprise sales people are such great actors: they can make a customer believe in the relationship whilst simultaneously optimizing the outcomes for themselves.

I'm still seeking enterprise sales horror stories from either the buy-side or the sell-side. Right now, I'm looking for anything that has to do with mismanagement of evidence (ie, when case studies or customer references, or POCs have gone wrong), and blow ups when vendors have pitched "innovation".

The final book will likely be out in a couple of months.

5 Situations You Should Pull "The Lever"

"The Lever" (def): A mystical, invisible handle you can pull to get crushed by a safe. A device often used in popular culture, especially in cartoon shows featuring comical adversaries and their booby-traps.

The top five signals you should pull "The Lever" include:

1. You have just been in a three hour meeting you thought was concluding. Then some bright spark pops up with three items of "any other business", each of which will take another three hours. Because they are more senior than you, smile sweetly and resign yourself. While you're waiting for the cobwebs to form and your beard to grow, you pull "The Lever" because being crushed by a safe is more stimulating than the alternative of propping your eyes up with matchsticks.
2. The startup time of your laptop is longer than that needed to get through the items of "any other business". When you question this, you are told everything is within the SLA. You pull "The Lever" to get crushed by a safe because the alternative is to make so many cups of tea you'd cause the local water pressure to drop in the pipes.
3. While you're waiting for the laptop, but before you pull "The Lever", you are confronted by a sales-guy who has a proposition so good you'll be "dying to hear about it". You pull "The Lever" and get crushed by a safe because you'd rather die without hearing about it.
4. You discover one morning that "The Lever" has been decorated with gold gilt and now has a sign attached inviting you to pull it every time you've achieved one of your goals. Someone senior has determined that a public display is a great way to motivate, so you pull "The Lever" to get the public display of being crushed whilst putting yourself out of your misery at the same time.
5. The top reason to pull "The Lever", however, is you discover the person with the "any other business", and who thinks that slow start up times are OK, and who decorated "The Lever" are the same person. Even knowing this, you go and pull "The Lever" to be crushed by a safe because you know if you fail to do it this time, they will next dream up a Button-That-Dumps-You-In-The-Piranha-Pond and conceal it in the "on" button of your slow-to-start laptop.
   

The Vendor Manual on Customers

I do a lot of meetings with vendors. A lot of meetings. And, as you'll know if you've been reading here for any amount of time, I'm of the view that many of these meetings are (frankly) a waste of time. Not all of them, by any stretch, but a very sizable percentage.

I'm beginning to come to a realisation about this. Vendors who have always been vendors (i.e., they have never worked customer side) are usually quite poor at understanding the real issues customers face. They say they understand, but I don't think they really do.

I have no other way to explain the behaviours you get from them otherwise.

Anyway, I also do quite a few speeches to vendors giving the "customer perspective". Almost always, people come up to me afterwards to say that they didn't realise X, or hadn't considered Y, and that my material was really interesting.  I like to be candid in those talks, so I usually don't pull punches.

Anyway, since I completed The Little Innovation Book I thought I'd try to do something constructive about the vendor thing. Therefore, I've paused One Big Thing (my next innovation book for people who have only one shot at getting things done) and decided to write an insiders view of the enterprise sale for vendors. I don't really have a good title yet (suggestions welcome).

It'll be another short, 30k word work, split into commute-readable chapters.

So you can get an idea of where I'm going, what follows is an excerpt from Chapter 2, which is about the falsity of the relationship selling model.

I open the chapter by reproducing an exchange between an Account Director and myself in one company I worked for. It was a technology vendor, one that mainly sold bits of commodity tin. Here is part of the analysis I follow this with:

The second point of note from the exchange I had was the Account Director, whether it was deliberate or not, was setting up an adversarial situation inside our organization.

When IT (for example) has made a decision on something that is disadvantageous to a vendor, it is a fairly normal reaction to scramble to find someone with more power that will re-balance things back in the vendor’s favour. There are strong economic motives for doing this, of course.

When a deal goes the wrong way, the potential loss of revenue can be huge. That is revenue that has to be made up elsewhere, and means that new deals have to be put on the table quickly if the Account Director is to make up their number at the end of the year.

From the perspective of the Account Director, trying to stop this happening makes excellent economic sense. For most selling organizations, the number of opportunities to make the number is essentially finite. Wasting any of them can have drastic consequences for end of year compensation.

Then, too, it may be that there is a real belief that the customer is making a mistake. In this case, in the name of the “doing the right thing for the customer”, you often see this behaviour occurring.

Whether or not the vendor is actually attempting to set up an internal confrontation, doing so is another example of the falsity of the relationship sales approach. In a true relationship, vendors would never dream of putting their partners in a situation where they are in the middle of a fight. Friends don’t do that to each other.

But the economic basis of relationship selling makes it very difficult to avoid. Faced with the certainty of a significant loss of money, or possibility of putting a relationship into a place from which it cannot recover, most Account Directors are forced to choose the latter.

After all, if they are good enough at their jobs - acting (that their primary concern is customers, not their targets) - it will be possible, given enough time and effort, to convince the customer that they really do  have their best interests at heart. A brilliant Account Director can make the choice of money over relationship time and time again and get away with it. Poor Account Directors, on the other hand, do so only once before they get thrown out by the customer.

Setting up adversarial relationships in accounts is an overt case of a much more common behaviour, known internally to the buy-side as “divide-and-conquer”. Vendors, usually with pretty good intentions, go around to as many people as they can making their pitch.

There will be a pretty varied reaction to this. Some people are open to a new proposition, and will be supportive. Most will be disinterested. And some will be openly dismissive.

By seeing as many influential people as they can,  vendors are able to maximize the opportunities they have to create a groundswell of demand for their offer. Indeed, this truly is a numbers game, because with enough meetings, it is possible to sell anything to a large organization by virtue of the fact that sooner or later, there will be enough people wanting it that a purchase is inevitable.

Divide and conquer is hated by the buy-side, because it creates a situation where things happen that are outside the strategic frame. The result is many smaller deals going on, which can add up to significant overspend over time. In one company I worked for, there were twice as many software licenses purchased as there were people in the organization.

This is demonstrably bad for the customer, and demonstrably very good for the vendor, of course. It is yet another example of where a decent account director will almost always trade relationship for revenue.

I'm planning to have the full book out in about 3 months. I'm still looking for any vendor horror stories - from either the buy or sell side - which can add some spice. I'll keep your identities and organisations confidential if you wish.

Never waste a crisis

I'm in Malaysia presently speaking at a banking conference (civil service watchers - I've taken annual leave to do so).

A question I've just gotten is "what is necessary to make a bank go after radical innovation"? My answer was "you need to be staring death in the face".

This is true for most organizations, I think. Truly business radical, game changing innovations that affect core business almost never comes from large organisations who can sit happy on their current operations.

"But", I hear you ask, "what about Apple? What about Google. What about.. what about..?".

Notice that I said game-changing innovation that affect core business. Apple, with iPhone went after a new segment. Google, with Docs and so forth, are going after a new segment. They're not doing anything that disrupts where they got their money previously.

Banks, and to a lesser degree, the public sector are different. Bankers don't have any new segments they can go after. They go after incremental innovations that let them do more of the same, certainly, but you either are a banking customer or you're not. And for public sector, you are a customer, whether you want to be or not.

In both cases, there is no reason to change anything unless you're facing a crisis of titanic proportions and your back is against the wall. You have to innovate because there are no other options available. If you fail to pull something out of the bag, its game-over.

Banking had it's crisis, but conveniently got a bit of a boost from the public sector. This meant it dodged the "do or die" transformation it might otherwise have been faced with. Whether that was the right thing or not, I won't comment on. But let's face facts. There will likely be no radical transformation of the banking service offer, because profits are returning and "going back to basics" is a perfectly reasonable strategy in this scenario.

The same cannot be said of the public sector though, which has its back to the wall substantially. We will not be able to do the things we've done in the past the way we've done them, because the money to do so doesn't exist. Ergo, we are forced into new ways of doing things, whether the entrenched hierarchy likes it or not.

Here is the conclusion I draw from all this. If you want to be an innovator, and you want to make a real difference, you can only go to organizations in crisis. They are the ones that are forced into changes rather than choosing to adopt changes. No-one chooses to change without a good reason.

Government needs a SkunkWorks

Picture this: you have a string of big projects, and all of them are expensive. All of them are late, and everyone is getting pretty fed up. You keep hearing stories of small, nimble organisations who, startup-like, produce miracles on a shoestring. And you look at them jealously, but no matter what you try, you just can't seem to get that kind of performance for yourself.

This is the problem with almost all development shops where there is Big-IT. Big-IT is characterised by big processes, big budgets, and very, very big projects. It is also characterised by big overruns, and significant budget-blow outs.

It is a problem which is magnified in Government. I say that knowing that doing so will likely get me into quite a bit of trouble. I do it anyway, because now is the first time in ages that there's a chance to change things.

Just why is it that Big-IT always fails to perform well when it comes to delivering big pieces of functionality?

Here's my view. If you want to build a small house, you can put down a concrete slab for a foundation and get started. If you want to build a skyscraper, you dig deep holes, put in very comprehensive foundations, and install significant infrastructures up and down the building to make sure nothing falls down. If you want to build an elevator to orbit, practically the whole building will be supporting infrastructure, and there'd going to be precious little space for anything useful for people.

In Big-IT, we almost always build elevators to orbit, especially in outsourced environments. Outsourcers love these things because all the governance, security, test, and process groupies allow them to sell way more hours than they'd be able to otherwise. They're hardly going to turn up for small projects, now, are they?

In Government, practically all IT projects are big. My argument, though, is that now is a good time to try something very different. Lets build lots of little projects without all the supporting infrastructures and administration first, and then worry about the infrastructure we must have after. Let us let projects get big only after we've proved that whatever-it-is works.

This is a tried approach,  known as a Skunkworks. Government needs a Skunkworks, and it needs one badly.

We need one badly because the entrenched ways of doing things - which have worked reasonably well for decades - have stopped working now. It is no longer possible to ignore the fact that groups of citizens, some with practically no training, can build stuff in days that takes Government years and costs millions. Fact is, those millions simply aren't available any more.

A Skunkworks would let us try new things, and more particularly, let us try new ways to do new things. It would also let us fail cheaply and quickly.

This last will be the hardest thing for civil servants to accept, of course, because failure is a very, very dirty word. But quick and cheap failure is really spectacular success. Failures of this kind teach lessons,  letting you move on to the right way of doing things more quickly.

My guess is  a Skunkworks which celebrated rapid and cheap failure would have significant economic upside, actually. If even 10% of the things it tried worked and produced value, I rather think that those few things would pay many times over for all the failures that went before.

Not to mention that those things would happen quickly.

What's stopping us spooling up a Skunkworks? Nothing but the momentum which continues to carry us down the old path. It's inertia, but, as I said, we're at the dawn of something new. Personally, I'm confident that all manner of  things which would have been difficult before will now become possible.

Technorati Tags: Government, skunkworks, failure

Where is the HSBC Mobile Offer?

The results of the election in the UK have not yet been called, which means I still can't talk about some of the things I've got backed up. In the meantime, Aden Davies (@aden_76) provokes me that I should "write a constructive post with a dedicated URL to get us off the ventilator". So let me use the election hiatus as an opportunity to comment on mobile banking, and more particularly, the lack of it at HSBC.

A week or so ago, I downloaded the NatWest iPhone banking app, apparently the only banking app in the UK on iPhone at present. Why this is so I have no idea - in other countries like Australia, you're almost not a bank unless you have an iPhone app. Anyway, I downloaded the app because I'd heard rumours that you could use it to access your HSBC accounts if you had a NatWest account. This is true, actually.

I am a long-standing HSBC customer, and I don't mind admitting I'm a bit of a fan of Premiere. I love that I can move money around the world free of charge with instant settlement, and I like it that you get all these special spaces in branches. I even like the internet banking service, which, whilst its nothing that special, is perfectly functional and does everything, almost, that I need.

I am, however, at a loss to understand the complete lack of a retail mobile banking application. Not just for iPhone, but at all. What is going on HSBC?

I have a feeling i know the answer though. I'll bet that someone, somewhere, has decided that mobile is strategic, and therefore a global, multi-market solution is needed. I'd guess the whole mobile thing is so strategic to everyone that a big-bang approach seems the only way to make a splash. Never mind that you can build iPhone apps for practically nothing these days, and never mind the fact that everyone else has a mobile offering, even if its not on iPhone. I mean, even the DWP has an app these days, and we're the government.

The NatWest app, by the way, is pretty lacking in functionality, and it is based on the generic service that banks in the UK get from Monetise. They're the same people that run the Link ATM network, and apparently the app uses that transaction network to get its data. In other words, there's no integration or effort required to get the Monetise app to work for a particular bank, and is the reason that I can use my HSBC accounts in the NatWest version.

Anyway, whilst a mobile app from HSBC would be nice, what is striking to me is that the bank hasn't recognised that there is a need to get early experience in this space if you want to take the lead later. Shoving a poor application out the door - like NatWest have done - is teaching them valuable lessons about how customers like to use Mobile.

Moreover, they're building a committed and loyal base of customers from the ground up. These are early adopters who have no choice but to open an account if they want to bank on iPhone. There are only so many early adopters available in a given market, and NatWest are getting all of them. Typically, somewhere between 15% and 18% of any audience will bother trying something new - but they're the ones that will tell everyone else about their experiences. Recruitment of these people is the key to building a base.

And lets not forget that, as the only bank with an iPhone app in the UK, Apple have been shoving the app in front of everyone through their TV commercials featuring "there's an App for that".

Of course, all this is pretty incidental to the real business of retail banking if all you're doing is offering transaction histories and balance checks, which is almost all the NatWest app does.

But consider this: if all the early adopters are somewhere else, and then you decide to drop a major game-changing new feature in, who will be around to talk about it? Who's going to tell their friend and friends of friends how their experience has changed?

The point of mobile banking, really, is what the next generation of apps is going to be able to do. Contactless payments, point-of-sale loans, banking related geo-games and so on and so forth. The potential for integrating banking services into the day to day of life is the game changing play that mobile enables.

Too bad if you haven't got any customers willing to try those features though. Hurry up HSBC, if you want a shot at it.

Update: Finextra have picked this up, and and Brett King add his thoughts here as well.

Update 2: I was wrong about HSBC and their lack of mobile. They do have an offering for supported handsets (not iPhone, though), powered by Monetise. The link is here. However, I have to say, at this point, that I couldn't find out how to navigate to that link from any of the products I have, and furthermore, mobile doesn't come up in their search when you ask for it. Despite all that, I think I stand by most of the comments in my post.