The Management Blog

In this first blog on the subject of using Web 2.0 tools and applications, I take a look the relationship between Web 2.0 applications and the needs of a networked company.

The other day I was sent a link to a website entitled How to use Twitter for marketing and PR a hot topic if ever there was one that, from its title, sounded like an interesting read. Frankly, it was both more prescient and a great deal more full of insight than one can imagine – it simply said ‘Don’t’. This places it directly at odds with the enthusiasts and supporters of Web 2.0 applications as marketing tools: something they like to call Enterprise 2.0 as though, somehow, this made it different. But Web 2.0 applications are much much more than communication tools for marketing.

Web 2.0 is really a set of computer applications that makes use of computer networks (and especially the Internet and Worldwide Web) in ways that allow for greater collaboration between users and a closer association than would otherwise be possible between those not who are not co-located . The underlying principle is that each of these applications allows the user to generate content that is then seen (or shared) by other users who can comment on, modify, or add to the original content. Between 2003, when the term was popularised, and 2006 when it became an accepted computing term, Web 2.0 tended to be the domain of the geek, the nerd, and the band-wagon jumping technology journalist. The focus was very much on blogs (often the random thoughts of empty minds?), forums (everyone an expert), wikis (like Wikipedia and, technically, a ‘community’ website in which all content can be edited by any user) and then the rise of the ‘social networking sites (MySpace and Facebook) and the advent of the micro-blogging sites (Twitter and others). Later, other applications arose allowing users to share photographs (Flikr is an example) and videos (YouTube).

The basic assumption is that all the world wants to communicate and that they want to communicate electronically, thus completely ignoring the fact that 71.3% of the world have little or no access to computers or networks on a regular basis. Field research does seem to confirm that everyone wants to communicate, but the same research also suggests that not everybody, and indeed, a majority would prefer not to communicate electronically. On a recent visit to a large corporation that is extremely well networked with Web 2.0 applications, it was interesting to see that face-to-face meetings were still the norm and many people preferred to ‘pop in to see a colleague’ rather than contact them via one of the networking tools.

Of course, when those involved are in a virtual team (either not co-located in the same building or not working in the same time zone – either geographically or by the result of shift work) or the organisation is operating in a physically dispersed or deconcentrated structure, then the use of networking tools facilitates communication in the way that the telephone and then email used to.

But Web 2.0 applications are not primarily about ‘communication’ (although they are probably the C in ICT – information and communication technology - which replaces both IT and IS in the business lexicon), they are actually about collaboration. They facilitate collaborative working practices and thus harness the power of the many in the way that Tapscott and Williams discuss in their 2006 book, Wikinomics (an essential read for all managers and especially CEOs hoping to harness the power of collaborative working).

Whether or not an organisation can benefit from the use of Web 2.0 applications depends very much on what it actually does and I’ll look at that in the next blog on this subject. Then we’ll have a look at the use of or access to Web 2.0 applications (especially the micro-blogging and social network sites) and its impact on performance. And finally, we’ll look at the use of Web 2.0 applications for marketing purposes.

In this final blog on ‘customerization’, we take a look at the third major industry that has opted for this approach – the airlines

On a recent trip to South Africa, I had a very ‘customerized’ travelling experience. Instead of going to a travel agent, I surfed the web and found a site that provided an overview of all the airlines, their routing, and the schedules. This is, of course, what a travel agent would have done for me. Having selected a specific airline, British Airways in this case for ease of connections and the directness of the routing (only three flights in each direction), I surfed to their website to compare prices – again, a service previously provided by the travel agent. I then booked my tickets on-line, paid on-line and was sent an email that contained my electronic ‘eTicket’.

I then rang the travel agent and asked for their best price for the same route and found that it was exactly the same – I had, therefore, done all the work and received no financial benefit whatsoever. The airline, on the other hand, had received a benefit in that they did not now have to pay a commission to the travel agent. Read the rest of this entry »

In this second blog on ‘customerization’ we take a look at the banks, another industry that is seeking to make their customers responsible for transactional activity that was previously done by the business.

The ubiquitous ‘hole-in-the-wall’ cash machine – or, more correctly, the automated teller machine or ATM – is a product of the 1960s with the first machines appearing on the high street in the mid to late 1960s. The raison d’être for their existence was the idea that customers could be given 24/7 access to their cash deposits through the use of networked computerised machines that would read a magnetic card and allow the user to withdrawn money. In theory, this is an excellent idea and a genuine benefit to the customer at a time when there was more money around and being spent and banking hours were, to put it mildly, restrictive.

Like most things in the ‘customerization’ field, the idea was not conceived as a benefit to the customer but as a benefit to the bank. Traditionally, banks had ‘tellers’ who sat behind glass screens or metal grills and manually checked customers’ balances and then cashed their cheques so that they could withdraw money. Given that this was the only way of withdrawing money at the time, banks had to employ growing numbers of tellers (or cashiers as they were known in the USA) to cope with the lengthening queues of customers wishing to make withdrawals. The efficiency experts watched and checked these queues and the estimated waiting time – they also checked the speed with which the teller could conduct the transaction (estimated at 90 seconds to 2.5 minutes) and thus how many they could process in an hour (usually around 30). With banking hours restricted to 09h30 – 16h00, a total of six and half hours, it soon became obvious that one teller could deal with a maximum of 195 customers in a day providing each only wanted to conduct one cash withdrawal transaction. Read the rest of this entry »

There are different interpretations of the term ‘customerization’ and in my next few blogs I will look at one aspect: the process in which the customer is encouraged or made to carry out the transactional activities of the business.

Close on 50 years ago, my father, then working for Mobil, was project manager for the development and subsequent opening of the very first 24-hour self-service petrol station in the UK somewhere near Southampton. Today, just about every petrol station/service station is self-service but back then this was a radical shift in the operating model for retailing petrol.

The logic behind the move was impeccable as far as the company was concerned. The margin on petrol sales was minute, often as low as pennies per gallon, and the government saw it as an easy target for taxation which meant that there was adequate cash-flow but very little operating margin with which to develop the services on offer and to pay the staff of attendants who, until then, had filled the cars (‘pumped gas’), cleaned windscreens, checked the oil and water and generally provided a useful service to the customer. Now that was about to change – the attendants were to be no more, the customer himself or herself would now have to get out of the car in all weathers and fill their own tanks, clean their own windscreens, check their own oil and so on whilst still paying exactly the same price for their fuel as they did in pre-self-service days. The retail margins were simply too small for price discounting. Read the rest of this entry »

The dispute between Amazon and Macmillan is interesting but oddly founded. The assumption in the trade is that Amazon is artificially subsidising the price of eBooks to offset the very high cost (299-699 USD) of their eBook reader, the Kindle, and that the publishers (Macmillan, in this case) are trying to keep the price of eBooks artificially high so as not to impact their print sales. Thus, both parties are in the ‘wrong’ as far as pricing is concerned (but not as far as their respective, very traditional, business models are concerned).

What was interesting, though, was Amazon’s response to the launch of the Apple iPad Read the rest of this entry »

There is something horribly fascinating about watching normally intelligent people submitting to the ‘herd instinct’ and engaging in actions that are self-evidently wrong. Irrational behaviour builds on irrational thinking that is itself based on incorrectly drawn conclusions. And once the cycle is started, it becomes a destructive vicious spiral. Such behavioural patterns occur in a large number of situations but never more so when driven by politicians who feel, just because they are politicians, that they have superior intellects and are so much better informed that the ‘common man’ and so much more able to make decisions that are best for everyone. This delusional attitude is supported by some journalists who have equally unfounded self-delusions.

And this is exactly what is happening with governmental reaction to the financial institutions and the mess they have made of their economic value and the economy as a whole. The extraordinary thing is that the UK government is not alone in its idiocy – other governments around the world are going down the same path in the sublime, but ridiculous, belief that if all governments agree then they must be right. Read the rest of this entry »

In the wake of collapse of the banking system, it is understandable that we want to make sure that is does not happen again. Politicians, those who are ostensibly elected to act on our behalf, are the ones who have to take the responsibility for finding a solution – not because they are knowledgeable and competent in the field but because it is the responsibility of politicians to act at a national and supranational level, a level at which we, as individuals, simply cannot. Unfortunately, the world’s politicians have assumed that they are competent to act directly (i.e. they are knowledgeable and have the skills in the field), rather than accepting that their role is to seek considered and thoughtful input from those that do know what they are talking about and then to mange the process so that a solution is found. The result of assumption of competence has been a rush by politicians to develop policy and enact law – and to get it spectacularly wrong!

Nicolas Sarkozy, the President of France and a member of the G20, has recently called for a tax on financial transactions as a method of reducing risky behaviour amongst bankers. This is profoundly flawed as an idea Read the rest of this entry »

This is a slightly edited version of part of my input to a discussion on a publishing forum.

People seem to either love or hate the big publishers and either support or are contemptuous of the self-publishing fraternity. Publishing is a business and there are simply two different business models here.

The big (traditional) publishers are operating with a very well established but inflexible business model that relies heavily of bringing out as many books as possible so that they obtain volume-based market share. Their competitive advantage is their professionalism, their financial clout, and their access to the book-retailing sector combined with their extensive market intelligence. Their competitive disadvantages are their incredibly slow product development cycle (the time it takes to bring a new book to market) and their very poor product acquisition strategies (how they actually find new authors/books that will give them market share or the greatest publicity).

The small publishers (and that is what self-publishers are) have a more flexible business model that Read the rest of this entry »

Email is a wonderful thing – or is supposed to be. The trouble is that it is addictive and time consuming – many managers spend more than 25% of their working day dealing with their email in-box and feel outside their comfort zone when deprived of email connectivity. But when one considers that the estimate by the Radicati Group, a company supplying research in this area, is that 76%+ of the 267,000,000,000 email messages sent each day are spam, it is easy to understand that email has lost its competitive advantage as a communication process. Perhaps we should re-think our communications strategies!

Although the research suggests that corporate email suffers slightly less badly that private email – 66% of corporate emails are considered spam as against 82% of private emails – it still means that Read the rest of this entry »

Recent reports in Business Week and The Economist suggest that business schools are not as recession-proof as once thought.

But there is more to this than first meets the eye and there are other possible implications - Business Week reported that business school applications (particularly for MBAs but also for undergraduate degrees) have been sliding downwards since the middle of last year. The immediate impulse has been to blame the recession (and it certainly has an impact) but research is showing up a more worrying issue: business schools and particularly the MBAs are seen as being too closely aligned with the thinking that has led to the current recession - and that the degrees being offered are not supplying the skills needed - skills such as thinking and interpreting rather than simply analysing, understanding the range of strategic Read the rest of this entry »