Do I Have To Eat It?

A recent opinion piece in the Wall Street Journal by Jesse Kornbluth, a onetime devoted and inspired employee of America Online, pondered the question of “How AOL—aka Facebook 1.0—Blew Its Lead.” Kornbluth does a good job acknowledging the irony of overlap between the fallen angel and the rising star—the staggering power of community, the seduction of the walled garden, the financial reward of vast momentum—but more importantly, he gets his head around what he believes to be the downward turning point for his former employer. It was not so much the bursting of the bubble, nor even the distractions of failed promise in the historic merger with Time Warner. As a product person, Kornbluth saw the blood start to flow when those who loved product began to be overruled by those who lived by argument. Those arguments were not the healthy tension of developers debating the relative merits of features and benefits. The conflict shifted to initiatives in product strategy that were driven by individuals who had assured themselves their creative ideas would lead to success, even though they did not much have time to embrace and use AOL they way its creators had previously.

When the consultants arrived, strategy was not driven by those who embraced the product and its audience; strategy became a set of theoretical suppositions evidenced by the competitive landscape. There were only two problems: 1) the consultants were no more obsessively using competitive products than those of AOL; and 2) the competitive landscape was crumbling because it was just as inorganic in construct, itself no more than the conclusions of observation. Using a product is not trying it once, it is using it every day and using competitive products to fully internalize how bad becomes good and good becomes great. Data, analysis, reconnaissance, and interpretation are all essential in responding to hyper growth, but if you aren’t eating your own dog food, all bets are off.

Yes, you must Eat Your Own Dog Food.

Alpo Lorne GreeneSome people trace this edict to the television commercials for Alpo in the 1970s and 1980s where Lorne Greene made a point of showing us that he fed the very product he endorsed to his own dogs. No, he didn’t actually eat it himself, but the way he looked at it, you could tell he might be considering it. His dogs were an extension of himself. That love made it clear he would only feed them a product he trusted, and he would only endorse it publicly because he trusted it. I am not saying he was right. I am just noting than his conviction was visceral.

In the software spectrum, the phrase “Eating Our Own Dog Food” is more commonly traced to a 1988 memo from then Microsoft Manager Paul Maritz, encouraging his team to obsess over use of Microsoft’s products. His basic tenet was that to win a category and perfect your work, you had to be the consumer. The memo spread widely throughout Microsoft, over the gate and through the industry. It resonated with many of us, and began being accompanied by such observations as, “If you won’t use the software when it’s free, why should anyone pay you for it?”

Soon after came the dawn of the Dot-com age in the mid 1990s, quickly followed by the implosion of Web 1.0 known as the Dot-bomb era circa 2000. Interesting to note, a few of the companies that survived the turmoil and went onto become the great first generation brands of the Internet like Amazon and eBay made it a point to eat their own dogfood. While third-party consultants poured into corporations to sort out their tanking business models and rationalize their value propositions, far too many of those consultants were busy writing decks and compiling spread sheets. When you asked them what online products and services they loved, they often couldn’t respond, because they were too overwhelmed by time commitments to use the products they would evaluate, let alone love them. For those who had already been through a product development cycle or two, the writing was on the whiteboard.

The absolute necessity of eating your own dog food is anything but limited to software. If you design cars for a living and are not planning to drive your own creation when it comes off the line, how can you attend to every nuance and detail that sets apart your vehicle from the vast number of choices already available for sale? If your team designs a new line of workplace apparel intended to be marketed as more comfortable, durable, and stylish than everything else already hanging on the rack, will you not be planning to wear what you have produced proudly at least a few days each week out of pure joy? When you have the privilege to be creative and innovative in your occupation, you are quickly humbled by the fact that an idea for a new product or service however inspired and brilliant is in fact almost worthless. Customers seldom buy or become loyal to the ideas you pitch. Until a concept is executed expertly and embraced by those who will champion it, it really is just a first draft—perhaps filled with promise, but nonetheless in need of refinement, iteration, and polish. There is a long and winding road from pitch to product, and all along the way details have to be vetted first by those who most love the work, the creators.

Apple long ago coined this notion as Evangelism, and no Apple Evangelist in his or her right mind would try to get you excited about a product they weren’t already using themselves. To be fair, Evangelism is a beginning, not an end, after which customer feedback must become part of the process, but if our goal in social marketing is to engage our community in a supportive and seamless dialogue, then we owe it to them to initiate the dialogue with honesty, commitment, and passion. There will always be pain to share in early releases, but the more defects we extract ahead of release because we already know they are there, the more our customers can trust us to take them seriously in allowing our own needs to be met before we presume to address theirs.

Design is not cynical; its true elegance is purely self-reflective because form and function are easily evaluated in day-to-day use. If something is good enough for your dog, it might be good enough for someone else’s dog. Now imagine if you ensured it was good enough for you before you topped off the can. That would be some seriously tasty dog food. Go on, take a byte.

Say It Loud

I like that people are speaking out.  I like that customers are letting corporations know what they think.  It’s good for democracy and free enterprise.  It’s great for business.

Bank Transfer DayLast week one individual, 27-year-old art gallery owner Kristen Christian, kicked off a true grass-roots movement that came to be known as Bank Transfer Day.  No one told her to do it, no giant entity or association formally backed her cause, she just did it and thousands of people got on board.  Since September 29, 2011 when Bank of America announced its $5.00 debit card fee, as many as 650,000 new credit union accounts have been opened.  This past week, Bank of America changed its mind about charging that fee.  You think they aren’t listening?  Maybe not as carefully as they should be, but it is clear some message got through.  This is how it should be.

Companies must never forget why they exist — to serve customers.  When they forget that, they are on a slippery slope.  Corporations can have a tendency to be inward thinking, they can focus with intense obsession on their internal issues, efficiencies, operations, politics, succession plans, and tactics for improved profitability.  Internal company struggles can become engrossing to the exclusion of more important matters, like creativity and customer focused quality.  When companies forget about customers, the other stuff ceases to matter.  They need to be reminded of that often and with passion.  Don’t feel bad when you complain or move your business, you are helping them.  They need to hear from us.  Our voice is vital to their survival.  If they don’t believe that and embrace it as a core value, creative destruction will do its job.

As I have written before, we are customers, we cannot allow ourselves to be reduced to the notion of being treated as consumers.  Customer service in a company needs to be both reactive and proactive:

Reactive customer service is when you call them to identify an issue or concern, the person on the phone or chat or responding to your email should do everything possible to solve your problem.  Great companies love these inbound calls, because each contact point is an opportunity to bond a customer for life.  If something goes wrong and a customer service person “makes the save,” your loyalty and lifetime value to that company can increase exponentially.  Conversely, if the customer service person manhandles the “win-back” moment, not only are you likely to be gone, you are likely to take a few dozen of your friends or the company’s future prospects from them, maybe more with the power of social media.  Again, you are doing the company a favor.  If you give them a chance to be helpful and they succeed, you have invested in their brand.  If they let you down, you teach them a lesson they need to learn quickly before their brand is permanently damaged.

Proactive customer service is the job of listening to customers before an action occurs, reading the trends and common themes that flow through the data bases of feedback systems.  Did banks know of the anger of the 650,000 customers who opened credit union accounts last month?  Some did and some didn’t.  Did they act in advance?  Did yours?  Why not?  If they are taking your business for granted, they deserve to lose it.  We all have options.  Proactive customer service focuses on retention activity in advance of crisis.  After crisis, it’s a public relations campaign, the spin doctors join the fray.  That may have worked a generation ago, but not so much today.  When we go, we are gone.

The Bank Transfer Day effort was careful to acknowledge that although it shared some inspiration from the activities of Occupy Wall Street, it was not part of that movement, it was its own thing.  Here again, the idea of customer voice is the key takeaway — what is being said, what is being heard, how can this help make systems function better?  Last week in the Wall Street Journal, Jeff Greene suggested the same basic idea, that “We Should Listen to the 99%” because they “are giving us a chance to address our problems before they grow worse.”  Neither Greene nor I are suggesting that every idea being articulated by OWS is necessarily actionable, but there is most certainly upside in listening and nothing but downside in ignoring the voices of passion.  If people have something to say, business is always well advised to listen.

And how about Congress, where the public approval rating dropped to 9%, are these elected officials not in need of working much harder at hearing?  Never has the need for the public’s voice been in more demand, and yet, as so many of us keep asking, is anyone listening?  The debt ceiling follow-up deadline for the Super Committee is November 23, just weeks away.  I don’t sense a consensus plan on the horizon or an amicable resolution, seems like business as usual in Washington to me.  Maybe we aren’t making enough phone calls or sending enough emails, we are much too polite.

It takes courage to speak out, to draw attention to oneself in a public forum and ask to be heard.  Likewise it takes courage in a corporation to align with the customer and advocate for improvements in the enterprise that cause customers to embrace goods and services along the lines of brand.  How much do banks spend on advertising to drive people through their doors?  What is the lifetime value of your business to a bank, to any company for that matter?  Can the banks not offer us valuable services over the course of a lifetime that produce reasonable profits?  Of course they can, or there would be no such sector.  While corporations worry about driving the value of their share prices, is there any better way to create value than to address customer needs and build lifelong customer relationships?  These are the backbone of profits, not much else that isn’t short-term financial engineering.  When innovation is applied to addressing real customer needs, good things happen for buyers and sellers.

It is so easy to give up and think that one individual cannot make a difference, but then someone like Kristen Christian comes along, fires up a Facebook page and shows us that there is power in the fabric of our nation.  That power of responsiveness is at the core of what can make a business great.  Our economic system can serve us well if we demand that it be responsive.  Don’t be quiet.  If you have something to say, say it and share it and drive the companies who need to earn your respect to work harder for the privilege to serve you.  When businesses listen they can only get better, help them to hear you by being brave and bold and honest.  A robust feedback loop makes good business sense, and everyone can have a say in that.  This is a business proposal with unlimited potential.

Innovation Finds a Way

If there is one thing the history of evolution has taught us, it’s that life will not be contained. Life breaks free, expands to new territory, and crashes through barriers, painfully, maybe even dangerously.  — Dr. Ian Malcolm (Jeff Goldblum), Jurassic Park, 1993

When not engaging in polite conversation over the past few weeks that involved either unsound journalistic ethics at News Corporation or the pending apocalypse of the U.S. debt ceiling, the most popular question I tended to encounter was, “Do you think we’re in a stock bubble?”  Truth be told, that has been a raging topic all year.  The cover story in the current issue of Fortune is “Tech Bubble 2.0” with a reasonably balanced assessment of Is It or Isn’t It.   My assessment?  Got me.

Here’s what I know.

It’s sure not 2000.  The internet is real now and so are an incredible number of businesses being launched of late.  This new wave of entrepreneurial enterprises sits upon real business models either with real revenues and real profits or real revenues and reasonably predictable profits at scale.  The business models are new, unexpected, but sound.  Some are working wildly well and bringing buckets of cash to their corporate bank accounts with pleased and well served customers, employees, and shareholders.  Others hold promise to do the same, aren’t quite there yet, but don’t take a lot of imagination to understand how they will scale to profitability because their models make sense.

Corporate earnings appear for the most part to be sound, albeit with heavy cost controls in place that aren’t doing much for the unemployed.  If you are buying the major indices across the board — domestic and international, large and small, growth and value — fully diversified along with fixed income to your own level of acceptable risk, you probably aren’t having trouble sleeping at night (except, of course, when you think about resolution to the debt ceiling).  Are the markets volatile?  They are, but they always are.  Are the fundamentals and multiples reasonable?  Well, I’m not an economist or a trader, but the Dow looks pretty understandable to me.

So how about that bubble?  Major players in venture capital have issued their opinions and are easy to search on other blogs, I am hardly qualified to comment.  Is it likely that some valuations are products of hope, optimism, or hyperbole?  Tell me anytime when that’s not the case.  Have you ever heard a Realtor tell you it’s not a good time to buy a house?  It’s always a good time, if it’s the right house at the right price.  My sense is, same with equities, preferred and common, private and public.  Bubble is a broad and complicated idea, always easy to assess in hindsight, virtually impossible in the crystal ball.

That’s what I know.  Sorry if I disappointed.

Here’s one thing else I know: the innovation all around us is astounding.  I can’t remember a time when there was so much happening so quickly and so much of it actually looked like true value creation.  Here is small sampling of the mind-blowing advances all around us:

Apple — the iPhone was a game changer, the iPad is a life changer.  I think the iPad will change everything about media for a generation.

Netflix — another game changer, first movies by mail, then movies on demand, easy and affordable, changing entertainment distribution paradigms at every turn.

Zynga — will people buy virtual goods?  They will.  Can a tiny segment of your audience underwrite the ability for everyone else to play free and still create profits?  Indeed.

Pandora — here’s technology that lets you create your own radio station that not only plays the songs you already like, but introduces you to new music you probably will like.

LinkedIn — not long ago if you had your resume online you were job hunting, afraid of being caught by the boss; now you must have your resume online or you don’t exist.

Hulu — one new brand aggregator derives more advertising revenue from network created content than the total online revenue of all the suppliers combined; wow!

Groupon & Living Social — coupons used to be the least cool way in the world to shop; call them time sensitive Daily Deals and online drives consumers back to storefronts offline.

Twitter — people communicate in less than 140 characters and the world is connected through snippets of information that can alter public opinion and evangelize democracy.

Facebook — connect people with friends, redefine the verb like, open your platform, create the most display ad inventory imaginable, then enjoy the value of 750 million accounts.

Again, this is just a sample of very cool companies doing very interesting things, among them, creating jobs and creating wealth.  Each of these represents incredible creativity, brilliant execution, and deep levels of passion.  People are working hard, people are working smart, people are being rewarded.  With > 9% national unemployment still our challenge, it is inspiring to see there are paths out of the malaise.  There are lessons to be learned in the current Silicon Valley run-up, first among them, the key is innovation.

It is ironic this “Tale of Two Economies” comes at a time when so much of the nation’s economy is suffering, and so many job losses lead the gloomy headlines.  It’s also ironic that it comes just as we lose a much beloved company, Borders, which in its day reinvented our notion of what a bookstore could be.  When the first wave of internet companies changed the landscape, Borders leased their digital real estate to Amazon.  They never recovered.  I asked a former VP of mine her sense of this recently, to which she replied: “They just forget to keep innovating.”

Perhaps the former CEO of Intel, the incomparable Andy Grove, said it best and most succinctly in the title of his 1996 book: Only the Paranoid Survive.

While I will always be reticent to render an opinion on the fair market value of a company, I can give a resounding endorsement to so much outstanding work I see going on all around us, much of it disruptive, as it should be in an entrepreneurial landscape that favors creative destruction.

Given a choice to share an opinion on the bubble versus the landscape, I’ll take the landscape.  I like what I see.  I would like to see it spread.  The old jobs aren’t coming back, innovation and automation pretty much assure that, there is little point waiting.  Let’s hope the new business models work so that new jobs will replace them and all boats float with the rising tide.  Many companies will fail, but the direction seems right.

Creativity tempered by sound judgment is the currency of the new economy.  It remains largely an open playing field for anyone who wants to relearn on a daily basis everything they thought they knew.