Category: Horizontal ideas (page 7 of 15)

Stop making cows. Quit being calves.

February 21, 2012 / / 3 Comments

Emoji_u1f42e.svg The World Wide Web that invented in 1990 was a collection of linked documents. The Web we have today is a collection not just of documents (some of which we quaintly call pages), but of real estate we call sites. This Web is mostly a commercial one.

Even if most sites aren’t commercial (I don’t know), most search results bring up commercial sites anyway, thanks both to the abundance of commercial sites on the Web, and “search engine optimization” (SEO) by commercial site operators. Online ad spending in the U.S. alone will hit $40 billion this year, and much of that money river runs through Google and Bing.

But that’s a feature, not a bug. The bug is that we’ve framed our understanding of the Web around locations and not around the fabric of connections that define both the Net and the Web at the deepest level. That’s why nearly every new business idea starts with real estate: a site with an address. Or, in the ranching-based lingo of marketing, a brand.

The problem isn’t with the sites themselves, or even with the real estate model we use to describe and understand them. It’s with their underlying architecture, called client-server.

Client-server, by design, subordinates visitors to websites. It does this by putting nearly all responsibility on the server side, so visitors are just users or consumers, rather than participants with equal power and shared responsibility in truly two-way relationship between equals. Thus the client-server relationship is roughly that of calf to cow:

calf-cow

From the teats of the cow-server, the calf-client sucks the milk of HTML and Javascript, plus : text files deposited by a website’s server in a visitor’s browser. Their original purpose was to help both the site and the visitor (the cow and the calf) remember where they were last time they met, and to retain other helpful information, such as logins and passwords.

But cookies also became a way for commercial cows and their business friends (aka third parties) to keep track of their calves, reporting back where those calves traveled, the  cows they suckled, the stuff they click on. Based on what they learn from tracking, the cows can — alone or with assistance from third parties, produce “personalized” milk in the form of customized pages and ads. This motivation is all the rage today, especially around advertising.

Nearly all the investment on ‘relating’ is still on the sell side: the cow side, because that’s where all the power is concentrated, thanks to client-server. So we keep making better cows and cow-based systems, forgetting that the calves are actual human beings called customers. We also overlook opportunity in helping demand drive supply, rather than just in helping supply drive demand.

But some of us haven’t forgotten. One is Phil Windley, a Ph.D. computer scientist, former CIO of Utah, co-founder of , and the inventor and lead maintainer of a language called , plus the rules engine for executing KRL code. (Both are open source.) The rules are the individual’s own. The rules engine can go anywhere. No cow required.

To describe the box outside of which Phil thinks, he gives a great presentation on the history of e-commerce. It goes like this:

1995: Invention of the Cookie.
The End.

To describe where he’s going (along with Kynetx and the rest of the VRM development community), Phil wrote a new book, The Live Web (a term you might have first read about here), and has been publishing a series of blog posts that deal with what he calls . Think of your Personal Event Network as the Live Web that you, as a human being (rather than as a calf) operate. Live. In real time. Your own way. You can take advantage of services offered by the servers of the world (through APIs, for example). But it’s your network, and it’s built with your own relationships. It doesn’t replace client-server, but it gives servers lots to do besides being cows. In fact, the opportunities are boundless, because they’re in wide-open virgin territory.

A Personal Event Network puts you at the center of your Live Web, with your own apps, and your own rules for what follows from events in your web of relationships. “Personal event networks interact with each other as equals,” Phil says. “They aren’t client server in nature.” Here’s how Phil draws one example:

Personal Event Network

Look at the three items indside the personal cloud:

  • At the center are apps. We’re already familiar with those on our computers and mobile devices. While they might have connections to outside services, they are personal tools of our own. They are neither calves nor cows.
  • On the left is an RFQ, or a Request For Quote, also called a .
  • On the right are rules, written in KRL.

Together those control how we interact with all the devices and services on the outside, on the Live Web. Note that those outside items are not functioning as cows, even though they also live in the commercial Web’s client-server world. They are being engaged outside the cow function, mostly through s.

Here’s how Phil explains how this works for a guy named Tim, who has a relationship with a flower shop, described here:

Tim’s personal event network has a number of apps installed. It’s also is listening on many event channels. These channels are carrying events about everything from Tim’s phone and appliances to merchants he frequents.

REI and the flowershop both have separate channels into Tim’s personal event network. Consequently, Tim can

  • Manage them independently. If REI starts spamming Tim with events he doesn’t like, he can simply delete the channel and they’re gone.
  • Permission them independently. Tim might want to get certain events from REI and other’s from the flowershop. Which events can be carried on which channels is up to Tim.
  • Respond to them independently. Tim might want to get notification events from the flowershop delivered to his phone today because it’s his wife’s birthday whereas normally merchant communications are sent to his mail box.

Tim is in charge of whether and how events are delivered. He manages the channel, delivery, and response while the publishers of these event choose the content.

This cannot be done within the bovine graces of any one company — not Apple, Facebook, Google or Microsoft — no matter how rich their services might be, and no matter how well they treat their users and customers. And not matter how much they might insist that they’re not really treating their users and customers as calves.

But they’re still playing the cow role, and we’re still stuck as calves. That’s why we keep looking for better cows.

For example take The Real Problem With Google’s New Privacy Policy, in . The subtitle explains, “The tech giant owes users better tools to manage their information.” Well, that might be true. But we also need our own tools for managing relationships with Google — and every other site and service on the Web. And we need those tools to work the same way with every company, rather than different ways with every company.

(We have this, for example, with email, thanks to open, standard and widely deployed protocols. Email is fully human, even if we submit to playing the half-calf role inside, say, Gmail. We can still take our whole email pile outside of Gmail and put it on any other server, or host it ourselves. Email’s protocols and standards support that degree of independence, and therefore of humanity as well.)

Another example is The Ecommerce Revolution is All About You, in . Here’s the closing paragraph:

So shoppers, be prepared to give up your data. In the coming year, we’re going to see many more retail sites ramping up data-driven discovery. And e-commerce sites who aren’t thinking about how to mine social and other forms of data are probably going to be left in the dust by the Amazons and Netflix’s of the next wave of personalization.

Credit where due to Amazon and Netflix: their personalization is best-of-breed. Their breed just happens to be bovine.

As it did in 1995, Amazon today provides their own milk and cookies for their own calf-customers. As a loyal Amazon customer, I have no problem being its calf. But I can’t easily take my data (preferences, history, reviews etc.) from Amazon and use it myself, in my own ways, and for my own purposes. It’s their data, not mine.

The problem with this — for both Amazon and me — is that Amazon isn’t the whole World Live Web. I don’t shop only at Amazon, and I would like better ways of interacting with all sellers than any one seller alone can provide, even if they’re the world’s best online seller. (Which Amazon, arguably, is.)

So sure, the Ecommerce Revolution is “about us.” But if it’s our revolution, why aren’t we getting more of our own tools and weapons? Why should we keep depending on sellers’ personalization systems to do all the work of providing relevance for us as shoppers? Should we give up our data to those companies just so they can raise the click-through rates of their messages from one in less than a hundred to one in ninety-eight — especially when many of the misses will now be creepily “personalized” as well?

Shouldn’t we know more about what to do with our data than any seller can guess at? And if we don’t know yet, why not create companies that help us buy at least as well as other companies are help sellers sell?

Well, those kinds of companies are being created, and you’ll find a pile of them listed here, Kynetx among them.

VCs need to start looking seriously at development on the demand side. Kynetx is one among dozens of companies that are flying below the radar of too many VCs just looking at better cows, and better ways to sell — or worse, to “target,” “capture,” “acquire,” “lock in” and “manage” customers as if they were slaves or cattle.

The idea that free markets are your-choice-of-captor is a relic of a dying mass-market-driven mentality from the pre-Internet age. Free markets need free customers. And we’ll get them, because we’ll be them.

We — the customers — are where the money that matters most comes from. Driving that money into the marketplace are our own intentions as sovereign and independent human beings.

In the next few years we’ll build an Intention Economy, driven by customers equipped with their own tools, and their own ways of interacting with sellers, including their own terms of engagement. This was the promise of the Net and the Web in the first place, and we’ve awaited delivery for long enough.

Time’s up. The age of captivity is ending. Start placing your bets on the demand side.

VRM and CCOs

February 12, 2012 / / Comments Off on VRM and CCOs

In The Rise Of The Chief Customer Officer, Paul Hagen of Forrester begins,

Over the past five years Forrester Research has observed an increase in the number of companies with a single executive leading customer experience efforts across a business unit or an entire company. These individuals often serve as top executives, with the mandate and power to design, orchestrate and improve customer experiences across every customer interaction. And whether firms call them Chief Customer Officers (CCOs) or give them some other label, these leaders sit at high levels of power at companies as diverse as Allstate, Dunkin’ Brands, Oracle and USAA.

Other titles meaning roughly the same thing are Chief Client Officer and Chief Experience Officer. All, Paul writes, “are charged with improving the customer experience.”

From the VRM perspective, that’s all we need to know. We’re the customers, and we’re charged with improving our experience too.

So I dug around a bit, and came up with a few leads and links that I’ll post here as a shout-out to the folks and disciplines involved.

First is the Chief Customer Officer Council, founded and led by Curtis Bingham (whom I see by LinkedIn is, like me, in the Boston area). Next are (via the CCOC),

These are people VRM-equipped customers are going to meet in the new middle. This small post is toward making the acquaintance.

Toward a new symbiosis between Demand and Supply

January 23, 2012 / / 1 Comment

I’m listening and watching with fascination to Keith Scovell‘s Shopper Power videos. In these Keith describes progress being made in a VRM direction by retailers and their upstream suppliers, detailing efforts made by Starbucks, Hallmark, CVS, Tesco/Homeplus, Frito-Lay, Reese’s and other companies — all recognizing that customers’ range of control over interactions in retail environments is increasing dramatically, and will increase a great deal more.

I haven’t watched all of Keith’s videos yet, but I’m taking notes as I do, and I recommend that others do the same, if they’re interested in how increasingly empowered and independent customers relate to vendors — especially at the retail level in the brick & mortar world. And how clueful vendors are working on better ways of interacting with those customers.

It’s interesting that Keith is coming from the CPG — Consumer Packaged Goods — industry, and not CRM, which is most commonly posed as the counterpart to VRM. Yet I think that CPG, and retailing in general, is the more direct counterpart of VRM. Talking about where the rubber meets the road here. Keith talks about market signals, which go in both directions. One purpose of VRM is to provide better means for signaling, as well as for engaging over the longer term.

Four things are important to point out as developers on both sides get acquainted:

  1. Customers will become more independent. That is, they will have their own ways of expressing demand, loyalty, brand preferences and terms of engagement. Many of today’s solutions on the vendors’ side — loyalty cards, for example — are both coercive and inconvenient, as customers are required to carry around many of these things, all with their own proprietary and silo’d systems. New tools and systems will emerge on the customer’s side to provide both independence and better means of engagement. And those tools and systems will be personal, not just social.
  2. VRM tools will not only provide or support that independence, but common means for engaging many vendors the same way. For example, they will provide ways for a customer to change his or her address one time for many vendors rather than many times for many vendors.
  3. The new market ecosystem will be symbiotic one between demand and supply. Not a coercive or competitive one. That means the best customers and the best vendors will be caring about each other and watching out for each others’ best interests. This will actually reduce need on the vendors’ side for discounts, coupons and other gimmicks, which often clutter and confuse an otherwise smooth relationship with customers, and which have other hard costs as well.
  4. New user interface elements will be required.

For that last two reasons I’ve flanked the text above between two r-buttons. Keith visits QR codes and other handy signaling devices already being used in the retail environment. But it’s still early, so we still lack are user interface (UI) elements that represent actions and states within relationships between buyers and sellers. As work in the VRM development community goes on the demand side moves toward work Keith and others are doing on the supply side, the two magnets will place a new force field over the marketplace: one that brings mutual interests into alignment, even as competition and other familiar market interactions continue as they always have.

Customers are personal, cont’d

January 17, 2012 / / Comments Off on Customers are personal, cont’d

There are so many excellent comments and questions following my last post, Consumers are social, Customers are personal, that I decided it would make more sense to address them in a new post than in comments under that one. So here goes.

Joshua Marsh, the CEO of Conversocial, writes,

I’m interested in your comment that social media is only semi-personal – could you expand on that point?

I think what you could be getting at is the current lack of tie up between social identity and customer records, which is a challenge (but one that can be overcome), and one we are working on. Or do you mean something else?

There can be additional benefits to customers for taking their customer service issues into social media over other channels. Once companies wake up to the fact that there are public complaints and issues on their Facebook pages, in tweets when people search for their company names etc, they will often start delivering better customer service over social than they do through other channels. The fully public nature of the issues and resolutions forces them to deliver the best service they can. I believe this will drive a virtuous circle – as companies deliver better service through social, more and more customers will begin to use it as a service channel.

First, I want to make clear that when we talk about “social media” today we mostly mean Facebook, Twitter, Google+, and other commercial services. Not telephony, email, texting, instant messaging and other social activities that have been around for a long time but tend not to get included in the “social media” category.

Three things make social media less than fully personal:

  1. As CRM Software said in another commment, “your conversations are personal yet public.”
  2. We don’t own social media. Yes, we use them, but they are not ours. They belong to Twitter, Facebook, Google or whomever. For what it’s worth (and it’s a lot), we can own domains on the Web and elsewhere. We can own email systems. We can own IM systems. We can be our own publishers, syndicate our own postings. Standards and protocols such as TCP/IP, HTTP, IMAP, POP3, SMTP, RSS and XMPP make that possible. Those standards and protocols give us independence, which is a founding virtue of the Net, of the Web, of blogging, of instant messaging. Those standards and protocols are used by social media, but we remain dependent rather than independent within social media environments. So it is critically important to remember and preserve the distinction between independence and dependence on the Net.
  3. Social media are designed to be personal, but in a social context. Facebook is for sharing with friends. Twitter is for following others and being followed. Linkedin is for sharing personal profiles. Google+ is for “real life sharing,” they say. Sure, we can get personal benefits out of social media, but as a collateral benefit more than as a core purpose.

The thing is, when all you’ve got are social hammers, even personal problems look like social nails. And this is what we are doing when we use social media to fix the problems of CRM and customer service, on either the vendor’s side or the customer’s. Yes, lots of progress has been made on the sCRM front, Conversocial is a leader in that movement, is clearly doing a good job, and should continue doing that. Yet, as individual customers we still lack a box of tools that are ours alone, and that help us relate personally with the companies whose goods and services we buy and use.

This is why a community of developers has been working on building out the tools called VRM, for Vendor Relationship Management, to work as customer-side counterparts of vendors CRM — Customer Relationship Management — systems.

About identity: yes, it’s critical. The quesitons around it are huge. For example, are we — as sovereign, independent and self-actualized human beings — who we say we are? Or are we reducible to our @-handles and “social identities” on the likes of Facebook? When Mark Zuckerberg introduced Facebook Connect in 2008, he said it would make it easy “for you to take your online identity with you all over the Web.” Note the presumption: that your handle with Facebook is “your online identity.” Sorry, but it isn’t. It’s handy as a shortcut, but it’s not who you are.

But in fact I was talking about something other than identity in that last post. I was talking about working on what’s personal in more than just social ways.

Louis Columbus writes,

1. The depth and breadth of personal information being shared on social media is creating advertised-based business models that will surpass Google AdWords’ revenue within five years or less. That’s coming thanks to the torrent of data that streams into social networks daily.

2. Improving customer service systems is indeed not enough because it still doesn’t strike to the center of what really needs to happen. Companies need to translate process efficiencies into more relevant, timely and focused customer experiences. The dividend of process efficiency needs to be spent on greater empathy for the customer. Profits will follow if a company can get its head around the concept of delivering an exceptional experience.

3. VRM shows potential to make each interaction more relevant, focused and over time, trusted.

Bottom line: the companies who will emerge stronger for all this turbulent change will stay focused on customer experience, empathy and intimacy as their compass and not waiver from that course.

Louis’ predictions about the future of advertising may be true. But remember: even highly personalized advertising is still guesswork. And no amount of personal data can empower any company, no matter how smart, to guess what I want or need next. Nor do I want that. First, most of the time I’m not buying anything. Second, when I am ready to buy something, I need instruments that help me express my intentions more than I need ones that are guessing what I might want and pushing something at me through a medium that’s paid to do the pushing.

This is why I believe what will emerge over the next five years is not a more personal attention economy (led by social media) but an intention economy, based on what customers actually want. This is why I wrote The Intention Economy: When Customers Take Charge, for Harvard Business Review Press, which is due to hit the shelves on May 1.

I agree with Louis’ second point about what companies need to do; and will add that the customer experience should be one for which the customer is at least partly responsible. Also that the experience of relationship should extend across many vendors in the same way, rather than working in isolation with each vendor. For example, I would like as a customer to experience changing my address with many vendors at once. No vendor working alone with one CRM system can deliver this experience. VRM is required for that, along with CRM systems that welcome simple and standard address-changing methods that work the same way across many different vendors.

I also agree with Louis’ bottom line: that vendors will have to be “focused on customer experience, empathy and intimacy.” And I believe this will require that customers welcome VRM tools when customers carry their own weight on their own sides of relationships.

Don Peppers writes,

One additional thought about the future of social media: Today, social media is funded by advertisers (the real “customers”), and provides a mechanism for giving them access to consumers. But this will almost certainly change as more and more social media services and platforms become open source. An open-source, community-developed platform for social interaction will unify consumers and customers, no?

When Twitter first appeared on the scene, for example, it took many months before the first commercial money began funding it. The consumers it served all worried that without some kind of external funding, the service might disappear. Sooner or later, we’ll find that IT and communications costs have become so low that very little, if any, commercial sponsorship will be required to sustain a genuinely consumer-oriented social media platform.

I believe we won’t get fully-developed one-to-one relationships (that link goes to the seminal work on the topic, buy Don Peppers and Martha Rogers) without significant contributions of code and standards from free and open source developers. You’ll find many in the roster of VRM developers and developments, but we need many more.

I also think we need to free ourselves from the knee-jerk belief that commercial sponsorship is the first-option business model for popular services on the Net. The successes of the Net, the Web, email, RSS and much else have long since disproven that belief.

In the long run far more economic activity will be supported by free and open standards, protocols and other building materials, than by commercial services paid for by advertising.

As for the promise of both social media “big data” for better customer relations, I like what Alan Mitchell said in his comment:

…there is a vast difference between the sharing of unstructured information on a one-to-many basis (social media), and the sharing of structured information on a one-to-one basis (VRM). As you point out, only the latter allows for real personalisation.

Alan has been a leading figure in VRM development, by the way.

Hanan Cohen writes,

Many people say that “Social media users are not customers of them, they are the product being sold.”

I think that we are the suppliers and try to prove it here;

http://info.org.il/english/The-Users-are-the-Suppliers.html

Can you please get in touch with an economics scholar you trust and ask her to sort out the difference in definitions?

It is quite true that we are upstream suppliers of valuable content to social media, and not just consumers of services, and Hanan makes many good points at that link.

As for distinctions between consumers and customers, I like what Doug Rauch — the former President of Trader Joe’s — told to me when I was working on my book: that consumers are “a statistical category.” “We believe in honesty and directness between human beings,” Doug said. “We do this by engaging with the whole person, rather than just with the part that ‘consumes.'”

Hope that helps.

Circling Around Your Wallet

August 28, 2011 / / 19 Comments

To get our heads all the way around Google+, it helps to remember Microsoft’s Hailstorm initiative from ten years ago. Think of Google+ as Hailstorm done right, or at least better. (That is, for Google.)

googlepluswallet

What Microsoft wanted with Hailstorm was less “social” than personal. (“Social” in 2001 was years away from getting buzzy.)  What Google wants with Google+ is very personal, or Google wouldn’t be so picky about the “real names” thing.

One difference from Hailstorm is that Google isn’t playing all its cards yet. Microsoft laid all theirs on the table with Hailstorm, and its identity service, Passport. What they wanted was to be the iDP, or IDentity Provider, for everybody. Is that what Google has in mind too? In 2005 John Battelle said Google was “angling to become the de facto marketplace for global commerce.” That might be a stretch, but it’s the vector that counts here, and Google+ points in that direction.

Let’s connect the dots.

  • Google’s “real names” policy (they actually say common names) for Google+ is freaking people out, sparking “nym wars“, on the other side of which are my.nameis.me, Kathy Gill, Kevin Marks, Skud (who unpacks the whole thing extensively) and many others. (Here’s the latest from Kaliya.)
  • Google+ has just started. The big type on the current index page says “A quick look at the first pieces of the project.” Brad Horowitz, who runs Google+, in an interview with Tim O’Reilly (Google’s main defender at this point) says the project is “unfinished”, in “limited field trial” and not “launch ready”, meaning some people aren’t being served, and getting going for others is still “hard”. Specifically, Google+ cannot serve “tranches” of users who, for example, a) work inside enterprises that “bet their businesses on Google”, b) are minors, c) are brands, and d) wish to use pseudonyms or otherwise uncommon names. (That last group includes many early adopters of Google+ who are now being rejected.)
  • The common names policy wasn’t there for Gmail or any (or many) of Google’s many other services. Why this one? An answer came from Eric Schmidt, who told Andy Carvin that Google+ was being built “primarily as an identity service.”
  • Google has many services, none of which are truly “finished,” and some of which are just getting started. On the finished end of that spectrum is Google Checkout. At just-started end is Google+. Not out yet but announced is Google Wallet. What matters is that they can all both iterate and connect.
  • Google makes most of its money from advertising. That’s different than being an “advertising company.” Google was launched as a search company, and found a way to make money through advertising. They surely wish to diversify their income streams. One way is to support actual commercial activities, at the point of engagement between buyer and seller: to support the Intention Economy that starts with buyer volition, and not just the Attention Economy of which advertising is a part. In other words, to work where the demand chain meets the supply chain.
  • The first source of revenue in markets is customers: ones that have real names on their drivers licenses and credit cards. Pseudonyms, handles and nicknames — such as IdentityWoman, @Skud, FactoryJoe and Doc — might appear on business cards, but not on the bank- or government-issued plastic cards in those folks’ wallets.
  • To Google, Twitter and Facebook, pseudonyms, handles and nicknames are for users. Real names, or common names, are for customers. And real names tend to be what we have on our credit cards and government-issued identification cards and documents, such as drivers licenses and passports. When a seller wishes to authenticate us, that’s what they ask for.
  • Note carefully: Most users don’t pay. All customers pay: that’s what makes them customers.
  • Facebook is already the de facto iDP for perhaps hundreds of millions of people. (Pete Touchner unpacks that nicely in a slide deck, especially starting here.) The ubiquitous Facebook Connect button testifies to that. (As does Marc Zuckerberg calling the name you use in Facebook “your online identity.” But…
  • Facebook Connect lacks infrastructural legs that Google can put under the market’s table — legs like Google Checkout, Android and Google Wallet, as well as Google’s own physical network, back-end processing power and engineering knowhow, spread across many more business and technical disciplines than Facebook can pull together.

Back in May, I posted Google’s Wallet and VRM here. In it I posed eleven reasons why Google Wallet is potentially a development of profound importance. Here’s one:

Reason #9: Now you can actually relate. When a customer has the ability to shop as well as to buy, right in his or her wallet — and to put shopping in the context of the rest of his or her life, which includes far more than shopping alone — retailers can discover advantages other than discounts, coupons and other gimmicks. Maybe you’ll buy from Store B because you like the people there better, because they’re more helpful in general, because they took your advice about something, or because they help your kid’s school. Many more factors can come into play.

Such as when your circles intersect.

The earliest thrust for Google Wallet has been NFC (Near Field Communication), for doing mobile payments. From a Google post back in May:

Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You’ll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.

At first, Google Wallet will support both Citi MasterCard and a Google Prepaid Card, which you’ll be able to fund with almost any payment card. From the outset, you’ll be able to tap your phone to pay wherever MasterCard PayPass is accepted. Google Wallet will also sync your Google Offers, which you’ll be able to redeem via NFC at participating SingleTap™ merchants, or by showing the barcode as you check out. Many merchants are working to integrate their offers and loyalty programs with Google Wallet.

With Google Wallet, we’re building an open commerce ecosystem, and we’re planning to develop APIs that will enable integration with numerous partners. In the beginning, Google Wallet will be compatible with Nexus S 4G by Google, available on Sprint. Over time, we plan on expanding support to more phones.

Two months after that, in July, Google acquired punchd, “a better solution for loyalty cards”. (More here.) And now it seems that one of the first retailers with the NFC devices required at checkout is going to be Radio Shack. (Google’s list of signed-up “single tap™” partners is quite long.)

Pause now to think about supply and demand.

Most of Google’s commercial work so far has been on the market’s supply side, especially with advertising. (Nearly all their customers are sellers, not buyers.) Google Wallet, however, works on the demand side, because it goes on your phone, which lives in your pocket or your purse.

Your electronic wallet is the point of contact between your demand chain and the sellers’ supply chain. With electronic wallets, we get many new ways for these two to dance. And, therefore, many more commercial opportunities.

Wallets are also instruments of independence. (As are, say, cars.) As the Intention Economy grows (and electronic wallets will help with that), so must the things we as individual customers can do with them — and behind them, back up our demand chain, in our personal data stores. This is where we need to be the point of integration for our own data, which should include data collected by and about us.

Don’t think about how and why we should sell our data, especially to marketing’s guesswork mills (of which Google is the largest). Think about what services we might buy, to help us apply intelligence to the use of our data.

Think about new and different ways in which we might save and spend our money — ways that have nothing to do with today’s defaulted vendor-run gimmicks (loyalty cards, “sales,” coupons, “rewards”…) meant to trap us, herd us and shake us down for more money. Think about having more control over how, why, and where we spend (or actually save — as in a bank) our money. That’s what we start to see when we think about electronic Wallets beyond the near horizons of point-of-sale connections and better come-ons from sellers. That’s what Google will start to see when they start talking with us, and not just with big companies looking for more and better ways to sell.

If our electronic wallets are to become instruments of independence, we need a choice of interchangeable ones that work the same with every seller — much as we have a choice of cars that work the same way with every driveway, highway, gas station and parking lot. This means Google’s can’t be the only wallet. (I’m sure they know and welcome that.)

Presumably, Google Wallet will be open source. In fact, that would be a good way to fight Isis, a new competitor to Google Wallet, funded by AT&T, Verizon and T-Mobile — and whatever Apple comes up with if it wishes to fight Google Wallet and/or Isis. Says Mashable (at that last link), “Isis was born last year, and aside from allowing mobile payments, it’ll also give you the ability to redeem coupons via their mobile payment service. It’s planned to debut in several unnamed major cities next year and will monetize by charging marketers a fee for sending offers to consumers’ phones.”

Earth to Big Boys: We’ll pay for value, including services that make our wallets serve us, and not just the marketing mills of the world.

When we have full independence, we will also have the ability to engage as equals in agreements and contracts. The legal dance online will need to resemble the legal dance offline, which is in the background. In the same way that we don’t need to “accept” a written “agreement” to enter and shop at most stores in the physical world, we shouldn’t need to do the same online. We should be able to bring agreeable terms with us, match them with those of sellers, electronically, without the intervention of lawyers or forms to sign, and do business. In other words, freedom of contract needs to obsolete contracts of adhesion, and the calf-cow system of asymmetrical non-relationships we’ve had online since the dawn of the cookie.

Listening to Brad Horowitz talk with Tim O’Reilly, I sense that Google is also tired of the old cookie-based paradigm of e-commerce. Helping make the customer independent, starting with his or her own wallet, is a great way to start breaking that paradigm.

The problem, as Google is discovering though the “nym wars”, is identity. People take that one personally.

To get a better angle on the issue, let’s look more closely at Microsoft’s Hailstorm. Here’s what I wrote about it at the time. Here’s a much longer piece by Clay Shirky, also from back then.

Microsoft saw Hailstorm as (among other things) a way to compete with AOL, which was the Facebook of its time. Hailstorm’s main feature was Passport: a then-new single-sign-on authentication service. The idea was to have Passport login buttons appear everywhere, like Facebook buttons do now (though far less securely than Passport, which didn’t spill your social guts by default). Such buttons provided Single Sign-On, or SSO.

Joe Wilcox’ unpacked Hailstorm and Passport in March 2001 for CNET. An excerpt:

HailStorm is a group of services, using Microsoft’s Passport authentication technology, meant to provide secure access to e-mail, address lists and other personal data from virtually anywhere via PCs, cell phones and PDAs (personal digital assistants). The catch? Users of the services will be required to pay a fee to use them. Analysts said that if the HailStorm model is widely adopted–and if people will pay a premium for security–the days of ad-subsidized Internet services, such as free e-mail and messaging, may be over.

“HailStorm is absolutely the test of can you make money on the Web,” saidGartner analyst Chris LeTocq. “But to get there, you have to offer people something they are willing to pay for. That will be the test for Microsoft.”

Microsoft executives are confident that the time is right for HailStorm. “There’s been a lot of stuff (on the Internet) in the last couple of years that was free and interesting, but people weren’t actually willing to pay for it,” said Charles Fitzgerald, director of business development in Microsoft’s platform strategy group. “We want to pursue a model that lets us deliver a lot more value in an economic fashion so that we all can get paid every two weeks like we’re used to.”

One big difference: Google isn’t looking to make money with fees here. In fact they say clearly that they are not. But Google is looking to make money their old-fashioned way, which is with “second and third order effects” that will manifest in due time.

Here’s what’s the same: Passport was an identity service. Which Eric Schmidt says Google+ is now.

Microsoft failed because they thought their platform (Window plus .Net) was bigger than the Net and the Web. (In the now-gone Hailstorm white paper, they talked about “moving the Web” in a new direction.) Google knows better.

Still, the game is the same. That game is turning users into customers.

In competitive terms, Facebook and Google will both have users. But Google will have the customers — even if they’re not customers of Google’s services directly. Google will be helping customers use their wallets, while Facebook will be stuck at SSO.

But Google vs. Facebook, or anybody vs. anybody, is the wrong way to look at the market opportunities opening up in the Intention Economy. Because the Intention Economy isn’t a supply-side game. It’s a demand-side game. The slate is fresh, but not blank. Two groups are already there:

  1. VRM developers, working to equip customers with tools of both independence and engagement. (Automobiles, rather than seats on railroad cars.)
  2. Fourth parties, working on behalf of customers, helping them build out their personal demand chains. These can include any service company an individual employs — that is, pays, to help work with the third and second parties of the world (numbered from the customer perspective). We’re talking here about banks, insurance companies and anything called an agency, plus all the new companies coming into the personal services and personal data store businesses. These might include parties the individual doesn’t pay, but that clearly are in business mainly to help individuals (first parties) rather than second and third parties. That qualifies Google, should they wish to join.

There is a lot happening with VRM here that we’re not ready to talk about yet. (No, none of it involves Google Wallet, at least not yet.) But demand chain (Craig Burton‘s term) hints strongly at where we’re going.

Investors take note.

Working for you

July 27, 2011 / / Comments Off on Working for you

As more native VRM tools come into the hands of individuals, what happens to the whole supply chain? Or, put another way, what happens to supply in general when there are more and better ways of expressing demand?

I was talking a couple days ago about that with Michael Stolarczyk, one of the world’s leading authorities on supply chains and logistics, when he brought TaskRabbit up. He pointed to this piece in Wired, and it got me thinking about fourth parties.

Right after that conversation I had lunch with Jose B. Alvarez of Harvard Business School, and a former CEO of Stop & Shop/Giant-Landover. One of the points he made was this: “The original purpose of a merchant was to serve as an agent for the customer.”

In other words, second parties (vendors) were also what we’ve been calling fourth parties. That is, agents for the customer.

I think this is where Cluetrain was going in the first place with “Markets are conversations.” In Customer Loyalty Programs That Work, in Working Knowledge (also from Harvard Business School, and published that same day), Maggie Starvish probes Jose’s work on loyalty programs, and concludes with these paragraphs:

“We’re at a place where technologies allow for retailers to have two-way, back-and-forth interactions with customers,” says Alvarez. “With smartphones, you have location-based information, so you can communicate with customers where they actually are.”

Successful loyalty schemes require advanced technology—and age-old techniques. “It’s about going back to the basic roots and origins of retailing,” says Alvarez. “Talk to the customer, listen, find out what they want, and get it for them.”

VRM tools are ones that are the customer’s first, serving individuals as independent actors in the marketplace. In that sense neither TaskRabbit nor current loyalty schemes qualify as pure VRM tools. But the movements here are very friendly toward VRM, and I believe will welcome (or help toward) the emergence of pure VRM tools. Those would be ones, for example, with which the customer arrives with their own means and devices for saying “Hi. Listen. Here’s what I’m looking for.” If real conversation follows — even if it’s between digital agents for both sides — our goal with VRM will be met.

Link roundup

July 25, 2011 / / Comments Off on Link roundup

The hot edge of VRM right now is in South Africa, where TrustFabric (@TrustFabric, also mention ed in the prior post) is answering that country’s approach to personal privacy concerns with TrustFabric Connect. Let’s help them out. Note also that they’re helping the rest of us by making their code free (GPL v2) and therefore also open source.

Also on the move is getable, based here in Boston, which has a personal RFP approach. Evan Pritchard points to it here. Commenters to that post correctly point out that Buyosphere and Zaarly are also in the space, though coming at it from different angles. Let’s help all them out too.

Jeremiah Owyang puts VRM squarely in the center of his radar with VRM Systems Put Power in Hands of Buyers –Disrupting Sellers.

Just ran across Sparksheet‘s Freeing the Customer with VRM Part I and Making Business More Human, a pair of interviews from last Fall. Haven’t changed my mind about anything since. (I also get a few seconds at the 3:09 point in the Future of Facebook trailer. Venessa Meimis and friends also give me the final word there, starting at 4:06.)

The older B2B meaning of VRM may start blurring with the newer C2B one, if we follow the thrust of Laura Cecere’s Spice it up? post at Supply Chain Shaman.

Personal RFP

June 19, 2011 / / 1 Comment

Terry Heaton just pointed me to . A couple paragraphs:

Any wasting asset–a restaurant table, a seat at a conference, a wasting box of fish–can be efficiently used instead of wasted if we use technology to identify and coordinate buyers.

Synchronizing buyers to improve efficiency and connection is a high-value endeavor, and it’s right around the corner. It will permit mesh products, better conferences, higher productivity and less waste, while giving significant new power to consumers and those that organize them.

Seth’s talking about aggregation here: people getting together in groups to assert demand. This is a good idea, but I don’t think it’s VRM. Not exactly, anyway.

VRM starts with one customer, expressing demand in his or her own ways, rather than in aggregate, or in ways provided by one commercial system or another. (For example, this blog is my own way of publishing. I’m not using Facebook or Twitter or anybody’s system.)

We don’t yet have a single, canonical VRMmmy way to issue a personal RFP, or to have it heard. Rather than explain what a personal RFP is, let’s just lift the whole entry from the page by that title in the ProjectVRM wiki:

Personal RFP

An RFP is a buyer-initiated procurement protocol used by businesses, governments and other large organizations. It is, literally, what the letters stand for: a Request For Proposal. Among a suite of similar TLAs (three letter acronyms) that begin with “Request for” — RFI (Request for Information), RFQ (Request for Quotation), RFT (Request for Tender) — RFP is the most familiar.

RFPs, however, are about as personal as heavy construction. They’re something only big organizations do.

In a VRM context, however, an RFP is something an individual should be able to do in the open marketplace. An individual should be able to issue an RFP that says, for example,

– “I need a stroller for twins in Glasgow in the next three hours.” – “I need a ThinkPad T60 power supply near SFO this afternoon.” – “I need to rent a minivan that seats six and has a roof rack in Salt Lake City next week.” – “I need wheel rims for a 1967 Peugeot 404.” – “I need a 200 watt 220-110 volt power converter in Copenhagen this afternoon”

[Scott Adams calls this] “broadcast shopping.”

The customer can also provide a sum he or she is willing to pay. He or she should be able to do this in a way that is secure and involves minimal disclosure of personal information.

There are many ways this can be done now, through non-substitutable websites and services. Craigs List and eBay both provide means for requesting products. Twitter does too. And Etsy.

What makes a personal RFP a VRM protocol is the substitutability of the services answering the request. The customer should be able to express demand in the open marketplace rather than only within a single intermediary’s silo or walled garden.

Personal RFPs can be thought of as a form by which demand advertises to supply, rather than vice versa. It involves no guesswork about what the customer wants, or whether there is money on the table.

As matters currently stand, there is an enormous sum of demand — such as the RFPs mentioned above — that can result in MLOTT (Money Left On The Table) if the supply side fails to hear the demand and complete a sale. There is no equivalent of the RFP, RFI and RFQ for individuals. Yet the demand exists. Money is there. What we need is the table.

That table is a set of protocols, rituals and systems for routing requests from demand to supply, and responses back. Setting up that table is a primary challenge for VRM.

There are sites that do this. RedBeacon is one. But can we imagine issuing a personal RFP without an intermediary like RedBeacon?

We’ve visited this question before. Wondering what we’ve learned in the (nearly) two years since then.

What makes a VRM tool VRM?

June 15, 2011 / / 17 Comments

‘s just came to my attention, thanks to this tweet by , who adds “Needs more symmetry of power for consumers though”.  All due respect to Andrew’s efforts (and he deserves much), I think the only way to get symmetry of power for consumers is by turning them into full-power customers—with their own tools. That’s what we’ve been working on in the VRM development community.

Several years ago I put up a list of ten principles of VRM. That was before we had most of the tools in development today. So now I’d like to post instead a list of characteristics that define VRM tools. As usual, these are provisional:

  1. VRM tools are personal. As with hammers, wallets and mobile phones, people use them as individuals,. They are social only in secondary ways.
  2. VRM tools help customers express intent. These include preferences, policies, terms and means of engagement, permissions, requests and anything else that’s possible in a free market (i.e. the open marketplace surrounding any one vendor’s silo or walled garden for “managing” captive customers).
  3. VRM tools help customers engage. This can be with each other, or with any organization, including (and especially) its CRM system.
  4. VRM tools help customers manage. This includes both their own data and systems and their relationships with other entities, and their systems.
  5. VRM tools are substitutable. This means no vendor of VRM tools can lock users in.

So, tell me how to improve the list, or suggest a better one.

 

Google’s Wallet and VRM

May 27, 2011 / / 8 Comments

Yesterday Google opened the curtain on Google Wallet. I think it’s the most important thing Google has launched since the search engine. Here’s why:

Reason #1: We’ve always needed an electronic wallet, especially one in our mobile phone. And, although others have tried to give us one, it hasn’t worked out for them, because…

Reason #2: We’ve needed one from somebody who doesn’t also have a hand in our pocket. Google WalletGoogle is the only company in the world that can pull this off, because it’s the only company in the world that lives to commodify exactly the businesses that desperately need commodification, and to await interesting consequences. I can’t think of a single company that’s better at causing tsunamis of commodification so they can join hundreds of other companies, surfing them to new shores. List the things Google does but doesn’t make money with, and you’ll have a roster of businesses that needed commodification. What Google looks for is what JP Rangaswami and I call because effects: you make money because of those things, not with them. (Note, not talking about “monetization” here. A subtle distinction.) A Google lawyer once told me this strategy was “looking for second and third order effects.” Same thing. Either way, they’re out to give us — and retailers we do business with — a hand. (But they will need to keep it out of our pockets, which includes data we consider personal. We’re the ones to say what that is, and others — including Google, Sprint, Citi and the retailers — need to respect that.)

Reason #3: This reduces friction in a huge way. It’s not an exaggeration when Google says this on their Vision page for the project:

In the past few thousand years, the way we pay has changed just three times—from coins, to paper money, to plastic cards.

Now we’re on the brink of the next big shift.

What weighs your wallet down? What slows you down at checkout? Sometimes it’s pulling out cash, but most times it’s dealing with cards. In the last few years every store, it seems, has been piling on with loyalty cards and keyring tags. This last week Panera Bread started, and watching the results have been a clinic in business fashion gone wrong. The poor folks behind the counter are now forced to ask customers if they have a Panera bread card, and the customers have to either say no (and feel strange), or to produce one from their wallet or key ring. Yesterday I asked the person behind the counter how she liked it. “We don’t need it, and customers don’t want it,” she said. “We’re only doing it because every other store does it. That’s all.” That’s a pain in the pocket nobody needs.

Says Google,

Google Wallet has been designed for an open commerce ecosystem. It will eventually hold many if not all of the cards you keep in your leather wallet today. And because Google Wallet is a mobile app, it will be able to do more than a regular wallet ever could, like storing thousands of payment cards and Google Offers but without the bulk. Eventually your loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys will be seamlessly synced to your Google Wallet. And every offer and loyalty point will be redeemed automatically with a single tap via NFC.

This assumes that the ecosystem will continue to support the kind of loyalty programs we have today. It won’t, because we won’t and that brings me to…

Reason #4: Now customers can truly relate with vendors. That is, if Google Wallet and participating retailers and other players welcome it. See, CRM — Customer Relationship Management — has thus far been almost entirely a sell-side thing. It’s how companies related with you, not how you related with them. They set the rules, they provided the cards, they put up the websites where you filled out long complicated forms, they send you the junk mail, and they do the guesswork about what you might want, usually because you’ve bought something like it before. But what if your phone has your shopping list? What if you want to advertise what you’re looking for, as a personal RFP for something you need right now, and may never need again? Think of this as advertising in reverse, or what Scott Adams (of Dilbert fame) calls “Broadcast Shopping”. This is one example of how …

Reason #5: Now demand can signal supply in great detail. Until now, about the only signals we could send were with cash, cards, and whatever might percolate up the corporate CRM chain from “social” CRM. There’s a lot here (see Brian Solis’ Converation Prism, for example, or follow Paul Greenberg). But those all depended on second (vendor) or third parties (all the petals in Brian’s prism, which actually looks more like a flower). They weren’t your signals. I see no reason why the open commerce ecosystem shouldn’t include that. Why should customers always be the dependent variables and not the independent ones? Speaking of independence…

Reason #6: Now you have your own pricing gun. You can tell a store, or a whole market, what you’re willing to pay for something — or what you might offer along with payment, such as information about your other relationships, or the fact that you just moved here and are likely to be shopping at this store more. (Or that you’re a high-status frequent flyer with another airline, and considering the same for this one.) Why not?

Reason #7: You can take your shopping cart with you. Back when e-commerce began, in 1995, my wife’s sister was the VP Finance for Netscape, so that company was something like family for us, making my wife (not a technical type) an early adopter. One of her first questions back then was one that exposes a flaw that’s been in e-commerce from the start: “Why can’t I take my shopping cart from one store to another?” At least conceivably, now you can. Let’s say you want to shop at Store B while you’re at Store A. This already happens when you scan a QR or a barcode with your smartphone to see if it’s cheaper at Amazon or something. But what if you want to be more sophisticated than that? The implications for retailers can be scary, but also advantageous. After all, retailers have physical locations, which Amazon doesn’t. Retailers can earn loyalty in ways that are as unique as each store, and each person working at a store.

Reason #8: Now you can bring your own data with you. Inevitably, you will have a personal data store, vault, locker, data wallet (yes, it’s already called that), trust framework — or other combination of means for managing and selectively sharing that data in secure, trustworthy and auditable ways. And your data doesn’t just have to be about shopping. Personal tracking and informatics are getting big now (read Quantified Self for more). That’s stuff we bring to the market’s table as well. The wallet in one’s phone seems a good way.

Reason #9: Now you can actually relate. When a customer has the ability to shop as well as buy, right in his or her wallet — and to put shopping in the contect of the rest of his or her life, which includes far more than shopping alone — retailers can discover advantages other than discounts, coupons and other gimmicks. Maybe you’ll buy from Store B because you like the people there better, because they’re more helpful in general, because they took your advice about something, or because they help your kid’s school. Many more factors can come into play.

Reason #10: Now you’re in a free and open marketplace. Not just the space contained by any store’s exclusive loyalty system. Nor in a “free” market that’s “your choice of captor” (which is one of the purposes of loyalty programs).  Along those same lines…

Reason #11: You don’t have to play calf to every store and website’s cow. The reason you can’t take your shopping cart with you from store to store on the Web is that e-commerce normalized from the start on the calf-cow, slave-master architecture of client-server computing. This is what turned the Web from a peer-to-peer, end-to-end egalitarian greenfield into fenced-off ranchland where vendors built walled gardens for “consumers” who fed on the milk of each site’s exclusive offerings, and also got cookies that helped calf and cow remember each other, but which sometimes also tracked the calves as they wandered off into other gardens. It was a submissive/dominant system from the get-go, and has been flawed for exactly that reason ever since. Google Wallet, at least conceptually, gives you ways in which you can relate to anybody or anything, on your terms and not just theirs. And not just in the old commercial-Web-based calf-cow system. You can divine the bovine right in your pocket, and avoid or correct vendors trying to feed you tainted milk or tracking cookies.

I could go on, but I have a book to write and not much time left. But I consider Google Wallet a move of profound importance, even if it doesn’t work out, so I’m putting this list out there for us to correct, debate or whatever else we need to do . At the very least Google Wallet gives us one thing a BigCo is doing that can mesh well with what the VRM development community has been working on for the last few years. I hope the synergies will get everybody excited.

[Later, in August…] Some additional news:

Stay tuned.
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