Marketing Innovation

Entrepreneurs vs. Employees: What do we want?

In the current issue(April 13, 2009) of BusinessWeek, the following letter appears, responding to an article by Vivek Wadhwa:

PUT AMERICAN ENGINEERS TO WORK FIRST
As an engineer with a graduate degree, I take exception to "America's Immigrant Brain Drain" (Outside Shot, Mar. 16).

The spirit of entrepreneurship existed in Silicon Valley well before the influx of H-1B immigrants. It's insulting to hear the author repeat the claim that there aren't enough qualified engineering and science grads in the U.S., while many of my colleagues find themselves out of work.

If companies truly believe this, they should lobby Congress to use some of the stimulus money to help graduates of American universities pursue advanced science degrees.

The author is confusing entrepreneurs and employees.  He says that his colleagues find themselves out of work and says that the solution is more spending on advanced science degrees.  I disagree.

Mr. Wadwha wrote that "[a]lthough [immigrants] represent just 12% of the US population, they have started 52% of Silicon Valley's tech companies".  That is fascinating -- and a vital part of US competitiveness.   (The point of his essay is that closing our visa process turns away people who are critical to our economy.)

That statistic can be rephrased -- the market for new capital has decided to invest 52% of its assets in companies led by people born and raised overseas and coming to the US to realize economic opportunity through business creation.  (Mr. Wadwha's research also shows that immigrants contributed to more than 25% of US global patents, make up 24% of science and engineering workers with bachelors degrees and 47% of PhDs.  This would indicate that they are making substantial contributions to new business creation in existing firms as well as startups.)

This raises an interesting question in my mind -- does the US education process churn people through a system where they graduate from college optimized to be traditional employees?  

For most of the last century, the US economy was dominated by corporations, large and small. That worked -- up through the 90's.  The pace of technological change accelerated at that point, and (to dramatically oversimplify things) the existing corporations couldn't keep up.  New business creation exploded, and Mr. Wadwha's research shows who led the charge.  

Further, if you were to read Mr. Wadwha's original piece, nowhere does he say that there is a lack of "qualified engineering and science grads in the US".   There are many (of all nationalities) and they are highly skilled.  However, it appears that there is a greater opportunity for those who create new businesses rather than are hired by them.  (Note that I don't say "start a company".)

The old phrase "Get a Job" (with a song by the same name made popular by the Silhouettes in 1957) might be better transformed in today's economy into "Create a Business".  As a student, consultant, and practitioner of entrepreneurial activity, my working definition of entrepreneurship -- applied at every level of business activity from start-up to intrapreneurial behavior inside a large corporation -- is the transformation of a concept into cash flow.

In 1999, Proctor and Gamble fundamentally changed their approach to product development, embracing a concept known as “Open Innovation” where new ideas are found both inside and outside the company.  (Please read Henry Chesbrough’s excellent book of the same name for more information.)  The $50 billion company realized that in order to grow by 10% per year, it needed to create a new, $5 billion company out of thin air every single year.  That is a daunting task, and it requires not only open innovation, but people who can create new businesses.

That requires key business skills and knowledge, calculation of risk and return, identification of opportunity -- and the ability to craft a business strategy to capture that opportunity.  This is not what our educational system teaches - we teach the skills geared toward creating employees.  That may have been appropriate in the last century, but it doesn't fit the demands of this century.  

Fact:  People who create businesses, create jobs.   They do so regardless of nation of origin.  If more people from overseas are willing to create business in the US -- start-up or inside the Fortune 500 -- more power to them.  Let's welcome them with open arms and help them succeed!

In addition to being a question of immigration policy, I think this is something that needs to enter the ongoing conversation on educational strategy, starting at the high school and community college levels and continuing on through graduate school and internal corporate education programs.  

Do we want to produce employees, or Creators of Business?

Dell: Return to its Roots to Find a New Future?

Dell is (again) restructuring its top management, and altering its strategy in an effort to rekindle growth.  Sometimes, there is value at looking at history through a different lens to gain insights into what made a company great.

In Dell’s case, the company started by selling a product directly to consumers.  What were the characteristics of that product (and the business model) that made the company even possible, much less successful?

Six factors:

• It used commodity components, meaning that there were multiple suppliers and (perhaps more importantly) no research and development was required.
• There was value added in the assembly (however minor) by the company.
• Supplier terms were favorable to Dell, especially later.  Multiple suppliers of each component meant competition kept prices low.  The exception was the CPU, where paradoxically the Intel monopoly kept prices low because there was always the threat of going to AMD.
• Mass customization of the end product was possible through mixing and matching a virtually infinite number of different component configurations.
• Massive inventory turns enabled by the direct-to-customer model meant that Dell could collect the price of the machine before they had to pay for the parts.
• A brand name that stood for quality.

This is ideal for a desktop computer.  It could be built in a dorm room (or a garage, or pretty much anywhere, which ultimately gave birth to the “white box” built in the so-called “screwdriver shops”, so named because anyone with a screwdriver could build a PC.)  It is also ideal for a PC-based server.

Notebook computers, on the other hand, remove four or five of these sources of competitive advantage.

• Assembly is not done by Dell, but by contract manufacturers, removing that value add.
• Supplier terms aren’t as favorable, because there are fewer contract manufacturers, and they aren’t able to be played off against one and other like, say, power supply suppliers could be.
• Mass customization was much more difficult, because there were a relatively low number of fixed configurations in notebooks.
• All the above three factors combined to produce much lower inventory turns.

As Dell grew, they diversified their product line to include more and more peripherals (printers, for instance) and other electronics (flat screen TV’s, for instance).  These items moved even further away from the six core principles that made Dell successful -- where was the ability to differentiate?  Why was a printer or TV purchased from Dell any better than one from Best Buy?

So what does this mean for the future?  For one possible answer, let’s ask the question a different way:  What products of the next 5 - 20 years share the six characteristics of the original PC?

Perhaps those products are in the PC business, like blade servers, or even parallel supercomputers.  On the other hand, the answer might be in completely different industries.  NOTHING about the “Six Success Factors of Dell” say anything about personal computing or even electronics.  The next industry to be transformed might be something like transportation, where the six competencies described above can provide some competitive advantage in an emerging and/or high growth market.

As for transportation:  We can compare the not-as-Big Three of today to the IBM and Digital Equipment of the 80’s.  Who would have thought that the lowly PC (a “toy”, in some early reviews) would transform one of those business so completely, and eliminate the other one?

"Beware of the Doghouse": As Brilliant as Diamonds!

A friend of mine forwarded me a link to an awesome site.  What a great viral marketing campaign!  I would rate this one very high on the Marketing Innovation Index!

Chevy Volt: Running on Empty (Even After a Full Charge)?

With all the news about GM these days, I'm intrigued by the near-constant use of the forthcoming Chevy Volt (pictured to the left) electric vehicle as a proof-point of the continued viability of the firm.  Of particular interest me, from a marketing innovation standpoint, is the promotion of the 40 mile battery range before needing the gas engine (a 1.3 liter, three cylinder model that keeps the electric motor running, but does not recharge the batteries).  It seems like GM trots out that range with pride every time the need to bolster their innovation cred arises.  (Which appears to be frequently.)  To boil it down to unflattering simplicity, it is like putting a gas-powered generator on the back of a golf cart, and using that to power the vehicle once the batteries are dead.

I am intrigued by the premise of an electric car.  However, it seems that the chemistry of energy storage is giving gasoline a bit of a leg up on the Lithium-Ion cell.  For under five bucks, you can buy enough stored energy (yes, gas) to push around just about any current vehicle for forty miles.  Heck, you can do that for under two bucks for some vehicles!

But I digress.  In addition to the Chevy Volt, there is another electric car out there, and it is a true electric car (no gas motor).  It is the Tesla Roadster (pictured below).  Here is a little comparison of the two vehicles:

                            Tesla                Volt
Price                    $109,000     $40,000-ish
Power (HP)               248              150
Recharge time        3.5 hrs         3.5 hrs
Battery weight        992 lbs.        375 lbs.
0 - 60 mph             <4 secs          8-9 secs
Battery rating         53 kWh         16 kWh
Range (miles)            244               40

What this table doesn't include is company image, or the brand.  (It also doesn't include sales projections, because I can't find any for the Volt.  The Tesla is a low production vehicle, in the 1,000 - 2,000 range, but is sold out with a waiting list for 2009.) 

Strategically, GM could have chosen to roll out this car as a high-performance, technology-laden marvel with a stunning design, perhaps under the Cadillac brand.  Instead, they chose to roll it out as an everyday kind of car, under the Chevy label.  And it looks like a Camry.  Or Accord.  Or Malibu.  Not distinctive, in other words.

Also strategically, they chose to highlight the 40 mile battery range.  I don't know about this.  When my car gets to the point when there is only 40 miles of range left, which is well after the little yellow light comes on, I panic.  My trip computer -- which tells me how many miles I have remaining in the tank -- stops making predictions when 50 miles remain.  It just blinks instead. 

If for some reason I drive home with that little range, I don't sleep well if I have anywhere to go the next day.  I hope that there is enough gas to get the nearest station.  Buying a car where that kind of range is when the electricity tank is full doesn't seem inspiring.  I wonder what kind of ad campaign will support this "feature".  ("Don't worry, you've still got gas"?)

Contrast this with the Roadster:  244 miles.  It looks like Tesla put in two-and-a-half times more batteries (measured by the pound), got three times the energy and six times the range, and threw away the gas engine.  I realize there might be more to it than that, but that's what jumps out at me.  Why didn't GM make that decision? 

Look at that table again.  Yeah, the Tesla is expensive, but it will come down.  It'll probably be like the iPhone -- really expensive at first, but then coming down to pretty expensive, and then perhaps to expensive.  Like a Corvette.  Funny I should mention that car -- it has performance specs very similar to the Tesla, but it does so motivated by a 7 liter, 436 horsepower V8 engine getting (a surprising) 20-ish mpg (Z51 model, around $60,000).  And there is another model (the ZR-1) that uses various enhancement technology to achieve slightly better specs at a price of about $110,000.  So GM (even Chevy) knows how to play at these price and performance levels.  Presumably, Tesla is profitable at this price, what with it being the only product the company sells.

It seems like a great management team, presented with a technology like this and a company with the resources of GM, would do this:  Start with a high performance technology, and let it find it's way into more pedestrian vehicles.  Start with something to really crow about -- an all-electric vehicle with eye-popping performance, drop-dead looks, and let the halo spread over the rest of the company.  Or they could get on private jets and go ask the federal government for a bailout.

Update 12/10/08:  The editorial cartoonist Pat Oliphant apparently agrees with me that the professed 40-mile range is somewhat underwhelming:

Innovation in the Newspaper Business? New Thinking is Needed.

Today’s local paper brought news of yet another cutback in the size of its staff and itself.  The company is contending with “one of the worst advertising slumps in its history”, citing particular pressures in real estate, employment and automotive advertising.  It is the third such cut in the last five months.

The number of full time staff will be reduced, and the paper itself will run 10 fewer pages per week.

This is sad, but it looks like it is headed into an irreversible spiral down. 

1.  Ad revenue slows
2.  Reduce staff
3.  Shrink size of paper
4.  Readership declines
5.  Repeat as long as possible

Or is it irreversible?  Let's see if innovation can play a role.

This cutback highlights a risk with an increasingly popular form of business model:  the ad-supported subsidy.  Any business that depends solely on revenue from advertising dollars works for only the advertisers.  You do not work for the people you call your “customers” or “users”.  Your true customers are the people that pay you.

Newspapers have a hybrid business model, with subscribers (readers) and advertisers both paying.  It seems like the subscription basically covers the cost of distribution, and ad dollars pay to produce news and editorial content.  This is necessary -- people simply won’t pay enough for a subscription to foot the bill to profitably produce a daily paper.

There’s a two things about ad dollars:  there’s only so much of them; and they only go where they can be shown to work.  If advertising revenue is decreasing, it is a function of one, the other, or both of these factors.

The first factor means that you will need to compete for ad spending.  The second factor is how you will compete.  You will need to show that your customer will do better by spending money with you than with all the zillions (and growing) of other places that their ad money can be spent.

There are a couple reasons why money is spent on advertising.  First is to build awareness.  The second (particularly in the employment and classified advertising) is to generate action (apply for a job; call and buy the item).

Advertisers presumably want to know that the audience to which they are pitching their wares is likely to buy those wares.  They want to know that they are reaching a sizable number of those people per dollar spent.  So the question is how to recruit and retain a sizable, loyal audience of people who have a preference of deciding to buy things based on ads in the paper?

The traditional way is to have enough content that people find essential to their existence that they will read the paper cover to cover, and linger on the ads to see which businesses offer what they need to buy at that time.  This isn’t very targeted, and relies on a host of assumptions about subscribers’ buying habits.

However...the number of people who depend on a daily newspaper is shrinking, and those people are older.  Older people are not as susceptible to advertising (if, in fact, anyone still is), but they have more disposable income than the young. (An aside:  The only reason that I can fathom that the 18-34 year old male demographic is regarded as the most desirable for advertisers is that 18-34 year old males spend money like drunken monkeys.  By the time they turn 34, they have either run out of money; gotten married and have to answer for their financial indiscretions (personal experience speaking); they have already bought everything worth buying; or they simply grow up.)

How do we make this model work with the constraints of a smaller, ad-resistant readership?  The answer is to produce something of value to that readership, and perhaps others.

This is about innovation.   Businesses must innovate and separate themselves from their competitors.  There are not a great many inspiring stories of businesses cost-cutting their way to growth and success.

What is it that papers are good at?  I think that it is in editing, printing, and distributing.  Putting stuff into the printing press, and distributing what comes out of it. 

Content typically comes from the reporting staff, augmented with national and international wire services.  The staff is typically focused on local information and opinion.

Is there an opportunity for innovation here?  Is there a way for low-cost (or even free) content generation?  How about giving subscribers a free website and/or blog in return for the right to harvest what they put on those websites and blogs?  Use the editorial and management skills to build a daily report of the most compelling and newsworthy sources.  Use technology to search, sort, and harvest content from the blogs and websites, and organize it into these new editions.  Print that and distribute it.  

It would be easier to target advertising on the blogs/websites themselves than in a traditional paper.  Or, better yet, publish several editions, aimed at different audiences.   For instance:  a political edition, a business edition, a lifestyle edition, a technology edition, and so on.  Advertisers might just like to see such targeting. People might even subscribe to several of these editions, instead of one.  (I subscribe to two dailys, plus another dozen or so magazines.)  The operating principle is called “mass customization”.

Perhaps the days of a single flagship daily per city are gone.  In their place, though, the same organization that stood behind that single flagship daily could be producing multiple, focused, dailies.  (Or biweeklies, or.....)    Maintain a solid, consistent editorial policy, and stay a force in government and open, civil, discourse.

Who knows?  It could just work!

Apples, Mac and Cheese, and A Set of Patio Furniture -- All at Kroger!

Retail business is tough.  The grocery business is insanely tough.  The business model is based on razor-thin margins and high turnover.  Costs must be kept low and traffic must be kept high.  Kroger is an excellently managed company, and one that is featured in Jim Collins' book "Good to Great".  In fact, there is a great example of how Kroger approaches inventory in that book (page 148-9):

"Imagine walking back into the warehouse and instead of seeing boxes of cereal and crates of apples, you see stacks and stacks of dollar bills - hundreds of thousands and millions of freshly minted, crisp and crinkly dollar bills just sitting there on pallets, piled high to the ceiling. That's exactly how you should think of inventory. Every single case of canned carrots is not just a case of canned carrots, it's cash. And it's cash just sitting there useless, until you sell that case of canned carrots."

One of the characteristics of canned carrots is that one can is pretty much the same as the next can, regardless of whose label is on it.  It is very difficult to command a premium price for a particular can of carrots.  As a result, regardless of whose store we buy our carrots from, the price is going to be pretty much the same.  Profit margins (the percentage difference between the sale price and the cost) will be squeezed to the lowest possible level that all grocery stores can live with, usually in the 2% - 4% range. 

"How can anyone make a profit with margins that low?", you might ask.  Well, since profit equals margins times the number of times you can turn over your inventory in a given period, you must get those carrots out of inventory into the checkout line muy pronto.  In business terms, we can see that the velocity of goods moving through any given store must be maximized.  You don't want things gathering dust, either in the warehouse or on the floor.  (By the way, this line of thought deals with canned carrots.  If your carrots aren't canned, then you have the problem of spoilage, making the need for speed that much more pressing.)

Which brings me to patio sets.   You know, wrought iron, or aluminum, or wooden outdoor furniture -- usually a table, four chairs (perhaps with cushions) and maybe a patio umbrella.  In my local Kroger, there's one for about $240.

Why?

Several of us pondered this question over lunch at the local Mexican restaurant, which happened to be in the very same shopping center as the aforementioned Kroger.  The apparent contradiction to me was that patio furniture is very nearly the antithesis of low margin, high turnover products. Why would they carry such a product?

One measure of performance for grocery stores (and retail stores in general) is sales (in dollars) per square foot of space.  Obviously, you want to offer things that sell -- after all, things that do not sell are not helping you turn inventory into cash, and they are taking up space that would be better used being filled by something that did sell.  Generally speaking, grocery stores are filled with items that you can pack a bunch of them into a square foot.  And, as we've seen, they need to sell quickly.

Even though Kroger pioneered the concept of the grocery superstore, there is still a limit to just how elastic people's behavior will be.  I mean, how many people will actually put patio furniture on their grocery list??  What's the thought process there?  "Let's see....we need apples, mac & cheese, bread, milk, and a set of patio furniture.  Now, off to Kroger!"

Patio furniture, though, is not perishable; it is durable. It is not small; it is large.  It strikes me as something that wouldn't turn over all that quickly, necessitating higher margins to be profitable.

So we put on our thinking caps.

Maybe it was to horizontal integration.  Kroger already sells prepackaged salads, potatoes, tomatoes, steak, steak seasoning, charcoal, lighter fluid and a grill.  All you need to prepare a meal.  Perhaps the reasoning was that people would also need a place to eat their meal.  OK....let's take that to another level.  What's the next step?  Selling houses behind which to put the patio set?  I don't think so.

Maybe it was to promote impulse buying, like the racks of candy, gum, soda, gift cards and tabloids to tempt (or inform) you as you wait in line.  Not likely at $240.

Maybe, one of us said, there was dead space in the store that would otherwise be contributing nothing to the "dollars per square foot" measurement but square feet, and filling that up with an item that might sell relatively few units but at higher prices might be worthwhile.  That made some sense!

So I decided to engage in some primary research, and went in to the Kroger.  After paying for my Golden Delicious apples, Yukon Gold potatoes, green onions, and a red onion (I'm making this awesome sounding potato salad for dinner!), I went to see the manager.

I told her that I was intrigued by the fact that they sold (or offered for sale -- that could be a crucial distinction) patio furniture, and that I couldn't really see people putting it on their shopping list (I gave her the "apples, mac & cheese, patio furniture" bit, which made two employees nearby laugh out loud) nor buying it on an impulse.  I asked how many she actually sold. 

"Oh, five to ten," she said.

"Per month?!" I asked, kind of surprised.  That made her laugh.

"No, sweetie, per year.  Five or ten per year."

So I got down to the real question.  "So why do you have them if you only sell five or ten a year?"

She had a very simple answer:  "Competition.  Everyone else has them, so we have to."

Mystery solved.

Update 12 August 2008 by GSH:  I returned to Kroger the other day, and saw that they also sell sleeping bags!  This sort of merchandise selection must represent an innovation in marketing.  I would love to sit in on a meeting at Kroger headquarters while the marketers discuss expanding the selection to include such items as patio furniture and sleeping bags.  I haven't done any research yet to see if "everyone else" has them, though that could be the driving force. 

Applying this sort of logic in reverse, what's next?  Coleman branded beef, ready for the trail, available at your local Kroger?

The End of the 4 P's of Marketing -- and How to Get Them Back

I’m in the market for a new digital camera, and I’ve been doing research for months about which one to buy.  In the course of that research, I’ve noticed that the price band for any given model is very narrow -- across all “places” where the camera is available.  The Internet is my primary source of information about price -- Amazon, J and R Photo, B and H Photo -- but as I branch out into mass merchandisers like Best Buy, Circuit City, and even the office superstores and department stores, I’ve noticed that they all offer a given model at essentially the same price.

So two of the four “P’s” -- price and place -- have been removed from the marketer’s arsenal as levers of differentiation.   Price has found its floor below which no firm will go, and it is available everywhere.  What to do?  

The answer to which the business world turns seems to be to spend money on a third “P” -- promotion.  Advertising is not only a method of promotion, it has become the source of entire business models. 

This is not sustainable. 

The amount of advertising that the average buyer is subjected to -- across all media -- makes the incremental impact of any single ad microscopic.  (If there is any impact at all.)  In short, you can’t promote your way to differentiation, either.  What’s left?

The fourth “P”:  product.  The product (or service) itself is the one lever that a company can use to differentiate itself.  The way to accomplish that is through innovation -- continuing to improve your offering through new features that benefit your customers (current and future). 

Going down this path is a commitment to a new way of doing business.  Once on this path, you can’t get off.  Anything you introduce will be copied, and become the basis of competition for everyone.  You must stay out ahead of the pack.  Innovation must become -- and stay -- part of the DNA of your organization.

The good news is that innovative products that offer new features that benefit your customers reignite the ability of the other three P’s to be marketing levers.  Innovative products have less competition than commodities, so you can offer them in unique places.  You can price in a premium for that innovation (or perhaps you have lowered costs, so you can offer more at a given price point.)  You can promote a difference (or, even better, have other people -- influencers -- promote it for you!)

The erosion of the three P’s seems to point to an inescapable conclusion:  innovation is imperative.  Keeping your “eye” on innovation can bring the four “P’s” back into play.

Disruptive Innovations Require Education and Outreach

Are the Speedo LZR swimsuit and nanotechnology swimming upstream against the current of public opinion?

Yesterday, my local paper, the Raleigh (NC) News and Observer had two items that were seemingly totally unrelated, but struck me as significant for people marketing innovative products or technologies. 

In the first item, guest sportswriter Scott Fowler, of the Charlotte Observer, laments the incursion of the technology that makes the Speedo LZR suit such a hit. For those that are unfamiliar with it, the LZR is a technological tour de force, utilizing amazing technology to compress a swimmer into a hydrodynamic bullet.  It is totally legal and meets all the sanctioning body's regulations.  It includes new seam sealing technology and new materials that repel water.  It's been tested at NASA.  The most controversial aspect is that the polyurethane panels take body parts that the rest of the fashion world tries to accentuate and squeezes them away.   An article in Fast Company magazine describes this "form drag" as being largely caused by breasts and buttocks, so this suit strives to smooth them out.  All this technology has resulted in over 40 world records since the suit was introduced.  The swimming world has been so moved that the Italian swim coach called wearing the suit the equivalent of "technological doping".  Mr. Fowler doesn't agree with that statement but says that the rate at which records are being broken "cheapens" the records themselves, and concludes with "I still don't like it".  Not a resounding endorsement.

The other article, titled "Tiny Tech, Unknown Risks" is about unknown hazards that may (or may not) be posed by nanotechnology.  It mentions that David Berube, an NCSU professor of communications, has received a National Science Foundation grant of $1.4 million to study how to communicate nanotech risks.  Not benefits; risks.  The article states that Dr. Berube believes in the potential of nanotechnology, but that the "public, in general, has no idea what is happening", creating the opportunity for a backlash of public opinion against the technology in the event of a negative event caused by an unknown (or worse, known but undisclosed) facet of the technology. 

Both of these subjects -- revolutionary swimwear and revolutionary materials science -- are disruptive innovations.  The swimsuit has improved human performance in arguably one of the most elemental sporting events.  Nanotechnology has created revolutionary new products in everything from fabric to pharmaceuticals.  The products are well accepted -- who doesn't like stain resistant clothes?

But these two articles point out a risk with innovation -- that those who are not adopters of the technology can become critics.  And their ranks can swell quickly. 

Disruptive innovations, in particular, require the market to be educated before it will buy.  While most effort is being spent educating the market, it is important that there are people totally distant from the purchase decision who must also be educated -- the influencers.  Who are they?  It can be tough to say.  Sometimes there are prominent media personalities who can be approached.  There might be consumer advocacy groups that would appreciate an early, honest conversation.  Outreach is suggested; being in a "react" mode means damage control at best.  And outreach  must be forthright -- "marketing" is a bad word to many such people.  They perceive that marketing is often a coverup (particularly if they decide that you are trying to "spin" them.)

The LZR has been swiftly adopted by the people who matter most, competitive swimmers.  No rules have been broken, and the records will fall.  All sports have enhancements to the equipment that make old records obsolete (golf might be the poster sport for this phenomenon) and there will always be people who liked things better the way they were.  (Note:  the suit goes on sale to the public later this year.  You can pre-order now at the Speedo website.)

Nanotech is at a critical juncture.  It will not disappear, but, like genetically modified food, and food irradiation, market acceptance could be well below its potential if the public decides that nanotech is dangerous.

Perhaps there should be an effort by some organization or organizations to fund a grant on how to educate the public about the benefits of nanotechnology, before the other side has too big a head start.

Apple iTunes Music Store: Customer Service Done Right

Just when you've had your fill of not-so-good customer service experiences, something comes along to make you happy you do business with certain companies. 

For some reason, I've been struck with the urge to create unique ringtones for various people on my iPhone.  You can create them using iTunes from certain songs.  I went to try it out by creating a short clip from Van Halen's "Running with the Devil", and it is a pretty cool process -- editing loops to use as ringtones.  The problem was that I wasn't able to actually buy them.  I'd go through all the steps, click on the "Buy" button, and nothing would happen.  I read forums and knowledge bases, but nothing.  So I wrote to Apple.  Here's the correspondence back from them, and my replies.

On Jun 11, 2008, at 2:09 PM, iTunes Store wrote:

Dear Greg,

I understand that you have been unable to create a ring tone from the iTunes Store. I can imagine how this may be frustrating. My name is Alyssa and I will be more than happy to assist you today.

To create ringtones, you must purchase a ringtone-eligible song, create a ringtone from it, and then purchase the ringtone. The ringtone purchase is separate from the original song purchase.

Follow these steps to create a ringtone:
[Multistep process follows, which is just a repeat of the instructions I followed on the iTunes Music Store.]

Very nice tone. No excuses and explanations, just friendly advice and concern. I had already followed those steps, so I hit "Reply" (even though the return address was iTunesStoreSupport@apple.com -- it didn't look like Alyssa's personal account) and sent this:

Alyssa,

I have followed all those steps, but when I click on the "buy" button in step 6, nothing happens.  I'm running iTunes 7.6.2.

I frankly didn't expect anything because I thought that my email would go into some sort of bulk trash can.  Surprisingly, Alyssa wrote back:

On Jun 12, 2008, at 11:06 AM, iTunes Store wrote:

Hello Greg,

I am sorry to learn that you are still unable to purchase a ring tone.  I'm sure you are anxious to have this issue resolved as soon as possible.

This is most likely because you have yet to agree to the updated terms of sales on the iTunes Store. To resolve this issue, please download a free song form the iTunes Store and agree to the terms of sales. Once this has been done, I trust you will be able to purchase your ringtone.

I apologize for the inconvenience, Greg. Have a wonderful day.

Sincerely,

Alyssa
iTunes Store Customer Support

Thank you for allowing me the opportunity to assist you. You may receive an AppleCare survey email; any feedback you provide would be greatly appreciated.

That was, indeed, the problem, and the solution worked great!  A little odd, but successful.  So I replied again:

That did the trick!  Thanks, Alyssa!

Greg

This time, I really didn't expect an answer.  I simply wrote to let her know it worked; maybe she'd get a charge out of solving a problem and knowing that I was grateful.  I misjudged my new friend:

On Jun 12, 2008, at 3:33 PM, iTunes Store wrote:

Dear Greg,

You're very welcome. I'm glad to hear that you are now able to purchase a ringtone.

Nothing makes Apple happier than to hear that we have pleased our customers. I hope that you continue to enjoy the iTunes Store.

Enjoy your new ringtone, Greg and have a wonderful day.

Sincerely,

Alyssa
iTunes Store Customer Support
Thank you for allowing me the opportunity to assist you. You may receive an AppleCare survey email; any feedback you provide would be greatly appreciated.

On top of great products, great design, and a great customer experience, add in great customer service to the list of reasons that I'll stick with Apple.

Time Warner Cable: Explanation

I recently posted about a service outage with my Internet Service Provider, Time Warner.  Unexpectedly, I got a comment from a TWC representative, inviting me to write.  Here's what he wrote:

I just want to assure you that we are paying attention. I'm sorry that you had a frustrating experience with our customer service. We strive to make the system as easy to use as possible and provide our customer service representatives with the information to correct issues as quickly as possible. Please feel free to contact me directly if the issue is not resolved to your satisfaction.

Alex Dudley
Alex.dudley@twcable.com

I took him up on his offer, sending this note:

Alex,

Thank you for taking the time to comment on my blog post.  I'd be interested in learning more about why my experience ever happened in the first place, however. 

I posed some questions at the end of the post that I'd appreciate if you could address.   In addition, I'd be interested to know whether or not there is a system in place by which the customer service reps can try and "make things right", perhaps by offering a free month of service, or something else along those lines.  Also, is there a way that technicians can propose new ideas to management in a way that would improve service?  After all, you guys are the ones closest to the customer, and probably have a whole bunch of ways to improve service and lower costs at the same time.

You write:  "We strive to make the system as easy to use as possible and provide our customer service representatives with the information to correct issues as quickly as possible."  I would say that the system still needs improvement.  It was not easy to use (it took me forever to find the number in the first place, and then I had to enter in my phone number, and then give it to EACH of the four techs I talked to.  And you clearly had not provided the customer service representatives with the information to correct issues as quickly as possible.

I've been a customer of TWC for many years, since it was first installed in this area.  I seem to remember, back in the early days, if there was an outage, and I called in, the answering message would say things like "There is an outage in North Raleigh.  We are aware of the issue and are working to resolve it as quickly as possible."  I'd know what was going on, hang up, and wait.  Total transaction time:  under a minute.  Total investment by TWC?  Probably under a minute to record the message.  Certainly not 36 minutes and four paid technicians.  Customer happiness level:  not great (after all, there is no service) but not totally frustrated about wasting that much time.

Looking forward to hearing from you,
Greg

Here's his reply:

Greg-
 
I'll look into why the outage occurred.  For the record, I am here at corporate, and can assure you that we do solicit and get feedback from CSRs.  As far as generally improving the system, we focus on three areas.  First, we want to invest in customer self-help technologies, things like chat help and email help, both of which are coming soon.  Second, we need to enhance the way our CRSs view the information.  We are rolling out a new desktop application that will put more information at their fingertips (without having to scroll through multiple screens to find simple data points about an account).  Third, we are continually trying to better train our employees, both before they start and on an ongoing basis.  Obviously, none of these is a panacea, but together we believe that they can help improve the experience.  There will always be room for improvement.  And yes, CSRs are allowed to offer "make-goods" if the customer experience warrants it.
 
Regarding your question about why, a while back, you could just call and there would be a message playing about an outage and the whole thing would take less than a minute, the difference is that we now offer three different products, as opposed to just one.  The fact that your internet service was out, but not your video complicates the matter.  I can assure you that if there had been some sort of accident where a main fiber trunk line were cut and ALL TWC services were out in an area, such a message would play.  But when video is working, but not data, it takes some time to locate the problem, diagnose and estimate repair time.
 
As far as the need to transfer you among several CSRs, that too, is a result of the increased complexity of our product offering.  Imagine sitting in a call center and when the phone rings the number of possible issues with which you (as a TWC CSR) can be faced.  You can be called about an internet outage, the next caller wants HBO and the third can't figure out why their phone service isn't working (sometimes because their cordless phone is out of batteries!).  All of this is to say that our CSRs have a tough job.  We are trying to make it easier on them (and thus on our customers).  Doing so is a process, not an event.  Mostly though, I commented because I want you (and others) to know that we are listening, we do care, we know you're frustrated and we're constantly working on the problem.  At any rate, thanks for writing and don't hesitate to contact me in the future.
 
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