Jim Treleaven

Why Customer Service Matters to Revenue Growth

For as long as businesses have existed, the vast majority have claimed a focus on satisfying their customers.  Unfortunately, in most cases, these pronouncements are little more than lip service.  It’s not that the firm’s managers don’t believe that customer satisfaction is important or don’t think that their firm has the appropriate focus, it’s that most firms fail to take the serious steps to create what Ken Blanchard famously referred to as “Raving Fans”.

In Raving Fans, Blanchard draws the important distinction between merely satisfied customers and raving fans.  The distinction is that satisfied customers will not be proactive advocates and would consider other suppliers during the next purchasing decision.  Blanchard advocates for exceeding your customer service promise every time you deal with the customer.  “Exceeding” means over delivering and “every time” implies consistency.

 

For a more in-depth look at Outstanding Customer Service attend this free seminar on

Tuesday, April 18th 1 to 4 PM at TechNexus in Chicago.

Let’s talk about two ways that companies can meet these goals. First, is my personal experience with Tony the Trash Guy.  We were finishing our basement after many years and, since it had been many years, we had accumulated all kinds of stuff that needed to be discarded.  I looked in the Yellow Pages for companies that might come and remove far more than the usual amount of trash.  After innumerable phone calls to unanswered numbers and voicemail messages, I was becoming quite discouraged.  Unlike all the others Tony returned my call within 5 min.  He asked the requisite questions about how much he needed to haul away and asked if we would be home at 4 PM that afternoon.  To my surprise, Tony showed up almost precisely at 4 PM.  I had moved most of the trash to the garage, but he willingly helped move the heavier trash from the basement.  At this point he had most certainly exceeded my already modest expectations.  But, it didn’t stop there.  He swept up the garage when he was done and left it far cleaner than it had been for some time.  Finally, I received a handwritten thank you note in the mail a few days later.  This was my first experience as a customer and he clearly exceeded any and all expectations.  I used Tony again several times in the future, but more importantly enthusiastically recommended him to quite a few other potential customers.

A second, and often overlooked, opportunity is what companies do when problems arise.  Companies that meet, or perhaps even slightly exceed initial expectations, may be satisfied customers, but they’re not yet raving fans.  An enterprise software company with Fortune 50 customers had for some time at least met expectations in providing an important supply chain application.  When the newest release had bugs that caused critical supply interruptions, the future of the company was at risk.  Senior management immediately met with each customer, assigned senior staff to work on site to keep operations going with workarounds and at considerable expense resolved all software issues in a very short period of time.  As a result customer satisfaction improved substantially from where it had been prior to the issues.

While these problems were dramatic, customer losses are rarely the result of such obvious issues.  A well-known study shows that the primary reason for customer defections is a poor attitude or indifference on the part of the provider.

Why Customers Leave

—  Moves, merger etc.                                       8%

—  Competition                                                  9%

—  Product dissatisfaction                                 14%

—  Attitude or indifference by provider                  68%

While the previous example may have created significant negative issues for the company, improved customer satisfaction has substantial measurable results for all businesses.  A 2006 University of Michigan study showed a significant relationship between customer satisfaction and financial success.  A portfolio of public companies that was managed based on changes in the American Customer Satisfaction Index (ACS I) substantially outperformed the S&P over a five-year period.

Likewise, a study by Bain showed that a 10% increase in customer retention results in a 30% increase in the value of the firm.  A Gartner study found that a 5% increase in retention resulted in an increase in profits of between 25% to 125%.  A 2% increase in retention was found to be the equivalent of a 10% reduction in cost.

New sales are also significantly impacted by improved customer satisfaction.  The probability of a sale to an existing customer is 3 to 5 times higher than to a new customer.  At the same time the cost of generating a new sale averages five times more than retaining an existing customer.  On average, happy customers tell 4 to 5 others while unhappy customers tell 9 to 12 others.

As Ken Blanchard has argued, the value of raving fans is considerable.  Companies that take customer satisfaction seriously, and make it the cornerstone of their strategy, will have an unbeatable competitive advantage.

 

Growth Isn’t Automatic Even For Technology Companies

At times, virtually all companies face growth challenges, even technology companies. In fact, many technology companies have low variable and high fixed costs.  As a consequence, fluctuations in revenue can have a profound impact on the bottom line. Whether it’s simply stalled growth or the bigger issue of declining revenue. Growing technology companies may believe even more growth is possible. Growth can be affected both by a company’s ability to generate new customers as well as a company’s ability to retain and grow existing customers. Customer retention is often a key issue for technology companies. And, all parts of the organization can have a profound impact on growth. Areas such as accounting and legal can either make revenue generation easier or much more difficult.

It’s important to review all areas in the company that either contribute to or hinder growth. In general these fall into the following categories:

  1. Marketplace. Here companies can face a number of issues ranging from a declining market for its products to significantly increased competition or substitute products or services. This is especially true for technology companies.
  2. Sales and Marketing. Companies often find that their sales and marketing processes are either inefficient, ineffective or both.
  3. Customers. Even if companies participate in a growing market and are very successful at bringing in new customers, a poor customer experience resulting in significant customer attrition can cause revenue declines.

 

This blog discusses some of the tools companies can use to uncover and address issues in each of these three issues.

Marketplace.

Several techniques can be used analyze the current market. Once the market situation is better understood, appropriate actions can be taken. Some markets face rapid change and an uncertain future. Technology, energy and healthcare are three markets where this is particularly challenging. Approaches like scenario planning can help companies rigorously examine possible future environments that can help them identify risks and opportunities. Looking into the future of technology is quite challenging and some of the industry’s most notable leaders have been notoriously wrong:

“I think there is a world market for maybe five computers.”

Thomas Watson, president of IBM, 1943

“There is no reason anyone would want a computer in their home.”

Ken Olsen, founder of Digital Equipment Corporation, 1977

Nevertheless, technology companies always need to be looking at least 3 to 5 years out in order to look for changing market trends, new entrants and substitute products. Research in Motion (RIM) at one point had over 40% of the smart phone market and just recently announced that they were going out of the hardware business entirely. Had they foreseen the changes taking place in the marketplace they could have taken several actions to mitigate those impacts. They could have focused on their expertise in secure networking and leverage that through other handset providers. Or they could’ve adapted their own handsets more rapidly to the form factors that replaced them.

A number of well understood techniques can help companies understand their environment. One of the most prominent is Porter’s 5 Forces which include the bargaining power of customers and suppliers, the threat of new entrants and substitute products and the competitive strength of the industry. Once the current and future market is well understood, the company can formulate a strategic response. Possible actions include product modifications, new products, new distribution channels, product eliminations, changing geographies and price changes.

 

Sales and Marketing

Volumes have been written on sales and marketing. Both new and mature companies often face challenges in effective sales and marketing operations. As is the case with market issues, an important first step is identifying any issues. More often than not, the focus is on the sales organization and the sales process, and particularly the proximate sales process. This is far too narrow.

Rather, current thinking focuses on what is generally called the “customer journey”. This involves every interaction that a customer has with the company starting with their initial search for a product or service and continues through their continuing experience as a customer. A walk-through this journey, will help companies identify any number of issues and opportunities that are the subjects of entire books themselves. In today’s digital world, over 70% of the buying decision is made before the company is ever contacted. Companies are increasingly relying on very sophisticated content marketing approaches to address this issue. Some key questions technology companies need to answer include:

  1. Does the company have a good understanding of their target market?
  2. Does the company have a good understanding of what their best prospects look like?
  3. Does the company have sufficient presence in the market that they can participate in a prospect’s initial research? This may include useful online content, participation in independent market research or traditional public relations.
  4. Are there effective mechanisms in place for suspects to self-identify as prospects or for company marketing activities to identify them?
  5. Is sales execution effective? Any number of issues can affect sales execution.
  6. Are appropriate salespeople hired?
  7. Is the sales force properly trained?
  8. Is incentive compensation appropriate?
  9. Are sales processes appropriate including the use of tools such as a CRM?
  10. Is the data in the CRM current?
  11. Are the sales forecasts accurate?
  12. Do all parts of the company that touch the sales process, including finance and legal,

Insure they facilitate the sales process?

 

Customer Experience

More often than not this is the most important area. As mentioned earlier, no matter how effectively companies acquire new customers, if they have significant turnover in their customer base, revenues will suffer accordingly. Technology companies, in particular depend on customer retention and recurring revenue. Customers have jaded, and often humorous views of technical support:

I was walking through an office one day and a user said to me, “At last! It’s taken you long enough. I pressed F1 (help button) over 2 hours ago!”

So how do companies that face the significant customer satisfaction challenges inherent in their businesses improve? Here are five steps that companies can take to significantly improve customer satisfaction and gain substantial improvement in financial performance.

  1. Seek constant feedback and measurement. In order to have a comprehensive customer satisfaction program, companies need constant feedback on how they’re performing and need to establish a baseline measurement. Surveys, interviews and social media are common means of developing baseline measures such as satisfaction statistics and net promoter scores. There are also multiple external sources such as G2 Crowd (the yelp of software) or analyst ratings from companies such as Forrester and Gartner.

While these more quantitatively focused survey techniques are useful, they rarely tell the whole story.  Companies need to exploit many other, more personal, qualitative feedback channels.  Senior management needs to regularly meet with customer decision-makers.  A powerful institutional mechanism for feedback is a well-functioning, independent user group.  User groups can systematically collect and aggregate extraordinarily useful feedback on company and product performance at relatively low cost.

Qualitative and quantitative data needs to be proactively documented and tracked over time.  But, most importantly, companies need to take appropriate action based on this feedback. Seeking feedback is usually viewed very positively by customers.  However, companies that fail to act on specific service or product issues will see customer satisfaction plummet relative to where it had been if they hadn’t sought customer feedback in the first place.

  1. Establish a customer centric corporate culture. The previous chapter mentioned the importance of culture. Many companies are notorious for having a corporate culture that treats the customer as an inconvenience at best. For example, at one company, a post-implementation debriefing meeting was held.  The installation team was asked their view of how the project had gone.  They universally reported the project had gone well and that the installation was successful.  However, when asked how the customer felt, they said the customer was very unhappy.  Clearly the culture of this company was focused on internal rather than customer satisfaction.

 

Cultural change is a challenge for firms in any industry, but is often most difficult for technology firms.  The more substantive interactions that take place between a broad base of employees and customers, the easier this cultural change will be.  Better empathy and understanding are the inevitable result.  These interactions can take place in a variety of venues ranging from involving customers in product design to active participation in user group activities.

  1. Establish multiple regular points of contact. In order to drive improved customer satisfaction and experience, companies need to maintain multiple points of contact in the customer organization and in particular, these points of contact need to be at all levels.  One company had a very stable software product that was very popular with the users.  Customer support at the user level was consistently rated as outstanding.  Nevertheless, this company was in serious danger of significant customer losses.  This company, while maintaining excellent contact at the user level, completely failed to maintain any relationships at the decision-maker level.  Since the market was undergoing rapid change, the decision-makers made the assumption that the current vendor was not keeping pace and were actively seeking alternatives they considered more state of the art.  The vendor was not involved at all in helping to influence the strategic direction of the customer.

 

  1. Create multiple opportunities for engagement. Companies need to establish multiple mechanisms through which they can engage customers. Very effective traditional approaches include advisory boards and user groups.  They range from informal ad hoc customer councils to user advice on specific product developments to formal long-established independent user groups.  More and more companies are now using social media and community development techniques either independently or in conjunction with established user groups.

 

  1. Make your company easily accessible. One of the most frustrating and satisfaction deflating things for customers is having a problem and not knowing who to contact or having a contact and getting no response. One well-known software vendor changed their support system to save money.  Technical support had a recorded message that they no longer took phone calls and only worked through online chat. While issues could be resolved, the fact that customers could no longer talk to anyone directly creates a significant negative reflection on the company.  Companies need to be easily accessible through as many channels as possible-phone, chat, e-mail and in person.  In person can range from a visit by a salesman to a local company or user group events.

 

The benefits of improved customer satisfaction are significant including improved financial performance, increased sales and reduced expenses.

 

Case Study

A large enterprise supply chain software company was facing a crisis. On the surface, the issue was rapidly declining revenue, persistent losses and a pending liquidity crisis. The company had burned through virtually all of the cash raised through the public offering over a period of five years. The crisis forced the board to remove the CEO and CFO and bring in a new CEO to quickly address the issues.

After talking with employees and key customers, it became clear to the new CEO that, for a variety of reasons, there was open revolt among the customers. Most customers were Fortune 100 companies with complex supply-chain challenges.  Many, if not most, were looking to replace the company’s products with competitors and several had filed or were threatening to file lawsuits. Publicly available customer satisfaction measures placed the company at or near the bottom of the industry. The root causes included:

  1. Substantial amounts of capital had been invested in product development. But, this development was focused on exploring new architectures and not enhancements desired by customers. In fact, virtually no customer input was sought. Customer saw no viable upgrade path going forward.
  2. Virtually no interaction with customer decision-makers was taking place. This exacerbated the view that there was no path forward with the company’s products.
  3. Day-to-day customer service was viewed by the company as largely an annoyance. Customer issues were left unresolved for extended periods.

Working with a cross functional team of key employees, the CEO developed a new organization structure focused on resolving customer issues. A knowledgeable senior employee was assigned to each key customer. That employee and the CEO visited every customer. The new organization was empowered to mobilize the company’s resources to resolve issues immediately. At the same time, it was necessary to refocus product development on features critical to customer success. The new architectures were abandoned. The importance of customer satisfaction was reinforced throughout the company in order to shift the culture. As a result of these changes, the liquidity crisis was averted, revenue growth was restored and the company became profitable.

Summary

This blog outlines the myriad issues that may affect a technology company’s growth. A number of these affect a company’s ability to acquire new customers. These issues include changes in the market, marketing programs and sales execution. Other issues impact a company’s ability to retain current customers or maximize the total value of those customers. Improving the customer experience and focusing on customer satisfaction can profoundly improve retention and growth. Taken together, these actions can materially improve any company’s growth and performance.

The Revenue Growth Audit and Scorecard System (RASS) Jim

At times, virtually all companies face growth challenges. Whether it’s simply stalled growth or the bigger issue of declining revenue. Growth can be affected both by a company’s ability to generate new customers as well as a company’s ability to retain and grow existing customers.

A valuable first step companies can take is a quick audit of their ability to generate new business as well as retain and grow existing business. Via Strategy Group developed the Revenue Audit and Scorecard System (RASS) in order to help companies quickly assess their current situation and develop a plan that can help them quickly and materially ramp up revenue. It’s important to note that every company is different and the successful application of RASS needs to be adapted for each unique situation. RASS has allowed some companies to double their growth rate and others to reverse a decade-long decline. The impact on the bottom line is profound.

RASS involves a quick but thorough audit of all factors within the organization that affect revenue. Based on the audit recommendations are then developed along with balanced scorecard that will ensure successful execution of the recommendation. The audit covers three general areas-the Market, Sales and Marketing, and Customer Experience. Briefly, the types of issues the audit will cover in these three areas include:

Marketplace.

Several techniques can be used analyze the current market. Once the market situation is better understood, appropriate actions can be taken. Some of these techniques include market research and competitive analysis. Once the current and future market is well understood, the company can formulate a strategic response. Possible actions include product modifications, new products, new distribution channels, product eliminations, expanding geographies and price changes.

Sales and Marketing

Both new and mature companies often face challenges in effective sales and marketing operations. More often than not, the focus is on the sales organization and the sales process. Rather, companies need to consider all steps inn what is generally called the “customer journey”. This involves every interaction that a customer has with the company beginning with their initial search for a product or service and continues through their continuing experience as a customer. An audit of this journey, will help companies identify any number of issues and opportunities that are the subjects of entire books themselves. Briefly:

  1. Does the company have a good understanding of their target market?
  2. Does the company have a good understanding of what their best prospects look like?
  3. Does the company have sufficient presence in the market that they can participate in a prospect’s initial research? This may include useful online content, participation in independent market research or traditional public relations.
  4. Are there effective mechanisms in place for suspects to self-identify as prospects or for company marketing activities to identify them?
  5. Is sales execution effective? Any number of issues can affect sales execution.
    • Are appropriate salespeople hired and trained?
    • Is incentive compensation appropriate?
    • Are sales processes appropriate including the use of tools such as a CRM?
    • Are the sales forecasts accurate?
    • Do all parts of the organization support sales including finance and legal?

Customers

More often than not this is the most important area. As mentioned earlier, no matter how effectively companies acquire new customers, if they have significant turnover in their customer base, revenues will suffer accordingly. So how do companies that face the significant customer satisfaction challenges inherent in their businesses improve? Here are five steps that companies can take to significantly improve customer satisfaction and gain substantial improvement in financial performance.

  1. Seek constant feedback and measurement.  In order to have a comprehensive customer satisfaction program, companies need constant feedback on how they’re performing and need to establish a baseline measurement.
  2. Establish a customer centric corporate culture. Companies need to establish and continually reinforce a culture that places the customer and the customer experience the center of all activities and decisions.
  3. Establish multiple regular points of contact.  In order to drive improved customer satisfaction and experience, companies need to maintain multiple points of contact in the customer organization and in particular, these points of contact need to be at all levels.
  4. Create multiple opportunities for engagement. Companies need to establish multiple mechanisms through which they can engage customers.  Very effective traditional approaches include Social media, advisory boards and user groups.  .
  5. Make your company easily accessible. Companies need to be easily accessible through as many channels as possible-phone, chat, e-mail and in person.  In person can range from a visit by a salesman to a local company or user group events.

RASS

RASS involves the three steps shown below.

RASS Jim Treleaven

To explore RASS further or to request the Revenue Growth White Paper, contact me at jtreleaven@viastrategygroyup.com or 708-306-1825.

The Value of Customer Satisfaction at Technology Companies

Virtually everyone in the US and other parts of the world interacts with technology every day-whether in obvious ways, such as surfing the web, or less obvious ways, such as dealing with your phone bill or driving your car.  For example, software is inherently very complex with an almost endless number of points of failure.  Problems can range from a confusing user model to the dreaded blue screen of death.  However, the technology companies that focus on customer satisfaction, and get it right, have a significant competitive advantage and enjoy substantially higher returns.  In our last installment I discussed how firms with better customer satisfaction experienced improved stock performance of 300 to 400%.  Likewise, a 5% increase in customer retention results in a 30% increase in the value of the firm.

So how do technology companies that face the significant customer satisfaction challenges inherent in their businesses improve customer satisfaction?  I propose five steps that technology companies can take to significantly improve customer satisfaction and gain substantial improvement in financial performance.

1. Seek constant feedback and measurement.  In order to have a comprehensive customer satisfaction program, technology companies need constant feedback on how they’re performing and need to establish a baseline measurement.  The following chart shows the most commonly used forms of feedback in use at a broad range of companies.

While these more quantitatively focused survey techniques are useful, they rarely tell the whole story.  Companies need to exploit many other, more personal, qualitative feedback channels.  Senior management needs to regularly meet with customer decision-makers.  A powerful institutional mechanism for feedback is a well functioning, independent user group.  User groups can systematically collect and aggregate extraordinarily useful feedback on company and product performance at relatively low cost.

Qualitative and quantitative data needs to be proactively documented and tracked over time.  But, most importantly, companies need to take appropriate action based on this feedback.  Seeking feedback is usually viewed very positively by customers.  However, companies that fail to act on specific service or product issues will see customer satisfaction plummet relative to where it had been if they hadn’t sought customer feedback in the first place.

2. Establish a customer centric corporate culture.  Many technology companies are notorious for having a corporate culture that treats the customer as an inconvenience at best.  At one company I attended a post-implementation debriefing meeting.  The installation team was asked their view of how the project had gone.  They universally reported the project had gone well and that the installation was successful.  However, when asked how the customer felt, they said the customer was very unhappy.  Clearly the culture of this company was focused on internal rather than customer satisfaction.

“When brand begins to involve the customer, the brand deepens.  When it begins to involve all elements of the enterprise-from employees to processes, procedures, collaboration, and even the environment-then it is culture.” <Need attribution>

Cultural change is a challenge for firms in any industry, but is often most difficult for technology firms.  The more substantive interactions that take place between a broad base of employees and customers the easier this cultural change will be.  Better empathy and understanding are the inevitable result.  These interactions can take place in a variety of venues ranging from involving customers in product design to active participation in user group activities.

3. Establish multiple regular points of contact.  In order to drive improved customer satisfaction and experience, technology companies need to maintain multiple points of contact in the customer organization and in particular, these points of contact need to be at all levels.  One company I was involved with had a very stable and the product was popular with the users.  Customer support at the user level was consistently rated as outstanding.  Nevertheless, this company was in serious danger of significant customer losses.  This company, while maintaining excellent contact at the user level, completely failed to maintain any relationships at the decision-maker level.  Since the applications space was undergoing rapid change, the decision-makers made the assumption that the current vendor was not keeping pace and were actively seeking alternatives they considered more state of the art.  The vendor was not involved at all in helping to influence the strategic direction of the customer.

4. Create multiple opportunities for engagement.  Technology companies need to establish multiple mechanisms through which they can engage customers.  Very effective traditional approaches include advisory boards and user groups.  They range from informal ad hoc customer councils to user advice on specific product developments to formal long-established independent user groups.  More and more technology companies are now using social media and community development techniques either independently or in conjunction with established user groups.

5. Make your company easily accessible.  One of the most frustrating and satisfaction deflating things for customers of technology companies is having a problem and not knowing who to contact or having a contact and getting no response.  I recently had a problem installing a software product from a well-known vendor.  Since it was a large company, I was able to reach someone on the phone.  I was informed, though, that technical support no longer took phone calls and only worked through online chat.  While I was able to resolve the issue, the fact that I could no longer talk to anyone directly creates a significant negative reflection on the company.  Technology companies need to be easily accessible through as many channels as possible-phone, chat, e-mail and in person.  In person can range from a visit by a salesman to local company or user group events.

Technology companies that effectively implement this five step program will be able to accrue the benefits of improved customer satisfaction including improved financial performance, increased sales and reduced expenses.

 

Perspectives on the STEM Crisis

At the end of a recent board meeting of the Illinois technology Association (ITA), the members were asked    to offer observations on how their respective companies were doing under the current economic conditions.  In general, the technology industry has been somewhat less impacted than many others by the recent protracted downturn.  There was, however, an almost universal observation that one of, if not the most significant, impediment to improved growth is the shortage of technically trained employees.

This shortage of a workforce trained in science, technology, engineering and math (STEM) is potentially the biggest long-term threat to a US economy that has thrived on its ability to innovate and develop much of today’s rapidly advancing technology.  According to the US Department of Labor only 5% of the US workforce is employed in fields related STEM, but that 5% is responsible for more than 50% of economic growth.

There are significant global implications for this workforce shortage as well.  For quite some time, the US was a primary source of innovation while other countries, particularly in Asia, provided much of the manufacturing.  US Universities remained the most significant training ground for the world’s STEM graduates.  The percent of students enrolled in graduate STEM programs in US Universities is approaching 70%. The problem in the US was exacerbated by the lack of visas and green cards which would allow STEM graduates to remain in the US.  This was partially addressed by the STEM Jobs Act of 2012.  This legislation sets aside 55,000 green cards for graduates with graduate degrees in STEM fields.  These green cards are allocated first to PhD graduates with the remaining going to Masters Graduates.

In recent years the situation has changed somewhat dramatically.  First, other countries, again particularly in Asia, have invested heavily in expanding their university systems.  Europe continues to have excellent universities but less overall capacity than the US.  Second, a noticeable amount of research and innovation is now taking place in other countries.  Ironically, early signs of manufacturing returning to the US are taking place.

What is causing a massive shortage of US students entering STEM fields?  For some time, it seemed like there were sufficient employment opportunities for graduates in a variety of other majors.  Throughout most of the first decade of this century unemployment was relatively low and most college graduates had little difficulty in finding employment.  That, of course, has changed recently but has not driven more students into STEM fields.  One obvious problem is the difficulty of these majors.  The course material is challenging and requires a significant aptitude in math.  Perhaps more of an issue is the work load these majors demand.  A recent study showed that the average engineer devoted twice as much time to their studies as other majors.  Fully 40% of entering freshmen who intend on majoring in a STEM field switch majors.

A second challenge I believe is that the US K-12 system does not encourage students to enter STEM majors, doesn’t adequately prepare students for STEM majors and, perhaps most important, doesn’t create the enthusiasm necessary to overcome the challenges mentioned above.  The favorable employment market conditions and the above average compensation for these majors is not communicated.

So, what to do?  First, we need to address the issues in the K-12 system.  We should allow more technically trained individuals to become teachers without the necessity of gaining teacher certification.  Those who have worked in the field are uniquely prepared to pass on enthusiasm for the field.  My youngest son had an excellent teacher in high school who was an engineer, conveyed significant enthusiasm for engineering and has resulted in one more enthusiastic engineering student.  Giving high school guidance counselors more information on the field and the concomitant opportunities would also help.  Universities need to provide extra support for students entering STEM fields in order to significantly reduce the attrition rate.

Next, a vast untapped pool of potential STEM students is found among women and minorities.  The old joke is “how does an engineer know he’s in the wrong class?  If there are more than two girls in the class and they are cute.”  While women account for close to 60% of the undergraduates in the US, they represent less than 25% of the STEM majors.  In addition, only 15% of STEM degrees are awarded to underrepresented minorities.  Again, changes in the K-12 system are needed to help address this challenge.  The Chicago Tech Academy, a Chicago public school system high school focused on STEM fields is a terrific example of one way to address this issue.  Other efforts can help here as well.  I serve on the board of the Chicago Engineers Foundation.  The purpose of the foundation is to provide scholarships for Chicago city high school students to study engineering in college.

Unfortunately, changing this trend will probably take at least a generation.  The tendency with problems that require long-term solutions is to kick the can down the road.  The US, and in fact the rest of the world, cannot afford to wait.  Our future economic growth depends on it.

 

Perspectives on the ROI of Social Media

We’ve seen this movie before.  A hot, exciting new technology comes along and it gets furiously snapped up because it’s cool, shiny and the thing to do.  Business enterprises are far from immune.  This phenomena certainly predates the 1980s, but let’s start there.  Prior to the early 80s, a few small microcomputers had been on the market.  Introduction of the IBM PC, however, was a game changer.  We were just coming out of the 1970s when “no one ever got fired for buying IBM”.  So, the IBM logo made the device relatively immune from corporate scrutiny.  Companies were snapping up the over $4000 device (for those too young to remember it had no hard drive and little memory) with relatively little thought to specific applications, let alone the financial return on that investment.  Often it was explicitly for experimentation.  After a decade, the technology had improved significantly, the applications were well developed and calculating a quantified return on investment was required.

Fast forward to today.  Social media in some form has been around for almost a decade.  Again, most of the early versions are becoming distant memories (MySpace) and the technology has improved significantly.  Unlike the PC however, virtually all of the early adopters were consumers and in almost all cases were teenagers and young adults.  In fact, that was the target audience.  The applications allowed an asynchronous way to stay in touch, share pictures, update statuses etc.  Adults joined the fray in many cases simply to keep tabs on their children.  So, social media was introduced to the denizens of the corporate world.

At that point we’ve entered the shiny object stage.  Eventually corporate marketing types were being told that social media was table stakes.  They had to have a Facebook page-all their competitors did.  Some were skeptical, but many succumbed.  As time moves forward again, the applications became more sophisticated, more targeted to specific corporate objectives and gradually became an integral part of most organization’s marketing mix.  Other applications of social media developed as well.  Companies began using social media techniques to improve customer self-service and knowledge sharing.  Communities that could influence and inform product development were formed using social media techniques.

As budgets grew, CEOs, CFOs and others began to question (appropriately so) the return on those growing investments.  This is where we are today.  Marketers especially love to track measures such as Facebook or Twitter followers, webpage hits, SEO rankings and other commonly available metrics.  Having more Facebook followers than your competition may give you bragging rights of sorts but doesn’t tell you much about the effectiveness of your presence or how it affects corporate results.  There are many intervening factors that need to be considered.  For example, having more web page hits on an ineffective webpage doesn’t really do you any good.  Having many more followers on a Facebook page that has an ineffective message doesn’t help.

So, to get an effective handle on the value and return on investment in social media, several steps are critical.

  1.  Each program needs to have quantifiable corporate objectives: increased revenue for a specific product, decreased support costs, decreased product development lifecycle, improved customer satisfaction metrics etc.
  2. All components of the program need to be identified and quality assured: effective landing pages, clear and effective messaging etc.
  3. Appropriate metrics need to be identified, quantified and collected: Facebook followers, landing page hits, community sign-ups, support solutions posted etc.
  4. These metrics need to be tied specifically to the objectives in number one.
  5. Traditional ROI can then be calculated.
  6. It doesn’t stop there.  Identified weak points in the system can then be improved.

The process is well-known in general in the corporate world, but is only now just beginning to be applied to social media investments.  New tools are being developed and new metrics are being made available.  As was the case with the PC, I have little doubt that tracking returns on the investment in social media will become well understood and commonplace.

Perspectives on the Future of Campus Technology

Via strategy group perspectivesFrom online classes to virtual campus tours, technology is having a profound impact on higher education. While universities are home to groundbreaking research and Nobel prizes, until recently they were laggards in the adoption of innovative technology to better deliver on their core mission-learning. I most certainly am not the best person to prognosticate on what new and innovative applications of technology we’ll see in the next few years. But, having been involved in higher education in one way or another for over 40 years, I can take a look back at some of the evolutionary changes that have had a profound impact on the delivery of post secondary education. I’ve experienced these changes personally with my own children.

The first is simply a profound change in how students select and apply to Colleges and Universities. Forty years ago it was quite an arduous and time consuming process. Research relied almost exclusively on printed directories and word of mouth. Campus visits were unstructured and time consuming. Applications were typed or filled out by hand. Today College rankings and evaluations are readily available on line. Every University has an extensive online presence with virtual campus tours. Applications are submitted online and the Common Application makes applying to multiple schools a breeze. In the movie How I got Into College, much was made of the daily trip to the mailbox and the high anxiety of waiting for acceptance or rejection letters. The anxiety persists of course, but prospective students can easily track the status of their applications online.

Next, you’ve been accepted and have to register. Course catalogs were thick and often out of date. Scheduling was a challenging manual process. As an undergraduate, I was fortunate that most engineers’ schedules were predetermined. I distinctly remember, however, my first experience as a graduate student at the University of Minnesota. For whatever reason, it took 14 separate physical stops throughout the campus to register for the first time. It took the better part of the day. It got a little easier after that but was still a challenge. Today is a completely different story. Programs of study and course catalogs are online, up-to-date, and easily searchable. Potential schedules are easily seen graphically in real-time. Registration is literally a few clicks and done in minutes.

Forty years ago managing your courses was a challenge. The good news, perhaps, was that, if you weren’t physically present, you had no idea what was going on in class or what the assignments were. Everything was a physical piece of paper handed out in class. Today, everything from the syllabus to the class notes to your grades on every assignment are readily accessible online. In some cases even, videos of the lectures are available. I can easily monitor my own kids classroom performance online in real-time. Unfortunately, there is less incentive to show up in class which remains as valuable as ever.

Finally, research has been profoundly impacted. Not long before I started my own doctoral program, dissertations were typed by hand-with the requisite carbon copies. Even minor revisions were often a massively time-consuming effort. Fortunately for me, word processing had become available by the time I wrote my dissertation. Revisions and multiple copies were trivial by comparison. Earlier, statistical analysis of research data was laboriously done with mechanical calculators. While data collection remained tedious, SPSS made analysis of that data a snap. And then there was the literature search. My wife and I reminisce about our day long trips to the library with rolls of dimes to make copies of journal articles bound in often missing dusty volumes. Today, of course, most of those journal articles are readily available online and can be quickly searched and printed from home.

On balance, these technological advances have made learning and research much more effective and efficient. Striking an appropriate balance between the use of this technology and personal interaction with faculty, other researchers and fellow students will be one of the challenges we’ll have to be more cognizant of in the future.

Perspectives on Mobile Computing

As a self acknowledged gadget freak and lifelong computer engineer, I’ve always been fascinated by the latest and greatest developments in technology. For those same reasons, however, I’ve often been a skeptic of the utility of mobile devices in particular and the spread of mobile computing in general. In almost every instance I’ve been proven wrong, so I view the future of mobile computing with my skeptic’s blinders removed.

Since I first used the Internet 40 years ago, I’ve seen communications technology improve in unimagined ways. Since using punched cards for input and line printers for output, I’ve seen the user interaction models evolve beyond my wildest imagination-and I have a fairly active imagination. Ten years ago or so ago I was involved in some projects looking to put applications on very early versions of smart phones. I was firmly convinced that, even if the screen size grew to match the size of the device, that it would be very difficult to create a user model that would be at all functional-especially as a browser for the Internet. I also doubted that cellular networks and other broadband protocols would ever be sufficiently ubiquitous or fast enough to be practical-although I expected significant evolution in communications. Well, I was clearly wrong in ways that I never imagined. More than most, I do understand the ever popular saying that there is more computing technology in my iPhone than was on board the Apollo moon missions.

With all this in mind, let’s take a look at some of the more interesting current developments and challenges in mobile computing. First, is the proliferation of ultraportable devices beyond smart phones. I was an early user of tablet computers since I’m not a particularly good typist and I felt that, if handwriting recognition could become adequate, I could be freed from my hunt and peck ways. They were actually quite useful but no more, and in some cases less, portable than other notebook computers. And, handwriting recognition never quite did the trick. The operative word in mobile computing is “mobile”. With the advent of the iPad and its android brethren, tablet devices have become very mobile and more than adequate substitutes for notebook and desktop computers (although I still wish I could type faster-I’m a big fan of voice recognition).

 

Next, the capabilities embedded in these mobile devices, have opened up a whole range of unimagined applications. I no longer have to bring a digital still camera and video camera to capture my children’s sporting events. My phone is more than up to the task. While my cars have GPS capabilities, I often find it easier to simply touch on an address and have my phone automatically locate it on a map and tell me how to get there-even if I’m walking. Augmented reality will allow me to simply point my phone or tablet at a scene and access all kinds of location relevant information. A whole host of business applications are also possible such as real-time delivery tracking. The range of applications in healthcare is too long for a short blog.

This opportunity, however, comes with challenges. As far as we’ve come, new user models will have to be explored. Can we make it easy enough for a physician to switch to writing on a tablet instead of paper records they’re used to? How will, at the moment heterogeneous, communications protocols evolve? Wi-Fi is becoming so ubiquitous, that I rarely find my traditional notebook computer to be without access. Will WiMAX challenge cellular networks? How will firms manage the rapidly blurring distinction between personal and enterprise applications and usage?

Finally, privacy and security become issues in ways we’ve never imagined. How much easier is it to gain unauthorized access to data over today’s variety of wireless networks than it used to be over private wired networks? How do individuals, corporations, and perhaps, most important, government security agencies protect their data? As society becomes more dependent on these technologies we become far more vulnerable. Denial of service attacks, electromagnetic pulses and other sources of deliberate or accidental system wide failures could cause disasters ranging from serious economic distortions to loss of life.

These issues, however, have been with us through every technological transition. New transportation modes (trains, automobiles, airplanes) all brought with them new risks. In each of these cases we’ve believed the good outweighed the bad and we’ve managed to adapt very successfully. I have no doubt, although I won’t be presumptuous enough to predict how, that we will successfully adapt to all of the new risks and opportunities afforded us by developments in mobile computing.

 

 

 

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