I don't think anyone would dispute Apple's ability, under the leadership of Steve Jobs, to deliver a superior customer experience that has been of enormous value and wealth.  Well some may, but they may very well be on a different planet, or a different platform, at least.

But the raging debate and intense speculation is about Job's roll in achieving such an incredible juggernaut of customer value and loyalty.  For, if he was THE source, then sooner or later the enterprise will run out of this rarified inspirational gas and lose, the employee's, customer's and investors loyalties.  Those who believe in Job's magical and mystical powers to somehow divine the tech market's entrails, will see this as the end of a great era and dynasty.

On the other hand if, as one commentator puts it - Apple is "infected with the Steve Job's virus" then this ship will be sailing high on the seas of customer value for a long time.  My hope, is in the latter state for Apple.  But even if this is not the case, Apple's roadmap (under Job's direction) is probably in good shape to deliver great value for a least a few more years.

It begs the question how does Apple consistently deliver such a great customer experience at so many levels?

If I was to point to one thing, I would point to their culture.  According to Mac Observer writer Chuck La Tournous: "Apple understands the importance of creating a culture that has this DNA. It may not use focus groups, but it does pay a lot of attention to how decisions are made and how culture is infused into its employees. They’ve even reportedly devoted a significant effort to studying—and documenting—the process."

Culture infused into its employees - this is the only way to sustain value beyond one great leader.  Culture is what takes a group of individuals and knits them together into a society that operates with a singular mission and focus.  And, if that culture is based upon a passionate commitment to delivering superior customer value it becomes not only a glue but an engine that drives the company to even greater value regardless of any one single individual in the organization.

In fact, I believe, if the entire organization is not behind delivering this kind of customer value, it's virtually impossible to achieve with the kind of consistency that Apple has attained.  One author refers to this as institutionalizing the delivery of value to the intended customer.  Teaching the organization to focus on the end result (customer experience), not the means to this result (products and services.)

That will be the most important legacy of Steve Job's, way beyond the beautifully designed and delivered technology of today to the organization (organism?) who's culture is designed to deliver a consistently superior customer experience.
Ok, I’ll admit right up front that this is going to be a bit shorter blog today.  In all honesty, we’re right in the sweet spot of Oregon’s finest weather for the year and it’s a bit hard to spend my whole day inside, staring at my computer.

That said the economic weather is down-right stormy (once again the DOW is down by another 170+ points today.)  Articles, blogs, news reports online and offline are all commiserating on how bad many of the economic fundamentals are these days.  You know the list, I don’t need to recite them again here.

I certainly know the difficulty facing software companies during these kinds of down, economic cycles.  Having come through this “great recession”, among others, and selling into the construction industry, I certainly appreciate the challenges facing the managers and owners of software companies these days.  

It’s all too easy to throw in the towel by hunkering down and simply “weathering-out” the storm.

My challenge and encouragement to you today is to not approach your business this way.  There has been spectacular business growth for some during this time - Apple is one that quickly comes to mind.  And while not a pure software company, it certainly is a bell-weather tech company that is also, by the way, creating many new software industry opportunities through it’s wildly successful “iplatform” strategy.

Apple didn’t achieve this kind of growth by getting lucky, they did it by getting it right.  And, at the risk of sounding self-serving, the key area that they got (and are getting) right has been in a continual quest to discover and deliver a superior customer experience.   Which translates into great customer value and which always translates into great revenue and profits - even in a bad economy.

Another great example is Intel, with it’s four billion dollar investment in the new Ronier Acres new research factory here in my backyard.  A two year construction project employing over 6,000 workers and employing 800 to 1000 researchers and technicians when it opens.  New value discovery and delivery, that’s what Intel has it’s vision and strategy aligned to - note this is a research facility.

So, like the fishing crews featured on Discovery’s “Deadliest Catch”, who brave the stormy ocean and make the big bucks, so it is with the companies that brave the economic storms by discovering and delivering new customer value.  They’re the ones that make great gains in market share, revenue and profitability.  They’re not content to play it safe in the harbor of customer annuities and cost-cuts.

It’s all too easy to blame poor performance on the economy and end up becoming a victim of it.  Instead, use this “stormy” economy as an opportunity to find new areas of value for your customers and markets.  Remember, they have new challenges as well that require new solutions that present new opportunities to those who are paying attention.

So which is it - victor or victim?  Safe harbor or stormy seas?  Hunkering down or heading out?  I encourage you to be the one to seize the new opportunities, someone will.

Now, out to that sunshine...

The IBM 5150 personal computer wasn’t the first PC for sure - Apple, Commodore, Osborne and Atari preceded it.  But, 30 years ago, on this day IBM introduced their “skunk-works-” developed PC in a rented room at the Waldorf Astoria in New York.   And a whole new industry and value proposition was created.  It’s hard to believe, but many of the tech industry’s most successful entrepreneurs (Mark Z for one) weren’t even born by then.

At a cost of $1,565, the 5150 was 28 pound computer that had a whopping 40KB of ROM and 16KB of RAM (without the floppy disk drives).  Most watches today have more computing capacity than that now.  And yet, it quickly became an incredible success and within two years, thanks to IBM’s uncharacteristic decision to publish the architecture, Compaq Computer had introduced their clone.  And hundreds followed.

Fast forward to 2005 when IBM sold the entire PC business to Chinese PC maker Lenovo for $1.75 billion; IBM just didn’t want to continue to compete in a commodity-based business - not their value strategy.  And now, we’re entering a new era where the platforms are smartphones, tablets and embedded devices and everything is connected to the Cloud.  Where standalone computing is becoming a thing of the past and the great opportunities are in exploiting the social networking spaces.

All in just a short, 30 years.

This is a story as much about the lifecycle of value as anything.  The birth of a new value proposition - personal computing - in a world of expensive, mini and mainframe computers.  In a world of custom-written software, packaged software.  In a world of proprietary computing platforms, an open platform.  In a world of calculators and typewriters, spreadsheets and word processors.  

New value to be discovered everywhere.

But, in technology, as in every industry, value is created, exploited, commoditized, and eliminated.  Moore’s law has been then driving force in new value creation for computing and yet, there’s been a consistent drag on this new value and it comes from the very industry that blossomed from the original IBM PC - software and application software to be specific.

How many applications that are still in use today were written ten or even twenty years ago? Sure they’ve been patched and ported and prettied up over time, but at their heart they’re still based upon a computing environment that just doesn’t exist any more.  Not today's Internet, today's operating systems or today's wireless networks or today's computing platforms and, most certainly, not today's customers.

Not to name names, but we don’t have to look far to find applications that are still being sold today, that were originally written around the early days of the PC era.  Amazing and troubling, for like earth’s plate tectonics, sometimes when those old plates shift, they move very fast and very violentlynd a lot of value can go away very quickly in the process.  I believe the pressure has been building for some years now, and the value shift for application software will happen and those that think they have the time to prepare will be left in the dust.  It will be fast, furious and final.

Are you ready?  What's your value strategy?
One thing for sure, they’re doing a whole lot more than they were a year ago!  McKinsey has been tracking consumers’ digital doings with survey’s covering more than 100,000 respondents across North America, Europe and Asia.  

In their multi-year study, McKinsey has identified seven major digital usage clusters including: 
  • Digital-media junkies
  • Digital communicators
  • Video digerati
  • Gamers
  • Professionals
  • On-the-go workers
  • Traditionalists
Depending on your particular market and customers base, you’ll likely have a mix of several of these clusters.  Regardless of whether you’re B2C or B2B, your customer base’s digital habits are changing and, in some cases, changing rapidly.  And, for most traditional software companies, these are probably not demographics that you’re keeping track of.  

Shouldn’t you?

For example, digital-media junkies and digital communicators are the heaviest smartphone users and communicate primarily through social media.  They also are the most rapid adopters of the new tablet devices, they went from no usage to 21% usage in just one year!

On the other hand, maybe you’ve got a stronger mix of professional, on-the-go workers and traditionalists.  They certainly aren’t on the cutting edge of digital tech, but they are all rapidly adopting social media, smartphones and to a lesser extent tablets.  Social media usage by professionals, for example, nearly doubled in two years to 46%!

My point in bring this up is the rapidly changing usage patterns of your customers, inside and outside the workplace is changing their expectations of their experience in using your software products.  And, depending on how your are monitoring their expectations, you may be blind to a growing and deepening dissatisfaction as they interact with your products and services. 

We tend to think of our customers (when I refer to customers I mean those that we have sold and those that we intend to sell to) as somewhat static entities when it comes to the purchase and use of our products.  We like to think of them as having the same basic interests, biases and preferences year after year.  This of course is not so, just look at your own behaviors - do you use digital media and devices the same way that you did 2 years ago?  Or even 1 year ago?

I bet not and so it is with your customers, we are all changing our digital usage practices at a rapid pace in many ways.  And for the software industry, this means that we not only need to keep up with these changes but we need to continually reinvent our approaches and solutions to adapt them to the needs and preferences of our customers.  

Our product and service offerings, are always within a context of not only alternative offerings but also customer expectations.  And, I assure you that there are a host of new offerings springing up everyday that are highly tuned to this new digital world.  I see them almost every day in my work helping local entrepreneurs through the Oregon Entrepreneur’s Network here in Portland.  

Many of these are software startups (all cloud based of course) that see opportunities for their new offerings by taking advantage of smartphones, E-readers, tablets and massively scaled, social media networks.  Are you seeing these as opportunities or are you defensively reacting to them as threats?  Or are you complacently convincing yourself that your customers just don’t use that “stuff?”

I’ll end by leaving you these sobering statistics from the most conservative of groups that McKinsey is tracking, the traditionalists, who from 2008 to 2010:
  • Doubled their use of social media
  • Tripled their use of smartphones
The times (along with your customers), they are a chang’n, are you?

    John Geffel

    Value is a much abused, misunderstood and misused word, everyone thinks they provide it but so few show real evidence that they do!

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