Good People with Good Ideas

Put 75 people together in a room and you never know what the conversation is going to turn too.  That is the magic of conferences and what keeps me coming back.  The Channel Management Summit created this effect and then some.  Yesterday I made a forecast about how I thought the conversation would go and well, it went a whole different way.  There were some great panel discussions, and good presenters.  The conversation quickly departed the stated theme of “From Volume to Value”.  That being said several of the channel partner program owners did indicate that they wanted to invest more meaningfully in a lower number of partners – which seemed to fit the bill.

Here were the items that stuck out for me in my notes:

Look in the Mirror First

If you want your partners to respect you, make sure you have your act together and that starts by working internally to ensure that everyone inside your company understands and agrees with the direction and is willing to stick with the messaging.  This will result in fewer random changes, a greater ability to explain the reasoning behind your decisions, and less confusion.  All seemingly simple, but in real life – quite a challenge to execute.

Get in their Shoes

We can get so caught up in our own stuff that we lose touch with the reality of our partner’s businesses.  Take the time to actually talk with them, figure out how they make money, understand their pain points.  We had a great conversation about what partners will and will not do.  Will sell your product (if it works), will work side by side with you, won’t penetrate new markets, won’t lose money.

The Death of Leads has Been Exaggerated

Instead of killing leads, social media has increased the volume.  Along with this increase has come a decrease in quality.  This has increased the importance of good process, professional qualification, and rigorous feedback tracking.  This was great validation for us – because it is what we do at CSG.

There were also some good presentations about measuring investment in partners – partner by partner – and comparing it to revenue generated.  Some ideas about how to start using social media tomorrow (get your partners to do it).  And good thoughts about specific things you can do with your most valuable partners. 

All together a great conference.

Getting from Volume to Value

One day in 1906 the Italian economist Vilfredo Pareto discovered that 80% of the peas produced in his garden came from 20% of the pea pods.  Ever since that day, channel partner program managers have been trying to grow just the highly productive pea pods.  For the next two days, those of us attending the Channel Management Summit in San Jose will be talking about how to escape Pareto’s 80/20 rule and get from Volume to Value.

I have the pleasure of chairing the event today.  Here are a few of the thoughts I hope to use to get the conversation going.

• Why now?  After 104 years of living with the 80/20 rule why do we think that we can now escape it?
• What happens when we cut off the less productive 80 percent?  Pareto also found that if you deconstruct just the top 20 percent, the rule still applies – 80 percent of the peas produced by the top 20 percent of the pods are produced by 20 percent of those top 20 percent.
• How do we find the top partners of next year?  The top 20 change over time so shouldn’t we invest most heavily in the partners that are going to be the most productive next year?
• Are Value and Volume mutually exclusive?
• How are social media, better data management, and automation changing the game?
• Is the environment getting more competitive?  Could the partners we turn away from become the top 20% for someone else?  Does that matter?

I am very much looking forward to the conversation.  

Labor Arbitrage, Automation and Customer Service

The feature article in the NY Times Magazine yesterday told the story of IBM's AI team creating a credible Jeopardy contestant.  Clearly the IBM team has made some progress since Deep Blue beat Garry Kasparov in May of 1997.  The computer may not win, but IBM will win a great deal of attention during the event next fall.  Probably both great technology and great marketing.

While reading the article, some roads converged in my technology imagination, mostly in the areas of labor arbitrage, automation, and customer service.  The effects of these changes are going to be felt slowly over some time -- but they will be significant.

Labor Arbitrage

We are a decade into the Internet enabled off-shoring movement fueled mostly by low cost labor.  Technology innovations only happen when the innovation is ten times better.  Offshore labor does not have to be 1/10th the onshore cost, but it needs to be at about a third in order to work.  If we are paying $9 per hour onshore for something that can be done for $3 per hour offshore -- the inefficiency of distance and the added cost of travel and/or transport can be overcome.  If onshore and offshore labor rates converge, off-shoring will become less compelling.  This convergence can happen by offshore labor rates rising as competition for workers and living standards are raised in offshore markets, or as onshore labor rates fall.  Wait, how can onshore labor rates fall?  Through automation.

Automation

Everywhere we look we see automation.  Cars are still being built in this country because robots do most of the work.  We see the combination of automation and self service every time we go to the bank machine or the grocery store.  Google signs up customers without any salespeople -- which is automation displacing labor in yet another way.  The IBM Watson project may seem too theoretical to start displacing humans, but as the NY Times piece points out, the first application may be in the call center.  Giving the computer the job of answering customers complex questions.  Just like on the manufacturing line, the bank machine, or the grocery store, the computer does not have to answer all of the questions, just a good percentage.  When the human's job becomes handling the extreme exception and managing the machine -- the skills required and the associated pay are each increased significantly.  At the end of this road lies a customer service capability for companies who have never operated in that mode.

Customer Service

Search for "Google Lack Customer Service" and you can read for days about how Google just does not do it.  This is a cause for relief by some of Google's more customer centric competitors.  When IBM delivers to Google an engineering driven answer to this deficiency it will be as big as any significant change in an ecosystem.  Kill all of the wolves and the elk population goes through the roof.  Google is not the only engineering driven company that will benefit.  HTC and many of the other sophisticated OEMs, will be able to accelerate their evolution from manufacturer for others to full competitor.  The ecosystem will never be the same.

Earlier this year I heard a presentation by Jaron Lanier where he gave the low cost labor countries like India, China, and the Philippines 20 years to get up the education ladder far enough to be safe from the flood caused by automation.  Could be 20, I would guess 10.

The Secret to the iPad is iTunes

The best thing about the iPad is iTunes.  There have been many reports of people walking out of the Apple store with their shiny new iPad, sitting down on the curb, only to find that the thing will not work until it is connected to iTunes on a Mac or a PC.  The Apple store will actually do this for you in the store if you want.  Many people have called this a shortfall of the product, but I propose the connection to iTunes is one of the things I like the most about both my iPod Touch and my iPad.  Here are the reasons:

1. Nothing to Lose:  Since the iPad is just showing me the things it got on the last sync up from iTunes -- my stuff is always backed up.  No worries -- I could run the thing over with the car and be out the iPad, but not my data or apps.
2. Easy Restore: Reinstalling an operating system on a PC is a week long exercise.  Sure I can wipe and reinstall the OS in a matter of a few hours, but then it takes me a week to find all of the other applications and files.  And I remember each application just when I need it and don't have time to install it.  I can wipe and restore my iPad with one button push and about an hour.  
3. Online or Offline:  The above listed backup and restore benefits sound a lot like the thin client benefits that have been championed for over a decade.  The difference is that once synced, the iPad can work connected or not connected to the network.  A thin client or a web OS type machine could not do that.
4. Lower Expectations:  Sure there are many things my desktop or laptop computers can do that my iPad cannot do.  But I never expected the iPad to do those things.  Steve has made the iPad do the things it does very well, which also means that the things not well suited for the device are not even attempted.  This is a much better user experience.

PC makers could apply some of these lessons and create a much better PC experience. Did Steve say that Apple was working on reducing the iPad's dependency on iTunes?  I think that would be a mistake.

File System Up for Grabs

After years of ever increasing complexity, sometimes even brought to us disguised as simplicity, some personal computers may actually be getting easier to use.  I am not talking about the Mac. I have tried to find ease of use in Macs over the years and just don’t see it.  Steve Jobs finds it easier – but long time Mac users are so deep in their own perspective they cannot see simplicity any more.

I am however, talking about the iPad and phones.  This could also go for anything running Andriod, but I don’t have first-hand experience with that yet.

The iPad is very easy to use.  You can just hand it to someone and they figure it out.  Ease of use is almost always accomplished through a reduction in functionality.  This is true with the iPad in several areas and most notably the lack of access to a file system.  We know there is a methodology of storing files on the machine, but the user never sees it.  I suspect this trend will continue because the file system is a very complicated thing and the source of endless user frustration.  I never have gotten used to the different views of the file system through Finder on Macs.  Thank goodness the search works well. 

Keeping files all in one place on a Windows machine is no easier and the lack of search that actually works amplifies the problem.   This is where the fan boys from either side blast me with evidence that the Mac presents the file tree well and that Windows 7 has great file search.  I don’t buy either argument.  If I can’t make the search work on Windows 7 – there is certainly going to be a very large population of people with the same experience (everyone less willing or able than me to monkey with the thing and make it work).  And whoever invented the virtual folders should just be shot.  I want my files to be in real folders.

The Microsoft site says this about search on Windows 7: Start typing into the Start menu search box, and you'll instantly see a list of relevant documents, pictures, music, and e-mail on your PC.

Sounds great, but this has not been my experience.  For me it takes forever and  usually returns with nothing.  Yes my indexing is on, and I have even reinstalled Windows Search per instructions from MS.  

Here is what I get when I search for excel files on my fully indexed B drive:

OK.  So neither Apple or Microsoft has a good way to manage files, and Apple has addressed the problem in the iPhone OS by hiding the files all together.  The need for file management is not going away.  Ever since the first written business record was generated – a method to store and recover files has been a central part of administrating a business.  No one in business is going to accept a system where all of the files are just thrown behind a curtain and magically retrieved just when needed.

With Apple going the other direction, Microsoft has an opportunity to capitalize.  Here are the main elements I would like to see:

1. Search that works.  I have been using X1 on my Windows 7 machine and it is incredible.  Fast and I am confident it is searching everything. Maybe Microsoft should buy these guys.
2. Don’t bury files all over.  I want all of my files close to the surface and segregated from program files.  I want to be able to back up just my files.
3. Don’t hide or translate names.  Get rid of virtual folders that include other folders but don’t really exist.  This is more than my small brain can handle.  Don’t hide part of the file name (like the extension), don’t have hidden files, if access to files or folders is restricted, grey it out or something.  Not showing it just causes me to keep looking and looking.
4. Don’t mix metaphors:  Why do mapped network drives show up under “Computer” and not “Network”? 
5. A new name.  Every time I try to explain Windows Explorer to my wife she only hears Explorer and thinks I am talking about IE.  I can just hear the internal debate about someday merging Windows Explorer with the browser – if only the EU would not block them…bla, bla, bla… a good way to view the file system should be separate from the browser.

Somebody is going to figure this out and it will be one of those revolutionary things that no one notices at first, but builds a technology foundation for long term customer satisfaction and retention.

Microsoft Losing its Killer Reputation

There was a time not long ago when Microsoft was the most feared company in the tech industry.  The rare individual that has not had at least a second hand (if not a first hand) experience with Microsoft's predatory practices, would certainly have read about them in the press.  From legends about the original DOS code deal, the OEM pricing policy, to Netscape, to tech startups that found their product ideas incorporated into MS products after pitching MS to acquire them, there is seemingly no end to this story.

Until now.  Could we be entering an era of a less predatory Microsoft?  Here are three things that contribute to such a thought:

1. Other predators on center stage:  Facebook, Apple, and Google are really getting into the act of either ripping off the ideas of others, to just swallowing start ups in one gulp.  
2. Microsoft's Partners are a significant asset:  Microsoft has been building its partner program for 25 years and it is the biggest, most sophisticated, and most mature business ecosystem the industry.  There was a time that people partnered with Microsoft because they had to, now they partner with Microsoft on its merits.  
3. Microsoft's margins are on the decline:  95% margins for packaged software were great -- but exist no longer.  Margins in the cloud are much lower -- maybe half that.  Declining margins mean less budget for R&D and Sales and Marketing.  This is going to be added encouragement for Microsoft to get along with its neighbors.

Microsoft may or may not be engaged in a thoughtful strategy of playing more nicely with others.  Premeditated or not, Microsoft does seem to be losing its killer reputation. I think this is a good thing for Microsoft, and its partners.

Intuit and the Tyranny of the Uptime Clock

Those of you following my Twittering and blog posts must think I have become obsessed with the Intuit outage.  At CSG we operate a hosted enterprise software service and face the tyranny of the uptime clock -- just like Intuit.  As the technology industry moves to adopt cloud computing, we all suffer a credibility loss when a major player like Intuit has a long term outage like this one.  The lack of an explanation, and generally poor levels of communication by Intuit during this episode does not help.  Sure they could not post on their own websites while down, but they have official blogs outside of their control that were up and so they did have the ability to communicate.  Here is a short list of the communications:

Intuit on Twitter @Intuit: First post was 11.5 hours into the outage, at this writing 8 posts, including a gap of 16 hours before the latest post saying they are now on the way back up.   The posts pointed to their community page with 4 undated or time stamped updates, and 2 references to the small business blog, where they posted an update 12 hours into the outage.

Quicken on Twitter @Quicken: First post was 13 hours into the outage, at this writing only 4 posts -- saying they are working on it.

Official Quicken Blog:  No posts, last post was April 26th.

Quickbooks on Twitter @Quickbooks: No posts, last post was May 21st.

The main site just now came back online -- making the outage approximately 34 hours in duration.  Current explanation: 

Our preliminary investigation indicates the outage occurred during a routine maintenance procedure Tuesday night. An accidental power failure during that procedure affected both our primary and backup systems, taking a number of Intuit websites and services offline. While power was quickly restored, we're working diligently to validate our systems and bring them back into full operation.

Intuit reported 300,000 online customers in May of this year -- many of whom use accounting and merchant services applications that require near universal uptime.  In the industry this is often referred to and "four nines" or "five nines" uptime for 99.99% and 99.999% uptime.

A few basics about uptime:  Scheduled outages are usually not included in the calculation, so the .001% downtime permitted in five nines uptime buys only 5.26 minutes of unscheduled downtime in a year.  Three nines gets you almost an hour, and two nines gets you almost a day.  Fortunately nobody died in this outage, so even a 34 hour outage is not a catastrophe on the BP scale.  But it will take 388 years of perfect uptime before Intiut can claim five nines of uptime.

All of us are relieved that they are back online.  This event will undoubtedly slow migrations to the cloud, and should give all of us reason to check and recheck our redundancy and uptime plans.  In addition, we should be checking and rechecking our communication plans associated with any downtime.  We are certainly capable of turning a bad situation worse by failing to communicate well with customers.

Intuit's Cloud Outage

When I saw some traffic in Twitter last night about Intuit's web site going down I first thought it would be back up in a minute and would be no big deal.  An hour later I checked back -- still down.  I checked @intuit, @quicken, and @quickbooks on Twitter thinking they would post an update -- none.  I searched for Intuit related blogs -- no posts in over a month!

Knowing that millions of people use intuit's accounting, payroll, tax preparation, and merchant services, and thinking that these activities are almost always time sensitive, I naturally thought that this was going to be a big story. Next I thought that since small businesses are a big deal for technology companies, and technology companies want small businesses to adopt cloud computing, this would be a big deal in the technology industry.  A major vendor like Intuit going down for hours without any communication to its users is enough to set back cloud adoption a few years -- right?

So I searched the news on Google about a story.  Top search result: Intuit press release about low cost Payment Solutions, next was CEO Brad Smith being profiled by "Inspiring West Virginians", and the next four were all about stock performance upgrades due to good recent financial results.  No stories about the outage.

Back to Twitter, a real time search for Intuit Down:  just a few tweets.  Nothing like I expected.

When a $3 Billion company with millions of customers goes down for over 12 hours without a mention in the press, without an update to its customers, and without any public outcry to speak of I can only conclude one of three things:

1. I fell down the Alice in Wonderland rabbit hole and never came back, or 
2. Not communicating during a crisis works -- no communication = no crisis, or
3. Not that many people are using Intuit's Cloud Services.

I did watch the movie and even with the 3D I don't think I am chasing the Jabberwoky -- so #1 is out, BP and others will tell you that #2 is not true, so logic tells us that #3 could be the most rational conclusion.

Intuit's recent acquisition, Mint, has stayed up the whole time.  No mention on any of Mint's blogs either.

Microsoft News 180?

The news herd has a tendency to travel together for a while until someone "breaks" a story and breaks away from the group.  The contrasting new perspective becomes news itself and then the herd reforms going the other direction.

This kind of thing may just be happening with Microsoft right now.  Microsoft has been getting the short end of it in the media for months - or even years - with that week when AAPL gained the number one market cap spot being the low point.  

This week looks to be different however.  The Xbox is really standing out at E3 with Natal/Kinect (why do they do that code name thing?), and a positive piece about profits, cash, and general sanity on CNN Money.

Maybe Microsoft has been characterized in the media as a predatory monopolist, a second rate innovator, and uncool for long enough that the new story about a Microsoft comeback will stick for a while.  As the CNN Money article points out, Microsoft is the second most profitable company in the US, has a giant pile of cash, and is adding to the pile at a pretty good clip.  And you can be part owner for a P/E of only 13.2!

Microsoft has so many products and technology assets that there is no end to the possible interesting combinations.  The combination Microsoft chose to spotlight yesterday is Xbox 360 Kinect + Windows Live Messenger = Video Kinect.  Let's imagine this for a moment.  A high quality game environment, big bandwidth connectivity, an interface that reads the motions of the user (formerly known as the controller), and two way live video chat.  If this works we could have real life emulating person to person interactions in a dimension we don't even have a way to categorize yet.

This could be cool.

Innovation Meets the Desire to Sell Less

Google's pursuit of efficiency through superior engineering has already driven a great deal of change in the advertising industry and is now driving change in how selling is accomplished.  They have achieved extraordinary growth without any sales or customer service to speak of and now other companies are trying to emulate this lowest of selling costs.  The question is: How does a company with a high cost of selling become a company with very low cost of selling?  I can think of two routes:  sell better or sell less.

Effective companies do this by measuring everything, then cutting the things that don't measure up, and doubling down on the things that do.  The result: increased selling effectiveness and lower cost.  In the dynamic world of sales and marketing a once highly effective sales tactic can lose momentum and fade into inefficiency.  After all, we hope that the things that don't measure up did not start out that way.  This seems simple enough until the conversation turns to innovation.  A company only focussed on measuring the relative efficiency of the things it is currently doing will not try to do new things and will be quickly passed by competitors that are not so burdened by yesterday's thinking.  

Time is an additional layer of complexity in this analysis.  Selling costs money now and delivers benefits in the future.  Very few companies have successfully neutralized the time dimension when analyzing sales effectiveness.  So cost cutting always looks great at first because the lower cost is being compared to sales activities purchased in previous periods.  Then the gradual decline in revenues starts and things don't look that great anymore.  Often at this point more cutting is administered and you can see where this is leading.  Bleeding the patient has obvious limits.

Better selling comes from innovation.  Innovation comes from rapid experimentation.  Rapid experimentation comes from the freedom to try new things.  New things are never sure things and all of this costs money.  Whether you are an investor looking to put your money to work, or an employee looking for a career, or a buyer looking to standardize on a product/service, beware of the company that is on the sell less track.  

If you are interested in more on this topic, try these posts:

Sales vs. Engineering

The Changing Role of the Salesperson

Making Marketing More Measurable

Science vs. Spray and Pray

Is Your KPI and RBI or an OBP?

Brand Promise vs. Intention

Working With People You Like

Last night we had a small event for our team leaders and employees participating in our mentor program.  We went out to an informal dinner and then to my house to get a lesson in the making of lemon-cello.  It was a very fun evening and a good opportunity to remember how important it is to like the people you work with.

Our company has been selected as one of the best places to work in Washington State in four of the past five years.  One of the main reasons we achieve that honor is that we just like being in the same room.  Sure it is important to enjoy what you do, and I submit it is just as important to enjoy who you do it with.

Life is too short, and we live a great deal of it at work.  I feel very fortunate to spend that time working with people that I like.

HP Announces Printing in the Cloud

HP rolled out its web printing capability, ePrintCenter, at Internet Week NY yesterday.  Here is a pretty good article in PC Mag about it.  

I don't ordinarily write about individual technology announcements, so why would I write about this?

Well, yesterday I wrote about two things that could really change the way small businesses buy technology: Google's Cloud Printing and Tungle.me's web based scheduling service.  Google's thing is still just a plan and HP has promised to deliver cloud printing this summer.  

Here is how it will work (from the PC Mag article):

The print-through-the Internet feature (which won't work with the older generation printers, unfortunately) lets you simply e-mail a file to the ePrintCenter's email address, which rasterizes the image and sends the print job to the printer. According to HP, the ePrintCenter can handle files in most common formats, including PDF, JPG, and Microsoft Office 2003 and 2007 versions of Word and Excel. Each printer gets a unique e-mail address.

I stopped buying HP printers for home a couple of years ago because they break so much and the software on the PC was gigantic.  Why printing would require software in the hundreds of MBs just never made any sense to me.  Add to that the fact that the software was telling me to download updates every other day -- and I was reminded early and often that HP was not the printer to buy.  All I wanted to do was print!

Anyone who has ever done tech support will tell you that printing is still a giant pain in the neck.  If HP does this right -- it could be a game changer.

This may not seem like a big deal -- but I bet the Microsoft Small Business Server team is thinking about the implications.

Could Small Business Go Without Networks?

Lately I have noticed two very interesting developments that don't seem like much at first but could have bigger implications down the road.  

First is Google's Cloud Printing Initiative

This yet to be released product is intended to let you connect printers to the web and print to them from anywhere.  I for one would appreciate this very much because my side job as tech support guy for my kids would get much easier.  Our network printers at home are a pain in the neck.

Second is Tungle.me's Web Based Scheduling System

This new service enables anyone to coordinate scheduling across multiple calendar platforms.  Exchange has done this forever inside companies -- but such functionality has not been available between companies before.

If you put these two things together, small businesses can delay building their own networks much longer than before.  Add to this cloud based file storage, databases, and collaboration tools and small businesses may not need their own networks.  Just a router and a connection to the internet.

That would change things a bit.

The Power of Why

Some time back I commented on Ric Merrifield's book: "Re:Think" where he created definitions for How and What in a business context.  Today I came across a book that ads Why to the list:  Simon Sineks's book: "Start With Why". In this book Sinek argues that if you want to motivate people to do something, think about Why your company exists.

If you are interested in the topic, I recommend going to Mr. Sinek's web site and watching the 18 minute video introducing the idea at the TEDx Puget Sound.

I agree.  Here are his ideas applied to our business:

What (the business we are in): We help large technology companies sell more through their channel partners.

How (what makes us different from our competitors):  Like our competitors, we bring our capacity to do work to the table, unlike our competitors, we also bring our experience and expertise.  In other words, our competitors want to be told what to do -- and then they do it.  We help our clients decide what to do, and then we do it.

Why (do we exist):  We exist to create a great place to work.  Many people could think of our business as a commodity.  As processes that can be standardized so each and every last penny can be squeezed out of its production.  We have unmatched passion for working together with each other and our clients to do things that make a difference.

A great place to work -- really?  I say yes.  There are many reasons to work and countless studies about why people work.  Getting paid is in there, also the challenge, and also doing things that matter.  These are mostly focused on the end result of work -- the destination.  We are focused on the journey.  Working side be side with each other and with our clients to deliver measurable results makes for an awesome job.   

AT&T Takes a Bite Out of the Cloud

It has been widely reported that AT&T changed its pricing model from unlimited to limited data plans.  The changes go into effect on June 7th. There have been many articles about this and some even come down on the side of AT&T.  As people work to figure out who the winners and the losers are -- I think the cloud could be the long term loser.

We are moving towards a world with thin wireless devices and computing in the cloud.  A variable cost of connecting to the cloud will certainly cause friction in this migration.  Slowing down the migration would be bad for Google and Apple, and give Microsoft a chance to catch up.

Google announced at Computex this week that their 100% cloud operating system Chrome OS will be available sometime this fall.  

This will be yet another interesting story to follow.

Ballmer Brings Ozzie to D8

I was at a small conference last month where Ray Ozzie spoke and he demonstrated, as he has done many times before, a refreshing grasp of the state of the industry and Microsoft's position within it.  Steve Ballmer did the right thing by bringing Ray to D8.  There has been a great deal of coverage, so instead of adding to the heap, here are some links:

• Ars Technica: This one is probably the best distillation 
• eWeek: A quick summary
• All Things Digital: A rough transcript
• Engadget:  This one contrasts Job's comments about PC = Truck to Ballmer's response

In the end Ballmer seemed on the defensive, and was not able to land an innovative forward thinking idea.  Ray Ozzie had some well crafted thoughts about the industry direction but in the few video clips I saw he seemed to get cut off right before he was going to say something meaningful.  Microsoft still has great deal of work to do.

Loyalty Love On the Decline

Done right, loyalty programs do a great deal to drive revenue.  Doing them right is much easier when the inventory of loyalty love is on the rise.  Frequent flier miles that can never be redeemed can even damage customer relationships.  When building a loyalty program it all seems quite easy.  Set aside some inventory, in the airline example this would be seats, and increase the inventory a bit each year to keep up with the increasing number of loyalty customers and their increasing expectations and you are all set.  This all comes to an unhappy end when the number of loyalty customers continues to rise, or worse accelerates, at the same time the inventory of awards contracts.

This is exactly what is happening right now with the airlines.  The airlines have reduced their capacity by paring back schedules and parking planes.  The people flying are mostly those that always fly -- those in the loyalty programs.  This means fewer reward tickets, fewer upgrades, and eventually, structural changes to loyalty programs.  My main airline just increase the highest level from 40,000 miles to 75,000 miles -- ouch.

We see the same thing happen to partner programs.  While on the upswing there is plenty of loyalty love to spread around.  In this case the loyalty love usually comes in the form of leads (opportunities for new business).  When in a recession the flow of leads goes down and the focus on leads by partners goes up.  Expectations up plus delivery down equals unhappy partners.  Here are three things to do about it:

1. Invest what you have in the right place:  As painful as it may seem, the airlines are doing the right thing.  They know they do not have the capacity to make everyone happy, and they are going to make sure the reduced number of happy people are the right ones.
2. Add new features and benefits:  There are always things that can be added to fill the gap.  Soft benefits are not as good as hard benefits -- but better than nothing.  As above, these new benefits have to go to the right places.
3. Engage to grab market share:  Vendor and partner both want to grow out of the cycle -- which in a down market means take market share.  Since this investment is being made anyway -- make the most of it by working closely with key partners to drive increased revenue for both entities.

Yes all of this means we have to pedal faster in a down market.  It is worth it however because the potential gains are tremendous.

More Advice for Microsoft

I have been working for a while on a post that would summarize all of the advice people are giving Ballmer and Microsoft.  With the whole market cap thing last week the flood of advice has me so buried I cannot read it all -- let alone comment.  So here are a couple good recent ones you may want to read:

• Fast Company: Argues that the thing to do is bring back Bill Gates.
• Motley Fool: Makes the case that Apple did not pass Microsoft, but rather Microsoft is killing itself.
• Information Week: A pretty good rant about the cloud, the market perception of "Microsoft as rigid, backward-looking, reactive, and afraid to compete" and the whole iPhone ban.
• Blogger Andrew Brust: A good list of things to do -- mostly focussed on the consumer space (again).
• Mini Microsoft: Can't have a list like this without a sweeping post from Mini - Microsoft.

If Microsoft really is in its final death dance -- will the wolves come and start picking at the carcass?  There are so many parts of Microsoft the challenge of listing the assets in prioritized order would be even bigger than tracking all of this advice.  

If I had a few billion to spend, I don't think I would buy any of the consumer stuff.  I think maybe Hyper V or SQL Server could be good. 

Steve Jobs at D8

Steve Jobs was the big feature at the All Things Digital conference yesterday.  He was humble about the market cap thing: “It’s surreal, but it doesn’t really mean anything” and about Apple itself: “Apple is a company that doesn’t have the most resources in the world, and the way we’ve succeeded is to bet the right technological horse, to look at technologies that have a future. We try to pick things that are in their springs. And if you choose wisely, you can be quite successful.” And he did not take the bait on war with Microsoft: “No, we don’t see ourselves in a platform war” says Jobs. “We never saw ourselves in a platform war with Microsoft, either…Maybe that’s why we lost. But we never thought of ourselves in a platform war; we just wanted to make good products.” or on war with Google: “Well, they’re competing with us...we didn’t go into search.”  

There is a really interesting riff on the development path that brought about the iPhone and eventually the iPad: 

Jobs: “I’ll tell you a secret. It began with the tablet. I had this idea about having a glass display, a multitouch display you could type on with your fingers. I asked our people about it. And six months later, they came back with this amazing display. And I gave it to one of our really brilliant UI guys. He got scrolling working and some other things, and I thought, ‘my God, we can build a phone with this!’ So we put the tablet aside, and we went to work on the iPhone.”

This just emphasizes how Jobs has the metal to make big decisions and make them decisively.  There have been a lot of these big decisions lately including Flash of course, and the market is being shaped and reshaped by Steve Jobs yet again.  This shaping will continue with Steve pulling for newspapers over bloggers: “I don’t want us to see us descend into a nation of bloggers,” civility and control over openness: “We have a rule that says you can’t defame people,” and his own curating of ideas: “The best ideas have to win, no matter who has them.”

Steve Jobs is still the best CEO in existence.  Quite a performance.

Microsoft's Secret Weapon: Channel Partners

It has been a rough week for Microsoft and the advice for Steve B is really starting to flow now.  Technology blogger Andrew Brust has a pretty good list, and I really like this point:

7. Set Up a Partner Platform for Custom Installers

There’s a whole sub-industry of companies that install, integrate and configure home theater, security and connected home products.  They have an industry group. They are influential in the high-end of the consumer electronics industry, and so are their customers.  They love Media Center and they love Windows Home Server.  But I have talked to several of them at the Consumer Electronics Show and they tell me you don’t love them.  They find it very difficult to do business with Microsoft, even though they want nothing more than to sell and evangelize your platform.  This is a travesty.  Please fix it.  Get Allison Watson and the Microsoft Partner Network on board and have her hire someone who knows how to run a channel program for consumer electronics companies.  Problem solved.  Markets expanded.

We have done a fair amount of work in both the traditional channel ecosystem (VAR, SP, ISV), and the consumer electronics ecosystem.  One would think they are the same thing or at least closely related, but in fact there are significant differences.  

Andrew is right.  If Microsoft were to make a serious run at building a CE channel it would be quite a strategic asset.