Ramblings for University level Principles of Marketing Class

I’d go for the disruptive approach. Marketing has so fundamentally changed. It’s all about digital marketing now. When Nike learns that it can have the same “reach” with their own digital online event as a Superbowl ad, you know we’re on a new path. Today’s it’s about engaging fans, building an audience and content marketing. It’s no longer people sitting on madison ave dictating a brand campaign for next year and taking half a year to put it together. Red Bull spends more on sponsorships, events and publishing than traditional ads (wait, a drink company has a leading magazine?). Rolex makes more money on events than watches.

Traditional Advertising

TV is dead

More young folks watch people play video games online than CBS. Oh, and these same video game players can fill a stadium easier than most bands today. But, it’s also evolving. It’s going to be more about the content and the device and knowning who’s watching than creating generic ads for massive audiences. Don’t believe me? Your setup box knows what you’re surfing on your iPad while sitting on the can and can change the ad you see when you get back to the TV (http://www.adobe.com/products/auditude.html). DVR’s were just the beginning. Now people binge watch Breaking Bad on Netflix and catch up on new shows via Hulu. This means that video ads will become more about speed and personalization. We’ll need more creatives and copy editors to come up with more versions tailored to very specific demographics.

Outdoor billboards

Notice how many are switching to digital displays. This is the first step to these all just being converted to the Google Ad network. It won’t be about a local sales force or agency buying locations to have a canvas hung for a month rather these screens will know who’s driving by them and who will be driving by them shortly. They’ll then be optimized to show ads to reach the most lucrative potential audience. This will be done by software algorithms and ad bidding networks. Might as well lump this into the SEM (search engine marketing) bucket.


Who listens to radio anymore? Spotify, Soundcloud, Pandora, Rdio and of course Apple dominate our cars and our earbuds. Honda just announced support for Apple’s CarPlay and Android Auto. If I were ClearChannel, I’d try to figure out how to buy Spotify and partner up with Google. Again, it won’t be about long drawn out campaign planning.


The bookstore closed and most magazines are struggling to keep their numbers up. I can have a greater reach and real conversion with display, social or search ads. Now, it’s not to say these won’t be there, especially in our digital magazines on our Apple Newstand, but this will all merge with the display networks from Google, Apple, Bing, etc.

If I’m focused on B2B, I get more out of content marketing (webinars, emails, blogs, social) than any traditional media. I also use these new strategies and my own digital properties to build demand and measure the results. It no longer makes sense to spend money on something I can’t measure.

If I’m B2C focused, I’m all about getting close to my customer, building fans and exciting my base. Again, this is about content marketing, not Madison Avenue.

The agencies are all struggling and consolidating to hold on to revenue. Most have build digital businesses as they know they won’t be making tons of money on campaigns anymore rather they’ll be producing content. Even the ones that have done well picking up the task of online ad buying and optimization see that this will be done by software (Adobe Media Optimizer, Marin Software) and not humans.

So what do you focus on?

Analytics – understand how to read data, find audiences, determine trends and target. Psychographics dominates and demographics is worthless. Tomorrow’s marketers also have to be able to show where they see an opportunity using data and then measure their results and constantly optimize their efforts

Testing – the art of a/b testing is now multivariate. Understanding statistics and what “statistically significant” means is relevant to knowning if their idea is good or dead.

Creative – The fun stuff still exists and more marketers should get more comfortable piecing together campaigns themselves because they’ll have tools where they can take digital assets and put together something (with a good copy editor) that can be pushed out to their audience in real time (from their phone while on the way to work)

I’d have them all take $50 and build an online campaign for a trinket they sell on etsy or an ebook they publish on Amazon. If they have a friend that makes something cool or has a small business, even better. Get in and see how you can target audiences on Facebook, understand what a Pinterest buy button might mean to marketing (yep, they’ll be measured by sales tomorrow not just reach and impressions).




Easy Attribution for Store to Store Sale

One of the biggest challenges to a delightful customer experience across channels is executive bonuses and the KPIs that illustrate whether they (we) should get them. When we first tried to allow merchandise returns to the store from the e-commerce channel, many retailers found their store leadership pushing back hard. Was it because they wanted to tell ‘their’ customer to go take a hike? No, it was because those returns then hit their numbers negatively and it wasn’t within their control to improve the process. The industry as a whole has mostly worked through this use case, but there are still many more challenges that have not been worked through from pricing to the more recent ‘buy online, pick-up in store’ capability.

A very simple idea came to me the other day while shopping for a gift. I overheard a woman asking about a particular piece of jewelry. Unfortunately, the store we were in didn’t have it. She then asked whether it was in a store near her home and the sales associate could hardly bother. She made it clear with her non-verbal communication that reopening the application, searching for the product, and then determining whether it was in stock at another store was not of interest to her (obviously because she was being measured to not care). That’s when I realized that there should be a way to attribute that sale to this store associate, or at least some portion of it, if in fact the woman went and bought it later.

In order to track it, and handle some of the existing infrastructure, I wonder if it could be as simple as a QR code or bar code being printed off of the machine the store associate was using that would include a reference for the other store to more easily look it up and scan prior to sale allowing the tracking. Now, obviously we’ll get to the point where this customer would be able to buy there and pick-up in the store near her home and many permutations of the same, but could it be that there are some simple solutions we could implement easier between now and then?

Don’t get me wrong, I still want inventory at my finger tip in my mobile app, but I recognize this will be a journey.

Omni-channel Retailing Falls Short in 2014

As we approach the busiest shopping weekend of the year in the US, I see many retailers still falling short of providing a true omni-channel retail experience. Before I share my thoughts on why and how so many retailers are falling short, I want to quickly define my expectations of an omni-channel retailer. First, the word “channel” only applies to the retailer, and as many profess, the customer does not understand this construct. Even those of us in the industry will admit forgetting about the complexities of our own businesses or those that we support in the moment where we are trying to accomplish a task for our own sake. From a customer experience perspective, I see the requirements of omni-channel retailing including the following:

  1. Product Discovery – Whether I am browsing a retailer’s product catalog from the comfort of my couch with a tablet, standing in their store searching on my mobile phone, talking to a store associate, or simply browsing the store, I expect consistency around product information, price and availability. Preferably, I can also see and share my shopping lists and carts across each of these touch points to then purchase in any location. Most retailers have done a great job of having consistent product information across channels for some time as the industry found the value of a single product information management (PIM) system to ensure this some time ago. However, availability of product is still a huge challenge as most retailers have visibility into only 60-70% of their in-store inventory. This means that when a retailer takes a short cut using algorithms to determine when something is shown in stock, to minimize the risk that it is not, they not only miss potential sales, decreasing the value of capital, but could also have a customer satisfaction/loyalty issue if the customer later goes in and sees that an item is in fact in stock.
  2. Loyalty – We all want our 15 min. of fame and to be appreciated for the business we do with retailers. Feeling special is why most people engage with loyalty programs as it provides this sense of appreciation that we are always seeking in our lives. As customers shop more online or across multiple stores, we loose the customer experience of a store associate knowing who we are, what we like and how much we spend. An omni-channel retailer then has to recognize this information gap and find creative ways to expose it to every touch point from how they personalize the customer experience online or more importantly pass this insight to the store itself and the associates supporting customers.
  3. Customer Service (Returns/Exchanges) – The purchase journey, as frictionless as it hopefully is made to be, can still often result in an issue requiring a return for reasons such as: we bought the wrong item, size, changed our mind, or found a defect. An omni-channel retailer knows the customer across any touch point (channel) and can respond and support the customer’s return or exchange across any touch point. Today, nearly all of the retailers mobile apps I have on my phone (which is a lot because of my focus on the industry) do not show my past purchases in the store and often connect me with call centers that can’t react to in-store purchases. Similarly, when I go into these same retailers stores, while they may now accept my return, they are not in a position to recognize my other online purchases (lifetime customer value) and may not even have the product assortment required to support an exchange.
  4. Purchase – I have purposely chosen to make the purchase event #4 as I believe the first three have a bigger impact on “customer lifetime value” and ultimately revenues and profitability, yet I see most retailers have focused on how to enable transactions such as “buy online, pick-up in store” or “buy online, ship from store”. While it is certainly valuable to be able to see something is available in a store nearby, buy it online and then head in to grab it, we all know negative customer experiences have a much greater impact on future sales. Following I’ll share a recent experience to illustrate.

So with all the omni-channel initiatives announced and the ones you are likely executing against this year, why am I writing about seeing such a miss? Ultimately, I think in our focus on the purchase event, we have set ourselves up for some very high transaction costs and negative impacts to customer experience that will result in reduced loyalty and ultimately reduced sales.

To better explain where I see the challenges, let me share a recent, personal shopping experience with a retailer famous for its focus on customer service. While out of town for work, I had some time to kill and wanted to buy a new sport coat and maybe an overcoat. My initial shopping experience was fantastic. While I deviated from my mission and ended up looking at jeans, a store associate approached me in a very disarming way and got past my typical response of “just looking”. As a guy that is not built for the latest designer jeans, I frustratingly shared that most likely there were none for me to purchase and that we should move on to the original task at hand. This gentleman however was not convinced and was determined to prove there was a pair for me. He was an attractive man that looked like he could be a jeans model for any major brand. I laughed to myself and figured it didn’t hurt to entertain the idea on the off chance he found me a pair that fit, and I’m always in “secret shopper” mode for my job, so off we went to the dressing room. I’ll share the full story later on how we went from not only finding a couple pair of nice jeans that fit me, but also conquered the original task of purchasing a new sport coat and overcoat. All in all, the purchase was a big one for this retailer, and I even opened a new store card. The challenge came later when I didn’t receive all of my items that were tailored and shipped to my home.

A couple weeks after the purchase, I awaited delivery of all of my items. Everything needed some tailoring, so interestingly I walked out of the store with nothing but a smile and the anticipation to receive everything at home. I had even chosen to have the receipt emailed to me rather than take home a printed version. Unfortunately, when I received the shipment, I was not at home. I went to the shipping company’s pick-up location and asked for the items for my address as I had forgot the slip at home. I was sent home with a nice big box and excitedly opened it when I got back to share all my new purchases with my wife, who I knew was going to particularly like the overcoat. And here is where the problems began.

There were two items missing from my order. I went to my email to try and understand if they were perhaps shipped separately and just hadn’t arrived. As it turns out, I never got the original receipt, but did have a couple emails with the shipping notification. The two emails looked identical and listed all items from the original email, so I assumed they were identical and maybe just duplicates. When I entered the tracking number on the shipping company’s website it showed that the package had been shipped and that there was only one. What I did not notice until much later was that those emails which contained the entire order contents versus showing that some items were in one shipment and some were in another had different tracking numbers. One package had indeed not yet arrived, but I did not know this yet. As I had been checking all of this from my mobile phone standing in my living room, I also remembered that I had the retailers app and assumed that it would be the fastest way to look up the customer support number to get this all resolved. It was in fact prominently displayed in the app and easy to trigger the call.

When I got a hold of a customer service rep, which was actually quite fast, we had a very difficult time finding my order. Not having a receipt with the order number on it proved to make it quite difficult, all I had was a tracking number that didn’t seem to help them. The service rep searched for my order by phone number and name and even after giving the credit card number (store card), could not find my order. Ultimately we both realized that the customer service rep seem to only have access to online orders (the phone number is likely different for online purchase than in-store and the mobile app is set to the online call center). I then had to be transferred to someone else that could support in-store purchases. They were ultimately not much help and had to call the store direct to talk with someone in shipping to determine if the items were missing or in another package as they also couldn’t tell this in their system. I spent a great deal of time on hold through all of this and ultimately the department manage said she’d figure out what was happening, track down the package herself and call me back when she knew the answer. The order had in fact been split into two deliveries and the other ironically arrived a few minutes after I had left the shipping pick-up location. As it was late on a Friday and the pick-up location was closed on the weekends, I would have to wait until Monday to go pick up the second package.

We all have busy lives, and I couldn’t make it into the pick-up location until Tuesday. Well, for some reason the shipping company marked the second package as having been with them for over 5 business days (counting from the first shipment vs. the second package) and sent it back to the store I originally bought the items from. At this point, I had to start all over with tracking down my jackets. Knowing the mobile app was not helpful, I went online via a desktop browser and tried to log into my account associated to the credit card hoping I could find the order number before I called again. Frustratingly I had to create a separate account on a separate site for the store card than the main account on their site. Forget not doing well at omni-channel, this was a fail for one channel! Either way, nothing online was showing my order so I had to call into customer service. This time I went through the same challenges, but unfortunately had even more trouble as the customer support rep I was working with seemed to have even more trouble navigating the multiple systems that had order and customer information. After over half an hour I hung up and tried calling the store directly (I later noticed in the shipping email that this was my instruction if there was a problem – not exactly an omni-channel experience). When I got connected with the store, even they struggled to find my order. The person I originally talked to took all my information down and committed to tracking down my missing item. Frankly at this point I was considering doing a chargeback on my credit card, but realized it was their store card (will likely impact me from using it in the future). The good news is that the store was able to find my jackets and shipped them back to me, with both sides crossing our fingers that I’d receive them ok. All in all, it was quite a fiasco. If I see you at NRF’s Big Show in New York, you get to see my new overcoat.

Reflecting back on this experience, I see a few key challenge areas that if addressed would have a material impact on customer satisfaction, cost of doing business and most likely future revenue.

  • Order History – While it is unlikely anytime soon retailers will be able to standardize on one purchase system, each system can have their order history exposed as an aggregation service that can be accessed by the customer support applications the call center reps use, store associates log into, and the mobile app. This would make it so that across any touch point, all orders, regardless of channel would be visible.
  • Customer Service Call Centers – Many retailers have their online and physical store businesses divided across different executives that own separate operations by channel. With this comes different call centers that use different tools to get their job done. If you can’t consolidate these operations or tools, then minimally make sure that the tools have access to a customer’s order history across channels and have return/exchange processes outlined such that the handoff is smooth or preferably enables the first responder to resolve the problem.
  • In-store System – Store associates that have to support customers walking in and on the phone, need to have complete visibility into all purchases regardless of channel, and better yet, they should be able to see the customer’s loyalty value so that they maximize the experience for those customers that we all know can be the larger percentage of our revenue.

Each of us carrying the Internet in our pocket has radically changed retail. As more and more of the shopping experience incorporates digital features, from window displays and mobile point of sale to e-ink price tags and near frictionless checkout with mobile payments, we need to excel on the basics before introducing too many new capabilities. As you plan for 2015, I’d set a goal to at least be able to show inventory and order history on any device for both your customers and employees.


Originally posted via LinkedIn Pulse

Realizing the Security Needs of In-store Apps

I am adventurous when it comes to e-commerce, mobile wallets, social sign-in and all things that support digital marketing. I’ve had to be as I am responsible for pushing these industries forward. As consumers we love to take advantage of free email, instant messaging apps and news. And as marketers and business owners we welcome this barter system established to offer such services in exchange for the ability to provide advertising to such consumers, which is increasingly more targeted and hopefully more relevant to each individual.

Behind the scenes my own little fears sometimes drive me to use my American Express credit card for a purchase with a retailer I don’t know well, I almost never use my debit card as I’m not sure it’s really as well covered from fraud as my other credit cards are, and I have a specific email account I use for websites just in case they trade it or sell it. So, while adventurous, I still worry about too many of my preferences getting out, wonder how it could impact my ability to get a life insurance policy at some point in the future, or worse yet how data about me and my lifestyle could impact my ability to stay employed. But, I fundamentally believe that it is human nature to barter. The only true currency is trading goods and services of like value, … and sometimes, this may require a few participants to complete the transaction.

“A few years ago, users of Internet services began to realize that when an online service is free, you’re not the customer. You’re the product. But at Apple, we believe a great customer experience shouldn’t come at the expense of your privacy.” – Tim Cook

As Apple Pay was announced this month I smiled with enthusiasm. Many mornings I grab a bagel and coffee at my neighborhood café that uses Square. I rarely have cash and being able to just walk over with my mobile phone and the Square Wallet app is refreshing. I still have to find my keys so that I can get back into my apartment, but even that step could be eliminated if I were to get a wireless door lock.

Recently I joined Intel to drive product strategy for solutions enabling retailers to create the next revolution in the shopping experience leveraging the Internet of Things. I envision experiences where the physical store knows who I am, finds my favorite store associate who then is reminded of all my tastes and preferences, and is able to help me find what I was looking for or simply didn’t know I needed. The purchase event will of course be frictionless. As I investigate the details of how the store will detect me, how applications will look up who I am and pull back incredibly detailed information, and expose it to devices in the store such as a tablet laying on a counter or a digital sign near the dressing room, it’s become chillingly obvious that my traditional application development architectures are inadequate.

As I think about hackers carefully placing their own beacons and sensors in the store calling the same APIs as the retailers business application or simply monitoring this data as it’s passed around the room, I see now that as mobile application developers we have to begin to understand how to know our environment, challenge that it is secure and verify that only our own apps are engaged with such personal and sensitive insights of our customers. I challenge every developer to learn more about gateways that can monitor your physical space, tokenization systems that can minimize the actual storage and transfer of sensitive data and ultimately keep in mind that your customer is whispering a secret into your ear and none of us wants to be known as someone that can’t keep a secret.

I appreciate and was inspired by Tim Cook’s (Apple’s CEO) message on protecting such things with all these new capabilities from Apple Pay to the Apple Watch and iPhone 6. I am also very excited about continuing to push the industry forward while knowing Intel has created some incredible solutions to support developers everywhere helping my neighborhood café know I’m walking over to pick up my bagel and coffee.

Prepper Book Review – Montana Alliance

With all the doomsday prepper shows and natural disasters that seem to hit our planet from all directions setting back communities into distressed chaos, I certainly wonder what it would be like if all hell broke loose. For full disclosure, I am the author’s son and supporting editor of this book. This is an art of passion and not a commercial enterprise, so please forgive minor editing mistakes. We did the best we could and look forward to making corrections based on readers feedback. If you have any, please visit our facebook page facebook.com/montanaalliance and we’ll make the correction (great part about a Kindle book).
Now, all of that said, I thought this book was quite the adventure. I had a hard time getting into it at first, wondering to myself, “is this plausible?” Then I realized it doesn’t matter. Between Japan’s Tōhoku earthquake and tsunami and Hurricane Sandy in the US, it’s clear that there are many things that could set us back a bit. What was more engaging was imaging what it would be like. Living in San Francisco, we’re all told how we should be prepared for “the big one”, have extra water on hand, food, and other supplies. But what happens if “the event” makes it such that our electricity production and manufacturing abilities are minimized to the point where we’re back to hunting and gathering? That was when I got hooked on the storyline. It’s set years later, outlining the challenges and creativity of different groups of people all learning how to survive where canned goods eventually are no good and even bicycle tires have rotted. What kinds of communities will form? How will you interact with your skilled neighbor? Do you trade with him or direct him at gun point? This is where I think this storyline takes off. There is the obvious hippy camp that gives a socialist structure a try and communal living a focused strategy, and of course you have to have the crazy dictator who ceases control of weapons and thugs that will help him to power. What’s more interesting is how you’re mind wanders from supporting one group to another, questioning what alliance you will actually make. If you’re looking for an escape, and want to challenge your idea of what prepared means, take a read. Let us know if you would join the Montana Alliance!

Dear Pandora – how do Thumbs work?

I’ve made an assumption all this time that the thumbs up/down would indicate to Pandora that for a given station, I don’t like a particular song. Not necessarily that I don’t like that song entirely, rather that it’s not appropriate for the sound I want the station to play.
Here’s an example…
I could create a station for Bon Jovi and it could be all over the place. Alternatively, I could create a station for You Give Love a Bad Name, and occasionally it might through in a ballad. But, maybe I only want high energy Bon Jovi type music, so in this case, I thumbs down all those ballads.
Now, I’m kind of a ballad guy, so in another station I might create it based on Bed of Roses, and in this case, if you start playing Living on a Prayer, I’m going to thumbs down it. Not because I don’t like that song, but because I don’t want it in this station.
I can’t find anything in the Help section that would let me know if you actually do this. To be honest, it’s the basis for my subscription and the reason I love Pandora. So, if you don’t, please start working on it..and oh, don’t let me know.
If you do, then I’d love to have this validated!
Your Fan.

Google Penguin Attacks My Hyperlink

I believe in hypertext. When Tim Berners-Lee proposed the concept and helped bring it to life, we all became a part of the world wide web. The concept is simple and beautiful. I can reference anything and link directly to something with meaning and additional context to my original work. For many years I have blogged off and on and one of my favorite features has been to leverage the “hypertext reference” feature. Now, thanks to Google, I have been asked to remove this link from a company working on behalf of another company that is being penalized by Google for my reference to a page on their site.
Now, first let me say that VirtualPBX has never paid me to include the link either directly or through another company. They’ve never asked me to include the link. They don’t even know who I am. I simply found their page explaining how call forwarding works, thought it was a nice little reference that provided more context to my blog post, and was happy to send a curious potential customer their way for their efforts in creating the page in the first place.
Unfortunately, “due [to] the Google Penguin update these links are negatively impacting both of our sites by creating an unnatural link.”
Here’s the email I received from a representative at RemoveThisLink.com:

I have been contracted to help with the optimization of the site http://www.virtualpbx.com/. In light of recent Google updates the site’s link profile needs to be cleaned up, so we would like to request that you please remove the links to our site located here:
Due do the Google Penguin update these links are negatively impacting both of our sites by creating an unnatural link. Please know that your site’s integrity and business practices are not in question, it is just that the existence of the link itself causes Google to establish a relationship between our sites that looks unnatural.
If you have any questions about the request above, please contact at Virtual PBX. He can be reached at .
Thank you for your consideration,


I think this is a real shame. I get that there is a significant amount of SEO spam out there, but the fact that I received this email, given my intent in my blog post… well, shame on Google. This sure feels evil and controlling and against the culture, purpose and value of the Internet.

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Major eCommerce Trends Affecting Platforms

General musings on relevant trends affecting today’s eCommerce platform providers:

  • 1-click and the paradigm of the cart – Apple & Amazon have reprogramed our expectations of eCommerce. In the beginning the analog chosen was the shopping cart. This made particular sense for online retailers selling a diverse selection of goods. However, most eCommerce sites today focus on a particular product catalogue and the act of going through a shopping cart checkout experience simply diminishes conversion. For example, if I go to Burton to buy a snowboard, I’m not putting multiple boards in my cart. If I want to buy a digital camera from Cannon’s website, I’m likely only getting one. And even if I go to REI.com to pick up a replacement pair of sunglasses lost over the weekend, my goal is likely “in and out”. Now, this doesn’t mean that the “window shopper” doesn’t exist or that there aren’t many retailers looking to get you to add as many items to your “basket” as possible, but the act of shopping should support the “buy now” phenomenon popularized by Amazon’s 1-Click, Apple’s licensed use of it for iTunes and the Mac App Store, along with eBay’s “Buy it Now”. Many companies selling online are finding that their existing platform is “stuck” in the paradigm of the shopping cart and cannot even support simple concepts like a “single page checkout”. Note: This is the main reason why Adobe.com did not implement ATG.
  • Mobile – Best Buy is struggling because it became the showcase for products to be purchased on Amazon later. Many savvy shoppers across all demographics are using their mobile phones to quickly price check items and do product research and lookup customer reviews. In these moments, some companies are supporting these requirements and others are losing the customer to a Google search that can often end with a 1-Click purchase of the same product in store bought from Amazon, which might even come with same day availability.
  • Product management. / multi-channel – Customers expect that companies with both eCommerce and “brick and mortar” presences to sell the same products and have access to the same inventory. These systems grew up under different corporate owners and thus are different databases all together. Companies now aspire to have one master product catalogue that can have all information (PIM) managed centrally and enable pricing and inventory to be pushed out to physical stores, online site(s), and partner marketplaces (e.g., eBay, Amazon)
  • Order management. / multi-channel – customers assume that if they buy online, they can return in the store. This requires centralized order management and visibility of all orders across the enterprise. Again, two systems today.
  • Relevance & Retargeting – customers expect companies to know their shopping behavior and even their browsing behavior. Amazon has popularized “recommendations” and leads customers to expect more relevant, targeted content. This includes carrying this insight forward to marketing campaigns such as emails, SEM and display ads. Sites that tie these insights together best and incorporate them effectively in their marketing spend, convert higher and sell more online. Today, companies have to use a plethora of disparate solutions to build these campaigns and often miss the pattern that would “push the customer over the edge” to buy.
  • Subscriptions – Beyond music, movies and games, more and more companies are finding ways to offer their products and services under a recurring order model. From shaving blades to organic produce, companies want to be able to bill for products and services on a recurring basis. This is not inherent in most eCommerce solutions and requires companies to support two billing solutions and two order management approaches.
  • Flash Sales – Social, email campaigns, mobile SMS (text messages), native mobile apps, and the website(s) itself are all vehicles used to inspire quick conversion and/or ‘dump inventory’ that needs to be moved. Popularized by Woot & One Kings Lane, future platforms not only need to enable this by channel, but also enable “1-click purchase” and automate based on business rules (e.g., If product X expires on September 16th, 2012, and there is > than 20% of inventory within 30 days of expiration, deploy flash sale to “mobile app”, Facebook page and Amazon.)
  • Social – While “social” receives tremendous amount of mindshare, company after company finds the results to be marginal at best. “It’s like trying to sell to someone talking to their friend at a bar”. While this may change over time, the key tenants above of enabling a product catalogue to be pushed out to different marketplaces and “flash sale sites”, is the same capability that can be leveraged by a Facebook page or whichever “social site” becomes the next standard (e.g., pinterest, Google +, yet to be invented).

Enterprise Software Companies Employ Agile/Scrum

Thirty-five percent of IT departments follow agile delivery methods, according to Forrester. No, they’re not just following iterative methods and calling it agile, but a little over twenty percent are and only thirteen percent are still following a waterfall method, including the famed CMM. These thirty-five percent are adopting a working style that empowers our highly skilled and highly paid technology professionals to solve business problems creatively and autonomously in self-managing, self-organizing, accountable teams. Beyond IT, product development at software companies all over the world have also begun to abandon the barriers of innovation and speed moving to Scrum teams that consist of people from product manager to test engineer.
Continuing to manage projects following a waterfall method invites failure and inconsistent customer satisfaction. In fact, Dr. Winston W. Royce, who sent us all on the waterfall course explicitly stated, “I believe in this concept, but … [it] is risky and invites failure.”[1] Too bad we’ve spent the last fifty years holding tight to the belief that we can manage software development with a project plan that presumes it can predict how long it will take us to elicit requirements and design a solution that meets the customer needs.
At this point you’re probably thinking, “Yeah, it’s easy for our R&D and IT teams to follow agile as they don’t have an external client to deal with.” But, we believe you can and here’s how.

Why should a professional services organization adopt Agile?

Several years ago Darin was mentoring a young consultant who was ambitious and eager to make her mark on the world but had become disillusioned quickly after her brief project experience. She couldn’t understand how so much time was spent on planning, discussing what should be done, and ruminating on how it would be done, then when she had started the actual work, she found that team after team would fall behind schedule and reduce scope or cut quality to meet deadlines. Sound familiar? She shared a great metaphor outlining how the project was progressing:

“We started the project getting the client really excited about what we were going to deliver. It was a Lexus. It was going to solve all their problems and get them there in style. Once the project began however, during requirements gathering we realized that we wouldn’t be able to build the Lexus in the first release given the timeline that was committed to. We would be able to build a Toyota Camry though, and it was pretty much the same thing as the two shared the same frame, body, engine and other parts. They’d just have to let go of a few bells and whistles, and if they did, we’d be right on plan. On it went through the software delivery life-cycle where at each stage it seemed necessary to reset expectations and continue to downgrade. By the time testing began we were now only committing to a Toyota Corolla. When UAT began, we realized that Release 1.0 was not going to work and that it would now only consist of the frame and body, and the engine wouldn’t be put in until Release 1.1, when we’d be able to do a soft launch.”

All too often we work with our clients enthusiastically espousing how our software solution is going to radically transform how they do business. What we don’t admit is that it’s difficult to change a company’s processes, gain buy-in from diverse stakeholders and more often than not our systems are not as flexible as we need them to be.
An agile approach follows an empirical process model that requires frequent inspection and adaptation, recognizing that software development is not like stamping out toys on an assembly line. Rather than spend a client’s money and time planning, you begin the work focusing on the highest priority items that will deliver business value. When those items are delivered, you move on to the next group of prioritized items. The outcome is that you deliver the Lexus in Release 1.0.

How do you convince a client?

Professional services organizations, consultancies, law firms, ad agencies, and any other services business have one thing in common – the contract. We call them work orders, statements of work, services contract, work request, etc. It’s our way of comforting a client given what we are selling is intangible. It’s not an invoice that comes after the work has been done. That would be all we needed if they were buying a hard-good from us as they’d be able to see it, touch it and say, “I want two hundred.” No, it’s not easy to convince a client to trust that we’re going to deliver on a promise given none of the work can be seen and in most cases understood. So, we draft a piece of paper that attempts to illustrate what we jointly agree the services will be. And when it comes to software, we’re asking them to imagine something they’ve never seen and then sign on the dotted line to indicate they understand it well enough to commit to a long engagement. Let’s be real, all you’re selling at this point is your reputation as both parties know that the piece of paper doesn’t even come close to defining what they’re going to get from the engagement.
An agile approach however only requires the client to hold their breath for one sprint at a time. You will continue to take time during the sales process to educate them on your approach. You’ll walk them how you will take a backlog of work and following their prioritization deliver work in small increments that demonstrate the software working, not provide hundred page specifications that they have to then envision what the software will look like, but real working code. This is dramatically different. This is a new commitment. This says, “I’m going to focus your money and energy on getting you up and running so we can solve those business challenges we convinced you our software solves.”
Still not convinced? Ask them to sign up for two sprints. If your software is a large, traditional implementation then your sprints are probably going to be thirty days each. This means you’re only asking them to hold their breath for thirty days and will only require an investment of a small portion of the engagement. If they don’t see results and feel engaged more than on any other project they’ve had, then let them terminate the agreement for convenience. We’re convinced that if you follow agile methods, you’ll demonstrate value in the first sprint and they’ll be hooked. They’ll be hooked because they’re going to see a level of transparency they’ve never had before and the data will be real. They’ll be hooked because you’re going to deliver working code after the first sprint. No, not Visio diagrams, HTML mock-ups or wire frames, but real, working software.
Practically speaking, you should break the work up into two engagements. The first is your Discovery Phase. During this short engagement you should have pre-packaged questionnaires, process flows and a vanilla version of your system to demonstrate. The exercise then would be to walk through your system similar to how you would in a detailed RFP life-cycle, but the focus would be to identify the areas that may need customizations to meet the client’s needs and gather the basic information that you need to understand what the effort will be to configure your system. We’re making the assumption that it’s packaged software (a.k.a., Commercial off the Shelf [COTS]) and so you should know what areas you have to setup and configure. We have seen many companies use a lengthy questionnaire that can be completed by the client themselves, to gather the key insights to allow the team to estimate the engagement. These details now become the backlog. Once you have this you can facilitate a prioritization with the client such that you finish the phase knowing what the work is you team needs to do and have something to estimate.

Estimating the Work

As with other areas of this article, we expect you to have read about agile and Scrum, and in this case we would recommend that you dive deeper into the books on estimating with agile. But, we do want to provide some highlights around the approach. Estimating software implementation efforts is hard. No methodology in the world can predict what your client’s demands and dreams will be once they become more familiar with your software. The difference between agile methods and traditional waterfall methods is agile approaches don’t pretend they can. Estimating following an agile approach is composed of two main processes. The first is when you are estimating backlog items and the second is when you’re estimating throughput of completing a grouping of backlog items.
Following the workshops and questionnaires of the Discovery Phase, you’ll have a backlog of items that represent specific configuration tasks and customizations. Each of these needs to be estimated for not only the “dev time”, but all the time related to completing the task from further requirements gathering, to integration testing and deployment. Teams use a method of comparison to something they know and use a metaphor such as “t-shirt sizes” to keep them focused on referencing something they know versus the new subject material. An example is when they look at a backlog item that requires them to setup the login screen. They may see that there are no changes to the software and thus be able to flag that item as Extra Small. In another case, they may be looking at an item that is typically a couple days of work, but in this case there are a number of customizations. So, what might normally be flagged as Medium or Large may now be increased in t-shirt size. The t-shirt sizes do represent time and thus later can be converted to hours or days. It will still remain difficult to estimate the throughput and so teams are best served using a comparative method that references past experiences with similar clients. Once the project begins however, estimating the completion time becomes increasingly accurate as you inspect actual burn-down of the backlog and the velocity of work completed. This becomes valuable when the client makes a request for something new in the middle of the project.
Regardless of what methodology you’re using today, your team should have a list of tasks or deliverables that if checked off as delivered mean your system is setup. Use this list to keep track of estimates and “actual” from client to client and estimating will become easier and easier for your team during the fast paced sales process.

Statement of Work

Well, we still need a contract. And yes, introducing a new methodology is likely going to be difficult – at least until everyone wakes up and starts challenging waterfall contracts more. Until then, we propose a few modifications to your contract to help alleviate client concerns. The first is to define Scrum and agile in the document itself. Include an overview of the process, your client’s involvement and highlight the level of transparency provided with this approach. We used illustrations to show how the sprints work pointing out that they get to have a formal review of working software at the conclusion of each sprint. Emphasize that they will also be able to control the prioritization and change direction as you go – something you won’t find in a waterfall based contract. Include the backlog and each item’s estimate. This should be translated to engineering hours or days, whichever is most relevant to your efforts.
A key selling point to agile is that it is much more flexible to change. Rather than scare everyone into the stone tablets that are typical requirements of waterfall engagements that require senior councils to approve any change once the project has begun and typically a major “sign-off” of a change order or revised contract, agile methods allow the client to add, modify and remove items from the backlog as they go. So, if they get into the project and having seen demonstrated working software after a few sprints realize that your solution is amazing and they just want to get using it and no longer are caught up on all their customizations, those items are simply de-prioritized and not executed on. Now, you’ve probably been wondering at this point, “yeah, this sounds all fine and good, but my client has to get approval for a budget and there isn’t all this infinite flexibility!” You’re right, which is why we propose introducing contingency. Yes, we still need contingency. The difference here is that we’re only going to use it if the client approves it versus adding in an arbitrary number to each waterfall phase because we know we never get through it like we predict. In this case we create a bucket for “refundable contingency” that gives the client some flexibility later to change the prioritization of a backlog item and/or add new scope once they’ve become more educated on our system. The best way to use this is to keep the client focused on using the software as intended and minimize customizations. When in the heat of the moment you can say, “we can definitely add a new backlog item to the next sprint that will allow for that customization if you approve us decrementing the refundable contingency bucket.” So, the client gets a contract with one number, which is really made up of what you believe the work to be plus a bucket of refundable contingency so that they can make their budget ask with some room. Can you always get this? No, but it’s worth a try and a lot easier to get approval for when they don’t just think contingency is being added to each scope item. Remember Parkinson’s Law: “Work expands so as to fill the time available for its completion.”
Again, if they’re not ready to sign up for the whole engagement, ask them to sign up for two sprints, then prove it.

Staffing & Training

Agile teams require deeper skills and competency than most managers are ready to recognize. They also require more multi-discipline resources that are comfortable doing different tasks. In a scrum team, the whole team commits to delivering the scope of a sprint, how they get there is up to them. The majority of coding tasks will be done by the developers and the majority of testing tasks will be done by the test engineer, but you need test engineers that can jump in and help coding if the team falls behind and developers that test their code. Additionally, you need to continue to invest in their skills. Every company should be doing this anyway, but let’s face it, most don’t invest in their human resources. We spend tons of money upgrading computers, changing out old furniture, upgrading plants and equipment, but rarely have the same focus on our people. Agile teams require deeper expertise and thus need more investment. The benefit is that you accomplish significantly more output with significantly less people. You’ll find scrum teams of seven to nine people that can outperform a forty person team from the top system integrator in the world. So, if you’re team uses a scripting language to configure your software, or have to code in Java typically or just use your proprietary configuration tools, make sure they are experts in these skills and invest in this over time.
Staffing an agile team requires breaking down boundaries between disciplines. It means a team must work together, even though team members may have reporting relationships that go up to different executives in your company. This becomes very difficult for most managers as they begin to worry about where they fit into this new world, which is unfortunate because if they were doing their jobs they’d realize their value is not in trying to control the flow of information or who works on what, rather they’d focus on improving the talents of their team by designing training programs for them, coaching them in their day to day work and finding new ways to share their skills across other teams so that everyone begins to build some multi-discipline experience. This is a huge job and if done right can produce truly high performing teams.
The other key to staffing an agile team is to create a new working environment for these teams. The cube farms and closed door offices don’t inspire creativity, innovation or collaboration. You need open work spaces, sometimes called “team rooms” where each team member can see one another, work together and collaborate on the commitments of each sprint. This doesn’t mean throw everyone in bullpens and save a ton of money on office space. You still need private areas and people need quiet places.
And most importantly, get everyone trained on the agile methods you’re adopting. If you choose Scrum as your project management framework, which is becoming the standard, then get everyone trained. Even if they won’t always play the role of scrum master, they all should be able to step into it and now how the process works. For those that will play a more traditional role of business analyst or client engagement roles, get them trained in what is called the product owner role, this role manages the backlog and helps the various stakeholders of a project to define their requirements. Engineers should also get training on software test automation tools as this is a critical pillar of agile delivery teams.

Project Tracking & Governance

Most people think agile is a free for all. They think it means developers get to just begin coding without requirements defined and no documentation. What most don’t realize is that agile methods actually have more planning and with more team members than any other method. And yes:
* You still need a project work plan; the architecture of it is just changed,
* You still need to track what everyone is working on and assigned to,
* You still get to track estimates and actuals,
* You still get to keep track of deliverables and milestones,
* You will have amazing status reports, and
* You still have change control.
Project plans are your backlog. You can pre-arrange the backlog items into buckets that you believe will be future sprints to allow you to forecast roughly when the engagement might finish. This also allows you to illustrate to the client the order that might be followed. These tasks though should be deliverable-based rather than activities-based. This allows you to demonstrate “earned value” rather than simplified metric of percent complete. The real value of agile in project tracking is the level of transparency provided. Prior to each sprint, a sprint backlog is created that is a decomposed group of backlog items that are made up of smaller tasks or work items. Each day the team then marks off only those that are complete, not partially complete, but 100% ready for deployment. This allows the team to provide a “burn-down chart”, daily illustrating progress. This along with standard impediment logs (a.k.a., issues log) can be aggregated to provide a daily status report. each backlog item has an effort estimate and during the sprint planning meeting, team members assign themselves to each item and so you also have visibility into who’s working on what.
Within a given sprint the rule is that you don’t introduce change. This is typically not met with too much resistance as the client only has to leave the team alone for a max of 30 days. Any changes proposed are converted into backlog items and then prioritized against everything remaining. If the team is completing items ahead of plan, then you may be able to absorb the new backlog item. If the new or modified item introduces more effort than originally planned, you would then remind the client of their refundable contingency and ask if it’s important enough to decrement that budget. This activity alone often gets them thinking more about business value of their ideas than any other approach you’ve used in the past. It puts the onus on them to make the call.

Quality Assurance (Testing)

Testing typically makes up most of the effort of any project. Many project managers like to pretend that testing will be some percent of development and most executives believe it should be less effort as we all want more features, less overhead. The reality is testing often takes almost twice as much effort as development and breaks schedules because of two reasons. The first is that developers in the waterfall approach get trapped in the telephone game and have to make guesses at what the client wanted and focus on meeting schedule milestones over validating assumptions and thus cut corners when it comes to the quality of their work. It will all get caught in testing, right? Secondly, when the project does decide to move to the test phase(s) of the project, the team typically has planned for manual testing that takes a significant number of resources and hours to repeat tests over and over after each bug is resolved. To become an agile team requires the team to validate their assumptions often with their client through daily check-ins and formal sprint review meetings and requires a team to automate their tests so that they can be run daily and constantly to continually verify the system works as expected.
This will require test engineers that have deeper technical skills and can build tests in the various automation tools. This also requires a better understanding of how the code actually works so that they create efficient tests rather than only black box tests because they don’t know that executing the four different scenarios is actually just executing the same function in the code four times.
The goals of an agile team are not to produce documentation and test cases and scripts, but rather to demonstrate working code that is potentially shippable after each sprint. This requires test driven development and automated tests to be built in the beginning. It also means a lot less overhead in your test management efforts as the team is more focused on making the system work then showing how the dev team missed requirements and/or have bugs.

How do I get started?

Don’t try to do this on your own. Get a coach and some practitioners to join your team. Supplement the teams with people that have done this before and get everyone trained up on the basics. You should also show your commitment by getting trained yourself. Unfortunately there is no “dipping your toe in” when it comes to agile. As a professional services organization this makes it difficult to begin. If you have an existing client that has follow-on project work, find a way to get one of those projects following this new approach. If you have a project that has stalled out or is failing, stop what they’re doing, create a backlog of what’s left and begin getting it back on track one sprint at a time. And however you start, don’t forget to employee the basic agile engineering practices out of the gate such as continuous integration and automated testing. This is your foundation.
This article was co-authored by Will Yen, VP, Interactive Marketing & Director of Consulting, Kenny & Company.
Recommended Reading:
Succeeding with Agile: Software Development Using Scrum
by Mike Cohn
Agile Project Management with Scrum (Microsoft Professional)
by Ken Schwaber
Agile Estimating and Planning
by Mike Cohn
[1] “Managing the Development of Large Software Systems”, Dr. Winston W.Royce, University of Maryland, 1970
Originally published at PSVillage on February 16, 2011