Government of National Unity. What a Concept.

I realize it is a slippery slope to talk about politics in a predominantly business-oriented blog. Therefore, even though I currently have some very strong opinions on the upcoming presidential race, I have stayed away from writing about politics...until now. An article in this past Sunday's Washington Post caught my eye. The article talks about a bipartisan meeting, which will be held on January 7 at the University of Oklahoma, that will "challenge the major-party contenders to spell out their plans for forming a 'government of national unity' to end the gridlock in Washington."

Much of the article talks about the potential backing of New York Mayor Michael Bloomberg as an independent candidate for the presidency if none of the current major candidates don't make a pledge to "'go beyond tokenism' in building an administration that seeks national consensus."

I don't know enough about Bloomberg to currently have an opinion on him being our next President but I do support the underlying objectives of this session. I strongly believe Washington D.C. is in a state of gridlock because of its deeply partisan nature and nothing will get done until each party is willing to begin working with the other again. David Boren, a former Democratic senator from Oklahoma and currently the president of the University of Oklahoma, says in the article...

Electing a president based solely on the platform or promises of one party is not adequate for this time. Until you end the polarization and have bipartisanship, nothing else matters, because one party simply will block the other from acting.

I am basing my support for the next President primarily on this issue. As a nation, we are in a mess. Domestically, we have big problems that need to be addressed but nothing significant is getting done because we are deeply divided, particularly in Washington D.C. Internationally, we have lost a great deal of credibility with other countries. For our next President, I believe we need a leader who can reach across the aisle and heal our divided nation, as well as regain our nation's credibility in the global arena.

I will be watching closely to see what comes out of the January 7 session.

Have Marketing Launches Changed?

I am currently consulting to a company that is getting ready to launch their company/service. As a result, I have been thinking a lot lately about the different launches I have participated in over the years and I am going to use this post to wonder out loud, "how much time should be spent on getting the messages just right for a launch?"

My first experiences with marketing launches in the technology world was when I worked at Sybase in the late 1980s/early 1990s (yikes!). At Sybase, we used to spend an incredible amount of time preparing for our launches. In particular, we used to spend unbelievable numbers of hours getting our messaging just right. In those days, it made sense to get your messaging right since we didn't have the tools we have available today to change our messages easily. For example, when it came to developing a sales presentation, we didn't have PowerPoint so we used to send out sets of 35mm slides to our sales reps (I will pause a bit to let some of you younger people wonder how silly that sounds). If we made a change to our sales presentation, we would have to send new 35mm slides to each rep. Since you didn't want to do this a lot, you made sure you didn't change your messaging a lot.

Over the years, however, even when things like the Web and PowerPoint have made it easier to change messages, it still seems to be the mindset within enterprise companies to spend a lot of effort getting the messaging just right when preparing for a launch. A couple recent experiences of mine make me wonder if such an effort is worth it.

Over the last year or so, I have been involved with a couple launches that were very successful (a new release at JotSpot and the first public preview of Twine by Radar Networks). Based on these launches, here is my current thinking:

• The messenger is more important than the message. Sure, time was spent on developing the messages for these launches but it was within reason. More importantly, in my mind, both of these launches had great messengers -- Joe Kraus at JotSpot, and Nova Spivack at Radar Networks -- who were able to effectively communicate the right messages.
• A launch is the beginning of a continuous conversation, not a proclamation that needs to be "set in stone" for a period of time. Sure, you don't want to confuse the marketplace and change your messaging often. At the same time, however, it is now very easy (thanks to the Web, pdf, and PowerPoint) to evolve your messages as you learn more from the marketplace.

What do you think? Does this make sense? Or, are things different when you are marketing enterprise software to organizations, versus "Web 2.0 for business" software to individuals and small groups? (I recently wrote another post related to this segmentation.) Let me know your thoughts.

Google's Knol Initiative and Knowledge Networking

Lots of discussion today about Google's Knol initiative...

Earlier this week, we started inviting a selected group of people to try a new, free tool that we are calling "knol", which stands for a unit of knowledge. Our goal is to encourage people who know a particular subject to write an authoritative article about it. The tool is still in development and this is just the first phase of testing. For now, using it is by invitation only. But we wanted to share with everyone the basic premises and goals behind this project.

The key idea behind the knol project is to highlight authors. Books have authors' names right on the cover, news articles have bylines, scientific articles always have authors -- but somehow the web evolved without a strong standard to keep authors names highlighted. We believe that knowing who wrote what will significantly help users make better use of web content. At the heart, a knol is just a web page; we use the word "knol" as the name of the project and as an instance of an article interchangeably. It is well-organized, nicely presented, and has a distinct look and feel, but it is still just a web page. Google will provide easy-to-use tools for writing, editing, and so on, and it will provide free hosting of the content. Writers only need to write; we'll do the rest.

Much of the discussion in the blogosphere is about the impact Knol will have on other knowledge-oriented services like Wikipedia and Squidoo. Larry Dignan at ZDNet offers a different slant on Knol...

Google Knol is initially being portrayed as a Wikipedia killer and perhaps a threat to Yahoo Answers, but there is a key difference that worth noting. Wikipedia is a community effort. Google Knol will highlight authors. If John Doe is an expert on something he can share that knowledge through Google Knol.

That author distinction makes me wonder if Google Knol could really become more of a knowledge management application. Knowledge management software has been around forever in the enterprise, but never quite caught on en masse. The biggest reason: Employees like to hoard knowledge and don’t want to share much because they become less valuable.

For companies, however, collecting institutional knowledge is critical. If you’re a utility that has one third or more of your workforce retiring in the next two years, you better figure out how to store key information. Most of this information isn’t textbook material–it’s little day to day workarounds that make the business more efficient.

That’s why Google Knol could be interesting. Of course, not all of the content will be worthy, but Google’s approach–if it works–may be worth adopting in the enterprise somehow via an API and a filter that aggregates employee expertise.

I agree with Larry. I have been writing a lot about a concept I call, "knowledge networking". It's kind of like social networking but it's less about "who knows who" and more about "who knows what". We have enough services available, in both the consumer and business worlds, that help us with the "who knows who" problem. We don't have much available when it comes to "who knows what". Google's Knol initiative could be a good step in that direction.

Marketing and Sales in a Freemium World

I am currently consulting to a couple different start-ups (Pathworks Software and Radar Networks) and they are both planning to enter the market with a freemium type of business model. A term coined by Fred Wilson, Wikipedia defines "freemium business model" as:

The freemium business model works by offering basic services for free, while charging a premium for advanced or special features. The word freemium is a portmanteau created by combining the two aspects of the business model: free + premium. The business model has gained popularity with Web 2.0 companies

In the business world (versus the consumer world), LinkedIn is a great example of a freemium service. Users can use many of LinkedIn's features for free but if you want to take advantage of premium features, like posting a job opening, you need to pay a subscription fee.

From my perspective, the freemium model is very similar to the open source model and is an effective method for start-ups to build their user base; however, the model also forces marketing and sales organizations -- especially those who are used to enterprise selling -- to rethink how they run their functions. In particular...

• The freemium model moves the "sales funnel" into the service being offered.
• The marketing function can now be measured in a quantiative manner.
• The sales function becomes transaction oriented, rather than relationship oriented.

Let me expand on each of these points.

The "Sales Funnel" Moves Into the Service

With any sales funnel, there are multiple steps a prospect takes before becoming a paying customer. Historically, marketing was responsible for part of the funnel (generating qualified leads) and sales was responsible for part of it (closing the deal).

With a freemium offering, the service itself plays a role in the sales funnel. As users use the free version, the service must move them through the sales funnel and entice them to pay for premium features. For this to be effective, the service must include "features" that highlight the premium features.

For example, if you providing an online document management service, one of the premium features might be extra storage. If that is the case, the amount of storage a "free" user is using should always be highlighted and as the user approaches their maximum "free" allotment, visual cues should be provided that encourages the user to sign up and pay for additional storage.

The Marketing Function Can Be Measured Quantiatively

Anybody who has been in the marketing function at a technology company has heard all of the lines -- "how do you justify that marketing budget?", "you are just overhead". It goes on and on. To some extent, it is difficult to argue against some of the underlying messages. In the past, it has been very difficult to quantitatively measure the effectiveness of marketing. Sure, there are some elements that can be easily measured (direct marketing being a good example) but it is difficult to do so for many of the functions within marketing (PR is a good example).

In a freemium model, the entire sales funnel, and therefore the marketing function, can be quantifiably measured. The number of people who visit the website, the number of website visitors who signup for the free service, the number of free users who become paid users. These are all metrics that marketing can greatly effect, and should be held accountable for.

In fact, when taking this metrics-based approach to measuring marketing, I would encourage marketing executives to take a fresh look at how they organize their department. I propose there should be one person (or group) held accountable for each of the metrics.

The Sales Function Becomes Transaction Oriented

The tone of this post thus far could lead a person into thinking that the sales function is no longer needed with the freemium model. That is not the case. The purchase decision making for any service used by a group of users is still an organizational one and it still requires some prodding. I believe, however, that the freemium model dictates a difference in how the sales function should be managed.

Unlike the direct sales model where reps are selling six-figure deals into enterprises by using a relationship-based selling approach, the freemium model encourages much more of an inside sales, transaction-oriented approach. Typically in a freemium model, the size of the early, seeding transactions tend to be small and cannot justify the expenses associated with direct sales. Over time, as a company grows and starts selling larger deals, direct sales can be layered into the sales function.

Summary

The use of the freemium business model is an exciting development in the technology market. It requires a different mindset across an entire company but particularly in the marketing and sales functions. Those organizations who can adopt the new mindset effectively will be ahead of those who remain stuck in the old mindset.

Should Enterprise Software Be Sexy?

Over the weekend, Robert Scoble set off a firestorm in the blogosphere with his post, "Why enterprise software isn't sexy". To be honest, I didn't quite get his argument. But many of the responses to his post do touch on what I consider is an important issue these days.

Nick Carr of Rough Type does a good job of hitting the issue on the head. He starts with ZDNet blogger Michael Krigsman's reply to Scoble...

As an enterprise software blogger ... I feel qualified to comment on the issue: Scoble’s question is irrelevant and meaningless. Robert Scoble misses this point: unlike consumer software, where sex appeal is critical to attracting a commercially-viable audience, enterprise software has a different set of goals. Enterprise software is all about helping organizations conduct their basic business in a better, more cost-effective manner. In software jargon, it’s intended to “enable core business processes” with a high degree of reliability, security, scalability, and so on ...

When I’m at home using Twitter, a great example of cool consumer software, I want to be delighted, thrilled, entertained, and engaged. When I transfer money through my bank, which is certainly a non-sexy enterprise system, I demand the system work every time without fail. There’s a big difference between enterprise and consumer systems, a lesson I suspect Robert Scoble is about to learn.

Carr then comes back with...

I'm sorry, but I think Krigsman is the one who doesn't understand enterprise software - or at least doesn't understand what it could become. The distinction he draws between business and consumer applications is specious. Are we really to believe that making software engaging is somehow incompatible with making it reliable and secure? That's just baloney.

And...

By perpetuating a false dichotomy between the friendliness of consumer apps and the seriousness of business apps, all that Krigsman is doing is giving enterprise vendors cover for continuing to produce software that's difficult and unpleasant to use. Give Scoble credit. He's asking the right question, in his own strange way.

Nick has been receiving a lot of grief on his post, especially from people who follow the enterprise software space, like the Enterprise Irregulars crew. I was in the enterprise software space for a long time and I'm with Nick. I not only feel that there aren't any good reasons why enterprise software can't look as good as consumer software but I also feel that in the near future, enterprise vendors will have to deliver a consumer-like experience in order to be accepted by young users who grow up using consumer Web services.

Also, as I stated in a recent post, more and more business software start-ups are taking a bottoms-up approach to entering a market by enamoring users before penetrating the enterprise. When taking this approach, they have to remember that they are initially marketing to individuals, not organizations, and a compelling user experience is an important criteria for an individual when they decide to use a new service.