Digital business encompass a range of activities, processes, and technology. The content in this section explores the richness of digital transformation. 

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Marketing Optimization and Omni-channel Customer Experience

  • Topic: Digital Business
Rachel Richter, VP, Dun & Bradstreet
Rachel Richter
VP, Customer Analytics & Insights
Dun & Bradstreet
Josh Mueller, SVP, Dun & Bradstreet
Josh Mueller
SVP, Global Marketing
Dun & Bradstreet
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

How is marketing and customer experience changing in an omnichannel world? Josh Mueller, Senior Vice President of Global Marketing at Dun and Bradstreet, and Rachel Richter, Senior Vice President of Customer Analytics and Insights at Dun and Bradstreet, tell CXOTalk about the “omnichannel customer experience,” which uses data and complex analytics to identify customers’ needs and optimize delivery.

“The most important thing is really to centralize all of the amazing data that you have at your fingertips and… unify it together so that you can act on it,” Richter explains. “It really allows us to explore with more complex analytics; some of those being propensity models such as look-alike models based on historical data; or even demand estimators which really help you identify opportunities and the dollar value of different prospects. And that, then, empowers that very customized engagement, really understanding your customers and prospects.”

As SVP at Dun & Bradstreet, Mueller has global responsibility for demand generation, digital, operations, marketing technology, creative and content. His organization is pivotal to Dun & Bradstreet’s transformation to a modern company with a focus on providing an amazing customer experience and scaling demand generation.

Richter leads Customer Analytics & Insights at Dun & Bradstreet with global responsibility for predictive modeling, customer segmentation & targeting, marketing analytics, business intelligence and customer/market research.

Transcript

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. And, we’re talking about marketing and customer experience in the omnichannel world, and I’m speaking with Josh Mueller, who is Senior Vice President of Global Marketing at Dun & Bradstreet, and Rachel Richter, who is VP of Customer Analytics and Insights.

So Josh, when we talk about omnichannel customer experience, what does that mean?

Josh Mueller: Well, omnichannel customer experience is a bit of a buzzword, and people have been talking about it for several years. At its most basic level, brands and customers are interacting across a lot of different channels. They're interacting in digital. They're interacting in events. They're interacting directly with sales teams. And, historically, marketers and brands often try to optimize for a specific channel. "Omnichannel" means you're optimizing across that customer experience. You're putting yourself in the customer's lens, and you're optimizing for that, not for what you're doing as a brand.

Michael Krigsman: And, what are the foundations? How do you deliver that?

Rachel Richter: The most important thing is really to centralize all of the amazing data that you have at your fingertips and bring that all and unify it together so that you can act on it. And then, it's all about how you build more complex analytics on top of that to help you really anticipate customer needs. And, at Dun & Bradstreet, having all of this amazing data at our fingertips, it really allows us to explore with more complex analytics — some of those being propensity models such as look-alike models based on historical data; or even demand estimators, which really help you identify opportunities and the dollar value of different prospects. And that, then, empowers that very customized engagement, really understanding your customers and prospects.

Michael Krigsman: So, Rachel, I have to ask, what is a "propensity model"?

Rachel Richter: So, a propensity model really looks back at historical data and tells you what the attributes are of customers that have purchased that product historically and really hones in on the right customers and prospects to target with a certain product.

Michael Krigsman: Josh, how does this work across channels?

Josh Mueller: Yeah, it’s really difficult to do. I’ll start with that. This doesn’t happen overnight, and it takes a lot of discipline, both from the marketing organization as well as the company holistically. A lot of companies make the mistake of going out and buying a lot of technology. [And they think it] will solve these problems for them and then they’ll be able to have omnichannel customer experiences. It doesn’t start with technology. It starts with a really good marketing strategy and knowing what you’re trying to accomplish. And then, it’s your data strategy. It’s actually being able to have consistent data across all of your systems and being able to truly have that 360-degree view.

And then, that's when you leverage marketing technology, which is amazing and it's better than it has ever been. But, without those two things in place — your marketing strategy and your data strategy — what you're trying to do from a marketing technology perspective will fall short.

Michael Krigsman: And how do you do that? How do you connect that data so that you’re managing across channels?

Rachel Richter: Yeah, so I will say we are very lucky, both of us, to work at a data and analytics company like Dun & Bradstreet, right? So, we have amazing, amazing data at our fingertips, right? And then, it allows us to then go study, and go test and learn, and bring that data together, right? So, we build ourselves kind of a centralized data warehouse or data lake like most best-in-class companies do. The advantage that we tend to have at Dun & Bradstreet is we almost get to be a guinea pig and really drink our own champagne for the newest data analytics

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. And, we’re talking about marketing and customer experience in the omnichannel world, and I’m speaking with Josh Mueller, who is Senior Vice President of Global Marketing at Dun & Bradstreet, and Rachel Richter, who is VP of Customer Analytics and Insights.

So Josh, when we talk about omnichannel customer experience, what does that mean?

Josh Mueller: Well, omnichannel customer experience is a bit of a buzzword, and people have been talking about it for several years. At its most basic level, brands and customers are interacting across a lot of different channels. They're interacting in digital. They're interacting in events. They're interacting directly with sales teams. And, historically, marketers and brands often try to optimize for a specific channel. "Omnichannel" means you're optimizing across that customer experience. You're putting yourself in the customer's lens, and you're optimizing for that, not for what you're doing as a brand.

Michael Krigsman: And, what are the foundations? How do you deliver that?

Rachel Richter: The most important thing is really to centralize all of the amazing data that you have at your fingertips and bring that all and unify it together so that you can act on it. And then, it's all about how you build more complex analytics on top of that to help you really anticipate customer needs. And, at Dun & Bradstreet, having all of this amazing data at our fingertips, it really allows us to explore with more complex analytics — some of those being propensity models such as look-alike models based on historical data; or even demand estimators, which really help you identify opportunities and the dollar value of different prospects. And that, then, empowers that very customized engagement, really understanding your customers and prospects.

Michael Krigsman: So, Rachel, I have to ask, what is a "propensity model"?

Rachel Richter: So, a propensity model really looks back at historical data and tells you what the attributes are of customers that have purchased that product historically and really hones in on the right customers and prospects to target with a certain product.

Michael Krigsman: Josh, how does this work across channels?

Josh Mueller: Yeah, it’s really difficult to do. I’ll start with that. This doesn’t happen overnight, and it takes a lot of discipline, both from the marketing organization as well as the company holistically. A lot of companies make the mistake of going out and buying a lot of technology. [And they think it] will solve these problems for them and then they’ll be able to have omnichannel customer experiences. It doesn’t start with technology. It starts with a really good marketing strategy and knowing what you’re trying to accomplish. And then, it’s your data strategy. It’s actually being able to have consistent data across all of your systems and being able to truly have that 360-degree view.

And then, that's when you leverage marketing technology, which is amazing and it's better than it has ever been. But, without those two things in place — your marketing strategy and your data strategy — what you're trying to do from a marketing technology perspective will fall short.

Michael Krigsman: And how do you do that? How do you connect that data so that you’re managing across channels?

Rachel Richter: Yeah, so I will say we are very lucky, both of us, to work at a data and analytics company like Dun & Bradstreet, right? So, we have amazing, amazing data at our fingertips, right? And then, it allows us to then go study, and go test and learn, and bring that data together, right? So, we build ourselves kind of a centralized data warehouse or data lake like most best-in-class companies do. The advantage that we tend to have at Dun & Bradstreet is we almost get to be a guinea pig and really drink our own champagne for the newest data analytics that we’re bringing to market; to test it and learn it on ourselves.

Michael Krigsman: And Josh, finally, what is your considered wisdom on getting this right?

Josh Mueller: It's 1) Being really patient because this is a big evolution for many companies and it frankly took us a lot of time. So, the words of wisdom are, "Try not to boil the ocean at once." It's, "Be very disciplined on where you want to start." So, we started with a single persona, a single customer set. And so, we're going to do it really well for this particular area. We started with a strategy: here's what we want marketing to look like in this area for the next year; then we figured out how we would ingest data and connect it; and then, we built our plans behind it — "What is our digital strategy? What's our outbound strategy? What's our event strategy?" against that. We started slowly and then, we were able to scale from there.

Rachel Richter: And I would say: be open to new challenges; be willing to test and learn. It is easy to look at all of the new data sources, the types of analytics that are best in class, and get stuck. And, it’s better to just get started: to explore your data; to test and learn; to think of new use cases. And even if certain things don’t work, just get out there and learn, and target, and test different channels, and see what works best for your company.

Michael Krigsman: Okay! I love it! Marketing and customer experience in an omnichannel world. Josh Mueller and Rachel Richter, thanks so much for speaking with me today!

BroadSoft Connections 2017: Summary and Key Themes

  • Topic: Digital Business
Taher Behbehani, Chief Digital and Marketing Officer, BroadSoft
Taher Behbehani
Chief Digital & Marketing Officer
BroadSoft
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

BroadSoft is a premier company in the unified communications market, with contact center and collaboration solutions. At its recent customer event, the company announced that it had entered into an agreement to be acquired by Cisco for approximately $2 billionn. In this video conversation with CXOTalk’s Michael Krigsman, BroadSoft’s Chief Digital & Marketing Officer, Taher Behbehani, summarizes key themes and explains why user experience and customer experience are so important.

Taher Behbehani is an entrepreneur and investor in firms driving digital disruption. As CDMO at BroadSoft, he is responsible for the company's digital and marketing efforts.

Transcript

Michael Krigsman: I’m Michael Krigsman, Industry Analyst and the Host of CXOTalk. We’re here at BroadSoft Connections, 2017, and I’m speaking with Taher Behbehani who is the Chief Digital & Marketing Officer of BroadSoft. Taher, how are you?

Taher Behbehani: Good, thank you. Nice to see you!

Michael Krigsman: Tell us about the key themes at this event!

Taher Behbehani: Absolutely! The key theme of the Events Connections 2017, is “Re-think innovation.” We need to really re-think how we innovate, not across just technology, but also our processes. How we take products to market, how much time it takes, how we manage to change the customer experience throughout that process. So, basically the idea is that we have all the technology we need.Let’s actually look at the innovative processes that we have to spend effort and energy on in taking products to the market.

Michael Krigsman: So, why is user experience, customer experience, so important today?

Taher Behbehani: Well, look, in any industry nowadays, everything around us, customer experience is the key differentiation factor. If you are using an application or device or a system in your work, you need to be looking forward to using it. Otherwise, frankly, you’ll ignore it. And our customers tell us. Our service providers tell us. And we want to make sure we create an experience that’s very close to, or better than, some of the consumer experience you get.

Michael Krigsman: So, what are the implications of this, as they’re developing new products and new services?

Taher Behbehani: Right. So, our philosophy is open-platform: APIs, SDKs — interfaces that you can connect to the devices, to a platform, then develop applications and services around ti. So, that by default, means that the developers that we have, whether they’re software or ecosystem, they need to also adjust and improve the experience by connecting to our platform, which we call, by the way, BroadSoft Business. And, the third part of it is whatever we do together, whatever we develop together, we need to make sure that the new experiences and the improvements or additions or enhancements — whatever you want to call them — they’re actually driven to market, presented to the marketplace much faster. That the cycles of innovation, the time to market, which is the main message, is actually much shorter for us as well.

Michael Krigsman: And this is all being driven by consumer expectations?

Taher Behbehani: Well, you know I think what we do is, is we compare ourselves and we benchmark against the best in-class consumer experience. The consumer side now spills over very much into the business side because we are the same people. We just happen to work part of the day.

Michael Krigsman: Where does mobility fit??

Taher Behbehani: Massively. Mobility is everything. I mean, I think that, that the discussion that people have usually about “mobile-first” frankly is no longer actually even should be used. It’s a cliché. I mean everybody is mobile. So, there is no mobile-first, -second, or -third. It’s just mobile. We call it unified communications.

Michael Krigsman: Now, on the enterprise side, what are some of the technology, as well as the organizational or process challenges and opportunities that they need to think about??

Taher Behbehani: The implications are actually quite severe because we’re being hard on ourselves and somewhat controversial. And that’s because our service-provider partners tell us to do so. We’re telling people, “Listen, this is taking too long.” Relying on existing systems which are very convoluted and require a lot of time to wire and re-wire and take a long time to create, to take our innovation into the marketplace is not acceptable. So, we’re saying, “We gotta change.” We gotta change the OSS, the provisioning, the onboarding, all of the billing systems and somehow make it much more streamline.

Michael Krigsman:

Michael Krigsman: I’m Michael Krigsman, Industry Analyst and the Host of CXOTalk. We’re here at BroadSoft Connections, 2017, and I’m speaking with Taher Behbehani who is the Chief Digital & Marketing Officer of BroadSoft. Taher, how are you?

Taher Behbehani: Good, thank you. Nice to see you!

Michael Krigsman: Tell us about the key themes at this event!

Taher Behbehani: Absolutely! The key theme of the Events Connections 2017, is “Re-think innovation.” We need to really re-think how we innovate, not across just technology, but also our processes. How we take products to market, how much time it takes, how we manage to change the customer experience throughout that process. So, basically the idea is that we have all the technology we need.Let’s actually look at the innovative processes that we have to spend effort and energy on in taking products to the market.

Michael Krigsman: So, why is user experience, customer experience, so important today?

Taher Behbehani: Well, look, in any industry nowadays, everything around us, customer experience is the key differentiation factor. If you are using an application or device or a system in your work, you need to be looking forward to using it. Otherwise, frankly, you’ll ignore it. And our customers tell us. Our service providers tell us. And we want to make sure we create an experience that’s very close to, or better than, some of the consumer experience you get.

Michael Krigsman: So, what are the implications of this, as they’re developing new products and new services?

Taher Behbehani: Right. So, our philosophy is open-platform: APIs, SDKs — interfaces that you can connect to the devices, to a platform, then develop applications and services around ti. So, that by default, means that the developers that we have, whether they’re software or ecosystem, they need to also adjust and improve the experience by connecting to our platform, which we call, by the way, BroadSoft Business. And, the third part of it is whatever we do together, whatever we develop together, we need to make sure that the new experiences and the improvements or additions or enhancements — whatever you want to call them — they’re actually driven to market, presented to the marketplace much faster. That the cycles of innovation, the time to market, which is the main message, is actually much shorter for us as well.

Michael Krigsman: And this is all being driven by consumer expectations?

Taher Behbehani: Well, you know I think what we do is, is we compare ourselves and we benchmark against the best in-class consumer experience. The consumer side now spills over very much into the business side because we are the same people. We just happen to work part of the day.

Michael Krigsman: Where does mobility fit??

Taher Behbehani: Massively. Mobility is everything. I mean, I think that, that the discussion that people have usually about “mobile-first” frankly is no longer actually even should be used. It’s a cliché. I mean everybody is mobile. So, there is no mobile-first, -second, or -third. It’s just mobile. We call it unified communications.

Michael Krigsman: Now, on the enterprise side, what are some of the technology, as well as the organizational or process challenges and opportunities that they need to think about??

Taher Behbehani: The implications are actually quite severe because we’re being hard on ourselves and somewhat controversial. And that’s because our service-provider partners tell us to do so. We’re telling people, “Listen, this is taking too long.” Relying on existing systems which are very convoluted and require a lot of time to wire and re-wire and take a long time to create, to take our innovation into the marketplace is not acceptable. So, we’re saying, “We gotta change.” We gotta change the OSS, the provisioning, the onboarding, all of the billing systems and somehow make it much more streamline.

Michael Krigsman: Simplifying!

Taher Behbehani: Simplifying! And, in fact, exactly right. What we have done on our side, in partnership with many of the service providers, we develop a platform, a system, which we call [BroadCloud] Channel Support System (CSS) that has all of that. So, if you are a partner of us and you deploy CSS, you can then roll out systems faster and services and then the enterprise! The CIO can also access it and make sure they provision within their own organization more easily.

Michael Krigsman: Where is this technology going during the next few years?

Taher Behbehani: I think that we are just at the beginning. As I said, unified and communications — interesting term. I think we are just at the beginning. We… you see a glimpse of the future. You see products such as Hub or RUC-01 or BroadSoft Business Platforms that integrate different experiences, tying to the workflow of a business and essentially have intelligence now built into it to be able to use data and my behavior — my sort of contextual data — to make my life easier at work. So, I think you’ll see a great deal of change across all of this and I think there will be, frankly, a tipping point sometime down the road by combining these correctly and putting it together so that everybody will say, “Well I can’t live without this stuff… I gotta have it”.  And, I think we’ll probably get there in the next 3-5 years.

Michael Krigsman: Okay! Taher Behbehani, thank you so much!

Taher Behbehani: Thank you! Appreciate it.

Ziff Davis: Behind the Scenes at a Digital Media Brand

  • Episode: 263
  • |
  • Topic: Digital Business
Anurag Harsh, SVP and Founding Executive, Ziff Davis
Anurag Harsh
Chief Marketing Officer
IPsoft
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

Digital media and publishing is a tough industry, with changing business models and competition from large and small players. Learn how a seasoned entrepreneur helped create one of the large digital media and publishing brands in the world.

Digital media guru Anurag Harsh was recently voted as LinkedIn’s #1 Voice in Technology. He is a founding member of the executive team at Ziff Davis for the past 7.5 years and has orchestrated its growth from a small privately held company into one of the world’s largest public digital media companies with the group's revenues exceeding $1 Billion at a $3.5B Market Cap and 200% growth in stock price.

Anurag is the author of 7 business books including three Amazon bestsellers, has published over 400 business articles for Huffpost, FORBES and other publishers, is a Wharton & MIT alum and has performed two sold out solo concerts at the Carnegie Hall as a vocalist. 

Transcript

Michael Krigsman: Digital media is everywhere. It surrounds us, and most of us have no idea of the impact of digital media on our lives; on social media on Facebook, on Twitter; and the amount of money that's being spent. Today, on Episode 263 of CxOTalk, we are exploring the secret life of digital media.

I want to say thank you to Livestream before we go further. Go to Livestream.com/CxOTalk, and they will give you a discount on their plans. Livestream supplies our video streaming infrastructure, and they're great. They're supporters of CxOTalk and, by George, that's a good enough reason to go check it out, Livestream.com/CxOTalk.

I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so thrilled to welcome back a repeat guest, Anurag Harsh, who is a top executive at Ziff Davis. Ziff Davis is one of the very largest media publishers, technical media publishers, in the world, on the face of the planet today. Anurag helped build that business. And so without further ado, Anurag Harsh, how are you doing?

Anurag Harsh: Hi, Michael. Thanks for having me. I really appreciate the opportunity.

Michael Krigsman: Anurag, it's great to see you again. Please tell us about Ziff Davis.

Anurag Harsh: Sure. Ziff Davis is a subsidiary of J2 Global. We're a leading global digital media company operating in four verticals: technology, gaming, healthcare, and shopping. Our brands are PCMag, Speedtest, ExtremeTech, Geek, Toolbox, IGN, Everyday Health, What to Expect, AskMen, Offers.com, TechBargains, emedia, and Salesify. What we do is we produce and distribute premium content across multiple platforms and devices. We deliver advertising, performance marketing, data services, and licensing solutions to thousands of clients worldwide. We publish in 25 languages across 114 countries.

Michael Krigsman: Okay. Well, we are going to explore a lot of these topics, but let's begin, Anurag. Share with us what is the state of digital media, digital publishing today? What are the key trends that you're seeing that we need to know about?

Anurag Harsh: Well, digital media and the advertising landscape is staggeringly complex. Let's start with some of the misnomers that people have about the landscape. Smartphone growth is slowing. Everybody thinks that it's all about mobile and smartphones. Therefore, a lot of the digital media publishers are publishing to smartphones. Of course, they should do that, but what they don't realize is that global smartphone shipments actually just grew 3% this year compared to 10% last year. That's something that's important. In order to build a business, a digital media business, you need to understand the landscape and who your target customer is and where they're actually browsing.

The other thing that is important to understand is the total Internet users in the world have only grown 10% this year. But guess what. That's flat year-over-year. Last year it was also 10%. Although it's promising because it's growing 10%, but it grew about the same as last year. Essentially, year-over-year, it's flat, so it's not increasing that much.

The other thing that's happening, and you can see that in iPhone sales because you're targeting Android and iPhone devices when you're developing your content, smartphones are actually hitting saturation. Smartphone shipment growth has dramatically declined in the last couple years, and it's only 3% this year. What that indicates to me is that almost everyone who really wants or needs a smartphone has one, and so people are not really upgrading as much.

The other thing that's happening when you think about the Internet usage growth is, at least in North America, adults are spending a lot of time every day, as we all know, about five or six hours a day, on the Internet. That's about 3 hours per day on just mobile compared to maybe it was like 45 or 50 minutes a few years ago. What's interesting here is this, because, as your digital media publishers, you're

Michael Krigsman: Digital media is everywhere. It surrounds us, and most of us have no idea of the impact of digital media on our lives; on social media on Facebook, on Twitter; and the amount of money that's being spent. Today, on Episode 263 of CxOTalk, we are exploring the secret life of digital media.

I want to say thank you to Livestream before we go further. Go to Livestream.com/CxOTalk, and they will give you a discount on their plans. Livestream supplies our video streaming infrastructure, and they're great. They're supporters of CxOTalk and, by George, that's a good enough reason to go check it out, Livestream.com/CxOTalk.

I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'm so thrilled to welcome back a repeat guest, Anurag Harsh, who is a top executive at Ziff Davis. Ziff Davis is one of the very largest media publishers, technical media publishers, in the world, on the face of the planet today. Anurag helped build that business. And so without further ado, Anurag Harsh, how are you doing?

Anurag Harsh: Hi, Michael. Thanks for having me. I really appreciate the opportunity.

Michael Krigsman: Anurag, it's great to see you again. Please tell us about Ziff Davis.

Anurag Harsh: Sure. Ziff Davis is a subsidiary of J2 Global. We're a leading global digital media company operating in four verticals: technology, gaming, healthcare, and shopping. Our brands are PCMag, Speedtest, ExtremeTech, Geek, Toolbox, IGN, Everyday Health, What to Expect, AskMen, Offers.com, TechBargains, emedia, and Salesify. What we do is we produce and distribute premium content across multiple platforms and devices. We deliver advertising, performance marketing, data services, and licensing solutions to thousands of clients worldwide. We publish in 25 languages across 114 countries.

Michael Krigsman: Okay. Well, we are going to explore a lot of these topics, but let's begin, Anurag. Share with us what is the state of digital media, digital publishing today? What are the key trends that you're seeing that we need to know about?

Anurag Harsh: Well, digital media and the advertising landscape is staggeringly complex. Let's start with some of the misnomers that people have about the landscape. Smartphone growth is slowing. Everybody thinks that it's all about mobile and smartphones. Therefore, a lot of the digital media publishers are publishing to smartphones. Of course, they should do that, but what they don't realize is that global smartphone shipments actually just grew 3% this year compared to 10% last year. That's something that's important. In order to build a business, a digital media business, you need to understand the landscape and who your target customer is and where they're actually browsing.

The other thing that is important to understand is the total Internet users in the world have only grown 10% this year. But guess what. That's flat year-over-year. Last year it was also 10%. Although it's promising because it's growing 10%, but it grew about the same as last year. Essentially, year-over-year, it's flat, so it's not increasing that much.

The other thing that's happening, and you can see that in iPhone sales because you're targeting Android and iPhone devices when you're developing your content, smartphones are actually hitting saturation. Smartphone shipment growth has dramatically declined in the last couple years, and it's only 3% this year. What that indicates to me is that almost everyone who really wants or needs a smartphone has one, and so people are not really upgrading as much.

The other thing that's happening when you think about the Internet usage growth is, at least in North America, adults are spending a lot of time every day, as we all know, about five or six hours a day, on the Internet. That's about 3 hours per day on just mobile compared to maybe it was like 45 or 50 minutes a few years ago. What's interesting here is this, because, as your digital media publishers, you're thinking about publishing content. Desktop usage--and this is an important point--has only declined slightly, indicating it's more of an addition of mobile than a shift to mobile. This is the key point. Desktop usage has declined slightly. It's not like it's just going away, and so that's something that people need to think about that it's the addition of mobile than a shift to mobile.

The other thing that's happening is the online total advertising spend because all the digital media business is fundamentally advertising driven, different forms of advertising. It could be commerce, it could be display, it could be affiliate, but it's all bundled under advertising. The total online ad spend, it's growing steadily. Mobile obviously has now overtaken the desktop in ad dollars, just as it has with usage and time. That's an important thing.

But what's going on is people are spending a third of their time--their media time, as I'd like to call it--on mobile. But what's going on is that, for whatever reason, the brands are not spending as much on mobile. It only receives a fifth of the overall ad spend. People are spending, let's say, 30% of the time on mobile device as media time just browsing content.

Michael Krigsman: Right.

Anurag Harsh: But they're only seeing 20% of the ad spend. What that tells me is there's a massive gap, and this gap is about $16 billion of opportunity for essentially brands to have more mobile ads on the Internet.

The other thing that's happening is--and we all know this, but I'm going to say it anyway--over the next several months, and it's probably already happening right now, the dollars that are spent on Internet ads are starting to eclipse dollars that are spent on television. What that tells me is it's indicating a huge opportunity for mobile products to soak up the shift. These are some of the things that are happening.

There are quite a few other things that are happening in the world of digital. This is absolutely true. There's the ad duopoly, which means Google and Facebook control 85% of the growth in online ads, and their share is increasing every year. As more data and impressions keep helping these companies improve their targeting, it really is becoming very, very hard, really impossible. It's an existential problem, I call it, and we're going to talk about this a little more, eventually.

It's becoming harder and harder for other platforms, and really any other publisher, to compete. That's the thing. There's this ad duopoly, and it's not going to go away. It's actually going to get even worse.

The other aspect of that is this whole thing called ad blocking. It's skyrocketing. People don't want to see ads, which is the glue and the oil of the Internet that powers all of digital media. In developing markets where data costs can be high, what users are doing is they're increasingly blocking ads whenever they can. Nearly 400 million people around the world are blocking mobile ads, and that's a problem.

Big platforms like Facebook, Google, Snap, they're responding to advertisers seeking to prove return on investment on their ad spend by improving ad targeting relevance, the ads that people are going to see--hopefully they don't block these ads because the ads are more relevant to what they want to see--and then measuring, the measurement of how these ads work. Targeting has become a huge thing.

The other thing that's going on is this whole aspect of driving purchases, like commerce. Facebook and Google, the big platforms are using increasing willingness, people's willingness to buy online to earn revenue through ads for products. Digital media publishers, when you're thinking about writing content, you've got to think about what the users want to do, which is essentially to purchase, transact, learn about products, and then be able to transact online.

The other thing, the other side of this that's interesting is this shift towards what I call foot traffic, which is, a digital media publisher--Google, Nextdoor, Foursquare, Uber--the location of their ads, they're starting to appear now. That's the trend in the industry. When you're actually publishing ads and content for a brand or for a publisher, think about users near a store. How can you affect the influence of purchasers so that they read something on your website and they actually go to a store and make a purchase? Those kind of things are happening.

In fact, it is even more interesting because what Google is doing is now starting to target by your images. Following Google's success with Adwords, based on what you type--that search, that's Google's business--Snap, for example, is now succeeding with ads based on the images that you share. It's really interesting to see that dynamic that's taking place.

Ads are repurposed from content shared by users on social media. User- or influencer-generated content are making great ads. It's not ads that are produced by agencies and publishers or brands. It's really ads that are repurposed from content that's shared by users or social media influencers. They perform better than content that's created by brands.

The other thing that's going on is image recognition. This is a big thing. Now you have this thing with iPhone X facial recognition. The image recognition and camera apps, what they're doing is they're allowing ad platforms to know what you're doing or what you're looking at, let's say, and they're able to serve more ads. These are ads based on what you're looking at. It's all about trying to figure out what you're doing and what your interests are. That's the game. That's the game of digital media.

The other thing that you may think about is not just vision. It's actually also voice. Voice recognition accuracy has improved. What's interesting or people don't realize is 20% of all mobile searches now are made with voice. Voice devices like, for example, Amazon Echo is exploding in popularity and breadth with--I don't know--10 million or 11 million Echoes are already installed in the United States. Those are some of the dynamics.

The customer service, when you think about it from that perspective, … (indiscernible, 00:10:50) e-commerce player, the customer service is actually shifting to chat. That's a rapid rise in the percentage of customer service conversations that are happening via real-time online chatting instead of phones. As users demand faster response times and wider access, there's a direct-to-consumer effort that's happening.

Michael Krigsman: Right.

Anurag Harsh: People are focusing on community and content marketing or a narrow selection of great products, these new brands, which are disrupting these old industries in technology, pet care, beauty, [and ] shoes. E-commerce is happening, so a lot of the publishers are starting to get into e-commerce.  Ziff Davis, e-commerce is a big play for us, and we're a big affiliate for Amazon, for example.

Think about Amazon. Amazon Prime and other online retailers--I mean it's not just Amazon--Best Buy, for example, they've caused the package and parcel shipping volume to grow 9% this year. That's phenomenal, right? It's not just shipping of products, but when you're developing content as a publisher, think about things like delivery services. Delivery services, like food delivery, that's skyrocketing. They've grown the percentage of revenue from delivery for one restaurant….

Michael Krigsman: Anurag, I hate to interrupt. Given all of this, for people who are trying to publish, whether it's media companies or the CMO inside a corporation, what does this mean? What are the practical implications of this?

Anurag Harsh: Well, when you're trying to publish something, you've got understand what you're publishing and why you are publishing to. What is happening with the consumer that will read your articles or consume your product? Think about it this way: In the milliseconds it takes for a Web page to load, dozens of companies you probably never heard of are bidding in a furious auction to serve you an ad. That's the business of digital media. That's just one area. That's called programmatic advertising.

Digital advertising is doing great, but the fact is that when you try to publish, you have to understand that it's a fragmented ecosystem you're publishing to, and it's a very convoluted supply chain. There are issues that now plague that sector, and I'm going to take you through all of those issues one-by-one.

As you think about publishing, you have to address these issues. I can offer some resolutions as well. Obviously, I'm not Yoda, and I can't offer everything and I don't necessarily have answers to everything, but I could tell you some of the things we've been doing. These issues have implications for pretty much the entire industry, all the way from marketers to agencies, tech intermediaries to publishers and, of course, to us consumers.

What I'm going to do is I'm going to force rank these issues from the standpoint of their impact on the digital ecosystem to you as a publisher, let's say, although digital media is not necessarily just about publishing. It is ad tech, and there's 700, 800 companies in the middle.  I'm going to rank this from [the] importance of, let's say, serious issues, the critical issues, to what I call existential issues.

Michael Krigsman: Existential issues, okay. [Laughter]

Anurag Harsh: Oh, yeah. Oh, yeah. Oh, yeah.

Michael Krigsman: [Laughter]

Anurag Harsh: I mean, look, and I'll talk about them. The Facebook/Google monopoly or duopoly, that's an existential issue. When 85% of advertising is going to just two players, that means that the others don't necessarily matter. The other 15% has maybe 1,000 companies, and we're just feeding it; we're the bottom feeder.

Anyway, let's start with it because that's an existential issue. There's a reason why publishers are falling of the line. The first four issues are either between constituents, I call them transparency, header bidding, and I'll talk about what "these" are, and they're universal problems that will eventually get solved via technology to consolidation, things like measurement or latency.  A big issue is the privacy, you know, tracking.  That's a big one with consumer groups, especially in Europe.

Let's stick to North America. Let's start with transparency. When you're publishing content, think about these things in your head. Think about the issues of transparency, issues of measurement, issues of latency, things like header bidding when you're making money, privacy tracking, viewability, fraud, ad blocking, the issue of walled gardens, which is what Apple has done, the issue of fragmentation. Let's talk about the critical issues.

The first issue is viewability. Viewability is an online advertising metric. Basically, what it is, it's aiming to track only the impressions. These are ad impressions that can actually be seen by users. For example, if an ad is loaded at the bottom of a Web page, but a user doesn't scroll down far enough to see it, that impression would basically be deemed not viewable. Viewability is designed to let advertisers pay only for the ads that users could possibly see.

Michael Krigsman: Sure. In an honest system, that's what you want.

Anurag Harsh: Right. Exactly. I'm actually coming to that now. To assess the impact of viewability with fraud and ad blocking, consider the lifecycle of a media impression, this little ad impression. Every load of a Web page or video creates an ad opportunity. However, the ad blocking, which is now estimated at over 22%, I think, in North America, and is higher in other countries, prevents ads from being served to a person or consumer. Now, of the ads that are served, some are seen by bots. These are the machines that are recording fraudulent impressions. Another portion is delivered to humans, but not seen. Think about the profundity of that. Whether an ad is viewable or not depends on the viewability standards that vary by platform, and there are no common standards.

That's the other problem. When you're actually developing content and you want advertisers on it, and you want basically the content to be seen, everything is different. For example, YouTube counts 30 seconds as a view. Facebook is three seconds. Snapchat is one second. Of the ads actually viewed, a very small portion of these instigates engagement by consumers. An even smaller portion results in a conversion. These two last elements are primarily relevant for direct response advertising, whereas the brand advertising's objective is to help build demand generation or preference, over time, and may benefit from an impression alone. If you analyze these issues from an economic perspective, there is significant value leakage in digital media. That's half the problem.

Marketers, they lost value. It is the sum of fraud and non-viewable impressions. Now, in both instances, they paid for an ad, and that was never seen by a potential consumer. Publishers, on the other hand, lose even more. They lose the value from both fraud and ad blocking. While I don't purport to have solutions, as I said, to all of these issues, I would suggest that whatever solutions are applied be done so with the consideration of the principles of the marketing equation: the marketer and the consumer.

Ad blocking, which is a seminal issue in this industry, ad blocking, in particular, I believe that the best way to prevent further proliferation of such ad blocking software downloads is to create a better consumer experience. I can't stress this enough. While I sympathize with the publishers' predicament and value the economic construct that supports journalism, forcing the consumer's hand with, honestly, draconian measures are not the way to go.

Consumer choice is here to stay. It's not going away. The trend towards performance metrics in advertising serves to mitigate some of these issues. When marketers are paying for business outcomes and not proxies like impressions, it alleviates many ills from measurement to fraud. As a digital media company, think about those things. If the marketer is not paying based on impressions, it's irrelevant that impressions are not seen. This is….

Michael Krigsman: How do we do this? Anurag, yes, of course, but how do we get to the point? What are the kind of relationships, deals, metrics that marketers can use to pay, therefore, for business outcomes rather than just views?

Anurag Harsh: Facebook is actually starting to do this a little bit. Let me lay the landscape out in terms of how Facebook is doing it compared to how Google is doing it compared to how Yahoo does it.  Facebook is doing a very good job of this. It's a CPM model. Companies that are deploying these models are essentially seeing higher rates of growth.

In performance advertising, think about it from this perspective. Think about if you draw a chart. On the left side you have the Y-axis. On the Y-axis you have scale. On the X-axis you have, let's say, automation. I'm almost doing it in my head right now. You have this arrow that's sort of going up. Right at the bottom, which is low automation, low scale, are companies like Yahoo. I'm not kicking Yahoo. I'm just saying it's just how it is. Those are CPM-based. It's cost per thousand. It's just good old advertising, you know, spots and dots.

Then somewhere in the middle is Google. Google is sort of midlevel automation and, I would say, a good amount of scale. It's midlevel scale. That's a CPC. It's cost per click. Hey, you're going to click on something, and then if you go there and it results in a transaction, then that's fantastic.

The problem is that you've got to click on something. If the viewability is low, if it's bots, if it's fraud, or there's ad blocking, then what are you going to click on? The human is not even seeing it. The CPC model is also sort of iffy.

The Facebook model is an interesting model. It just takes away all of this.  Facebook is very high on the automation axis, and it's very high on the scale axis. That's a CPA model. It's all CPA. It's cost per acquisition. Nobody pays Facebook unless it performs.

Think about doing CPA-based advertising, just the way it works. That could become a commerce play as well because now you have content that you're actually writing that will allow somebody to go to the brand's website and maybe convert there because you educated them enough on your website. You brought them … (indiscernible, 00:22:01) little funnel.  You take them to the advertiser's website, they convert over there, and you get a piece of that pie. Those are important things.

There are other issues, like the walled garden, which we talked about. That relates to this Google/Facebook monopoly and the reason that CPC and CPA are the names of digital advertising and digital media now. Pretty much the only guys who are doing it correctly, and even Google is going up the food chain now into the Facebook territory now with the whole CPA model, is the duopoly. It's just those two guys, and that's why they're getting 80% to 90% of the entire revenue and investment.

Think about the walled gardens of content from the '90s. What Facebook and Google have done--and this is learning, this is what the other digital media publishers need to learn--Facebook and Google have put up walled gardens of data. The walled gardens are no surprise because obviously they have tremendous first-party data assets and reach, which enable them to effectively target consumers and deliver high ROI to advertisers.

What they're doing is they're extending this advantage across third-party apps. For publishers, they should consider doing that as well. These are third-party apps and sites to further -- to further their dominance with the additional benefit of not degrading--this is important--their owned and operated properties with more ads. A lot of the publishers like … (indiscernible, 00:23:24) New York Times, or even Ziff Davis are starting to do things like that or should do more of that.

Think about Google. What has Google done? It's not … (indiscernible, 00:23:34). Google has DoubleClick. It also has AdMob, which are the extensions. Facebook has Facebook -- we call it FAN. It's Facebook Audience Network. It extends it to that. That way they keep Facebook clean. It has Atlas by Facebook. A lot of people don't know that. When you place an ad it goes there as well. It has LiveRail, which is another extension.

Obviously, this begs the question; will other companies with significant first-party data, large publishers for example, which are not making a lot of money and are pretty low on the EBITDA margin as well, will these other publishers and other companies join Facebook and Google as a third walled garden? Now, this is interesting. With a sizable subscriber base and recent acquisitions, everybody is saying Verizon, which now owns AOL, Millennial Media, HuffPost, and all of that, Yahoo, may be a likely candidate. To date, I think this strategy has been extremely effective for Facebook and Google, but not necessarily for everybody else. There's a learning lesson there. I frankly think that Amazon is going to be the next third wall, and it's just a matter of when. It's a $5 billion advertising business for them, and it's just a matter of them deciding that they want to do that.

Now, a recent analyst study, as I said, suggests that the combined share of all incremental ad spend has exceeded 85%. Now, it's a frightening figure, honestly, for pretty much everybody else, all the thousands of companies that are vying for the remainder. That's why, Michael, I call this an existential issue.

Finally - finally, when you think about it from a digital media publishing perspective or just a digital media company perspective, there is this issue of fragmentation. This is important. It's a condition that is really unsustainable for both the principals and the intermediaries. Let me explain that. Marketers and publishers--two ends of the spectrum--struggle with the complexity caused by the myriad of point solutions in the industry. There are too many companies in the middle trying to take 10%, 5%, 15%. I mean it is horrible. For these intermediaries, it's a constant challenge to differentiate and grow with so much competition, which has led to what I call a pullback in venture funding. What the industry is begging is consolidation.

Now, these issues are major issues, but obviously some of them (indiscernible, 00:26:07) more attention, such as header bidding, for example, is a big thing. I'll explain what that is. In fact, not just header bidding. I would like to add what I call adverse context into this list. It's a culmination of what I call fake news and brand safety issues into this mix, which is a big story this year, as obviously everybody knows. What one could initially dismiss is a simple hack. Header bidding has turned out to be a lot more. It's really fundamentally changing the economics and relationships across the programmatic ecosystem in digital media, and it's a major disruptive force.

This is what header bidding is. Some people call it advanced bidding or pre-bidding. It's an advanced programmatic technique wherein publishers--these guys who are writing all this content--offer inventory to multiple ad exchanges simultaneously before making a call to the ad servers. The idea is that by letting multiple demand sources bid on the same inventory at the same time, the publishers increase their yield and they make more money.

See, for publishers, true programmatic efficiency is a bit like alien life. It's probably out there, but nobody has actually seen it. Instead, publishers, to manage their programmatic yield thus far, what they do is they daisy chain it. It's a waterfall structure. The publishers offer impressions in one sales channel. The buyers are not buying there. They push them down to another, less valuable channels, until someone makes a bid.

Now, the system works, but it's highly fractured and it's, frankly, inherently inefficient. Publishers say the system leaves money on the table. You don't want money on the table. Net-net, I think header bidding is a good thing. A lot of the publishers in the digital media ecosystem should adopt it. It accelerates the availability of high-quality inventory that will drive higher CPMs. The challenging aspect of header bidding--you know there's always that--is the increased competition and tighter economics, which I believe will hasten consolidation in the sector.

Now, the other thing, when you're thinking about publishing content, is privacy is an issue. It is an issue. Let me highlight that a little bit. There's this thing called General Data Protection Regulation. It's called GDPR, which is essentially European. It's going to enter North America at some point. It's a European data protection regulation that'll go into effect in 2018.

GDPR, mark my words, will have a material impact on how companies manage consumer data. It's predicated to have -- I would say 50% of the companies will be under-prepared for this profound shift. Earlier on, I mean a few minutes ago I talked about this lifecycle of the media impression, which is really to highlight the challenges of fraud, unviewable inventory, and ad blocking. Now marketers are taking a stand and demanding that we see changes to these issues. The marketers are doing it, so it's no surprise because viewability-in standards are very inconsistent across the major platforms, as I said.

Now there's this company in our industry called Media Rating Council (MRC). They have basically said--because video is huge now, because you're a publisher, you're producing video--video viewability standards right now desktop, a good old computer, is 50% in view at two seconds, and mobile is 50% in view at two seconds, so it's consistent. This is MRC, which is the Media Rating Council.

Facebook has its own. Facebook says, "No. Desktop is 100% in view for three seconds, and mobile is 50% in view for three seconds." YouTube has its own. It says 100% in view for at least 30 seconds or to completion, whichever is shorter. Twitter has its own. It says 100% in view for three seconds. Then you have Snapchat, which is 100%--

Michael Krigsman: There's a company--

Anurag Harsh: Yeah, it's a mess.

Michael Krigsman: There's another company that we use that's five seconds fully in view.

Anurag Harsh: What is that?

Michael Krigsman: The video window has to be in view for five seconds, or the user has to click inside it to count as a view.

Anurag Harsh: Well, look at Snapchat. Snapchat is 100% in view upon start. Instagram is the same thing. In feed, in Instagram, they're saying 100% in view for three seconds, and their stories, which are Instagram stories, are 100% in view upon start.

Look. This is an issue. This is an issue. Brand safety, which is important, has become an issue.

Now, it's gotten more attention with obviously the recent struggles surrounding Facebook and YouTube … (indiscernible, 00:30:41) the fake advertising, fake news, extremist content, and all that, but the world's largest advertisers are pulling spend from these platforms while others are boycotting them because all these issues need to be resolved. Now obviously Facebook and YouTube are working quickly. They want to clean up the platforms and obviously win back the trust.

Now, one of the reactions to adverse context (indiscernible, 00:31:04) in the sector has been the rise of premium publisher consortia. Now, this is interesting. Major publishers, traditional and digital, they're banding together, and they're offering advertisers aggregated, premium inventory with large-scale across their properties. If you're a publisher and you're sort of falling through the cracks, this is something they probably want to join.

For example, in the TV world, you have this thing called OpenAP, which is Fox, Turner, and Viacom. Fox, Turner, and Viacom: they've combined together, and they say, "We have this consortium. We call it Open AP.

In the digital world there are two. The first one is called Concert.  Concert is a combo of Conde Nast, NBCUniversal, and Vox Media. They basically said, "We're going to go in as one and as a consortia called Concert."

The other one, which is a much larger one, is called TrustX. TrustX is a whole bunch of large publishers like NBCUniversal. You have The Weather Company. You've got Conde Naste [and] The Guardian. The Washington Post is in there. Purch is in there, Slate, Time, Inc., Daily Caller, Vox Media, [and] Scripps. Financial Times is in there. There's Hearst in there. There's AccuWeather in there. Meredith is in there, Edmunds, Atlantic Media, Business Insider. Fox is in there. Well, Fox News is in there, CBS Corporation and ESPN. This is a big consortium. It's called TrustX.

What the industry needs, what you as a digital media publisher need, is valid third-party measurement where all the major platforms cannot grade their own homework. There are standards that are being set by these independent third parties like the Media Ratings Council that I said, MRC, and its one second, 50% in view standard, while technology vendors have been leaned on to push consistency across the industry. Even with standards in place, like the MRC viewability standard, we should be asking ourselves, "Are we measuring the right thing?  Do you feel you're getting any value from these standards? Should we be focusing on something that has more to do with engagement?"

See, I believe we're on an inevitable march away from proxies and more towards understanding where consumers are spending time, how they are engaging and, ultimately, driving business outcomes. I talked about this duopoly. I keep bringing it back because it's hitting me in the face every single day … (indiscernible, 00:33:22) business because it's true. Eighty percent of the profit in all the publishing businesses is coming from these two guys, Google and Facebook.

Michael Krigsman: All right.

Anurag Harsh: Now it's going to be Amazon.

Michael Krigsman: Right. Okay. Hold on. Hold on. I hate to interrupt, but we have ten minutes left.

Anurag Harsh: Oh, wow!

Michael Krigsman: We have to talk about Facebook and what makes Facebook such a powerful platform, and how can advertisers take advantage of it in the best possible way? That's what everybody cares about, right?

Anurag Harsh: Yeah. I'll you about it, but I think the more important, bigger force is going to be Amazon. It's not going to be Facebook.

Michael Krigsman: Amazon? Yeah, okay.

Anurag Harsh: Yeah, in advertising.

Michael Krigsman: Okay, briefly, but I want to be sure that we get to [the] advice on Facebook because everybody cares about that.

Anurag Harsh: Well, for Facebook, it's just a matter of people boost their ads, and obviously Facebook offers a lot of metrics. There are lots of third-party companies that do that. It's the largest player in the market so, if you're a publisher, a lot of them have what they call Facebook instant articles. Basically, Facebook has invited the publishing community to come and publish within Facebook.

What Facebook is saying is, "I, Facebook, am the Internet. You don't need to be on the Internet. I am the Internet. You come within me because I have all the audiences in the world. The world is on it. Probably the whole world is on it now. And I know who these people are. It's not just these are bots. We kind of know who these people are because they have accounts with us, they're active on us, and they're on us at least once a day. And so you advertise, and we're going to give you the targeting. And we can target hyperlocal, and you could target in Jersey City if you want. You could target in Omaha, Nebraska. I mean anywhere you want against any demographic in any hyperlocal target, and it's easy."

It's self-serve. You can do it on your own. You don't need a brand agency. You don't need a DMP, which is Demand Managed Platform. You don't need any of these technologies. Facebook has done it for you. You, as a user, can actually literally take an ad, create a piece of content, and you can boost it on Facebook. It can reach consumers, and that's what's happening.

Large advertisers are building these huge platforms called Facebook pages on Facebook, and they're inviting their audiences, Facebook audiences, targeting ads, inviting audiences to actually come in there and participate in this whole ecosystem that they've built. Of course, it extends to customer service because these are real people and not bots. If people have a problem, they'll go onto the page, and they'll basically say, "I bought so-and-so, and it broke down," or this and that, "and I called customer service and it sucks," I mean things like that, and you can respond to it.

You've gone and built a presence on Facebook. There are companies who don't even have their own websites, small businesses. Their websites are Facebook pages. That's good enough because that's where the audience is. That's what I'm saying. Facebook, how do you take advantage of it is to actually go in there and start to play around with it. Talk to experts who can help you develop a whole presence on Facebook and be able to capture audience data from it. Then target ads and target content, and hone in on the content.

Make sure that your audience is reading what you are actually peddling to them because that's important. You can put content out there and nobody is reading it, and you'll know that. If you're a traditional publisher, oftentimes you have to use metrics like Omniture and Google Analytics to figure out what to do. On Facebook, they just provide it to you. That's why it's so attractive.

Now -- now this is the important thing, and this is what I want people to understand. Amazon-Amazon, this is it - Amazon. It's all Amazon, man. Amazon is playing a different game. See, Facebook says, "I know who you are." Google says, "I know what you might be looking for." What Amazon says is, "I know what you bought and what you will buy next," and that's where the rubber hits the road.  It's important stuff, and that's the play.

I think Amazon is going to be the next walled garden. Facebook and Google, obviously they have the demographic data. They've got the proxies for intent. Amazon, instead, has true intent. It has purchase history data to understand the full customer journey. Amazon has a unique data position in this ecosystem, and that's who you want. At some point Amazon is going to light up, and it's going to be huge in this whole ecosystem. That's what I'd like to leave you guys with.

Michael Krigsman: Wow! That is pretty extraordinary. You think Amazon eventually will light up an advertising network for content or social network, something that takes advantage of all of this data.

Anurag Harsh: Yeah, absolutely. Absolutely. It's bound to happen. It's bound to happen. That's definitely the case.

There's one other thing I want to leave your audiences with, Michael. You know everybody is getting into programmatic and Internet is all about data and everything else. Here is the thing, though. It's all about building a brand. Building a strong brand like PCMag is a 30-year-old, strong brand. It is the implementer. When PCMag says that this product is great, people believe it. And so building a strong brand is not easy.

The most recognized and iconic media brands were built from a unique voice, history and, frankly, many other intangibles. The New York Times, Vox Media, you've got The Wall Street Journal, Vice, Business Insider, The New Yorker, Buzz Feed, Vogue, Financial Times: these are strong brands, and they're a powerful asset. You know why? Because they are less vulnerable to ecosystem change in monetization and the whims of programmatic, as well as algorithm changes and, frankly, the whims of major distribution platforms like Facebook, Google, and Twitter.

I envision the publisher value matrix, the digital media value matrix with two lenses: the want-to-know and the need-to-know properties. While there are large publishers of general interest or, let's call it, want to know content, there are others with scale and the need to know content that have a material advantage. Even small publishers like niche focused, B2B travel media company, Skift, for example, they can build loyal, lucrative audiences and, by effect, obviously, a strong, defensible position. If small publishers don't deliver quality content, they will face a challenging future. It's very important that that be the case.

I'm witnessing some interesting developments unfold. Like Buzzfeed, for example, is finding success with its new standalone food brand. It's called Tasty. It's building a blueprint to start more vertical properties.

Vox Media has pursued this strategy. It's a vertical strategy. They've built and acquired a family of verticals to address all kinds of content and engage audiences. Vox has what? In B2C, they've got The Verge, Vox, SB Nation. They've got Eater, Curbed, Racked, Re/code, [and] Skift.

Ziff Davis has done the same thing. It's all vertical publishing. We've got a whole bunch. Right at the beginning of this conversation, I named all the brands. We acquired Everyday Health, and we have some fantastic brands in healthcare in Everyday Health.

Ultimately, if publishers can build a loyal following and direct relationships with their audiences, they will have a wide variety of monetization opportunities beyond advertising. This is important. It's beyond advertising.

These are the five things you've got to think about in digital media.

  1. Advertising - traditional.
  2. Subscription - traditional. Newspapers, now it's online.
  3. Events - think about that.
  4. Affiliate, which is commerce. How can I educate the audience and then be able to handhold them and take them to, let's say, Best Buy or Amazon or other etailers and have them transact there and then get, let's say, a piece of that pie.
  5. Finally, it's lead gen. Lead gen is huge. Lead gen is a huge part of the Internet because the audience is coming to you, Mr. Digital Media Publisher. And so you've got to figure out who these audiences are and how you can qualify these audiences.

In Ziff Davis we call it HQL, which is a High Quality Leads business. Then you can offer these audiences as a high quality lead to the brand, which obviously wants to reach these companies.

I think that's kind of where things are. We can keep talking about mobile and content.

Michael Krigsman: Well, we're just about out of time, but Gus Bekdash from Twitter has an important question. That is, "What is the role these days of influencers? Where is that going, and how do you prevent corruption among those influencers?"

Anurag Harsh: Yeah.

Michael Krigsman: We have only a few minutes, so very quickly, please, share with us your thoughts on influencers.

Anurag Harsh: There are good influencers and bad, just like there's good humans and bad. It's just how it is. It's the nature of us as human beings. We're not robots, and we're not all programmed to be just completely honest. It's just how it works.

There'll always be influencers who will get paid. Indirectly, a lot of the brands are actually starting to approach them and try to convince them that they can pay them. We're going to pay you $500 if you put this tweet out. Now that happens. Don't get me wrong. That happens. In fact, the largest influencers on the Internet, the large gaming influencers with, like, 40 million, 50 million audiences and subscribers, they do this for a living. This is how it works.

There are lots of influencers that don't do this for money. I'm not necessarily an influencer, but I do have a following on LinkedIn. Whatever I put out there, even if it's about a brand, I don't get paid for it, and I don't want to get paid for it. I'm not a shill for somebody. There are a lot of influencers out there who are like that, but economics is an important thing. If at some point the economics becomes so big that they just can't refuse the money, then that's obviously the thing that one has to think about.

There are lots and lots of companies at the end of the day, which companies are influencers, right? Ziff Davis is an influencer because it's influencing audiences. It influences people, helping them make buying decisions. That's the business that Zipp Davis is in, as PCMag is in. But we're not shills for anybody. We are church and state. We are the implementor. We are like the Vatican. We're the last word in quality reviews of content.

You'll always find the entire spectrum of companies and influencers, and they come in all shapes and sizes. It's really up to you. Frankly, here's the thing, the Internet is very transparent now. It takes just a few minutes to figure out if somebody has gotten paid to write something. If you're an influencer and you're thinking about getting paid for peddling products, don't do it because, at some point, people will know that you're doing it, and then nobody is going to listen to you. That's my advice.

Michael Krigsman: Okay. In the final analysis, transparency rules. Transparency comes out.

Anurag Harsh: Absolutely.

Michael Krigsman: Okay. Well, that has been a very fast 45 minutes. It went by in a flash. Anurag Harsh, you are a top exec with Ziff Davis, and thanks so much for joining us and sharing your experience in publishing and digital media.

Anurag Harsh: Thank you, Michael. Thank you, everybody, for listening.

Michael Krigsman: I am Michael Krigsman. You have been watching Episode #263 of CxOTalk. Next Friday, a week from today, we are speaking with the CEO of Century 21. It's the largest real estate brokerage brand in the world. We're thrilled to welcome their CEO, Nick Bailey, and we will be talking about changes in the real estate market driven by data, driven by Zillow and folks like that.

Everybody, thanks so much for watching, and hope you have a great day. Bye-bye.

GE: Digital Transformation of the Global Salesforce

  • Episode: 266
  • |
  • Topic: Digital Business
Cate Gutowski, Vice President, General Electric
Cate Gutowski
Vice President, Commercial and Digital Thread
General Electric
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

How is one of the largest companies in the world evolving the way it sells? Cate Gutowski, Vice President, Commercial & digital THREAD at General Electric, speaks with CXOTalk about digital transformation of the global salesforce at General Electric, and the changing relationship between sales and IT.

Gutowski, who has worked at GE for two decades, explains the sales function is about to undergo the biggest transformation in the history of selling:

“We are driving the digital transformation of our sales force by activating the Commercial digital THREAD, a connected digital ecosystem that will enable our Field Sales professionals to serve our customers with speed, and drive growth,” she says. “My team of Product Managers incubates new technologies in Artificial Intelligence, Machine Learning, and Predictive Analytics to rapidly test and learn on how we can drive more productivity for our 25,000 sellers across 180 countries. Our mission is to enable our Field Sales teams all over the world to do their jobs simpler, faster and better than they could before by leveraging technology.”

Transcript

Michael Krigsman: Okay. You are a 100-year-old company with $125 billion in revenue, and you decide it's time to change the company and transform how we sell. Who are you going to call? You're going to call our guest today, Cate Gutowski, who is with General Electric.

Before we turn it to Cate, I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. You are watching Episode #266 of CxOTalk.

I want to say a heartfelt thank you to tact.ai. They are an amazing company. It's a small company that builds an assistant, a personal assistant based on artificial intelligence for salespeople. I've been an advisor to the company. They're a great company. Some of their customers are the largest organizations in the world, including General Electric. Go to their website tact.ai, and thank you so much to Tact for supporting CxOTalk.

Without further ado, I want to give a hearty welcome to Cate Gutowski. I've mangled your name, and I'm sorry, Cate.

Cate Gutowski: No! [Laughter]

Michael Krigsman: How are you? [Laughter]

Cate Gutowski: No problem. No problem. [Laughter] [Laughter]

Cate Gutowski: Hi, Michael. How are you?

Michael Krigsman: I am well. Thank you so much for being a guest on CxOTalk. Tell us about GE, and tell us what you do.

Cate Gutowski: Great. No, thanks for having me, Michael. I'm currently based in Boston. I've been with GE for 20 years. What I'm currently doing for the company is leading our sales function globally. Specifically, I'm leading the current digital transformation of our sales force.

Today, GE has ten different business units. We have 25,000 sellers in 180 countries. The job that my team and I have is to really help create a technology stack for sales. The reason why we're working on a transformation of our sales force is because GE is in the process of transforming from a 125-year-old industrial company to a digital industrial. One of the things that we've recognized is that if we're really going to become a digital industrial, it's important that we think, act, and work in a digital way.

Michael Krigsman: From a sales perspective, what does that mean? When you say, "Think, act, and work in a digital way," give us some color as to what that means.

Cate Gutowski: Yeah, it's a great question, Michael. I'll share a specific example. For me, I've been with the company 20 years, as I mentioned. When I look at the way that our sales teams are selling, they're fundamentally selling the same way as I did when I started and graduated off GE's technical leadership program 18 years ago.

The tools of the sales force are mostly PowerPoint; it's mostly product training; more recently, outcome selling training; and, more recently, probably in the last ten years, one of the key tools of the sales force is CRM systems, which essentially are really databases. When we think about those as the tools of the sales force, I would argue that those aren't modern and contemporary tools. What we really want to do is create a technology stack for sales that helps our sellers to be more modern, more contemporary and, most importantly, helps them to address our customers' needs.

Michael Krigsman: It's the intersection of technology and sales that you're focused on right now.

Cate Gutowski: Yeah, that's right, Michael. I think I have the best job in the company because my job really is the intersection of three things that I really love, which are getting to spend time with our sales teams all around the world. It's product development, particularly software product development, and it's all focused on change, transformation, and the digital space. It's a great role.

Michael Krigsman: This transformation that you've been describing is a very large transformation that cuts across GE.

Cate Gutowski: That's right. That's right. The way to think about our team is, we're currently a horizontal in the company, so meaning we really focus on the common needs and common problems of each of

Michael Krigsman: Okay. You are a 100-year-old company with $125 billion in revenue, and you decide it's time to change the company and transform how we sell. Who are you going to call? You're going to call our guest today, Cate Gutowski, who is with General Electric.

Before we turn it to Cate, I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. You are watching Episode #266 of CxOTalk.

I want to say a heartfelt thank you to tact.ai. They are an amazing company. It's a small company that builds an assistant, a personal assistant based on artificial intelligence for salespeople. I've been an advisor to the company. They're a great company. Some of their customers are the largest organizations in the world, including General Electric. Go to their website tact.ai, and thank you so much to Tact for supporting CxOTalk.

Without further ado, I want to give a hearty welcome to Cate Gutowski. I've mangled your name, and I'm sorry, Cate.

Cate Gutowski: No! [Laughter]

Michael Krigsman: How are you? [Laughter]

Cate Gutowski: No problem. No problem. [Laughter] [Laughter]

Cate Gutowski: Hi, Michael. How are you?

Michael Krigsman: I am well. Thank you so much for being a guest on CxOTalk. Tell us about GE, and tell us what you do.

Cate Gutowski: Great. No, thanks for having me, Michael. I'm currently based in Boston. I've been with GE for 20 years. What I'm currently doing for the company is leading our sales function globally. Specifically, I'm leading the current digital transformation of our sales force.

Today, GE has ten different business units. We have 25,000 sellers in 180 countries. The job that my team and I have is to really help create a technology stack for sales. The reason why we're working on a transformation of our sales force is because GE is in the process of transforming from a 125-year-old industrial company to a digital industrial. One of the things that we've recognized is that if we're really going to become a digital industrial, it's important that we think, act, and work in a digital way.

Michael Krigsman: From a sales perspective, what does that mean? When you say, "Think, act, and work in a digital way," give us some color as to what that means.

Cate Gutowski: Yeah, it's a great question, Michael. I'll share a specific example. For me, I've been with the company 20 years, as I mentioned. When I look at the way that our sales teams are selling, they're fundamentally selling the same way as I did when I started and graduated off GE's technical leadership program 18 years ago.

The tools of the sales force are mostly PowerPoint; it's mostly product training; more recently, outcome selling training; and, more recently, probably in the last ten years, one of the key tools of the sales force is CRM systems, which essentially are really databases. When we think about those as the tools of the sales force, I would argue that those aren't modern and contemporary tools. What we really want to do is create a technology stack for sales that helps our sellers to be more modern, more contemporary and, most importantly, helps them to address our customers' needs.

Michael Krigsman: It's the intersection of technology and sales that you're focused on right now.

Cate Gutowski: Yeah, that's right, Michael. I think I have the best job in the company because my job really is the intersection of three things that I really love, which are getting to spend time with our sales teams all around the world. It's product development, particularly software product development, and it's all focused on change, transformation, and the digital space. It's a great role.

Michael Krigsman: This transformation that you've been describing is a very large transformation that cuts across GE.

Cate Gutowski: That's right. That's right. The way to think about our team is, we're currently a horizontal in the company, so meaning we really focus on the common needs and common problems of each of the different business units. Even though we might be selling aircraft engines in one business and MRI machines in another business in our healthcare business, at the end of the day there's more that's common across all of our different business units than that's different. And so, we work on the common needs and common problems of those divisions.

Michael Krigsman: From a sales standpoint then, General Electric has so many different divisions, and they're so disparate. From a sales standpoint, what are some of those common elements? Is it fair to say that you're unifying?

Cate Gutowski: Yeah. It's a great question. Here's an example I'd share. I think one of the great things we've done in partnership with our CIO is we've created more synergies. In the past, each business unit would have its own commercial CIO. That commercial CIO was dedicated to working with the sales leaders to make sure that the sales teams had the tools and the technologies that they needed. We've recognized that that's probably an inefficient way to work, and so we've consolidated all of that into one commercial CIO that works across all of the businesses and is essentially my partner in getting a lot of this work done.

Michael Krigsman: You're working very closely with IT and the CIO.

Cate Gutowski: Yeah.

Michael Krigsman: I just want to remind everybody that we're talking with Cate Gutowski, who is with General Electric and responsible for sales transformation. There is a tweet chat going on right now using the hashtag #CxOTalk. If you go to Twitter, you can actually send questions to Cate.

You're working closely with IT and the CIO. Why is that so important?

Cate Gutowski: Yeah, great question, Michael. I love that question. Look; one of the things I'm convinced of is that all future sales leaders, I think, in order to be successful, you really need to have a very close working partnership with your CIO. Look; there's a lot of technology that exists today. It exists right now. It's on the market right now that can dramatically change your sales process and make you significantly more efficient and make your sales teams more productive.

The problem is a lot of us quite simply don't like change. And so, for me, it's been fantastic. I almost felt like an IT wannabe. I've spent a lot of time with the IT team. What I can tell you is that they're incredible partners. Any job I ever take in the future, I'm going to make sure that I have the opportunity to really develop a close partnership because I can see how it can be incredibly productive.

Michael Krigsman: How do you engage? The reason I'm asking, for many organizations, there are such strong silos. We have sales. We have marketing.

Cate Gutowski: Mm-hmm.  Mm-hmm.

Michael Krigsman: We have IT. These all, each of these groups, have its own objective, its own KPIs. How do you manage the collaboration? How do you do that?

Cate Gutowski: Yes, it's a good question. When I was asked to lead this digital transformation, chose to organize my team as product management. I have product managers that wake up every morning that are focused on different areas. They partner with a lot of technology companies.

We make decisions every day, Michael. Are we going to build, make, or buy technologies? In some cases things are strategic and we want to have the IP around it. We feel like we can execute it faster than someone else, and so we'll choose to do it on our own. But, in a lot of cases, there's a lot. The sales technology landscape is exploding right now, and there are a lot of great technology, like tact.ai, for example, that exists that it's cheaper, faster, and better for us to partner with a company like Tact to bring a product like the GE Digital Assistant to market and to our sales professionals than it would be to try to create it on our own.

Michael Krigsman: That's really interesting. You are actively deciding where to invest.

Cate Gutowski: Mm-hmm.

Michael Krigsman: Do we build the technology that we need? Do we go out of house and buy that technology?

Cate Gutowski: Mm-hmm.

Michael Krigsman: Working with IT to deploy that technology.

Cate Gutowski: Right.

Michael Krigsman: How do you make those kinds of difficult investment decisions, those make versus buy decisions?

Cate Gutowski: Yeah, it's a great question. It's really the core function of product management to make those decisions. Every dollar that we have to invest from a capital standpoint, we want to make sure that we're getting a $4 to $5 return. And so, from a capital allocation standpoint, that's how we look at it.

The other strategic questions that we ask ourselves are, is this strategic in nature? I'll give you an example. It was strategic for us. We just built our customer data foundation. It took us nine months to link 50 instances of sales force all around the company and to set up master data management and data governance for our customer data. We believe that data is the new oil and that having data is going to be strategically important for us.

For us as GE, we have always spent a lot of time valuing financial data. We protect the financial data. We spend a lot of time on the financial data, but we hadn't been spending time and investing money in our customer data. I would argue that that's strategically more important in the next three to five years than the financial data. And so, that was an area that we chose to invest in. We did have a partner that helped us with machine learning, but we invested in that on our own.

In other areas, like for example Digital Assistant, which helps our sales teams to rapidly update CRM with never having to open up their computer, which they love. They can text it in or voice in their CRM updates. That's an area that is already developed that the artificial intelligence technology there is sophisticated. It would take us longer to try to do that on our own versus we can get to market faster. We can implement it and see a benefit sooner than if we were trying to do it on our own.

Michael Krigsman: Cate, you raised a very, very fascinating point that data is the new oil, and we've been focused on financial data.

Cate Gutowski: Mm-hmm.

Michael Krigsman: But now we're focused, or I should say you're focused, on the customer data. And so, would you elaborate on that? That's quite fascinating, actually, quite interesting.

Cate Gutowski: Yeah, this is a topic I'm really passionate about. The way that we started to work on this was really quite simple. Like a lot of companies, [laughter] look, I'm embarrassed to say that we didn't have a system to manage all of our customer data all across the company. The outcome of that is staggering. We know that our sales teams spend two-thirds of their time today on administrative tasks and only one-third of their time face-to-face with customers. We know that when our sales team spends more time in front of our customers, we know that they sell more. We've proven that with statistics and regression analysis, and we know that cold.

What was important to us was, look, Michael. I was building the things that I always wanted when I was selling and leading the sales organization. I'll give you an example. I came from the lighting business. When I was in lighting, I wanted to leverage the GE store. I wanted to leverage the contacts that someone in oil and gas had with Exxon Mobile. And, I wanted to get a warm introduction to Exxon Mobile.

In the past, I would spend three weeks, on average, calling and emailing around the company to try to find the right person that could give me a warm introduction. The reality is that that's just not efficient, and it's not productive. The reason why we invested time and money to put this customer data set altogether for the company is because now if I want to get a warm introduction to Exxon Mobile, I can find the information in seconds, and I can see who are the 12 people in the company who have active deals with Exxon Mobile, who are they working with, what's the job, how big is it. I can see all of that, whereas in the past it was like finding a needle in a haystack, Michael.

Michael Krigsman: Having the right data will make a direct impact on the time that salespeople are able to spend with customers. But, at the same time, they'll have better, more accurate, more up-to-date and complete information as well, so it's both of those things.

Cate Gutowski: Yes. That's exactly right. That's exactly right.

Michael Krigsman: We have a question from Twitter.

Cate Gutowski: Okay.

Michael Krigsman: From Scott Weitzman. Scott Weitzman is asking, is utilizing these new technologies helping you drive higher engagement from field sales and, therefore, becomes almost like a new form of motivation? I'll add the data. Does it help motivate the salespeople?

Cate Gutowski: The answer is yes. We've seen that. First of all, thank you so much for the question. I think it's a great question. One of the things that we've seen is that it is a motivator. I'll give you a great example. We implemented, in partnership with Tact, the new GE Digital Assistant.

One of the things that we saw, one of my favorite quotes is from Mack D'Maeo (phonetic) and from our healthcare business. He told us. He said, "Look. I love this technology because, Cate, in one day I saw more customers; I updated CRM more times, eight times in one day versus once a day on average; and I never even had to open up my laptop."

If you think about it, all of our sellers, it doesn't matter if you're with GE or what company you're with. Every seller that's really worth their salt, they all just want to sell, and they don't want to be bothered with a lot of administrative tasks. And so, we've found that, yes, a lot of these technologies do provide motivation, and they quite simply enable our sales teams to just do what they love, which is to spend time with customers and not spend time on a lot of administrative tasks.

Michael Krigsman: Now, Cate, we've been talking about how technology enables the relationship with customers, enables the salespeople to do a better job, to be more efficient, and so forth. But, from the customer's standpoint, how have buyers' expectations, your customers' expectations changed? How do the customers view this, what do they want, and what do they demand?

Cate Gutowski: Yeah. I like this question because I think this is one of our biggest learnings. Look; here's what we've really learned about our customers. What we've learned about our customers is that our customers are changing faster than we are, quite honestly. What's driving this? There are a couple of things driving this.

One of the key things that's driving this is the consumerization, the consumer Internet companies, Google, Facebook, Amazon, and more. They've had a tremendous impact on not just our customers, but our employees. How is that? Well, before I go to bed at night, I might buy something on Amazon. It's really easy, right? It takes me less than a minute or two to do that.

Then I wake up in the morning, and I go to work. If I'm a sales professional, I open up my CRM, and I see what looks like a database. Quite honestly, it just doesn't feel good. You know? It doesn't.

What we see is the need for technology to transform the sales experience. One of the things that we believe is that if we invest to transform the sales experience, we then, in turn, empower our sales professionals to transform the customer experience. That's been a big learning for us.

Michael Krigsman: Yeah, isn't that amazing? We've come to expect tools that somehow not only have the functions but somehow make us feel good.

Cate Gutowski: Yeah. [Laughter]

Michael Krigsman: Right?

Cate Gutowski: Right. That's right. That's right, Michael. Our customers, though, are demanding a better experience, and our employees, rightfully so, are also demanding a better experience.

I want to build on that question. There's one other point I want to make on that that I think is really important for your audience because I think this is a key learning for us. I wish I would have known this, so I'll share it with the audience.

One of the other realizations that we've come to is that our customers really want to buy differently than they have in the past. I think, in the past, Michael, if we wanted to drive growth, we would say, "Ah, we just need to go hire more salespeople." But you know what? That's actually not what we need to do. [Laughter]

If you look at the way the customers want to buy, they don't want to see a salesperson at the beginning of the journey. But what our customers do want is they do want to see a thoughtful white paper. They do want to read an interesting case study. They want to go to a conference and hear a great presentation about something that worked at another company. All of that is done by marketing, and so we have to invest in marketing at the beginning of the buyer's journey.

The other thing is that we always want the salesperson to kind of own the whole process, but the reality is that our customers don't want to buy that way. In the middle of the sales cycle, they're probably more comfortable interacting with someone online or on social media or getting a simple question answered. It's actually much later in the sales cycles that they want to see, interact, and spend time with a sales professional.

It means several things. Number one, we need new investment in marketing and more investment in inside sales than we've ever had before in order to enable our customers to be more delighted with how they work with us. Essentially, it means a new division of labor. It means to me that we don't need necessarily as many sales professionals as we've had in the past. We can deliver a better experience to our customers at a lower cost if we just look at how we do work differently.

Michael Krigsman: You're talking about that whole sense of experience. It seems to be creating that positive experience, both for salespeople inside the company, your employees, and especially for your customers. That's a very strong common thread here.

Cate Gutowski: Yes, that's exactly right.

Michael Krigsman: We have an interesting question from the @CxOTalk account who asks, "What does sales transformation actually look like at General Electric in terms of things like process? How does the process change the outcomes? What are the outcomes you expect from this?"

Cate Gutowski: That's a great question. Look; a couple things. First of all, I'd say that [laughter] I think it's really important to note we're not done with our transformation by any means, but I do think that when we get invitations to speak about it, one of the things that we do feel is important is to be very transparent about what we're learning and also about how we're failing, and how we're making mistakes in hopes that we can help the entire industry.

One of the things that I'd share, to answer your question, the process does look different in businesses like our GE Power business, for example. One of the things that our GE Power business has done a really great job, under the leadership of Meg Chapman, a very talented marketing professional, is they've invested a lot more in digital technologies that help capture data about our customers. I'll share a quick example.

One of the things that Meg Chapman and her team did is they started to capture data about customers that were visiting the website. What they started to do was piece together the customer fingerprint. They would get data about what things the customer was downloading, what they were interested in, and how much time did they spent in certain areas.

I remember recently that they shared this information with one of the sales professionals in the GE Power team. They said to the sales professional, "Look, John. You really need to talk to this customer, this utility in Florida, about this new product.

The sales professional John said, "Oh, no, I don't need to speak to them about that. I don't think they're interested in it."

They said, "Well, look, we've been capturing data. We've captured the customer fingerprint. It says that they are."

And so, he said, "Okay. I'm going to try it," and so he goes, and he speaks to the customer about this technology.

Sure enough, it turns out they were interested because they were downloading information. They were looking at different case studies and more. In four months, this sales professional won an $8 million order that normally would have taken a year to win. And so, I think that's a great example of sales and marketing collaboration, but it's also a good example of GE Power implementing their sales transformation and it's resulting in more orders faster.

Michael Krigsman: You have real collaboration across all of these groups. That seems another fundamental--

Cate Gutowski: Oh, well, I wouldn't say that we have real collaboration across all groups, but I think we're on a journey. But, that's certainly the goal, and I think every business is at a different place in their transformation. I think we've got pockets of a lot of great work happening all across the company.

Michael Krigsman: Well, I want to just take a moment and say thank you to the 16,000 viewers who are watching this right now. We are speaking with Cate Gutowski, who is responsible for sales transformation at General Electric, which is a $125 billion company. Think about that. That's a lot of billions.

Go over to Twitter using the hashtag #CxOTalk because there's a tweet chat happening right now. You can ask questions directly of Cate.

Cate, you've been talking about change and transformation. Change is hard. You said that earlier. And so, how do you drive change through such a large company?

Cate Gutowski: Yeah, it's a great question. Look, again, I'll share a failure and a learning that I think illustrates the point. Look; when we were at the beginning of this transformation, one of the things that I did is that I started talking about why we were doing it and why we were investing in it and investing time in it. One of the things that I explain to folks was that, look, we're doing this for a couple of reasons. Number one, we want to become a digital industrial and we recognize that if we want to sell digital, we have to actually be digital ourselves. That's important. You have incredible credibility with customers if you can share your own experiences because the future of selling isn't about selling. It's about really sharing insights, thought leadership, and experience with your customers so that they can be successful in their own transformations. That was part of why we were doing it.

When I spoke at a very high level about why we were doing it, I spoke about we're trying to drive growth, we're trying to drive speed, [and] we're trying to drive productivity. We know that when we drive 5% productivity in the sales force, we can deliver $6 billion, which is no small amount of money. When I started talking about this, Michael, the reality is that the sellers, like talking about growth, speed, and productivity, it didn't really make them want to jump out of bed in the morning. It just didn't. If I'm honest with myself, it just didn't.

I read Simon Sinek's book Start with Why, and it had a big impact on me. I really came to understand the importance of purpose in uniting a group. I learned that there is a difference between leading an initiative and starting a movement. I said, "I want to start a movement." [Laughter]

What I came to be familiar with was the law of innovation. What the law of innovation says is if you want to drive any change anywhere, if you want to successfully sell any product, if you want to drive a sales transformation, whatever you want to do, the law of innovation is a simple bell curve. What it says is that you need to first convert the innovators, the first 2.5%, and then [the] early adopters, the next 12.5%. At that point in the curve, you get to the first 18%. That's your tipping point. That's how you really create change.

What we did is, we gathered together the different business units, and we crowdsourced our purpose for our transformation. Instead of talking about growth, speed, and productivity, which people didn't care about, we crowdsourced the purpose. The sales team came up with something much better than I could have ever come up with, which was, our purpose is we're here. We wake up every morning inspired to build trusted relationships with our customers so that, together, we can change the world. This relates to GE's bigger purpose of we're here to build power, cure, and move the world. I don't know. I thought it was very inspiring.

Michael Krigsman: Do you consider yourself to be a change agent? I know you're a sales transformation leader, but how do you think about yourself in this change role?

Cate Gutowski: Yeah. You know what's funny about that, Michael, is I recently worked with Simon Sinek and his team. They helped me discover my own purpose. I didn't know of it, but when I went through the process, I discovered my own purpose. My purpose is that I have the courage to go first and then I make it safe for others to come along. I didn't realize it about myself, but when we went through kind of my life history, [laughter] there was a lot of examples of where that was true, and so that's why this is a great job for me because it's really aligned with my purpose.

Michael Krigsman: I'm just tweeting this out. I love that. You've just defined. That's the definition of a natural change agent. I have the purpose to go first and make it safe for others to come along.

Cate Gutowski: Oh, I have the courage. I have the courage.

Michael Krigsman: Oh, courage. Courage. Courage. Thank you.

Cate Gutowski: Yeah, I have the courage to go first. I have the courage to go first, and then I make it safe for others to follow. Yep. I don't know why. I just ended up that way. I don't know. Genetics. I'm not sure. [Laughter]

Michael Krigsman: Change agent, obviously, clearly is a major part of what you do. That's what you do.

Cate Gutowski: That's right.

Michael Krigsman: I want to switch back now to some of the tools discussion. I know that you're working closely with tact.ai--

Cate Gutowski: Mm-hmm.

Michael Krigsman: --which is underwriting this episode. Again, I want to say thank you to Tact. Being on CxOTalk, there's no cost to watch CxOTalk. We are not paid for people to be on CxOTalk. It's pure meritocracy. It's underwriters like Tact who make it possible for us to be here. We're like NPR. It's literally true.

Cate Gutowski: [Laughter]

Michael Krigsman: We're very grateful to Tact. I know you're working closely with Tact.

Cate Gutowski: Mm-hmm.

Michael Krigsman: Please, tell us, what are you doing with tact.ai?

Cate Gutowski: Yes, so Tact has been a great partner for GE. Tact has worked with several of our business units: our GE Healthcare business, our GE Energy Connections business, [and] our GE Digital business. What we've loved from the beginning about the technology is that when we talked about that consumerization that our customers and our employees are really kind of demanding, tact.ai really delivers on that. It really creates an enhanced experience for our sellers.

What we've loved about it is that it doesn't matter what business unit I talk to. Believe me, I've looked. The sales technology landscape, as we talked about earlier, is exploding right now. What's happening to sales is what happened to marketing about seven to nine years ago. The function will transform more in the next 2 years than it has in the past 50, and it's happening right now. One of the things that's really important is that we find technologies that can be used in multiple types of business units. This is the only one that it seems everybody can agree creates real value.

Michael Krigsman: What are you doing with them? Tell us about the nature of that.

Cate Gutowski: Oh, yes. I'm sorry. I'm sorry, Michael. [Laughter]

Michael Krigsman: Tell us about that relationship. [Laughter]

Cate Gutowski: What am I doing? [Laughter] Here's what we're doing. We've been partnering with Tact. We partnered with them to create the GE Digital Assistant. Essentially, what this is, this is an overlay on top of our CRM instance. What it does, quite simply, is for those in the audience that are listening or watching that maybe can relate to this. If you're a business and you're struggling, you have low CRM adoption, there's a reason why. It's because your sellers don't want to enter data into a database because there's not really anything in it for them.

If you're listening, you might say, "Well, I'm a company that doesn't have good data in my CRM database." Well, again, there's a reason why. It's because there's not really anything in it for your sellers.

What we've loved about the GE Digital Assistant product that we built together is that it enables a seller to capture, either through text or through voice, what we call the golden five minutes after a sales meeting. What we find is that we're getting more data entered into the CRM system. In businesses like healthcare, it's eight times a day on average. We just got done with a large pilot of 300 users. In businesses like digital, we're getting CRM updates on average 16 times a day versus 1 day on average. That excites us because, as we get more data entered into the system, we're also seeing better data quality. Once you get better data quality, you can start to share that with your supply chain function, your product management function, and your marketing function, all these functions in the company that want to help sellers win, but they just quite honestly don't have good enough data.

Michael Krigsman: Now, you're obviously a very, very large company, and Tact is a startup. How do you work; how do you manage that? Really, for many companies, it's hard for many large organizations. It's hard to do that, so how do you manage that relationship and work in a productive way with a smaller company?

Cate Gutowski: Yeah. I think one of the biggest changes that we've had in the company, and I really give our Vice Chair Beth Comstock credit for this. I think Beth has really made it safe for all of us in the company to really partner a lot more with companies of all sizes: startups, small companies, midsize companies. It doesn't really matter. I think she's really made it safe for us to do that.

I think one of the values that we have as a company is we're really seeking the best ideas regardless of the source. For us, we love partnering with startups because, really, GE, we're a 125-year-old industrial company, but what we want to be is a digital industrial startup. We're trying to reinvent ourselves. And so, we love; we love spending time with startups because we're trying to think, act, and work more like a startup ourselves.

We really valued the partnership with Tact. They've taught us a lot. Very early on when we were working to build our strategy, they were a key partner in helping us think through that.

Michael Krigsman: That's interesting. It's not just a matter of product features and functions in that relationship. It's learning from them and sharing that strategy development, we could say as well.

Cate Gutowski: That's right. That's right. That's been key for us. The other thing is they've also had great assets. They have a great, very nimble team. I remember we spent a whole weekend working on a video. It was better than what we could do in-house. We needed that video because we needed to communicate what the Digital Assistant was, and we needed to help leadership really understand it.

We were getting ready for a big commercial council meeting with our CEO, and so it was a great experience. They made us feel good too because they said, "Look. You're such a big company, but yet when we worked with you over the weekend on this, we got a lot done. It almost felt like we were working with a startup." That kind of made us feel good because we're trying to be one, actually. [Laughter]

Michael Krigsman: When you're working with a company like Tact, how do you evaluate the relationship? Are there metrics? Is there a checklist? How do you think about that?

Cate Gutowski: Yeah. Yeah, so I think when we're evaluating companies, what we're looking for in a partner is, we're looking for a couple things. Number one, are they strategic? Do they have thought leadership that we can take advantage of? Do they have great technology? Do they have a quality mindset? I think the other piece is, can they help make GE more competitive than it is today? That can come in the form of price, but that can also come in the form of other areas of value.

Michael Krigsman: These are the kind of checklist items that you think about when you're evaluating this kind of relationship.

Cate Gutowski: Yes, absolutely, and I think we're also looking for partners that are flexible. We're also looking for partners that think and work in terms of data and metrics. For example, when we have been working on this 300-person pilot with our healthcare business, we set up a whole host of KPIs and metrics at the beginning of the pilot. We said, "Look. If we achieve these goals, we'll both mutually deem that this was successful and worth investing in and scaling." That's what we've been working on more recently.

Michael Krigsman: We have only about five minutes left. Again, I just want to remind everybody that we're speaking with Cate Gutowski, who is responsible for sales transformation at General Electric. There's still a moment where you can ask questions. Go to Twitter at #CxOTalk.

I also want to give a shout-out to Jill Rowley, who introduced me to Cate. Jill came to me, and she said, "You have not spoken about digital transformation and sales transformation on CxOTalk, and that's an oversight. You need to speak with Cate." She introduced us, and so that's a shout-out to Jill. Thank you so much.

Cate, as we finish up, what advice do you have for other organizations who may be trying to undertake a similar kind of transformation as you've been going through? You've been through it, and you're going through it. What advice do you have?

Cate Gutowski: Yeah. I think some of the advice I have is--you mention Jill, and I think Jill was one of the strategic consultants we partnered with early on--to quite honestly just really understand the industry and how it had really been changing. She'd been a great strategic advisor and partner to us early on. I think, number one, you've got to surround yourself with experts and thought leaders in the industry. I think that's important.

I think, second, the things that I wish someone would have told me, quite honestly, is, number one, I think a lot of us are Type-A, right? At GE, we've got a lot. We have 300,000 Type-A people here. When you're Type-A, you tend to want to be perfect. You want to do everything perfectly. I think that that worked in an old, industrial world, but I think we're in a time of great disruption.

Every industry is being disrupted, every company, every function. What that means is that we all have to change and adapt our ways of working and thinking. One of the ways that we've been trying to adapt is we've been trying to think, act, and work like a startup. That means starting small. That means testing and learning. That means being really comfortable with failing, and I mean really comfortable where you've got to celebrate failures.

I know Beth Comstock loves to give the example of how there was someone who came to her with a great idea and said, "I want you to give me $1 million."

She said, "Look. Before I give you $1 million for this idea, let's just test it. Let's just spend $10,000. Let's just test it."

They spent $10,000 and found out that the idea would not work. In fact, it failed. As a result, she celebrated the fact that we didn't spend $900,000, but we only spent $10,000. I think that was a great example of a leader who's helping us to see the world differently and to help us to see that we actually should celebrate failure. When we do that, we make it more comfortable for our teams to fail.

When we're failing, we're learning. When we're learning, we're growing. When we're growing, we're changing and we're getting better.

Michael Krigsman: I think that this kind of testing and experimenting and then changing course based on the learnings, that gets right to the heart of not just corporate agility, but functioning as a startup and innovation. It gets right to the center of it.

Cate Gutowski: Yeah, that's exactly right, Michael. For those that are listening, I think a lot of people say, "Well, I can't do a sales transformation because I'm not big like GE," or, "I don't have a lot of resources." I would actually argue the opposite. I believe that any company of any size can execute a transformation. You don't need a lot of money, and you don't need a big team. All you need is a commitment to test, learn, fail, experiment, and keep iterating just like a startup would.

Michael Krigsman: We're actually out of time, but we have one last question from Twitter. This is from Anurag Harsh, who is a senior executive at Ziff Davis and a guest. He's written seven books on digital transformation, and he's been a guest on this show. He's saying, "What are the key strategies that you have to incentivize the best salespeople? Do sales commissions work anymore?"

Cate Gutowski: Hmm. Oh, it's a great question. Thank you for that. Look; here's what I would say. We're actually looking at incentive compensation right now as a company. I think there are some fundamental principles or beliefs that we have. I think, under our new leadership, under our new CEO John Flannery, one of the things that he believes is that our best sales professionals should make a lot of money. They should be making more than our CEOs. I think that's a fundamental strategy change for us because that hasn't been the case in the past. I think that's one area that we're exploring.

I think the other area that's important to explore is that the role of sales is changing. Meaning that our customers, when I think about some of the biggest deals that we're winning, it's not just the seller that's selling on their own. It's actually a team of individuals. A lot of times the customers are making the buy decision.

For example, in our Aviation Digital business, customers are making the decision to buy after they've met with the chief technology officer. That's a great example of how more of the functions are playing a role. We've got other businesses where big deals that we've done wouldn't have gotten done without the personal involvement of the CFO walking the customer through the financing package that GE was going to offer for a large deal. I think that groups like finance, technology, product management, they're all playing a critical role in helping us win big deals. As a result, it only makes sense that their incentives should change as well.

Michael Krigsman: Okay. Well, that was a very detailed question and a detailed answer, as we are done with this very fast episode of CxOTalk. Boy, the time flew by quickly. You have been watching Episode number -- which episode is it?

Cate Gutowski: 266! Right, Michael?

Michael Krigsman: [Laughter]

Cate Gutowski: [Laughter]

Michael Krigsman: Yes, that's right. Thank you. You have been watching Episode #266 of CxOTalk. We've been speaking with Cate Gutowski, who is responsible for sales transformation at General Electric. Cate, thank you so much, and I hope you'll come back and do this again with us another time.

Cate Gutowski: I'd be happy to, Michael. Thank you. It's been fun.

Michael Krigsman: Everybody, thank you for watching. Next week, at this same time, we are speaking with Chris Satchell who is the chief product officer at Comcast. Check it out, and be sure to like us on Facebook. Don't forget. And, subscribe on YouTube. Thanks, everybody. Have a great day. Bye-bye.

Comcast: Digital Transformation and Innovation

  • Episode: 267
  • |
  • Topic: Digital Business
Chris Satchell, EVP and Chief Product Officer, Comcast Cable
Chris Satchell
Executive Vice President and Chief Product Officer
Comcast
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK
Brian Solis, Principal Analyst, Altimeter
Brian Solis
Principal Analyst
Altimeter

How are cable providers evolving to compete with cord-cutting, streaming services and new media? Chris Satchell, Executive Vice President and Chief Product Officer at Comcast Cable, speaks with CXOTalk and guest co-host Brian Solis about digital transformation in the cable TV industry.

Satchell leads Comcast’s product, design and innovation teams in Philadelphia, Denver and Silicon Valley to develop and design the company’s consumer products used by millions daily. He previously served as Consumer Technology Officer at Nike, and EVP of research and development at IGT (International Game Technology), the world leader in gaming entertainment and casino systems.

Transcript

Michael Krigsman: Welcome to Episode 267 of CxOTalk! What an amazing show we have today! Did you know that Comcast, the cable provider, is one of the largest media companies in the world? Their revenues last year were like $80 billion. And so, today we are speaking with Chris Satchell, who is Comcast's Executive Vice President and Chief Product Officer. But, not only that, we are also talking with one of the top digital transformation focused industry analysts in the world, Brian Solis.

I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I want to say a quick thank you to Livestream because Livestream provides our video infrastructure. Those guys supported CxOTalk from the start. If you go to Livestream.com/CxOTalk, they will give you a discount on their plans.

I always forget this. We have a tweet chat going on at this very minute. Go to Twitter with the hashtag #CxOTalk. If you're on Facebook, go to Twitter also because that's where the conversation [is]. You can ask Chris and Brian questions, and they'll answer.

Without further ado, Chris Satchell, how are you? Welcome to CxOTalk, and thank you so much for being here.

Chris Satchell: Thank you for inviting me, Michael. It's great to be here. It's great to have Brian here as well. I'm looking forward to this conversation.

Michael Krigsman: Chris, very briefly tell us about Comcast and tell us what [is] your role. You're a chief product officer. What does that actually mean? What do you do there?

Chris Satchell: Well ... (indiscernible, 00:02:03) Comcast.... I mean it is a very large U.S. company, $80 billion in revenue in 2016, growing well this year. It's quite a complex company because, on the cable side, we have the world's biggest IP network. We are almost in 30 million households with products from high-speed data and smart intelligent wi-fi to branded home security and life preservation services to smart cameras. Then we have voice services and, of course, video. We do a huge amount of video services. We also have a very large and growing business-to-business side of what we do. Not as big as residential, but it's a huge business in its own right. Then, of course, we have the other half of the company with NBC Universal, which is incredible in the realm of content production, whether it's for network television, for cable, for films, or theme parks, and so a very broad media company.

My role is a little strange. It says chief product officer, but I come traditionally to companies as a chief technology officer. I'm just very sort of creative-focused in that, and so what my teams do is we design; we build; we operate all of the consumer-facing products and services for Comcast. That's everything from hardware, from the sort of SoC design on up, industrial design, firmware, to services like X1, which is our contemporary video service. We do the back-end cloud services for that as well as the clients across any platform.

We're a fully integrated design, product management, and engineering organization that spans about 2,000 people. That's just my area that does consumer products. We're a much larger engineering and technology organization. It's something people don't really realize about us. We are a hardcore technology product development company very forward leaning, and hopefully, we'll get to talk about some of those things today.

Michael Krigsman: Fantastic. You're a very rich, diverse company with a lot of different products. I am a very happy Comcast customer. When it comes to Internet, I do this; I stream this video show called CxOTalk. I have your gigabit service, and the technology is great. It works really well.

Chris Satchell: That's good to hear.

Michael Krigsman: Yeah, well, hey. Hey, I'm a grateful customer. Our cohost, the other guest, and also my guest co-host, an old buddy who has been on CxOTalk before is Brian Solis. Brian, you're one of the top people out there researching digital transformation. Welcome.

Michael Krigsman: Welcome to Episode 267 of CxOTalk! What an amazing show we have today! Did you know that Comcast, the cable provider, is one of the largest media companies in the world? Their revenues last year were like $80 billion. And so, today we are speaking with Chris Satchell, who is Comcast's Executive Vice President and Chief Product Officer. But, not only that, we are also talking with one of the top digital transformation focused industry analysts in the world, Brian Solis.

I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I want to say a quick thank you to Livestream because Livestream provides our video infrastructure. Those guys supported CxOTalk from the start. If you go to Livestream.com/CxOTalk, they will give you a discount on their plans.

I always forget this. We have a tweet chat going on at this very minute. Go to Twitter with the hashtag #CxOTalk. If you're on Facebook, go to Twitter also because that's where the conversation [is]. You can ask Chris and Brian questions, and they'll answer.

Without further ado, Chris Satchell, how are you? Welcome to CxOTalk, and thank you so much for being here.

Chris Satchell: Thank you for inviting me, Michael. It's great to be here. It's great to have Brian here as well. I'm looking forward to this conversation.

Michael Krigsman: Chris, very briefly tell us about Comcast and tell us what [is] your role. You're a chief product officer. What does that actually mean? What do you do there?

Chris Satchell: Well ... (indiscernible, 00:02:03) Comcast.... I mean it is a very large U.S. company, $80 billion in revenue in 2016, growing well this year. It's quite a complex company because, on the cable side, we have the world's biggest IP network. We are almost in 30 million households with products from high-speed data and smart intelligent wi-fi to branded home security and life preservation services to smart cameras. Then we have voice services and, of course, video. We do a huge amount of video services. We also have a very large and growing business-to-business side of what we do. Not as big as residential, but it's a huge business in its own right. Then, of course, we have the other half of the company with NBC Universal, which is incredible in the realm of content production, whether it's for network television, for cable, for films, or theme parks, and so a very broad media company.

My role is a little strange. It says chief product officer, but I come traditionally to companies as a chief technology officer. I'm just very sort of creative-focused in that, and so what my teams do is we design; we build; we operate all of the consumer-facing products and services for Comcast. That's everything from hardware, from the sort of SoC design on up, industrial design, firmware, to services like X1, which is our contemporary video service. We do the back-end cloud services for that as well as the clients across any platform.

We're a fully integrated design, product management, and engineering organization that spans about 2,000 people. That's just my area that does consumer products. We're a much larger engineering and technology organization. It's something people don't really realize about us. We are a hardcore technology product development company very forward leaning, and hopefully, we'll get to talk about some of those things today.

Michael Krigsman: Fantastic. You're a very rich, diverse company with a lot of different products. I am a very happy Comcast customer. When it comes to Internet, I do this; I stream this video show called CxOTalk. I have your gigabit service, and the technology is great. It works really well.

Chris Satchell: That's good to hear.

Michael Krigsman: Yeah, well, hey. Hey, I'm a grateful customer. Our cohost, the other guest, and also my guest co-host, an old buddy who has been on CxOTalk before is Brian Solis. Brian, you're one of the top people out there researching digital transformation. Welcome. What are you working on these days?

Brian Solis: Well, it is an absolute pleasure to be back. Also, Chris and I are old-time friends and also old friends, I guess, if you want to get technical about it.

Chris Satchell: [Laughter]

Brian Solis: We share a love for very many things outside of innovation and work, so it's really fun to be here. What I'm working on, there are three things that I'm focused on. One is digital transformation. The other is innovation, corporate innovation because they go hand-in-hand. Actually, four things. The third is this idea of customer and employee experience because it gives the first two, innovation and digital transformation, purpose. Then lastly, if you put a Venn diagram right there at the center, is corporate culture. That is really either a catalyst or the greatest inhibitor of all of the above. I'm really trying to get not just to the technology side of all of these things, but the human side of it.

I just published a report this week, actually, called The Change Agent's Manifesto, which was written for folks like Chris to help them basically change mindsets and perspectives of the C-suite and boards to help them understand that all of these things aren't cost centers in that we have to look broader than quarter-to-quarter performance. We have to look for the long-term to compete for the future. That's my focus. It's basically nothing much.

Michael Krigsman: [Laughter]

Brian Solis: [Laughter]

Michael Krigsman: Okay, so change and transformation. Comcast has been in business, Chris, for almost 55 years, roughly?

Chris Satchell: Yeah.

Michael Krigsman: I have to imagine that, in the course of those 55 years, Comcast has gone through various types of changes. You're a technology business, so how do you think about what Brian was just saying: transformation, the cultural dimensions, and change? How do you manage that? How do you think about that?

Chris Satchell: Well, the first thing I'll say is I think we did less continuous delivery 50 years ago than we do now. That seems likely a little bit before my time, but I fully agree with Brian. Brian and I, one of the reasons that we became friends is we see eye-to-eye on so many things about the consumer journey and how you have to enable that. I fully agree.

Culture and people are the keys of any technology transformation, I mean any transformation, but especially technology transformations. One of the things I always think about, and I talk to people about this, is in my whole career I've only actually ever seen two projects go off the rails because of sheer technology, and your technology is just too hard to overcome. I mean it's just limitations at that point in history where you just couldn't get past it.

Every other issue has been about people, and so, for me, technology is inherently a people issue. That's how we approach it. You have to get the culture right. You have to get the context right. You have to get the team right. You have to get direction right. Then you can drive change and accelerate it.

You have to get the right platform. As we talk about enabling change, enabling innovation, it's fine to have great intentions. But, all your platforms, systems, the connectivity between them, and the tools you have to get ideas into those platforms, if they aren't in place and if they aren't designed around velocity, you're not going to be as fast as you need to be in this world. Although you have to have everything else, what I say about it is that a great team will overcome anything. If you can take a great team, give them the context including the tools to do great work, they will accelerate, and they will outstrip anything you thought they might be able to do.

Michael Krigsman: Brian, I know you have comments on this.

Brian Solis: [Laughter]

Michael Krigsman: [Laughter] We're all so polite waiting for each other.

[Laughter]

Michael Krigsman: Hey, this is not a family show, so don't be so polite. Just jump in and interrupt me.

Chris Satchell: Remember, I'm English. I had years of conditioning with brainwashing, as my mom would call it. In England, you have to wait until somebody stops talking to start talking. I've had 18 years in America trying to unlearn that, Michael.

Brian Solis: [Laughter] Oh, alright. Well, I want to ask a question. Well, not ask a question, but there's a part of Chris's story that I would love to be shared with everyone. I wrote a book a couple of years ago called X: The Experience When Business Meets Design. It was really about how to think differently about innovation by taking a step back and thinking about design for a new generation of customers and employees that really are not in alignment with today's corporate policies, processes, and even just how we think and how we think about productization. When I first met Chris, he was a recent transplant from Nike to Comcast. We shared an immediate passion for design, and I wanted Chris to sort of tell us a bit about his background from Nike to Comcast and what he brought to the company that was unique.

Chris Satchell: Well, as you said, we hit it off. Part of the reason is it's about design, and it's about designing the entire journey. I think that's something that there's a couple of things we really focused on at Nike.

One was this idea of consumer brand business. Do what's right for the customer first; then worry about the brand and the brand promise you make to the customer; then worry about the business. If you get the first two right, the third will come.

The second one was about thinking about the entire journey. Every touch point on that journey is an interaction with the customer. That can be positive or negative, so you could be building promoters all the way along or detractors all the way along.

You have to think very broadly, and so you think way beyond when you've got a product installed or you've got it in your home. You have to think, how did I learn about it? How did I acquire it? How did I pay for it? How did it get to me? How did I install it?

At Nike, we would think all the way to, "What is my interaction with an in-store athlete that was serving me?" because that is a great connection point with the company. Every point along a journey is your brand. You have to be authentic, and you have to serve the customer correctly there. That's some of the things we brought here.

Then from my time at Xbox, again it's a lot about delivering the very best experience, not settling, and never being content with what you're providing, no matter how good it is, because you kind of have to think in this consumer world about how good you think your experience is. There is somebody out there merrily raising the bar on you. It won't have to be in your sector. It doesn't have to be in your industry.

I think, as far as consumers are concerned, it's wherever they see the best experience, they now expect you to match it. Whether that would make business sense for you or not, that's just what consumers think now. And so, that relentless drive forward to just be the very best--not sector, not business, not industry, but just the best--is something that I brought here, but other people have brought it here as well.

My directs, they're amazing people. They all think, and those leaders think the same thing. And so, we're always trying to push each other to think about how we deliver a better product to a consumer.

Brian Solis: Michael, if I could just ask one more question on that front because that's a tremendous train of thought in that your work today, and your past work, is really the future of what I think most organizations seem to think about because you hit on something that I think a lot of executives miss, and that is the consumer doesn't care about all of the politics and BS that happen within the organization. They just want the experience to be personalized. They want it to be great. They want it to be intuitive, maybe transparent in many ways. But, the thing that I really hope the people can learn from you and other organizations that are breaking new ground is that innovation is as much about products as it is about policies, processes, and how we even work as well. I think the biggest thing is just shifting mindsets.

I look at today's--I call them--Generation C. They're not millennials. They're not Centennials.  They're not Generation X. They're just anybody who lives a digital lifestyle. What they all share is this heightened bar for expectations and these new behaviors. They're impatient and all of these things that, for example, we talk about the uberization or the consumerization of technology. When someone uses Uber, that becomes their standard for engagement. When someone uses an Apple product, that's their standard - or Google Search.

This new level of experience is blurring the line regardless of products or services that they want that same sort of intuition, that same sort of clarity and cleanliness throughout the entire journey. Yet, organizations are built on these 50-, 60-year-old structures that have all of those things apart. How, in your work, have you been able to go cross-functionally to bring these people together and see the light?

Chris Satchell: Yeah, it's such a good point, Brian, because one way to say it is if I'm a customer, I think my reaction is, "Your org structure is not my problem." We used to even talk about this back at Xbox about trying to paper over the cracks in our org structure so that the consumer didn't see. You'll see so many companies when you track that product portfolio, it matches the org structure, and you've got to fight so hard to take that mentality out, and you've got to find leaders who will be selfless and say, "Okay. Yes, I have this release vehicle, but I'm going to take functionality from somewhere else. I'm going to give up something in my release vehicle because it doesn't make sense to the customer."

One thing we do is we come customer-in. Everybody says that, but we really think about what would the customer want to do, and that saw us remove a lot of apps from the app store. We really shrunk down our video apps. We've really consolidated.

It's also having a great understanding. We have a very strong user research function here. You've just got to be open to it because one of the things I found is people say, "We need research." Then you show them research and they're like, "I don't agree with the research, so we're going to carry on what we were doing." Why did I do all that research?

What we try to do is, as much as we can, be really sort of selfless about it and say, "Well, hey. What did the customer just tell us?"  Even if it's not what we wanted to hear, even if it's a different direction than our brilliant strategic minds came up with, this is what they said, so let's go follow that. When you come customer-in, you start making different decisions. Then what you have to do is fight, fight, fight internally to cross organizations to make sure that you deliver the way the customer wants.

One thing that I find really helpful is building that combined vision strategy and constantly updating it to say, "This is what our portfolio means for the consumer. Here's what we're doing for them," and resist talking about release vehicles in that and say, "Here are consumer problems we're going to solve. Here are opportunities to delight them," and then fill in how your portfolio should do that and you start to get a different answer.

You say, "Well, we've always done this in this release vehicle here, this app, this product, this piece of hardware." That doesn't make any sense anymore. In this world we're defining, it should be somewhere else. Then you just have to deal with the politics of that. It's a constant pressure because people will regress into their SAP reporting structures.

It just takes a lot of political capital from all the leaders to keep doing the right thing for the customer. If you do it enough, it becomes learned behavior, which is great. Now you start talking. One of the things that can help, as I think about it, is getting that common language.

I'll give you a very strong example. We have amazing high-speed data services, and we have great home security services. But really, what the consumer thinks about is their digital home. They don't really care what the products are or the org structure.

I have a digital home. I want to have automation in it. I want to have great, ubiquitous wi-fi. I want it to be able to react to me. I want to have peace of mind around my home.

None of that says you have to have a particular product structure, and so we changed the name. We said, "Look. We're now Digital Home. We're going to integrate the teams. We're going to think about it differently than just the vertical businesses we thought about before." All this takes pressure.

The last thing I'll add in is, because I think it speaks to the journey, we did a product we released in May this year called xFi, and it's like a smart, intelligent, whole home wi-fi. One of the things I love, and I use this as an example internally about what the team did, they spent as much time developing all of the on-boarding from on-boarding the gateway, setting up your network. That took as much development effort, as much design effort, as much product effort as all the rest of the experience combined, all the different functions, all the different things it could do.

The idea is you don't get to do that often. You may do it once every few years. You may do it a couple of times a year if you're moving. The key is we wanted that moment of truth to be amazing, and I think that's something that we're trying to think about here is not every app is a minutes-of-usage engagement app or visits per day engagement app. It's about were you there at the moment of truth and how good were you? Thinking about products that way is a great way to really serve the customer.

My example of doing that is we learned that from Nordstrom, right? If you take something back to Nordstrom it's an incredible experience. I don't spend my life taking garments back to Nordstrom, but I'm glad when I do. It's fantastic, and I remember that.

Good to think in your products. Are you a moment of truth product or are you an engagement product? Do you transition from one to do the other, or do you stay in that domain?

Michael Krigsman: I have a question for both of you. By the way, I was remiss in not pointing out that today is Brian Solis's birthday. Not only that, Brian just hopped off a plane from India, ran home, and jumped on this CxOTalk. Brian, happy birthday! [Laughter] How in the world did you survive India and then from here?

Chris Satchell: Yeah. Happy birthday, Brian. But also, now that he said that, you look so much better than I do; it's disgusting.

Brian Solis: [Laughter]

Michael Krigsman: I was thinking he looks better than me too.

Brian Solis: [Laughter] The secret is that--

Chris Satchell: It's makeup, isn't it?

Brian Solis: Champagne.  Actually champagne.

Michael Krigsman: The champagne. Right. Exactly. There you go. [Laughter]

Brian Solis: [Laughter] Thank you, Michael. Thank you, Chris.

Michael Krigsman: Anyway, here's my question. Chris, you were just describing an approach to product development, placing the consumer first, and that requires empathy. You're a large organization. Brian, you've been studying large organizations, looking at that experience.

For people listening, how do you institutionalize? How can an organization institutionalize that kind of empathy perspective when surrounding everybody that works inside a company is the press of spreadsheets and MBAs? Save two cents there and, if you do that, you can save five cents. But wait, but what about the customers? Save the five cents.

Brian, maybe start with you. How do you institutionalize that?

Chris Satchell: Well, I have this joke that I tried to be innovative once, but I got stuck in meetings all day.

Michael Krigsman: [Laughter]

Brian Solis: [Laughter] The reality is that, as Chris said, much of this is--I hate to use the word, but it's so true--political. I found that the five most common hurdles in trying to institutionalize any of this are all human challenges, things like fear, ego, sabotage, self-preservation. Actually, there's more than five, but I had to try to categorize it for a matter of simplicity. It's a matter of juggling.

What Chris said were the nuances of it. You have to speak a common language. You have to bring people to the table in a safe way. You have to show that there's greater return than just the inherent benefits of trying to be innovative or trying to be digitally transformed. More so, you have to step out of your role and realize that if you're waiting for someone to tell you what to do, you're on the wrong side of innovation. These people, I call them change agents, but they go by many other names.

Change comes from the middle most of the time, and it's really helping people see that all of this change that's happening on the outside is actually for the betterment of everybody. It's just that we're dealing with folks that we're just coming down to change management issues, really. I think if you can give change management a purpose where people can see that their work actually has an impact on this front, then you have a start. But, there is no easy answer to this. Chris, you live it every day, so maybe you have some more tangible things to share.

Chris Satchell: It's interesting you talk about we're a big company, but often you look at my organization. We're still a pretty large organization. It really isn't like that. It's not one big organization. It's 40, 50, 60 squads with product management, with design, with development. Those product managers are encouraged to understand their customer, to look at the stats coming in on the products, to look at the research studies, to go out into the field and ride with our techs and see what happens with the customer, to listen to calls through our call centers. There are lots of ways to do those touch points that can keep those teams really focused on their area.

I think the other thing you have to do is leadership. You need to give those people cover. When I talk about a context that allows people to be successful, it's about that. What we try to encourage the product managers and the dev teams is don't worry about the business yet. Maybe there are key, key business requirements we have to take onboard as we think about a product, but don't worry about how it monetizes. Don't worry about the cost. Let's build the right thing and come up with the right designs.

I think another one is to tell people not to censor themselves too early. I've been in sessions before where you're brainstorming something new, and everybody is self-editing. They're like, "Well, I don't think the business would go for that. Our legal is going to tell us no." I think one of the things that help is you say, "Look. After we get out of this meeting, there is an entire world of people whose job are designed to tell you no, to cut down the idea, to make it tenable for all these different systems in your company, so don't edit yourself. You've got a whole organization to do that for you. Let's start thinking great ideas and keep driving for them."

Then I think what you need is leadership that knows when to really push and says, "I understand what those business requirements are. They're wrong. We should spend more." Let me interrupt myself because what I've found with a lot of disagreements between product and the business, it's not that if you talk about the very end goal and no timelines you disagree. Businesspeople want to serve the customer as well. It's not like they're these evil people. They really want to give a great service as well.

What happens is you talk about two different timelines, often. You will say, "Hey, I want to do these great products," and you're thinking how I'm going to live it next year, and then two years after that. I've got this five-year roadmap for the product. Yeah, I know I'm going to have to change it because consumers change every year, but I've got these big ideas.

The business might be thinking, "I've got constraints this quarter. I've got constraints this half of this year." Often you can agree on an endpoint, and then it's really about how you prioritize in between. I think it's very good to make sure you're talking about time horizon, but then sometimes you've just got to go back and say, "I'm going to fight for the right thing for the customer even if it looks like the wrong business right now because, if I look at the long-term value of the customer, this will pay dividends. Very infrequently does anybody get chastised in the long-term by consumers for doing the right thing for consumers, and so you've just got to be ready to fight for that.

Michael Krigsman: We have a couple of comments from Twitter, a couple of questions. They're really the same question. Shelly Lucas and Arsalan Khan are both asking in different ways, how do you empower managers to make these kinds of decisions that you're describing, to withstand the corporate pressures to do the right thing? How do you do that?

Chris Satchell: What we do is we set up processes that help them. I'll scrub that in a moment. Also, it really is about the layers of leadership. You have to show those people that you have confidence in them. We let them define their features. We let them go and research it. You can test it with consumers. And, we let them build it.

One of the biggest sorts of intellectual sets of hubris you can see from leadership is believing you always know the right answer because you're not as close to the problem, often, as the people that are building it. And so, you have to be willing to say, "You know what? That's not what I would have done." But what I would suggest you do, "It's not better. It's just different, so let's go with your idea because you spent more time and research on it."

One is just giving people that protection. It's also that elevation. When you say, "Hey, we've got an exec review," you can bring the people in that actually have the idea. Or, it might be a time when you don't bring them in because you're just going to defend their ideas, you're going to push back hard, and you don't want an audience doing that.

One of the things that we've done that's really helped empower the teams--and it's going to sound really boring, but it's so important--is we have this quarterly planning process. It's how we take our annual goals for our portfolio and break it into quarters. Every quarter what we do is, the products managers, they get with all their stakeholders, wherever they are, including user research and what they want to do, and they write. They say, "For my area, here is a one-page spec of what I want to do," and it's something that can be achieved in a quarter for their end of the product or their product.

It says, "Here's all the teams' help I need." What we do is we have this process where we stack rank them. Then we plan, and we just plan from top to bottom, making sure that any higher priority thing, you know, it fills resources in first so we don't get sort of that hanging chad syndrome common in development. There are 2,000 people in my organization, and there are another 8,000 people we work with. What you don't want to have happen is you start off on something and then you find out one of the constituent teams can't deal with the capacity constraints for that quarter, and you can't deliver anything.

We solved that problem, but importantly, it gives all your partners somewhere to go. When they say mid-quarter, "We'd like to go in this direction," or, "We want to change what's happening," you say, "Great. Talk to your product manager. If they like the idea, they can bring it to the next planning."

It's a way that we have managed to kind of bring quarterly agility to annual planning. What we do is we only schedule 50% of our capacity that way. We call it "directed." We do 50% of what we call "trusted capacity" where we just say to the scrum teams, "Hey, work your backlog. Put on your backlog what you know that you need, what the customer needs. That's your capacity to manage. Go manage it." We work very hard to carve off part of their capacity that they could just use to do the right thing. It's taken us almost a year and a half of constant effort to get that to work, but it really has helped us take the 36 teams that we're feeding into video and actually make them more agile and coordinate across them. It's agile writ large at a very big scale.

Michael Krigsman: Brian, Chris was just talking about two different things, in a sense. One is kind of the qualitative aspects of institutionalizing that empathy and focus on the customer. Then he was just alluding to more quantitative approaches in terms of process and structure. The question that I have is, as you've been researching this, Brian, are there metrics, KPIs that can help people think about, again, embedding this and institutionalizing this kind of way of thinking, customer-centric thinking in agile product development and so forth?

Brian Solis: I think I'm going to turn this into a two-part answer where the first part I'll answer and then I'll defer to Chris to share what he can about some of the metrics that he's using because what I have noticed is, in my research, this is directly tied to corporate culture. How the company works, the leadership infrastructure, the management infrastructure, it has to see and talk about things differently. It's just the nature of how the company works. Metrics, you still have your hard metrics that have to show ROI and KPIs that lead to that ROI; but to get there, that's the real story.

I'll tell you that, in many cases, I found that change agents have found that not only does ROI stand for return on investment; it also stands for return on ignorance. What happens if we don't do this?

Chris Satchell: [Laughter]

Brian Solis: What is that cost? What can we prove out that shows that these investments will yield this now and over time? It's really trying to change people's perspectives and mindsets of what return actually looks like. It opens their mind because, in many cases, executives don't know what they don't know.

I want to believe that Chris is right that people want to do the right thing, that they're not evil in many ways. The reality is that many executives actually just don't live the life the way or live the company the way that their customers and employees do. I used to call this the Undercover Boss moment, if you ever watch that show, which [laughter] I love because it's always inspiring, but it has the same ending every episode. That is, when you put an executive in the shoes of an employee or a customer, they can't help but feel the empathy of what someone else has to go through on a day-to-day basis. It opens their eyes to see what's possible.

We have right now such a distinct difference between how customers are evolving and employees are evolving and how executives are going day-to-day in terms of what they're reporting and what they're driving. Someone has to bridge that gap. Part of what Chris was referring to in terms of speaking the language or the common language, or what I call speaking the language of the C-suite, is that you have to put those numbers together. You have to be many things.

I say in this research report on The Change Agent's Manifesto is that you have to be not just a politician, but also a lawyer and also a data storyteller in that you have to bring all of these different things together that show what someone needs to hear and how they need to hear it tied together with numbers, tied together with evidence, tied together with possible outcomes and potential outcomes so that everybody involved can believe in your work. Chris, I'll let you finish that and what you're measuring.

Chris Satchell: Yeah, it's interesting. I don't know, for all of us in new development, but here's a controversial statement. I think it is absolutely pointless measuring ROI below the portfolio level for a given line of business. I sometimes have some very spirited discussions with our finance team around this. The reason is, we've got all these projects. They're feeding into the overall experience the consumer gets. Then the consumer, especially in our business, has got a subscription they're holding because of that.

When somebody comes to me and says, "Well, we need to know exactly what it costs," I go, "Why do you need to know what it costs? You know what the portfolio costs."

They're like, "Well, so we can plan ROI." I'm like, "How on earth do you know what the return is? There is no way to un-entangle these variables. That is impossible. It's mathematically impossible. We don't have that precision."

And so, I think one of the problems is when people start measuring ROI. Measure it at an appropriate level. The level I think is appropriate is: Here's what we invest in a business, and here's what that business returns. If you start looking at features, and you start looking at product extensions and all these other things, and saying, "Well, we need an ROI," I think you're kind of missing the point in the modern world. I think you need to look at total investment, total return. That clears up kind of actually a lot of the mess if you can convince people of that because I find that a lot of organizations love, would actually much prefer, to be precisely incorrect and generally right because it gives them this sense of, "Well, they must be on it because they've got all these detailed numbers."

Well, the detailed numbers are a fiction. We don't really know how the customer will receive it. How many of us really see ROI projections that really pan out?

Now, large-cap scale investment and capital investment, that's a different matter. You can actually plan that. But, when it comes to consumer-based products, I just don't think, other than the line of business, you can really plan it. The first one is, if you can, don't get caught in the game of ROI for small things. Talk about portfolio ROI.

Then what we measure really depends. You've got your vanity stats because you kind of want to know your population and what your monthly actives are and your unique users. But beyond that, you have to measure, one, what you think is really important. If you're in a moment of truth, you need to measure success across a moment of truth. Maybe you need to measure net promoter score one side then the other.

That means you have to run experiments, take people through a new experience and measure what their net promoter score was at the end versus the net promoter score of people on the old path.

We have this idea of relationship net promoter score, so RNPS, which is the long-term [of] how you feel. Then TNPS, which is, through a transaction, how did you feel? Then other than that it's, you've got to come back to the product teams. It's like any good data science. KPI is no different. What question do you need to answer? You have to think about the questions you need to answer and then plan for the data to answer those questions.

From a development perspective, it's great to put the infrastructure in to be able to say, "I want real-time stats. I want batch stats. I've got these different things that I want to get back from my application to make it very easy for developers to instrument."  Whereas, product comes in and says, "Could you find these things out for me?"  They're like, "Yeah, that's easy. I can just go and add that."

Beyond that, it really depends [on] what you're trying to answer for that question. If you've got a funnel problem with, "Hey, how do I track from when somebody downloads an application, how many people go through, set up an account, and they watch that first video and go to the second video?" That's very different than saying, "I want to understand the heat map of how somebody moves through our user experience."  We'd say in England, "Horses for courses," but it really is about understanding the question; design your data feeds and your data analysis for the answer.

Michael Krigsman: Let's actually talk tech for a moment since you brought up data, which is such an interesting topic. Brian, jump in as well. How can organizations use data in the service of customer experience, in the service of digital transformation? Where do you get that data, and how does Comcast, how do you think about data? I know you've just been talking about that a little bit.

Chris Satchell: We have huge amounts of data across everything, whether it's our products. You can only vaguely imagine how much data our network produces. We're using it in many ways. We use it operationally to keep the service running, to give customers a great service. We also use it, as I said, to answer product questions, to understand where we should go next in our products.

More and more, we have a very strong machine learning, artificial intelligence, and deep learning set of core teams here, and so we're using that data to not only sort of find out new insights to be able to recognize in our products; we're using that data to actually create new product experiences that you can only create with those intelligent methods. Then the same with operations, feeding data in and looking for that sort of pattern matching recognition and next action recommendation that you can only do by using very deep networks to be able to recognize all this data coming in.

We're starting to use data as a way to actually change how we operate and as a core of how we build and the functionality our products deliver. I think that's going to become common to many companies. You will start. Data will become part of the product. I think what we're finding is the algorithms that are available are becoming a commodity. You can get great data algorithms everywhere.

The actual technology frameworks--whether it's MXNet, whether it's TensorFlow--analysis and modeling frameworks are becoming a commodity. The real thing you have as a company is your data. The models you build with that data, that is your secret sauce. That is your gold. We're very focused on, how do we use our data effectively? It's more of a question of capacity. We have infinite amounts of great questions and things we can do. It's just sequencing them through product development, through product insights, through network operations and customer experience to be able to get the most valuable things done first.

I think we always talk about big data. Now we're talking about A.I. and machine learning, but all of that--let's just remember--they're just tools. Without great people thinking great ideas, without being able to actually develop it, without actually being able to take the insights or the data and have the actuation loop to really affect things, there's no point collecting it.

I mean I used to joke that what would happen is, in the big data world, you'd have a board of director that says, "We need data." Dutifully, the company would go off and gather, like, huge amounts of data. Then they would say, "Well, nothing is happening," and so they go, "Ah, we need more data!" So you get even bigger data.

Then you realize a little bit later, you've got no insights from it, so you start building the insight engine. You have this, like, huge first bit, and then it narrows to insights. Then still nothing happens. Everybody is scratching their heads, and then you realize actuation. There was no pathway to take the results we had and actually change the world based on that. You kind of want it to look more like a pipe where your insights match your analysis match your ability to actuate.

The last point I'll say on that is the trouble is lots of people are very opinionated. They used to, in the old world, say, "Well, this is my opinion, and so let's go do it."

Brian Solis: [Laughter]

Chris Satchell: Then you say, "Well, we're going to become a data-driven organization," and what they really mean is, "I'm going to be a data-driven organization unless I disagree with the data. Then suddenly I'm going to challenge the data, not my thinking."

There is a cultural element where you really need to start being able to check your ego and say, "Wow. I'm surprised. I had an insight. My insight was wrong, but I've got a new insight. Let's go drive that." If you can get those to line up, you can actually start making a change in the org.

Michael Krigsman: Brian Solis, as you look across many organizations, this role of data, what are you seeing? What do you suggest? I love this notion of data being the key because algorithms are a commodity.

Brian Solis: [Laughter] Yeah, I mean it's one of the reasons why I'm vice president of the Chris Satchell fan club.

Chris Satchell: [Laughter]

Brian Solis: I think I report to his wife, who is the president of the fan club.

Chris Satchell: [Laughter]

Brian Solis: But, you know, he nailed it right. I mean he's been nailing everything. But, right there at the end, it's the biggest challenge I've seen data meet. This is across the board in any conversation is that, remember, the challenges for any of this are human. Really, what you have is that you're working against a career long of experiences that are behind every executive, or behind every decision-maker that you're working with, in that they got to that role of where they are because they've made great decisions along the way. Those decisions have fortified their experiences and have validated their beliefs and their perspectives.

What you're really trying to do is challenge convention. This is where it gets very difficult because data only reinforces what you want to see or what you expect to see, and so you have to. This is one of the reasons why I say being a data storyteller and having common language is that you have to be able to get data to tell the story of what is actually happening based on an assumption that is going to challenge the convention. This is the art of it, and this is where it gets very difficult because what you're essentially doing is trying to apply a Jedi mind trick to someone who doesn't want to be wrong in a way that you get them to feel that they're part of the solution and that, in some way, shape, or form that they're validated in this direction.

I mean just apply this to any conversation about politics on Facebook today. It's very different to say, "This is what I think, and this is what someone else is thinking." They'll come back and say, "Wow, you've completely changed my mind. Thank you for that."

Michael Krigsman: [Laughter]

Brian Solis: I mean that just never happens.

The other thing, too, is that the story is bigger than, I think, anyone is really able to comprehend. What Chris mentioned earlier and what I'd love to kind of go back to at some point is that NPS is one of those things that validate part of the story and can validate the old story or can validate the new story. Chris has used moments of truth, which is something I'm a big believer in.

If you look at the proper definition of customer experience, or employee experience for that matter, it is the sum of all engagements someone has with your organization throughout the entire journey and throughout the lifecycle. It's not just about any one moment. It's about how all those moments come together.

What I try to use data for, and also metrics--coming back to that point--is something that I've learned from a good friend of mine named Thomas Marzano at Philips where you've created essentially an experience flow where you've taken all of those key moments of truth. You've designed what those experiences should be, how they parlay into every bit of it, and it doesn't just play out into a flow. It also plays out into what's the messaging, what's the packaging, what's the support infrastructure look like, what do the policies look like?

You're building out this whole thing where NPS, or whatever metrics you want to use--as Chris mentioned, you look transactionally and also overall--you're now starting to measure for what I call experience architecture. What is the experience that someone is supposed to have? That is the design. We're not talking about a brand style guide. We're not talking about corporate vision or mission. We are talking about the human emotion, and we'll measure those emotions by the reactions that they have and what happens next.

Essentially, what I feel is ironic, but also beautiful at the same time, is that A.I. and machine learning and deep learning are allowing us to humanize all of these aspects, leaning on technology to actually humanize these experiences that someone has to say, "This is the standard of which we want to deliver, and now let's design for that."

I have two questions that I want to kind of flop back over to Chris. One is, how did you get to what is essentially becoming an experience flow, and how did you get people to see that? Then the second part is, how did you get to this agile-like organization?

I document digital transformation in six stages. Comcast is up there at the top of the stages, but you had to get there from a point that was before your time that was nowhere close to the fourth, fifth, or sixth stage. I think people would want to hear two things about experience flow, which I think is part of the story of how you got people to the table. Then secondly, how you got executives to support an agile infrastructure.

Chris Satchell: The experience flow side, some of it, I think, we got to and I got to personally from kind of just hard lessons. I can go back a couple of companies, and I can think about this. Here's what sort of threw me into experience flow. You build the next generation of your app, the next release, and it's great. It's better than the current one.

You put it in the app store, and the ratings go way down. That's hard. We really tested it. We thought it was great. Then you go read the comments, and you realize the comments are really rating your upgrade cycle or your upgrade path, not the actual app once you're in there.

There are comments, "Oh, it made me log in again." "Oh, it nuked my preferences." "Oh, I have to reattach something or re-log into another service."

What they're really saying is, "You thought too narrowly about what the application was. You thought the experience was just, 'Well, everything is good. Now, I iterate through and I get to do something.'" It's like, "No. You have to think about what is it like when you upgrade? What is it like when you acquire that application? How do you get into it? How do you learn about the application, first of all? How do you even pick the application?

As you got those hard lessons, you start spanning out from the core experience in each direction, and you're saying, "Well, hang on. The world is bigger than I thought." If every touch point is giving an impression of our brand and of our services, oh dear because I have not been managing two-thirds of it.

One of the messages that we give to product managers is, you have to think all the way from the beginning. Think about even when the person doesn't even know they have a need for it. How are you going to tell them about that? How do they actually discontinue the relationship with that application, and how would they go and be a promoter? Can the app help them do that?

It means you've got to measure in the field. Your job as a product manager does not finish when the thing is released. Then you start actively measuring what's happening in the field, and you've got to react to that both on the ideas you had for the next version plus this. In a way, you have to start mapping out all the points in an experience journey.

Sure, if you imagine this on a piece of paper, probably the engagement bit, once you've gone through acquisition and you've set up and you're ready to go, it's probably got the most flows within it, but you kind of have to think about how they work together. How would they recommend this to somebody else? How do you get them re-engaged?

If they do want to leave, how do you have a nice, clean exit relationship? I think that should be great as well. There's no point making it difficult for somebody. That just kind of annoys them. It's like, "Hey, you've decided to leave because you maybe don't like something or maybe it's not useful. On the way out, we're going to kick you a bit because we think that will make you a promoter after this." It's, "Hey, if we just keep kicking you, you'll stay." It's a silly way to think about how people engage.

One is, you just have to start in the middle and think broad. You just have to tell your product managers, tell your developers, keep thinking broadly and keep asking the question, "Well, what would happen then? What happens if I don't have this?"

I wish I could remember who to attribute this to. Brian, you might remember. It's that show me how much you care about your edge cases, and I'll show you how much you care about your customer.  That is one of the kinds of little insidious things about MVP. People took MVP to mean, "Oh, I'm just going to do my core experience, and I won't worry about all the edge cases."

I think that term should have died about seven years ago because now consumers do not have the time or patience. If you're not thinking about that journey, if you're not thinking about edge cases, you've got kind of a minute now, maybe two, to convince people to keep using your application. If you haven't thought about your onboard journey, and you'll see app developers really do this well now, but if you've not thought about it, if you're not thinking about how you get in or how you have an effective first couple of minutes that are orchestrated to make it great and how you go on to your next experience, you're going to lose people. You can't just have an MVP anymore. We like to talk about having MLP, like minimum lovable product.

On the agile side, let's give my boss, Tony Werner, a lot of credit. He really took Comcast from being an aggregator, and integrator, to a full technology shop. Our ex-CTO, Shree Kotay, he did a great job of championing agile. Then I think the more people you bring in, and as we brought people in from all other industries, as we keep hiring from great universities, people just expect that agile is the way you're going to work.

For us, we have to have continuous delivery. We have to have a very rapid release. There's no other way. Our products are too big to try to have, like, monolithic releases or waterfall. You have to allow sprint teams to release independently. Maybe into the same vehicle, but they have to be able to release their code individually.

That just becomes really important for velocity, and I think we think a lot about velocity. I'll give you an example. We've got a program called RDK, and it is the firmware for all of our devices. We open source it. There are about 700 companies that are onboard using it.

One of the reasons we do it, the main reason is, we can change our firmware, and we do change our firmware and our hardware every two weeks. Now, we do multiple releases in between, and we take them to 5%. We check if they're solving the problems we thought or adding the functionality correctly. But, every two weeks we're rolling a full firmware release across our hardware footprint. We can't do that unless we have agile teams and we control that code. Everything we do is set up for these teams to be able to deliver quickly.

I think one of the nice things about Comcast is we had an executive team--Brian, Neil Smit when he was the COO, now Dave as the COO, and Tony--that believed in us and said, "Well, as long as you keep producing great results, we don't really mind how you organize development," so we're constantly tweaking it to make it great for our staff and make it productive.

We just say, "Focus on the results. Look how fast we can get things out. Look how much we're producing. Look at the quality. Don't focus on our development methods. Just let us worry about that in development."

Michael Krigsman: Fantastic! We are past time. We are out of time. We are done. This has gone by so quickly. But, as we go to the end, Brian, you're going to have the last word, but quick, quick, quick. Then, Chris, another alternative is we could just maybe do this for another hour or two.

[Laughter]

Michael Krigsman:[Laughter] Brian, you've got the last word, very quickly, though - very quick.

Brian Solis: All right, Chris. I'm just going to turn this to you for a quick, quick, quick answer. That is, I talk often about the difference between iteration and innovation. Many companies think they're being innovative, but they're actually being iterative, which I describe as doing the same thing, but better, whereas innovation is doing new things that create new value.

I look at the Comcast or the Xfinity remote as sort of this metaphor for the two. Buttons are iterative: backlit keys, dedicated buttons. Then the voice, the whole infrastructure for voice was innovative. How did you get the company to see the difference between the two?

Michael Krigsman: Chris, really quick because we are out of time. We're past time.

Chris Satchell: It's a continuum, so I think small iteration is just micro innovation. You need innovation that's small. You need innovation that's medium where you're expanding products. You need innovations doing completely new things, and you have people dedicated across that time continuum.

Michael Krigsman: All right, that was quick. Really, this has been a fast conversation. I sure wish we had more time. Chris Satchell, you're executive vice president and chief product officer at Comcast. I hope you'll come back and do this again another time.

Chris Satchell: Would love to.

Michael Krigsman: Brian Solis, you are one of the top researchers on change and digital transformation in the world. We're honored that you are back again, and I hope you will come back and do this another time as well.

Brian Solis: Yeah, absolutely.

Michael Krigsman: Dear, audience members, we hope you will definitely come back. [Laughter]

Next week on CxOTalk, next Friday, we are speaking with Michael Chui, who runs McKinsey Global Institute. That's the research arm of McKinsey. When he does research on the future and he does research on artificial intelligence, man, he's the guy to listen to.

Everybody, thanks so much for watching CxOTalk. Come back soon. Be sure to like us on Facebook. Don't forget that. See you later, everybody. Bye-bye.

Century 21: Digital Transformation in Real Estate

  • Episode: 264
  • |
  • Topic: Digital Business
Nick Bailey, President and CEO, Century 21
Nick Bailey
President and Chief Executive Officer
Century 21
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

Digital transformation in real estate: Nick Bailey, President and CEO at Century 21, tells CXOTalk how the largest real estate brand in the U.S. navigates changing global trends from data-driven competitors in property listings and homes for sale.

Bailey has more than 21 years of industry experience as a licensed broker, opened a real estate brokerage where he actively listed and sold properties, and previously served as Vice President of Broker Relations for the Zillow Group. He was appointed president and chief executive officer of Century 21 Real Estate LLC in August 2017, leading the iconic C21 brand and its approximately 7,450 independently owned and operated offices in 79 countries and territories worldwide.

Transcript

Michael Krigsman: Real estate, it is changing! Today, on Episode #264 of CxOTalk, we are speaking with Nick Bailey, who is the CEO of Century 21. Hey, Nick. How are you? Thank you so much for taking the time to be here today.

Nick Bailey: Thanks, Michael. Glad to be here. Appreciate it.

Michael Krigsman: Nick, tell us about Century 21.

Nick Bailey: Well, you said it best. An iconic brand around the globe, this is an organization that has been a world leader in real estate, spanning nearly 80 countries, nearly 7,500 locations, and 115,000 sales professionals worldwide that are helping buyers and sellers every single day. This is an organization that, over its 46 years in existence, has grown to [be] know [as] the best brand between buyers and sellers on the entire planet.

Michael Krigsman: You're CEO of Century 21. Maybe it's an obvious question, but what does that mean? What do you do? [Laughter]

Nick Bailey: [Laughter] I like the question. Yeah, what do I do? Well, first and foremost, as a leader in the real estate franchise and organization within the industry, it's all about helping entrepreneurs grow their business. That comes in two ways. One is we help individuals that want to start their own real estate business and their own office. That's about attracting real estate professionals. My main job is to help those entrepreneurs grow their business. Then the second part of my job is to help real estate professionals capture buyers and sellers, and help them with the all American dream of owning real estate.

Michael Krigsman: Now, real estate is undergoing tremendous change. Maybe you can set the stage for us by describing what's going on in the market that's shaping real estate today.

Nick Bailey: There is a lot of talk about what's changing in real estate. I think it comes down to one thing, which is, we are in a consumer-driven movement. What I mean by that, it's not just specific to real estate, but it's also just how consumers are engaging with products and services. We can point to many companies that have been at the forefront of this movement, companies like Amazon, like Netflix, like Uber.

Via the mediums of technology, consumers are able to make things easier, faster, or take anxiety out of the process. How that translates to real estate today is, the home search process is very popular. People jump online. They jump on their mobile device looking for property, dreaming about property in certain vacation areas, and they get very involved.

Real estate is a hot topic. Look at television shows about remodeling your home, or should I stay in it or buy something else? It's just something that's become at the forefront of consumers and excitement.

With that, though, comes a great deal of opportunity, which is, if anyone has bought or sold real estate lately, they know that the home search part of it can be fun and exciting.  But as soon as you go into the next steps of the home shopping and going into actually purchasing a property, the process of how you go from purchasing that property to moving into it has a lot of room to be improved. Unfortunately, you ask many people that have bought a home recently if they'd like to do it again soon and, generally, they say no because the process to get there is so complex. That's where having a real estate professional to help with that process is crucial.

I saw a recent study that said there are, on average, 181 steps from the time you start looking for a property to moving in. That creates a lot of complexity, and so we have to help solve for that. Consumers are demanding better experiences with lower levels of anxiety, and we have the opportunity, as an organization and as a brand, to help make that process better.

Michael Krigsman: The consumer experience dimension, can we say that's your special sauce, or is that your focus? How would you characterize that?

Nick Bailey: As you mentioned, with a lot of change that's going on in the industry

Michael Krigsman: Real estate, it is changing! Today, on Episode #264 of CxOTalk, we are speaking with Nick Bailey, who is the CEO of Century 21. Hey, Nick. How are you? Thank you so much for taking the time to be here today.

Nick Bailey: Thanks, Michael. Glad to be here. Appreciate it.

Michael Krigsman: Nick, tell us about Century 21.

Nick Bailey: Well, you said it best. An iconic brand around the globe, this is an organization that has been a world leader in real estate, spanning nearly 80 countries, nearly 7,500 locations, and 115,000 sales professionals worldwide that are helping buyers and sellers every single day. This is an organization that, over its 46 years in existence, has grown to [be] know [as] the best brand between buyers and sellers on the entire planet.

Michael Krigsman: You're CEO of Century 21. Maybe it's an obvious question, but what does that mean? What do you do? [Laughter]

Nick Bailey: [Laughter] I like the question. Yeah, what do I do? Well, first and foremost, as a leader in the real estate franchise and organization within the industry, it's all about helping entrepreneurs grow their business. That comes in two ways. One is we help individuals that want to start their own real estate business and their own office. That's about attracting real estate professionals. My main job is to help those entrepreneurs grow their business. Then the second part of my job is to help real estate professionals capture buyers and sellers, and help them with the all American dream of owning real estate.

Michael Krigsman: Now, real estate is undergoing tremendous change. Maybe you can set the stage for us by describing what's going on in the market that's shaping real estate today.

Nick Bailey: There is a lot of talk about what's changing in real estate. I think it comes down to one thing, which is, we are in a consumer-driven movement. What I mean by that, it's not just specific to real estate, but it's also just how consumers are engaging with products and services. We can point to many companies that have been at the forefront of this movement, companies like Amazon, like Netflix, like Uber.

Via the mediums of technology, consumers are able to make things easier, faster, or take anxiety out of the process. How that translates to real estate today is, the home search process is very popular. People jump online. They jump on their mobile device looking for property, dreaming about property in certain vacation areas, and they get very involved.

Real estate is a hot topic. Look at television shows about remodeling your home, or should I stay in it or buy something else? It's just something that's become at the forefront of consumers and excitement.

With that, though, comes a great deal of opportunity, which is, if anyone has bought or sold real estate lately, they know that the home search part of it can be fun and exciting.  But as soon as you go into the next steps of the home shopping and going into actually purchasing a property, the process of how you go from purchasing that property to moving into it has a lot of room to be improved. Unfortunately, you ask many people that have bought a home recently if they'd like to do it again soon and, generally, they say no because the process to get there is so complex. That's where having a real estate professional to help with that process is crucial.

I saw a recent study that said there are, on average, 181 steps from the time you start looking for a property to moving in. That creates a lot of complexity, and so we have to help solve for that. Consumers are demanding better experiences with lower levels of anxiety, and we have the opportunity, as an organization and as a brand, to help make that process better.

Michael Krigsman: The consumer experience dimension, can we say that's your special sauce, or is that your focus? How would you characterize that?

Nick Bailey: As you mentioned, with a lot of change that's going on in the industry from what does home search mean, how do consumers engage with their real estate professional, and how do all those components come together, here's what I know. The real estate professional is still the most important part of a real estate transaction for someone wanting to buy or sell. There is no level of data or analytics that can do the job of what a knowledgeable professional can do to help someone make what is generally the biggest financial decision of their life.

It's still very emotional. If you look at all the data and analytics behind price depreciation and comparables within a neighborhood, still you walk into a home and it's a very emotional process of, do I want to live here; do I want to raise my family here? Here's where the memories and the holidays take place.

There's a balance between that emotional need and then the financial analytical side. When we look at it as an organization, we have to balance both of them, which we're dealing, at Century 21, with entrepreneurs that want to build their business and help people buy and sell. We're also dealing with consumers that are buying and selling and saying, "I am demanding a better process." We have to, as leaders, be able to bring those two constituents together to create a better result for both.

Michael Krigsman: Popularly, this notion of data and just being able to cut out the middleman seems to be very important. Where does that fit into the scheme of things?

Nick Bailey: Let's start with this. When you talk about cutting out the middleman, I'm going to translate that as maybe thinking cutting out the agent. [Laughter] If that's a fair assessment.

Michael Krigsman: [Laughter]

Nick Bailey: You'll look. Just two weeks ago there was data released that for sale by owners are at the lowest level that they've ever been in history.  They keep declining. The question is, why?

One is because the transaction continues to get complex, more complex than it ever has been. You look at what's happened with financing. We're approaching the ten-year anniversary of the decline that we started to see in 2007. As a result of that, financing created more regulation, more complexity for the average homebuyer, and they need someone to help navigate it.

It's not just about data. It's about knowing how to go into the property, what's happening with the neighborhood. An agent knowing that, for example, the city council just approved that there are train tracks that, next year, are going to be going through the backyard. There's that community type of knowledge that a certain level of data will never be able to provide to someone that's making a huge, huge investment.

Here's where data can be really good, though, is in the education process. Especially for first-time homebuyers, you look at 47% of transactions last year were done by first-time homebuyers. Of that, 53% of them were under the age of 35. They are using online data and analytics to help educate themselves on what they should be looking for in the process. But, once you go into the actual process of buying, there are so many areas where the transaction can go wrong, from financing, the appraisal, the inspection, [and] all those negotiation pieces that have nothing to do with data, but have everything to do with getting to the closing table.

Michael Krigsman: The issue then from your perspective is the appropriate use of that data, knowing where to plug that data into the process, that complicated process you were describing, and simplifying the process with that data, I suppose.

Nick Bailey: Yeah, and I would say there are two things from that comment. One is, here's where data can be so useful, like I mentioned, the education process and the home search process. Where do I want to live? Where does my family need to be? What's happening in the neighborhood with pricing on homes? Are the values going up? Are they going down? Are they staying the same?

Creating that level of data, of empowering people to be able to see what's on the market, see what's not on the market, and do their homework on certain neighborhoods. I'm doing this myself right now. I happen to be going through a relocation, and so I'm using an immense amount of data in looking at neighborhoods and comparables on properties to find exactly the right area.

At the same time, when I visit the area that I'm looking to move, my agent is so critical of how he's helping create lifestyle for my family. My wife is a huge outdoor enthusiast, and I have young children, and so schools, sports, and community is really important. The data doesn't show that. That's where I think that you can couple data in your home search process for what house, what neighborhood, what's right for the financial side of it, what do I qualify for? Then you combine that with the community knowledge of a professional to figure out lifestyle of where you want to live.

Michael Krigsman: The role of a professional then is to help aggregate that data, but combine it with an understanding of your emotional and psychological needs, family needs and so forth.

Nick Bailey: That's right. They have to know the needs. I'll give you a great example. When I called and interviewed my agent, I said I was moving from Colorado to New Jersey. His first assessment was, "Do you happen to be outdoorsy?" I said, "Interesting you mention that. My wife rides her road bike 60 to 80 miles a day in good weather, my boys love to ski, and we play golf." He was translating this to, "Okay, we need to find you access to outdoor activities.

He asked if we had ever lived on the East Coast, do we have family friends [there]? We said no. He immediately said, "We have to find you a community where you can meet people." Those are all those components of what's really important for my family for lifestyle that the data can't complete.

I think the same holds true for every single person looking to buy a home. Where do I want to live? Where am I going to feel comfortable raising my family? And, does it fit my lifestyle? That's where, to me, the agent is so crucial in the real estate transaction.

Michael Krigsman: How do you plot a course considering the technology, considering the data, considering all of these things? What are the steps that you need to take as you plot the course for Century 21 going forward into the further reaches of the 21st Century?

Nick Bailey: Love that question. That you for that. It comes, in my mind, in two buckets. One is serving consumers, buyers and sellers, and the other bucket is serving real estate professionals.

As the leader of the Century 21 organization, we have to figure out, from a technology perspective, how to satisfy both of those constituents.  When you look at the consumer side of it, we just talked moments ago about how they want to see properties online. They want to see big, beautiful photos. They want to see every type of information they can on as many properties as they can.

We're in a low inventory market nationwide, and so the need for looking at accurate data quickly from a consumer perspective is really important. What's new on the market? What does it look like? Is it in the neighborhood I'm looking? From a technology perspective, we want to make sure that we're serving up the absolute best, most timely information about real estate listings to consumers as we can. That will help create engagement with our system.

Then when you look over on the other side of it, the other bucket that I mentioned, which is for real estate professionals, our job is to help them be productive and simplify their life. We know that, with consumers and agents alike, mobile is where everyone is. Very few people are sitting behind a desktop, fewer and fewer people all the time sitting behind a desk doing searches and spending time. They are driven through their mobile device of their interactions.

From a technology platform, what I want to see within our organization is to create a mobile-first platform that helps connect buyers and sellers with our real estate professionals and helps them take their buyers and sellers from search to close because that process can be rocky. If we can make that process easy for our agents, which in turn makes it easy and transparent for consumers, that to me is a winning formula.

Michael Krigsman: Nick, how do you transform the organization to adopt these changes that you're describing?

Nick Bailey: First off, I mean the beautiful part, I told you the magnitude of this organization globally, which we have an incredible foundation with the number of associates, the number of offices, the number of transactions and the buyers and sellers that we help on a regular basis.  Awesome foundation to catapult some of these initiatives, these forward-thinking initiatives from. At the same time, whenever you have a large organization at scale like this, any type of innovation that comes to market, it takes a lot of energy to get the entire system to adopt and move. That's just the responsibility that we have as an organization. If we're making the right decisions for our agents, and we're making the right decisions for consumers, in making this process of buying and selling real estate easier, then they'll be quick to adopt.

If we're serving up exactly the right things, they will be coming and saying, "We're going to carry the load of adoption for you."  If we don't, and we miss that mark, then it is very difficult to turn. But, I would rather start with the foundation and the global presence that we have as an organization than start from scratch with no one and no countries, no transactions.

Startups are very difficult.  We don't have that challenge. We just have the challenge of saying, "We have a 46-year-old killer organization. How do we now take 46 years of brand equity and make it relevant to the future and for the next generation? We can do that.

Michael Krigsman: How do you do that? As you said, it's an enormous, large organization. How do you take that brand equity and use it as the energy to bring forth that innovation and move that entire organization? It seems like a big challenge to do that for any company.

Nick Bailey: We have a big advantage. What that advantage is, is having when I talked about nearly 7,500 locations. Those are independently owned and operated locations, which means we have nearly 7,500 entrepreneurs out there that have partnered with us that have said, "We want to partner and be part of that innovation with you."

It's not as if we're looking at an organization of, say, 115,000 employees that you're trying to steer a ship, but you have business owners that have a vested interest in their success as a business owner and have partnered with us. Because of that inherent nature of the relationship, they are saying be leaders, be innovative, provide it to us, and we will be super excited to take it to market. When you have that many entrepreneurs on the ground level and on the forefront saying, "We're here to carry that load for you," it does make it a lot easier to create a very quick initiative or momentum on innovation.

Michael Krigsman: We have some good questions from Twitter. Bob Latigona--and I hope I pronounced his name correctly--says, "It's time to change your image from your grandfather's real estate company to a new, updated image. What's the plan?"

Nick Bailey: I hear that a lot. This also comes in two buckets. Thanks for the question, Bob. Consumers, when it comes to the Century 21 brand, they love it; they know it; they trust it. It always ranks highest in every survey of brand name awareness in real estate. The terms are synonymous. When you think real estate, people think Century 21. When they think Century 21, they think real estate. That's great for consumers.

We also know and are not naïve to the fact that, within the industry, when you take an organization and a brand that's been around for 46 years, we have to blow the dust off of it. What I mean by that is we have to reinvest in a complete overhaul of brand image within the industry. We started that work this summer. Even before I came onboard, the team started working on it, and we are moving at an incredible pace on this.

What does that mean, brand image? Let me give you an example. I think Apple is a great example that I think a lot of consumers can relate to. I remember in elementary school going in on the Apple IIe, and you had to swipe your hand under the keyboard so you didn't shock the system. As they evolved, if you think of them today, think of when you see a commercial; when you visit their website; when you receive one of their products, what the packaging looks like; when you walk through the mall and you see what one of their stores looks like. There's a cohesive nature about their brand image that has a very innovative, forward-thinking feel.

We can do the exact same thing with our brand, which is, what are consumers demanding and wanting and, at the same time, what are agents demanding and wanting? We've already received that feedback, so now it's up to us to deliver on it. From everything we do, from consumer-facing marketing, from collateral and tools and services that we provide to our agents, from our actual image, from our logo, for example, all of that we can work on and evolve it to make sure that it looks like today and in the future. That work is well underway, and we have a very aggressive timeline, early next year, for starting to bring this to light not only in the industry, but for consumers as well.

That is the reason I'm here with this position that I recently accepted and why I'm most excited about the organization because, essentially, we're making the Century 21 brand the very first challenger brand in the real estate space. A challenger brand is all about the relentless pursuit of innovation and forward thinking.

In fact, we already have a new mission statement. It is to defy mediocrity and create extraordinary experiences because--let's face it--as long as the National Association of Realtors, which is our membership system, is all about numbers, we have low barriers of entry to getting a real estate license. We will always have this huge spectrum of people that dabble in real estate, and we also have the other spectrum of wicked, amazing professionals that completely raise the bar. That's just what we're dealing with in our industry is everything in between.

We as an organization say we have to be innovative, be the place that people want to be. We have to show it, demonstrate it, and make sure to bring all of this to life and not settle for anything less. That's the new charge of the Century 21 system. When you couple that mission with what will be, months away, the new look and feel of the organization, I think it's going to be a powerhouse.

Michael Krigsman: Nick, you've just been talking about innovation and brand image, ensuring those two match up. We have a bunch of other questions from Twitter, and here's an interesting one from ... (indescernible, 00:19:43) account, which is asking, "How does Century 21 deal with digital platforms like Zillow, with A.I., artificial intelligence, big data, and all of that?" You alluded to that earlier, but maybe if you can touch on that more directly.

Nick Bailey: Sure. Yeah. I'm glad you asked that Zillow question because, prior to coming to this role, I actually spent some time at Zillow. A wonderful company, and I think that they've done amazing things for the consumer experience within home search.

Here's what I know. You're using Zillow as an example. There are several other companies that do something similar. They have done a great job in looking at what are consumers wanting in their home search process. They've done a great deal of work in this home search area. As soon as homebuyers and sellers move into, say, home shopping to close, which is the main part of a transaction, that's where the shift happens. And so, they are a great example of consumers demanding; saying, "I want insight. I want information, more that's readily available to me about neighborhoods, housing, prices, and lending." Zillow has served that up to the consumers.

Now, still, the consumer then goes and actually starts the home shopping process. Once they go under contract, it's almost as if we shut the lights out on the consumer. Then they have to work with their agent. Is the appraisal done? Did I get approved on a loan? Do we have inspection issues? There's this constant back and forth that creates a lot of anxiety for a homebuyer. That's where we still have to solve for.

Now, in terms of big data, there are so many things that can be done when you look at, for example, some of our technology today at Century 21. We are able to allow an agent to work with their sphere of influence. If their sphere, if their buyers start to go online, are looking at properties, and start to engage in that process, our technology alerts our agents to say, "Hey, one of your clients is looking at real estate and may want to get involved with you." We try to connect those dots.

I think, moving forward, though, there's going to be a lot of interesting dynamics around predictive analytics for home sellers. Look around a neighborhood. Can we use technology and big data to figure out who is going to list their home for sale, say, in the next six months? I think we're going to hear a lot more about that. We're already engaging with a company to look at what those opportunities are because, how great would it be for our real estate agents to be able to serve up, via technology, some data of showing people that may have a need to move so that we can be right there to help them through that process. I think we're going to see a lot more of that on the seller side, but we absolutely can use data to help consumers and agents alike.

Michael Krigsman: Okay. We have a bunch of questions from Twitter. Let's jump into those. Again, I apologize for my audio. Fortunately, everybody is here to hear Nick, and so his audio is good.

Arsalan Khan, on the subject of agents, makes the comment that agents come with biases like everybody else. How do you tackle those biases in the home advisory phase that you described earlier?

Nick Bailey: In terms of biases, did they give a specific example?

Michael Krigsman: How does the agent ensure that the buyer is getting what they want as opposed to the agent projecting their emotions onto the type of potential purchase?

Nick Bailey: Sure. Let me answer this kind of from a broad level, which is, right now what we're dealing with within the industry and consumers is somewhat of a clash. Here's what I mean by that. When you rewind the clock even 20 years ago within the real estate industry, agents had full control of all of the data. When I say data, it was what homes are for sale; where are they? That was driven through even hard copies of books, MLS books. It was a scenario where you'd invite a consumer in, and the only avenue of figuring out detailed information on what's for sale in the market was via the agent.

You still have a number of agents within the industry that were so used to their value proposition being a conduit or someone that delivers the data that now all of a sudden we've moved way past that. The data conversation, to me, we're on the back nine. All of that information is public. It's out there. You can find it. It's easy.

Now it's about creating value of an exceptional experience, which, as I mentioned, we know it can be a rocky experience. We're really in the customer service game, not the data game. What happens is, you have agents that are still used to providing that level of data or wanting to control that consumer experience where the consumers are over here saying, "I've done my research, Mr. and Mrs. Agent. Here are the three houses I'd like to see." That data exchange in terms of how the information is served between the two has flipped, and some agents are having a hard time responding to it.

You look at, for example, on some of the platforms that have automated valuation calculators that you can go on and see what homes are worth. That can drive agents crazy. They say, "No, I'm the expert on pricing. These websites shouldn't be telling buyers and sellers what these properties are worth." You get this collision of agents saying, "I should have that job." Consumers saying, "Yeah, but I want to search that out on my own."

That's where I think we have to bring clarity between agents and consumers to say, "If consumers are demanding this information, we have to serve it up to them because they're going to find it one way or another. Then we have to be there to help them through a very complex process. That to me goes back to somewhat of a bias is, "Hey, I controlled that data before, and I still want to as a real estate agent." But the reality of it is, those days are behind us, and so we need to be thinking ahead saying, "What does the consumer want?" and we need to be delivering a better experience to their wants and needs versus what we think they want and need, as an agent.

Michael Krigsman: You mention that you are in the customer service business.  Therefore, can we take away that the role of the agent becomes, as we were saying earlier, the lever point for pulling together the data, the psychological demographic information, the family goals of that buyer in order to create as easy a process as possible in this very complex and difficult environment, which is buying real estate?

Nick Bailey: A good agent will make it look like it's easy. Put it that way. They are the collection point of all these different components, not only data, but also the potholes that exist. Good agents can anticipate things, essentially anticipate the unexpected needs of what could go wrong with a transaction. They can help keep it on course.

I see it all the time. I see people go into purchasing a property, and there are going to be bumps along the road. When you have an agent that can help navigate those, whether that be with the financing, whether it be with the appraisal, whether it be with the home inspection, there are all those different components that come into play along the process before you move in that have to be dealt with.

Having someone experienced to know how to deal with them can absolutely make or break whether or not someone ends up at the closing table.  That's where an agent not only has to be knowledgeable about the area, the community, the home, but it's just as much or more important for them to be knowledgeable about the process of how to get someone through the funnel, to the closing table so that they can move in.  It's difficult, and it has potential to have a lot of disruptions. You have to be able to navigate it well.

Michael Krigsman: This has become a little bit of a town hall on Twitter for Century 21 agents, and why not? We have a question from @Century21Universallux, Century 21 UniLux, who says, "Will you combine the five branches of the brand with featured advertising so people know the full power of the brand."

Nick Bailey: I think if heard you right, will we combine certain branches of the brand? When they say branches, I'm assuming they consider things like commercial, Fine Homes & Estates, maybe some of those things. When you look at it, obviously consumers have different needs. Some are high-end luxury buyers. Some are farm and ranch. We have some of our agents who specialize in commercial.

I think the key is--again, when you think real estate, you think Century 21, and vice versa--we have to make sure that we have agents that are experts in every one of those areas and that and that we have the ability that, when a consumer raises their hand and says, "I'm a high-end buyer and I'm interested in luxury properties, we are pairing them with the right person that specializes in that area.  I think it's more important, not as much even to advertise those different segments, as much as it is to connect those people with the right people because that's how you're going to create the extraordinary experience.

From an advertising perspective, we want to make sure the consumers know, trust, and understand that if they're dealing with Century 21, they're going to have a successful experience, an exceptional experience. That, to me, is what should happen at the top level with advertising. The specialties of the branches should happen between consumer and agent.

Michael Krigsman: That's interesting. The foundation of that consumer experience is confidence and trust in the brand, and then, of course, the agent needs to execute against that in a similar manner.

Nick Bailey: They do. The agent creates the experience for the consumer. They're completely dependent on it. That's where I think, if you move forward looking at technology, we can combine technology, increase the level of transparency to the consumer along the process to where there's interaction via technology from home shopping to close that allows consumers to be part of that process even more so. It will also help the agent because good agents make it look easy.

Sometimes consumers say, "Why am I paying an agent so much money? This process seems really easy?" The agent is back there wiping the sweat off saying, "Mr. and Mrs. Buyer/Seller, you have no idea what I just did to get you to the closing table."

And so, there's a disconnect there, and that's where I see technology moving forward in the next five years of bringing those two together so they can share in the experience. It takes the anxiety away from the consumer. It increases showing the transparency of the value of the agent and will help move along to a successful, easier, less stressful process to close.

Michael Krigsman: We have another question from Twitter. MichaelangeloAmantia is asking about the technology systems. He wants to be able to do things like capture his own buyer leads instead of having them sold back to them, similar to Zillow, and then he talks about user experience. I guess if we abstract that out, what's the role of technology for agents going forward, and where do you see the role of Century 21 in developing technology to fill that gap to support the agents?

Nick Bailey: Yeah, let me start. I like this question. I hear this a lot because, when you see technology marketing companies out there that are marketing real estate listings, I hear this all the time. "Why should we provide our listing content to online marketers, and then they sell us back our leads?"

Let's keep in mind that there was a point in which, even when I started my career selling real estate 21 years ago, that we were somewhat, as agents, jack-of-all-trades, master-of-none in the sense that we developed all of our own marketing, and we developed all of our lead gen. Then we took them through our process, lead to close, and our paperwork. We had to do so many things.

At the same time, we relied on newspapers and magazines to be the marketing challenges. They had distribution. They had scale. Even though they were expensive for us as agents to advertise with, we could not go out and create our own newspaper or create our own magazine and scale it the way that those marketing arms could.

I think the same holds true today, except we're seeing it online. It's not as much about us providing listing content and these companies selling back leads to us, but it's what we know is, in any business, you will spend marketing dollars. As much has changed, just as much has stayed the same. What I mean by that is, as a real estate agent, you're looking for someone that wants to buy and someone that needs to sell. By doing that, you work your sphere. You also spend marketing dollars to hopefully create that buzz and that attention back to you.

When I spent money and bought a half page in Harmonhomes or Homes Illustrated, I was hoping someone would pick up the magazine. I provided them [with] my listing content.  I paid for it to be in there. What I was hoping is that they would pick up the phone and call me. I would capture them as a client and hopefully turn them into a successful business.

The same thing happens today. We are providing our listing content to online marketers or magazines, classifieds, if you will, and the difference is, today, the newspapers and magazines didn't allow you to put that information out there for free. I couldn't call and say, "Will you put my ten listings in for free?" and they say, "Nick, I'm happy to do that." There was always a charge.

What's awesome today is you can put that content out there and create activity on your listing content that can return leads back to you, and you haven't invested a dollar. Now, you have a choice in the online lead game to invest more to put fuel on the fire, to increase that lead flow back to you. But, at the end of the day, we know this. Agents will always spend marketing dollars to create interest in finding buyers and sellers.

That is exactly what's happening today, especially with technology today like these mobile devices. I can't go out and create my own mobile device. I have to rely on Apple or Android. I want to leverage it. Because of technology, you are seeing buckets of specialties. You see companies like Realtor, like Zillow, like Trulia. They are specialties in online marketing, and that's what they do really well. We need to let them do that, partner with them, but leverage them for our business just as we did magazines and any type of more classic type advertising from years past.

Michael Krigsman: That's interesting as well. Those data-driven companies are essentially marketing organizations using that data even though your core competency is in the underlying data rather than in marketing, per se.

Nick Bailey: Here's where I think we'll get ahead because, ultimately, all of our entrepreneurs in our system, whether you're a broker/owner, whether you're an agent, they are in business to make money and grow their business. That's why they've joined up with a well-known brand like ours. We can't be experts in every single component of the business. Sometimes we have to partner with them.

What I believe we need to be great at, moving forward, is creating that exceptional real estate buying or selling process. We will not own 100% of the lead gen. We will not own 100% of every single one of the processes that go through. We don't own 100% of the appraisal companies or the mortgage companies. Let's allow those experts to be really good at what they are. We partner and leverage them, but we need to be the very best at what we do, which is helping buyers and sellers transact. If we do that and create a phenomenal experience, then that's going to deliver even more repeat and referral business back to us because, ultimately, we don't want anyone to buy or sell real estate without it being done with Century 21.

Michael Krigsman: Where do you see the technology of all of this going?

Nick Bailey: Yeah, so specifically here's what I see. One, mobile first. I mentioned it earlier. Everything is mobile. It's where consumers [and] it's where agents are doing their business. But when you look at [it], no one yet in the industry has solved from lead to close.

What I mean by that is, I raise my hand; I inquire; I'm interested in buying a property. I go and I look. I submit an offer. The paperwork and how that's done on transaction management, taking you through all the steps to get it to the closing table. Then getting down and signing that final 180-page book at the closing table to actually own the property.

That's where there's opportunity from a mobile perspective. I envision a space where I, as a real estate agent, can use my mobile device that a lead comes in, and I can take that lead through the entire process. If you want to see homes, I interface with you via my mobile device. When you're ready to write an offer, I'm writing an offer on my mobile device and submitting it to the necessary stakeholders. When it comes down to an appraisal and how that fits into the transaction [that's done] via the mobile device, [and] the financing that comes through. Even to a point when you get to the closing table, I envision a day where buyers and sellers will sit with a mobile device and sign all of their closing documents instead of going to the title company and actually having a close.

I think that the mobile device is going to transcend that transaction process. That's where we have to be innovative as leaders in this space in saying, "What can we invest in to make sure that we're delivering an awesome mobile experience from lead to close?"

Michael Krigsman: To what extent do you foresee technology becoming a core competence of Century 21 because, after all, you're ... (indiscernible, 00:38:37) relationship in the buying and the selling business, but you're not inherently in the technology business?

Nick Bailey: We already are. It is already a big part of our DNA, which is, right now we have the ability for consumers to search for real estate using our consumer technologies. We also have productivity tools, marketing tools for agents that are available.

The thing that we have to do and realize, though, is once that technology comes out, we have to constantly be thinking about the next one. That's just the space we're in. Everyone can relate to mobile devices. You get a brand new one. I just received mine last week. I'm already thinking about how I make sure that I get the new one that's next year.

We have to stay ahead of that curve. That's our job as leadership from a brand perspective is to say, "What technologies are out there? Are there some that we can build and make proprietary in-house because we have phenomenal technology resources?" But, we also have to make sure to say, "Our core business is not a technology company, so there are times that we need to go out to the street, find best in class, and incorporate them into what we do. Let those best in class companies be great at what they do, leverage them, and bring them into our platform." That's what we plan to do.

Michael Krigsman: Technology is, remains, and will be a core part of any ... (indiscernible, 00:40:00) judgment, what we develop in-house, what we buy, where we stake our claim to technology, given ... (indiscernible, 00:40:08) continually changing, and your focus ultimately is on that relationship with your buyer and seller?

Nick Bailey: Yeah. Today, here's the reality of what's happening in real estate. The space is very fragmented. What I mean by that is there are agents--I know if they're listening, they'll be shaking their head yes--that are using two, three, four different systems to do their business. The innovation, to me, is going to come with integration. Making an agent's life easier is being able to utilize one system.

For example, what I mean by that is every lead source that they have, whether it be online from their website, maybe an advertiser's website, coming from the brand's website, whatever lead source they have coming in, they need it to dump in one single spot so that they can manage their business efficiently from there, not log into three systems. Even if you're not in real estate, we all have that where you may go to your bank for something and your credit card for something else. Agents are dealing with that all across the board with multiple platforms.

Our goal within Century 21 is to say, "How can we create a singular base program that everything can plug into and integrate?" because that to me is innovation of when everything talks to everything else. We're not there yet, and that's where I see it as great, great opportunity in technology because I think the real estate industry lags in overall technology innovation as a whole in society. We can move faster at it.

Michael Krigsman: We have only three minutes left, so I'd love to explore what you were just talking about, but I think, to close, maybe it makes sense to ask you for advice that you can offer to agents in how they can survive and they can thrive in this changing environment that ... (indiscernible, 00:42:02).

Nick Bailey: I get asked that a lot. Here's what it is. We're in a very noisy space within real estate right now. There are a lot of startups. If you look at 2017, it is set to have over $1 billion of capital influx into just technology innovation. It's the highest it will have been in years. It was climbing before 2007. Obviously, the trajectory changed on that a bit. It's on a steady climb, but over $1 billion of capital coming in for new technology. You have startups popping up all over the place.

We're seeing prices increase. We're seeing low inventory markets. Real estate is hot. When it is hot, we start to see a flavor of everything coming out of the woodwork. What that does for agents is creates a whole lot of noise to say, "What should I invest in? What should I be using to expand my business?"

Here's how I would narrow it down.

  1. A successful real estate professional works their sphere and knows that the vast majority of their business will come from repeat and referral business. If you've done business with someone, keep in contact with them. They're likely to do business with you again. It sounds simple, but it's so easy to go to the closing table and then forget to talk to your past clients. That is still the biggest basis of where you can grow your business.
  2. Invest in marketing, and I say marketing where you advertise. If you invest in purchasing online leads, whatever that is, track it because we can get, in all this noisy space, the hot flavor of the day. Agents say, "Oh, I've got to go spend on this," and they throw their credit card down. Six months later, they haven't looked to see if there's any result. Don't toss money where it doesn't need to be tossed. Make sure you're investing in your marketing and you know that it's delivering you a return.
  3. Be the very best master of your trade in creating an exceptional experience for buyers and sellers because that is where I believe, as long as I'm alive, the agent will be at the foremost most important component of a transaction, creating an exceptional experience for a buyer or seller.

Work your sphere, track your ROI, and make sure you are the very best at what you do in taking a buyer or seller from lead to close.

Michael Krigsman: You have been watching Episode #264 of CxOTalk. We've been speaking with Nick Bailey, who is the CEO of Century 21. Thanks so much, everybody, and have a great day.

Customer Experience, Group Collaboration, and IT

  • Topic: Digital Business
Gwen Becknell, Senior Director, HP
Gwen Becknell
Senior Director, Employee Experience and Support
HP, Inc.
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

Customer experience is one of the great opportunities and challenges for the CIO and IT. Historically, IT focused on systems rather than people, creating inefficiency rather than fostering innovation. In this video, HP's Senior Director of Employee Experience and Support, Gwen Becknell, explains how her organization deploys technology to improve user experience and foster collaboration. She discusses how IT helps groups inside the company collaborate and work together with tools and communications platforms, such as Zoom for video conferencing.

Transcript

Michael Krigsman: We are speaking about customer experience, and customer experience applied to IT. I’m Michael Krigsman. I’m an industry analyst and the host of CxOTalk. And, I want to thank Zoom for underwriting this episode and making it possible. We are talking with Gwen Becknell, who is with HP. Hello to you, and thank you for being here and being a guest on CxOTalk. How are you doing?

Gwen Becknell: Thanks, Michael! Thank you for having me today. My role is really around the things that touch an employee. It's all the tools that the employees need to make sure that they can get their job done to then serve our customers - our external customers.

Michael Krigsman: And, I know a lot of your focus is, in fact, around treating your IT stakeholders as customers. That’s what you do!

Gwen Becknell: That’s absolutely what we do.

Michael Krigsman: So, Gwen, this notion of the technology just working; is that… Can we say that’s kind of the foundation that you’d push forward?

Gwen Becknell: I think, to a large extent, that’s true, right? We want to be the lights-on organization, so people don’t have to think about the technology. That’s a good day for us. So, in my team, we’re really working on the mobility play and how we can ensure that they can work seamlessly from one modality to another. It doesn’t matter if I’m on my phone, or I’m on my computer, or I’m on my tablet that I should be able to seamlessly go from one thing to another. I should be able to transit around the building and not worry about my WiFi. And so, what we’re trying to do now is just really look at the easy button, right? So, how do I walk in and just hit one button and instantaneously connect it? My boss harps on this every day and until I get that easy button done, you know, our work is really not done.

Michael Krigsman: So, the whole collaboration piece is essential in the transformation of IT to be more customer-centric.

Gwen Becknell: Absolutely. Communication is our number one, you know, mode with being able to get back to the employees and really collaborating with them and helping them to be able to get their jobs done.

Michael Krigsman: So, briefly tell us about what you do with Zoom. I know it’s all around this issue of collaboration.

Gwen Becknell: Yeah. We've been working with Zoom for about a year now, and in that time, we are utilizing Zoom from a video conferencing perspective so, again, we can help to bring the employees together so that they can get their jobs done. That whole collaboration piece from a video perspective has done a couple things for us within HP. We have about 125 video conferencing rooms across the globe that allow people to have a pseudo-face-to-face engagement between them and that's done a couple things.

One, it's really allowed us to reduce costs from a travel perspective because, now, you and I can have a conversation even though we're thousands of miles away, but we feel like we're able to collaborate together. There are whiteboarding features and lots of different collaboration pieces that come along with Zoom that allow us almost to sound like we're all in the same room to be able to collaborate. So, we see a cost-savings there and also, the ability that you're bringing our employees together more closely.

We have about five thousand users currently within HP that are using Zoom. It’s just starting to take off now. We have around… This last month, we had about 700,000 minutes on Zoom.

Michael Krigsman: Wow! That’s a lot of minutes! So, where does this all fit into this sense of creating a bond or sense of community, or shared culture at HP?

Gwen Becknell: It allows us to enable that collaboration, right, and […] it really allows us to bring people together so that they can have that communication mode that they need to without having to worry about… You can imagine a company like HP; hundreds of thousands of millions of dollars that we spend

Michael Krigsman: We are speaking about customer experience, and customer experience applied to IT. I’m Michael Krigsman. I’m an industry analyst and the host of CxOTalk. And, I want to thank Zoom for underwriting this episode and making it possible. We are talking with Gwen Becknell, who is with HP. Hello to you, and thank you for being here and being a guest on CxOTalk. How are you doing?

Gwen Becknell: Thanks, Michael! Thank you for having me today. My role is really around the things that touch an employee. It's all the tools that the employees need to make sure that they can get their job done to then serve our customers - our external customers.

Michael Krigsman: And, I know a lot of your focus is, in fact, around treating your IT stakeholders as customers. That’s what you do!

Gwen Becknell: That’s absolutely what we do.

Michael Krigsman: So, Gwen, this notion of the technology just working; is that… Can we say that’s kind of the foundation that you’d push forward?

Gwen Becknell: I think, to a large extent, that’s true, right? We want to be the lights-on organization, so people don’t have to think about the technology. That’s a good day for us. So, in my team, we’re really working on the mobility play and how we can ensure that they can work seamlessly from one modality to another. It doesn’t matter if I’m on my phone, or I’m on my computer, or I’m on my tablet that I should be able to seamlessly go from one thing to another. I should be able to transit around the building and not worry about my WiFi. And so, what we’re trying to do now is just really look at the easy button, right? So, how do I walk in and just hit one button and instantaneously connect it? My boss harps on this every day and until I get that easy button done, you know, our work is really not done.

Michael Krigsman: So, the whole collaboration piece is essential in the transformation of IT to be more customer-centric.

Gwen Becknell: Absolutely. Communication is our number one, you know, mode with being able to get back to the employees and really collaborating with them and helping them to be able to get their jobs done.

Michael Krigsman: So, briefly tell us about what you do with Zoom. I know it’s all around this issue of collaboration.

Gwen Becknell: Yeah. We've been working with Zoom for about a year now, and in that time, we are utilizing Zoom from a video conferencing perspective so, again, we can help to bring the employees together so that they can get their jobs done. That whole collaboration piece from a video perspective has done a couple things for us within HP. We have about 125 video conferencing rooms across the globe that allow people to have a pseudo-face-to-face engagement between them and that's done a couple things.

One, it's really allowed us to reduce costs from a travel perspective because, now, you and I can have a conversation even though we're thousands of miles away, but we feel like we're able to collaborate together. There are whiteboarding features and lots of different collaboration pieces that come along with Zoom that allow us almost to sound like we're all in the same room to be able to collaborate. So, we see a cost-savings there and also, the ability that you're bringing our employees together more closely.

We have about five thousand users currently within HP that are using Zoom. It’s just starting to take off now. We have around… This last month, we had about 700,000 minutes on Zoom.

Michael Krigsman: Wow! That’s a lot of minutes! So, where does this all fit into this sense of creating a bond or sense of community, or shared culture at HP?

Gwen Becknell: It allows us to enable that collaboration, right, and […] it really allows us to bring people together so that they can have that communication mode that they need to without having to worry about… You can imagine a company like HP; hundreds of thousands of millions of dollars that we spend on travel a year. And so, if I don’t have to travel, I save time, I save money, and I’m able to then have that same feeling of being face-to-face without having to worry about it. I can literally just be in my current location in San Diego and I can be having a good conversation with my boss or whoever the rest of my team that are sitting in Palo Alto, without having to worry about hopping on a plane and taking a half a day out of my schedule to go do that.

Michael Krigsman: Well, Gwen Becknell, from HP. Thank you for taking the time! We really do appreciate it.

Gwen Becknell: Thanks for having me! I enjoyed it.

Michael Krigsman: And, a huge thank you to Zoom for underwriting this episode. It makes it possible for us to have these incredible conversations. Go to CxOTalk.com and “like” us on Facebook! And also, subscribe on YouTube, because that’s a good thing to do. Everybody, thanks a lot. Bye-bye!

Accelerate Sales with Data and Analytics

  • Topic: Digital Business
Rishi Dave, Chief Marketing Officer, Dun & Bradstreet
Rishi Dave
Chief Marketing Officer
Dun & Bradstreet
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

Collaboration between Marketing and Sales is a prerequisite for customer success today. However, marketers must use data and analytics to gain insight into customer behavior and establish a personalized relationship with buyers.

Rishi Dave, the Chief Marketing Officer at iconic brand Dun and Bradstreet, explains how to use data to achieve these crucial customer relationship goals. As CMO, Rishi oversees all of Dun & Bradstreet's marketing including brand, customer analytics, marketing technology, social, demand generation, digital marketing, events, creative, and content.

Transcript

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. And, I’m speaking with Rishi Dave, who is the Chief Marketing Officer of Dun & Bradstreet. So Rishi, tell us about Dun & Bradstreet.

Rishi Dave: Yeah. Dun & Bradstreet is a global company squarely in the data analytics space. We have data on 265 million businesses around the world, updated three million times a day.

Michael Krigsman: It’s quite extraordinary! How have buyers and their expectations changed over time?

Rishi Dave: Boy, if you think about what the experience today with companies like Uber or Amazon, they really expect a company to understand and know them, and know the main pain points that they’re trying to solve and then when they interact with the company, they expect the company to have the backbone on them and actually be very targeted and personalized in how they interact with them.

Michael Krigsman: And so, how does the availability of this data create that sense of personalization or even, can I say, sense of intimacy, with that customer?

Rishi Dave: Well, there are three key things that we see. One is that there’s a lot of data out there. And so, first and foremost, companies are increasingly taking all that data and structuring it and cleaning it. Secondly, they’re using analytics and other ways to really understand what that data means. And thirdly, they’re surfacing those insights in a way that people and systems can take action on them.

Michael Krigsman: When you say, “Take action,” can you elaborate on that, please?

Rishi Dave: So, a salesperson may, for example, see within their CRM that based on all the data that the company has, this customer has the highest propensity to buy this type of product and this is the right person. And by the way, this person was recently promoted to this position. That's a lot of great information they can use to target the person at the right time, new to […], with the right information saying, "Okay, this is the exact solution that the data are telling us they need."

Michael Krigsman: But, it’s not just sales, right? Their marketing has to work lockstep with sales, as well. And, that’s been a problem for many companies that silo. So, how do we get around that and unify, bring together, marketing and sales?

Rishi Dave: Marketing has a larger and larger role. If you think about it, the marketer plays a very large role in architecting the right experiences before the customer even goes to a salesperson or even decides to talk to your company. Then, once it gets to a salesperson, that salesperson has to be enabled with the right data, content, etc. And, marketing also can play a very large role there, as well.

So ultimately, that requires sales and marketing to be very close and work very closely together. So, kind of garner the days when marketing says, "Okay, I'm going to generate as many leads as possible," and sales says, "I'm focused on closing." Now, everyone needs to focus on closing sales because both marketing and sales have a role in that."

Michael Krigsman: So, you’re CMO of a large, well-established organization and so, how do you think about this collaboration with sales in your own organization?

Rishi Dave: Oh, you know, I think about it every day and it’s actually critical to our success. So, I’ll give you a great example. You know, we may leverage analytics and marketing to prioritize the right set of accounts that we need to go after for a particular new product. But, we absolutely work with the sales team to bring in the qualitative data into that process and then jointly decide what part of […] accounts to go after, and nothing happens in a silo.

Michael Krigsman: You mentioned metrics. What are the ultimate metrics and how do you know it’s working?

Rishi Dave: Sales. [Laughter] What sales are you closing? I mean, ultimately, as marketers, we have to measure ourselves on sales. And, once marketers

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. And, I’m speaking with Rishi Dave, who is the Chief Marketing Officer of Dun & Bradstreet. So Rishi, tell us about Dun & Bradstreet.

Rishi Dave: Yeah. Dun & Bradstreet is a global company squarely in the data analytics space. We have data on 265 million businesses around the world, updated three million times a day.

Michael Krigsman: It’s quite extraordinary! How have buyers and their expectations changed over time?

Rishi Dave: Boy, if you think about what the experience today with companies like Uber or Amazon, they really expect a company to understand and know them, and know the main pain points that they’re trying to solve and then when they interact with the company, they expect the company to have the backbone on them and actually be very targeted and personalized in how they interact with them.

Michael Krigsman: And so, how does the availability of this data create that sense of personalization or even, can I say, sense of intimacy, with that customer?

Rishi Dave: Well, there are three key things that we see. One is that there’s a lot of data out there. And so, first and foremost, companies are increasingly taking all that data and structuring it and cleaning it. Secondly, they’re using analytics and other ways to really understand what that data means. And thirdly, they’re surfacing those insights in a way that people and systems can take action on them.

Michael Krigsman: When you say, “Take action,” can you elaborate on that, please?

Rishi Dave: So, a salesperson may, for example, see within their CRM that based on all the data that the company has, this customer has the highest propensity to buy this type of product and this is the right person. And by the way, this person was recently promoted to this position. That's a lot of great information they can use to target the person at the right time, new to […], with the right information saying, "Okay, this is the exact solution that the data are telling us they need."

Michael Krigsman: But, it’s not just sales, right? Their marketing has to work lockstep with sales, as well. And, that’s been a problem for many companies that silo. So, how do we get around that and unify, bring together, marketing and sales?

Rishi Dave: Marketing has a larger and larger role. If you think about it, the marketer plays a very large role in architecting the right experiences before the customer even goes to a salesperson or even decides to talk to your company. Then, once it gets to a salesperson, that salesperson has to be enabled with the right data, content, etc. And, marketing also can play a very large role there, as well.

So ultimately, that requires sales and marketing to be very close and work very closely together. So, kind of garner the days when marketing says, "Okay, I'm going to generate as many leads as possible," and sales says, "I'm focused on closing." Now, everyone needs to focus on closing sales because both marketing and sales have a role in that."

Michael Krigsman: So, you’re CMO of a large, well-established organization and so, how do you think about this collaboration with sales in your own organization?

Rishi Dave: Oh, you know, I think about it every day and it’s actually critical to our success. So, I’ll give you a great example. You know, we may leverage analytics and marketing to prioritize the right set of accounts that we need to go after for a particular new product. But, we absolutely work with the sales team to bring in the qualitative data into that process and then jointly decide what part of […] accounts to go after, and nothing happens in a silo.

Michael Krigsman: You mentioned metrics. What are the ultimate metrics and how do you know it’s working?

Rishi Dave: Sales. [Laughter] What sales are you closing? I mean, ultimately, as marketers, we have to measure ourselves on sales. And, once marketers start doing that, then the alignment happens very well with the sales team. So, making sure the leads are high quality and [to] lead the sales, the pipeline is high quality and reads the sales. It's not just generating for the sake of generating. Once that happens, then there's real alignment between the two organizations.

Michael Krigsman: So, what advice do you have for marketers and for salespeople to foster that alignment that you were just describing?

Rishi Dave: Making sure that the sales team and the marketing team are using common definitions, looking at the same reports and same information, and making decisions together on where to invest and where to move money, and where to move budgets and things like that, and where to focus and what customers to focus on.

Michael Krigsman: Okay! Rishi Dave, Chief Marketing Officer of Dun and Bradstreet. Thanks so much for spending the time with us!

Fraud Prevention: Data and Analytics in Law Enforcement

  • Episode: 253
  • |
  • Topic: Digital Business
Kelly Tshibaka, Chief Data Officer, Office of Inspector General, United States Postal Service
Kelly Tshibaka
Chief Data Officer, Office of Inspector General
United States Postal Service
Caryl Brzymialkiewicz, Chief Data Officer, Office of Inspector General, U.S. Dep't of Health and Human Services
Caryl Brzymialkiewicz
Chief Data Officer, Office of Inspector General
U.S. Dep't of Health and Human Services
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

How does law enforcement use data to prevent fraud? Kelly Tshibaka, Chief Data Officer of the U.S. Postal Service Office of Inspector General, and Caryl Brzymialkiewicz, Assistant Inspector General & Chief Data Officer at U.S. Department of Health and Human Services Office of Inspector General, speak with CXOTalk about how different agencies at the Office of Inspector General use data analytics.

Since 2015, Tshibaka has served as Chief Data Officer in the U.S. Postal Service Office of Inspector General (OIG), where data analytics has resulted in more than $920 million in financial impact or audit findings in FY16. She previously served as the Acting Inspector General of the Federal Trade Commission, worked in the Office of the Director for National Intelligence (ODNI), and served as the Special Assistant to the Department of Justice Inspector General.

As the first Chief Data Officer for the OIG within the Department of Health and Human Services (HHS), Brzymialkiewicz is focused on providing more and better access to data and analytics; accelerate analytics for use in audits, investigations, evaluations, and compliance oversight; and enhance OIG’s use of data to make more informed decisions. She previously served as the Deputy Assistant Secretary for Risk and Decision Analysis at the Department of Homeland Security (DHS). She also previously served as the Operations Research Division Chief at the Joint Improvised Explosive Device Defeat Organization, and led a team of analysts at the Center for Naval Analyses.

Transcript

Michael Krigsman: Data, analytics; it is everywhere! And, today on Episode #253 of CxOTalk, we’re being visited by the feds! No, that’s true! We are. We have two amazing women who are going to be talking about the role of data in law enforcement and these folks are fantastic and they are right in the middle of it.

I’m Michael Krigsman, an industry analyst and the host of CxOTalk. Before we start, I want to say “thank you,” as I always do, to Livestream because those guys are the best. They provide our video streaming infrastructure and if you go to Livestream.com/CxOTalk, they will give you a discount on their plans. And so, thank you so much to Livestream.

There is a tweet chat going on right now using the hashtag #cxotalk. And, if you join in on Twitter using #cxotalk, you can ask questions and you can participate in this conversation. And, if you’re on Facebook, then go over to Twitter, because that’s where the chat is happening.

So, without further ado, let me introduce the first of our two guests, Kelly Tshibaka is in the house and hey, Kelly, how are you?

Kelly Tshibaka: I’m good! Thanks for having me today!

Michael Krigsman: So, Kelly, who do you work for and what do you do?

Kelly Tshibaka: Currently, I work for the US Postal Service, Office of the Inspector General. I’m the Chief Data Officer here. I’ve been here about two years. Prior to this, I’ve mostly done my career in the Inspector General Community. I was at the Department of Justice, the Director of National Intelligence, and the Federal Trade Commission OIGs. I’ve done audits, investigations, inspections, legal counsel work, congressional relations, so getting to do the data analytics piece is just adding another element to the layer of oversight and fighting fraud.

Michael Krigsman: Okay! Well, we’re going to be learning a lot more about this during the next forty-five minutes. And, our second guest is Caryl Brzymialkiewicz, who is Kelly’s peer, I guess we could say, in another agency. And Caryl Brzymialkiewiecz… You know, there’s no words and no excuse. Caryl Brzymialkiewicz, how are you and welcome to CxOTalk!

Caryl Brzymialkiewicz: Thank you so much, Michael! Hey, you got Brzymialkiewiecz right, so I give you that! If you change Kelly and my name around, that’s alright! You got our last names right, so congratulations to you for that.

Yes, I am Kelly’s peer. I am the Chief Data Officer at Health and Human Services, our office of Inspector General. I’ve been here a little over two years as well. We are the two Chief Data Officers in the Office of Inspector General community, so it was exciting to meet Kelly and to see what she’s trying to do in her organization and a lot of what we’re trying to do in our organization. So, we’re happy to share what we’re doing from our piece. You know, you mentioned the Feds are here! So, our small piece of what we’re trying to do; happy to talk about that today!

Michael Krigsman: Fantastic! And, let me ask either one of you to explain for us… Maybe, Kelly, you can explain what is the Office of the Inspector General and how does it fit? You work for the post office, Caryl works for Health and Human Services so how do the pieces fit together?

Kelly Tshibaka: I’m so glad you asked! I actually really love this community. When I first interviewed for my job at DoJ, I had no idea what an Inspector General’s Office is. And then, I had come to find out that I actually really love it. We’re essentially the law enforcement internal affairs people in the federal agency. So, nearly every federal agency has an Inspector General office, and we do audits and investigations for the purpose of detecting and deterring fraud and abuse, and promoting the efficiency and effectiveness of the government agency. That’s basically the legal language for saying, we make government better. We’re the people assigned to that, and yes, we have job security because

Michael Krigsman: Data, analytics; it is everywhere! And, today on Episode #253 of CxOTalk, we’re being visited by the feds! No, that’s true! We are. We have two amazing women who are going to be talking about the role of data in law enforcement and these folks are fantastic and they are right in the middle of it.

I’m Michael Krigsman, an industry analyst and the host of CxOTalk. Before we start, I want to say “thank you,” as I always do, to Livestream because those guys are the best. They provide our video streaming infrastructure and if you go to Livestream.com/CxOTalk, they will give you a discount on their plans. And so, thank you so much to Livestream.

There is a tweet chat going on right now using the hashtag #cxotalk. And, if you join in on Twitter using #cxotalk, you can ask questions and you can participate in this conversation. And, if you’re on Facebook, then go over to Twitter, because that’s where the chat is happening.

So, without further ado, let me introduce the first of our two guests, Kelly Tshibaka is in the house and hey, Kelly, how are you?

Kelly Tshibaka: I’m good! Thanks for having me today!

Michael Krigsman: So, Kelly, who do you work for and what do you do?

Kelly Tshibaka: Currently, I work for the US Postal Service, Office of the Inspector General. I’m the Chief Data Officer here. I’ve been here about two years. Prior to this, I’ve mostly done my career in the Inspector General Community. I was at the Department of Justice, the Director of National Intelligence, and the Federal Trade Commission OIGs. I’ve done audits, investigations, inspections, legal counsel work, congressional relations, so getting to do the data analytics piece is just adding another element to the layer of oversight and fighting fraud.

Michael Krigsman: Okay! Well, we’re going to be learning a lot more about this during the next forty-five minutes. And, our second guest is Caryl Brzymialkiewicz, who is Kelly’s peer, I guess we could say, in another agency. And Caryl Brzymialkiewiecz… You know, there’s no words and no excuse. Caryl Brzymialkiewicz, how are you and welcome to CxOTalk!

Caryl Brzymialkiewicz: Thank you so much, Michael! Hey, you got Brzymialkiewiecz right, so I give you that! If you change Kelly and my name around, that’s alright! You got our last names right, so congratulations to you for that.

Yes, I am Kelly’s peer. I am the Chief Data Officer at Health and Human Services, our office of Inspector General. I’ve been here a little over two years as well. We are the two Chief Data Officers in the Office of Inspector General community, so it was exciting to meet Kelly and to see what she’s trying to do in her organization and a lot of what we’re trying to do in our organization. So, we’re happy to share what we’re doing from our piece. You know, you mentioned the Feds are here! So, our small piece of what we’re trying to do; happy to talk about that today!

Michael Krigsman: Fantastic! And, let me ask either one of you to explain for us… Maybe, Kelly, you can explain what is the Office of the Inspector General and how does it fit? You work for the post office, Caryl works for Health and Human Services so how do the pieces fit together?

Kelly Tshibaka: I’m so glad you asked! I actually really love this community. When I first interviewed for my job at DoJ, I had no idea what an Inspector General’s Office is. And then, I had come to find out that I actually really love it. We’re essentially the law enforcement internal affairs people in the federal agency. So, nearly every federal agency has an Inspector General office, and we do audits and investigations for the purpose of detecting and deterring fraud and abuse, and promoting the efficiency and effectiveness of the government agency. That’s basically the legal language for saying, we make government better. We’re the people assigned to that, and yes, we have job security because we have an impossible job.

Michael Krigsman: So, you report, then, both to the agency as well as to the central Inspector General office. Would that be the right way to say it?

Kelly Tshibaka: No.

Michael Krigsman: Okay.

Kelly Tshibaka: Although, I appreciate the attempt. There is not yet a central Inspector General. Congress has considered it. We have dual-reporting to our agency head and then, actually directly to Congress. And so, our oversight committees are Congressional Senators and Representatives who are interested in our work. Those are the people who we are accountable to, and that’s how we preserve our independence, by having two separate people who we have to report to on the progress of the agency that it is making, and where it’s having its management challenges and how we can help it. That’s how the Inspector General does its job.

Michael Krigsman: And, Caryl, can you maybe elaborate on this, because I think it’s a very interesting point. So, you report to two separate people in order to ensure that as an inspector general, or working in the office of the inspector general, that you maintain independence. That’s very important. Could you elaborate on that point, please?

Caryl Brzymialkiewicz: Yes. Absolutely. So, for our organization, for example, health and human services is a trillion-dollar portfolio. So, our responsibility is to provide oversight for the agency. Think about centers for Medicaid, Medicare, think about the Center for Disease Control, the Food and Drug Administration, the National Institutes of Health, and many, many other agencies. But, that duel-reporting structure really allows for, as Kelly mentioned, that the independence… We want to give the information, first and foremost, to the agency to help make the agency better but we also know that there’s a lot of things that Congress is expecting us to make sure we’re using the dollars as most effectively as we can.

One thing I will say, too, that’s interesting about the law enforcement angle that you mentioned, we’re not just trying to knock on doors within the agency and figure out where people may or may not be filing the right paperwork, if you will. Really, what we’re trying to do is protect the integrity of the programs to make sure that the beneficiaries of those programs are getting what they need, and to make sure that outside entities aren’t… You know, when we think about fraud, the outside entities aren’t taking advantage of the programs as well. So, it’s not just an internal focus, it’s not supposed to be a “Gotcha!” moment.

You know, one of the first things that our leadership team does, especially in this new administration and new leaders are saying… All right, we're an independent source. If you have concerns about fraud, waste, and abuse, come talk to us. We will be objective. We have a lot of subject-matter expertise in the organization to give you an objective opinion. We can tell you where programs might need to be strengthened and talk about those management challenges with the organization. But, they've also engaged in a dialogue to ask, you know, "What's keeping you up at night? Where can we help? Where do we need to look?" Because again, it's really about protecting the programs and protecting the beneficiaries, the health, and welfare of the people who those programs are intended to serve.

Michael Krigsman: And you’re both involved with very high-profile investigations so maybe, can you kind of share with us something about those investigations and then, let’s drill down into the data aspect of both Chief Data Officers. And so, let’s talk about that. Kelly, can I ask you to either talk a little louder or move a little bit closer to the microphone?

Kelly Tshibaka: Oh, sure! Not a problem! Is that better?

Michael Krigsman: That is definitely better.

Kelly Tshibaka: Okay! I’m really excited about things that we’re working on that my Inspector General testified about yesterday, actually, before Congress. So, using data analytics, a couple weeks ago, we started exploring a new dataset that we’re receiving from the Postal Service. The Postal Service is getting more and more advance-electronic information; you know, national postal agencies, on the packages that are inbound to the US. And so, under their direction, our IT’s direction, we started looking at the dataset. We’re using data analytics to see if it was possible to look for trends, or patterns that could identify suspicious parcels that are coming in that could contain narcotics, particularly opioids like fentanyl. For the viewers who don’t know, fentanyl is a highly powerful narcotic that is up to a hundred times more powerful than morphine, and it is oftentimes lethal even upon contact. So, it poses a real danger to the postal service employees who are working and handling those packages and not knowing that they’re coming in.

It turns out that the postal service receives about two hundred and seventy-five million packages from overseas every year. And, the CDP and the Postal Inspection Service is working to try and identify the packages that contain opioids. Well, we ended up… We happen to be invited into a case where it appeared that a postal service carrier was colluding with drug traffickers from China in order to deliver opioids here in the US. And so, we were working that case and when we made the test and confirmed that the package contained fentanyl, we were able just to trace back that sender with the data and say who else has that sender sent packages to in the last several months?

And then, we looked at those recipients’ addresses to identify other people they were receiving packages from internationally and found some overlap where it looked like shipper one and shipper two shared some customers in common, and it turns out we confirmed with CDP that both shippers had several packages seized by CDP and that they contain fentanyl. So, with one case, and going through data analytics, we were able to identify over twenty-hundred suspicious parcels that have come into the US in the last couple months.

Now, what we do with this from here requires a lot of inter-agency collaboration to do something with it. But, you can imagine the potential is just endless for what we can do, using data analytics to try to fight the opioid crisis that our nation is facing.

Michael Krigsman: So, tell us about the data and Caryl, jump in as well. What kind of data do you look at? Where do you get the data? How do you analyze the data?

Caryl Brzymialkiewicz: So, I was going to follow on, too and say that for the opioid crisis in this country, we are also taking a look at that. That's a huge priority for not only Health and Human Services but also on our specific Office of Inspector General. We're looking for how to reduce prescription drug abuse that […] is impacting beneficiaries. And so, part of our takedown into why I actually target medical professionals that were potentially facilitating abuse of these drugs…. And what that really means when you’re talking about it from a data perspective, right? There are a lot of practitioners; a lot of physicians and just medical professionals as a whole that are doing absolutely the right thing. And, what you’re trying to do is if you’re developing, targeting, or sometimes our agents have a question, they need information very quickly to determine whether or not what they’re seeing is behavior that they expect to see, or whether it’s kind of outlier behavior or something out of the norm.

What we’re trying to do is look at the data to very quickly sift through that, give more information to our agents so they can make that informed choice. We’ve created some tools based on CMS’s data environment, so Centers for Medicaid and Medicare have an integrated data repository. It’s a wealth of information and it’s over a petabyte’s worth of information. And, a lot of it’s looking at eligibility, data, enrollment data, provider data, and claims data. And so, when you’re trying to sift through that very quickly, it’s understanding, “Okay, what were the trends in an area that a provider is prescribing something that’s, you know, one hundred times more than anyone else in the local area.” It doesn’t necessarily mean that it’s wrong, it just means we need to understand that and we need to understand that two, is it tied to cancer patients? If it’s something that’s not meant to be pain… related to high levels of pain medications that you would expect, it just opens up a question.

So, concurrent with our takedown back in July with our agents. There were 412 defendants across all areas where there was a specific portion of that which was targeted towards opioid high prescribers. We actually had partnered with our evaluators and released a data brief. It’s called the “Part D Data Brief.” It’s on our website if you’re interested in it, but it was looking at those cases where people are being prescribed extremely high doses of opioids. You know, almost a hundred times more than the CDC recommends. And so, that’s just concerning. It was one of those things that out of about 18,000 providers that prescribe opioids to Medicare beneficiaries, only about 400 were really prescribing high levels of dosages to patients. But, that was about 90,000 beneficiaries.

So, that’s a concern to us. So, when we talk about the data, again, it’s how do you sift through a petabyte; really the Big Data problem; to very quickly query information so you can focus in on a specific provider interest, or agents [can] more quickly give information that they need to help build their case. Likewise, we’re also using some of the data analytics to generate risk models, kind of in a predictive sense, right? And it’s based on good training data. We’re seeing what outcomes are coming from some of our law enforcement cases, and we use that to build several models. So, it’s kind of an iterative. We talk about it being both proactive analytics, and kind of the reactive analytics, but it’s mostly in partnership with our agents.

Michael Krigsman: So, how do you sift through a petabyte of data in order to find that needle in the haystack?

Caryl Brzymialkiewicz: So, I talk a lot about I'm so fortunate to have the team that I do. I think of them as unicorns, those where data talent experts that just have programming knowledge have a statistical background, have subject-matter expertise now, right? The Medicare, Medicaid programs are not easy to understand. And, if you think about your parents, your grandparents, looking at their explanation of benefits from the Medicare programs, [you] usually end up with more questions than anything else. So, all of those medical codes, to understand how to slice and dice the data… And in order to do that, we've got several tools that we use to through that using technology and we're also looking at open source. We've got several commercial products that we're leveraging, and we're leveraging CMS's environment. But, I'll tell you that my folks are just multilingual in programming to be able to come through that.

It’s some tools so that people can get our agents, can just put in… It’s a national provider index, an NPI number that was created several years ago that can put in the NPI quickly into the computer within a few minutes. Our team has already written all the code so it queries the information, and what they get back is a PDF summarized information of everything that they probably like to know. But that takes time, that takes resources to develop the tools. I think what we realize is we kept getting the same kind of analytic questions, right? How much is this provider referring to other places? What are the top ten pharmacies that they're sending their patients to? What're the overall trends in that geographic area? Is this an outlier kind of payment? So, we try to get some of the questions that we normally get with our risk scores and looking at questionable billing patterns and put that all, package it in one place for our agents to be able to get that information very quickly.

But, we can do this too without our agents, right? I want to make sure that’s clear. This is mostly on them, and I say this too, that if we don’t figure out ways to help them, then we’re failing in our job.

Michael Krigsman: And so, Kelly, how about on your side, you must be going through similar kinds of, or facing similar kinds of issues but with different sets of data?

Kelly Tshibaka: Absolutely! So, I think just to build on some of the stuff that Caryl is saying, we pull our data largely from the agencies that we oversee, because those are… That's where our primary responsibility is. But then, we start with the business question. What am I trying to answer? So, like, to give you an example, we wanted to find out, in the data that we have and the information we have, can we put together any trends or any ideas about how to solve this question? And interestingly, just another shout-out, like Caryl was saying for agents, we can't do our data analytics job without a business understanding of what's going on. So, we have to partner closely with the agents and want the auditors to understand how data are collected, what it's used for, how they understand it. Because, once we understand a little bit more than their business and what they're trying to do, then we can work with the data. Our teams can work with the data in order to figure out how to best use the data and look through it in order to answer those business questions so we get business understanding from our auditors and our agents and oftentimes, even from the people in the agencies that we oversee.

And then, we use that to answer business questions for them and, just like Caryl said, in a lot of ways, I see us like a volleyball team. We’re the setters. We’re positioned, too, on the team. We’re not the one calling the shots and we’re not the one spiking it over that. We’re just setting it up for everybody. Making sure everybody has got what they need in order to make the play that they need to play. That’s what we do and we do it really well. And, it’s exciting to get to use data to do it.

So, to answer your question specifically, Michael, we pull it from the agency, but we also pull it from other agencies if we need it. We’ll pull it from private companies if we need it, and if we can get it. You’ll be surprised what’s even just publicly available on the internet that we can pull and if we can get it into a usable format, then it makes it a lot easier for us to work with it and come up with insights that people can take action on.

Michael Krigsman: We have an interesting question from Arsalan Khan on Twitter, who asks, “Do the OIGs, the people working in the Office of the Inspector General share datasets across agencies and who is responsible for gathering, managing, and distributing these datasets?” Who wants to take that?

Kelly Tshibaka: I’ll take that!

Caryl Brzymialkiewicz: That’s fine!

Kelly Tshibaka: Sure. So, the answer is, “Yes, it depends on the lawyers.” Does that help? Yes, we do share datasets when we can, and usually, it’s the lawyers who are the ones deciding what we can share and how much, because the government has different rules about how it collects data, what it’s used for, and a lot of those roles are governed by the Privacy Act. And, even if we all say we want more data so we can do better oversight of government agencies, we also all know that when we start pulling on that thread too far, we’re starting to really implicate our own privacy rights. And so, there’s this tension in the government about how much information we have, what we can use it for, how long we can use it, where we keep it, what the retention rates are. And, there’s a lot of different agencies, a lot of different lawyers, a lot of different statutes that apply to potential datasets.

So, between the OIGs, yes, we do share datasets when we can, and it’s usually the lawyers who make the decision about what we can share and when. And interestingly, one of the policy challenges of data is that the policy on data changes. It’s sort of an emerging field, and policy usually lags behind emerging trends, it doesn't usually get in front of it. We still have some statutes on record that talk about how we use telephone surveillance, and it talks about telephones and how they were wired in the 1970s. So, most of us don't use phones plugged into our kitchen walls anymore. But, that's how the statutes are written and until things get updated, we're limited in what the policy can do for us.

Well similarly, what we found in the data world is that a lot of times, the policy has to catch up to where the data is. And so, we have to use careful principles of how things worked in the past in order to kind of do our best guess of how to protect privacy and use data now. But then, what we find is we'll build models and we have to revise them when policy changes and [they] let us do more with data, or sometimes, let us do less.

Caryl Brzymialkiewicz: Can I add to that as well? The two things that I would add to what Kelly said is that one, the ID Empowerment Act from 2016 actually gave OIG's special exemptions from some of the Computer Matching Act. So, there are a whole lot of rules; rules and regulations that we have to follow. So, Kelly's absolutely right that we're concerned about privacy; we're concerned about security. But, we also know that, you know, our concern is that if fraudsters are taking advantage of one program, they might be taking advantage of others. And so, how can the OIG community […] with each other and coordinate appropriately?

So, even within that OIG community, there’s Counseled Inspector Generals… CIGIE; what does the “I” stand for? You know…

Kelly Tshibaka: Integrity and efficiency.

Caryl Brzymialkiewicz: Thank you, I was blanking on the "I" for just a second. CIGIE is looking into and giving guidance to all OIGs as to how we can best share that information. So, there are moves within the OIG to share information amongst ourselves. The other thing that I always think about, too, in our organization… A lot of people want to share as much as we can, and I understand that, but I always balance that with we also have our data use agreements with the agencies, right? A lot of our data does come from the agency itself. And so, we have to be mindful that we aren't the generators of the data, and we have to respect how those agreements have been and make sure that we're doing it appropriately.

Now, Kelly talked about the lawyers, but I see it as a very positive way that we’re protecting the information that we’ve been entrusted to look at. Or, we’re still pursuing wrongdoers and holding them accountable.

Michael Krigsman: How do you strike that balance? Because you must be… You know, I can imagine being torn apart in one sense, because you have these dual obligations to protect privacy and at the same time, to catch the bad guys and fulfill your organizational missions. So, I can imagine that this is a very tough balance. So, how do you strike that balance?

Caryl Brzymialkiewicz: I think it’s a constant tension between, I have a specific entity of interest, and so, usually if you think about it in a subpoena case, or I want to go follow something specifically, even agency folks tend to be more willing to give you information. If you already have somebody, a point of interest, right? It’s harder to do this in the Big Data world. That’s where it’s kind of fuzzier boundaries at the moment. And so, it’s an evolving landscape, as Kelly mentioned, right? If I have all of the claims data, then who should have access to all the claims data for trends and outliers? Who should be able to see that? Is it law enforcement sensitive? If we’re combining it with other datasets, what does that mean?

And then, for us, it’s also extremely important to remember that our agents aren’t prosecuting their cases. We partner with the department of justice, very much so. They are the ones that are actually taking these cases and following it to an outcome. And so, a lot of it how much information do we make available to them up front, if we can? Can we make our tools available to them so that they have the same picture as us? But, it’s a balance and it’s a lot of conversation.

I found when I first came to the OIG, I was invited to a meeting with our agents and we were trying to talk about sharing information and everybody fell back to, "It's the technology. We can't do it. It's a tool. It's a tool issue. We have to figure it out." And I said, "Well why don't we just use… We have a secure channel. Why don't we use the secure channel and send a hundred leads? If you think that's really information-sharing…" I don't think it's a technology problem. And sure enough, it ended up being more culture and process. And that was the right conversation to drive, but I think everyone wanted to start off with wanting to talk about it being a technology barrier, when in fact, it wasn't a technology barrier at all. And those are the right conversations we need to have.

Michael Krigsman: And, Kelly, you know, again, in this whole privacy… How do you draw this line? I think this whole issue is such an important one.

Kelly Tshibaka: Yeah. You’re absolutely right. It’s really hard to talk about it in general terms, because it really comes up on a case-by case basis. But, I’d be happy to share with you my philosophy. My philosophy on it is that we hold, just like you’re saying, we hold both of these values as equally important. And so, then, when it comes time to start talking with the people who, like, Caryl said, own the data or we start talking with the people who have the data may not own it, but have it, we start evaluating those two considerations. So, on the one hand, what are the roles? What does it actually say the limitations are? Caryl’s right. A lot of it is read in like the times I’ve heard “Privacy Act” thrown around. “Privacy, privacy;” well, if you open the Privacy Act, it doesn’t say anything about anything you’re saying, but there aren’t a lot of people courageous enough to read it.

So, you kind of have to knock down the fake obstacles and then look at the real obstacles. Something I found, Michael, is that it seems like data… You know how they used to say, “Music and math are universal languages across cultures and languages,” I think, in a similar way, data is becoming that way. It’s becoming like a universal language across government agencies where we can all get behind the same data and say, “That’s what it says,” or “That is the business problem. I have something I can add to that. Can we get behind the mission to find a solution?” And I’m not in any way saying the solution is just more data, more data; I’m just saying that there’s probably more solutions than what we have on the table and if we knock down the fake obstacles and look at the real obstacles, usually, we can solve them. But, it takes everybody kind of having a meeting of the minds to say our common intent is to, for example, stop fraud in our agency. We’re not here to point the finger at anybody. The data says what it says. What are we going to do about it? Or, the data says “this” and we need a little bit more to understand it so we can help you.

Usually, when people have… They know that, like Caryl is saying, that we’re not playing “Gotcha!” We’re really here to try to use data to find where the real criminals are. The enemy isn’t the OIG. The enemy isn’t agency management. The enemy is the person who is taking advantage of our agencies and defrauding them, whether those are external vendors, or they’re even people who work for us. And, we can all unite about that. And, what can we do to find solutions to the problems that are getting in our way of solving that? Sometimes, the law or the culture, or the agreements, they’re just not going to let us move forward. But, it seems more and more, and I agree with Caryl. I applaud our attorneys. We have really creative attorneys who work here. They’re not going to talk about, Yes Attorneys or No Attorneys, or Greenlight-Redlight Attorneys, it’s just too easy to find an attorney who says “no.” But, it’s a lot harder to find out what their real obstacles are. Sometimes, those can’t be resolved. But a lot of times, they can. And then, let’s work together to fix them.

Michael Krigsman: Caryl, you’re nodding your head.

Caryl Brzymialkiewicz: Oh, absolutely! I think one of the things I think about with our analytic team is we obviously… It’s kind of the first mention of “Yes we can” and “How can we?” Right? So, we have a very customer service-focused team, and it’s always just a matter of, “What really are the real barriers? Not just the perceived barriers? And how do we find the right people to pull to the table and have a conversation to work through it?” That’s why I was nodding my head, because we have some fantastic folks in our counsel’s office that help us navigate some of these issues.

A lot of what we talk about to users is the difference between data access, right? IT’s based on the ID Act and the ID Empowerment Act. We have access to data of the agency. That doesn’t necessarily mean system access, which can be a challenge if you’re fighting fraud and you need something very quickly and you want real-time information. One of our successes has been that we do have system access into the Center for Medicaid and Medicare's integrated data repository, which has been huge.

So, an example of that: There’s actually the DOJ press release that you can see. Our team partnered with the FBI to uncover a billion dollar Medicare fraud scheme in Florida. And it was really because we had access to the system to be able to pull a thread very quickly looking at the claims data that we were able to uncover some of the schemes, some of the pattern of the fraud. And so, you know, we talk about the “How can we?” Once we have the system access and are able to look at the data right here, “Here’s what it’s enabling.” And so, I was also taking it back to system owners within CMS and saying, “Thank you so much for working with us. I know that wasn’t easy to let the OIG have access to your system, but here’s now what we’re able to do with it.”

Here's what we've been able to find. Here's what it's empowered. And, I think that's been very helpful both from their perspective, I hope. I think it has been. But also, just to share it with the leadership here, right, within HHS that here's what happens when you do share data. I think some folks are afraid to share data because they're still worried about that it might get misinterpreted. You know, I'm not sure a change is frequent. I want to make sure that you have absolutely the right thing. But, part of it, it's also we try to take a very transparent approach with the folks we're working with to get the data, to run the algorithm, to see the results and then circle back with them to say, "Here's what we found. Is this right to you?" So, if something is misleading in the data for some reason, right? Looked at the wrong variable, something got misinterpreted, and there can be a conversation about that.

So, I think data’s not the only story or the end of the story. It’s usually the very beginning. It’s the volleyball now. Of course, I’m too short so I can’t play volleyball very well [Laughter], but I like that analogy of thinking of us as the setters in volleyball.

Michael Krigsman: And, you’re sitting at the intersection of technology and the business; how the business functions and the law and so, I have to imagine that that makes everything that much more complicated.

Kelly Tshibaka: Well, “complicated” is one word. “Adventurous,” and “exciting” is another. [Laughter]

Michael Krigsman: So, you’re dealing with the data science and you started talking earlier about your teams. And so, from a technology standpoint, who do you employ? You mentioned; Caryl mentioned earlier “Unicorn programmers are needed to find those data needles in the haystack.” I’m assuming you must have data scientists, so who supports you from a technology standpoint?

Caryl Brzymialkiewicz: I’m happy to go at that first. I had a great partner in the CIO Chris Chilbert, who has been absolutely fabulous. I think, when I got here, we were looking at our own infrastructure and figuring out if it was the most effective and efficient within our own organization. So, you know, my team had done a lot. Several years ago under sequestration, it was always the push to do more with less; do more with less; do more with less; and they are just so creative and figured out how to program in new languages, to figure out how to leverage these external systems and environments with the power behind them. And now, it’s really an opportunity again to think, “Okay. What more can we do?” We have a new CIO here. He’s been here about a year and a half now, and thinking about we want to get our infrastructure more resilient. We want to make sure our network’s upgraded. We’re looking into cloud solutions. We’re looking more into open source. We’re looking into mobile capabilities and really figuring out how do we enable our agents?

So, you know, for an example, our agents used to have Blackberries, right? Like, there’s nothing more telling that you’re a Fed that you have a Blackberry. [Laughter] So, part of it was figuring, I guess, […] first we’d pilot it with our agents, but now, that got us thinking when we first created our tools, right? One of them was looking at the payments by geographic area to understand what was happening in their federal judicial district or by county, or by state. Whatever level they wanted, but when we created it, it was meant to be under desktop. It was meant to be on your monitor. Well, after out in the field, where agents are really at their desks very often, they're out talking to people. They have questions. So now, we're thinking about how do we really make sure that our technologies are mobile-enabled to give them exactly what they need and when they need it?

So, it’s exciting, right? It’s not challenging. Like Kelly said, it’s exciting to have that conversation, to pull our digital services director, we have a new person here, too, Evan Lee, who’s been here about maybe a year now? Can’t remember exactly when, too, but I talk about it’s a lot of us are newer to the organization and we’re the change agents. We’re trying to enable people to do more with what we have and we’re being thoughtful and creative about other solutions we can bring to the table. And so, it is a fun intersection of technology and data analytics. And the folks that I have on my team are more the data scientists actually producing the algorithms and coding to figure out how do we take all these complicated healthcare codes and look for the outliers and look for the comparisons. Though, we need our partners very much in our team; OIT, our permission technology group and our digital services to figure out how to evolve the system.

Michael Krigsman: Kelly, what about this notion of being the change agent? Maybe, could you elaborate on that?

Kelly Tshibaka: Absolutely! I should think that ties in nicely with what Caryl was just talking about. Who are we looking for here? We can talk about degrees and backgrounds. You know business scientists, business analysts, computer scientists, data scientists, but the fact is, what I think I found in common with all of our top performers is I think of them as "Imagineers." They're highly creative people who are like engineers with data or with computers. They know how to use technology to answer these questions and to kind of… They use it to explore and to do basically whole investigations, or full audits […] from their computer. They can just dig into all of this information and they do it with a lot of joy and enthusiasm.

But interestingly, when we talk about the change agent piece, if we just think about data scientists or our data analyst division, a Chief Data Officer office of just being a bunch of data geeks, you’ve totally missed it. What I think has worked really well for us, our IT thought outside the box and said, “We need to pull in,” again, the key here is understanding what this is being used for and how to use it. We need to pull in these creative ambitious people from around the agency and get them all in this one think-tank; this creative tank known as CDO. It’s like, the Switzerland in the camps of audit and investigations. You’re not going to see CDO and AIG […].

So, anybody who comes here kind of has to leave their audit or investigator title at the door. They don’t actually, but they come with that background into CDO where we all get around a table or get in front of a board, or get in front of a computer screen and figure out solutions to problems. So, our team’s agent; the way we worked is once we saw that we could actually do stuff with the data; the data was valuable and we could turn it into results for the organization. Our goal is to make the OIG better to improve its return on investment in audits and investigations. We’re doing investigations and audits faster. They’re higher quality they have better turnaround because of the data.

Like Caryl was saying, one of our goals in this era of “Do more with less,” is to use analytics to do that. I really think analytics is the solution of how do we do more with less? How do we make sure auditors are directed to the highest value audits? Make sure that we […] 500 leads to investigations last year, only one of them was unfounded. All of the others had merit. And that’s a huge win, just saving time and effort for our agents that they know that they’re looking at stuff that’s valuable. So, when we get all of those people; auditors, agents, people with inspection backgrounds, a lawyer, accountants, fraud examiners, MBAs, all of these people are in our group. Get ‘em around the table, they approach the problem from different perspectives and that’s how change happens.

Not only do we come up with more creative solutions that if you think of a ship, we’re able to inform the executive how to direct the ship. Like, let’s go in this direction. But, we also can weaken our support to organizations with the data analytics. We can grow in them back and guide from the front. It's a really great place to be, but I think, really, the key is that we do it with a lot of creativity. We do it with some knowledge expertise, whether that's in data, or in business, or actually in the work that we do like investigations and audit. That's how we've been able to do change here at OIG.

Michael Krigsman: It’s really interesting what you said, that data and analytics are the keys to doing more with less. And, you touched on some of the metrics and KPIs that guide your work. And, Caryl, what about on your side? Can you talk about how do you measure what you're doing and the outcomes that you're on the right track?

Caryl Brzymialkiewicz: So, part of our effort, actually, from my office is also just to establish parity outcomes and keep performance that caters to the whole organization and then to figure out better ways of tracking it internally to see if we’re meeting our metrics. Very specifically, for analytics, one of the things I was really pushing on was to understand if we’re developing all these tools, how many people are using them and what kinds of things are they pulling to inform the work? And so, we had to create tracking mechanisms to understand that. We reported out on that routinely. We have internal meetings within our division that we talk about that, and we actually put it out to the organization to say, “Here is what we are delivering on your behalf. Here’s what we’re trying to do.” And, it’s also just to make sure that people are aware. The part that I was also reflecting on; Kelly and I talked about this; a lot of it also has to do with communication and education in the organization.

If you say data at the fingertips of the OIG, that can mean multiple things to multiple people, right? So, which data are you talking about? Is it our internal data? Is it the external mission data? Are we talking about data for executives in management? Are we talking about data for our front line auditors, evaluators, or investigators and attorneys? What are you talking about? It’s a huge conversation. So, what I found as some of the metrics we’ve put in place have actually made… Well, that conversation mostly to help with the education and communication about what we’re trying to do. Overall, my goal is to make sure, as an organization, our specific mission is to provide more and better access to data analytics.

And, my specific metric is trying to reduce the time it takes for all of our folks to access quality data. That is loaded, right? There were lots of conversations about how are we going to measure it? And, I still don't think we've quite gotten there on the how do we measure our quality data for some of these pieces? But, we're working on it. And then, a point that we try to derive what we need to create these metrics so we make sure tracking to the right thing, and we just keep talking about that priority, and our mission, and how we're trying to accelerate our analytics are trying to use data to drive more firm decisions and just enhancing our use of data.

There’s data all over the place. It’s how do we pull it together and make sure we talk about this too? How do we make sure that OIG knows what OIG knows, right? So, we don’t have ten copies of the same spreadsheet that it’s appropriately shared, appropriately stored, appropriately controlled. And so, those are kind of some of the things that we’re tracking.

Michael Krigsman: It’s interesting. It sounds like Caryl, your focus, you’re describing your metrics and KPIs as relating to the data and how the data is then used. And Kelly, you were describing yours as speed of investigations. And things like that. So, is there… Are those different? Are you saying different things? Are you saying the same things in different ways? Does it reflect different focus for each of you in your particular agency?

Kelly Tshibaka: Yeah. I think one of the things Caryl and I have talked about, we’ve worked together in sharing what our respective performance measures would be because we both have a role to play in developing those for our agencies. And, I think that you’re right, Michael, that in a way, we are looking at similar things in a way we’re emphasizing slightly different things. But, I think, ultimately, we’re aiming towards the same goal. We have to take our agency, the place where it is now, and help guide it towards being the best possible OIG it can be. So, one of the things that we decided to look at for data analytics, we know we’re going to be successful and helping our agents if we’re reducing the time it takes for them to make successful cases.

So, it used to take around three hundred, or 530 to do a case, on average. And now, we have it down to under 390 when they’re using data analytics. Or, we used to have a return of about 600,000 dollars on average in financial impact on a case. And now, it’s over 900,000 because of the data analytics. And so, we’re trying to measure exactly how the data analytics is helping. We also look at the cases and the audits that are performed as a result of the tools that we’ve developed.

And so, one of our models was an audit model because you wanted to talk about fraud. So, we developed an audit model looking at contract fraud; pulling data from different areas. You know, looking at things that we would consider like contract pricing of the CEO’s role and then contract; just looking at different elements of contract. And, we pulled it together into a model for auditors to be able to really quickly rack and stack the thirteen billion dollars in contracts the postal service has every year so they can identify which contractors or which contracts had the highest probability of fraud. And in one of those years, there was a 500 million dollar return in our audit findings just from that one model. So, those are the kind of things that we’re looking at over here at the OIG.

Michael Krigsman: So, it’s enabling you to not just conduct these investigations more efficiently, but it sounds like the data enables you to do new kinds of investigations to kind of rethink the type of investigations you do, because of the availability of that data and the type of analytics that you’re performing on that data. Is that correct?

Caryl Brzymialkiewicz: I think what we talk about is, in particular, Medicare fraud if you think about Florida, Miami, there’s so much fraud… This is not about generating leads for our agents, it’s really about how can we help an optimization of the work? So, as Kelly was just talking about with the optimizing audits, where do we want to point our resources? So, for our organization, if you think about a trillion dollar portfolio that you’re supposed to provide an oversight for, we have about 1,600 people in the whole Office of Inspector General, and about 70-plus offices throughout the country. That’s really not a lot of people but that size of portfolio… We’ve done a bubble chart of our budget compared to the whole budget of HHS. It’s not big.

So, what it really needs is we're trying to focus the efforts as best as we can and help inform those conversations, right? Data are not going to be the only input into deciding which audit to do, which evaluation to do, or which case to go after. But, it can be helpful. And, that's really the way we looked at our predictive analytics with our risk models. Does it help find maybe a risk of… There's a high-risk provider that's not yet under investigation, or it's validating that when we do run our models, we compare it against our case management system and find that there actually are a lot that is already under investigation. And then, in that case, we look for other linkages and what's the link in analysis? What’s a network analysis? What else can we add to those cases? That may be an additional insight that we hadn’t seen before, and that’s why I think we’re really trying to add value in that case.

Michael Krigsman: It’s really fascinating. We’re almost out of time and so, I’ll ask each of you maybe Kelly, want to go first for your final thoughts on the use of data in these kinds of investigations that you’ve been describing?

Kelly Tshibaka: I think that the data analytics frontier just represents so many incredible possibilities for doing oversight work of federal agencies in new; and I agree with you, Caryl; optimized ways. We want to find, as effective and efficient ways as possible, to do our job so that our auditors and our agents get to work the best cases and are working on the highest risk program areas for our respective agencies. And that’s just a win for us. I mean, I think that with what Caryl and I are doing, we’re really exploring that frontier and turning it into a reality for our respective OIGs.

Michael Krigsman: And Caryl, it looks like you’re going to get the last word. Maybe, share with us your thoughts on being a change agent in the government since clearly, that’s a very, very important function that both of you play.

Caryl Brzymialkiewicz: Change management is not an afterthought. It should be the first thought and everything that we do, no matter where we are in the federal government… You know, we talked a lot about the “How can I?”, but the questions I love the most are “What if?” and “Why not?” And if you start from that, you can get some momentum going behind you about how can we make this better? I tell my team all the time that we are the change agents, the innovators, the enablers, and the accelerators. It’s not that there’s something broken in our organization that we need to fix, it’s we need to take what’s working and make it better. And so, any way that we can enable that and help our folks do their jobs even more, that’s when we really know we’re connecting to the mission, right? We want to hold wrongdoers accountable. We want to make sure that we’re protecting the programs.

And so, being change agents; you know, sometimes I call us the gentle agitators; because, that’s really our role is to ask that question of “Why not?” and “What if?” And so, really, I’m inspired to […] on my team. I have a fantastic team and it’s really about the organization and the partnerships we’ve had here with the business. I’m very appreciative of all of our investigators and our auditors and our evaluators that work with us to figure this out or without them, we would not be successful.

Michael Krigsman: Okay! Wow! What an interesting conversation and I love that the gentle instigators… Well, you have been watching Episode #253 of CxOTalk and we have been speaking with Kelly Tshibaka, who is the Chief Data Officer of the U.S. Postal Service with the Office of the Inspector General. And, we’ve also been talking with Caryl Brzymialkiewicz, who is the Assistant Inspector General and Chief Data Officer at the U.S. Department of Health and Human Services, also with the Office of the Inspector General. Thanks so much for watching CxOTalk! Be sure to “like” us on Facebook and also, subscribe on YouTube, and we will be back with more next week. Go to CxOTalk.com and check it out. Thanks so much, everybody. Have a great day. Bye-bye!

FinancialForce CEO on Digital Transformation: The New Services Economy in the Cloud

  • Topic: Digital Business
  • |
  • Partner: FinancialForce
Tod Nielsen, President and CEO, FinancialForce
Tod Nielsen
President and CEO
FinancialForce
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
CXOTALK

FinancialForce CEO Tod Nielsen tells CXOTalk about digital transformation in the new services economy. More businesses are moving to cloud computing, focusing on speed and curated functions.

“Services are devouring the galaxy,” Nielsen says. “The economy of how consumers and businesses buy from other businesses is changing completely. The idea of having assets and owning physical goods will go away. There’s going to be a day when people literally won’t own anything.”

Nielsen adds that the premise of the “triangle” – people, processes and technology – has changed as people and processes are as important if not more important than the tech itself. A partnership in the vendor-customer relationship “is no longer just a buzzword. It is an important imperative for successful projects.”

Transcript

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. We’re here in Las Vegas at the FinancialForce.com conference called Community Live 2017. And I’m speaking with Tod Nielsen, who is the CEO of FinancialForce. Hi, Tod! How are you?

Tod Nielsen: Good, Mike! How are you?

Michael Krigsman: I am great! So, this morning at your keynote, you spoke about the new service economy.

Tod Nielsen: I did.

Michael Krigsman: What is the service economy?

Tod Nielsen: So, I talked about the evolution our industry has been going through, and how our experience as consumers is changing from buying products to consuming everything as a service. And, we spent some time talking about the op-ed piece that Mark Andreessen wrote in 2011 saying how software was going to eat the world, and how in just six short years, we’ve not evolved into where more and more things are experienced as a service. And so, going forward, I laid out the premise that services are devouring the galaxy. And, the economy of how consumers and businesses buy from other businesses is changing completely. The idea of having assets and owning physical goods is actually going to go away. But, there’s going to be a day when people literally won’t own anything.

If you look at WhatsApp, that Facebook bought for $19 billion, it was sixteen developers and then, 30 million users. How a company could have sixteen developers and 30 million users and be able to build this incredible service is something that we’re now seeing as reality. And it will be important going forward.

Michael Krigsman: And this is affecting companies in every industry. You gave the example of Boeing.

Tod Nielsen: Absolutely! You know, Boeing used to be known for “Hey, we’re going to build jet planes. Let’s go!” And they buy their parts, and they’re jet engines. And they’re finding from their suppliers that they actually are selling to Boeing the engines at cost and they’re making their money on the maintenance and the upkeep and all this stuff. And any classic hardware companies, quote-on-quite like Tesla, and now realizing they’re really a services company, and the hardware is simply a delivery vehicle for them to enhance their services.

Michael Krigsman: FinancialForce is a, can we say, a back-end software provider of ERP. Although, you also now are touching the front-end, touching the users. And so, why is this so important to FinancialForce?

Tod Nielsen: Well, I think if you look at the market right now, we're seeing a couple of interesting trends. One is the adoption of cloud computing. I've spent my career in the infrastructure and platform world, and I think we're now getting to the point where businesses are realizing there's opportunity in the cloud for them. And there's no longer a point of if they go to the cloud, but when. And so, it's a great opportunity for our customers to say, "How are we going to get our back office? How are we going to get our systems to the cloud so we can be more aligned and attuned with the overall business?"

Second, with all the demanding changes, one of the phrases I said this morning was, “Speed is the new currency.” And, you know, businesses are saying “We need more, we need more, we need more,” and when they look to their back office, their back office team is saying, “Sorry. We can’t accommodate. We can’t move that fast.” It’s going to be viewed as slowing growth or preventing future progress. And so, the back-office teams are saying, “What can we do to transform ourselves to respond to the incredible demands that our businesses are giving us?”

Michael Krigsman: So, this issue of speed is extremely important, and we hear the phrase “digital transformation.”

Tod Nielsen: Absolutely.

Michael Krigsman: This issue of speed is so important. So, could you maybe elaborate on that dimension as well?

Tod Nielsen: Sure! So, speed is no longer the point of

Michael Krigsman: I’m Michael Krigsman, an industry analyst and the host of CxOTalk. We’re here in Las Vegas at the FinancialForce.com conference called Community Live 2017. And I’m speaking with Tod Nielsen, who is the CEO of FinancialForce. Hi, Tod! How are you?

Tod Nielsen: Good, Mike! How are you?

Michael Krigsman: I am great! So, this morning at your keynote, you spoke about the new service economy.

Tod Nielsen: I did.

Michael Krigsman: What is the service economy?

Tod Nielsen: So, I talked about the evolution our industry has been going through, and how our experience as consumers is changing from buying products to consuming everything as a service. And, we spent some time talking about the op-ed piece that Mark Andreessen wrote in 2011 saying how software was going to eat the world, and how in just six short years, we’ve not evolved into where more and more things are experienced as a service. And so, going forward, I laid out the premise that services are devouring the galaxy. And, the economy of how consumers and businesses buy from other businesses is changing completely. The idea of having assets and owning physical goods is actually going to go away. But, there’s going to be a day when people literally won’t own anything.

If you look at WhatsApp, that Facebook bought for $19 billion, it was sixteen developers and then, 30 million users. How a company could have sixteen developers and 30 million users and be able to build this incredible service is something that we’re now seeing as reality. And it will be important going forward.

Michael Krigsman: And this is affecting companies in every industry. You gave the example of Boeing.

Tod Nielsen: Absolutely! You know, Boeing used to be known for “Hey, we’re going to build jet planes. Let’s go!” And they buy their parts, and they’re jet engines. And they’re finding from their suppliers that they actually are selling to Boeing the engines at cost and they’re making their money on the maintenance and the upkeep and all this stuff. And any classic hardware companies, quote-on-quite like Tesla, and now realizing they’re really a services company, and the hardware is simply a delivery vehicle for them to enhance their services.

Michael Krigsman: FinancialForce is a, can we say, a back-end software provider of ERP. Although, you also now are touching the front-end, touching the users. And so, why is this so important to FinancialForce?

Tod Nielsen: Well, I think if you look at the market right now, we're seeing a couple of interesting trends. One is the adoption of cloud computing. I've spent my career in the infrastructure and platform world, and I think we're now getting to the point where businesses are realizing there's opportunity in the cloud for them. And there's no longer a point of if they go to the cloud, but when. And so, it's a great opportunity for our customers to say, "How are we going to get our back office? How are we going to get our systems to the cloud so we can be more aligned and attuned with the overall business?"

Second, with all the demanding changes, one of the phrases I said this morning was, “Speed is the new currency.” And, you know, businesses are saying “We need more, we need more, we need more,” and when they look to their back office, their back office team is saying, “Sorry. We can’t accommodate. We can’t move that fast.” It’s going to be viewed as slowing growth or preventing future progress. And so, the back-office teams are saying, “What can we do to transform ourselves to respond to the incredible demands that our businesses are giving us?”

Michael Krigsman: So, this issue of speed is extremely important, and we hear the phrase “digital transformation.”

Tod Nielsen: Absolutely.

Michael Krigsman: This issue of speed is so important. So, could you maybe elaborate on that dimension as well?

Tod Nielsen: Sure! So, speed is no longer the point of, "Hey, let's do a project that's going to take three years." So the idea of an SAP implementation that's going to take three years to go, that is so yesteryear. Now, businesses are saying, "What can we do to move fast?" And so, I think what you're finding is companies are saying, "Okay, I'm going to be less picky about the particular customization and I want to have a more curated path of technology that's going to meet my needs, so I can move fast."

You know, every business I talk to is talking about incredible releases. In fact, in the software industry, it used to be… I grew up with Microsoft. We would do a release every year, or every two years. And then we went to quarterly releases, and that was a dramatic event. And now in the cloud computing, when I was running Heroku when I was at Salesforce, we were doing releases every day. So, there's a certain amount of responsiveness and iteration and “in-the-game” that’s important.

Michael Krigsman: So, software and features as a set of curated functions.

Tod Nielsen: It used to be viewed as here is a lump of clay, and let’s take time to mold and sculpt it into what you…

Michael Krigsman: And […] had ten-year, twenty-year implementation…

Tod Nielsen: Exactly! And no one is happy at the end. And so, I have a view that going forward; it's more of a "Let's make a deal" approach.  Do you want door number one or door number two, and which is going to meet my needs? And then, the focus is on configuration, not customization. So, you can figure it can meet your particular needs or business model nuances, but not have something that's completely customized and sending you down a rathole that you may be able to get out of.

Michael Krigsman: What advice do you have for customers who want to move to the cloud, who want to adopt this kind of speed?

Tod Nielsen: Yeah, I think the most important thing, and I talked a little bit about it this morning, is in the IT world, there’s a triangle, a famous triangle of People, Process, and Technology. And it used to be that technology was the long pole in the tent. And we’re now to a point where people and process are as important, if not more important. And so, what I would say to people that are wanting to move fast is identify your vendors or who you’re going to purchase products from, and lean in with them because success is a team sport. It’s going to require you to lean in and invest your time and actually deliver to let them know what you need, and then expect them to lean in equally hard to provide you the capabilities and functionality you need. And together, you can be the yin and yang to actually deliver the success.

Michael Krigsman: So, collaboration inside the organization is the key.

Tod Nielsen: Inside the organization and with your partners, it is now a matter of… The idea, “Oh, we’re going to be a partnership in this vendor-customer relationship,” it’s no longer just a buzzword. It is an important imperative for successful projects.

Michael Krigsman: So, ecosystem is a fundamental part of this.

Tod Nielsen: Absolutely. The cloud is all about the network effect and bringing people together and as you're driving these implementations, you can't do it alone. No successful company will be an island; it has got to be working together as an ecosystem, working together as a team to achieve that success.

Michael Krigsman: I love that. You can’t do it alone. Tod Nielsen, thank you so much!

Tod Nielsen: Yeah, thank you!