Zappos: If You Are Great at Something - Let It Go...
(Or Resell It)

I am fascinated by what I see as Zappos' ongoing evolution from a simple, online retailer to a leading online innovator. A few months back I wrote about Zappos pioneering what I called “Experience Syndication" with their Powered by Zappos (PBZ) service. In brief, PBZ syndicates the end-to-end value of shopping with Zappos - from the online store experience to shipping, to returns, to the call center - everything. Clarks Shoes, Stuart Weitzman and many other online sites are providing a customer experience entirely syndicated by Zappos.

Last night I saw CEO Tony Hsieh’s tweet about Zappos Insights - a paid membership site “that allows 'Fortune one million' companies to gain insights from the learnings of Zappos.com. The site will allow access to Zappos.com management and contacts and provide guidance and direct answers for user generated questions via video responses.”

If PBZ syndicates the customer experience, Zappos Insights is syndicating the internal business experience; providing a window into the leadership and culture that has made Zappos such a successful business. What is so radical about this is the notion that Zappos is willing to let go of the very thing that makes them so exceptional.

What other company would you like to see create a similar service?

Online Communities: The Tribalization of Business

Or, you may download the file.



Recently I spoke with Francois Gossieaux of Beeline Labs about the role of online communities in the enterprise. Francois has been evangelizing the learning gained from his recent study “The Tribalization of Business” (see here for the Slideshare presentation).



The interview is broken into three parts. Francois is a great storyteller, bringing case studies in to support nearly every point. Here are a few insights I took away from our conversation:
Community for community’s sake: most businesses begin planning a community with traditional objectives (lower support costs, drive innovation, increase customer loyalty etc.). On the Social Web this is the equivalent of entering a personal relationship with an ulterior motive (which never works out quite right). Businesses should begin with the question, “how can I satisfy the needs of this community?”- and then follow the community’s lead. Be open to the unexpected.

In my experience this is one of the hardest things for companies to get behind and relegates this kind of "enlightened" community effort to either top-level leadership or skunk works development. Middle management is typically the most reluctant to deviate from standard practice and place a bet on community for the community’s sake.

Communities require a social framework to thrive - most companies have a mindset that reflects the legal, contractual and hierarchical underpinnings of their business and carry these behaviors with them into the community. This informs their planning, measurement and how they encourage contribution. These incentives have little sway on the Social Web where the mindset is social and trust, reputation and relationship are big drivers of contribution. As Francois says, “The most successful communities occur when you tap into that social framework”

Consider stories as a success metric: While there is a fair amount in this interview about measurement - this was my favorite: A great anectdote about how one company views the stories that emerge from their community as a key metric of success. Great stories are inherently viral and can have a profound impact on decision making in an organization.

Think Bigger: Most large companies are satisfied to have small communities; basically bringing a focus group online. Doing so misses the potential of the online community to transform your business. Consider how Intuit is now embedding live community directly into their application - allowing users to seek help and get questions answered directly.

Transformative communities blur the lines between company and customer and portend a future where retail ecommerce sites go well beyond ratings and reviews and provide problem solving, shopping mentors, product development and other services directly from the community. Where internet sites are co-evolved (from interface to feature-sets to codebase) in cooperation with community, where complex applications (desktop and cloud-based) meld standard functions with community functions. Communities are certainly helpful in providing feedback on customer behavior but that is just one small part of the story.

A Star is Born? NY Times syndicates outside blogs but that's not enough

Recently the New York Times announced that it will be syndicating content from three well-known blogs, Read/Write Web, Giga Om and Venture Beat. The New York Times is using these blogs as an extra-sensory organ; they can dial into what is happening in the tech sector (and particularly the West Coast with this trio) without allocating a lot of internal resources to it. Smart move.

As newspapers are locked in a desperate bid for survival I get the sense that we are watching the business equivalent of A Star is Born. In this case the iconic, shaggy-maned newsman falls for a feisty blogger with a horrific perm. Two strangers meeting in life's stairwell; One headed down - the other headed up... Let's hope this pairing has a better ending.

Syndication seems to have one goal - leverage that content to build online ad revenues. I hope the Times has more up its sleeve because this is just a “more of the same” strategy. Ad revenues for newspapers dropped $3 billion in the first six months of this year. With the Wall Street implosion it looks like revenues will continue to collapse as overall big-spend, ad budgets decline. I say this despite predictions of growth in '09 online ads because big print newspapers need both online/offline revenue to stay viable. Bumping online ad sales in place of plummeting offline ad revenue will not come close to solving the fundamental problem.

In order to survive newspapers need to:
1. Get better at their core revenue business: advertisting. Use behavioral targeting to maximize ad prices - better user profiles equal higher revenues. Currently traditional newspaper ad networks are outsourced, weak and generic. Understanding these technologies should be a core competence inside a modern news organization.

2. Aggressive online diversification. U.S. Newspapers missed a chance to claim the classified space. Craigslist got there first and locked the newspapers out (in most U.S. markets). Schibsted, a pioneering media company in Europe, has a very healthy online classified business because they got there first. (Similarly Schibsted is competing with Google for search b/c they have huge data assets in content and video etc. that they are using to compete). Online services like this feed off of network effects - leaving precious little for runner-ups. It is too late for US papers to compete with Google or Craigslist but there are other areas that have not been claimed. Newspapers need to move aggressively to create services that deliver value; all-things-local; niche classifieds, local real estate, political polling data, creating decision markets with their readers etc. Newspapers still have assets that are hard to rival: large sales teams with great relationships; top-notch content-creation teams; established brands with public trust and, last but not least an online readership that can help become a pillar of new innovation.

3. Gene Therapy: This is what I call “the harder stuff.” Traditional newspapers require a DNA transplant. Many of the tenets of the social web: innovation from the outside, publish-then-filter, rapid adaptive behavior (fail forward fast) and learning from failure all meet with stiff organizational resistance. If newspapers do not empower their online businesses, take more small risks and get out of the way there will be nothing left in a few years to reclaim.

Newsgathering organizations serve a vital civic function - but without a clear revenue model they will become an artifact of the last millennium. Time is not on their side.

What else do newspapers need to do to save themselves?

Customer Service is the New Marketing: Interview with Lane Becker

The Internet changes the power relations between companies and customers.

Social technologies like blogs, social networks, ratings and reviews etc. allow customers to share experiences; good and bad to the 1.4 billion people on the Internet. Zappos exemplifies the positive benefits of extraordinary customer service while Comcast shines a light on the perils of getting it wrong.

Lane (co-founder of Get Satisfaction) speaks better than anyone about the power of building relationships via a strong customer service focus. During the Web 2.0 Expo New York we had a discussion that digs into
· What is meant by Customer Service is the New Marketing
· The challenges of moving to a customer-service-as-marketing model

The most insightful moment, in my opinion, comes when Lane talks about how even smaller companies, and companies not structured to provide superior customer service, can use new technology to get it right.

My favorite quote: "Historically, customer service has actually been customer avoidance" Remember that next time you need to schedule Comcast!

Lane agreed to answer some of the comments to this video post - so if you have questions - fire away.

(Disclaimer: OATV is an investor in Get Satisfaction)

Getting Web 2.0 right: The hard stuff vs. the harder stuff…

I had a powerful conversation recently in Europe with one of the top executives of a major industrial company. They have 100K+ employees in over 50 countries. When he joined five years ago their business was struggling and in need of major transformation; their stock was at two dollars a share, they had ethics issues and product quality problems - you name the malady, they were suffering from it…

Fast forward to 2008 and now they are one of the most extraordinary success stories in Europe - stock is over $28 a share, great profits, growing operations, well regarded in the business community etc. When you fly through a European airport they are everywhere.

I asked him how they were able to turn such a large, multinational ship around.

He told me most executives talk about “the hard stuff” vs. “the soft stuff”. Their focus for success in the organization is on the hard stuff - finance, technology, manufacturing, R&D, Sales - where the money is to be found, where costs savings are to be made. The soft stuff - leadership, culture, change and implementation - is there in rhetoric but not in reality (e.g., “people are our most important resource”). But the truth is that it is not the “hard stuff” vs. the “soft stuff”, but the hard stuff vs. the harder stuff. And it is this “harder stuff” that drives both revenues and profits by making or breaking a decision, leading a project to a successful conclusion - or not, and allowing for effective collaboration within a business unit or an organization - or not. He told me it was a consistent focus on the harder stuff that allowed them to turn their company around.

This is an apt description of the problems we face in bringing Web 2.0 into the enterprise. Web 2.0 is a game changer - it holds the potential to turbo-charge back office functions, foster collaboration and transform every business unit in the enterprise. Yet the resistance occurs when it comes down to implementing Web 2.0 because it represents a series of shifts that challenge traditional business culture and models of leadership. How often have I heard the knee-jerk reaction, “we can’t let our customers talk to each other” or “we don’t share our data” or “we are going to upgrade to a new platform - we are on a three year plan to get it done” (I keep a list of these reactions so please help me add to it). If developing a web 2.0 strategy is the hard stuff - moving that strategy forward is the harder stuff - and the bigger the company I work with - the harder the harder stuff is.

Open beats Closed: Best Buy’s new APIs

Welcome to Joshua-Michele Ross, who joins the Radar team with a focus on how Web 2.0 is affecting business strategy - Sara Winge

Best Buy is a pioneer when it comes to unleashing the talent of their own staff; from the Loop Marketplace that allows employees to submit ideas for Digg-style ranking AND funding across divisions (for example an HR manager can fund an idea from a customer service employee) to their use of prediction markets and their support of the employee-driven social network, Blue Shirt Nation.

Now they are hoping to tap into the developer talent pool with remix.bestbuy.com which they announced at the recent NYC Web 2.0 Expo. According to project lead, Dave Micko, Remix is “an open API to access all of the data that feeds www.bestbuy.com. So, all of the rich information featured on Best Buy’s extensive, deep and content rich web site will now be available publicly via a simple, REST-based API call. “

While other big box stores are thinking small and releasing unappetizing Facebook widgets like this:


Best Buy is thinking much more strategically about the value of the Internet by allowing anyone to reinvent their entire online store. With “access to all the data that feeds Bestbuy.com” imagine the potential of creating your own, curated site on top of Best Buy’s catalog and supply chain. Imagine top Blue Shirts running their own online stores with select merchandise that they stand behind or imagine a thousand home-theater geeks and “go-to-guys” (and girls) extending their expertise and word-of-mouth via their own online stores.

Much needed breakthroughs in ecommerce usability (product and catalog navigation, visualization, design and findability) are now open to thousands of developers to work on. Best Buy will be able to bring that intelligence back into their organization. The only missing piece seems to be some form of compensation for folks who actually go to the trouble of creating their own stores; reward zone points, commission, reputation etc.

Open beats Closed:
This move reflects one of the new strategic principles at work on the Internet: Open beats Closed. There are two readings of open beats closed - both correct and on-point for Best Buy. First, it is the literal injunction to be consistent with the norms of behavior on the Social Web; authentic, transparent and candid. Second, businesses are finding new ways of sourcing content, innovation and market insight and energy outside of their organization. They are letting more people to contribute by allowing access to once tightly guarded data or business processes (via APIs and mashups). As a result they are redrawing the boundaries of the traditional organization. As we dig deeper into the network economy closed companies are going to find it more and more difficult to survive against open companies.

Has anyone in the Radar community seen a similar, open move by a big, traditional company? I have not.
(In full disclosure: I have worked with Best Buy on several initiatives but have nothing to do with the remix project.)