There's a fraction too much friction! Customers, service, and staff.

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While trawling around on YouTube recently I came across a 1980s video of Tim Finn’s There’s a Fraction too much Friction and it got me thinking about the things that annoy me  in dealing with businesses. I concluded that the source of my irritation is friction.

I have long observed that business has many things in common with war, and friction is probably the thing that most comes to mind as significant in both business and war.

The problem with friction is nicely put by Clausewitz:

“Everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war.”

This description of the effects of friction in war are eerily reminiscent of dealing with a large business (say for example, one of our large telecommunications companies).

The huge opportunity that the digital revolution offers is to remove friction between different parts of businesses – between customers and staff, between operational silos within the organisation, between groups who are internal and external to the organisation.

Organisations that see and act on this opportunity are the ones that will triumph in the hyperconnected future.

People who see a dedicated niche that they can service seamlessly and effectively will grow their businesses almost without trying, and customers will flock to them.

In this milieu the one-stop-shops that try to do everything – those who previously leveraged scale and centralization – are likely to suffer.  This is because scale creates and does not reduce friction. Only in the past when the friction in having services and products delivered from many smaller suppliers was so great did the one-stop-shops have an advantage.

But now even small organisations can remove friction and deliver seamlessly to their customers using web and mobile applications.

Now organisations are liberated to serve customers in ways that were impossible before ubiquitous internet connected mobile devices.

Big companies that are not already offering effective online services are the new dinosaurs.  It will take only the slightest change in their terrestrial trading conditions for them to sicken and die. Two examples of this phenomenon  worth keeping an eye on are Harvey Norman and David Jones . It will be very interesting to see if they can evolve their business models sufficiently fast to survive.

Reduced information asymmetry is another opportunity offered by this reduction in friction.  In the past companies, especially retailers, had better information about pricing of the good they sold.  Now this asymmetry in access to pricing information is dying. A recent tweet from my friend Mark Pesce exemplifies this new trend:

And US retailer J.C. Penney recently launched a new pricing model:

“J.C. Penney (JCP) is permanently marking down all of its merchandise by at least 40% so shoppers will no longer have to wait for a sale to get the lowest prices in its stores.

Penney said Wednesday that it is getting rid of the hundreds of sales it offers each year in favor of a simpler approach to pricing. On Feb. 1, the retailer is rolling out a three-tiered strategy that offers “Every Day” low pricing daily, “Monthly Value” discounts on select merchandise each month and clearance deals called “Best Price” during the first and the third Friday of each month when many shoppers get paid.”

Source: Daily Finance, 25 Jan 2012 

The results of this pricing experiment are just starting to flow in.  There has been an initial drop in sales revenue but analysts note:

“We believe our findings demonstrate that the strategies announced to transform (Penney’s) business are the right actions to take and will resonate well with consumers over time” (Source: MSNBC, Penney’s pricing strategy takes a toll on sales, 30 Mar 2012)

Against this backdrop it is amusing to see an Australian retailer’s response to market conditions – “David Jones Outlines Strategic Plan to Cut Costs” along with their very late in the day online shopping initiatives. It is especially amusing when one observes one of their chief competitors, Net-a-Porter – saying:

“It’s very easy to copy the look and feel, which people have helped themselves generously to,” Massenet said. “But we have 12 years of building ahead [of other sites] and we are sending out 5,000 orders a day as opposed to 20 orders a day and I think it’s very difficult for a business to keep up with that operationally.”

Source: Sydney Morning Herald, How to create an e-empire, 29 Mar 2012

Net-a-Porter is an excellent example of an organisation that has nailed servicing a niche, delivering good product, and ensuring a good customer experience supported by excellent customer service.

The bar has well and truly been raised for traditional organisations. And only those who work out how to reduce friction and deliver seamless service will survive.

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Social Media – the US Army gets it

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Most organisations are grappling with the digital revolution and its democratization of communication. The US Army is no different.

However, they have met the organisational challenges of social media head on and have become an acknowledged leader in practice. They along with other parts of the US military – such as the US Air Force – have invested resources in adopting, using and benefiting from this digital revolution.

It is interesting that so many civilian organisations are still ignoring the potential benefits of the digital revolution while government and military adopt it so readily.

The US Army has updated their Social Media Handbook for 2011 and it’s available on slideshare as well as embedded below.

It’s worth a read no matter what stage of adoption your organisation is at – it gives some good ideas about how to communicate with people about how an organisation can use social media.

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Sometimes a tweet is not enough

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In the olden days when I was very young it was the custom, upon receipt of a kindness from someone, to write them a thank-you note. This note took the form of a missive, hand-written, on personal stationery or a note card. The note was then taken to the post office and sent via that which we now call snail-mail.

Someone did me a kindness very recently. That is, they went out of their way to do something nice for me. And it seemed that just sending a tweet that said something like “hey thx that was gr8” did not truly express how touching I found their action.

With the advent of modern telecommunications such as email, and the subsequent growth of micro-format communications like Twitter, we have lost idea of sending a tangible token of our gratitude.

So today, for the first time in many years, I sat down and wrote a thank-you note using pen and paper. Then Trotsky and I walked up to the post office to send it off via snail-mail (using two stamps because I’m not sure how much it costs these days).

To send a tangible token of thanks rather than a digital one enables the recipient to perceive it with their various physical senses. For example, they can put the physical token on their desk or bookshelf, or pop it into their wallet and carry it around with them. These are things we cannot yet do reliably with our electronic communications at present.

Clearly since so much of our interaction these days is online it is often the best, fastest and most relevant way to communicate with people. But sometimes a tweet is not enough and this idea of sending thank-you notes might just be a new (but old) way of doing things?

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Perhaps progress on the Telstra ADSL front?

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Received an email from Telstra Bigpond as follows the other day:

“Telstra realises that there has been a delay in responding to your enquiry and we would like to extend our apologies. Your email has now been received by our department and we have included a response to your email below.

If you would like to supply us with the phone number, including the STD area code, that you wish to have BigPond Broadband ADSL connected to, and address, we will be able to advise of ADSL availability on this line.
Yours sincerely,
Rick Palma
On behalf of Justin Milne
BigPond Customer Service Team”

I am waiting to see if anything positive comes of this, will continue to note progress here.

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Whirlpool News – Telstra to stop rolling out pair gain (2002-Oct-2)

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This from 2002: Whirlpool News – Telstra to stop rolling out pair gain

Many people (including me) are still suffering from this stupidity and cupidity of Telstra!

They knew pair gain was a cheap but ineffective way to roll out phone lines but they did it anyway. I think this bolsters arguments not to privatise them.

If this is how Telstra behaves when they are under government regulation what will they be like when they are free to do anything they want!

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More on getting ADSL in Sydney – evil Telstra still trying to stop me

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The next installment in my continued quest to obtain late 20th century broadband access in the 21st century …

Phoned Telstra and was advised “you have pair gain there is nothing that can be done”. They essentially told me to go away and stop bothering them.

Wrote email to Justin Milne, Managing Director, BigPond (Telstra internet department) asking why I cannot get modern technology when I live in the largest city in Australia.

So far no response, but did a little research & found a great site that explains some of the ways to keep up th fight. It is on the dataco.com.au web site Telstra :

When NO can mean YES. I’ll be trying some of these suggestions and will track my progress here.

In the meantime, I’ve also discovered a lot of people who hate Telstra, this includes (but is not limited to:

RESULT: As soon as the wireless networks that do not rely on Telstra come of age I will be an early adopter. Telstra is a business that ignores their customer’s needs & as such they will become a dinosaur – we may just find Telstra’s fossilized remains in the not too distant future?

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3rd world telecommunications in Australia

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It is very annoying to live in an allegedly civilized and technically advanced society only to find out that one is unable to get access to broadband services since the phone lines here are pair gain.

I live in a major city in Australia, just one of the outer suburbs – not in a remote rural area – this is crazy!

They have offered me satellite at a ludicrously high price and wondered why I refused.

How can we be the clever country if we still have to use 56k dial up?

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