I’ve used the term “social media” as a handle for the types of publishing that everyday people are using to be influential publishers in Content Nation. What really is social media and how does it work? Let’s take a look at what makes social media “tick” and what has really changed when people use today’s technologies to change the dynamics of how people create and find value through influential publishing.
Read the Secrets and full story here!
The Three Stages of Strategic Alliances
Source: Harvard Knowledgebase
Not every alliance is created equal. Harvard business professor James Austin studied five cross-sector alliances and discovered the three stages of how a partnership evolves. Here are his findings on how companies like Timberland, Starbucks, and Bayer pursued strategic relationships with complementary partners.
How Alliances Fit into Corporate Strategy
Source: The Boston Consulting Group
This guide breaks down the process of forming a smart partnership, from choosing the right partner and negotiating the deal, to making sure both parties stay goal-oriented. Turn to the handy 10-point CEO checklist if you’re too pressed for time to read the entire white paper.
Getting Everyone Together: A Road Map for Action
Source: Massachusetts Institute of Technology
When two organizations decide to partner up, the focus tends toward the financial and contractual aspects of the deal. But if an alliance is going to succeed, authors Jennifer Kemeny and Joel Yanowitz argue that companies must also focus on the “human factors” – the ways that each company’s staff will think and interact. In this article, learn how to effectively align two different cultures and their expectations.
Seven Strategies for Maintaining Good Relations
Source: Gruner + Jahr USA Publishing
According to a Vantage Partners study of 130 companies, somewhere between 55 and 70 percent of business coalitions either fail or don’t meet their original goals. Why? Alliance managers cite poor working relationships as the root cause. The founding partners of Vantage share seven tricks to initiating – and maintaining – a lasting partnership.
Source: Penton Media
Forming the right alliance is the first hurdle. The next challenge is measuring how much value it’s generating for both partners. Find the right metrics to make sure your company is getting out what it’s putting into the partnership.
Courtesy - bnet
Tags: Strategic Alliance, Alliance, Partnership, Business Structures, Strategy, Finance, Management, BNET Editorial, Strategic Alliances, Collaboration, Metrics, Starbucks Corp., Timberland Co.
I’m amazed at the number of sources there are for defining just what a social networking strategy should and should not have for companies considering implementing one.
Mainstream publications at times revert to a structured model of social networking strategies, no doubt to make the concepts quickly interpreted and used by their readers. Others, including bloggers and the leading Twitter contributors, have infused social networking strategies with an immediacy and urgency that is lost in mainstream media due to production timeframes. This is not a knock on either, just an observation.
What does emerge from watching this growing dichotomy are the following take-aways:
· It’s not about the company it’s about you and your passion for what you are doing. I can think of nothing more boring that having a blog that is faceless, nameless, and devoid of passion, even if it is one for a company. No wonder Forrester reports this week that B2B blogs have been seen as the new kings of dull. They need people writing who are passionate about what they do and this needs to infuse their writing and perspective. Waking up a boring B2B blog needs to start with a more passionate voice from people willing to sign their names, not just sign a corporate byline.
· Unleash people passionate about sharing information and writing, letting them do cannonballs into the social networking pool. The top-down methodologies that some mainstream media advocate miss this point. Let’s break it down (and I do not mean to sound patronizing here) but companies are just groups of individuals – if a social networking strategy is going to work find the most passionate person in the group and unleash them on the blog and Twitter. Not to self-promote or spam about your company but to deliver valuable information, which leads to the next point.
· Realize that “joining the conversation” is a cliché, giving more than you get is all. Twitter this week has had some great posts, including a blog reference from Jeremiah Owyang of Forrester and his great Why Some Don’t Need to Join the Conversation . Be sure to read it and the comments. It really gets one thinking about what social networking from a company strategy standpoint is all about.
· Before attempting to create a social networking strategy get a Twitter account and watch the traffic for a few weeks. I found this fascinating and highly addictive personally. Doing this shows you that you that offering up and serving others with useful information and insights is what makes this all work.
Bottom line: Social networking’s value is in giving more than you give. Find a passionate person and turn them loose, give them the authority to freely share information – on the good and bad – and refuse to be the king of dull by infusing passion into B2B blogs by writing about what your customers and you really care about.
Courtesy - Louis Columbus, Perfect CEM
Marketers are continually hopping onto social media marketing as a perfectly productive means of reaching out to more and more people. Even if they are not able to measure the numbers yet, they are keen on using this tool as an effective means of creating the right buzz about themselves.
In an innovative big to promote itself, Aquafina created a contest on video networking website MySpace for users to create a winning video. The reward was a trip to none-other-than the Sundance Film Festival. The brand has profiled itself on MySpace since 2006, filling in with podcasts and film festival updates. This was one of their most innovative and effective ways to reach out to the film community. The influence that social media marketing of this kind provides cannot be met with a single line ad.
Closer home, a recent instance is the promotion of Bollywood [s1] film Tashan on Facebook, YouTube and Orkut. Promoters of the film have created a community specific to the film. On Facebook, it runs with the tagline, “Don’t worry about who you are, just carry your Tashan in your heart.” The film got popular even before it was released and the reader profile perfectly complimented the audience the film required.
Social media marketing can be a tricky game. If your existence on the web is simply a platform for your company, you might want to get involved with B2B media marketing that allows you to access the communities you specifically want to target. You can access this on networks like ITtoolbox or LinkedIn.
On the other hand, you can involve more publicly by hosting podcasts, webcasts and blogs for your brand on the numerous social networking websites with their readership of anything like a million. Since people are talking about you anyway, you might as well don the discussion hat and play along. It will only benefit your brand. Cincom Systems, an IT organization has made available a series of online educational & promotional videos, podcasts and screencasts, on the social media sites YouTube, Ning and Facebook. The famous bollywood actor Amitab Bachan, Aamir Khan and other are now hooked to blogging. Marketing experts like Dale Wolf runs the perfect customer experience management (www.perfectcem.com) blog, Steve Kayser’s Expert Access newsletter has managed to achieve a phenomenal global subscription base of nearly 141,000 subscribers. These examples truly accentuate the importance of these next generation tools for marketers.
For those who have still not recognized the perfectly simple and productive marketing tool that social media provides, it is time to wake up and smell the coffee. There is no challenging the tremendous traffic that a good posting can attract. These will be people who can add to your business and a lot of them will be ones who will keep coming back to your website.
Thanks to Web 2.0 you can use this master of a marketer to attract more links to your website or the company. The idea is to create a posting or an advertisement that connects to the user on the website you are choosing to harness. Added to this is the low cost advantage that all of us are eventually happy to employ. Search engines also pick up websites that receive natural links from known domain names. These are some first hand advantages of social media marketing that many of us are meaning to ignore so very far into its development.
It’s easy to assume that most of the traffic generated thus will not be productive. But a trend that has been noticed is that while initially you might see a spurt of visitors, the numbers will stabilize soon after. And this will be the number to reckon with. It could be clients, customers, partners, potential partners,. All of whom need to be on your list. It is also not presumptuous to say that a lot of the secondary traffic that visits your website could be people interested in what you provide.
Simply advertising on Web 2.0 is an efficient means of attracting traffic to your website. Because the number of users is so high on this case, it adds to the traffic you will eventually attract. Again, the only trick is to make it available to your target audience because the click, as we all know, is only a flick of a second.
While the profits of such marketing do not add up immediately or even evidently, it will generate a linkage on the web that will support your business through mentions, connects and recommendations. Social media marketing perfectly compliments your other forms of marketing. It can even be a support system for you as this is one means of communication that has no time span or recurring costs involved.
Another term touted with as much ease as social media marketing these days is ‘social media optimization’. With this, brands aim to alter their website such that it makes it easily searchable and receives more mention on blogs and podcasts etc. Adding a blog to your own website is a greater way of going about it. If your website is static, it will get more dynamic with regular updates and with several links connecting to anything that you post.
Social media marketing can therefore be a great means to promote your site through social media networks as well as within 3D worlds like Second Life and There.com.
Instead of randomly rushing through this sea of information, marketers prefer to build on a specific idea for brand awareness and then encourage brand attention and feedback with increased albeit more casual visibility. What cautions them is the user feedback that can also be negative. But one cannot forget that users in this case also become contributors and when the product is good, gladly act as ambassadors. As more threads are attached to your name, viral marketing picks up at an unprecedented pace. And this is where the crux of the game lies.
Marketers are therefore now busy fine tuning themselves to the new needs of this growing media that cannot be ignored. Social media marketing is far removed from traditional concepts of marketing. This makes it a more challenging medium but one that can be most effective in the medium to long run.
Intellectuals are still pondering over measurements that most correctly define the reach of this new media. There are four broad measures identified so far—audience, content tracking, online media analysis and online market research. Whatever the measurements and whatever its reach, opinion is unanimous for social media marketing. There seems to be nothing like it in the near future.
[s1]The Indian Film Industry like Hollywood
Accelerating the sourcing process using an interactive and collaborative approach is not only desired, but also appropriate for many organizations today
Speed is an indispensable element in enhancing business competitiveness. If what need to done can be done faster, then it better be done that way is the mantra. So, if sectors like food and airlines, and functions like supply chains and product development can go the ‘fast’ way, why not sourcing? Global sourcing experts are in the process of developing the concept of accelerated sourcing. Though there is no mass following or universal agreement about this yet, the practice is gaining ground in real-life global sourcing situations.
“Accelerated Sourcing (sometimes referred to as ‘Fast Track Sourcing’) typically refers to a methodology where the process and timeframe to get to contract is compressed. The traditional sourcing method takes between 14 to 18 weeks. The process is compressed by simplifying and fast-tracking the various aspects — statement of work, service-level agreements, pricing, and terms and conditions — of a commercial outsourcing agreement,” explained Thomas Young, Partner and Managing Director, TPI.
Different Approach
The proponents see accelerated sourcing as a response to the market dynamics. “We are reacting to the market need. The current trend is such that the customers don’t have the time, and if we keep pushing them to follow the traditional sourcing process, fewer and fewer buyers would want to outsource,” said Doug Plotkin, Sourcing Leader, PA Consulting.
How does one cut the slack out of the traditional sourcing process? This is where the perspectives and approaches differ. According to TPI, “The approach an organization takes in accelerated sourcing is not different from the standard sourcing approach. The key is for organizations to have a good understanding of their environment and what areas need most attention and which ones need to be simplified. For example, if the service levels are well understood and tracked, and the organization has a lot of historical data in this area, then much less time needs to be spent on developing and agreeing to service level approaches, calculations and baseline establishment,” explained Young. This also means that accelerated sourcing makes more sense for firms that have been outsourcing services for a while and have the basic understanding of the outsourcing process.
The reason why traditional method works well for the beginners is that it eradicates most of the possible risks. However, this doesn’t mean that accelerated sourcing tends to increase your risks; it creates more filters at the initial stages such that only the suitable providers reach to the final stages. “The traditional method is very structured and only one step can be taken at a time. Thus the process takes from six weeks to many many months,” added Plotkin.
The Right Candidate
What kind of companies or engagements are more suitable for accelerated sourcing? There are varying opinions on this.
The first school of thought subscribes to the belief that the companies that have been outsourcing for a while are more comfortable with the process of accelerated sourcing. “Within the Fortune 2000, virtually every company has some experience in sourcing services. Many companies have extensive experience. As such, the sourcing approaches by these firms tend to be more sophisticated and, more importantly, built on the organization’s prior experiences. So it is easier for them to adopt the fast path,” said Young of TPI. “And the firms who are looking to initiate outsourcing should go through a more deliberative process so that they understand all aspects of the potential deal.”
The other school of thought opines that maturity in outsourcing is neither necessary nor sufficient. Said Karoor of neoIT, “This is not entirely true. Definitely the companies with better understanding of the sourcing process tend to opt for it more. But the acceptability rate has been almost 70 to 75 percent even by the new entrants to the trend.”
At times, the companies that have been outsourcing for long might find it difficult to imbibe a new process. First-time outsourcers will go for it as it comes with a cost and time advantage. However, the limiting factors for accelerated sourcing are:
So the organizations that have the availability of resources tend to go for accelerated sourcing process, irrespective of experience or no experience.
The Readiness for Adoption
Timelines play a key role. If the deal needs to be closed by the end of the quarter, accelerated sourcing is the suggested form. But this doesn’t mean that the details can be deferred to at a later stage because leaving substantive details after the deal is “signed” leaves organizations with little leverage to negotiate from a favorable position. The keys benefits offered by accelerated sourcing process, as noticed by a market-leading reverse auction provider, are:
“In cases where organizations are re-bidding the existing work and have well understood statements of work, SLAs, and pricing, there accelerated sourcing works well,” said Young.
The concept is still in its development stages, but it is evident that accelerating the sourcing process via an interactive and collaborative approach is not only desired, but also appropriate for many firms today. The benefits attached with this form of sourcing are not dependant on whether there are multiple or a single provider; whether you are a beginner or pro. Even if there is only one potential provider, then too you still require a rigorous approach including the detailed preparation of requirements and final contract, etc. Thus, once you are done strategizing the process, realize the key benefits and then utilize them wisely.
Case Study: Accelerated Sourcing
One of world’s leading manufacturers of hi-tech equipment wanted to outsource part of its IT operations. Its objectives were:
Scope of the Process: Application support, (ERP package) development and support, IT infra.
Geography Targeted: North America to start with, extended to include most other locations across
the globe.
The Challenges:
The Solution:
The Results:
Courtesy - Namita Goel, Global Services Media
An excerpt from the new Tuned In book appeared in Volume 6 Issue 2 of The Pragmatic Marketer. In that issue, we set the stage for learning how to stay “tuned in” to your market. Here, we provide additional advice for becoming tuned in.
Of all the causes of tuned out behavior, the most common we’ve observed is the logical (but incorrect) assumption that, because you’re an expert in a market or industry, you therefore know more than your buyers about how your product can solve their problems. It’s natural, for instance, for 20-year auto industry veterans to assume they know more than 100 mothers do about how to drive preschool-age children around town each day.
Or a cell phone manufacturer might think they are able to guess which capabilities are most important to users because “they use their own products daily.” Similarly, a software business leader might assume because of the complexities and/or flexibility of their leading-edge technologies, the company is best equipped to decide how to present solutions that package a comprehensive set of capabilities. Wrong!
Too often, this type of assumption results in poor products, such as those created when Detroit product development experts design the radio (or keyless entry system or cup holder) that they themselves would want to buy. How many tech devices and software products have overwhelmed even the power users? We’re missing a fundamental ingredient to the puzzle here:
When was the last time you bought your company’s product?
Leaders who guess at what the market wants, follow a typical and familiar path: They start chasing outcomes. They get trapped doing this for two very simple reasons:
The result? You pretty much get what your research predicted…a solution that satisfies a small audience (sometimes only you). You then begin the slow and painful process of developing marketing plans, sales strategies, and new incremental development projects targeted to reach big audiences (executed rapidly because you are “agile”). It is then that you start chasing outcomes.
Sales are lower than expected, so you launch more marketing campaigns. Marketing results are lackluster, so you create a new version of your offering and re-launch. This time, you hold the sales channels accountable and start adding more management to each cycle to ensure that buyers “get it.” And then the cycle repeats.
Bad news everyone. You’ll never get there!
Chasing outcomes is analogous to playing a sport and spending all of your time watching the scoreboard. Those who have tried this approach will tell you that you lose all sense of competing and end up with the result you feared. If you had channeled all of that energy into the right things earlier, the result might have been different.
But, that would require a better perspective…a tuned in perspective.
We’ve analyzed hundreds of companies to understand the process of becoming (and staying) tuned in, and we’ve determined that most have a single, dominant focus that drives their approach to business. Think of it as a “company personality” that determines how an organization structures itself and behaves in the market.
The most successful organizations are tuned in to their markets. Whenever leaders create products or services—for potential new customers or even entirely new markets—they seek to solve buyer problems first.
We have also identified three other common types of organizational cultures. When an organization allows one of these three cultures to dominate, the resulting approach to business is very different from the one we outline in the Tuned In Process:
While most companies exhibit at least a small amount of each of these driving behaviors, one usually dominates. And the choice directly correlates to their success (or failure). Let’s explore each of these cultures in further detail—debunking the myths along the way.
Debunking the myth that Innovation Is Everything
These days, innovation is hot. Check out all of the magazine articles, business school courses, and books on the subject, and you’ll find countless examples detailing how innovation creates breakthroughs. This focus has led many organizations (start-ups in particular) to focus exclusively on their ability to innovate and to create a disruptive breakthrough that will make them famous. But directionless innovation is a common road to the business scrap heap.
The culture of “Innovation Is Everything” breeds tuned out behaviors. Innovation-driven leaders tend to listen only to themselves, although they do religiously track competitors. These companies fixate on “one-upping” alternative products in the marketplace. And they obsess about who’s getting credit for the most clever or unique inventions.
Focusing on “changing the game” is not inherently a bad thing. Some organizations are really good at creating and marketing innovative products—Bose, Nike, and Brookstone are three that come to mind.
Unfortunately, what we tend to see more often are companies that innovate for innovations’ sake, using inside-out thinking. In other words, they create products that are new, hip, and cool—or that have new, never-before-seen features. But these feature-laden products and services aren’t developed in response to buyer-defined needs.
While it is possible that a product or service created by a tuned out, innovation-driven company will catch on, it is much less likely than if the innovation were specifically designed to solve market problems. As a result, these innovation-led companies invest big resources in hopes of a big win (much like a baseball player swinging for a home run on every pitch). Their risk of failure is huge.
Only when an innovation solves people’s problems does it become a potent force.
We realize we’re being a bit radical here. But, consider the piles of money plowed into innovation during the dot-com boom. Venture capital firms funded innovative e-commerce companies, innovative Web tool developers, and innovative portal sites that sounded new, hip, and, well…innovative. Anything with an “e” in front of it qualified. But unless they solved an underlying problem, these exciting innovations are mostly distant memories. Remember, the truly successful Web companies, such as eBay, Yahoo, and Amazon, solved market problems.
We’ve also noticed that many innovation-driven companies obsess over competitors’ moves and try to make incremental (and innovative!) improvements to what the other guys are doing. This approach assumes that your competitors are already connected to the things your market values most and that the game is just a simple matter of establishing a clear area of superiority (through innovation, of course).
Another problem with this approach is that you tend to create products and services that are “better” than the other guys’ because they are bigger, smaller, faster, or cheaper. The problem with this approach is that, too often, your customers don’t care. Focusing on your competitors is a tit-for-tat game that rarely produces a market leader.
There’s an important distinction to be made here, however. It is possible for a tuned in organization to learn about an unresolved market problem that has to do with another company’s product. Interviewing buyers, for example, might reveal that people are ready to pay money for a product that they describe by comparing it to the competitor’s product (“a good quality haircut in half the time that I would need to spend at the hairdresser in town”). Creating a product to solve this problem is definitely an example of tuned in behavior, even though the market problem is expressed as a comparison to an existing product.
But, in the end, a corporate personality built around innovation by itself has a low probability of success. Obsessing over the competition’s product, or over your own product’s increased performance or new features, means you aren’t focused on the most important success driver: the market problems faced by your buyers.
Believe us, there is no such thing as the creative dreamer, sitting in an isolated office, who builds products that succeed every time. It may happen occasionally, but the products made by the vast majority of innovation-driven companies just don’t resonate with the market.
Debunking the myth that “Revenue Cures All”
This culture is often founded on the belief that revenue and sales are always the most important goals—which typically emerges soon after an initial round of fund-raising or some other infusion of capital. When companies enter a perceived growth phase (dictated by the strength of a market opportunity or some early wins), it is common for outsiders (such as investors, the board of directors, or your spouse) to insist on a strong sales focus. In larger organizations, a highly charged sales executive is often hired; some companies even make the new sales person the President and/or COO.
“Getting serious about sales” sometimes results in an initial brief period of success resulting from sheer force of will to push solutions into the market. But, because the revenue-driven company will often resort to signing any contract to make the numbers, lowering the price to bring in the business, or telling any story to close the sale, it’s not long before the organization becomes tuned out to the real market problems of buyers. Then the salespeople start making promises the company can’t afford to keep.
Non-revenue-generating departments (such as marketing, customer service, and product development) often suffer from reduced influence and resources, and can even face elimination. In response, the company ends up acquiring more and more resources to support the dynamic requests of Sales, often resulting in a death spiral that requires the sale of the company, a merger, or even bankruptcy.
The revenue-driven organization worries about individual sales opportunities one at a time, rather than what resonates with a large marketplace.
In many consumer products, the “Revenue Cures All” approach results in jumping on the hype cycle. Some organizations spend huge amounts of money on expensive advertising in an attempt to buy their way into buyers’ minds. These tuned out organizations believe that TV commercials, direct mail, and other forms of interruption-based marketing are the tools they need to succeed.
Instead of spending time understanding buyers and their problems, hype-driven companies spend time with their agencies working on campaigns to bombard people with slogans and messages.
We’re not against advertising when used as a strategy to communicate powerful ideas that already resonate with people. Wendy’s “Where’s The Beef” campaign worked because it communicated an answer to buyers’ problems (hamburgers had beef patties that were too small). But the hype-driven company manufactures buzz that has very little to do with helping people solve problems.
Debunking the myth that “Customers Know Best”
There are thousands of books, countless blogs and forums, hundreds of conferences, and lots of plain-old common sense that suggest an unrelenting focus on the customer is the best way to guide an organization. But there is a fundamental flaw with being a customer-driven organization: Your existing customers represent a small percentage of your opportunity…they have different market problems than non-customers (buyers who don’t yet do business with you)…and—most importantly—they only frame their view of your future based on incremental improvements to their past experiences.
For example, if a company in the late 1990s that made and sold portable music devices asked their existing customers what they wanted, they might say “more storage” or a “smaller unit.” The companies that listened to their customers missed the biggest market problems that were identified by Apple when they developed the iPod—that the existing portable devices were too difficult to use and impractical for downloading and managing more than a few songs.
Don’t misunderstand us—we’re all in favor of great customer service. We just don’t believe that an obsession exclusively on your existing customers is the right way to design and build product experiences and to reach the total market. Eventually, the customer-driven company gets bogged down by taking baby steps to tweak features in existing offerings (to please existing customers) rather than making the bold leap to develop new products and services that solve potential buyers’ problems.
Because the customer-driven organization relies on existing customer requests for endless extensions to existing product lines, the company can’t develop breakthrough products and services that resonate with non-customers.
Assuming your customer knows best is a comfortable strategy, because it’s very easy to get feedback about how to conduct your business. You ask: “What do you want us to create next?” And the customer is delighted to tell you. This strategy leads to a situation where you have listened to only a few people (those you already do business with) rather than many (the untapped market). Unfortunately, working only for your existing customers usually results in sleepy, increasingly unprofitable companies.
A missionary sell?
Ultimately, a focus on any of these other approaches—being a customer-, revenue-, or innovation-driven company—is more risky than a tuned in approach. It is possible to build success, but the odds are stacked against you. And, if you do beat the odds and develop a winner, you may still fail later. It might take years for the results of being tuned out to become apparent if your initially successful product can be turned into a cash cow.
A resonator is a product or service that sells itself. You find them in the market, not in your mind.
We often see tuned out companies create products and services that do not resonate. To compensate, they must adopt drastic strategies to drum up business for their offerings. You know how many companies talk about their “product evangelists”? And how many organizations say they are “missionaries in the market” and that they need to “educate people about the issues so they see the value of our product or service”?
These missionary selling strategies are simply symptoms of a tuned out company. You shouldn’t have to wave your arms around and shout at people to convince them to pay attention to your product or service.
The tuned in, market-driven company understands market problems and builds products that resonate; these practices drive both sales and customer satisfaction.
Are you tuned in or tuned out?
If your organizational culture is closest to one of the three we’ve outlined here, it means your organization is tuned out. The key distinction is that being tuned out requires you guess when making important decisions such as what product to build, whom to try to sell it to, where to sell it, and so on. But each time you guess at one of these elements, you introduce more risk into your business.
Consider your own organization. How would you answer these questions?
You probably realize that a “yes” answer to any of these questions means you’ve got some of the symptoms of being tuned out—and that you’re guessing at what your market requires. A “yes” also means you show the signs of a company chasing outcomes. Like a dog chasing cars, it’s a path that often ends in a bad outcome.
By Phil Myers Co-author of Tuned In: Uncover the Extraordinary Opportunities That Lead to Business Breakthroughs
Phil Myers is President of Pragmatic Marketing, Inc. During his business career, he has led three technology start-ups, two initial public offerings and launched seven products to market that became category leaders. Contact Phil at pmyers@pragmaticmarketing.com
The tech industry is crawling with market-research firms that size up products, services, and companies. One firm that's had a meteoric rise in recent years is Brown & Wilson Group of Clearwater, Fla., which began publishing rankings of global outsourcing service providers in 2005 and publishes The Black Book of Outsourcing. When the firm issues its annual lists, many companies rush to publicize their rankings. A flurry of such press releases came out after Brown & Wilson's June report on the world's 50 best-managed outsourcing companies.
But while Brown & Wilson has become something of a kingmaker, key players in the outsourcing industry question whether it merits such status. They say its methodology is not consistent with most accepted business research techniques. As a result, companies often rise or fall dramatically from one year to the next—an unusual pattern for a customer satisfaction ranking. "We looked at their methodology, and we couldn't find any rhyme or reason to it," says David Parker, vice-president of marketing for IBM's (IBM) strategic outsourcing business.
Brown & Wilson Group's principals defend their way of doing business. Scott Wilson and Doug Brown say their survey, which results in multiple rankings, is the world's most independent and objective rating of outsourcers. "We bring an unbiased view. It comes from the clients," says Wilson. What they publish matters because companies consider their data when choosing outsourcing providers. A growing slice of the $750 billion tech services industry goes to outsourcing firms.
Among a dozen outsourcing companies contacted by BusinessWeek, three were positive about Brown & Wilson. Marcelo Costa, marketing manager for Miami-based outsourcer Neoris, says, "We feel like it's a credible firm." The other companies were skeptical. Peter McLaughlin, manager of public relations for Infosys Technologies (INFY), says the firm peppered Infosys executives with e-mails pressuring them to participate in the survey process. "Beyond the methodology, which we question, we also have concerns about their aggressive promotional behavior," he says.
Infosys and IBM (IBM) were among the companies whose rankings dropped precipitously this year. But even some companies that scored well were skeptical of Brown & Wilson. Jessie Paul, chief marketing officer for Wipro Technologies, ranked sixth, says, "I don't use this research to validate [our customer service] because the rankings are so erratic across years."
Brown & Wilson relies on the Internet to conduct its research. It sends out e-mails to 400,000 people at companies large and small who it believes are involved in outsourcing relationships. The e-mails invite people to go to the Brown & Wilson Web site and complete a survey. About 24,000 people responded this year, Brown and Wilson say. The firm also encourages outsourcers to contact customers and urge them to participate.
Claes G. Fornell, a professor at the University of Michigan Ross School of Business who specializes in customer satisfaction surveying, says Brown & Wilson's methods aren't sound. First, he says, the firm can't be sure all the people who respond are qualified. Second, the results could be tilted in favor of companies that urge their customers to participate. "You'd be better off not doing anything than doing a survey like this," says Fornell.
Brown and Wilson argue that their results are fair and valid because they check the credentials of many of the participants. Concerning the volatility, they point out that all of the companies in the top 50 are outstanding performers and they can move on the list significantly if their raw score changes just a fraction of a point.
Brown & Wilson's approach is different from most established tech researchers. Firms such as Gartner (IT) and Forrester Research (FORR) employ dozens of analysts who use detailed phone surveys of high-ranking tech purchasing executives as one of their research methods. Gartner's so-called Magic Quadrant reports typically show only gradual movement in companies' positions from year to year.
The way Brown and Wilson promote their business has also raised questions about their reliability. Last month, an article showed up on their Web site that appeared to have been published by CIO Magazine. The story compared Brown & Wilson favorably to two of its rivals. But CIO Magazine says it published no such article. Brown and Wilson say they had no hand in putting the story on their site; the article was provided by a service they hired to supply stories about them.
The two also claimed on their Web site to be "adjunct professors" at Syracuse University. But a school spokesman says they hold no such position. When questioned, the pair said they never taught at Syracuse but tried to develop online classes.
There is other information on the Brown & Wilson Web site that is not quite what it appears. It shows a photo of a sleek office building alongside a listing of an office address. But Brown & Wilson doesn't have such a building. The "office address" they list on their Web site is actually the address of a UPS Store (UPS) where they have a mailbox. They work from home, using shared office space when needed. "It's not a big operation," explains Brown. "It's a database."
Courtesy - Steve Hamm, BusinessWeek.
