IT Spending Recovers (Source: American Banker)

IT If you listen to bank tech execs, analysts and technologists talk about new strategy for the coming year, you can almost hear a page turning.

Gone is the moribund posture of retrenchment and compliance focus that’s dominated IT work for the past five years, replaced by an outlook that’s more focused on true innovation than at any time since before the real estate bubble burst.

Sure, spending’s not growing by leaps and bounds and the evergreen line items like compliance, credit risk, disaster recovery and security aren’t exactly going away soon. Basell III, Dodd-Frank, rising sea levels and hackers will ensure that.

But the primary pressure on banks is now coming from nimble startups developing exciting new tools that change the way people make payments, deposit funds, and engage their finances; as well as from consumers who expect and demand a robust, layered, educational, and even fun experience when managing their money. While it may not be 1999, the air is filled with creativity.

“2013 is the first year of ‘beyond the financial crisis.’ From 2008 to 2012, the banking industry was consumed with the crisis, with consumer credit, regulatory impact, introspection and cutbacks. But when we talk to senior level executives now, they are carving out a strategy to go forward,” says Jim Eckenrode, the executive director of the Deloitte Center for Financial Services.

Even though economic weakness lingers, particularly in Europe, most banks feel as though they can no longer wait on new tech projects. “Banks have been talking about growth despite the climate of uncertainty. It’s time for the rubber to meet the road in terms of innovation and growth,” says Lisa Kart, a research director at Gartner.


The projections suggest steady growth in overall bank technology spending. Gartner says that in the banking sector, technology spending is expected to reach $460 billion in 2013, up 3.5 % from $445 billion in 2012, with lending, payments, trading and risk management receiving an uplift in funds. Across all industries, global IT spending is forecast to total $2,679 trillion in 2013, a 2.5% increase from 2012′s projected $2,603 trillion.

“North America is looking better than Eastern Europe [which faces a fiscal crisis],” says Kart, who adds that while Citigroup’s recent announcement of cost-cutting may impact the forecast slightly, the overall climate in North America is relatively healthy. “Most banks expect IT budgets will increase, and only about 7% say they are decreasing IT budgets, so that’s a very positive sign.”

In the most recent numbers available, Celent has projected 2012 bank IT spending in North America, Europe and Asia to total $173 billion (the dollar size of different analysts’ predictions can differ widely because definitions of bank IT spending differ), or 2.8% higher than 2011. 2013 is projected to come in at about 3% higher, or about $180 billion, with 2014 expanding by about 3.4%.

Read the full article here


Recommended for you:

How Do You Innovate “Innovation”?

Mukesh Gupta

A couple of days ago, I submitted my entry for the HBR/McKinsey M-Prize Challenge run by Management Exchange.

This challenge is about “Innovating Innovation” and will be judged by some of the greatest thinkers in innovation.

You can find below my submission for the challenge. If you like my thoughts, I request you to vote for my submission here.


Its not the lack of ideas that stops organizations from being innovative, but the way resources are allocated & employees rewarded that is the key.

We need to change the way we set and manage KPI’s, the way we allocate funds (quarterly budgeting with reduced budget year-on-year for standard activities) and the way we recognize and reward teams (based on IQ – Innovation quotient).


Currently, organizations are managed as follows:

KPI’s and organizational strategy:

  • The top management decides the strategy and the key initiatives for the organization.
  • These are then cascaded down to the different lines of businesses.
  • Each LoB head then defines the goals for his team based on the organizational goals

Challenges in this process:

  • This process resembles the election of a Pope. That is, the average employee has little to no understanding of, and input to, the process, and is instead reduced to waiting for the output of the process (“the white smoke up the chimney”).
  • This tends to dis-empower the employee base, but perhaps most importantly, robs decision-makers of the useful “push back” that the broader organization (particularly those working at the “front line”) can provide.


  • Each LoB head takes his last year cost, adds a percentage (maybe 5 or 10%) to the cost and submits the same for approval.
  • This is an annual process and gets repeated only next year

Challenges in this process:

  • This is where power turfs are created which lead to a lot of power tussles in the organization which help no one.
  • This process also adds a lot of fat in the organization. If you are continuing to do the same tasks year-on-year, you should be getting better at the task & can find better ways to complete the same, thereby freeing up resources for the more important activities of the organization
  • Increases the cost of doing business as-usual
  • Due to the annual cycle, so many resources are wasted by continuing to pursue ideas or projects that should have been killed. This also means that other ideas/projects have not been allocated those very same resources.
  • There is a separate LoB responsible for product development or R&D or innovation.


  • This team also goes through the same process as all other LoB for KPI definition and budgeting.
  • Makes it difficult to get the right amount of funding for the innovation efforts.

Challenges in this approach:

  • This puts the imperative of innovation on a small team instead of the fact that everyone one in the organization should have innovation on their agenda.
  • This also reduces the total resources available for funding new innovations as this team also has to compete with other LoB’s for resources.

Rewards & recognition:

  • Individual employees are then rewarded and recognized based on their performance as measured against the cascaded KPI’s
  • A lot of times these KPI’s do not have any component about innovation as it is considered to be the responsibility of the Innovation department
  • This creates a culture of competition among employees as the rewards and recognitions are limited and all employees (alright, most of them) want a piece of that cake.
  • Most organizations have a bell curve for evaluating and rewarding employees, which means that in every team, they expect a few employees to be below average, a few to be above average and all others average performers. This hurts most when you have a great team with super employees. By definition, you prohibit such teams to form and thrive.

Challenges in this approach:

  • Innovation is a team activity. Running an organization is also a team activity. So, why rewarding individual performance results in a few lone wolves who might not be great team players getting a lot of .
  • By following the bell curve, you are naturally encouring average performance from the team and discouraging high performing teams with high performing employees.
  • Individual top performers who care only about their performances get rewarded, recognized and promoted. These are the kind of people who are most likely to get involved in turf wars and create what we call the mid-management wall or bulge.


In my opinion the following approach would work much better:

KPI’s and organizational strategy:

  • The top management involves the frontline employees (sales, delivery, support, etc) who talk to customers/partners every day in the process of defining organizational strategy and key decision.
  • This process of discussion to also involve in defining the key challenges (with respect to product/service and competition). These challenges then become the areas to innovate.
  • The top management can now come out with the “Commanders Intent” of what they want to achieve and leave the details to the frontline staff to manage themselves, to achieve the intent.


  • Each LoB gets a cut in budget every year (maybe 5 or 10%) to manage their business as usual activities. The rationale behind this is the fact that if you are doing something regularly, you can always find ways to improve the same on a continuous basis and hence should be able to manage at a lower cost. This is an annual process.
  • There is a second budgeting cycle that is executed quarterly. This is to decide on the funding for various innovation projects in the areas identified as the focus areas during the process of forming the strategy or any other activity that can give competitive advantage to the organization. In any case, these projects could focus on one of the following:
    • New product or service creation
    • New business model creation
    • New market development
    • Process improvements that lead to improved topline or increased bottom-line
  • New projects are pitched and existing projects provide an update on their progress. As this is a quarterly process, the organizations can decide if any of the existing projects require to be killed and if new projects show promise and need to be funded. A panel consisting of senior executives, front-line managers and the relevant functional experts takes decisions on the funding for the various projects.
  • Projects where the team is convinced about the viability but the management is not sure, should have an option to get into the start-up mode with the organization providing the seed funding, provided the team is able to get funding from other VC funds. This with the option that the organization gets the first right of refusal for further funding and buy-out. At a later stage if the employees want to kill the project, they could also be considered for re-hire based on the then open situations.


  • A small team of innovation coaches created who can be used by the different teams on their innovation projects. They work as consultants, coaches and bring in the outside-in perspective to the problems and also facilitate the process of innovation.

Rewards & recognition:

  • Teams are rewarded and recognized rather than individuals.
  • Better performing teams are rewarded more than average performing teams or low performing teams.
  • Individual performances are still evaluated, recognized and rewarded, but within the framework of the performance of the team. So, if the team did well, your rewards will be better than if the team did not do well. So, in order for you to succeed, your team should also succeed. The individual performance evaluation is done by both managers and the peers.


The impact of my ideas would be as below:

KPI’s and organizational strategy – advantages:

  • This process ensures that the perception of the senior management is put to test and corrected if required, thereby eliminating the risk of creating strategy based on wrong perception.
  • This process also gets the front-line employees to participate in the creation of strategy that they are expected to execute. This increases the chances that the execution of strategy will be much better than otherwise. As many CEO’s will vouch that the difference between great organizations and not so great ones is this ability to execute their strategy well.
  • With the commander’s intent for the organization in place, employees can respond better to any situation they encounter and hence the ability of the organization to respond to change quickly and correctly is greatly enhanced. In times of great uncertainty, this ability to respond fast can be the difference between survival and growth.

Advantages of the 2 stage Budgeting process: 

  • This process ensures that there is continuous improvements in the process and does not create a situation where there is more staff than there is work or worse, managers invent additional work for their staff, thereby creating a culture of improvement & innovation.
  • This process frees up a lot of resources that can be used to fund a lot more projects that can address the key challenges identified in the strategy building stage.
  • This also takes care of situations where the project team believes in a project and is willing to take the risk of starting up in order to continue their work. If they succeed, they win big and if they fail, they still have a chance to re-join the organization.
  • Innovation becomes the responsibility of the entire organization and not of one small team in the organization.

Advantages of the “Everyone Innovates” process: 

  • Clear identification of the key challenges helps in focusing the efforts of the organization in solving these problems which will have the biggest impact on the organizations success/failure.
  • Creates the opportunity for innovations in areas where they are needed the most as the employees who face challenging situations are also more likely to come up with solutions.

Advantages of the new team based Rewards & recognition:

  • This approach ensures that all employees are working together as a team as their individual success rewards and recognition depends on the success of the team.
  • This drastically reduces the chances of someone succeeding (at their KPI’s) at the cost of their colleagues or customers.
  • This also eliminates any bias (perceived or real) that might creep in the performance evaluation by the manager
  • This will create an environment of trust and togetherness, which by itself, leads to a better environment which fosters creativity and high productivity.


Challenges that one will face during implementation of the above approach:

  • This involves complete overhaul of the management processes used in the organizations currently, which means that change management is a big challenge in implementing this idea of management.
  • There will be resistance from the mid-managers as they will perceive to be stripped of a lot of power that comes with being in the mid-manager layers that they have enjoyed so far. Unless, this is handled well and there is buy-in from them, the entire process can potentially fall apart, which will then make it even more challenging environment for the CEO to start fresh.
  • This said, the upside of being able to implement this approach to management is very high and is still worth the risk.


The process can be implemented in phases or pilots:

  • The senior management can initiate the workshop with front-line staff for strategy definition, along with the mid-managers, to identify the key areas where they need innovations or solutions to current challenges that have been identified. This can be done by any management at the start of their strategy cycle.
  • Create and communicate the “Commanders Intent” to the entire organization. Challenge the entire organization to move towards achieving the “Commanders intent”.
  • Create a team of experts who will work as coaches to teams that want help in addressing the challenge that they want to solve.
  • Identify 2 or 3 managers (of high performing teams) who are open to try the new team based performance appraisal system. Help them to get the buy-in from the team members.
  • Publicly announce the pilot of the appraisal system with the team and congratulate the teams that have taken the first step to adopt the new practices.
  • Budgeting process will need to be the last process change to be adopted. If the previous steps have yielded good results, the adoption of the budgeting process becomes so much more easier (as the senior management would have already won the trust of the organization).

Do you agree with the approaches that I have suggested above. Do let me know by commenting below or tweet your thoughts to me at @rmukeshgupta.

P.S.: Some interesting videos on Innovation:



Recommended for you:

The 15 Most Important Computer Security Startups Of 2013

Julie Bort

Computer security is a difficult problem that attracts some of the brightest minds in the tech industry who build some of the most innovative products.

We’ve assembled this list of the hottest, coolest security startups creating buzz for a number of reasons:

  • They’ve landed big finance rounds.
  • They have impressive founders.
  • They are solving a hard security problem.
  • They are approaching security in a fresh new way.

1.) Appthority: Protecting mobile app developers

Appthority CEO and cofounder Anthony Bettini

These days, everyone and anyone is a mobile app developer. But just because you can build an app, doesn’t mean it’s good or safe.

Appthority offers a cloud platform that checks to see if an app is secure so it can’t be hacked by the bad guys.

Appthority’s CEO and co-founder, Anthony Bettini hails from McAfee and was the technical editor for one of the best-selling hacking books of all time, “Hacking Exposed.”

2.) ThreatMetrix: Putting it all together to stop fraud fast

Reed Taussig, CEO, ThreatMetrix

Most businesses use a whole bunch of security products. If they find evidence of a hacker, that info isn’t easily shared between security products.

ThreatMetrix offers a cloud service that does all the big security stuff in one system and this lets it detect fraud the instant it happens, not sometime later.

ThreatMetrix landed on the Wall Street Jounal’s Top 50 startups of 2012 after it acquired another buzzy startup, malware detection firm TrustDefender, last year.

3.) Marble Cloud Security: Keeps hackers from fooling you into loading their malware

Dave Jevans, founder, Marble Cloud

Marble Cloud offers software for the bring-your-own-device phenom. Install it and if a user gets hacked, the malware can’t gain access to the company’s other data through the device.

It also protects people from bad stuff that could happen when they use a public Wi-Fi and from a growing threat known as “SMS phishing” where a text from the bad guys can fool you into installing malware or giving away your password.

Dave Jevans, founder and CTO, is also the founder of the Anti-Phishing Working Group, whose members include Yahoo, eBay, Google and Microsoft.

4.) AnchorFree: Safe and private public hotspots

AnchorFree: Safe and private public hotspots

David Gorodyansky, CEO and co-founder AnchorFree

AnchorFree offers software it calls the “Hotspot Shield” which gives everyone secure, anonymous, and private browsing on the Internet.

It came to fame during the Arab Spring, helping people in oppressed countries stay under-the-radar when using the Internet. That helped it land a $52 million investment led by Goldman Sachs last year.

AnchorFree has also attracted a whole bunch of famous angels including Flickr backer Esther Dyson, former Huffington Post president Greg Coleman, and Bert Roberts, the former CEO of MCI.

5.) Wickr: Your message will self destruct

Wickr: Your message will self destruct.

Kevin Smith/Business insider

Wickr’s mission is to let you use the mobile Internet and “Leave No Trace.”

It offers an app that gives you uber-control over your mobile messages — text, pictures, audio, video — with military-grade security to prevent snooping.

Then, at your command, the message self destructs and is gone forever.

Wickr isn’t the only one working in this area. Snapchat offers some of these features, as does Silent Circle.

Still, Wickr stands out for its co-founder, Nico Sell, who has started over 20 security companies over the past two decades and also helped run the yearly hacking conference DEFCON.

6.) Impermium: Making nasty comments go away

Impermium: Making nasty comments go away

Mark Risher did a lot of anti-spam work for Yahoo before cofounding Impermium

The Internet isn’t always a nice place. People and blog spammers write the nastiest comments and Tweets.

Impermium calls that stuff “Mal.content” and its tool finds it, deletes it and stops the spread of it.

Built by the former leaders of Yahoo!’s anti-spam and security teams, Mark Risher and Vish Ramarao, Imperium recently hired Sameer Bhalotra, the former White House senior director for cybersecurity, as its COO.

7.) Victrio: identifying bad guys when they call on the phone

Victrio: identifying bad guys when they call on the phone

Victrio cofounder Lisa Guerra (LinkedIn/Lisa Guerra)

What’s to stop fraudsters from calling a company on the phone and lying their way into obtaining forbidden information?

Victrio, that’s what.

Victrio has a very cool tech that does realtime phone fraud detection based on a “voice print.”  The tech is popular with banks, credit card companies, and any company that still does a lot of business through call centers.

Founder Tony Rajakumar and vice president of engineering and co-founder, Lisa Guerra, cut their teeth at BeVocal, a voice detection company bought in 2007 by Nuance Communications.

8.) Shape Security: Keeping people away from bad websites

Shape Security: Keeping people away from bad websites

Shape Security cofounder Sumit Agarwal

Shape is still in stealth mode and has been somewhat tight-lipped about its technology, but we know that it’s working on a way that makes it harder for hackers to trick people into visiting malware-laced websites.

The company has a whole bunch of Valley tech bigwigs excited enough to invest. It just raised $20 million (bringing their total to $26 million) from investors like Venrock, the venture-capital arm of the Rockefeller family; Kleiner Perkins; Eric Schmidt’s TomorrowVentures; and executives at DropboxFacebookLinkedIn, and Twitter.

Shape was cofounded by ex-Googler Sumit Agarwal, who was head of Google’s mobile product management.

9.) 41st Parameter: Taking a digital fingerprint of your PC

41st Parameter: Taking a digital fingerprint of your PC

Ori Eisen, founder, 41st Parameter

41st Parameter’s FraudNet has a creative approach to help retailers find hackers and fraudsters.

It invisibly scans the PC and creates a digital “fingerprint” of it. Even if a hacker has your credentials, if the person’s not logging in from your actual PC, 41st knows it and flags those activities.

The company was founded by Ori Eisen, who was the worldwide fraud director for American Express.

10.) CrowdStrike: Seeking to unmask and capture the hackers themselves

CrowdStrike: Seeking to unmask and capture the hackers themselves

George Kurtz

CrowdStrike is taking a completely different approach to security: find and identify the hacker.

Although CrowdStrike is technically in stealth mode, the company has created a ton of buzz for its aggressive stance on rooting out the hackers, as opposed to an emphasis on building defensive tech.

Its founders include George Kurtz, McAfee’s former CTO. Early employees are former FBI cybercrime bigwigs and a top U.S. information-warfare Air Force colonel, now retired.

11.) Tenable Network Security: Protecting the Department of Defense

Tenable Network Security: Protecting the Department of Defense

Ron Gula, CEO, Tenable Network Security

In September, Accel invested $50 million into Tenable, (YouTube/tenablesecurity) the biggest investment Accel ever made in a North American company.

Tenable isn’t that young (founded in 2002) and doesn’t make the sexiest security tech: Its flagship product is the Nessus “vulnerability management software” which helps companies manage all the security alerts and patches.

But it’s got a giant list of enterprise customers including a recently-signed huge contract with the Department of Defense.

12.) FireEye: Stopping the attacks that no one else can stop

FireEye: Stopping the attacks that no one else can stop

Ashar Aziz, founder, FireEye

FireEye solves two really hard problems: protecting corporate networks against so-called “advanced persistent threats” and against “zero-day” attacks.

APTs are very personalized attacks by hackers determined to get into a particular network.  Zero-day attacks are software holes that haven’t been fixed by the software vendor.

FireEye finds this stuff by flagging suspicious stuff and then opening it in a safe, virtual environment. For instance, its email appliance opens the suspected email attachment to see what it does. The whole process takes a fractions of a second and if the email contains malware, it stops it.

FireEye was founded by former Sun distinguished engineer Ashar Aziz who holds 18 patents on this tech alone.

13.) Co3 Systems: Helping companies recover after an attack

Co3 Systems: Helping companies recover after an attack

Ted Julian, chief marketing officer, Co3 Systems (Twitter/@eajulian)

Despite all the security companies buy, they can still get hacked.

When that happens, Co3 Systems solves an interesting problem: reporting that security breach. It makes sure a company meets its compliance obligations.

The company is run by a team of experienced execs including EMCs former director of engineering, Allen Rogers, and one-time IDC market research analyst, Ted Julian, who previously cofounded Arbor Networks.

14.) Bromium: Letting malware happen, safely

Bromium: Letting malware happen, safely

Simon Crosby, co–founder, CTO, Bromium

Bromium is doing for computer security what VMware did for servers. The company has created a technology called “micro-virtualization” that doesn’t care if potentially dangerous software gets installed on a PC because it runs in a safe container that can’t touch the rest of the PC.

In this way, PC users can download apps or open attachments without worrying about unleashing a virus on the company.

It was founded by Simon Crosby, who is known as the founder of XenSource, an open source competitor to VMware.

15.) CipherCloud: Encrypting data before sending it to the cloud

CipherCloud: Encrypting data before sending it to the cloud

Pravin Kothari, founder, CipherCloud (Twitter/@pkothari)

CipherCloud offers a service that just about every enterprise is going to need as it adopts the cloud.

It secures a company’s sensitive data in real time before that data is sent to the cloud. That means enterprises don’t have to trust the cloud provider to keep their stuff safe.

It was founded by Pravin Kothari, whose previous security company was ArcSight, which he sold to Hewlett Packard for $1.6 billion. In its first year in business, CipherCloud has already nabbed about 40 big enterprise customers, including two of the world’s top banks.

Plus, Andreessen Horowitz put $30 million into the company last month, raising its total to $31.4 million.

Please follow SAI: Enterprise on Twitter and Facebook.


Recommended for you:

What Diet Pills, Athletes And CRM Have in Common

SAP Guest

By Nicholas Kontopoulos

Imagen de Hola Gourmets 2009

Imagen de Hola Gourmets 2009 (Photo credit: jlastras)

My father was a chef, so I have enjoyed a lifelong love affair with well-prepared and delicious food of all kinds. But I haven’t enjoyed the subsequent battle of the bulge, which had me looking for a quick victory.

But I soon learned there’s no such thing as a “magic pill” for swiftly achieving and maintaining optimal weight and fitness level. As with Olympic athletes or professional sports teams, success depends on a dedicated coaching staff, a healthy diet, collaboration and even data analysis. An entire support system works in concert to achieve a clearly delineated goal.

So it is with customer relationship management systems. Often, CRM systems and cloud-based solutions are sold as a “secret sauce” or “magic bullet” that will yield instant success. But these diet-pill-style solutions often fail to address what is broken in the business, such as strategy alignment, customer centricity, a shared vision of what the business is trying to achieve and the willingness to see it through.

Corner-cutting businesses join the sad statistics that surround CRM:

  • Nearly half suffer technical and integration difficulties
  • One third report project failures due to poor business design
  • Almost a quarter realize they need to customize their CRM

A piece of technology plugged into the wall is not what delivers value. Those who think otherwise suffer the all too painful reality of CRM failure, according to John Burton, director of product management on SAP’s CRM team. The benefits of CRM accrue only when you bring the various parts of the enterprise together — aligned and passionate about a common goal — and enable them to work in concert to understand and deliver what customers really need.

What separates winning restaurants from the losers is the ability to bring together delicious food with an environment that inspires employees to put their heart and soul into delivering an indelible experience to customers. For athletes, it’s the common vision and teamwork that results in success.

For CRM, it’s not just about the technology box you buy. Success requires the intersection and alignment of four components: strategy, processes, people and technology.

You need:

So, when it comes to CRM: Think big, but start small. Don’t fall for the magic pill. A successful strategy will require a clear vision of what you are trying to achieve and a passion to see it through.


Recommended for you:

The Social CMO: Ted Rubin On Listening, Relationships, And The Social C-Suite

Todd Wilms

the social CMOAfter doing this awhile, you get to see the signs of the self-promoter and the quick name-for-themselves artists.  You also – with more rarity – get to meet the real deal.  So, I was very pleased when he agreed to sit down and chat on topics ranging from the new directions for marketing, listening and relationships, and why “lurking” in social is a good thing.

1. We have to start off with your title. Why Social CMO?

Before becoming the CMO at Collective Bias, I decided that I really wanted to focus on social and have become tired of the C-suite’s focus total on ROI directly from search and banners and affiliate programs.  It is time to wake up and realize that social is a shell that should be wrapped around everything we do as marketers. You can easily extend this beyond marketing to areas like your supply chain or HR.  So, I took that title believing it expressed a lot better what I am looking to accomplish.

2. Just so everyone understands the context of who you are, explain your company, Collective Bias?

My business partner John Andrews, while serving as Head of Emerging Media at Wal-Mart, came up with the idea of interacting with bloggers to gain insight into real products from real people. It then evolved into a content and media strategy, and then the basis for the Wal-Mart Moms program.  He left Wal-Mart and started Collective Bias based on that idea.  Collective Bias® is a content marketing media company that drives retail sales through the coordinated creation of social media stories. Through Social Fabric®, a private and proprietary community of over 1,400 influencers with a reach of over 30MM , Collective Bias connects shoppers with the brands and retailers shoppers use in their daily lives to drive conversations on a wide variety of social media platforms. Their stories build consumer engagement and brand loyalty, which leads to increased sales.

3. So, is this “Blogging, Evolved?”

Not really the evolution of blogging, more like leveraged and syndicated content as the evolution of media. Bloggers, or micro-publishers are totally democratizing content and creating what truly is “New Media.” I talk to many people who say that they don’t read blogs. When we open up their computer and look at what they do read, 9 out of 10 of their sites are blogs – they just don’t realize because they are so professionally done. Some of the top technology, finance, food and travel information they are reading are from bloggers.

4. Where do companies fail in their efforts to be social?

For years, marketing and advertising has been about control. Consumers now have a heavy hand in the control of your brand… it is now “Generation WE,” and not just with Millennials. There is no more total control by marketers. Any person can spread “their” message of your brand through their social graph at such a dramatic pace.  And the conversation goes on and on – at an accelerated level and pace.

5. Does this apply to PR agencies as well?

Absolutely.  For years, PR was about control of the message.  Say as little as possible and control it yourself.  Now, with social media, it has been turned on its head – other people control and can freely comment on or interact with your message and share their feelings or perceptions.  Most executives in the C-Suite still want to control, but it is too late – you don’t own it any more.

6. So where does the C-Suite go wrong with this control?

C-Suite execs go wrong when they don’t want to understand – they still dismiss it.  I have conversations with execs who say that it is a waste of time because people are just talking about when they go to the bathroom (chuckle), but what they don’t realize is that was so 2006, it is now 2013 and we have moved well beyond that.  People are fundamentally building relationships and aggressively pursuing engaging dialogue within their networks using these social tools. Social media is not a passing fad… and influencers are emerging every day. Welcome to the ‘Age of Influence,’ where anyone can build an audience and effect change, advocate brands, build relationships and make a difference.

Secondly, they miss when they don’t encourage their employees to actively build on these channels.  This is another version of control – wanting to centrally control the message.  But where this is a miss is when you don’t utilize some of your best assets within your company – your people – to help build and enhance your brand and be dynamic advocates for your products and services.   This also leads to a fundamental loss in your opportunities and ability to listen.

7. You talk a lot about listening. Why is this so important?

What is so scary for companies about listening is that they have to hear what is being said about them and that forces a reaction.  What is so great – and so revolutionary – about social media is that it truly gives the opportunity for every person to have a voice and an impact on what they like, don’t like, love, etc. about the products and services they use.  Previously, companies only had a few channels to receive that kind of communication – big customers, or analysts or some partners.  Now, everyone has a voice.

If you allow your employees to listen and really hear what is being said, you actually give them the ability to build relationships with your brand’s supporters and your detractors. This is your ability to build digital relationships.

8. I have heard you call this ‘looking people in the eye, digitally,’ correct?

Absolutely, this is where the idea of relationships has the same importance as before – that old notion of “people do business with people they have a relationship with” is still true – but now we can scale it.  We can now interact with people at scale. Before you were limited in the number of people you could meet or pick up the phone to call or fax to.  Even email was limiting because it was one way and sometimes you could not even reply to some emails. Very often extremely frustrating for consumers.

I hear ‘What do you mean scale – I mean, how many tweets can you answer?’ all the time. What I see happening is that you will gain a lot of traction with the so-called “lurkers” – the silent observers – in your communities and not just with the people you are directly engaging with. Lurkers are engaging with you by watching how you interact with your communities.  These are some of the most important people in your network.

9. The lurkers – those who don’t add anything to conversation – are important?

Absolutely.  Look at it this way – we use the cocktail party analogy for social media all the time.  If you went to a cocktail party and everyone was doing all the talking and no one was listening, nothing would ever get accomplished, because no one would hear anything. You need those folks who listen as a part of that community… for brands very often they are the most valuable, and most often they share in other places… via different social platforms, and with good old face-to-face word of mouth, still a VERY powerful medium.

10. Hence, you just wrote your book on relationships called ‘Return on Relationship.’

Relationships are the new currency… the digital revolution has turned marketing on its head (or so some would have you believe). Just when you thought you had a handle on measuring ROI (Return on Investment), it seems that social media has thrown a monkey-wrench in the whole business. But has it really?

In some ways it has, because traditional formulas for calculating ROI really work better for advertising initiatives—and social is more about communication than it is about advertising. It’s more about developing relationships and nurturing them, which oddly enough is almost a full-circle back to the “before mass advertising” days of face- to-face sales and marketing. In those days we actually met our customers, talked to them and got to know them personally. What a novel concept!

Mass advertising (while it has its place) moved us away from our face-to-face roots, but social is bringing us back. It’s how people today like to receive information and make buying decisions. They talk to each other via social channels. They seek information there, and they want to interact with businesses there directly or vicariously via the interaction of others. If you want to continue reaching your prospects in this social media age, your marketing focus needs to return to building relationships.

ROR isn’t a new concept in marketing; it’s the value that accrues over time through loyalty, recommendations and sharing. It’s a back-to-basics measurement that calculates how well brands create authentic connection, interaction and engagement with customers—and it’s time to re-learn the concept.

 11. You are pretty active on twitter and you write frequently.  Are these good channels for you for listening and communicating?

I have four personal twitter handles… @TedRubin, @R_onR, @Parentng, and @just_b_nice.  What it comes down to is that I am a frustrated author (chuckle).  So I use twitter to express my ideas and to share them for feedback.  Where others might use it for just promoting their or other’s links, I use it like a digital whiteboard.  I sketch out my ideas and thoughts to gain reactions and insights from my community.  This goes back to my idea of truly listening and really hearing what is going on.

12. On Twitter, you shared some ideas on how to use it.  Care to elaborate?

Yes, I don’t think there is a right way or wrong way to use these tools.  I hear from a lot folks who are nervous to try these out because they are afraid of making a mistake.  My guidance is this: do what you want to do.  Does it work for you? Great!  If not, try something else until you get the result you are looking for.  It is really that simple.  Just because I say – or some “guru” says here are the “Top 10 things to do on Twitter” doesn’t mean they are the right things for you to do on twitter.

*My philosophy is that Twitter’s an amazing networking, communication and outreach tool and platform that leads into other forms of social sharing. Do not underestimate the value of those who simply lurk, search, and absorb content.

13. This, I think, leads us down the path of measurements and how to know what works?

Yes.  Look, everyone wants to know that what they are doing is working.  Our problem is that when digital came along in the ’90s we tried to measure it just like we did everything before it.  We applied the old standards of things like “impressions” on that new medium.  We have continued that trend with social and are trying to measure it the same way we do traditional digital, and we often make the mistake of thinking it is the same as all digital advertising just because it lives on digital platforms. This is one of the biggest headaches for marketers today.  Execs want measurements they can’t get – or don’t mean what they think they mean – and marketers struggle to find ways to collect those measurements.

Success” in a social campaign, and an annualized social media calendar, should be determined by the goals for the campaign and an overall long-term strategy… we like to use the term “Conditions of Satisfaction.” Far too often, companies start a campaign simply with the goal of having a “social” campaign, because that’s something they feel like they need to do or have been pitched by an agency. Most Social Marketing “experts” flock to those kinds of clients, and then pick some random metric as success.

In our world of coordinated creation of social media stories at Collective Bias, there are typically two kinds of success, or ROI, on social campaigns – Cost Mitigation, and Sales Increase. And we believe there is a Return on Relationship (ROR) fostered by all brand relevant content and communication… simply put the value that is accrued by a person or brand due to nurturing a relationship. ROI is simple $’s and cents, ROR is the value (both perceived and real) that will accrue over time through loyalty, recommendations and sharing.


Interested in more of what makes the CMO tick? I will be following up with further insights via Twitter @toddmwilms or on LinkedIn.  Big thank you to Ted for this insight.  I think I have 5-6 more blogs from our series of conversations.


Recommended for you: