Supply Chain Shaman

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More than just an F-WORD

I think that we are in a new bubble. It will grow and pop like the ones before.  However, for a short minute, it will be dazzling.  Like bubbles rising from a child softly blowing on their new toy,  I think that we are seeing multiple bubbles beginning to rise.  It will be a new horizon filled with color, uncertainty and rising expectations. It is more than a F-Word.  Here I explain….

Managing the Bubble

I like to blow bubbles.  There is nothing quite like it on a hot summer day:  splashing through a fountain in flip flops with soap suds on a spoon with a child in hand.  As you blow them, they take-on a wonderful array of colors.  The bubble then pauses for brief second on your spoon.  As if it is asking, “it is time to take flight?” And, then abruptly, the bubble succumbs to the power of the air, and is swept into the sky.  As you watch the bubbles rise, you feel a short exhilaration, but only for a minute.  They dance on the horizon, and then they are gone.
Tech bubbles are analogous.  For many of us, that have lived through them before, we are skeptics. We watch them form and skeptically view the horizon as the press fills it with names and concepts that are new.  There will be hype, technology pitches/marketing with over-inflated expectations, brilliant early adopters that will flash with brilliance and then fade,  shortly followed by the hangover or period of disillusionment.  However, as these bubbles form on this new horizon, I would like for you to be like a child in a fountain first discovering soap suds.  Why?  I believe, that this  bubble offers supply chain leaders great promise if we can look past the hype, side-step the early mis-steps, and shape the promise. Here I share some insights….

More than Hot Air

This bubble is social technology.  It is not to be confused with social media (as an end state). It is ready to take flight.  While the press strongly touts it, I strongly believe that here is more to  it than just a “F-word”. <Facebook> I believe that it can be the redefinition networks, a new way of defining demand processes from the outside-in, offering new possibilities to listen and have dialogue with the customer’s customer, and to sense market changes with less latency.  It is about a new type of technology:  networks that can connect the socialgraph with personalized interests to actively communicate with micro-segments of the market.  It is about dialogue.  The definition of the network is fundamentally different in reach than eCommerce.  It provides a unique opportunity to forge relationships and influence buying behaviors based on friends of friends.  Think about what is possible….  We have never had the ability to listen in near-real time.  Supply chain networks have never been based on relationships.  Instead, we have depended on order to cash transactions fraught with days and weeks of latency.  How could we redefine supply chains if we had technologies that could operate in a different context based on relationships with near zero latency of information.
Why is this different than eCommerce?  While some might argue that social is an extension of eCommerce, I disagree.  The network is fundamentally different.  The technology possibilities are different.  While there are similarities, we cannot stop there.  For example, while eCommerce exploded our access to data, improved access to data and improved data latency, communication was pushed to us through search words, it also spawned new technologies and capabilities.  Remember the early days of technologies of Search Engine Optimization (SEO), electronic Catalogues, Online Shopping (B2C), eProcurement, Electronic Requests for Proposals(eRFP)?  I was a Gartner analyst then postulating which business to business networks would transform supply chains.  As a new analyst, I took a hard stance– and a subsequent beating by their founders– against Agentrics, Covisint, CommerceOne and Transora. (Wow, I feel old just typing these names.)
In those days, I believed that there was not enough there in those supposedly cool eCommerce offerings to improve the value network.  In contrast, I openly supported E2Open, Exostar and GS1 as offering something to supply chain networks beyond hype.  While not 100% accurate in my predictions, I do believe that the basics of this decision carry-over today to our discussion of social commerce.  As we look at this rising bubble, we need to ask ourselves three questions:

  1. Which are hype and which have real promise?
  2. Given the promise, how can I use these new data sources and improved latency to my advantage?
  3. Are there new ways to define technologies in networks to drive new levels of value?

Today, as I postulate the possibilities with a different set of technologies like Zyngna(gaming), Digital Portfolio(electronic list management), Groupon (social couponing), Spiceworks( sales of IT Technology through a community for the B2B audience), Bazaarvoice (content/review aggregation), ExpoTV(video reviews), I am convinced that this social bubble is growing an infrastructure that, like a bubble, takes many forms and colors before it takes flight.  These disparate technologies will rise in their own separate bubbles before the coalesce.

Why should you care?

For supply chain leaders, I believe that the the social bubble has the potential to fuel more than a Facebook phenomena.  Here I share why supply chain executives should look more broadly at this technology than social media, and how to steer supply chain leadership teams through the hype cycle.

The What

  • Groupon announced intentions to IPO last week. The market is buzzing.  Zyngna (think gaming software like Mafia Wars and Farmville) is an IPO coming soon, and we feel that Facebook will not be far behind.
  • In May, LinkedIn successfully competed their Initial Public Offering (IPO) offering 7.8 Million shares in the market at 32-35$/share.  When the shares topped $120.00/share, a market hungry for tech started came alive.
  • Mobile Internet is growing at 8X the rate of the web browser when Netscape launched in 1994.  In 2010, there were 8.2 billion mobile applications downloaded.   Kleiner Perkins forecasts that mobile traffic will grow 26X over the next five years.  Mobile applications are an accelerant for social dialogue.
  • Social commerce, nascent when Altimeter launched the Rise of Social Commerce last year, is now a market.  On average 65% of consumer brands have more Facebook traffic than website traffic.  Buying directly from Facebook or through Twitter is an accepted practice and virtual currency and reward systems are gaining ground
  • The use of social technologies to improve customer service is also blossoming.  When it comes to defining customer service, both Facebook and Twitter have some unique advantages, and new customer service models are taking form.
  • Technology vendors–that have no direct connection to social commerce–in the supply chain space are jumping on the bandwagon. Confusion abounds. At two traditional supply chain technologies conferences that I attended in May, the CEO’s presented their message in a social wrapper that was completely disconnected from what they do.  Supply chain technology leaders are jumping on the bandwagon trying to be “cool” even though their applications and their users have not embraced the potential of the socialgraph.  <Buyers beware…>

 

The So What?

As we think about the supply chain as the flow of goods and services with minimal information latency that maximizes our cash opportunities, this wave offers new hope to redefine the supply chain to drive a step-change.  However, this can only happen if we avoid the potholes:
Social networks are not an extension of eCommerce. While many companies have entrusted their social strategies to the eCommerce team, I don’t believe that social commerce is an extension of e-commerce.  The fundamentals are different.  Social commerce is a new channel.  I believe that companies that see social technologies as an extension of e-commerce will fail to reach full potential.
Inside-out versus Outside-in I also don’t believe that social should be owned by marketing.  In fact, I think that the hype caused by social media for social’s sake in marketing will give a pre-mature death to many well-intended initiatives.  Buyers just don’t want to be YELLED at anymore.
Instead, I believe that social is a way for us to truly get to know our customers, our shoppers, our buyers.  You may use your favorite term–customer-centric, demand-driven, market-driven–but I believe that the real difference happens when the design of the supply chain starts from the outside in.  Leaders will learn how to listen to their customers, will redesign processes to use near real-time feedback, and the ideation cycle can be redefined to better source and use consumer insights.  Instead of a blind, unintelligent, costly response called supply chain today; companies will build sensing mechanisms and learn near real-time through test and learn systems.  Seems simple enough, but while the promise is large, the answer is in the future.  The concepts are vastly different than traditional supply chain management, and social technologies offer us some important technologies.
Disintermediation will become Easier. Why? Manufacturers are trying to gain power to have more muscle with retailers and improve global presence. Mergers and acquisitions (M&A) have redefined the landscape with Kraft/Cadbury and Unilever/Alberto Culver as recent notable announcements. So how does a mid-market company compete? The rise of social commerce gives mid-market companies a new opportunity to build a relationship directly with the shopper and better manage the long-tail of the supply chain more easily.  There is less channel friction for a manufacturer to sell directly to the customer than we saw in the evolution of eCommerce.

The Now What!

As you think about what this means for your business, I offer five words of wisdom:
Social must come before Commerce. Social commerce–the use of social technologies to enhance and define the shopping experience–is a new channel.  it is also an exciting new way to build a direct relationship with the shopper.  However, it is only successful if social precedes commerce and the manufacturer builds a relationship with the shopper.  It should not be seen as an extension of advertising or e-commerce.  It is about building a relationship that can be enhanced by commerce.  It is too important to leave in the hands of marketing.
Be where the Action is. For a company to be successful, carefully craft your presence in four social media: Twitter (customer service and listening), Facebook (direct connection with fans), U-Tube (product advocacy and usage tips) and Linked-in (for Human Resource purposes).  This is important to business and defining new business processes.  Forge a cross-functional group to think about how social, mobile and tags can be used to redefine supply chain, customer service, human resource processes, innovation and sourcing processes.
Giving starts at Home. For many companies, the start of this journey has a tough hurdle.  Just as President Reagan stood in 1987 in front of the Brandenburg Gate and challenged “Mr. Gorbachev tear down this wall.”  President Obama would be well served to tell American Companies to tear down their firewalls, and free their employees to be social in a meaningful way.  I am embarrassed when I visit promising companies and see employees interacting on social networks for business purposes off of their personal mobile devices.  Supply chain is business.  Social is a new way to redefine this business process.  Mr. CEO tear down that wall!  Train your employees on your social policy and begin the building of new supply chain processes from the outside in….  The race is on.
Put more There There. While it is easy to get caught up in the technology (so many cool and promising offerings), at the end of the day, it is about building and enhancing the relationship to improve value in the value chain.  It is not about technology for technology sake.  It is not about cool toys for cool boys and girls.  Likewise, don’t hamstring your teams initially with Return on Investment (ROI) goals, instead invest in social technology projects when there is a promise to improve the relationship, reduce data latency and improve the context of information.  Don’t get caught up in the hype, ask the three simple questions in this blog and fund experimental projects to listen, engage in meaningful customer dialogue, better sense market changes, test and learn based on customer preferences, improve demand insights and drive an intelligent respond.
Don’t get Caught up in the Hype. Let’s face it.  Traditional supply chain management technology has lost it’s coolness factor.  As a result, many well-intending supply chain vendors will attempt to improve their coolness factor on the back of this market trend.  However, don’t believe it.  A fox in sheep’s clothing is still a fox.  Learn about the new technologies and invest in learning the differences.  Smart technology companies will evaluate how this new technology can enrich and redefine the old.  They will encourage environments to enable experimentation with the new approaches and think about how the power of the redefinition of the network based on relationships, and the potential to redefine faceless enterprise applications from the outside-in.

Tear down those Walls!

I strongly believe that we as supply chain leaders need to tear down their walls.  If we are to build value networks from the customers’ customer to the supplier’s supplier, this is too important of a technology shift to ignore or to leave in the hands of marketing.  The other day, I was having coffee with the SVP of supply chain at one of the largest consumer companies, an unquestioned leader in social marketing, and I was discussing the possibilities.  As we stirred our coffee, and discussed the supply chain possibilities, he exclaimed that his marketing department had this all figured out.  I pushed back.  I had just talked to his marketing department.  Their interest was social for the sake of social.  Social technologies to improve marketing messages and branding.  They have no interest in improving the value networks on the back of social technologies.  He pushed back.  we wrestled the topic for  an hour.  At the end of the discussion, he agreed it was up to him to tear down the walls, to build the vision,and start to redefine business processes from the outside in.  Are you willing to take the challenge?  I hope so; because for me, this bubble is more than a F-WORD.  It has the potential to allow us to really collaborate, build value networks and sense and learn.  It will not happen tomorrow, in fact, I think that it will take at least five years.  The most successful will navigate this hype cycle.  For more on this topic, listen to my recent video with Foundatino for Strategic Sourcing (F4SS) at http://vimeo.com/24129190.
What do you think?  Please share your thoughts with the audience of this blog.  It is now read by over 2000 readers/week in 62 countries.  I look forward to hearing from you.
 

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