Netflix Revises Strategy ..... Again!

Nigel Fenwick

Netflix has come to its senses and revised its strategy in favor of the customer. After a recently announced decision to split out its DVD business from its streaming business, Netflix received a barrage of criticism from customers -- including my last blog post, where I questioned the wisdom of this strategy. Today, CEO Reed Hastings announced a 180-degree about turn -- well done Mr. Hastings. While it would surely have been wiser to have made a better strategic decision in the first place, changing course in face of customer criticism at least shows Netflix is still willing to put its customers first.

This turn of events highlights the difficulty of getting strategic planning right. While abstract analysis of strategic options may point to an optimal choice for any set of circumstances, any strategic analysis which ignores customer impact is fatally flawed. As my colleague Luca Paderni and I pointed out in our recent keynote at the Forrester CIO-CMO Forum, companies must become customer obsessed. Indeed, we highlighted Netflix as an example of a company that had succeeded in large part because it was customer obsessed and had mastered the customer data flow in a way that increased customer value.

There is a lesson here for us all ... success in the future will go to those companies willing to become customer obsessed and put the customer ahead of Wall Street.

Steve Jobs: The Accidental Architect Of Consumerization

Ted Schadler

Okay, so maybe it was Steve Jobs's plan all along. To make tools so profoundly useful and totemic that everybody wants one. But surely in the dark days of the 1990s and early 2000s, nobody could have seen that Steve Jobs and Apple would overtake the enterprise. But it happened.

First was iPod. After an enthusiastic start restricted to a few million Macintosh aficionados, Apple ported iTunes to Windows and suddenly 100 million people were using iPods. And a new gadget was weighting down the pockets of business travelers and everyday employees. And then it wasn't so heavy after all as Apple volume-priced the flash memory market and shank the gadget to nano size.

Consumerization whispered, "I'm coming." IT wasn't too worried, but it did scramble to keep iTunes off of corporate desktops. [It didn't matter. People have computers at home.]

Next was iPhone. In the winter of 2008 before there was even an App Store, the guy behind the pizza counter at The Upper Crust in Lexington was swiping at his iPhone revealing page after page of colorful icons. When I asked him what that little swipey motion was all about, he replied, "Oh, these are apps. Games and instant messaging and movies and stuff. I get 'em off the Internet. There are hundreds of them." And I (and Apple) knew that the world had changed. Steve Jobs and team launched the App Store so tens of thousands of developers could build hundreds of thousands of applications. And make billions of dollars selling their work.

Consumerization knocked on the door saying, "I'm here and I want to get email on my iPhone." IT said no way and kept buying BlackBerrys.

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Oracle Makes Their Play For Social Enabled Business Processes

TJ Keitt

On Wednesday afternoon, Oracle's Larry Ellison unveiled the Oracle Social Network. The fact that he did so on the same stage Marc Benioff used in San Francisco's Moscone Center to announce Salesforce Chatter's centricity to the "social enterprise" won't go unnoticed, and not simply for all of the not-so-subtle shots Mr. Ellison took at his former colleague's outfit. For content & collaboration professionals, the thing to note about these dual announcements is they mark, along with IBM's "social business" strategy, an attempt by vendors to make social software relevant to the entire workforce by tying them into specific business processes.

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Apple’s iCloud And Siri Herald A Shift To Personal Cloud And Voice Interfaces

Frank Gillett

The name of Apple’s event today “Let’s Talk iPhone” indicates where much of the news focus is — on the new iPhone. But that focus distracts vendor strategists from understanding the deeper implications of Apple’s advances in online services and user experience.

Apple’s iCloud is an important new software platform and service that will integrate Apple’s customer experiences across their iPhone, iPad, iPod Touch, and Mac products. This first version creates a personal cloud experience of the individual’s work, personal, and purchased content being seamlessly available across all their Apple products, in contrast to the fragmented experience of Google, Microsoft, and Amazon. Beyond music plus contacts, calendar, and email, Apple is supporting iCloud push in iMessage, Safari’s Read It Later feature, and push distribution of photos. Be sure to watch Apple’s iCloud concept video — that really conveys the personal cloud idea.

The Siri feature is the beginning of a new user experience built around context that will eventually create a much more personal, intimate experience for using all of Apple’s mobile and Mac products. Both of these offerings will have enduring impact beyond the latest model of the iPhone. Though only supported today on the iPhone 4S, I believe it is the beginning of a new form of interacting with all mobile devices and PCs. Voice control and input have not been widely used despite long-standing offerings from Nuance and Microsoft’s Tellme, though they do have strong adoption in specific segments. Apple’s integration of the user’s context will make the experience compatible with mainstream users.

Financial Market Turmoil And The Impact On Telecoms Providers

Dan Bieler

As a former investment analyst, I remember the feeling when stock market screens turn deep red. Such days turn one’s stomach upside down on a dealing floor. But even from the outside, such days are unnerving. The big question in the telecoms markets making the rounds at present is how the current market turmoil will affect the telcos. The 2008 financial crisis might provide some clues to what we could expect in 2011 and 2012, albeit in a less-pronounced fashion:

  • Consumer spending on communications will remain pretty stable. During the last financial crisis, spending on communications remained largely untouched by the consumer. We do expect a slight migration towards flat rates for customers with the desire for greater cost certainties and towards prepaid by customers with the desire to lower their communication expenditure. One obvious danger in times of turmoil are price wars between service providers. They can offer only short-term growth relief, but at a high cost. Resulting poor margins will be felt for a long time.
  • Businesses will put nonessential IT projects on hold or water them down. We have not yet seen evidence that COOs and IT departments have tapped the brakes on their tech buying, but they certainly have become more cautious. If the economies of the US or Europe go into recession — a possibility, but not our baseline forecast — that will hit IT budgets, as happened in 2008 and 2009. I am hearing from telecoms providers that their enterprise sales pipelines are already under pressure as customers slow their IT investments and look for ways to reduce their telecom services spending. Projects that support end-users with their sales efforts, e.g., sales force automation projects, are likely to be less affected than others.
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How The Sustainability Boom Changes Business As Usual For Green Suppliers

Chris Mines
How the Sustainability Boom Changes Business as Usual for Green Suppliers

Call me crazy, but there's a revival of interest in sustainability underway. Despite the Collapse in Copenhagen, the Demise of (US) Cap & Trade, and the ongoing Great Recession, companies around the world continue to invest in IT solutions to improve their operational efficiency and reduce their environmental impact.

My travels these past few weeks had me visiting with two sustainability practice leaders at large consulting/integration firms, the product heads for two of the leading energy and carbon management software providers, and the internal sustainability champions at a very large IT systems company.

In all five instances, folks were surprisingly chipper given the economic environment and its drag effect on sustainability spending. One of the sustainability practice leaders, for example, told me of their plans to grow from 150 people at the end of 2011 to 1,000 people three years hence.

What's going on? Here's my theory: Sustainability is becoming embedded in corporate behavior, metrics, and strategy. It's not a separate investment line item, a separate set of metrics, a separate organization . . . it's embedded into mainstream operations. As one of the software leaders put it, "Sustainability is sitting at the adults' table now."

What does that mean for these suppliers and their brethren? A big change in the way they go to market.

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To HP’s New CEO: Keep PCs And Focus On Consumerization Of IT To Best Serve The Enterprise Customer

Frank Gillett

Picture the scene in the HP boardroom when the board members decide the company needs (another) new CEO. They had trouble just last fall finding outside candidates and don’t seem satisfied with internal candidates. I can imagine a New Yorker cartoon–like scene, where they all agree to draw straws, and the board member drawing the short straw gets the CEO job!

But it was not like that. The board realized something that Forrester felt for some time — that HP needs better communications to customers, markets, and employees. Meg Whitman, former eBay CEO, is a not an obvious choice, especially given her primarily consumer and web business experience. But she brings strong Silicon Valley roots, something lacking in HP’s recent CEOs, which should help a lot with injecting new energy into HP. And she starts with a strong business reputation for growing eBay, being a good leader, and communicating well. Plus she’s got a nine-month head start as board member on understanding HP over any outside candidate.

As the new HP CEO, Whitman faces a difficult situation. HP has a strong set of products and customer brand that are being damaged by the uncertain directions of the board and the repeated CEO turmoil. Meanwhile, the Wall Street traders and technology press are overreacting, as they often do — HP has solid product and service offerings that are just as good as they were last week, before the latest leadership turmoil. So what should she do?

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Winners of the 2011 Forrester Groundswell Awards (Management Division)

Ted Schadler

We're announcing the first set of winners of the Forrester Groundswell Awards -- the management division winners, with applications aimed at employees. These awards are being announced today at the Forrester Content & Collaboration Forum in Boston. Congratulations to the winners and finalists -- with 205 entries this year, being selected for one of these awards is a real accomplishment.

Collaboration System (Management)

Finalists

An Agenda For Social Sales by IBM
Alcoa Fastening Systems by Alcoa

Winner: Collaboration (Management)

Deloitte Australia Yammer Network by Yammer

The Australian affiliate of Deloitte, the global services company, deployed Yammer in 2008 with no plans for mass adoption. But usage rapidly exploded, spreading to 5,000 of the company's staff and 12 national offices. Yammer users have lower staff turnover (2% vs. company average 15-20%) and Deloitte says Yammer has reduced costs, broken down silos, and accelerated innovation. It also builds culture, improves connections for mobile workers, and makes it easier to leverage knowledge and expertise.



 

Employee Mobile Application (Management)

Winner: Mobile (Management)

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Despite Economic Problems, Tech Market Will Continue To Grow In 2011 And 2012

Andrew Bartels

As readers of my blog will remember, we were all ready to publish our mid-2011 update to our global economy report (see July 28, 2011, "Forrester Will Lower Its Tech Market Forecast By One-to-Two Percentage Points, Depending On Federal Debt Ceiling Outcome") when the US deficit ceiling crisis, renewal of the European debt crisis, and other developments raised questions about the strength of the economic recovery. Given the deterioration in the economic outlook, we stopped publication to rework our forecast to reflect those changes. The delay did have a some side benefits, including getting Q2 tech market data for Canada, adjusting our US data on computer equipment, communications, and equipment for Bureau of Economic Affairs revisions, incorporating new data sources for our US projections for IT consulting and outsourcing services, and taking advantage of the better data on Australia, China, India, and Japan from Forrester's acquisition of Springboard.

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Netflix: Can A Company Really Be This Inept And Succeed?

Nigel Fenwick

NetflixIf you thought Netflix handled its earlier price increase badly, just wait till you hear the complaints about its latest move. In a letter to subscribers sent today, Reed Hastings, Netflix Co-Founder and CEO, opens with:

“It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes.” – Hmm, perhaps a little bit of an understatement! (Read the full text at the end of this post.)

So members like me might be lulled into the false impression that this letter was going to be an apology in an attempt to smooth things over. Boy, was I wrong. Instead Hastings goes on to say the following (my paraphrasing, not his):

  • Because you are such a good customer, renting both DVDs and streaming, we’re going to degrade your service.
  • We know you like the fact that you can easily move movies between your online queue and your instant queue, which is why we’re going to stop you from doing that.
  • We know you liked the fact that a movie in your DVD queue is added to your instant queue automatically when it becomes available for instant viewing – so we’re going to stop allowing that.
  • We recognize that our website, with its easy-to-use features is one of the reasons you use our service, so we decided to give you twice the benefit by breaking it into two websites and asking you to use the two sites instead of one.
  • We won’t be increasing our prices as a result of reducing your service levels – we already did that.
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