Making online service people-friendly
What should businesses do about this phenomenon?
I think the tendency is going to be to provide more and more self-service
solutions for the consumer. So you now basically are your own teller or
banker. You can go online either by telephone or computer, or an ATM
machine, and you can select your services. You do your own interface
Don't you think consumers are going to wonder what they're paying their bank for if they have to do all their own banking?
Oh, absolutely. And, in fact, what you're paying your bank for may be to
provide network access. And so Intuit
may be my banker.
For example, if you buy a home, there are hundreds, if not thousands, of
different mortgage brokerage firms around the country from which you can
get a mortgage. How do you know how to select from that infinite variety?
The variety is competitive, so it provides you a lower interest. So you
want the variety, you want the choice. Yet making that selection requires
some sort of an interface. It can be an individual or it can be a computer
program, and, depending on your choice, you can go in and easily access the
information and make decisions based on that.
There are over a thousand models of cars on the highway today, so if you go
out to buy a new car, it's much easier to go online and sort of scan all
the spec sheets and see what it is you want before you go out. There are
all of these kinds of interfaces that are being created that are making
If you ask people if they want more choices in their lives, they will tell
you no. But, in fact, people continue to support it. There are a thousand
brands of mustard in the American marketplace; there are almost a hundred
brands of dog food. But if you take [those choices] away, people
won't buy in that shop.
It's a good thing that we support variety, because that is what has made
new businesses. If Nabisco were the
only cookie company we trusted, we'd never have Mother's or Famous Amos or
Mrs. Fields. So entrepreneurism depends upon this choice that we as a
society have learned is of high value.
OK, let's say I'm convinced that I have to operate my business in real time to succeed. How do I do it?
Organizations today have become highly flexible, modular, programmable, and
high-speed. They have to be in order to compete, because the guy down the
street is doing exactly the same thing.
Programmability enables us to design products or solutions for a narrower
segment of the market than was economically possible to do before. Most
machine tools in the United States produce 50 items or less in any one
production run. We can serve you as an individual, we can
serve a narrow segment of the market.
In the mass-production era, you got what everybody else got and you liked
it--one Ford, it's black, but it's low-cost. Today, you can get any shape,
any size, in any form you want. In fact, I heard an executive of Ford Motor Company say that the car today
is, per pound, cheaper than a hamburger and you get vastly more functions
and serviceability out of the car today than you did 10 or 15 years ago. So
your design operations have to be highly flexible.
From an organizational standpoint, programmability also changes
dramatically. Probably the most significant thing we've seen happen over
the last 10 or 15 years in our organizations is the impact of quality.
Quality used to be a box on the
organizational chart. When I was in the [high-tech] industry in the
early '60s, I can remember having the quality guy fired because we had a
quality problem. We never think about that today. We look at the design of
the product and the manufacturing of the product, we look at suppliers, we
look at all sorts of aspects. And, in fact, the best quality is not having
the quality box at all--it's integrating quality into everybody's box.
Then we found out that design and manufacturing couldn't sit opposite of each
other and fight, because the manufacturing would say, "You designed it
wrong," and design would say, "You don't know how to manufacture it." And
so we had to
integrate, so we broke down the walls between those two.
How about marketing? What part does marketing play? Do they get involved earlier in the cycle now?
We now have to use marketing as an integrated part of engineering. In fact,
I think that was one of the key factors that allowed Intel to succeed in the microprocessor
business. When they were competing with Motorola back in the late '70s and early
'80s, it was really the integration of marketing
and engineering that enabled them to design and develop a strategy for
competing with Motorola. Integrating those two functions speeds the
operation up and it puts the engineering and the design and the
development in touch with what's going on in the marketplace.
Used to be, the customer was always either dealt with through a third
party, a sales force, or through a retailer. And so the feedback mechanism,
and the feedback from the consumer, changes your organization.
If I am selling computers through retail and I go out and say, "What would
you like us to do?" the retailer will say, "I want lower prices, I want more
advertising, I want you to give my salesmen kits, I want to make more
margins." But if your customers are CIOs in major corporations and you say,
"What would you like?" They're going to say, "I want compatibility, I want
mission-critical software to be reliable and flexible and extendible, I
want to talk across the organization, I want choice so I'm not stuck with
one standard." They'll tell you a whole different story than you would hear
from talking to retailers. That changes the organization because the people
with whom you interface change you.
So, rather than squeezing out dialogue between the customer and the company, the pace of technological change is actually enhancing it?
Yes. What's happening is that, in traditional marketing, the producer
was talking at you. Marketing was trying to figure out what was in your
head so they could manipulate it to where you think you need their
product. Today what we're doing is trying to learn a lot about our
customers because we can use these facilities to react and support them
with a specific solution, service, or product that adapts to them, not try
to adapt them to the product.
What we're trying to do is to get closer and closer to the customer, in order
for us to improve, and for them to improve. And dialogue does that.
When you're in a dialogue, I learn something about you and you learn
something about me. In the past, the notion was, "I don't care what you know
about me. In fact, the less you know about me the better. I just want you
to buy my product. I don't want you to know anything about the character
and the substance and the nature of General
Motors, I just want you to buy my cars. And I don't want you to know
anything about the car either, except that it makes you sexy, it makes you
feel good, you're heroic and manly and all those other kinds of things. So
don't ask me questions about what's under the hood. Don't ask me questions
about its reliability. Don't ask me questions about its safety. And don't
ask me any questions about the management of the company and how much money
Is the DOJ doing the right thing in pursuing Microsoft?
It's doing the right thing in the sense that it's raising the issues that I
think have to be resolved before we move forward. Defining what is
antitrust in the age of information is a very complex and difficult
subject, but it's going to come up some time. And I think to begin to build
case law around it is important. Is it really a viable thing for Microsoft
to keep integrating more and more of the functions of the computer into
their operating system, so that, once controlling that, they can control all
the applications that plug into it? Or are these separate products that
allow for new companies and new entrepreneurship to grow? In the last
decade, small startup companies employed somewhere between 10 million and
15 million people in the United States--it's the largest employer. If we
stifle innovation and look at large companies--they employ relatively few people, in fact, a couple of million less than they did 10 years ago--we will
stagnate in innovation, we will stagnate in growth, and we will stagnate in
growth of the employment base.
We have to let ideas flourish, we have to fund them, we have to support
them. In 1985 to about 1987, IBM so
dominated the computer industry that the venture capital communities shied
away from investing in any new computer companies. In fact, I wrote a book
as a result of that called Who's Afraid of Big Blue? The book said
that companies like Compaq, Apple, Microsoft, and others would dominate
the industry in the future, and not IBM. I said IBM may even go away. And
of course everybody laughed at the book, but it did predict the problems
that IBM was going to be faced with, and it was largely because these new
companies were bringing technologies that were moving much more rapidly and much more pervasively into our society and were changing things more rapidly than IBM could control. I think, in the end, it probably was better for IBM, and it certainly was better for the consumer.
If, indeed, one company so dominates an industry that it stifles innovation
or does not allow for the growth of new ideas, I think we're all going to
suffer for that.
Microsoft's reply to that is that the consumer isn't suffering. Prices are low, functionality is high, things are getting better and better for computer users.
I think a monopoly can, at times, appear to be better, and, in fact, it does
drive costs down. Under AT&T, the cost of
a long distance telephone call continually declined.
On the other hand, the breakup of AT&T has created huge competition in this
country. It certainly has stimulated lots and lots of innovation. You would
not have seen, for example, Cisco. Cisco
would have been forced to sell to Western Electric or to get its
products standardized there. It probably would have taken 15 years. As a
result, you would not be on the Internet today. You might have been on the
Internet 10 years from now, but you would not be on the Internet today.
So the question of "Is it of benefit to the customers?," I think that is
highly debatable. New services and facilities that you probably
can't imagine today would be made available to you through the ideas and
innovations of lots of people out there who will be forced to go through a
very narrow defining entity called Microsoft. And to get into the
marketplace, you have to abide by that one standard.
Diversity is a mark of our society. We are more diverse as a society today
than ever before. In fact, the majority of Californians are now minorities.
And diversity in products are very good, too. When you go to the supermarket,
you have your choice of over 40,000 different products. Now, you only spend
17 minutes in the grocery store, but when you go there, you want to get
things or you want choices--if something is not there, you want to have an
option. That's a benefit to the consumer. We don't have many options when
we have one source.
NEXT: Coming to terms with techno-anxiety