Customer Intelligence

Zen and the Art of US Bank

Thu, 11 May 2006 23:22:27 -0500

US Bank won the 2006 SAS Enterprise Intelligence Award for capitalizing on data created by 13 million consumer-banking customers and 1 million business customers, notes David Stodder in a recent issue of Intelligent Enterprise. "Never-ending modeling and mining cycles provide critical intelligence for multiple (and multichannel) US Bank marketing campaigns," he explains. "Using the results along with SAS Interaction Management software, the bank can track customer behavior and let representatives know when to get in touch, especially if they become aware of anomalies or important status changes."

The award was presented at the recent SAS User Group International (SUGI) conference in San Francisco. "Data mining and CRM analysis professionals, as well as their direct business and IT management bosses, understand better than most the idea of information refinement cycles based on their experience with testing models," Stodder explains. "What's new is that this notion is spreading to other parts of organizations and affecting many more kinds of business computing."

As Stodder further points out, continuous improvement "is an essential component in making business process management (BPM) a success." Expect this commitment to continous improvement to continue gathering momentum in the corporate world -- just as Kaizen helped Japanese auto companies outperform Detroit and ascending the levels of the capability maturity model (CMM) has built the credibility of the Indian software and services industry.

Robert Pirsig captured the drift in his mid-1970s classic Zen and the Art of Motorcycle Maintenance. "The real train of knowledge isn't a static entity that can be stopped and subdivided," he writes. "It's always going somewhere. On a track called Quality."

The Voice of Truth

Mon, 27 Mar 2006 22:38:04 -0500

Marketers have learned one very important thing in recent years. What's that? Well, that buyers are liars. More to the point, buyers can't tell you the truth because the truth eludes even them. With this insight, Procter and Gamble turned the Swiffer into a phenomenally popular cleaning item. They didn't ask their customers want they wanted in a cleaning tool; they observed their behavior.

Well, you don't just have to observe anymore. Now, you can listen. The human voice is more revealing than we ever knew.

That's what wireless services company Nextel has discovered. "A customer can say they’re satisfied with a product," says John Tidwell, director of primary market research for Nextel. "But until now, we’ve had no real way of knowing the truth."

Nextel is using Layered Voice Analysis (LVA) to analyze customerr conversations and derive key marketing insights. LVA leverages mathematical algorithms to assess voice frequencies and identify levels of stress, deception and enthusiasm. The technology, which was developed by the Israeli firm Nemesysco for security uses, promises to make important contributions to the field of customer intelligence.

What Nextel found is that the technology can be used to analyze customer responses to brand extensions and gauge levels of overall product satisfaction. One focus group recently revealed their dissatisfaction with a product through their narratives. "They could not articulate what was making them upset, so they created scenarios to help quantify their feelings," Tidwell says.

Such insights are helping Nextel refine its offerings to strengthen customer relationships. "It’s amazing marketers haven’t gotten into this in a deeper way yet," he says. "But when they do, a lot about marketing and its capacity is going to change."

British Invasion: The Tesco Test

Thu, 09 Feb 2006 10:05:06 -0500

Get ready for an acceleration of intelligence-driven retailing in America. Indeed, this is one area of business in which the real innovators in customer intelligence have been overseas as opposed to the U.S. Now, one key retail player -- UK-based Tesco PLC -- is coming to the states to compete against other retail powerhouses such as Wal-Mart Stores Inc. and Costco Wholesale Corp.

Tesco intends to set up shop on the U.S. West Coast in 2007 with a convenience-store format. The company intends to annually invest £250 million ($436.1 million) on its West Coast expansion. It has already entered China and other emerging markets and half its shelf space is outside the UK.

"We have been watching the U.S. market for many years, but never thought we had the right approach and format for the American consumer," Chief Executive Terry Leahy said. "We could have gone in before, but our new format is tailored to the U.S. and brings something original."

Of course, there are skeptics. UK-based J Sainsbury PLC, the U.K. supermarket group, for instance, performed miserably in the US and eventually pulled out. "Any company which tries to enter the U.S. market ends up destroying shareholder value," said a trader in a Wall Street Journal article.

But they were not the innovators in customer intelligence that Tesco has turned out to be. That could prove a serious competitive advantage. "Everyone is an important competitor and you try to respect them and learn from them, but not be the same even though we're all competing for the same dollar," Leahy said.

Marketing Malpractice?

Tue, 27 Dec 2005 22:06:38 -0500

"People don't want to buy a quarter-inch drill," wrote Harvard marketing professor Theodore Levitt, apprising us of our "myopia" and unleashing a whole new school of new paradigm thinking. "They want a quarter-inch hole!" Citing the old master, Clayton Christensen (of Harvard Business School), Scott Cook (of Intuit) and Taddy Hall (of the Advertising Research Foundation), encourage us to rethink marketing yet again.

As they see it, we have become wedded to marketing dogma that revolves around demographic segmentation. We see our customers through the prisms of age, gender, race, income, geography and lifestyle. We think in terms of averages. "The problem is that customers don't conform their desires to match those of the average consumer in their demographic segment," they write in a recent piece in the Harvard Business Review called "Marketing Malpractice."

Instead, they argue we should see our customers in terms of the "jobs" they are trying to get done. "When people find themselves needing to get a job done, they essentially hire products to do that job for them. The marketer's task is therefore to understand what jobs periodically arise in customers' lives for which they might hire products the company could make. If a marketer can understand the job, design a product and associated experiences in purchase and use to do that job, and deliver it in a way that reinforces its intended use, then when customers find themselves needing to get that job done, they will hire that product."

The job, not the customer, should be the "fundamental unit of analysis for the the marketer," they contend. The authors cite Procter and Gamble's Swiffer, which was designed to do the job of cleaning floors, and Pierre Omidyar's eBay, which was designed to sell personal items. Neither solution was designed for a particular demographic or psychographic.

They speculate that marketers focus on customers for historical reasons -- harking back to a time when the overlap between customer demographics and the job itself were more closely aligned. Even Scott Cook's Intuit developed a Quicken Financial Planner product in the mid-1990s only to discover that it had enormous market share in a relatively unimpressive market (and eventually pulled it). "[W]hile the demographics suggested that lots of families needed a financial plan, constructing one actually wasn't a job that most people were trying to do," they note.

Interestingly, the authors find, "Job defined markets are generally much larger than product category-defined markets. Marketers who are stuck in the mental trap that equates market size with product categories don't understand whom they are competing against from the customer's point of view."

Get Ready for Knowledge Process Outsourcing

Tue, 27 Dec 2005 20:47:42 -0500

The next wave of offshore outsourcing will revolve around high-end knowledge work. It may also have important implications for companies engaged in customer analysis and intelligence initiatives.

While the first wave of outsourcing was related to manufacturing activities, the second wave information technology (ITO) and the third wave business processes (BPO), the next wave is all about "knowledge processes." Hence, the introduction of a new buzzword -- knowledge process outsourcing (KPO) -- to replace the last one, BPO. This is where outsourcing meets customer intelligence.

One recent report from a group called Global Sourcing Now contends the KPO business will grow to $17 billion by 2010. The report suggests 70 per cent of the total -- or $12 billion -- will be outsourced to India. The number of Indian jobs in the sector is expected to grow from 25,000 at present to 300,000.

KPO refers to knowledge-intensive work that involves specialized domain expertise. High value processes that fall into this realm: valuation; research; investment researches; patent filing; and legal and insurance claim analysis. That would certainly include customer analytics and related processes.

Sameer Walia, director, SmartCube, explains, "There is a vast pool of people who work for us, including MBAs, chartered accountants, economists and engineers... Those with good education and analytical abilities can look forward to a fantastic career in KPOs."

Some see KPO business in industries such as pharma, biotech, management services, financial services, technology research, engineering. But other skills that are directly relevant to those engaged in customer intelligence work have been mentioned including financial analysis, data integration, and research and analytics. Among the companies exploring this new sector: GE Capital; Accenture; Motorola; Intel; IBM; Cisco; Texas Instruments; Nokia; Astra Zeneca; and GlaxoSmithKline.

Preventing Terror or Eroding Trust?

Sun, 27 Nov 2005 14:55:28 -0500

With guidance from the Pentagon, the White House is exploring ways of extending the Defense Department's reach in terms of domestic intelligence gathering and analysis. The stated objective is to preempt acts of future terror as well as treason and economic espionage.

This obviously raises some concerns among civil libertarians -- and with some justification. There already is significant concern that the Patriot Act has been abused as law enforcement officials use its permissions to pursue alleged drug criminals, tax evaders and others beyond the act's original justification.

That said, it's also vital to consider the vulnerabilities that nations face as the weaponry of mass terror inevitably becomes more mobile, compact and deadly in the coming years. Given the porous borders of countries like America, one could argue that our greatest line of defense in the long term is indeed intelligence.

The key issue at present has been the move to expand a little-known DOD organization known as the Counterintelligence Field Activity, or CIFA. As the Washington Post reports:

Neither the size of its staff, said to be more than 1,000, nor its budget is public, said [Lt. Col. Chris] Conway, the Pentagon spokesman. The CIFA brochure says the agency's mission is to "transform" the way counterintelligence is done "fully utilizing 21st century tools and resources."
One CIFA activity, threat assessments, involves using "leading edge information technologies and data harvesting," according to a February 2004 Pentagon budget document. This involves "exploiting commercial data" with the help of outside contractors including White Oak Technologies Inc. of Silver Spring, and MZM Inc., a Washington-based research organization, according to the Pentagon document.

For CIFA, counterintelligence involves not just collecting data but also "conducting activities to protect DoD and the nation against espionage, other intelligence activities, sabotage, assassinations, and terrorist activities," its brochure states.

Note the interest in "commercial data." One might be led to believe that domestic intelligence organizations increasingly will pull from the same data sources that corporations now rely on to identify prospects and better understand their customers.

Clearly, the White House wants to see defense intelligence organizations obtain more leeway to gather, integrate and analyze intelligence relative to domestic threats. This suggests that current organizations such as the FBI and the Department of Homeland Security are considered to be incapable by some of effectively handling these tasks on their own.

All of which raises interesting concerns that must be weighed and considered in relation to the terror threats that loom in the future. Of data sharing legislation now making its way through Congress, Kate Martin, director of the Center for National Security Studies, says it would give the Pentagon significant access to the FBI's massive data stores, including information on citizens that are not linked to terrorist or espionage activities. The measure, she contends, "removes one of the few existing privacy protections against the creation of secret dossiers on Americans by government intelligence agencies."

Contrary to the visceral views of civil libertarians, one might reasonably accept that "dossier assembly" is an inevitable aspect of terror prevention in the post-9/11 world. The question is whether such activities will be performed in a sensible, precise and diligent fashion with strictly defined objectives (ie. prevent terrorist acts) or if they will become just another blunt instrument of law enforcement. If the latter proves to be the case, the government will not only be wasting the limited resources now devoted to pre-empting terror, it will fatally undermine the public's trust and support.

Competing on Analytics

Sun, 30 Oct 2005 23:26:34 -0500

Ready for the next stage in the evolution of business? Tom Davenport, director of research at Babson College and author of the new book Thinking for a Living, contends it is "competing on analytics" (COA). This is the point when data- and fact-based decisions become the primary basis of competition.

Speaking last week at the Better Management Live conference in Las Vegas, Davenport explained that analytics enable "the optimization of key business processes" -- whether in the realm of human resources, supply chains or customer relationships. As Davenport's research suggests, such moves are proving to be a key element of competitive differentiation and market growth.

In a study of 32 enterprises, Davenport found multiple organizations that are competing on analytics at this point. Among them: Marriott; Walmart; Mars; Dell; Procter & Gamble; Progressive Insurance; Harrah's; Gallo; Capital One; Amazon.com; Yahoo; Google; and Verizon. He also mentions sports teams -- such as the Oakland A's, Boston Red Sox and the New England Patriots -- that are thriving on statistical modeling and analysis. This suggests that analytical leadership has the potential to transform all industries and fields of endeavor in the coming years.

Davenport offers five stages of development in this regard:

Stage 5: Clearly competing on analytics (11 of 32) ;
Stage 4: Clear intent and almost there (6 of 32);
Stage 3: Have vision, but a long way to go (7 of 32);
Stage 2: Some local, non-strategic analytical activity (6 of 32);
Stage 1: Still wrestling with the basics (2 of 32).

Finally, Davenport offers some key factors associated with competing on analytics. He points to the importance of gaining senior management commitment, engaging in sophisticated analytics (such as predictive modeling) and being able to manage business intelligence at an enterprise level.

Harrah's, whose CEO has led the charge in this direction, is a triumphant exemplar of the approach. Indeed, the gaming giant is presently working on an initiative called "Project Moonshot" that would enable it to leverage cross-property intelligence to engage in real-time service interventions. Lose a bundle on the slots or at the craps table? You can expect an attractive host or hostess (who has just been flagged electronically) to step up beside you at the moment of disappointment and offer you a gift that reflects your personal preferences -- whether it's a spa day, a golf outing or tickets to Cirque Du Soleil. Now, every loyal and profitable customer -- who happens to be carrying a trackable "Total Rewards" card -- can feel like a high roller. Welcome to the future.

Swan Song

Fri, 28 Oct 2005 13:17:49 -0500

You heard it here first folks (see "Roaches and Reptiles" -- written last November). After watching the PBS Frontline documentary The Persuaders (written by media theorist Doug Rushkoff), I predicted that this strange airline would soon crash and burn. Here's the story:

Delta to Eliminate Discount Carrier Song
Oct 28 10:05 AM US/Eastern
AP -- Delta Air Lines Inc., which is reorganizing under protection from the federal bankruptcy court, announced plans Friday to discontinue its discount carrier Song by May 2006 and incorporate Song's fleet into Delta's regular service. In the interim, Delta plans to include first-class service on Song's 48 planes in an attempt to make the flights more attractive to business travelers and to conform with Delta's regular service. "As Delta continues its transformation to become a more customer- focused airline, we are incorporating the best of Song into the best of Delta," said Delta CEO Gerald Grinstein in a statement. "Our new Song service will set the standard in transcontinental travel, making Delta the first choice for customers on these routes." The financially-strapped parent company also plans to convert an additional 50-plus Delta aircraft to two-class Song service and expand in-flight entertainment on Song flights. Joanne Smith, currently president of Song, has been named vice president of consumer maketing for Delta, effective immediately. Atlanta-based Delta filed for Chapter 11 bankrupcy protection from creditors in New York on Sept. 14.

Whatever the jibberish about "incorporating the best of Song into the best of Delta," this is clearly a failed experiment. The question is: What does this experiment teach us? In my opinion, it teaches us that companies cannot rely on Madison avenue to create a corporate vision. That's what seems to have happened here. We're not talking about image problems; we are talking about "the vision thing." Song never had it. And it's not something you can just outsource to "mystical branding gurus."

For Whom the Boom Tolls

Sun, 23 Oct 2005 19:06:56 -0500

Fascinating article last week in the New York Times Magazine about the building industry and boom through the eyes of Horsham, Penn.-based Toll Brothers -- one of the giants in the business. Money quote: "We're really a marketing company that happens to build houses."

They even seem to resemble Dell Computer in many ways. They don't actually build anything. Physical work is subcontracted to electrical, framing, roofing, painting, masonry and plumbing companies. They don't start construction until contracts are signed and deposits are in the bank. The company also follows the "mass customization" (they prefer to call it "semi custom") principles that have made Dell so successful and profitable. Indeed, they ran the numbers back in the mid-1980s and learned that they could be much more profitable and meet 98% of customer demands by radically limiting custom options. Construction errors, delays and costs were often generated by the option process. "The more options we sold," said CFO Joel Rassman, "the less we made."

On the customer intelligence front, it seems that the insight that matters most is related to the preferences of prospective buyers in various regions and socio-economic groups -- whether it's for "stately Colonials" or "Mediterranean-style ranches." (Tolls Brothers -- which competes with other large, national builders such as Pulte, Lennar, Centex Homes, D. R. Horton and KB Home -- skews to the high end of the market). Competitive intelligence is also critical to ensure that the company is incorporating the features that other developers are having success selling. Jed Gibson, a vice president who runs Toll's architecture division, explains, "Our business model is: what's selling out there, and how can we do it better?"

Founder Bob Toll spends much of his time poring over data related to various potential property purchases. At this point, there are roughly 74 million owner-occupied homes in America. But Toll and others believe we actually may be running out of desirable land for development as today's exurbs get built out and push us farther from city centers and workplaces. Extensive building regulations, meanwhile, add costs that smaller developers can't afford to assume. The ability of big builders to understand these regulations, bear these costs and fight the fights associated with new development further strengthen their hand.

Indeed, Toll Brothers is not convinced that the boom will ever end as far as it is concerned. While it expects the market to cool down and crush some overexuberant investors, it sees 15% growth as far as the eye can see. "Why can't real estate just have a boom like every other industry?" Toll asks rhetorically. "Why do we have to have a bubble and then a pop?"

The Learning Agenda

Fri, 30 Sep 2005 20:21:12 -0500

"As the success of an array of forward looking marketing organizations suggests, the defining element of competitive differentiation is now strategic and systematic learning," contend Julie Baker, Ken Demma and Niall Budds from the marketing consulting firm Quaero.

The piece argues that strategic learning "is beginning to attain much greater prominence as the advantages associated with brand and product become less enduring. If Marketing is to strengthen its credibility and even elevate its strategic value within the enterprise, then it must play a central role in the enablement and acceleration of organizational learning."

The authors go on to support the concept of a "Learning Agenda" as part of a forward-looking marketing strategy and investment portfolio. "When we invest intelligently, we develop an agenda of marketing objectives and priorities that reflect the wider business objectives of our companies. The open (and ugly) secret associated with today’s marketing plans and planning processes is that they have become increasingly focused on operations and tactics, media and messaging. Too often, marketing organizations fail to actively and systematically invest in learning. Because they see their role as one of mere implementation, they have stopped making the discoveries, eliciting the insights and defining the knowledge that can truly influence the strategic direction of the enterprise."

I encourage you to read the whole piece. It offers a far-reaching perspective and provides a framework for marketing-driven innovation. With profiles of Harrah's, Capital One and others, the piece goes on to advocate that marketing leaders invest in "breakthrough learning" and "incremental learning" as part of a "learning portfolio."

"The work of Harvard Business School professors Gerald Zaltman and Rohit Deshpandé suggests that corporate managers who typically commission market research generally don’t seek or welcome 'surprises' and often suppress them when they arise," the authors observe. "This suggests that marketing leaders should invest in and actively seek out market discoveries as part of the learning portfolio. Breakthrough innovations and advancements depend on such learning. And yet, we also know that high performance lies in the “patient accumulation of successes” that come with continuous improvement. Those types of gains also must be funded. A well diversified learning portfolio should include a smart mix of 'aggressive' and 'conservative' investments."

As the piece concludes, "The Learning Agenda is not a lightweight, touchy feely endeavor. It represents the marketing organization’s hidden and unrealized source of strategic value. As Marketing ascends the learning curve, it promises to become a strategic leader and catalyst in the next era of competitive success."

Are You Experienced?

Thu, 25 Aug 2005 17:51:52 -0500

Instead of talking about mere customer relationships, our perspective has become more multi-dimensional. Now, we are talking about the customer experience. Tom Johnson, a managing director with business-consulting firm BearingPoint, actually sees Customer Relationship Management (CRM) maturing into Customer Experience Management (CEM).. He thinks CRM began to decline when its emphasis shifted to cost-cutting. "But CRM is really about driving growth, not cutting costs," he says.

As a recent article in CIO Today suggests, CEM is about providing a consistent customer experience across all channels -- from marketing to sales to customer support. "If your brand's message is cheap and fast, then you need to be cheap and fast all the time, in every interaction with every customer," says Woody (Woodruff) Driggs, managing partner of Operational CRM at Accenture. "If you are high-end, you need to always be high-end."

The challenge within companies is, in many ways, a failure to communicate. "CEM starts by getting everyone who is important to the customer experience in a room," said Driggs. "We are constantly amazed to discover how often this is the first time that the key people from marketing, advertising, sales and service have talked to one another about what the customer experience should be."

What it shouldn't be is the thing Dell Computer is now trying to address. It began when Jeff Jarvis started making waves with his blog, Buzz Machine. In an "open letter" posted on the site, he berated Michael Dell for making shoddy product after his own $1,600 Dell machine crashed and burned (an experience I have had myself with a brand-new Dell). Apparently, the blog now gets 10,000 daily visits (with comments like, "Buy an Apple, Dude.").

Dell's response? The company got Jarvis his money back right away -- and has started actively tracking down angry customers (particularly the vocal ones). John Hamlin, Dell's SVP for U.S. consumer business, says Dell is adding more call centers and trained phone reps. "The customer experience is one of the most important issues for us," he adds.

There's that word again: experience.

If you are particularly interested in where this idea of customer experience management is headed, I suggest you consider attending the upcoming thinkAbout conference in Keystone, Colorado, which takes place September 14 and 15. It is hosted by Joe Pine and Jim Gilmore, co-authors of The Experience Economy.

"Our experience is not for the meek," they explain. "Each year, it attracts a potent mix of imaginative minds, business trailblazers, and experience mavens. These are people who truly desire to advance the boundaries of new offerings and envision new ways to think about the business of business."

Tesco Triumphs

Sun, 07 Aug 2005 20:12:27 -0500

One clear powerhouse of customer insight is UK-based Tesco. In a recent piece in the Economist, the high-growth retailer is recognized for its ability to adapt to and even influence British culture. "If an anthropologist wanted to know what Britain was like, he would do well to take his notebook to Tesco," the publication writes. "That's partly because it sells a third of Britain's groceries. But it is also because Tesco's customers are made up of the wealthy, middling and poor in just the same proportions as shoppers in the country as a whole. Tesco has become big by being like Britain."

Tesco has proved a master at leveraging customer intelligence. It recently collaborated with the University College London's geography department to figure out how to make the most of its statistical information. However, it gathers most of its data from its successful Clubcard. With 12 million cards in use in Britain, Tesco can closely watch what its shoppers are purchasing. It then explores linkages between the products people presently buy and the ones they might be persuaded to buy next. “We believe we have one of the largest databases anywhere in the world,” says Martin Hayward of dunnhumby, which handles data management for the company.

As the Economist explains, "This knowledge allows Tesco to do two things. First, it can lavish attention on customers by giving them discounts on things that they buy routinely. Each cardholder gets a letter at the end of each quarter containing vouchers worth 1% of what they have spent. But they also get coupons that entitle them to discounts on products that Tesco's database, working much like the software that powers Amazon.com, suggests they might like. Last quarter, the store sent out 6m versions of this letter, each offering slightly different discounts....

Second, Tesco can adjust its shelves to suit the profile of the local area, or even the time of day. Tesco in Brixton, an area of south London settled by immigrants from the Caribbean, sells plantains, a kind of savoury banana that can also be found for sale on market stalls outside. Tesco stores in central London do not, but are instead designed around selling sandwiches to office workers at lunchtime and then ready-meals to them in the evening. The aim is to combine the local knowledge of the village shop with a multinational's economies of scale in buying and logistics."

Those are impressive capabilities. They position the company for increasing growth in the years ahead, particularly as its competitors continue to deny the extraordinary power that this intelligence delivers.

CRM Still on Hold

Sun, 07 Aug 2005 19:46:36 -0500

None other than Accenture -- a longtime advocate of Customer Relationship Management technology -- has pronounced CRM a virtual failure in the telecom industry. Citing its own survey of 1000 UK consumers, it notes that CRM technology has not improved customer service.

Despite heavy investments in CRM on the service provider side, over half of respondents claim to have switched service providers because of poor service. "These findings are troubling for any industry with heavy customer interaction, given that poor service was the predominant reason for half of the respondents changing service providers in one industry or another last year," says John Freeland, global managing partner at Accenture's CRM practice. "Winning companies strike the right balance between using technology to help reduce costs, and streamlining the customer experience with well-considered processes that contribute to more personalized services."

One key annoyance was "technologies that delay or stop service" among 20% of respondents. However, long hold times was the key annoyance for 82%. Average UK consumers spend as much as six minutes on hold and speak to an average of 2.7 customer reps as they try to solve problems.

"I am not surprised by this report. It's a classic example of rolling out technology and expecting it to solve all your problems," says Chris Boorman, vice president of marketing for Europe at Salesforce.com. "Organizations need to focus on meeting business requirements first and foremost. They should not adapt to technology. Technology should adapt to companies, and it's crucial to customize for each industry. You cannot have an off-the-shelf product that suits every vertical sector."

GE Begins Reorganizing Around the Customer

Thu, 23 Jun 2005 12:58:47 -0500

One of thet greatest barriers to success in terms of leveraging customer intelligence is structural. Too often, companies organize to simply sell more products instead of enhancing customer growth and profitability. But there are reasons to believe change is on the horizon.

Corporate bellwether General Electric has just taken a step in the "customer- focused" direction by reorganizing around industries to reach its next level of growth. GE Chairman and Chief Executive Jeffrey Immelt stated: "This change allows us to leverage our exceptionally deep leadership team to accelerate growth and improve productivity."

As part of the move, GE will consolidate 11 divisions into six businesses: infrastructure, industrial, commercial financial services, NBC Universal, health care and consumer finance. While the decision is certained to reduce operational costs and rendundancies, it also lays the groundwork for new approaches to customer management.

As opposed to managing the client based on product, the restructuring potentiallly makes it easier for GE to mine and manage customer information in ways that help it expand its existing customer relationships. The focus is no longer the product, but rather, the customer's industry. Considering GE's influence on business in general, it will be interesting to see which companies follow suit and begin taking steps in this direction -- organizing around their customers as opposed to the products and business lines.

Data Debacle

Sun, 15 May 2005 17:38:43 -0500

While I certainly don't think the current customer data frauds and follies are any excuse to stop collecting it, I think there is a real danger that this could be the result if companies don't start managing it more responsibly.

According to a recent piece in Fortune Magazine, it will take more than IT security spending alone to address the problem. "Secure information typically walks out the door in one of three ways: hackers grab it, employees steal it, or companies lose it—through incompetence, poor gatekeeping, bad procedures, or some combination of the three. High tech allows the data to be captured, but tech isn't always the way it escapes."

One data debacle that the magazine looks into takes place at Bank of America. Last December, bank employees "packed up and sent to its backup data center tapes containing information on government workers enrolled in a charge-card account. Or at least, that's where they were supposed to go. The tapes—none of which were encrypted—shipped via commercial air. But just after New Year's, bank officials realized that the tapes had never arrived. They scrambled to see what might be lost. It wasn't pretty: more than a million names, addresses, account numbers, and Social Security numbers."

In early January, the bank called the Secret Service, which has jurisdiction over such problems. "Account holders had no idea that their information might be on the loose. Bank of America says the Secret Service asked it to keep quiet while it investigated. The bank kept monitoring the accounts, looking for any funny business, but found none—and still hasn't, it says. In mid-February the bank finally went public, promising that it had changed its ways (backup tapes no longer go by commercial air, for instance) and offering free credit reports and fraud monitoring to affected consumers."

While Bank of America apparently got lucky this time, security experts are now shaking their heads in disbelief. "The Bank of America incident was absolute stupidity," says Jim Stickley, the CTO of TraceSecurity, a threat-management company based in Baton Rouge, LA.

The real threat here is the backlash that inane behavior such as this could very well bring to life. We won't be any better off if customer data is no longer legally collectable, but that's the outcome if "absolute stupidity" remains an industry standard.