The Future of the Communications World - Serving the Customer

The Future of the Communications World - Serving the Customer.

How I wish that I had the crystal ball that would show us the best path to follow. I talk with various vendors on a regular basis who promise that they are the best and their solution will take us into the next century. Today's announcement that Nortel is filing for bankruptcy started me think, again, along the paths of how best to serve the customer. The customer is different depending on what company you work for. Do you sell to enterprise customers? Do you sell to residential customers? Do you sell to government agencies? Do you care? Many companies spend a lot of time trying to define who the customer is. The definition changes with new products/services, the economy, and, well, the new marketing person.

Who is the customer?

The basic definition usually comes down to two specific points. There is an Internal customer and an external customer. The internal customer is usually your employees in your department or another department within your company. The external customer is the customer you have sold a product or service to outside your company. There is nothing relevational regarding this definition. So why is it so hard for many companies to stay focused? If you look at companies such as Nortel and the others that have filed for bankruptcy, it is usually poor decisions made throughout a company.

What does the customer want?

Many people in technology positions look first at the technology and then how the technology can serve the customer. This works well in some cases, but not in many. The customer is not looking for a technology. Not really. The customer is looking for a solution that will solve the job they want done. It may be a particular technology or it may be a solution combining multiple technologies. Each customer has a job that they want done. Be it washing clothes, sending email, paying bills, moving from one place to another, communications, teaching, etc. The customer just wants to get the job done. If you follow this basic premise, then you understand where to start to find the right technology or solution for your internal or external customer. Price plays a role in the purchase of a solution for a job, but not always. If it always played a role, Apple would not have sold millions of iPhones or iPods. People are willing to pay more if you have the only solution to get a job done. If you are just another vendor, well, get ready for a volume game in order to make money on a commodity product.

How do you choose which way to serve the customer?

This one is easier. The primary focus of any company that wants to stay in business is to build a relationship with a customer. Yes, you can build a relationship with a customer even if you are selling a widget. Apple has a huge following from their customer base. They spent a great deal of time trying to understand the job that the customer needed done. Then they built a product/widget that met those needs. By listening to the customer, they built a relationship that goes deep and strong. Nortel, ironic enough, used to do the same thing. Nortel spent a great deal of time building products that the customer needed. First, it was a product that no one else had and they could charge a premium for the product(s). Then they built a relationship by setting up regular and constant visits/communication with the customer. They were good about bringing customers into the lab and showing them how their product. They did multiple testing scenarios and really took care of the customer.

Why does Apple succeed and why is Nortel failing?

Look back at the history of what Apple has achieved and where they have failed. Apple has had plenty of successes and failures. Many people attribute the success of Apple only to Steve Jobs. Jobs is a driving force in their success, but he is not the only one. He has the vision, determination, and focus, but other people do the work. Apple went downhill when Jobs left and grew to dominance when he returned. Compare Nortel. They have been a leader for a long, long time in several areas. In particular, we have used their phone switch DMS gear and their SONET gear. The systems were just well built and ran. They had their share of problems. But between a system that worked and the relationship with the customer, they built a strong company. The problem from my viewpoint is that Nortel missed the change in the winds. They produced phone systems where a new feature (i.e. Caller ID) would cost a carrier $50k +. They had SONET gear that was about as redundant as you could get. The winds changed, the customer changed their need for the job, and new products/solutions/services were needed. Customers wanted solutions where they could get 50 features on a phone instead of just 3 for the same price. Hence, VoIP became stable and took off. Customers wanted flexibility in networks and wanted to be able to grow. Ethernet moved from a LAN technology to a WAN technology with scalability. Convergence arrived. VoIP and Ethernet changed the landscape.

I'm not saying that VoIP and Ethernet caused the problem for Nortel. I'm saying that the customer's needs changed. They wanted something different and "better". Nortel was not able to move in the right direction. Customers bought more of the other solutions. Nortel hung on to current products. Customers bought more of other solutions. Nortel stayed firm. Customers moved and Nortel tried change. But it was too late. The new innovators came in with new solutions to solve the needs of the customer and simply took the customers away from Nortel. Now their isn't enough money from current customers to research and deliver new products. Too little too late.

VoIP and Ethernet were not, initially, the best techonologies. Ethernet still does not provide a customer the level of redundancy that SONET does. But everyone wants the flexibility of Ethernet and will accept a lower level of performance - for now. Ethernet, however, will either provide the same level of redundancy over time or it will be replaced. (As a comparison, we achived 99.999% uptime on a core MPLS/VPLS network for 2008.)

Conclusion

Apple has succeeded because they listened to the customer and are currently delivering a product that meets the need for the job. They have the hammer to pound the nail. It won't last though. Plenty of competitors are on their tails. Nortel missed the boat and failed to respond to the basic principle. Meet the needs of the customer for the job they want done when they want it done.

Good Reading.

If you are interested in getting more details along these lines with some good data, take a look at these two books to help undestand the customer focus and the internal disciple needed to be successful.

- The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business - by Clayton M. Christensen (Author)

- Good to Great: Why Some Companies Make the Leap... and Others Don't - by Jim Collins (Author)

** All views are my own. Feedback always welcome. :)