ROI: The 800 lbs Gorilla in the Corner pt 1

Image from WikipediaA lot of the stuff I do is difficult to present in terms of ROI: web development and programming, software training, SEO/SEM, and Community Building can be very esoteric in terms of raw dollars.

Old Days
It's been like this since my first days in the computer field.
My second job in IT was as a commission sales person for NEC. To the world back then, IBM meant Computers. NEC was unknown outside Japan. They entered the US market through Europe with a superb microcomputer system based on the new 286 processor. (I did warn you I'd been at this a long time, right?)
Not only was the system faster, but it had the best color monitor on the market. It could be networked - with a little careful programming- with the new Netware software, so it didn't need a license for token ring technology from IBM.

I didn't know much about programming or computers in those days. All I knew was I wanted to work with this cutting edge stuff. Fortunately, microcomputers leveled the playing field for folks like me. Colleges were training people on mainframes. Even people with Masters' degrees in Computer Science had rarely seen a micro.
My only real advantage was to be organized. I might not have had much more to say than what was in the brochure, but I made sure I got to every appointment on time to say it.
I was really excited to be working for one of the obvious industry leaders as it expanded into a vast new market.

This one manager was impressed with my naive enthusiasm. On the second visit to his distribution company, he smiled and told me: "If you can find me one piece of software that will run on that system, I'll replace every computer in the room." I looked across the room at 25 computers, and my pupils must have dilated.
Then he said, "I'll replace them all,...if you can find me one piece of software that will run on 286 systems." Then he handed me a copy of DataSources. DataSources was once the Bible of the computing industry. These two huge books were 4 inches thick and the size of a coffee table book. One was for software. One for hardware.
"Go ahead. You can take them with you. You find one piece of software, even if I can't use it, and I'll sign the requisition today," he said. "Then come talk to me next week."

I took those books home and poured over them. I even looked through the hardware book hoping to find something to trace down in the public library. There was nothing.
I had to go back in there the next week and admit defeat. He just laughed as he handed me some coffee.

The new DataSources came out in about 6 months. It was filled with software that ran on 286 systems, and software that was compatible for both 286 and 8080 systems. Both had options to use CP/M, PCDOS or MSDOS as the operating system.
Turns out, he did replace all his computers, networked them, and signed on to an annual service contract to contain his costs - all through me. I ended up doing a lot of the work myself. I followed the NEC tech around and helped him to learn about all the new technologies.
The owner and I had a lot of coffees together.

This was the days before the Internet and Windows. Windows was out, but version 2.x didn't work reliably. It was a year or so later when version 3.1 came out that Windows began to make a place for itself.
The Internet was a secret subject for tech people. We wished upon the stars for it. It was more an impossible dream than reality. And many people thought it would never happen. The Internet would mean too much information and freedom, the hacks canted. No government would allow that.

Faith?
Thing is, this guy didn't replace his computers because he could show a real return from the dollars spent. He didn't buy them because he needed the fabulous 10Mbyte harddrives, or the advanced CGA graphics.
There wasn't any way to calculate an ROI on so many unproven technologies. The technologies were so new no one knew how much it would cost to keep them running. Netware was promising to make micros work like mainframes. It sounded almost impossible.
It wasn't hard for IBM to show that converting paper records to searchable databases saved money and increased productivity. But that was for big business with hundreds of thousands of records. IBM had whole systems: printers, terminals, harddrives, and mainframes.
No one even knew how to connect printers to these new microcomputer networks. In most cases, a programmer had to write a driver for a Netware network. How do you figure that cost into the ROI?

IBM threatened, then released their own Personal Computers. But they didn't even connect to the mainframes. PC's worked like dumb terminals which cost much less. IBM only got into the microcomputer market to quash the upstarts.
We know now it didn't work. But when this guy bought that room full of micros and networked them, he could not have justified it to anyone.

So ... Why did he buy 25 computers, a network, and a long term service contract on unproven technology and put his whole career and business on the line?

• Part of it was the excitement of the microcomputer revolution.
• Part of it was a need to keep technologically ahead of his competitors.
• Part of it was to keep up his company's reputation.
• Part of it was NEC's international reputation.
• Part of it was all the times I came to him over coffee so many times to tell him exciting and good news about the developing industry.

He made the right decision. But he only saw the ROI in passing. I doubt he ever sat down to figure it all up. If I had had to justify the purchase in terms of his return on investment, he would never have made the purchase.
Many times, I've sat down with prospective customers and told this story.
I emphasize the brilliance of his foresight by quoting Napoleon "L'audace. L'audace. Toujours, l'audace." Then I mention the practicality of the long term service contract which guaranteed him support any time, and specified hourly programming fees - and how that limited his exposure to the uncertainties.

Options
Could he have made safer, more productive choices? Maybe. No one knew it at the time, but his network absorbed technology and upgrades for almost a decade. Netware upgraded to accommodate 386 systems and software, then 486 systems.
If he had networked 8080 or Z80 systems with Netware, it would have been much more risky.
Software is defined for workers in terms of the interface. The costs of retraining staff would have been much more dramatic to move from green text on black screens to 16 and then 256 color monitors.

Color screens turned out to cause less eyestrain, headaches and were proven to be more productive. People were more willing to put in long hours and could concentrate easier on choices distinguished by different colors.

NEC did not offer a long term contract for support on such an ad hoc (technologically) network. Programming and technical support would've had to be billed at the market rate. Netware was made to run on the 286 (or at least the 8086/80186).
Replacing 286-based systems turned out to be much less expensive because IBM opened up its architecture (in a last ditch attempt to bury micros, many thought).
But no one could have known all of that.

What does this story prove?
As the story unfolds, many advantages showed themselves:

• color screens for productivity (and employee moral);
• harddrives saved server time;
• projects and departments were separated for security and practicality;
• improving technology melded software and hardware to reduce upgrade costs;
• Microsoft broke free from IBM and Windows came into its own;
  
• and much more.

Today we have the advantage of those years of anticipation and determination. But still, many purchases come down to prioritizing the goals of the business. That's really how this forward-thinking manager made his decision.
Look back at the list of reasons I gave. Then glance over the whole article. Not many of those elements could be expressed in hard numbers going in. They had to be managed to prove themselves.
And there is an element of just plain luck.

He chose to make the purchase because of his own priorities. His priorities were not easily quantifiable. There is no question they are qualifiable though. And in time some of his qualifiable reasons proved themselves.

The story illustrates a reality of any technology purchase: hardware, software, training, websites, SEO/SEM, and community building, the decision is made on priorities, not necessarily hard numbers. Technology in business is too closely integrated with ergonomics to quantify everything. Employees and customers are a part of the equation.
If the technology is not a priority, it will not be purchased no matter what is quantified.

Does that mean not to put into numbers anything that can be quantified? No. At every opportunity, quantify. Managers need numbers to manage. It's an old adage of management.
But management at every level has to respect the elements of technology that are qualifiable, but resist being quantified.
We'll explore these topics further in the next few posts in terms of each of the services and products.



SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.

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Online Community Building

Image from WikipediaI had a friend in Monterey California whose passion was growing grass.
Ever watched grass grow? It's not the most exciting thing to do. Watching time lapse photography of growing grass is much more fun.
My friend used to sit and watch grass grow. She loved it. She would sit and watch for hours.
She could make grass grow anywhere. And it always came up lush and green, thick enough to just lay around in.
She wouldn't just pile on fertilizer and chemicals. She worked with the native soil. That meant sandy mushy soil around Monterey. Not many people around Monterey have lawns. The soil just doesn't work.
She worked with the soil as it is. Her reasoning was simple: "The native soil is going to come back anyway. Why fight it?"
They hired her to work on the Pebble Beach golf course. She was a consultant.
If you watch a golf tournament at Pebble Beach, the first thing you'll notice is the long, gorgeous green fairways. Those aren't just fertilizer and sod. That grass grows because my friend knows how to make the grass grow.

Growing Communities
Growing an online community is a lot like watching grass grow. If you know what you're doing, it's just a matter of wanting to see how well it grows.

My first attempt at growing an online community was largely a failure. There were a lot of reasons. The guy I was working with had never heard of blogs. Almost no one in Australia had a blog in those days. No one had heard of Digg or Technorati. At least neither my client nor his customers.
It was a few years ago. Google hadn't even opened up an office in Australia. The Copyright Law amendments hadn't nearly closed down local entrepreneurial search engines. That stuff almost caused Google to refuse to index Australian sites altogether.
And, probably more than anything else, the Howard government was still working to frighten Australia away from the Web; and using Telstra's lust for profits to keep access slow and expensive.

Just an aside, I was talking to a guy who lives in Berwick a couple of days ago. He tells me he can't get ADSL. There are no ports on the phone exchange.
Berwick is a fast growing suburb of Melbourne with a university, a large TAFE, a hospital and a major regional clinic. Yet the residents can't even get reliable access to fraudband, much less ADSL.

Now, only a few years later, Australians are probably overrepresented on Facebook. There are even a couple of Australian social networking sites!

The goals of my first attempt at building an online community weren't lofty.
It was just to keep the customers of my client coming back to his site. We set up a local business directory, and offered members the option of putting a web page on his site as advertising.
Not much of an effort, I know now. But, it did build the traffic to his site.
Members could comment on any of the articles on the site. In over a year, we got one comment. Maybe two, not counting the spamming on the blog.

Communispace, a company in Boston, sets up online communities. I found their press release from 2006 "10 Best Practices for Online Customer Communities" cited in a book by Larry Weber on Marketing the Social Web. Reading through the list as a sort of post mortem on my own efforts, it's not hard to see what worked and what didn't.

1. Invite the right people, keep it private and small. That wasn't hard. The company only had about 40 customers. Because my client wasn't familiar with the concepts though, he never invited them.
2. View members as advisors to the company. Membership was resisted because my client didn't want to be a source of spam. It was impossible to get past the idea of spam to the idea of community.
3. Find the social glue, make it member-centric. This was my mistake. I chose a social glue that could be perceived as negative. My intention was to empower the customers by informing them.
And then the social glue was never properly implemented. The blog was informative, but the website never adopted a goal of being informative or useful - in the customers' eyes.
4. Work at building the community. Building the community was done backwards. We would include a customer's website in the Local Business Directory, then try to get them to become involved.
The SEO boom hadn't begun. Internet access was much worse than today. Small business owners couldn't see the advantage of giving them a link to their sites. For that matter, many didn't know why the had websites - other than public expectations.
Almost all of my client's customers were home or small business. In my enthusiasm for the Web, I had closed my eyes to a reality of the target market.
5. Be genuine, encourage candor. We didn't have much response for other reasons. Too often the articles on the website and the blog were simply commercials for the company.
And there was the sense that some of the information in both places was giving away trade secrets.
Candor was not a goal. (insert wry chuckle here)
6. Just plain ask. When I could, I did. In an environment where the customer just wanted to know when it was done, asking for opinions and viewpoints was considered offensive. Customers didn't like being asked for their opinions about something they "knew nothing about but their kids (or grandkids) did".
This may seem like a strange reaction considering the statistical make up of Australians on the Web.
7. Pay even more attention to what members initiate. Instead of getting the customers' reactions on the site or blog, we did pay attention to the changing nature of customer requirements. On the ground, so to speak.
At that point in Australia's web history, maybe on the ground was the only means of discovering what the customers wanted (or initiated.)
8. Don’t squelch the negative. Despite some effort, this customer relationship was still one-way. In one-way customer interactions, negatives are always squelched one way or the other.
My client, and his customers, had expectations based on the principles of interruptive, not interactive, marketing.
9. Don’t ask too much, too often. Refer to comments on No.s 1-8 above.
10. Use the right mix of technologies and methodologies, and keep experimenting. Bingo.
The whole effort was the wrong mix of technologies and methodologies. My responsibility, of course. The community was largely a failure.
We certainly kept experimenting though.
The experiments bore fruit. The goals of the project were to:

1. Maintain the customer base;
2. Generate leads for new business;
3. Promote referrals;
4. and to Explore new sources of income.

No.s 1 and 4 were successful. The small local customer base stayed loyal.
Only a few new customers were added because of the site. But those customers opened up new avenues for business. The site gained prominence in the SERPs and page rank.
As an attempt to produce a community, the effort was largely a failure. But the project did double the business gross income and profits within a year.

I can't help but wonder if I made a good lawn?

We worked at it for over a year with poor results. There were so many things missing, not the least was an understanding of how to build an online community. Or even Why to build an online community given the online environment created by government, physical connections, and the naivete of most of the customers.
The results were better than the quality of the effort deserved perhaps. Then again, it was an innovative project for a small local company to initiate.
I had gone into the project with ambitious goals based on my experience in the US. This was Australia. It became a struggle with infinitesimals. The delta between 1 and 2 may be 100%, but the result is still insignificant for most purposes.

When I got the idea to work through this exercise, I had hoped it would offer some insights into building a community online. Looking over it, I can't say that it did. The concept of an online community could be better described as a point of conflict than a business goal. The story looks like a project management "failure to get high level advocacy" lesson.
I mean, with only 3 people involved, how much closer to the "reins of power" do you have to get? The answer is something like: "You just don't understand my customers." unfortunately. And in the end, that may be right.

SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.

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