December 1997 Marketer Articles

Electronic Connectivity

Written by James Falkanger

Are you prepared to soar into the 21st century with creativity and a newfound understanding of technology and its role in the changing economic landscape? Or, are you like most of us, caught in a thinking vortex ever circulating around hype, fact, frustration and overall lack of time to grasp "this technology thing"?

Maybe it’s the pace that frustrates us. Regis McKenna, the noted consultant and author, declares that technology is focused on compressing to zero the amount of time it takes to acquire and use information, to learn, to make decisions, to initiate actions, to deploy resources, and to innovate. Some call this process of compression the "vanishing effect" of technology.

The robust economy of the past few years means that a large number of our A/E/C and environmental firms have been extremely busy and profitable. Nevertheless, many of us have an ever-present agitation about the future. We know, at least intuitively, that if we are building success in the future as high-performance organizations, we need to somehow take full advantage of this collapsing and vanishing effect.

Technology is commoditizing services and vaporizing the "middle ground" between high-end world leaders and small, technologically sophisticated niche players or low cost providers. We have no choice but to carve out our respective territories now. Two decades in the future we will reflect back on the new millennium as a pioneering opportunity unparalleled in history.

Tools vs. Connectivity

Reducing the hype bundled with revolutionary products (and the techno-wizards who bring the new tools to our industry) is challenging. Technology for our industry is not:

Technology for the A/E/C and environmental industry is electronic connectivity that leads to constant, 24-hour, 7-days-a-week, 365-days-a-year, real time, simultaneous access. Firms that fully embrace technology realize the future is all about immediacy, content-rich information streams, and interactive and individualized communication.

The reality of 21st century economics, profit squeeze, salary pressures, personal freedom, combined with a host of other issues, is forcing costs backward in the supply channel, rather than forward to customers – making connectivity readily available to our clients and ourselves. (See diagram.)

For example, connectivity allows clients to reach into the distribution channel and "pull" out what they want. That's information age reality. In the Industrial Revolution age, it was different: companies pushed products and services to respective markets.

Today, clients have access to more choices than ever before, increasing the challenge of getting our message heard -- assuming our message is of interest (a big assumption in an era of commoditization). The march toward retooling our firms into high-performance organizations is on -- and the first to assimilate technology wisely, affordably, and rapidly, will be tomorrow’s leaders.

Leading firms in our industry embrace the new "thinking" on knowledge and intellectual capital management and have added new positions in response. Chief Information Officer and other new titles have emerged in the past several years in an effort to manage the "gush" of information generated and received daily. Anticipating the future has now been brought in-house as firm strategists mix modeling and what-if scenarios like never before.

Connectivity = One-to-One Linkage

One real-life scenario that is taking hold is the absolute importance of getting closer to clients and linking to greater stakeholder communities. Business Marketing magazine in their December 1996 issue argues that the top marketing trend for 1997 is one-to-one marketing. This theme has been explored by a variety of writers, most notably Don Peppers and Dr. Martha Rogers (see sidebar).

We are not speaking now of the client-building practices that are already common in our industry, but a deeper, more interdependent and strategic relationship brought about through the medium of electronic connectivity.

The fact is, we are nearing the end of traditional, in-the-box marketing solutions for differentiating our firms. One-to-one marketing offers greater and longer term relationship-building opportunities with key clients through sophisticated tracking software, interactive dialogue (clients talking back to firms like never before), and the developing growth of mass customized services. If we accept the premise that competition for clients' attention is growing increasingly difficult, then every interaction becomes important. At the heart of one-to-one marketing is cultivating a "learning relationship" -- relationships where every interaction is recorded and differences among clients are noted. Simply stated, the combined effort of our firm's interaction with a client -- and their interaction with us -- grows a learning relationship.

In the 21st century digital economy, we will have less time to search out new clients. Similarly, clients will find it increasingly burdensome and costly to search out new "vendors". A learning relationship involves significant investment by both parties in the way of time, training, tools, and staff resources to build and maintain their common linkage. So long as we maintain our distinctive competencies that are necessary to the client’s needs, our client will be unlikely to dissolve the partnership and start the costly process all over again with another provider.

Savvy marketers who understand strategic relationship-building at this level will recognize and accept the two-way commitment posed by these "exit barriers" with their clients. Of course, these same savvy marketers will also recognize the value in allowing prospects and clients the privilege of customizing their entry into the marketer's firm. Providing clients access to whatever information they desire, in whatever format they prefer, and at the hour and place of their choosing, is a vital component in a one-to-one enterprise.

From client entry customization and learning relationships, one-to-one marketing progresses to "interactive client-community experiences." Many A/E/C and environmental firms today have made a solid first effort with customized Intranets. The combined value of interactivity among clients, consultants, vendors, contractors, and related community stakeholders will prove priceless in readying firms for 21st century competition.

As this always-in-contact, online, connected community grows – it self-organizes, self-operates, and self-sustains the relationship. And as we grow learning relationships, we begin erecting exit barriers. Firms caught on the outside -- out of the loop -- are rendered helpless to effectively penetrate the closed loop community. We in effect seal out our competitors.

Value Streams

Truly, if the future is comprised of interactive client communities, then firms (and their marketers) need to independently value each client. This requires formulating "client value differentiation variables" which begins when we realize certain clients are worth more, particularly when measured against a prospective client's lifetime value.

Industrial age thinking caused firms to be vigilant about profitability. Information age thinking means we first think long-term strategic fit prior to profitability. New world organizations will create value streams behind every core client. The value stream is not necessarily viewed in terms of near-term profits, but rather the stream of expected future profits rendered in the form of referrals, access to the loop, new services creation, and deeper awareness of client preferences.

To elevate our firms within this value stream requires empowering our clients. Technology not only allows clients to do more, but also to better understand the services we provide.

Expanding the Client Base Reach

Another one-to-one marketing concept is "changing client geographics." In the digital information age, marketers must rethink the opportunities at hand; clients can be virtually anywhere. If our business specializes in a distinctive service that truly is a core competency, our potential "client base reach" is broader than ever before. Technology delivers clients worldwide to our desktop, collapsing time and distance. The paradox of 21st century opportunity is that to grow larger, many firms will have to grow smaller even as they grow global.

Technology is diminishing the time required to connect clients with markets. Marketers realize that a tightly focused specificity, combined with electronic connectivity, presents greater opportunity in distances. The challenges of language, customs, universal marketing communications, etc. remain, but are dwarfed by greater global opportunity. Firms experienced in international presence and growth have struggled with it, but ultimately are finding success not only because of their core competencies, but because of the manner in which technology allows them to communicate and enter into relationships. In 1990, services accounted for 15% of exports. By 2000, the Kipplinger news organization forecasts that services will account for 40% of exports. Big growth will come from abroad as our world collapses.

Fundamental Change or Another Tool?

One question that emerges from this theme of electronic connectivity is whether this technology is (a) fundamentally changing our industry, or (b) simply adding another tool in our marketing and business-operations arsenal. If we answer "both," we fail to comprehend the mutual exclusivity between the emerging digital economy and its old world antecedents. The forces utterly reshaping service and manufacturing industries worldwide will likewise reshape our own.

If we answer option "b," we run the very real risk that we may never drive our firms out from the "deadly middle ground" that most of us currently occupy. Middle ground players, in our industry, are the small to mid-sized design and construction companies who deliver a mix of services and products that are largely indistinguishable from ten years ago. They are generalists who see technology as a set of new tools to do what they have always done, based on an economic model that will have less and less validity in the digital world.

Those who answer (and truly believe) option "a" will be part of this emerging hybrid community of high-performance organizations whose make-up and service-mix will be entirely unlike what we see today in the design and construction industry. They represent organizations that already are able to stretch their organizational muscle and:

How we mesh technology, accommodate an evolving work orientation, and create a vision of the future will lay the foundation of 21st century success. Remember: we are not talking about new tools to marginally improve the way we do what we have always done. We are talking about the absolute medium through which business and client-relationships will transpire.

Suggested Reading List

Working Knowledge: Managing What Your Organization Knows – a new book to be published by the Harvard Business School Press in November 1997.

Selling the Invisible – by Harry Beckwith, which includes some poignant discussion on the "deadly middle ground"

Enterprise One to One – by Don Peppers and Dr. Martha Rogers, which more fully explores one-to-one marketing concepts of learning relationships, exit barrier strategies, client entry customization, changing client geographics, client empowerment, and interactive client-community experiences.

About the Author

James Falkanger is president of the Minneapolis-based, The Falkanger Group. He provides professional services firms with proactive technology and marketing implementation strategies. Mr. Falkanger addressed conference attendees at the SMPS 1997 National Marketing Conference on "Technology, Trends and the Internet—Marketing in the 21st Century." He can be contacted at 612-854-4445 or email Falkanger1@aol.com.