Thursday, September 21, 2006

The Problem of George : Technology in Marketing

This year’s British Association of Advancement of Science’s annual conference in Norwich is an unlikely event of interest for marketing man, but a significant new prototype was being presented. Known as George, this is a conversational Artificial Intelligence [AI] system, designed for a contact centre environment, which can handle customer calls and log responses.

What is new about this system, reported, is that this one can track emotions, slangs and jokes. It can monitor the caller’s mood from the tone of voice and the use of words, and effectively escalate the call to a more specialised human agent in case it is not able to answer the query or the caller is getting annoyed. The system is designed to be adaptive too – learning from every call it could not handle, which it monitors and prepares itself with a response for next occasion.

The benefits of such systems are rather obvious. These systems, if effective, can effectively handle the first level customer interaction and can handle simple queries and responses. This will free up the resources for the ‘human’ team of customer service representatives, allowing the organisations to improve upon their quality of response by superior training and more selective recruitment, as well as by allowing them more time to spend with customers with complicated problems.

The scientists are enthusiastic that they may be able to develop quite effective conversational AI systems like George to be adopted in contact centre environments by organisations. Perhaps they are right. But, from a marketer’s point of view, adoption of such technology may still have three significant obstacles.

First problem is related to infrastructure. Systems like George are resource-intensive, and needs high specification servers to run the system. The scientists point out that the any actual implementation of such systems will be simpler, and a typical contact centre implementation may need only a few hundred thousand words – not the millions that the system has currently. Systems need computing power in line with their database size, and a scaled down ‘specified’ version will require less computing power, and the infrastructure can grow with the system, if needed. However, it is unlikely to be a simple proposition. A commercial product will need to follow the commands of economics as much as it does of science, and the ‘scaling down’ for economic reasons may not match the ‘scaling down’ perceived by its makers, and render the system dumb and ineffective.

The second problem is economic. Conversational AI systems may become smarter, but they will have to perform at an economic level and compete with millions of English-speaking ‘human’ agents entering or realigning in the workforce. Not just India, Ireland and Philippines will give George a run for its money, even the workers from the decimated manufacturing industries in the west will compete with George on cost terms. Remember, such systems will only start at the lower level simple tasks [forget about the scaling down for a moment – but even without that, conversational AI systems are only meant for simple tasks to start with]. And, remember, yes, AI systems will get trained over time once they are put in the job, but so will the workers. And, yes, there is a challenge teaching an Indian worker right accent and etiquette, but surely it is not harder than teaching an AI system to read human emotions correctly.

And, finally, the third problem will be of integration. A truly beautiful scientific invention doesn’t always follow the demands of commerce, as we were trying to point out above. The other end of the same problem is that often, real life services are a combination of many elements, and even a beautiful system like George, handling one part of the whole chain of functions, can only be as effective as the weakest part of the chain, often the management aspect of things – human decisions under pressure from the realities of the stock market. Without going into what may go wrong, let’s make the point – George needs to be able to work with other applications, some of which may be ‘not so great’. In reality, such integrations are rarely a success.

I am not sceptical of George, or for that matter, the technological inventions affecting various aspects of marketing. I am in fact euphoric, and know for a fact that technology has changed our lives and trades. But, I must warn against the pure inventions, and have a feel how far they must travel before becoming a productive system. When I read the story of George, this is exactly what popped up in my mind.

Friday, September 15, 2006

Today's Wisdom

Indifference will be the downfall of mankind, but who cares?

Thursday, September 14, 2006

Advertising in The Age of Choice

I have been watching and talking a lot about the music industry recently. My interest is more business than musical – I see exciting news about the industry hitting the press everyday. I know this has now reached a Point of Inflection, a time when all the established rules of the industry change, and to survive all players must change the way they do business.

Incidentally, it is also ‘all change’ in another industry – Advertising! Advertising is dying, say experts. Maurice Saatchi gave this speech bemoaning the death of his old friend, advertising. Al Ries’ latest book is titled ‘The Fall of Advertising and the Rise of PR’. The industry is abuzz with debate, discussing quick fixes, back-to-basics solutions, and new age ideas.

At the first glance, again, it appears to be a technology-driven destruction. Yes, it certainly is – the media overload has diminished the return on advertising spend, and direct to heart ways of reaching an individual through search advertising has started delivering better results. However, the point I am trying to make is that it is not just a technology-driven restructuring, and I don’t believe that 50% of all advertising spend will suddenly move to online advertising in 10 years.

I have been ‘selling’ for more than 14 years now. I now see the selling function is undergoing a revolutionary change. And, I believe this is connected to the structural shifts in advertising, in fact, driving it. So, the way advertising industry will go over the next decade will not be just technology-determined, but customer-determined, where expanding technological possibilities will play an enabling role.

Let me explain. There is a lot of discussion on where selling and marketing are going [for example, refer to The Ending of War between Sales and Marketing, by Philip Kotler, Neil Rackham, and Suj Krishnaswamy, on HBR] and all commentators agree that [a] we are living in the age of explosion of choices; and [b] the customers love the choices and exercise it at every occasion they can. The fundamental shift in sales, then, is from broadcast messaging and revelling on Unique Selling Points towards knowing the customer and stretching the handshake – custom-building value proposition for each individual customer.

This is a key – the age of choice, driven by technology, helped to ‘individualise’ the customer at the same time as endowing them with a tremendous power of grapevine – the world of Blogs, chat and Wikis. The business models of this age of choice are different, as discussed succinctly by Chris Anderson in his now famous The Long Tail article. In my view, this ground shift in the sales/ marketing model is the key driver behind the changes in the advertising industry.

Building the advertising model for tomorrow is not just about building e-marketing capability and knowing how Google Adwords work, it is about adjusting to this whole new phenomenon of selling to individuals.

This shift, then, is about moving from the broadcast mode to one-on-one mode, a shift from output to input, from seeing customers as groups to customers as individuals, from presentations to conversations. This is a shift from Wal*Mart to eBay, and one needs a completely new pair of eyes to deal with it. And, as I mentioned earlier, Technology is just part of this shift, an enabler – not the shift itself.

I shall not be surprised if in 10 years time all advertising agencies routinely work on a profit share basis with clients, and newspapers and magazines [or whatever is left of them] dont have advertisements at all, but run sponsored company-customer dialogue [for example, how about a Ask Microsoft! column in The Times, of course sponsored by Microsoft].

While I agree that people need to be induced to buy, and more so in the age of choice and hyper-competition, this is an industry in the middle of a flux, and All change, please, all change!

FDI in Education : Comment

I saw a news item on that the Indian Commerce Ministry has recently recommended allowing 100% FDI in education.

Already a Danish company has come forward with the proposal of building 200 playschools across the country. Also, there are proposals from MIT, Georgia Tech and other American universities for building Greenfield campuses in India. Sadly, the left parties and the HRD Ministry is opposing the proposal. Here is what I posted as a reaction :

I am disappointed to see this news. I have a strong feeling that Arjun Singh is the wrong man, and he needs to be moved. He has a mindset of the last century, and is completely out of sync with the modern world. He is anti-meritocratic, as his penchant for various kinds of controls and reservations show, and the education system he wants to build will be only good in producing babus [in line with the good old specifications of the British Raj].

The FDI in education will be needed to let India move up the global value chain, beyond BPO and as a source of knowhow and innovation. It will foster competition, allow the best to be the best. If government is really serious about education, they should tax the profits the new institutions make, and plough the procceds back into building primary education infrastructure.

I would not comment about left parties. I come from West Bengal, and seen their systematic destruction they brought about in education, by bureaucratic intervention, anti-meritocratic and political appointments, and plain stupid policies. I would recommend that they should not be turned to for guidance on education policies, as their records will clearly show that they are not very good at it.

Thursday, September 07, 2006

The Legacy of Tony Blair

While the British Press and British Public are busying themselves at this time with the departure of Tony Blair, a debate is already raging about the legacy he is going to leave behind.

Not many men, even Prime Ministers or leaders of countries, can claim the position to leave a legacy. But, despite many shortcomings that he may have had, Tony Blair is one of those rare individuals who indeed can make the claim, having led Britain and the modern world to a ‘point of inflection’ in its history.

Also, it must be mentioned, legacies can not be judged at such a close range, except speculatively, as they are, by definition, meant for the posterity, and manifest themselves over a number of years. However, such speculations, at times, are worth indulging in, as in case of Mr. Blair’s, because this may impact our individual lives and the way we choose to live them in future.

Also, to be fair, it must be stated that judging a legacy is not judging a man, as legacies are seen in the context of the society, both current and future, and in the mirrors of many private lives and opinions. Any individual represents a combination of courage and frailties, a collection of varying moments each having its unique origins, contexts and consequences, and each individual needs his or her own apologists and critics to be fully judged.

All said, what does Mr. Blair leave us with, then? He, indeed, is a brilliant political strategist, who will find his place in history books with Bill Clinton as the men who did a Reagan-Thatcher act on left-of-the-centre. But, one can argue, that is not a legacy, but a tactic, employed in the context of a rapidly changing political fashion. Pragmatism was not a Blairite invention, though one may cite its rarity in the Labour politics, and credit him [or, blame him, depending on stance] with importing this eternal virtue [or, vice] into left-of-the-centre.

The other great legacy of Mr. Blair is the reshaping the welfare state agenda for the modern world. Labour, traditionally seen as the knights in the shining armour for failing public services, nailed the coffin of welfare state when it publicly and with impact moved towards ‘choice’, a thinly-veiled word for ‘monetarisation’ in the modern parlance.

This, though an essential shift by the new generation of Labour leaders collectively, was shaped and led by Mr. Blair’s own sense of history and destiny, his deep faith in Protestant Ethic, a sense of Darwinian Freedom, and above all, a pragmatic adjustment of labour ideology to the post-Soviet age.

Many leaders, ordinary men at the core, rise to the challenges of their task with a personal view of history. Likes of Hitler are the prime examples, who led and destroyed themselves by pursuing a vision of history over rationality – a Teutonic state pitted against Slavic Russia, but in some sort of coexistence with Protestant Britain – something that was far from the ground realities in 1939, but which sat at the core of his world vision, and caught up with him in his subsequent actions. Churchill, who had an imperial vision of the moral and intellectual leadership of the English-speaking people, and a deep sense of commonality with the Americans, drew strength from this and persisted steadfastly against the Germans. Churchill also saw the world in the historical terms of spheres of influence [should we credit Price Metternich with its origin], and could visualise an iron curtain, some sort of a garage-gate, coming down over some parts of Europe much better than his contemporaries.

Mr. Blair had his own sense of history, and he helped shape the world along its lines. His version of history has been deeply influenced by Churchill, and holds the common sense of purpose with the American people in its core. His sense of moral and intellectual leadership was based on ‘freedom’ – a combination of economic Darwinism, tabloid journalism, and free speech in English – and led him to visualise a free world with Afghan ladies in Bikinis, Swazi king campaigning for Ballots and the Indian farmers singing along Rolling Stones with conviction. He believed that there would be no stopping on the way to this in the post-Soviet post-Internet world. And, he pursued this vision with all his energies, and helped shape up the new battle frontiers.

This is the prime legacy he would leave behind, creation an Anglo-American alliance, committed to dominate and shape the entire world after itself. Mr. Blair saw himself as the High Priest and Intellectual Force behind this vision, much like Churchill. Mr. Blair’s world had to have its antagonists, and the Islamic world, out of favour after the soviet threat was gone, presented an alternate vision - the only other cohort of people with a global vision different from the Anglo-Saxon one – presented themselves to the cause. So, another competition for Global Dominance was set off – which will run over the next decades and will be aimed at hearts and minds and pockets of people, and will probably be concluded when the oil has finally run out, and a post-petroleum world emerges with its new ideologies.

It is unclear when and how Mr. Blair will go. But, no doubt, he presents us with a new world order – new battle frontiers, a new social reality, an inevitable climb [or, slide] to a dog-eat-dog morality and a tabloid intellect in a reality-show world. It is going to affect all of us, and our children. His legacy will be to make us free but to subvert the idea of freedom, just like he attempted to provide public services by destroying what was left of it.

Monday, September 04, 2006

McKinsey Survey of Global Executive Confidence

  • The confidence of executives in the global economy has fallen significantly in the past three months, according to a McKinsey survey.

  • Executives in India reported the biggest decrease: nearly 28 percent.

  • Yet they and a slim plurality of executives around the world still plan to hire additional employees in the next six months.

Highlights from the McKinsey Global Survey of Executive Confidence paints a rather gloomier picture this year, compared to the one 6 months ago. The fall in confidence is common worldwide, though in relative terms it is the highest in India. I shall see this more as a reflection of the worldwide trend than an independent development, and note that this is only in relative terms, 73% of Indian executives surveyed intend to expand their labour force in the next 6 months, highest worldwide, elsewhere in the same survey.

The fact that 2007 may turn out to be gloomier than 2006 can be ascribed to an old disease, inflation : the beast raises its head once again after a tame decade. This happens primarily as a follow-up of the global energy price rise, but also because the effects of Chinese and Indian integration in the global economy is firmly bedded in and approaches some sort of maturity, its downward effects on consumer prices and wages start to weaken. It may not fade away completely, but the relative effect of these will continue to weaken, putting pressure on inflation figures.

For a start, this may lead to sustained inflation – like the one noticed in Britain already – and force the central banks to raise the interest rates significantly. This may lead to a slump in house buying, and consequently on all consumer expenditure, setting in a deep recession worldwide. The effects on Indian economy can be quite devastating, now that we are far more exposed to global fluctuations than ever before.

This is not the only scenario though, and by no means, this is inevitable. But the key thing to remember is that it is likely. Increasingly, as the Business Leaders seem to know already. The solution is not to turn inward – because that will accentuate the disaster by adding a political dimension - but prepare ourselves for a few hard years ahead.

Business strategies that survived recessions, historically, have always been focused on the basics – innovation, good salesmanship, new ideas in value building and customer service etc – seen businesses through. Each depression cycle has seen a rise in public investment, and without being Keynesian, one knows that this will come. Lot of this investment will happen in infrastructure; physical as well as intellectual, things like education and skills, and businesses in these areas would stand to gain.

So, not everything is bleak, but times may get tougher, and need a set of new business strategies. Hopefully, Indian businesses will up their game and be ready for this new reality as and when it hits us.

Jairam Ramesh

A very endearing portrait of Jairam Ramesh as the Minister of State for Commerce in today’s Business Standard – reproduced in Rediff here

We knew Jairam Ramesh for his sharp wit and analysis on TV, but here is a lot of common sense and what one would call ‘vision’. This is exceptional, as politicians are rarely concerned with things that don’t make big news, and do not usually concern themselves with fundamental ideas.

Contrast this approach with the State Industrial Promotion bureaus and the Chief Ministers who travel around the world scouting for foreign investment. In my opinion, they sell their states short and attempt to get investment with concessions they will never make to the ‘little guys’. They also rarely concern themselves with infrastructure – why this idea of an international airport in the Northern Bengal never came up on the State’s agenda?

I would strongly believe that foreign investment, unless it concerns a transfer of technology and know-how [which it rarely does], has usually no positive longer term impact on an economy. What they indeed have is short term impact and glamour, but they rarely solve local job creation problems, and are notoriously fickle.

What matters in long term development is grassroots entrepreneurship, which Dr. Ramesh is concerning him with.

A fresh, different approach, just what India needs at this time!

Friday, September 01, 2006

The Road Travelled

Our age has somehow become very similar to the time a century ago, when everything seemed permanent, civilisation reached a new height, and one could think – life will go on like this.

There are several reasons for this confidence. Several doomsday predictions failed to materialise. Soviet Union crumbled like a toy-house. Millennium Bug never arrived. The empire of money could expand into newer territories; even the Communist China was purchasable. Many of the fears that essentially created the defensive liberalism of the west seemed overdone.

Isn’t that very similar to the world early in the 20th century, when the centre of progress was firmly in Europe, Sciences and Arts were making unimaginable progress, morality seemed well defined and there was, all around, a sense of permanence. Everyone would have thought the European wars are over, and socialism, only a marginal force. The world seemed to have stabilized.

Had I lived in Britain those days, I would have now planned my career the way I am planning today. A global prosperity beckoning me, I would have saved money and picked up technical skills, convinced that the history has reached a plateau and if I look out, I can see the next 30/40/50 years, if not beyond.

I would have also probably thought that history itself has become a subject of no importance, now that science is leading us into a new age of prosperity and progress.

But, then, that was then, and I am living in Britain now. Similar hopes, but full of foreboding. I am a student of history, and the omens look so similar. The confidence at its height, the welfare state folded up, the world united under the empire of the money, moralities well settled, boundaries of civilisation well marked and the current system well fortified with the triple defences of media, money and military – this must be the height of civilisation and the end of history.

But, doubts linger. Why is the welfare state unsustainable? Why is the flow of money so contrary to the flow of labour? Why is democracy in Iraq looks so made up? Why, after all the confirmation from the wisebodies, globalisation does not seem to do good people who need this most [or, so we are told].

I am no revolutionary, and would not attempt to pose an answer. But, am I right in having a doubt? Does it seem similar to 1906 in some ways? Are we, humans, moving in circles really, and heading down the same road over again?

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