Friday, July 10, 2020

Sales Friction Creates Barriers to Buying Behavior

Sales friction occurs when a sales process is:

  • too long (the line at the grocery store)

  • too complicated (working with real estate agents)

  • asks for excessive data (a phone number just to get a guest pass)

  • doesn’t provide the right info at the right time (no prices)

Not all friction requires sophisticated technology. Firms can curate information, simplifying an otherwise bewildering number of choices. Customers can be offered guarantees, easy cancellation policies, YouTube “how to use” videos or Apple “Genius Bar” support. Frequently asked question support and prompt customer service also can help. 

source: Radial Group

But technology has been routinely used by sales teams for decades. 

Sales-oriented applied artificial intelligence apps are one way we can expect to remove friction from the sales process, updating customer relationship records, allowing sales forces to better keep track of how they are spending their time, integrating calendars to schedule meetings, providing personality profiles for composing emails and messages, automating work flow, analyzing sales effectiveness, automating email communications and sales scripts or recording and analyzing sales conversations. 

source: saleshacker

Less Friction Means Better Business Results

No business is ever completely, 100 percent effective at organizing its resources to attain its business mission. To use an analogy from thermodynamics, achieving any objective means overcoming inertia, which is a form of resistance or friction

Sales friction can be understood as anything that prevents a customer from completing a purchase. Friction has a major influence on conversion rates for all business models, business to business or consumer retail. According to Aberdeen, 92 percent of organizations have below-average sales conversion rates simply because of some kind of friction in the customer journey funnel.

source: Business Matters

Friction exists in virtually all parts of any business, because humans are not perfect, systems and processes are not perfect. 

New products do not materialize as if by magic. Teams of developers, designers and manufacturing personnel must cooperate to create each new product, in volume. 

Financing has to be supplied to support all those efforts. Marketing teams must create sales channels, while sales processes must be aligned to move products into the hands of buyers. Support operations must exist to handle after-sale support, training. Logistics teams must store, ship and track products from factory to warehouse to retail channels, handling returns when necessary.

source: Khan Academy

None of that can happen with perfect efficiency and without friction.  Meetings and memos, for example, are necessary to ensure that all activities are synchronized. But such meetings and memos arguably represent inefficiency, time spent on activities other than the actual effort to discover needs, devote people and money to create products to satisfy those needs, price products, manufacture and then support the products, develop sales channels and build awareness among potential buyers of the values of the products. 

When product changes have to be made, causing retooling of the manufacturing process, that is friction. When internal parts of an organization battle with others, that is additional friction.

The promise of all information technology is that friction is reduced. The whole point of machine learning, deep learning and artificial intelligence overall is to discover what customers want, faster and more accurately.

The whole point of internet of things sensors is to monitor processes to prevent bottlenecks, wastage, avoid machine breakdowns or damage. The whole point of customer resource management is to better understand buyer needs and preferences. The value of inventory management is to reduce the cost of building, storing and shipping products to channel partners and customers. 

Call centers, for example, use artificial intelligence to answer customer questions faster, more accurately, with better outcomes, using less customer support time and effort. Retail sensors and inventory systems help retailers keep shelves stocked, and create insight into any potential changes in customer demand. 

In other words, all advanced information technology, from AI to blockchain to identity management and automated cloud computing processes, are designed to reduce business friction. Reduced friction, by intent, lowers cost, raises profits, identifies customer demand more effectively and allows firms to more rapidly move to produce and sell products customers desire. 

When any firm can reduce friction, in any part of its business, it has the potential to achieve better business results.

New Technology is Interesting to Some; Frictionless Business is Interesting to Many

With the caveat that most people conflate any number of related developments with “5G,” and that many see artificial intelligence as a product rather than a capability, the Gartner hype cycle suggests we should soon begin hearing about 5G disappointments and dashed hopes. Gartner believes a period of disillusionment happens with most new technologies, and 5G is about at the peak of such expectations. 

source: Gartner

Hype around various forms of artificial intelligence continues to build and will likely be even harder to comprehend than 5G, as AI represents different ways of using computing to derive insights, but also is not a “product” one buys. 

People can buy 5G service, 5G phones and devices; they cannot purchase “AI” off the shelf as a product they consume and use directly. Instead, AI will enhance the performance of all sorts of devices, software, apps and networks. 

That can make conversations about “AI” quite difficult. A better way to approach matters is to view any number of emerging capabilities and technologies as ways to reduce business friction, allowing firms to understand and target customer needs; improve the quality of their experiences with a product; reduce the cost of creating and providing products; increase sales; boost profit margins and heighten customer delight. 

The more practical the setting, the less likely it is that people, executives or firms will want to spend too much time hearing about AI. But any number of emerging and new technologies have value because they promise to take friction out of any business process.

And friction means cost, waste, delay, customers less happy than they might otherwise be, less precise satisfaction of customer wants and needs.

Big Cities have Best Broadband; Small Towns Tend to Have the Worst:Altman Solon Report

A new report by Altman Solon likely confirms what you would suspect, namely that the largest cities, with the greatest density and population, are least likely to feature municipal-owned networks, as private internet service providers have ample incentive to provide service. Conversely, small communities are the places where the incentives for private operators are lowest, and where municipal efforts are more common. 

source: Altman Solon

In communities with fewer than 1,000 total households, about 11 percent of the communities are “unserved,” defined as places where at least half of homes cannot buy internet access at speeds of 25 Mbps downstream. There are virtually no communities among tier one cities--with at least 100,000 households--where half of homes cannot buy 250 Mbps service.

Thursday, July 9, 2020

PTC Academy Now Offers IACET Continuing Education Credit

The PTC Academy offers professional training with an award of recognized continuing education credit to mid-career professionals upgrading their skills in the telecom industry. This year, for the first time, because of the global Covid-19 pandemic, the classroom course is being offered online. Sept. 14 to 30, in the Singapore time zone. 

Participants of this course (it is graded) will receive 1.2 Continuing Education Units administered by Submarine Telecoms Forum, an International Association for Continuing Education and Training (IACET)-accredited continuing education provider. Attendees also receive a PTC Academy Certificate of Completion.

The course features instruction on:

  • Business context of the telecom industry: the key changes since the monopoly era gave way to competition; structure of the industry and broader ecosystem, business, and revenue models; key customer trends, value chain roles, and functions; key industry issues including revenue, revenue growth, profit margins, product life cycles, product substitution, regulation, competition, and the impact of the Internet

  • How C-level executives can manage or benefit from over the top competition and opportunities

  • C-level perspectives on balancing stakeholder welfare (customers, employees, partners, and society)

  • Key issues and trends in data center and cloud computing, and how they affect communications

  • How C-level executives approach key revenue, competition, cost, and innovation challenges (workshop)

  • How mid-level managers can prepare for C-level advancement

  • Overview of the data center and cloud computing businesses; customers; products; growth

  • The connectivity business in an Internet era

Does Mobile Broadband Cause Economic Growth?

Shockingly, it might be a myth that mobile broadband contributes to economic growth. Perhaps even more shockingly, some argue mobile broadband could, in some instances, actually retard growth. 

Counter to common expectations, the relationship between expanded mobile broadband usage and economic growth is chaotic: it might help, it might have no effect, or it might, shockingly, harm economic growth. Some studies suggest relatively small effects, if we can indeed isolate broadband from all the other forces contributing to economic activity. Yet other studies interpreted as suggesting causation actually only show correlation

The reasons for such non-correlation (ignoring for the moment causation) are likely that economic growth is the result of many interacting forces. Broadband alone is hard to isolate. 

“Since broadband is an access technology for data communications, it only has an economic effect in combination with the adoption of information technology, and the implementation of organizational and process changes in enterprises,” the United Nations Broadband Commission has noted. “In other words, for broadband to have an impact on productivity, the ICT ecosystem has to be sufficiently developed.”

In other words, broadband alone does not explain very much, from an agency that believes broadband must be extended to increase economic benefits. 

You might well suppose that mobile broadband, and broadband generally, has the greatest impact where information work is most intensive. Conversely, you might expect clear impact to be least where that is not the case. That is what the U.N. study found. 

“This very surprising conclusion comes from Businessweek having a look at some recent UN numbers on broadband and telecoms more generally around the world,” says Forbes. “We get the highly counterintuitive result that an expansion of mobile broadband coverage leads to a reduction in the rate of economic growth.”

“Focusing on the top 20 leaders in the mobile group, we see there is actually a negative relationship between GDP growth and broadband penetration,” Forbes notes. “It’s not even fair to say that the fastest-growing economies are the fastest growers in broadband.”

That said, most observers instinctively believe more mobile broadband is helpful. Correlation is highest in developed countries; lower in developing countries. 

“Economic benefits to sub-Saharan Africa stemming from Facebook’s connectivity initiatives can exceed USD50 billion over the next five years (2020–2024) in nominal current GDP terms,” say analysts at Analysys Mason. Most of the impact comes from the value and impact of internet traffic on the wide area and local access infrastructure Facebook has put into place. 

source: Analysys Mason

Methodology and assumptions are everything in forecasts. Analysys Mason derives its estimates by applying a rule of thumb used by the International Telecommunications Union. 

“A 2019 study by the ITU used econometric analysis of data from the majority of countries in Africa to determine that a 10 percent increase in mobile broadband penetration (e.g. from 20 percent to 22 percent) in Africa would yield a 2.5 percent increase in GDP per capita in a given year, over and above the baseline growth projected for the country or region,” Analysys Mason says. 

Virtually nobody would disagree that having quality broadband is correlated with some amount of economic growth. The problem is that we have no certain way of knowing the full causal chain. 

Would gross domestic product grow even in the absence of more-ubiquitous broadband? Almost certainly. But does more-ubiquitous broadband access “cause” faster growth, or does faster growth lead to higher demand for broadband? It is a question we cannot answer. 

One must assume the ITU formula of “mobile broadband and mobile broadband adoption” illustrates a causal relationship and not merely an associative relationship. In other words, ubiquitous broadband somehow creates economic growth, rather than economic development driving demand for more broadband.

Though correlation is not causation, it might also be said that, in terms of the relationship between mobile broadband adoption and gross domestic product, the correlation might be positive, neutral or negative. 

That is not what people tend to believe, or want to believe. But neither does evidence necessarily support the notion that mobile broadband causes, or leads to, economic growth.

source: Yankee Group

"There are just too many other factors that affect GDP growth for mobile broadband to have any significant and measurable effect,” said Yankee Group Research VP Declan Lonergan. 

Still, it is fair to say virtually everyone wishes to believe that more-extensive mobile broadband does have a positive impact on economic and social development. We simply cannot say for sure when, and how much, mobile broadband might contribute. 

Most of us believe there is a correlation between widespread broadband access and economic growth or wealth. But there also is a clear correlation between education, income and age and supply or use of broadband and the internet. It’s hard to distinguish between chickens and eggs, in terms of “which came first?”

Tuesday, July 7, 2020

How Much Demand Remains, in U.S., for Low-Cost Broadband?

Comcast, the U.S. cable TV and internet company, has had significant success offering its own low-cost broadband service to low-income households, signing up about eight million customers for a 15-Mbps service costing $10 a month. Most other major internet service providers offer something similar, though it seems few have been as successful as Comcast. 

source: Axios

While government subsidy programs will continue, and can be important, one wonders how much demand exists for customers who would buy, but believe the cost is too high. Most customers who value fixed network internet access likely already buy.

Some People Just Do Not Wish to Use the Internet

To solve a problem, one must have a theory about what causes the problem. Consider broadband non-adoption. Some households cannot subscribe because service is not available at the home. The solution there is to build and extend networks so the option to buy is available. 

For households that can purchase service, they do not for a variety of reasons, including the inability to pay the market price. Subsidies can help, in that case. Non-interest is a much-harder problem, and is not easy to solve, since it is hard to sell a product, no matter what the price, if the product solves no perceived problem. 

“Consistently, the U.S. Census Bureau surveys reveal that the primary cause for non-adoption is a lack of interest in what the Internet offers,” says George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Studies chief economist. “A distant second reason is the expense of the service and/or the devices required to use it.” 

Surveys by the National Telecommunications and Information Administration clearly show that “do not need it” has become the main reason households do not buy fixed network internet access, by about a three to one margin over respondents who say it is  “too expensive.”

source: Phoenix Center

According to U.S. Census Bureau statistics, the main barrier to adoption now seems to be that potential buyers do not see the need. Very few say cost is the main barrier for not buying. 

source: Phoenix Center

The point is that internet access adoption cannot be “solved” completely by any single tactic. Extending networks works if one assumes those new locations want to buy and use internet access. Subsidizing usage might convince a small percentage of people to buy. But some consumers might simply refuse to buy, no matter what is available and at what price, because they do not wish to use the internet and do not find it useful.

Confounding Economic Data Might Mean "Not as Much Permanent Change" as We Think

For anyone who believes “everything has changed” since the advent of the Covid-19 pandemic, measurable economic data is confounding. What we can measure is equally confounding. The Institute for Supply Management non-manufacturing index already has shown a sharp “V” recovery, far more sudden than the recovery from the Great Recession of 2008. 

source: Wall Street Journal

The index is a monthly composite index based on surveys of 300 purchasing managers throughout the United States in 20 industries in the non-manufacturing area. The index is released on the first business day of the month and covers the previous month’s data, which makes it particularly timely. If the index is above 50, it indicates that the economy is expanding. Values below 50 indicate a contraction.

Within the overall index, there are nine subindices: new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, and import orders. The index is believed to reflect future movements in gross domestic product,

However haltingly, the index suggests the non-manufacturing part of the U.S. economy is rebounding sharply from its March plunge. That might indicate that “some things could change,” but likely not that “everything” will change. 

Similarly, about 80 percent of respondents say they are growing again after the Covid-19 economic shutdown. That is likely unprecedented in the modern era. 

source: ISM

Employment, as much of the retail, hospitality and transportation sectors of the economy remain closed or operating at a fraction of former capacity, has yet to return to “normal” levels. But job losses in the wake of the internet bubble burst of 2001 and the Great Recession of 2008 also suggest that normalization will happen. 

sources: Nordea, Macrobond

That is not to deny an acceleration of trends already underway prior to the pandemic striking. It is a caution that the amount of permanent change we see in daily life, schooling and work might not be anywhere near as great as many suggest.

Reducing Friction is Purpose of AI

If telecom companies truly operated with complete efficiency (maximum gain, minimum waste) and effectiveness (consistently doing the right things to operate and grow their businesses), we would never see failed acquisitions, mergers that failed to deliver intended benefits, marketing programs that failed to boost accounts or reduce churn, or technology initiatives that swiftly delivered the promised value. 

Telecom firms--like all others--suffer from “friction.” As a practical matter, when all business processes become more frictionless, it should lead to outcomes such as higher lead-to-customer conversion rates, lower churn and higher account retention, plus higher renewal rates, as well as enhanced productivity (the ability to produce and sell more while reducing the cost of doing so). 

To reduce friction, many agree that better insight is required of operations, customer experiences and expectations, supply chain and partner behavior. And almost everybody agrees at some level that artificial intelligence, machine learning or deep learning will underpin the efforts to glean much more insight. 

But it often is hard to imagine how artificial intelligence can be implemented, as a practical matter, since AI is a capability, not a product; a learning system, not a discrete set of attributes. 

One does not go “buy AI off the shelf,” so to speak. So it might be better to cast AI as a tool for reducing unwanted friction, where the theoretical scenario is:

  • 100-percent efficiency and knowledge of buyer demands, preferences, tastes

  • complete understanding, in real time, of the state of a firm’s supply chain

  • as-good-as-can-be-expected employee productivity, based on knowledge of actual behavior

  • full effectiveness of all information technology systems, devices and software

  • real-time knowledge of any legal or regulatory compliance issues

  • Robust feedback loops and intelligence gathering that aids in the development process for new products and features 

In practice, no organization operates that way, all the time. There are inefficiencies in all operations processes, capital allocation, employee alignment with organizational objectives, understanding of customer demand changes and supply chain processes. 

source: capgemini

Fragmented customer profiles, departmental silos, inefficient workflows, shadow IT, slow feature deployment and redundant processes are examples of friction. And friction matters because it gets in the way of customer and user experience, not to mention sales and profits. 

Friction also exists whenever a firm or organization has to work with other stakeholders outside the firm boundaries, including  customers, partners, suppliers or regulatory and political entities. 

Frictionless systems aim, at a high level, to deliver insight, allowing an organization to accomplish its desired outcomes in both an effective and efficient way. And it is hard to imagine effective friction-reducing knowledge systems not using artificial intelligence, deep learning or machine learning. 

So maybe we should speak less about AI as a technology and more about how AI enhances core business processes to remove friction.

Sunday, July 5, 2020

When Better Broadband Might Not Help

The Wisconsin Economic Development Corporation, in detailing the impact of the Covid-19 pandemic on various sectors of the Wisconsin economy, recommends three priorities

  • Get Everyone Back to Work

  • Fix Broadband:

  • Support Innovation

It is what one might expect, but also shows the difficulty of generating economic growth where it might not be happening organically. An isolated region heavily dependent on tourism might prefer to diversify, but there are good reasons why all sorts of firms and industries do not locate themselves in remote areas. 

A region with low population might similarly wish to spur economic growth by focusing on one or two new potential growth areas, but with no natural advantages in human resources, distribution networks or other underpinnings of an industry. 

That is not a criticism of a report by the WEDC, simply an observation that economic growth is not easy when low population, remote location, lack of skills or knowledge or other attributes that attract people and firms are lacking. 

Nor is it easy to suggest how the situation might be changed, by any set of feasible government policies other than reopening the economy.

There is a direct and measurable causal link between “going back to work” and worker income and tax revenue. The causal link between broadband and economic growth or innovation is much harder to demonstrate. 

In fact, there might be correlation without causation, in the same way that better broadband tends to exist where people are wealthier, live in higher-density areas, have higher education attainment and are younger. 

People generally believe there is such a causal relationship, but the reverse might generally be the case. Economic success leads to demand for better broadband. 

Virtually everyone “believes” (or at least acts as though they believed) that advanced technology (faster broadband, artificial intelligence, IoT, 5G) leads to an increase in productivity. People, organizations, firms and countries that have and use more of such assets are presumed to make faster productivity gains, and generate more economic growth.

The problem, aside from inability to measure precisely, seems to be that the evidence is suspect. It still does not appear that better, faster, more extensive broadband adoption actually is related to productivity gains.

source: Bureau of Labor Statistics

Broadband and innovation are good things. It simply is not clear that better broadband leads to economic growth in any direct way.

Saturday, July 4, 2020

How Much Business Value from Influencing 5G Standards?

Historically, there has been business value when a firm is able to influence the setting of technology standards in ways that play to the firm’s strengths. 

Some argue 3G, 4G and 5G provide examples.  With the exception of “market-driven” standards such as Windows or IoS, it is less clear to me that vendor influence actually delivers so much value in setting telecom standards. 

Standard setting does not always create market power for the standardized technology,” say economists at NERA Economic Research. 

“The gains from formal standard setting can be defined as the difference between the royalty that the technology owner can charge after being selected formally as the standard and the royalty that she could charge if no formal standard were set,” they say. 

source: Statista

Some will point to quantitative measures to suggest Chinese firms have a clear lead in 5G patents. But more patents do not necessarily mean better patents, some will note. 

By some accounts, patent portfolios are rather more distributed than often appears.

source: GreyB

In settings where compatibility requirements are high, standards competition may be very important as the choice of a standard may virtually eliminate, not merely disadvantage, competing technologies. 

One hears it argued that Europe benefited from its “leadership” of 3G, while the United States benefited from its “leadership” in 4G. It is hard to parse such statements. One might note that European firms Ericsson and Nokia benefited hugely in the 3G era as suppliers of infrastructure. 

The same argument is heard about U.S. firms in the 4G era, but the argument is nuanced. Firms such as Qualcomm lead in chipsets, but no U.S. firms lead in radio infrastructure. To the extent there was “leadership,” it was in applications and service development, not infrastructure or necessarily “economic benefits.” 

Also, the growth of open source and virtualization tends to degrade any potential value standards influence might have, as, by definition, open source means buyers have choices beyond the usual cast of supplier characters.

One way of putting it is that what mattered was the economic benefit derived from 4G, not the “leadership” in standards or infrastructure supply, and that mostly because it was application developers, platforms and content suppliers that drove the value of what could be done with 4G, not the network infrastructure or connectivity supply. 

The same “value” often tends to be believed about patent portfolios, and there is evidence that the causal link is quite weak: patent portfolios do not often lead to market dominance. 

It is not the infrastructure; it is the value a nation or a firm can wring from it that matters.

Ultra-Low Latency Use Cases is Where Most New 5G Apps Will Develop

Though capacity matters, the big use case upside for 5G is expected to come in the area of ultra-low latency applications or perhaps ultra-reliable and ultra-low-latency use cases. If prior history proves a useful guide, many of the new use cases will develop only after five or more yeras. Many could  flourish only in the 6G era, even if essentially prototyped on 5G networks. 

source: Nokia

It takes time to envision and then retool entire business processes to take advantage of the new network’s performance attributes. And many additional parts of the ecosystem, such as edge computing, also must develop in tandem.

Thursday, July 2, 2020

Public Policy is Devilishly Hard Stuff

Public policy success always is harder than you might think, if only because the causal relationships between a policy and an intended outcome are tough to confirm, and often because unintended consequences are common as well. At other times policy failures are hard to diagnose or predict. But policy failure rates arguably are fairly high, despite good intentions. 

An examination of a recent program to increase broadband internet access adoption and quality might provide an example. “we find no positive effect on home broadband adoption from programs funded by the Broadband Technology Opportunity Program (‘BTOP’),” say economists George Ford,  T. Randolph Beard and Michael Stern. 

BTOP, which added about $4.7 billion to ongoing efforts to supply access to the estimated six percent of U.S. households without terrestrial network access to internet access at a minimum of 25 Mbps, seems to have had no effect. 

“We find no effect of the BTOP programs on home broadband adoption,” the economists say. “The evaluation of BTOP and similar programs has been done before. As for BTOP generally, econometric analysis by Hauge and Prieger (2015) found that the effect of the BTOP “stimulus spending on broadband adoption may well be zero.”

Another study found the “program had no significant impact on broadband adoption rates.” 

That is not to say success, measured as service adoption, is impossible. Comcast’s program for low-income customers seems to have added as many as eight million households. Generally speaking, lower prices tend to spur higher buying rates for any desired product. The issue is that many “non-buyers” of internet access have reasons for not buying that are not strongly affected by price reductions.

“Though using an admittedly crude calculation, Rosston and Wallsten (2019) estimate the own-price elasticity of demand for broadband (for low-income households) to be only about 0.10 to 0.13. A 10 percent reduction in price only increases subscriptions by about one percent,” the authors say. Other studies suggest similar low price elasticity. 

“It does not appear that price is the primary reason for non-adoption,” they conclude. According to U.S. Census Department surveys, most people who do not buy internet access report they do so because they “do not need it.” Perhaps only half a percent of non-buyers say “price” is the reason they do not buy. 

source: Phoenix Center

One might well draw the conclusion that the drive to make such access available is fully consistent with our presumed general positions on equity: everyone should be able to avail themselves of internet access. That is perhaps an obviously different goal from “everybody uses the internet,” which is a choice individuals make. 

It is worth noting that individuals also vary in the means they use to satisfy that need. A significant percentage of consumers consciously choose to buy mobile access rather than fixed access, as their sole form of access. 

And some people, especially some older people, might never decide they “need” the internet. That is a generational issue that fixed itself with time. There was a time when many older people believed they did not need linear video services. Many more might believe they do not need streaming video, either. Those demand profiles change over time. 

The point is that public policy is a devilishly complicated endeavor. Even well-meaning policy goals may miss the mark. Ensuring that everyone has quality fixed network internet access seems a well-established and rational policy aim. 

We might still find that some people do not wish to avail themselves of such services, even when price is not a barrier, especially when substitutes (mobile access) are available.

Sales Friction Creates Barriers to Buying Behavior

Sales friction occurs when a sales process is: too long (the line at the grocery store) too complicated (working with real estate agents) a...