Making Email more Effective

HBS Working Knowledge addresses the question: "Sending e-mail requests for help or information to multiple people will get you an answer more quickly, right? Wrong." We have all felt this, but Greg Barron articulates the need for personalised email very clearly:

We demonstrated that the more people queried, the lower the proportion of responses. While we were pleased with the clean results, we were not surprised. Social psychologists have been studying the diffusion of responsibility effect ever since Darley and Latané's (1970) influential studies that were motivated in part by the murder of Kitty Genovese in full view of thirty-eight bystanders who did nothing to help. It seemed natural for us to assume that the effect could be generalized to e-mail requests.

Latané and Darley explained their findings in terms of the bystander's cue value—the belief, conveyed by verbal or nonverbal communication, that others are capable of helping. Accordingly, if an e-mail sent through a discussion group is evaluated by its recipient as being sent to many individuals that are capable of responding, the diffusion of responsibility effect would imply a decreased tendency to respond.

The effect of additional addresses in the cc field on the recipient is an interesting empirical question that we have not looked at, but note that in terms of cue value, the cc field is very different from the To field. Almost by definition, recipients in the cc field are not expected to respond to the e-mail so we would not expect a diffusion of responsibility to occur.

Managers need to keep their e-mails personalized whenever possible. It's that simple. The idea that a personalized communication has a larger impact is supported by a large body of both psychology and marketing literature besides our own line of research.

Software as Service

News.com reports on the comments by Ray Lane (Kleiner Perkins) at the Software 2004 conference:

The software industry can no longer expect "the entire world around (software) to change to make it work," Ray Lane said.

Instead, companies must learn to sell software as a service, fulfilling customer needs to grow and shrink very quickly, said Lane.

Lane outlined a software future strikingly different from the past, in which proprietary technology sold at high price points. "This industry has arrived at a watershed," he told the audience of software executives and investors.

The software industry was created by a series of what Lane called "tectonic events," including the microprocessor, PC and Internet. "The likelihood is there will be another one of these events," he said. "I don't know what it will be, but in between we need to work on all the little things that make the last big thing work--the Internet."

Another message Lane delivered was that globalization is here to stay. He said he was impressed by a recent visit to India. "I went over thinking it was a black box--you send work over, and it comes back to you. What I found was innovation, work ethic and incredible skills," he said.

The open-source movement has also hastened the service-centric model of software by making it easier to swap out functional components, Lane said. "If you're starting a software business today, I suggest you go to a service model." New companies can be "pure" in their approach to business, he added, "because we haven't built up all this stuff around them yet."

Lane said Silicon Valley can use the current "period of normalcy in which we've finally become part of the rest of the world" to listen to its customers and give them what they want. "If we think about software as a service business this will again be the largest industry on earth."

Clay Shirky on VoIP

Clay Shirky writes how the likes of Vonage and Skype are going to change the telecom industry:

The question is no longer whether voice is going to become an internet application, but when.

"When" could still be a very long time, however. The incumbent local phone companies -- Verizon, SBC, BellSouth and Qwest -- have various degrees of interest in VoIP, but are loathe to embrace it quickly or completely, because doing so means admitting to everyone -- shareholders, regulators, customers -- that both monopoly control and artificially high voice revenues are going away. (The fact that this is true does not much lessen the pain of saying so.) As a result, they will likely try to convince regulatory agencies, both the FCC and the states', to burden competitive VoIP firms like Vonage with additional costs and rules, while delaying their own offerings.

Complicating this de facto Plan A, however, is the fact that VoIP isn't a service, it's just a set of protocols, meaning that competitors don't have to set themselves up as upstart phone companies to deploy VoIP. If Plan A is "Replace the phone system slowly and from within," Plan B is far more radical: "Replace the phone system. Period."

Where Vonage and a number of the other VoIP startups present themselves to the customer as phone companies, emulating the incumbents they are challenging, you can think of Plan B as the Skype plan. Skype isn't taking on the trappings of a phone company; instead, it offers free two-way voice conversations over the internet (they aren't phone calls, for the obvious reason) between users who have downloaded and installed software onto their computer. (Other versions of Plan B include instant messaging clients that let users talk, not just type, and software like shtoom, a set of VoIP tools for the Python programming language.)

The Plan B strategy is simple: "Familiarity is the enemy of progress. Forget backwards compatibility, and concentrate on offering services the traditional phone companies can't touch." For example, Skype recently added user-defined conference calling, a kind of cross between call waiting and conference calling, so that when someone calls while you're on the phone, you can simply turn it into a three-way call, a pattern more like joining a conversation at a party than today's cumbersome conference calling.

The phone companies are overestimating the threat of Vonage (which also wants to charge users to talk to one another) and underestimating the threat of Skype (which doesn't.) And yet if they succeed in killing off their Plan A competitors, they will strengthen the far more radical challenge from Plan B.

Customer-Obsessed Companies

[via Veer Bothra] Ed Sim points to a Fred Wilson post about building a "customer-obsessed company" as opposed to a "technology-obsessed company."

Fred: "It's going to get harder and harder to build value in core technologies that have broad horizontal markets. The value is going to get created in providing technology-enabled solutions for customers. And if its the customer that matters most, instead of the technology, then I want to invest in customer obsessed companies, not technology obsessed companies...I like to say the way you start a company is you build something for not a lot of money, sell it to a few brave customers who you then develop deep relationships with, listen to them very closely, follow their lead and improve your product and develop new products around your customers feedback, and soon enough you'll have a good business that will be profitable and loved by its customers. It's not easy to do but that's the model I like best."

Ed adds some great advice:

I was just at a board strategy session with one of our new investments where we are in the process of ramping up the business. As we reviewed the 2004 budget and dove into the technology department and product deliverables for the year, it was clear that the developers were getting pulled into many different directions. This is a common problem. Many companies that bootstrap their businesses tend to have developers acting as presales support, post sales support, and customer service. Every second a developer is out helping with a customer is a second not focused on advancing the product. Every second a developer is coding is time not spent answering customer support issues. As you ramp, this is not an ideal solution. So our recommendation was to make sure that the company created a separate presales group/sales engineering group to work with the sales team and to make the investment now to create a separate customer service organization to build for the future. As Fred mentions, too many companies overlook the customer support side of the business. Many times, putting the right customer support processes and organization in place early can mean the difference between success and failure.

And yes, product management is an incredibly important role to fill early on in a company's life. This function should serve as the intermediary between market and customer requirements and engineering. If you have someone too close to sales performing this function, you may end up with a focus on short-term results where too many one-off requests are made to just close a deal. If your engineering handles this, you may end up with an over-engineered product that does not meet customer needs. Your product person should be in marketing with significant experience balancing the short-term and long-term needs of the various stakeholders. This includes gathering data from customers (direct meetings, customer support, sales team), prospects, analysts (yes it is a necessary evil), and your own team to prioritize the product "must-haves" for the next release.

Real-Time Traffic Alerts

Everytime I am stuck in traffic, I wonder why no one provides alerts on cellphones. NYTimes has news of Zipdash:

Zipdash, a start-up in Palo Alto, Calif., hopes to take advantage of the growing number of mobile telephones with global positioning satellite receivers to gather the travel speeds of thousands or tens of thousands of drivers, displaying highway conditions as maps on cellphone screens.

The Zipdash application displays a map of traffic speeds as green, yellow and red arrows, graphically representing traffic jams and bottlenecks. The company plans to add features, including route planning and accident alerts. The service will be free to cellphone users and Zipdash is planning to create a business by selling accurate traffic information to Web sites and other publishers.

Currently in many states, highway departments offer some traffic information drawn from sensor networks embedded in freeways that report speeds and fixed cameras that monitor different choke points. By contrast, the Zipdash system uses both traffic data gathered from individual travelers as well as additional information from taxi and trucking and shuttle fleets. That allows a much finer picture of traffic patterns than what is available with sensor data.

TECH TALK: As India Develops: A Tutorial on Development (Part 4)

Atanu on Poverty and making India a Stuff Superpower: “Poverty is lack of income. What is income? Income is that share of stuff produced that you get to take home for yourself. Let's not confuse money with income. Income is often denominated in monetary units but in real terms, income is what you get to keep from what is produced overall. Per capita income is therefore a ratio: a ratio of what is produced (the numerator) to the total number of people (the denominator). You can increase income by either producing more or by reducing the number of people. If the rate of growth of production is lower than the rate of growth of the population, you will have a falling per capita income. In time, you would have deepening of poverty….To repeat that point: we are poor because the amount of stuff we produce is low relative to the number of people we have to distribute the stuff to. IT can help increase the amount of stuff produced but IT can never be a substitute for stuff. So India has to become a STUFF SUPERPOWER because we are a PEOPLE SUPERPOWER. If you divide STUFF INFERIORPOWER with PEOPLE SUPERPOWER, you get poverty-ridden India. On the other hand, if you divide STUFF SUPERPOWER with PEOPLE INFERIOR POWER, you get stuff-rich USA.”

Atanu writes on India’s biggest advantage – its size, and the need to address the domestic market:

The most significant positive factor in India's favor is its size. It is what we economists call a "large economy". Large economies have the luxury of changing parameters which define the market itself. In comparison to that, "small" economies have to take those parameters as given (or 'exogenous') or external to them or outside their control. In a way, you can consider a large economy to be have some sort of 'monopoly power'. Monopolies have the power to change one parameter (price) at will which firms in competitive (or oligopolistic) markets don't have -- the latter are 'price takers' in that they cannot dictate prices and take whatever price they can get.

So India is large enough to be able to change 'world prices'. Suppose you were to create a widget which is suited to Indian conditions. Assume that the cost of production of these widgets exhibit economies of scale -- that is, fixed costs are extremely high and marginal costs are very low, and hence average costs continue to decline as the volume produced increases. In such a case, given India's enormous population, the number of widgets required would be high, and thus the average cost will be appropriately low, and therefore the market clearing price for widgets will be low and quantities will be high.

Now replace 'widgets' in the above with whatever -- "COMPUTING SOLUTION" for instance. Get the hardware that is appropriate for the Indian market developed and get the software developed for the same. Concentrate on the needs of India alone to begin with. Note that hardware and software meet the criteria of high fixed cost and low marginal cost. Marry the hardware and software to create the computing solution, price it just above average cost, and voila! YOU HAVE LIFT-OFF!!

This is at the heart of what the rest of the series will discuss. As India develops, what are the opportunities that are created in the domestic market? And correspondingly, what solutions can we create to help India in the development process? The one thing I strongly believe in is that a handful of Indians with vision and will can make a difference. Once upon a time, we had hoped that our politicians would be this handful. While those hopes have long been belied, they have in the recent past done just about enough to get India rolling (a little) and reduce government involvement in many aspects of life and business. This creates the opportunity for entrepreneurs (and not just inheritors) to thrive.

Tomorrow: The Process

Related Entries:  [All]