Survival of the Relatively More Fit

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Evolution may be the cleverest algorithm ever discovered. It truly was discovered—by Charles Darwin—not made up like some of the equations the rocket scientists on Wall Street came up with over the last couple of decades. Part of its cleverness comes from the deceptively simple mechanism it suggests: Try various solution designs to any real-world problem and see which variants work best. Let the best designs propagate their improvements throughout the population of solutions, then let them have another go at it. Repeat this process ad infinitum.

That’s it. Evolution doesn’t have perfection as its goal or end result. The closest it gets to perfection is to have a design that’s well adapted to present conditions. And since future conditions will most certainly be different, there is a mandate for change built into the algorithm. People wonder aloud, “What’s the matter with kids these days?” The answer is: everything—subtle change is inevitable. And the answer is also nothing—change leads to innovation.

So what’s this got to do with CRM? Evolution makes sense with living things, but what sense is there in discussing it in the context of inanimate objects such as software? Well, quite a bit. Most software manages day-to-day human interactions—and CRM, in particular, is all about those interactions. Our life patterns change—sometimes because people alter their habits for personal reasons and sometimes because technology makes it possible for them to change their habits. Technology has been enabling change at least since some genius invented the wheel.

Implicit in all this is the idea that, as situations change, so must all of their relevant components. For instance, when CRM was invented, business activity was robust. New product categories sprouted like mushrooms in the forest and eager businesses and individuals happily plunked down cash for the new whizbangs.

The CRM that developed in that climate was built around the idea of order-taking. Sales force automation captured a small set of information needed to consummate a deal, marketing dug up suspects, and service got overwhelmed with phone calls.

Today’s market is very different. Deals mature more slowly. Salespeople try to find out as much as possible about the people they’re selling to. Marketing nurtures prospects, capturing the information those prospects radiate. Service has differentiated into a long list of modalities that reduce waiting and involve customers in problem-solving at many different levels. Each advance has been made in increments as vendors try this or that—and sometimes fail—while customers sit in judgment about which designs work best.

Like everything else in this world, CRM is changing, evolving to suit the demands of the moment, and many new business processes are coming forward, as is the supporting technology. The most obvious example is what’s happening with social media.

Social media is the innovation point for this time and place. With fewer buyers, vendors need to qualify prospects to a higher degree or risk wasting time and resources on opportunities that never come to fruition. A cascade has begun: In addition to salespeople needing to know more, customers have a great deal of latitude in how they gather the information that will inform their decisions. To an extent barely dreamed of a decade ago, fellow customers now play a critical role in the process. As a result, in addition to minding their own information, vendors also have to monitor the customers’ collective stream of consciousness. On and on it goes, as social media plays an increasingly larger role not only in the information-gathering and -dissemination processes, but even in the gathering of competitive intelligence.

You may ask, “Where does it end?” The answer is, it doesn’t—and shouldn’t. Evolution simply makes today’s companies more fit to compete for business. The market will change again as the economy regains momentum, and at some point we will all need to re-evaluate social media’s role within customer relationships. For now, though, there are standards to be innovated, solutions to be built, and designs to be tested according to an algorithm that never misses a beat.

Denis Pombriant, founder and managing principal of CRM market research firm and consultancy Beagle Research Group, has been writing about CRM since January 2000, and was the first analyst to specialize in on-demand computing. His 2004 white paper, “The New Garage,” laid out the blueprint for cloud computing. He can be reached at denis@beagleresearch.com, or on Twitter (@denispombriant).

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