• December 1, 2008
  • By Denis Pombriant, founder and managing principal, Beagle Research Group

The Next Disruption

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As you might know, disruptive innovation is one of my favorite topics to research and write about. Though we see disruptions all the time, in my experience most disruptions are not recognized as such when they happen. We might see them as large events, but the idea that these events are in some way transformative eludes us for a while.

Such was the case in CRM in 2000 when several vendors decided to deliver software-as-a-service. As often happens with disruptive events, the entrenched market leaders dismissed the on-demand revolution as a cute idea and little more. Many established vendors elected to do nothing but watch to see if fledgling companies could make a go of it. Today, as Salesforce.com closes in on its first billion-dollar revenue year, some of the watchers are out of business, having elected not to act for a little too long.

At any rate, disruption is my theme and in some ways it is baked into my DNA. I look for it in the everyday and in the exotic—I am still amazed, for example, that a Victorian clergyman named Charles Darwin could formulate a compelling scientific theory to explain disruption from his observations of the world around him.

Not long ago I published my observations on what I think is a new disruption called Peak Oil that promises to affect not only our industry but also much of global business. To avoid replowing the same field, let me only say that Peak Oil matters to CRM because it explains why energy costs—and thus the cost of travel to visit customers—are high and dynamic, making it hard to forecast internal costs as well as margins.

Many of our front-office business processes are dependent on travel, and there is a great opportunity for CRM vendors to build products and services that reduce the role of energy in those processes. At the same time, we also need to be careful that our efforts are only (or at least mostly) additive, not the reverse. Too often when we think of measures that conserve in one way or another, we elect to cut things that might be good and useful along with that which is wasteful. The result is less all around.

It would be easy to construct CRM practices and products that reduce costs but substitute operational efficiency for customer intimacy. In the effort to reduce costs and thus the impact of Peak Oil, there are plenty of lessons that we can learn from CRM 2.0 and, more broadly, Web 2.0.

Certainly, one of the great lessons of the Internet era has been how powerful the medium is for communicating and spreading ideas. The intersection of CRM, analytics, and social networking means that the Internet has become a vast commons for vendors, customers, and the merely curious to meet, exchange ideas, and transact. That need not stop—and it ought to increase—as we enter a protracted period where travel is reduced.

Adjusting to the oil disruption will require a bit of skill and some quick thinking. It will demand that we think up new ways to work and to manage workers in remote settings. Moreover, I expect dealing with disruption will cause us to rely more on video communications, which will cause marketing departments to become adept at producing video on the desktop. It will also require more sophisticated partner communication and management. And all of this will lean heavily on analytics.

In the aftermath of a disruption, there is frequently opportunity for innovation, if one knows how to look for it. The disruption called Peak Oil will provide numerous opportunities for companies savvy enough to see them. It will also require that all companies—vendors and customers, existing and emerging—see and seize those opportunities in the moment rather than waiting on the sidelines to see if the opportunities are real.

Denis Pombriant is the founder and managing principal of Beagle Research Group, a CRM market research firm and consultancy. He can be reached at denis.pombriant@beagleresearch.com.

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