Lessons from the Obama Campaign for the Software Business

Yesterday at the 15th Annual Stanford University Accel Symposium, I heard an energizing talk with Chris Hughes, Facebook, and Architect of Obama’s Digital Campaign Strategies, and Matthew Barzun, National Finance Team for Obama and Former Chief Strategy Officer, CNET Networks, Inc. on “Technology Priorities: Lessons from the Campaign”.

Three powerful lessons leapt from the stage that certainly any software company trying to do something different should understand. These apply to any company who cares about their customer community and focuses on growing a large business.

Scale and Focus

Traditional software counts on hunting down customers and finding those willing to pay the large price tag. Kind of like traditional political fund raising where fund raisers seek big-heeled donors for the $5,000/plate dinner.

The Obama campaign’s New School thinking concentrated on creating scale and community. Instead of only mining a list for the 1-in-5 donor with the big bucks, they started asking 25 people to go out and each find 25 more to pay $25 to show up at an event. The first time they tried this, they sold every ticket. So they tried it again, and next thing they knew: 1,800-person venue sold out.

Thinking how to scale from a smaller list of initial supporters (Obama challenge) was very different than thinking how to divide-and-conquer the large list of potential donors (Clinton early advantage). Matthew said it required concentrating on metrics that really matter – a mantra within the campaign, lowering the barriers to entry for donors and supporters, while having high expectations for the ultimate outcome. Aside from this concentration on large scale, they were relentlessly focused on immediate outcomes: they had to win Iowa; there was nothing after Iowa. Matthew represented this new thinking…


Farming vs. Hunting

The campaign compared their marketing strategy to Seth Goding’s Farming and Hunting analogy. The new school campaign focused on farming a community versus only game hunting (Yes, they did both: about half small donors; half large.). The idea was to spread word-of-mouth, build a bigger community using the existing base of early passionate supporters.

The trick was multiplying the base versus the traditional 1-in-5 division game of hunting. Build the community through networking. Get 25 supporters to rally another for a small entry fee. This is how Matthew illustrates some of the early results…

Once the Obama campaign got this farming working, the multiplier trumped any notion of relying on the traditional approach.

Values Matter

Communities thrive on trust and respect. If you are serious about building a community of supporters or customers, start with asking how to treat people. Here’s the Obama Campaign Code they handed out for the Iowa caucuses: three simple values:

Respect
Empower
Include

At one caucus the Clinton people showed up with 13 supporters, which on a Cold Day in Hell in Iowa is a good showing. The Obama supporters on the other side of the room numbered 68. But the Clinton group was below the 15 count needed to participate. The doors to the caucus closed at a specific time, meaning no more participants. The Clinton team was potentially without a quorum.

Then after the rules allowed, in walk two more Clinton supporters, giving Clinton a quorum. This was against the rules. What did the Obama supporters say? Let them in. Include them. They deserve to be here. The spirit in the room was immediately more inclusive.

Software companies (all companies frankly) would do well to start by treating their customers with respect, treating them well, and concentrating on inclusion. A couple values we think apply to software companies is treating customers equally and fairly regardless of their company’s size or the size of their orders, and opening up information about your company (pricing, licensing, source code, bugs) so you build trust.

Applying new school marketing thinking and concentrating on scale, inclusion, and low barriers made a whopping 100% difference to what Obama raised. What would it do for your business, Mister Software Man?

Buying Software in this Economy

In spite of the delayed affect this economy seems to be having on technology, investors have no doubt, hence the market reaction. What does this mean for customers? What should one do differently when buying software? Part of my focus here is on Enterprise 2.0 and Web 2.0 software, but the advice generally applies.

Here are 5 tips for those buying during a weak economy…

1. Be a Cheap Bastard

Regardless of the economy, I come to the table biased: Software is generally way too expensive. Now, any bias doesn’t matter. Customers, who have budgets, will have greater buying power.

This is a story that repeats itself: Eighteen months ago the CEO of a new search technology start-up demoed his product to me. When I asked how much he would charge, he responded, “As much as possible.” This is a behavior that is commonplace; it is rooted in hiring expensive sales people and meeting unrealistic investor expectations. Today, this fellow would not get funding. Today, his VC would tell him to lower his prices and try a new marketing strategy.

Ingrained behaviors in enterprise software companies don’t die easily, so look for software where the value is compelling. This software may be all your CFO supports in the next year.

2. Focus on Project Teams and Content

(This is where I piss off the social media and Web 2.0 crowd). In the Enterprise 2.0 software space, a lot is made of social networking. Andrew McAfee‘s definition of Enterprise 2.0 includes the word “social”. Yet when times get tough, the core work is all we’ll care about because we’ll have fewer people to do the work. The core work is not my social network, it is my project, and the content we build every day. By core, I mean: what I need 90% of the day that leads to a real outcome.

Ned Lerner of Sony Playstation said something interesting at Enterprise 2.0 in Boston last June, he said, “We don’t worry about getting the next person motivated to join the large corporate social network, we worry about great tools for our project teams.” He focuses on how to make his projects productive.

When the chips are down and budgets are low, this type of practical thinking will dominate, because all CIOs and CFOs will care about is whether or not a tool really increases productivity, and helps the next high priority project.

It’s not that the social aspects of this new software are useless. Quite the contrary. It’s that the Doubting Eyes of Skeptics in your company will glaze over if you trumpet the personal pages and social connections in this wonderful new software. Your ability to search on who uses certain tags won’t get people jumping up and down.

As an example, you instead should be demonstrating how project teams can produce documentation for customers on the web site without any expensive software, and (if you like) customers will be able comment on it, or (if you like) edit and improve it. The difference is the focus on content.

3. Focus on Killer Apps – Obviously Useful Tools.

Email and Word processing are considered killer apps because their benefit is obvious and they spread rapidly. Obviously Useful Tools don’t need a Return on Investment (ROI) analysis. They don’t need a seminar on adoption. A $100K piece of traditional enterprise software rarely is a killer app because adoption invariably requires considerable work: convincing users, training, roll-out projects, and the Famous Dreaded ROI Study.

Blogs have been so popular, they are a killer app. I would classify blogging as a Tier Two Killer App simply because they are nowhere near as pervasive as say, office apps. Nonetheless, blogging has proved an extremely useful communication vehicle.

Wikis also earn this distinction. Thousands of people in companies are now using wikis, without training courses, management edicts, and ROI studies. The value wikis play in communities, collaboration, and knowledge capture is clear.

A practical test: ask how concrete or vague is the description of the software. I still don’t know what a Collaboration Platform really is, let alone a Scalable Enterprise one. If a vendor concentrates on the concrete usefulness at a tool level, then you have a) a better chance of understanding it, and b) eliminated a blizzard of marketing bullshit.

If one takes as a given that securing a new budget for a large software purchase will be hard for many CFOs to swallow in this economy, then concentrating on inexpensive, highly useful tools is the way to go.

4. Ask the Vendor a lot of Hard Questions

Although Oracle’s financial strength won’t be doubted, half or more of Silicon Valley should be. VCs take enormous risks, but is your CFO interested in this type of risk right now?

I am not advocating shutting out small companies. Instead, if you focus on truly useful tools (Tip #3) and you are a Cheap Bastard (Tip #1), then you are most of the way home here. How much can you lose on a $1,000 or 3,000 system?

Still, ask hard questions about the company’s performance and about their approach to doing business. How transparent are they? Transparency removes doubt about with whom you’re dealing. The honest, open small vendor with a useful, inexpensive tool might serve you better than the (seemingly) safe, expensive, traditional, Cloaked-in-Confidential-Price-Lists traditional vendor.

5. Did I say: Be a Cheap Bastard?

Oh yeah, in case I forgot. Now’s a good time to be a World-Class Tightwad. I spend time regularly in Sydney and Amsterdam, homes of the Dutch and Australians, both world renowned for seeking value (I am being polite). Right now, make a practical Dutchman your role model when you belly up to the Software Bar. Cheers.

Is Agile Development Only for Nerds?

Eskander Matta

This man says, “No.” So what? He may look a little nerdy but he is a Senior Vice President at Wells Fargo Bank and using agile development techniques, he has dramatically reduced the time to develop new products for Wells Fargo’s online business.

 
What’s the big deal? Eskander Matta is not a software developer, and he is not in the IT department. Eskander is a banking executive, with a Harvard MBA, who thinks traditional development methodologies are impediments to building new online products faster and better. Eskander believes, “There is so much innovation in Financial Services that speed to market is critical. A lengthy linear process inhibits one’s ability to compete.”

Eighteen months ago, Eskander got a group of bank employees together to take a meat cleaver to a development cycle that had 26 artifacts (think: pieces of documentation). His goal was to remove all artifacts that had no downstream consumer. “If no one is going to read it, then get rid of it”, he asked the team. The team whacked the process down to 5 artifacts. Then equally important, all this was enabled with a wiki.

As is most often the case, Eskander, the business guy, asked the IT dept what wiki to use. The IT guys told him to use Confluence.

By underpinning everything with the wiki, communication and interaction between people was enabled. “If the wiki was a static word document, it wouldn’t have worked”, Eskander points out. The wiki enabled collaboration in a more formal sense.

What’s so interesting is…

• A business executive took the leadership to streamline development using Agile Development concepts.
• The outcome was fantastic: 26 development artifacts reduced to 5.
• The result ended up on one collaborative work space on a wiki.
• All this was in service of a major bank producing new online products faster.

Granted, Financial Services is largely an information business, this sector is the biggest spender on IT, and in this instance, the product was the Internet. Yet, this story is compelling evidence that there are other executives out there who understand what technology can do, who seek best practices like Agile Development, and who seek out the newest collaborative technologies.

Why Go to an Atlassian User Group?

This Thursday I’ll be at Atlassian’s Boston User Group, and speaking at Enterprise 2.0. Why User groups? Lessons and tips youu can learn. Here’s one, almost fantastic, example of what I learned from our German customers in Frankfurt a week ago. Vodafone’s CEO using our enterprise wiki, Confluence was cool, but well… you decide.

This is the knowledge management team at Deutsche Bahn (DB), the 240,000 employee German railway.

Pretty intense looking bunch. They focus on spreading collaboration across Deutsche Bahn. Although they look a little intimidating — “I’m gonna kick your collaboration ass” flashes through my brain — they do it with a lot of humor, internal marketing, and — is there such a thing? — wacky German good fun.

Marvin the robot from the Hitchhiker’s Guide to the Galaxy is their mascot. Why? Because he has a brain the size of a planet, and he rarely get to use it. They made him as real as possible. He has an email address, a phone number, a blog, and yes, a C.V.

To motivate employees to contribute, every year the team has the 42nd Marvin Awards for great contributions to knowledge. Why 42? You really shouldn’t ask; it’s the answer to everything in the Hitchhiker’s Guide.

And they give out Golden Marvins. Of course.

The team also has a clear metric and goal: of the 240,000 employees, 80,000 are online, and they figure getting 40,000 using the wiki, Confluence, is success. Currently the count is 15,000. Particularly interesting, the users include many non-IT people, including engineering and maintenance. Given the reputation of the German railway, this was my favorite bit.

Hope to see you at the next user group.

Microsoft Response to Google Gets an A

The most interesting aspect of the Google Apps and Cap Gemini announcement was not the announcement. It was Microsoft’s response. Regardless of your opinion of Microsoft’s products, this was world-class competitive positioning. Whoever wrote this deserves a raise:

• Google touts having enterprise level customers but how many “USERS” of their applications truly exist within the enterprise?
• Google’s primary focus is on ad funded search. Their enterprise focus and now apps exist on the very fringe…
• Google’s apps only work if an enterprise has no power users…
• Google’s tech support is open M-F 1AM-6PM PST – are these the new hours of global business?…
• Google says that enterprise customers use only 10% of the features in today’s productivity applications which implies that EVERYONE needs the SAME 10%…

Now here’s what surprised me. It was not an official response. This was an internal response that was leaked. What a shame. I would like to think Microsoft is proud to produce this quality of a response to Google. I’m still impressed.

The Goggle announcement itself is terribly Ho-Hum. As fellow Enterprise Irregular Dennis Howlett pointed out on ZDnet, Cap Gemini is not a top 10 systems integrator in the US, where Google Apps have to be successful, if they ever will be. Also the desktop outsourcing business, which is what this announcement is about, is a bottom-feeder business with low margins. Why do you think Accenture concentrates on applications?

I would like to expect more from Google, but it’s not an enterprise software company, as Microsoft relishes in pointing out. Nevertheless, I would not underestimate what Google plans next.

The Benchmark for Corporate Wikis?

Sun Microsystems may set the benchmark for large corporations using blogging. Now Sun is trying to do the same with wikis.sun.com which makes it fast and simple for all employees to get up and running collaborating on a wiki. Excuse me, on Atlassian Confluence, I should say. Which is an honor given Sun’s wonderful ambition.

Linda Skrocki posted this Sun video today and aside from being long at six minutes [it would kill at three minutes!], it’s an awesome example of how one company is evolving communication.

I dig the 80’s music. The Aussies will think it’s contemporary. 🙂

BarCamp Block Needs VC-Supplied Beer

I’ll be attending BarCamp Block this Saturday in Palo Alto whether or not HP opens its Garage as Robert Scoble requested. This is a great marketing and community relations opportunity for HP, and literally sitting on their doorstep. Besides it would give BarCamp the right hard core engineering vibe.

What is BarCamp?

Almost two years ago, a group of 6 San Francisco geeks in 7 days, using blogs, wikis and IRC slapped together a weekend conference with wifi, food and amazing presentations in Palo Alto, California. This was a different kind of conference, though. There were no superstar keynote speakers. There were no pre-programmed agendas. There was a brilliant agenda filled with content by and for the attendees. More than 200 people showed up and people watched remotely from all over the world. This event was BarCamp.

If HP opens their Garage, then all we need is beer. I can think of a bunch of VCs with swank offices right in downtown Palo Alto that could sponsor and serve lots of beer and food, if they were so inclined: Technology Crossover Ventures, Advanced Technology Ventures, Norwest Venture Partners, Trident Capital and my friend Fred Harman at Oak Investment Partners. C’mon guys, this is the pulse. Put your finger on it. Support your community of entrepreneurs.

Scoble is predicting a huge turnout. Sounds like a great opportunity for the right VCs. 🙂

And thanks to Ross and Socialtext for offering up their offices for this.

What is Enterprise 2.0?

I love it when someone does a useful, instructive job explaining terms we take for granted here in technology. Lee Lefever nailed “Wikis in Plain English” with his video. Scott Gavin explains the potentially trendy term Enterprise 2.0 simply. Although Andrew McAfee is without doubt the authoritative author on the subject of Enterprise 2.0, Scott hit the basics.

Scott even said it was “social software within the firewall” which was refreshing to see with all the blather that everything must be hosted. The fact is most enterprises want something as vital as the content on a wiki behind the firewall. Not all surely, but the lion’s share.

What still leaves me wanting about everyone’s definition of Enterprise 2.0 is that it misses an important point: Enterprise 2.0 is just another natural evolution towards lighter weight software. Doesn’t matter if it hosted, behind the firewall, social or not. Companies embraced the open source movement and software-as-a-service because they were fed up with traditional enterprise software. Lightweight software is just another movement serving this same frustration and need.

Lightweight software serves a gap in the enterprise which Jonathan Nolen articulated in an interview:

“We think there’s a huge middle ground between open source and enterprise software that hasn’t been addressed—lightweight software,” Nolen said.

This movement to lighter weight software is broader than the typical definitions of Enterprise 2.0 software. It’s about customers wanting easy to use, practical, easy to install (or hosted) software that is far less expensive and that does not entail an arduous, painful purchasing process. It’s should be simple, straightforward and easy to buy. In fact, it’s not about sales in our opinion at Atlassian.

This is why some of us believe that Enterprise 2.0 is not just about social software. It’s about a fundamental shift in the complexity and cost of software.

Enterprise 2.0 ROI

Enterprise 2.0 ROI? Wrong question. I am hearing ROI debated here at Enterprise 2.0, and it’s not particularly useful. Shouldn’t all software be subjected to this rigor? Well, no actually.

At dinner last night with the Enterprise Irregulars, Andrew McAfee said he asked fellow Harvard professor Robert Kaplan, an innovative researcher on linking cost and performance, and recently elected to the Accounting Hall of Fame [yes, there is one!], can we measure ROI with these new social tools. Kaplan said it cannot be done.

Why?

• The productivity and improvements are micro-tasks. It’s akin to doing operations research studies with a stop watch on the benefits to using email. Did anyone get fired because Microsoft Office was released? I highly doubt it. Wikis shift work from email and documents to wiki pages and a more facile method of collaboration. Measure it? Spend your time in more fruitful endeavors.
• Management consultants who are actually trained to do these types of studies generally avoid micro operations improvements because they walk in the Land of Serious Business Cases. They have to; their fees are so high. They know that if you cannot measure productivity with a yard stick, then forget it.
• If you’re spending $4,000 on a wiki, how much time should you spend on an intense ROI analysis? You are much better served experimenting with these tools, finding out how others are making them work, giving them to the pioneers in your organization, and learning.
• When software companies give you ROI analyses, leave the room. As fast as you can. This is true for any type of software. The fixation on ROI during the economic downturn — which was because salesforces were shrinking and they desperately needed something to justify themselves — was largely patent BS. I have not seen an Enterprise 2.0 ROI study, but I will be as excited to see one as to stick needles in my eyes. Beware.

Of course we want to derive benefits and understand them. ROI studies are not the way.

Atlassian User Group: Boston

We’re holding a 1/2 day Atlassian user group in Boston on June 21st at MIT in Cambridge. This is a good opportunity to meet other Atlassian customers and learn about how others use JIRA, Confluence, Crowd and Bamboo.

We are also looking for speakers who can present case studies. Based on feedback from our European user groups, attendees want to hear from peers. The event is free to attend for customers, partners and anyone interested in Atlassian products.

Scott Farquhar, one of our founders, will be in Boston for the user group, so that means the Irish will have some competition at the Pub for a change!

The User Group is the same week some of us are at Enterprise 2.0. I’ll be co-speaking at Enterprise 2.0 with Stewart Mader, who is our wiki evangelist and looks after Wikipatterns.

You can RSVP here for the Boston User Group.