Business of Software Blog

Business of Software 2007 now over

The conference is now over. It's been hard work, but worth it. The talks were consistently excellent, and I got to meet a whole bunch of interesting people (speakers and attendees). People came from all over for the conference. From within the US we had people from 30 states, from Alaska to Georgia. Internationally, people flew in from 12 different countries including Australia, Brasil, The Czech Republic, Denmark and England.

I'm going to post up links to the speakers' blogs, books and, where possible, slide decks and videos. Initially this is on the Facebook Business of Software group (http://www.facebook.com/group.php?gid=7006257142) but once I've got time I'll update the main web site with highlights.

Thanks again to everybody who made the effort to attend the conference, and I hope to see you all next year.

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Closing the Knowing-Doing Gap

Bob Cramblitt reports on Jeff Pfeffer's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Ignorance might be bliss, but it is anathema to a great company.

Jeffrey Pfeffer of the Stanford Graduate School of Business capped the two-day Business of Software 2007 conference by urging conference participants to start the future tomorrow, and to decide what they will do differently.

Pfeffer's presentation, titled "Why Software Companies Don't Do What They Know -- And What Leaders Can Do About It" was peppered with anecdotes from his experience with diverse organizations such as SAS Institute and Men's Wearhouse.

Overcoming fear, the corporate star system, and the millstones of the past were central themes.  Pfeffer discussed the principal obstacles to closing the gap between what companies know and what they do, including:

• Doing what everyone else is doing.
• Measuring too many things and the wrong things. Measure the two or three most important things for your business, and not what is easiest.
• Absence of an action orientation because of fear of making a mistake.
• Fear of job loss, telling the truth, conflict, or not being liked.
• Ego that gets in the way of admitting what we don't know and that we've made mistakes.
• The victim mentality -- seeing things as happening to us instead of feeling efficacious.
• Commitment to the past.
• Choosing "better before worse" instead of "worse before better."
• Reluctance to doing things differently.

For more on Pfeffer, please see the interview on this blog:
http://blog.businessofsoftware.org/2007/09/think----and-th.html

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A Tailor, a Winery and Microsoft

Bob Cramblitt reports on Hugh MacLeod's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

A Savile Row tailor, a South African winery and Microsoft.  Strange bedfellows, perhaps, but not if it's Hugh MacLeod's bed.  MacLeod (www.gapingvoid.com) has helped all three define themselves in new and distinct ways that have nothing to do with product, and everything to do with people and their embracing of social objects.

The tailor, Thomas Mahon, has established a blog (http://www.englishcut.com/) that personalizes his craft, leading to recognition around the world, and demand that far exceeds supply.  The South African winery, Stormhoek (http://www.stormhoek.com/blog/), has tripled its sales over the last few years with its "smarter wine" campaign.  MacLeod's cartoon for Microsoft (see below) has become an underground hit within the company, leading to a new mantra: "Change the World or Go Home."

As for software, MacLeod says, "If geeks aren't geeking out over your product, you're in trouble.  Make your product a social object and you will succeed."

MacLeod's iconoclastic insights might not seem immediately relevant to software, but look a little closer, and you'll see the connection.  Check out his tips on how to be creative: http://www.gapingvoid.com/Moveable_Type/archives/000932.html

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Ignore Relationships at Your Own Peril

Bob Cramblitt reports on Jennifer Aaker's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

What's your favorite product at Trader Joe's?  If you are a Trader Joe's customer, you can no doubt name more than a few.  What's your favorite product at Safeway? You probably have trouble naming one.

What would your reaction be to torn packaging at Trader Joe's vs. the same thing at Safeway?

The companies are in the same industry, and offer the same basic products.  But, your reactions to and perceptions of the two are quite different, because you have different relationships and social contracts with the two stores.

Relationships -- formed immediately and changing over time -- define brands and your perception of the companies behind them, according to Jennifer Aaker (http://gsbapps.stanford.edu/facultybios/biomain.asp?id=04071874) of the Haas School of Business and Stanford Graduate School of Business.  Good companies know this and make decisions based on the impact of relationships.

In her presentation at the Business of Software conference, Aaker defined four basic points:

(1) Rethink your concept of brand. Reputations color all interactions.
(2) Reactions to brands depend on implicit contracts -- the do's and don'ts of the relationship.
(3) Rethink transgressions: Letdowns aren't always bad; they can serve as an opportunity to re-engage.
(4) Engagement is multi-dimensional -- essentially about memories of the time spent.

Many companies tend to see relationships with customers as an optional thing, without a solid impact on the bottom line.  Studies and business results show otherwise.  Ignore the relationship with your customers at your own peril.

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Are You Ready for the SaaS Tsunami?

Bob Cramblitt reports on Rick Chapman's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

It's coming, and many software companies will either ride it or drown in it.  It's the SaaS tsunami, and its success is inevitable, according to Rick Chapman's presentation today at Business of Software 2007.

The success of SaaS is evidenced by a 21% a year growth rate. It will be a $21B market by 2009, according to Gartner.  Ironically, Microsoft has supplied two key drivers for SaaS success: The failure of Microsoft Vista, and Microsoft WGA copyright protection, which, in Chapman's words, makes Microsoft look like an "old fart company" interested only in circling the wagons around its fiefdom.

Companies buy Saas for the following reasons:
new capabilities -- 59%
operating, not capital expense -- 16%
other -- 14%
replace client/server -- 11%

For those interested in following the SaaS tsunami and other software issues, subscribe to Rick Chapman's Softletter: http://www.softletter.com/

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Piracy is Good

Bob Cramblitt reports on Matt Mason's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

"Greed is good," said the Gordon Gekko character in the movie Wall Street.  Although it goes against most established thought about software, Matt Mason, author of the upcoming book, The Pirate's Dilemma (www.thepiratesdilemma.com), says that piracy can be good.

Mason, a former pirate radio DJ, makes the compelling argument that piracy drives innovation by exposing flaws in the current marketplace -- the music business is a prime example.  Historically, piracy has been imbedded into the very fabric of business, especially in America, a nation practically founded on piracy.

Having your work copied can be a powerful force in the market -- think about mods in the gaming industry or designer copying in fashion. And, pirating doesn't necessarily hurt the marketplace as much as one might think: Despite all the pirating of movies, Hollywood had its biggest summer ever this year.

The dilemma comes from the thin line between when piracy does good for an industry and when it does harm.  I have a feeling that Mason's book, with a cover blurb by Seth Godin, will be a "must read" for business book readers.   

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Marketing Made Simple

Bob Cramblitt reports on Dan Nunan's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Writers have long known that it is easier to churn out 1,000 words on a subject than 100.  The same goes for software according to Dan Nunan, chief marketing officer for Red Gate (www.red-gate.com).  Nunan kicked off the second day of the Business of Software 2007 conference, attended by more than 150 people from 30 states and 12 different countries.

Although simplicity is more difficult to achieve, it is worth it, according to Nunan.  Unnecessary complexity -- such as the four different versions of Microsoft Vista -- tends to inhibit decision-making, effectively paralyzing the customer.

Nunan presented four steps toward marketing simplicity:

• Be authentic -- Be transparent, trust your employees and use common sense (Microsoft's policy on blogging).
• Make do with limited resources.  Throwing money at marketing doesn't make marketing more effective.
• Respect your customers  -- and don't worry about what your competitors are having for breakfast.
• Worry about complexity -- Your customers don't need 100 reasons to use your software or be presented with 300 new features.  Focus on one or two things that resonate with customers.

Nunan has learned 10 things about software marketing:

1. If your software is completely lousy, go home.
2. Just because a piece of software doesn't have any bugs, doesn't mean it is high quality.  The customer is the arbiter of quality.
3. Software marketing people are the organizational glue between technical people and sales.
4. Sales works (but you need something to sell).
5. Print advertising doesn't work (but not for the reasons you think). It doesn't work because of how much time is spent doing it; time that could be better spent doing something more effective.
6. PR isn't press releases. Work with influencers; those who write books, blogs.  Communicate with the community and get feedback.
7. Understand Google. You need someone in the organization who understands Google and everything they do.
8. The future of graphical display ads is dim. Use of ad blockers is increasing; it's difficult to display graphics in e-mail.
9. Software is a great place for the future of marketing.
10. Branding still counts, but you don't need $10M to build an awesome brand.

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Joel on Hiring and Retention

Bob Cramblitt reports on Joel Spolsky's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Everybody in the capacity audience at Business of Software 2007 wanted to know what he thought about employee hiring and retention.  He is Joel Spolsky, CEO of Fog Creek Software and author of the popular Joel on Software blog.  In a fast-paced presentation and question-and-answer period, Spolsky covered what type of people his company looks for, how he attracts them, and how they are kept in the fold.

The Fog Creek screening process for incoming resumes includes the following factors:

• Passion – This is manifested by long-time interest in programming and an agressive pursuit of goals.
• English – Not mastery of the English language, but good communication skills.
• Creativity – As evidenced by whether applicants have shown that they want this particular job at this particular company.
• Selectivity – The candidate has been selected by good schools and/or employers.
• Brains – As reflected by good grades, participation in math camps, and special honors.
• Diversity – People unlike those currently in the company; people with different ideas, and ethnic, cultural backgrounds.

Those who make the resume cut go through a phone interview, then could be invited to NYC for a personal interview, with all expenses paid.  Spolsky says it is important to make a good impression on the prospective employee.  The most important factors for most applicants are working with smart and interesting people, working on interesting problems, free lunches and other benefits, a nice office, and a boss who "gets" them.  Way down on the list is salary, although that certainly has to be competitive.

Two key criteria outweigh all for Fog Creek (1) being smart and (2) getting things done. An optional third factor: not being an asshole.

Things that Spolsky and his team have done to help make Fog Creek a great place to work include:

• private offices
• nice computing systems with large monitors
• Aeron chairs
• giving employees what they need to do their jobs
• free lunches
• more vacation than the average company
• high bonuses

Brand awareness has become a major factor not just for products, but for attracting recruits, and the prominence of the Joel on Software blog definitely helps.  Spolsky says he has been on campus recruiting trips and heard Fog Creek mentioned in the same breath as Google and Microsoft.

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A Man Who Knows His Crap

Bob Cramblitt reports on Alberto Savoia's talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Alberto Savoia of Agitar Software (www.agitar.com) knows crappy software, in every permutation.  More than talking about it, his company is eradicating crappy software through better testing.  Business of Software 2007 attendees were treated to a hilarious treatise on crappy software from Savoia.  Those who experienced Alberto live won't forget him anytime soon.  For the rest of you, there's the interview on this blog: http://blog.businessofsoftware.org/2007/09/alberto-savoia-.html

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And the Software Idol is...

Steve Johnson of Pragmatic Marketing (www.pragmaticmarketing.com) won the closely contested Software Idol competition at Business of Software 2007.  Johnson's presentation centered on a market-driven model for managing and marketing technology software.

Congrats to Steve and the other finalists: Geoff Perlman of Real Software; Bob Walsh of 47hats.com; Jeffrey Gordon, author of the Software Licensing Handbook; and Jerry Foster of Plexus Systems.

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