Frustrated by schedule slips and confused questions, a developer at one of the world’s largest telecom companies did something he really wasn’t supposed to do: He gave away his code to a key circuit chip supplier. His motivation wasn’t generosity; it was self-interest. His company’s supplier consistently had to run through two or three complex iterations to meet the software’s evolving specifications. That prompted persistent delays in release dates, sometimes by weeks, and threatened other software development and manufacturing schedules. To accelerate the process, the developer had written a little personal tool that tested critical functionality of the supplier’s embedded software. It worked.
In a blinding epiphany of the obvious, the developer realized everyone would benefit if he just gave away the code. So he spent 20 minutes writing documentation and another few minutes slapping on an interface he thought the supplier would find easy to use. It did. His under-a-hundred-lines software giveaway probably saved both companies well over $500,000 in time and testing. Not only did the supplier’s development team gobble up his code, they came back with ideas to make their module better. That previously personal tool had given the developer’s company keener insight into its customer’s software design sensibility. It produced better software faster based on that simple freeware “gift.”
That’s the kind of gift that more CIOs should insist their IT organizations give. After all, they have an untapped and underutilized asset that has strategic implications for customer and supplier relationships. The odds are excellent that their IT organizations are filled with portfolios of personal tools that, with just a bit of thought and polish, could be externalized to save time, effort, and resources for key customers and suppliers.
Digital designers, developers, programmers and testers create these kinds of informal toolkits all the time. The catch is that they’re almost always too personal; they’re built for the express use of the individual and no one else. But, unsurprisingly, the potential value of these personal innovations can go far beyond the individual.
Most of the time, people have no interest in how you solve a particular IT problem. But for those aspects of a problem (or opportunity) that they might like some control or influence over, they’re very interested in whatever insights and shortcuts you might have to offer. If it’s in code they’re confident already works, so much the better.
These tools have particular credibility and authenticity because your people are already using them to make their lives easier. All it takes is a smidgen of ingenuity and investment to turn the tools into platforms that make the business lives of your customers and suppliers easier. Cost-effectively leveraging an existing investment is smart business.
Investment Bank Giveaways
The world’s top investment banks are all familiar with this idea. Goldman Sachs, Credit Lyonais and Merrill Lynch profitably peddle billions of dollars’ worth of synthetic securities and derivative instruments to Fortune 1000 firms and hedge funds. For obvious reasons, many prospective customers for these “exotics” don’t hesitate to use these complex instruments for risk management and speculation. So what did the banks gradually realize? Listening to their customers and trying to sell to them wasn’t good enough.
They began to give away their own tools. They gave their prospects the same software “wind tunnel” and stress testing algorithms that they themselves used to design the instruments in the first place. They essentially told potential clients: Here, you can use the same tools we use to design and test our products to test them for yourselves. Go ahead and play until you’re comfortable. If any questions or problems crop up, we’ll be happy to address them.
In this growing era of open-source software tools and development, the economics of externalizing the tools your systems designers, developers and testers use become far more attractive. They make it easier and safer for your customers and suppliers to take a chance on your innovations and change-management initiatives. CIOs should treat this as the enormous opportunity it is.
It’s easy to imagine a store chain sharing some of its supply chain and inventory management tools with its key suppliers. Similarly, many companies reliant on CRM might benefit if their best customers could serve themselves with the help of the informal tools they’re already using to customize the system.
While this approach most naturally lends itself to B2B interactions, little creativity is required to come up with scenarios where consumers can benefit from tool-sharing. For example, if Amazon or Apple iTunes programmers shared some of the tools they use to tweak and fine-tune the algorithms of their popular recommendation engines, it’s likely that many customers would love to use them to better personalize book and song selections.
The CIO challenge is straightforward: What are the fastest, easiest and most cost-effective ways to learn what kinds of informal digital toolsets exist within the enterprise?
The next step is slightly more challenging but far more fun: What are the 10 or 15 tools that you’re productively using inside the organization that might really have a big impact on a customer, client, business partner or supplier if you gave them away? Needless to say, this question creates the opportunity for all kinds of interesting conversations with marketing, sales and procurement personnel within the company.
The third step is the trickiest: What kind of marginal investments must you make to turn these informal tools into user-friendly, accessible and economically valuable tools for your target market? If the investment is more than marginal, it may ruin the economics of your initiative. And if the tools are simply too cumbersome or complex to be used by a desired constituency, they won’t work.
But if you are a CIO who cares about innovation and who wants to cultivate a reputation for turning underutilized assets into new business value, deciding which tools to give away merits pride of place on your priority list. To be sure, this requires that you broaden and deepen your understanding of both your customer and your own organization. But really, shouldn’t you be doing that anyway?