Facebook & Siebel: A Tale of Two Decades

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Advanced technology. Ideas that promise to revolutionize the way businesses are run. Out with the old, in with the new. Not sure how it’ll make any money? Mere details. Get going or risk getting left behind. Great riches will come to those with the guts to throw caution and experience to the wind. 

CRM. Social media. We’ve seen the story before, and comparisons between the two phenomenon aren’t new, either. But looking at things at the company level reveals a sobering possibility: we’re about due for The Crash. The parallels are imprecise and sometimes the histories are outright apples and oranges. Get over it. If I’m even partially right, there’s a reckoning a’coming.

Siebel was founded in 1993 and received notoriety during a popular business craze. It grew by leaps and bounds, yet within a decade the writing was on the wall…more competitors, different competitors, and a general disillusionment with the explicit and implicit promises made for the type of products it sold meant that its sales, and those of the category, would fade. Sales never recovered but rather morphed. Siebel got acquired at a valuation based on its installed (if unhappy) base, and not on any future prospects. We talk about CRM very differently now, and rarely without mentioning a few other acronyms or processes. And that’s when we talk about it at all.

Facebook was founded in 2003. It’s now well into 2010. Here are five precautionary parallels:

  • Unseen causes: I think that much of Siebel’s success was driven by the Y2K crisis, as well as general awareness of technology products and innovation. These underlying co-drivers of sales were taken for granted (at best) or consciously misunderstood (more likely) while everyone was talking about how CRM would remake businesses. I wonder if the social trend supporting Facebook’s rise to stardom is less a cause and more of an effect of a deeper, less understood phenomenon. My vote would be for the steep decline in the believability and utility of advertising content, which gets misrepresented as an issue about media. Maybe social has been less an active embrace and more an escape from traditional outlets? Remember, when CRM buyers literally "woke up" in 2002 from the nightmare they’d imagined it was clear to them that almost three-fourths of the implementations had failed to live up to expectations.
  • Technology-driven strategy: So much of what was written about CRM in the mid-1990s tried to make the case that it wasn’t a technology but a strategy, when the truth was that it was very much a capability in search of a purpose. The ability of technology to do things often exceeds our vision of what we need it to do, and business reality didn’t catch up with CRM until almost a decade after it appeared on the scene. Consider how consumers’ ability to connect with one another online has similarly driven a mad dash to find uses for that behavior; it’s not as if we’ve just discovered that peer groups and referrals are dynamics that matter to businesses, but rather that our new technologies lead us to try and manage/track those actions. So what’s the new idea here? See point above about unseen causes. Social interaction without meaningful content is no different than CRM without the stuff upon which real customer relationships are based.
  • Insane valuations. Siebel made a lot of people rich (as the Internet bubble enriched that many more, at least until it crashed and made penniless whomever got stuck holding the stock certificates). It seemed to mint money as it helped invent what we then called The New Economy. Fast forward to the private investments in Facebook that value it somewhere north of $3 billion. Has the market really proven to be a good or reliable mechanism for assigning value to companies? I know it should be, but it just isn’t; in fact, valuations of cutting-edge businesses are usually evidence of the fact that we really have no idea what they’re worth…or that whatever numbers you read are most likely wrong. If you think that there are some crazy, convoluted models used to explain the valuations now, they were even crazier in the 1990s, though equally suspect.
  • Endless "how to" lists. An entire industry of consultants arose in the 1990s to lecture companies on how to do CRM, and they were supported by academics who knew a meal ticket when they saw it. Books, learned articles, and popular media (remember The Industry Standard?) described in mind-numbing detail and repetition the incomprehensibly complicated steps required to successfully implement CRM; miss one, or complete it imperfectly, and the software would fail. The twist here was that said failures were the clients’ fault. Today’s guru-dom descriptions of doing social media are scarily similar. There are lists, reports, systems and any other way to provide the simulation of a body of knowledge and agreed pursuit where none exists. Anybody can and does post the "how to" for social, and lots of them get paid to implement said campaigns. The fundamental presumption, as it was with CRM, isn’t that there should be a business purpose whether to do anything at all, but rather that the campaigns have a de facto benefit which you just can’t see it until you spend money on them. The "how to" lists don’t include exactly how to find those benefits.
  • Unintended consequences. I’m actually a big believer in CRM, as it’s now one of the oldest (well, less new) software and process concepts, so it has been vetted and improved. But the stuff was originally sold to improve customer relationships, which it failed to do; instead, the real short-term payback ended up being cost-reduction. I’m not sure businesses had any real idea what it was supposed to do — the idea that you can put customer relationships into a machine is kooky — so it got put to use as an efficiency tool. It took years to figure out what CRM was really good for. Now consider the ubiquitous Facebook page that every new product or service just must have because it creates online social relationships. So far, social has been an efficiency play also, as it has replaced the imaginary engagement of mass-media branding with a far cheaper alternative. Both approaches rely on people recognizing and talking about content, only now there’s not even the presumption of trying to sell anything. I don’t think we’ve found the real long-term payback for social, presuming there even is such a thing.

Again, my parallels here aren’t prefect, I know, and one big difference is that social marketing evangelists seem to be aware of the CRM fiasco. Many of the voices that had once promoted just do it are now talking about sales and the importance of translating into meaningful actions all the free clicks and minutes wasted on entertaining videos that most social media campaigns deliver. Since they sold those inane campaigns in the first place I don’t think they have much credibility, but this business practice benefits from excruciatingly low expectations. Maybe it has time to fix itself before The Crash occurs.

I’m not overly optimistic. The pattern is too similar and obvious to what we experienced only a decade ago. I wonder if we really see the underlying cause for consumer interest in social, or know how to conceive, deliver, and value either the campaigns built upon the technology, or the businesses who deliver those tools and services.

If Siebel is even a partially accurate comparison, it means that Facebook will not be the company that guides the maturation of social media but rather the poster child for its fleeting youthful exuberance. 

It also means that soon there’s a reckoning a’coming for the marketing world.

Image source: pshab

Original Post: http://www.dimbulb.net/my_weblog/2010/04/facebook-siebel-a-tale-of-two-decades.html