Phil Simon joins us on the show to discuss how small companies are leveraging new technologies like cloud computing and social media to better their businesses.

Phil is the author of the New Small and has a ton of great insights on how to make companies more agile with some of these new tools.

Transcript

David: Hey, everybody. Welcome to Episode Number 9 of Inbound Now. Today I have a very special guest with us here today, Mr. Phil Simon. Phil is the author of “Why New Systems Fail”, “The Next Wave of Technologies”, and his most recent book, “The New Small.”

Welcome to the show, Phil.

Phil: David, thanks for having me.

David: It’s a pleasure to have you on here. I wanted to get you on the show today to talk about some of the key concepts in your book, “The New Small,” identifying some of the underlying tactics and technologies that these companies are using to become more agile and successful, and also talk about how some of these companies are successfully using the social web to do so. Does that sound good?

Phil: Rock ‘n roll.

David: Rock and roll. Okay. Cool. So let’s start with the book. Who is this book for, and what exactly is the new small?

Phil: Well, the book really is for small business owners. So many of them, David, as I’m sure you know, are doing so little with these emerging technologies. So that’s sort of the audience for the book. That’s what I had in mind when I was writing the book. In terms of who is the new small, it really is this group of dynamic small companies using emerging technologies to achieve some absolutely amazing results.

David: Okay. Cool. In the book, you talk about that there are five different enablers. Cloud computing, software as a service, free and open source software. You talk about how mobility is important in the mobile Internet, and also you talk about how social media is being used. Of those that you talk about in the book, what would you say would be most important for companies starting out? They may be a traditional type company. What’s some advice you could give to get them to transition into using some of these newer platforms?

Phil: Well, you asked two questions. (A), which one’s most important, and (B) what advice would I give? As for which is most important, it’s really difficult to say. The book has 11 case studies, and for any of the 11 companies, one technology may have been the most important.

For example, there’s a law firm in Minneapolis, Skjold-Barthel, and they threw all of their data and apps into the Cloud and dropped their IT costs by 75 percent. So for them, Cloud computing is probably the most important. I’m not an attorney, but, David, there are legal reasons that I think a lot of law firms are a little bit reluctant to get into social media.

For example, if you were to throw out a blog post about what to do if, someone may construe it as legal advice and there may be a lawsuit. So for a law firm, social media could be important, but there are additional considerations that, say, a restaurateur, like Chef Tony down in Maryland, another case study in the book really doesn’t have to worry about. The short answer, and this is the consultant in me about which one is most important, is it depends. You had one more question. Refresh my memory.

David: Basically, a lot of these companies, there’s a fear in embracing new technologies because there seems to be new platforms and new tools coming out every single day, right? So there’s a paradox of choice there. What advice would you give to some of these companies kind of dipping their toe, trying to basically make their company more agile moving forward? What would be some tips on where they should start?

Phil: Well, I think that you hit the nail on the head, David. It’s where you should start. You don’t become an expert at any one technology, much less every technology overnight. A smarter man than myself once said, “Getting information off the Internet is like drinking from a fire hose,” and I think that the same thing still applies.

Even if you went within just one area, like social media, you don’t become a social media expert, and I absolutely hate that term, overnight. People start a blog often, as you know, and then they don’t get a lot of traction and they wonder. Or they start a Twitter account and they start tweeting, and they don’t see any sort of transformative effect on their business and they wonder why.

Well, anyone can start a Twitter account in a few minutes. Anyone can start a blog in a few minutes. I read a statistic that a blog gets started something like every seven seconds. So with 200 million blogs out there, depending on which site you go to, the world isn’t necessarily waiting for your blog. It does take a great deal of time.

With social media, people say, “Well, I don’t see the ROI on it,” just as an example. I say, “Okay, it’s hard to really quantify it.” How is that fundamentally different than a company that takes out a Super Bowl ad, or someone that takes out a newspaper ad? Can you really be that precise and say that we have a 43.7 percent ROI on this particular ad or campaign? I’m not so sure that you can do that. So, just because you can’t, in the case of social media, precisely quantify something doesn’t mean that you shouldn’t do it.

In fact, the way that I look at social media is much like the telephone. No one sits around and goes, “What’s the ROI of having a phone line?” Right? Because it’s just a part, it’s sort of a necessary part of doing business. There are a lot of tips in the book. I don’t want to blabber on for hours and hours, but there are plenty of starting points. In general, I think you’re right. A lot of people are struggling, and they’re feeling overwhelmed with just so much that’s going on in the technology world right now.

David: Right. And to your point about one of the case studies in the book, about Chef Tony, one of the enablers in the book is using the social web, and the new small understands harnessing the social web can yield enormous benefits. Talk a little bit more about the story of Chef Tony and how he’s using the media to grow his business.

Phil: Sure. First of all, he has no marketing budget. Second of all, he started his latest restaurant in 2007, when the economy was starting to drop. When you think about it, people are more likely to stop what they would consider to be superfluous expenditures when the economy drops, right? You don’t have to go out to eat. You can eat in. It’s obviously cheaper.

Tony has actually been able to increase his cost per check by using social media. In other words, he has, David, no marketing budget. He does all social media. He’s got one of my favorite lines in the book, “There are two parts of my head, food and technology. And I’m constantly thinking about how to fuse the two together.”

So Tony is absolutely huge on blogs, on podcasts, on videos. He’ll record videos of himself in the kitchen cooking fish, and he realizes that someone may be watching that in Alaska. But maybe that person comments on it, on say Facebook. Then you watch it and you see your friend, who’s in Alaska, but you live in Maryland, which is where his restaurant is located. He realizes that you’re throwing content out there. You’re not necessarily giving away the keys to the kingdom. You’re starting a conversation.

There’s another great story in the book about Tony and how he uses social media to do what I call customer rescue. Someone had a bad meal at his restaurant and had blogged about it. It turns out it was a fairly influential food critic. Well, Tony’s Google Alerts pick it up. He goes to the blog post. He reads it. He comments.

He actually reaches out to the guy who wrote the post. They start e-mailing. Tony finally calls him up, and he wasn’t yelling at him. He just said, “I’m sorry you had a bad experience. What can I do to help? How can I make it better?” Long story short, the food critic comes back in the restaurant a couple of weeks later, has a much better meal, amends his blog post, and Tony, in that very short example, shows how you can use social media to turn a potential detractor into an advocate.

That’s really, in a nutshell, David, the point of the book. You’re not using social media or any of the five enablers or any technology for that matter for the sake of using it. You’re using it to meet a business need, and in this case turning, as I said, a bad experience into a good one for a customer I would argue is something that you should be doing even if you don’t use social media. But social media, obviously, makes it easier.

David: Right. It gives you the look in. You need to be listening out there on social media, because people are talking about either it’s your brand or a competitor’s brand. And if someone’s complaining about it, just reach out and be helpful. Even if it’s not your customer, you can still help them and kind of foster that relationship. Right?

Phil: Oh, absolutely. I think that there are other ways to use social media beyond being reactive, as you point out. Certainly, if someone starts slamming you, you may want to pay attention with a Twitter search or Google Alerts or whatever.

There’s another great example in the book of a company called DODOcase, and they make iPad cases. Now, when the iPad came out, I want to say in March or April of 2010, they didn’t realize that the DODOcase was going to be so popular. They got a tweet from Evan Stone or Williams.

David: Evan Williams, I think.

Phil: Williams, right. The tweet was something along the lines of, “Got my DODOcase, sweet.” That and an Engadget review meant that this company with four people were just flooded with orders.

Knowing that they would have some problems meeting those orders because the DODOcase was seen as the standard case, the one that everyone has to have, on Facebook they would proactively communicate with their customers. They wouldn’t wait for someone to call up or e-mail and be upset because you just bought your iPad for $800, $1000. You don’t want it to get scratched. You want it to be protected.

So, they would use the Facebook page to give the updates. Orders placed in May will be shipped on June 1st along with a special prize or some kind of reward or discount coupon. Again, you’re being proactive with social media. You realize that there are some problems. People are going to be upset.

I think that most people will appreciate it that you’re being proactive, and you’re tapping them on the shoulder to let you know what’s going on as opposed to having to find an answer through navigating an 800 number or something like that.

David: Right. Yeah, you mentioned that in the book, sending people through like a phone tree, an automated phone system, it’s not what people want to do anymore. They’re tired of it. A lot of big brands and a lot of companies are leveraging Twitter to reach out proactively to these people, fixing those problems before they have to send them through this massive phone line tree, where it’s like, press one for this, press two for that. I think you’re dead on there.

Phil: Well, I think that a lot of people get very frustrated navigating different mazes. There is something to be said for being able to pick up the phone and talk to a person. That doesn’t mean that you shouldn’t have a forum on your website for support, and customers can interact or you can have a FAQ, because to handle every customer query, if you’re a big customer, may be cost prohibitive.

Again, these companies are using the web. They’re embracing the different technologies there. They don’t pretend that social media doesn’t exist. Whether or not you want people to talk about you, people are going to be talking about you, as a person, as a company, as a brand. So why not have a social media presence and also realize that you’re not going to make everybody happy.

If Tony, in the example before, found out that the guy didn’t like that he had to pay for his meal, but the meal itself was great, well, you know what? That’s just not a customer that you’re going to make happy. You can’t, obviously, have a thousand percent batting average. But if someone legitimately had a bad experience, I think and I know as a customer myself, I enjoy it when people say, “What can we do to make it better?”

David: Right, totally. One of the cool things I thought you did in the book, each enabler you kind of lay out the groundwork, and then you also outlined the roadblocks to change. A lot of companies will say, oh … and here's one of them for social media that you had in the book. People are saying social media is a waste of time. What would you say to a company that told you that?

Phil: I would ask, what are they doing instead for marketing? For all I know, for some companies, maybe it is a waste of time. Maybe your demographic is 65 years and older and people who tend not to be on a computer. Maybe you’re in the geriatric business or something like that. I do think that you have to know your customer, but I think that that’s the exception that proves the rule.

So I would ask, what else are companies doing for marketing efforts? To me, social media can be a lot of fun, whether it’s creating videos or blog posts or doing podcasts, reaching out to people, following conversations on Twitter.

Look at what just happened in Egypt right now. These are game changing technologies and platforms. If you are not paying attention to what people are saying about you on Twitter, again, there might be individuals out there who just have a bone to pick. But what’s the general sentiment? And companies like HubSpot, I think, have tools that are very valuable for sort of gauging that sentiment.

What do people like about you? As a small business owner of one, I can fairly easily follow the tweets that reference @PhilSimon or @TheNewSmall. But if you’re a 500 person company, you have a lot of products and you say have $25 million or $40 million in revenue, that’s probably more than you can manage with Google Alerts.

I make the point in the book that regardless of the tool that you use, you really need to be paying attention. In the book, it really is the vendor and technology agnostic. There are different Cloud providers. There are different open source solutions. It’s not pro or anti any one technology. But things have moved so fast. I completely agree with what you said before. If you have the same fundamental technologies and applications that you did even five years ago, I’d argue that you have to be missing out on something.

David: Right. So back to the software as a service example, how have you seen in some of the case studies you outline in the book, what are the benefits with going with the software as a service solution as opposed to hardware or an actual physical software solution?

Phil: Well, for one thing, you can date before you get married. You can sign up with Salesforce.com and poke around in the system in five minutes. You’re not going to have all of your data there. It won’t be completely customized, but you can see, in general, if you like it and that’s huge. If you go back even ten years when you had the on-premise applications, you would have to write an enormous check. And in this economy, obviously, a lot of people aren’t writing those types of checks, David. And then, you would get the application.

In my first book, “Why New Systems Fail,” it was all about organizations that, maybe didn’t make the right decision for whatever reason. Here you can get your hands dirty. You can play around with something, and then if you think it works, you can take the next step.

The other advantage from an accounting perspective is that you’re talking about smaller monthly operational expenses as opposed to large capital expenditures. As I said, those are more difficult to justify.

The other benefit with SaaS is that you can get out of the IT business. In other words, as long as you can connect to a browser, you can get to Workday. You can get to Salesforce.com. You can get to any number of CRM or sort of back office applications. You don’t need to have an on-site server, or you don’t need a database. Again, as long as you can get to a website, you’re good to go. There are so many benefits of SaaS. I’m a big proponent of it.

David: Definitely. It kind of plays into using tools like in the Cloud or software as a service where you don’t have to be at your work computer. A tool like Dropbox, you mentioned, and I use it all the time. I love it. You can sync and share files with people. You don’t have to e-mail stuff back and forth. There are revision changes. And Google Docs is another one that I love.

I think that some businesses don’t know that these exist, and they’re doing it the old way. Right? E-mailing a spreadsheet back and forth.

Phil: Don’t ever get me started on e-mail, man. It’s a big pet peeve of mine. Chapter 17 in the book, on collaboration, is all about how, yes, e-mail is important. I still probably send 150 e-mails a day, but it’s not a collaborative tool. I can’t stand these 16 different versions of a PowerPoint deck. My general rule is if you’ve had more than three e-mails back and forth, pick up the phone.

If you’re trying to schedule something, there are all sorts of different tools out there, like Time Driver, Google Calendar. You can share documents. You can really, as I say in the book, use the technology such that it’s running in the background. I shouldn’t have to spend my time figuring out how I need to send you a 45 megabyte video file. There are sites that will let you do it. But yes, I can burn it on a CD and drop it in the mail. But I can also embed it on YouTube or Vimeo. I can also use Dropbox. I can use YouSendIt.com.

In the book, I detail a number of different tools, and I learned a lot by writing this book. I know a tremendous … this is my third book about technology management, and I’m not going to lie to you, man. I learned a lot talking to a dental office about the specific apps that they use. Same thing with restaurants and law firms. There are specific examples in the book, but there really is an overarching philosophy. You can make these tools work for you.

Work can be actually fun because you’re creating interesting content, and you’re not sitting there going, “Oh, I guess I have to drive in to work today even though it’s snowing because our company won’t do video Skype and I have to be there to type something in.” We’ve really, I think, evolved quite a bit from the mid-1990s when I first started working with enterprise software.

David: Right. I think, yeah, the workplace is evolving, and you highlight that in a chapter of the book. You also talk about how social CRM is playing a big piece in the way these companies are moving forward. What are some examples of some companies using social CRM?

Phil: Oh, gosh. There are plenty of them in the book. I think a great example would be, as I said before, DODOcase or even Voices.com. That’s a Canadian voiceover company. They’re paying attention to what the customers are saying, and they realize that an angry customer … it's a hackneyed example. Everybody uses it, but I’m going to bring it up here because everyone knows about “United Breaks Guitars.” There’s one guy, Dave Carroll. So I’m speaking at a conference last year. He had one bad experience, and he wouldn’t have written that song and posted that video if United hadn’t completely blown him off. Again, that’s a hackneyed example, but I think it’s a classic one. I also have people bring up Comcast Cares.

They’re not examples in the book. I want to make that clear. I feel like that material has really been covered. I specifically picked 11 companies that I had never heard of and that I’m sure most people had never heard of. These companies just understand that any success they have can be fleeting. One negative review could carry a lot of weight. Sites like Yelp, sites like Google Places, if you can take advantage of these tools, you really can, I think, do some amazing things.

One of the central points of the book, David, is that it’s easier for small companies to act big than it is for big companies to act small. I think that the second you start ignoring your customer, knowing that a customer can have a blog that reaches 30,000 or 50,000 people or post a video that gets 5 or 6 million hits. Social CRM to these companies, David, is almost table stakes.

David: Right.

Phil: If you ignore it, these customers can kill you.

David: Exactly. You definitely need to be paying attention to the influential people, even people that aren’t influential. It can blow up out of proportion.

Phil: Tim Ferriss, for his book, “The 4-Hour Workweek,” for marketing, I don’t know if you know this story. He said I’m going to find the most influential bloggers and send them books. I’m not going to send it to Business Week or the Wall Street Journal for a book review.

And what happened to “The 4-Hour Workweek?” It was I don’t know how many hundreds of thousands, a couple of million copies it sold. Bloggers and people with strong voices, Malcolm Gladwell, in “The Tipping Point,” calls them influencers. These are people who aren’t really seen as sort of traditional opinion or thought leaders, but they’re really becoming them.

David: Absolutely. Having a strong blogger outreach, building those relationships is really important.

I want to switch gears to another one of the enablers in the book talking about mobility and really rethinking the fact that people are consuming more and more content through their mobile device. What are some innovative ways that companies are using this concept of increased using more and more mobile?

Phil: Sure. Again, Chef Tony is a great example. He works with a company called Open Table. They have, and this is a key point, opt-in text based marketing. So he may text out to people, “Hey, we’ve got Thursday night martinis for $4.” Again, he’s not spamming because these people have consented to be in, but I certainly didn’t know that there were technologies that could do that and now I do.

A couple of companies in the book have developed their own apps. In fact, one of the companies, Chaotic Moon, is a mobile app development company. They listen to what their clients are saying. There’s a great example in the book of an application called Flight Aware. The company that had brought Chaotic Moon in had just horrible reviews with the version 1.0 of Flight Aware. It was clunky. The GUI wasn’t very user friendly.

So Chaotic Moon comes in, and all of these one star ratings from version one became five star ratings in the App Store with version 5.0. It’s actually become the standard. You can literally see which planes are above you because it’s integrated with Google Maps. They were making their clients happy even though it was a bigger client. This is a small company that realizes the power of mobility.

There’s this notion of citizen journalism. When the plane from the Hudson landed by Sullenberger about a year ago, not too far from where I live in New Jersey, the citizen journalists were reporting it and taking pictures before the reporters were on the scene. Again, we live in a much different world now. If you don’t understand that, your customers, if you have a brick and mortar store, for example, are probably sitting there with phones and mini computers, again, I think that you’re really missing the boat.

David: Right. And leveraging those technologies. You mentioned that Chef Tony used Foursquare to push out promotions as well. Location-based services, they’re still an up and coming thing, but it’s something that brick and mortar places can really leverage. It’s basically like a free customer loyalty program, right?

Phil: Oh, yeah and think about it. These people are opting in. I think that’s critical. They want to be part of the tribe or the community. The new small, David, doesn’t use social media as thinly veiled marketing or spamming, and it’s one of my real sensitive points. To me, social media is a means to an end.

As I said before, you don’t do social media for the sake of doing social media. You really want to reach different people. You want to engage them in a conversation. If they comment on your blog, you want to acknowledge that. Certainly, if they write something profane or something totally inappropriate, then you may want to delete the comment.

What was it about a year and half ago Nestle on Facebook was deleting a bunch of comments from customers that weren’t really inappropriate, they just were a little bit critical. If you really want to make people mad, delete their comments.

David: Right.

Phil: You’re basically telling them, “We don’t care about your opinion.” And that’s going to irritate people. Again, I think that the new small really uses social media in intelligent ways, and it was really refreshing writing this book because I found 11 kindred spirits, people who just got it. They didn’t want to make their technology overly complex. They didn’t use social media to just spam people. They really took a very intelligent and simplistic approach to technology. It has to work for you, and if not, you have to go in a different direction.

David: Right. And one of the things that you mentioned, each one kind of had in common was their websites. They didn’t just have the standard brochure, five pages website. It was more of a content laden site where they’re pulling in people with that organic search. What were some examples of that?

Phil: Well, most of the company sites in the book were WordPress or Drupal or Joomla or some sort of mainstream content management system. I laugh when I see a lot of these ’90s sites, and that’s what I call them in the book. You’re right. They are brochures — home, about, contact, services. There’s never a compelling reason to come back. I just think it’s silly. You want people to be coming back.

There are all sorts of SEO ramifications for having backlinks, for having loads of meaningful content. You don’t really want people to just go to your site and never want to come back. There needs to be something interesting in the design, but beyond the design, it’s kind of like having a very nice house. If there isn’t a good conversation going on inside, I’m really not going to come back to that house.

So it’s astonishing to me how many companies and people out there think that it takes, even my local chamber of commerce, they said, oh, we don’t really like our website, but we don’t have 15 or $20,000. And I say, go to TheNewSmall.com. Do you really think that I spent 15 or $20,000 on that site? I’m not independently wealthy.

Well, if you know a little bit about, in my case, WordPress and you know a good web developer, you can get going for $1000, $1200. If you’re really technical, you can do all this yourself. But if you want to customize it, obviously you’re talking about a little bit more money. $1200 for a website, depending on the business, you might be talking about one sale that covers the cost of a proper website.

There’s just no excuse now, in my opinion, to have an ugly site that turns people off. It’s your store front to the world. You can keep going with websites, and at some point you do hit, David, the law of diminishing returns. But why you wouldn’t want to have an aesthetically pleasing website is beyond me.

David: Right. Like you said, the costs of these things are going way down with all of these new platforms emerging. Spending $25,000 on a website, unless you’re building out some custom application, I don’t see why you would pay that much, me personally.

Phil: Even if you are building a custom app, there’s an example in the book of a company called PeerPort, and the head of the company, Colin Hickey, actually built a collaborative platform based on Drupal. He worked with an overseas firm called Macromonius over in India, and they use collaborative tools like video Skype to use this.

So, to your point, you can build these more robust platforms, but that’s their product. That’s not a website that shows their product. That’s literally what they sell. Again, it’s a SaaS model to other companies. If you’re talking about development, then yes, you’re talking about more money. But even the development costs have dropped. If you use the collaborative tools, the traditional limitation of outsourcing is that through e-mail or conference calls, you miss out on the non-verbal communication.

Even as I watch you talk right now on video Skype, I can tell that you’re nodding, you’re smiling, you’re moving your eyes. They say that 90 percent of all communication is non-verbal. So these companies eat their own dog food. It’s not like they evangelize the benefits of social media or software as a service or Cloud computing, but they don’t use any of it. I think that there’s this, as I said before, sort of very consistent philosophy in the way that they eat their own dog food.

David: Absolutely. One of the quotes in the book is from … I don’t have the author’s name here but from the Harvard Business Review. You quote it, and he kind of states, “The productivity of any organization or worker has always been proportional to the quality of tools that they’re using.”

I thought this is dead-on, where if you’re using older tools that aren’t cutting it anymore, don’t be afraid to look for another solution. Google a solution. Talk to someone else in your industry. See what they’re using, and they might have a better solution out there.

Phil: Or use social search. Throw it out there on Facebook.

A true story, when I bought my MacBook Pro four months ago. Before I did, I didn’t Google it, which I could have done very easily. On Facebook, I asked my 500 friends, whatever that means, “Hey, I’m thinking of buying a Mac. What do you guys think?” And 12 people who knew me really well said, hey Phil, you will love a Mac. My friends know me, and they were absolutely right. Take advantage of social search. There are just so many different ways to arrive at the right answer.

As I said before, I think that if you think that the applications … and there are a couple of examples in the book of companies that got away from sort of older CRM solutions and went with something like a Salesforce.com. It can be tough because the devil that you know is better than the devil that you don’t.

There’s always this fear of failure when you’re implementing a new system, but again, because of the freemium model, because of broadband, because of the decrease in the price of storage, it isn’t difficult to try out a new app and see if it works for you. In some cases, it will. In some cases, it won’t. But the alternative is to stay still and fight change. And I just don’t think that for a small business these days or really for any business, that’s a viable proposition.

David: Right. If you’re not constantly evolving with the changes in the market, someone’s going to come along and eat your lunch.

Phil: One of my favorite quotes of all time, and it’s actually in the book, is from Charles Darwin. And it’s this, “It’s not the strongest of the species that will survive or the most intelligent but the one most adaptive to change.” I really do believe that. Books like Christensen’s “The Innovator’s Dilemma” detail how companies that have gotten to a certain level of success, say, Microsoft, for example. They made billions of dollars by promoting Microsoft Office as a productivity app and Microsoft Windows.

Well, now that open source and productivity alternatives are out there, Microsoft now has Cloud religion. I used to own Microsoft stock. I just sold it. It really hasn’t done anything in the last three or four years, and that’s because they’re looking for the next big thing. I’ll give a company like Google a lot of credit. They’re a huge, huge company, but they act like a small one. They are constantly trying to figure out what comes after AdWords. They’re smart enough to know that AdWords won’t be around forever. Look at Groupon. Look at Facebook. These companies have almost a paranoid mentality that if they’re not constantly looking at something better, they could not be around in a year.

David: Right. I think it’s a healthy paranoia there.

Phil: That might be the title for my next book, man. I love it. There might be a book in you, man.

David: There you go, yeah. Quote me on that in the foreword. So Phil, where can people find you online and more about “The New Small”?

Phil: Well, the simplest way, David, is go to TheNewSmall.com. The book itself is on Barnes & Noble, Amazon, indie book stores, all the major ones. I think it’s on Borders, but I’m not sure that that matters anymore.

David: Yeah, right. Cool. Well, thanks for coming on the show and sharing some of these insights about how companies can kind of move in a more agile and efficient way, moving into the future. We hope to get you back on the show sometime.

Phil: I’d like that. David, I enjoyed it. Thank you for having me.