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It’s clear to say that we are living and working in a time of great change. Digital transformation is top of mind for most businesses and the process can be a challenge for even the most technologically savvy organizations.

One of the most difficult aspects of digital transformation is knowing when the time is right to make necessary changes. Businesses large and small often find themselves struggling to catch up to their competition before they realize they have fallen behind. In order to make the most of this moment in time, businesses need to plan strategically for the future, take advantage of the growing market opportunity, and head off any internal resistance before it impacts momentum. That’s why it’s so important to recognize when the moment is right and that a company is ready to change.

Recognizing Opportunity In Change

On the most recent episode of the Microsoft Partner Network podcast, we heard from Executive Vice President of VML, Eric Baumgartner, about the top 3 indicators of the need for corporate change. Eric Baumgartner has been with VML for more than 20 years and has experienced change management directly as the chief creative officer, chief innovation officer, and now the director of VML West. He has seen the power of digital transformation as a Microsoft partner and in how the needs of customers are changing as well.

New technology is making it possible for businesses to meet those changing needs, from wearables and IoT to mixed reality. While it can seem like an uphill battle to transform a business from the ground up to stay relevant, there is a great opportunity in meeting those needs first and best.

Eric says that there are three key indicators that flag when a business needs to change and adapt to a rapidly transforming market. Here is a breakdown of those indicators.

Indicator 1 – Changing Customer Expectations

Eric emphasized the importance of businesses recognizing changing customer expectations. Today’s consumers are on the cutting edge of technology. From mobile devices to cloud computing, consumer lives are an excellent example of how technology is dramatically transforming our world. And because their lives are changing, they expect the products and services they use to be reflective of that change.

“Customers have changed their expectations and their demand for everything; from watching movies to how they do banking, it’s all completely transformed. So, if a company does not keep up with that change in how customers are experiencing different things and then translate that into their own business, they’re going to fail.”
– Eric Baumgartner, Director of VML West

Indicator 2 – Shrinking Market Share

If you find that your market share is shrinking, that is an obvious red flag. But while you might automatically think to change your customer service interactions, your marketing strategy, or perhaps your pricing, the problem might actually be more about not meeting your future customers’ needs.

Eric says that is it now a customer controlled world and to neglect that is a definite mistake.

“We found that for a lot of our customers, their business is changing because it is now so customer controlled. Customers are demanding more transparency from the businesses they work with. They’re demanding deeper and richer experiences. A lot of companies are having to move beyond to product or services they sell.”
– Eric Baumgartner, Director of VML West

Indicator 3 – Falling Behind the Competition

Technology is constantly changing, but staying ahead of the curve is crucial for business success. Eric says that he is very interested in partnering with the companies (such as Microsoft) that can provide him with the capabilities that his clients request. He knows that if he is not able to provide those services, the competition soon will.

“I’m seeing the industry change. Whether it’s systems integration or mixed reality, if my customers and my competition are moving on, I risk losing business because I’m not keeping up. So what I want to know is how can I keep up and even surge ahead of my competition through digital transformation.”
– Eric Baumgartner, Director of VML West

Learn More

For more on the subject of successful business transformation, tune into the latest episode of the Microsoft Partner Network podcast. Subscribe to the podcast for weekly downloads of our conversations with industry experts and thought leaders on the cutting edge of business and technology. Past episodes are available for download on iTunesSoundCloudiHeartRadio, Google Play Music, and YouTube.

Rachel Braunstein: Welcome to the Microsoft Partner Network Podcast. Every week, we bring in industry leaders and Microsoft partners to talk about the big ideas shaping business and technology today.

In today’s episode, we’re talking with Eric Baumgartner, Executive President of VML, about how to stay relevant in our age of digital transformation. Hey, Eric.

Eric Baumgartner: Hey, Rachel.

Braunstein: Super excited to have you in here.

Baumgartner: Excited to be here.

Braunstein: Eric works with the Microsoft Partner Network with VML. VML has been a partner for 12 years so you know what it’s like around here. Tell us about yourself.

Baumgartner: Sure. I’ve been with VML for 23 years which, in advertising years, I think that makes me 1,000 years old. But it’s been really amazing experience. I’ve had literally four careers within VML. Been the Chief Creative Officer, the Chief Innovation Officer, and I now run VML West which is all our client business west of Denver. So, along the coast. We’re predominately centered here in Seattle.

Braunstein: Got it. And what does VML do exactly?

Baumgartner: So, VML—you know, what we kind of like to call ourselves is a contemporary marketing agency. Really what that means is we’ve taken digital and traditional advertising and melded those together to really create and craft what we call very experiential storytelling. And as we get into what our customers, our clients need, we found that this meld really starts to create these really wonderful customer experiences for them that can really propel their business. So, we’ve seen a lot of success in that kind of merger of digital and traditional.

Braunstein: And VML has how many—I mean, over 2,000 employees?

Baumgartner: Yeah. We’re 2600 people in 28 offices around the world. And that ranges in all sorts of different capabilities. We have over 400 developers, for example, and creatives of all flavors from writers to animators to art directors and designers. But we also have lots of really interesting other folks. We have creative technologists who is a group of people that really look into the different technologies available from wearables to now this kind of mixed reality, you know, as a lot of our customers are really starting to look into that aspect for their business.

Braunstein: Yeah. Something you talked about in our conversation is VML used to build websites. I mean, you were charging so much money, building websites, right? And over the past however many years you’ve had to really transform your business and that was one of the things you had to transform. So, can you talk a little bit about what that’s been like for VML to have to really start moving to what the customer’s need?

Baumgartner: Exactly. And to your point, Rachel, I mean we used to sell the heck out of websites. That was our bread and butter. Then new Word Press and Square Space and Wicks—somebody can go online and for a couple hundred bucks and make a really beautiful website with ecommerce and they’re off to the races. Or even, you know, as we start to see many companies are taking a lot of that work in house so that they have greater control over their corporate brand image and how they’re interacting with customers. But we’ve had to transform as an organization. So, what I think we’ve been really successful at is getting to know our customer’s customer, if you will, and finding out what they’re interests are, what their needs are. And that’s been something that’s been very transformational for us. As we’ve really started to get into that, we’ve found that a lot of our customers, their business is changing because it’s so now customer controlled. Customers are demanding more transparency with the brands that they interact with. They’re demanding deeper and richer experiences. So, a lot of our companies have to move beyond the product or service they sell. I can give you a couple examples. Ford is one of my favorites. It’s our largest client. Ford is an automobile company but in the past two years, they’re seeing that as the younger generation comes up, they’ve got Uber and they’ve got Lift and they got shared Zip cars and Share rides and all these different options and then you add to that the myriad of different transportation from public and trains—whatever it might be. So, Ford is seeing a fairly significant change in the automobile industry. So, they are transforming into a mobility company. How do they become the company that people see as a way to get from point A to point B? It means some pretty exciting things like multi-lease. Let me give you an example. Multi-lease would be let’s say you and I and two of our other friends are talking one day and it’s like oh, it would be great to have a truck but I don’t want to go out and buy a truck. Well, four of us can lease a truck together and what Ford will do is they’ll allow those four people to share that truck. You can even schedule who gets the truck from this weekend or next weekend, and you can even start the truck with the app so you don’t have to have four sets of keys. All done through this app. That’s just one of multiple things you can do through the Ford Pass. You can do car sharing. You walk up to one of the car shares right there on the street. Unlock it, turn it on with the app. They’re even doing these things where, you know, mobility maps where I’m going to take public transportation from here to here. I’m going to take a Ford Share car from here to here and then I’m going to pick up an Ebike and ride the rest of the way. And that’s all controlled through your Ford Pass. So, Mark Fields, the CEO of Ford, came out two years ago and instead of announcing a new car, he announced the Ford Pass as the big innovation for Ford at the Detroit Auto Show. So, that’s just one example of a company. Ford has to rethink what they are. They went from being an automobile company to a mobility company.

Braunstein: So, you’re moving from focusing on your product to focusing on an experience.

Baumgartner: Around it. You know, and it’s this transformational thing and technology allows you to do that. Five years ago, we couldn’t have done the Ford Pass. The systems weren’t in place or the technology wasn’t mature enough.

Braunstein: And customers weren’t used to that.

Baumgartner: No. It’s completely foreign to them. But as we started investigating what customers were really interested in and how their buying habits around automobiles were changing, Ford is adapting to that rapidly. I think it’s a really exciting time for them. But every one of our clients is like that. We can go down the line and see how customer habits are transforming what a company does to what it’s going to do.

Braunstein: And so, as a Microsoft partner and you work with our team but you also work with your customers, how did you get to figuring out the Ford Pass?

Baumgartner: Where that came from was born out of first that Ford started to see the change. Call it declining sales or change in buying habits—there was an indicator.

Braunstein: So, some sort of market indicator, trend. Looking at the landscape.

Baumgartner: And from that, what we do and where our strength is, is really going to Ford’s customers and really understanding exactly what’s going on in the marketplace. How are they transforming? What are their needs? What are the things that they’re looking for and how can we be opportunistic and take advantage of those based off of what we can do as a company? And so we marry the operational aspects of what Ford is doing, what their capable of doing, and what they can do in the future to what those customer needs are. So, it’s both human understanding and operational and technological understanding and finding a way for those to work together for a better solution. 

Braunstein: Now what about—you’re talking about Ford. Huge brand awareness. Tons of money. A lot of our partners are small businesses. They are wearing many hats, don’t have that kind of dollar yet to spend. How can you do this at a smaller scale?

Baumgartner: Yeah. I’ll talk more in generalities as opposed to a specific customer or specific client because a lot of our clients are fairly good size. But, you know, what we can talk about is again, understanding a customer’s customer. So, for example, if we were working with a lawn care service. Fairly small. They might have 60 employees and 20 trucks and the teams out there. You start to understand how customers start to think about their own experience and we can blame a lot of technology companies, some I don’t need to name by name, who have transformed the way people think experiences should go. Like if I go onto a website and I order something, it should be here tomorrow. Or if I go out and I want a service, I want to reserve a table, I should be able to reserve it by voice in my car on the way to the restaurant without ever picking up the phone.

Braunstein: Changing customer expectations.

Baumgartner: Yeah. Customers have changed their expectations and their demand, everything from watching movies to how they do banking has completely transformed. So, a company like a lawn care service, if they don’t keep up with that change and understand how their customers are experiencing other things and then translate that into their own business, they’re going to fail. So, how do you use technology to, say, customer calls up and says I need my grass cut today because I’m having a lawn party.

Braunstein: Pool party today.

Baumgartner: Pool party today. You know, I need my yard picked up. It used to be I’ll get you on the schedule and we can get to you next week. But now technology enables for more crowd sourcing of that. More flexible work force. How does that lawn care service then say I’ve got 20 kids that can cut grass; I can put a bid out there using Dynamics 365 CRM that sends out my crowd source of lawn care specialist. One says, I’ll take that. They go cut it. The customer is automatically billed. They come home and their grass is taken care of. That experience is what is expected from the customer. So, what happens is our customer has to learn how to create an infrastructure that can manage something like that. And technology can solve a lot of those problems. Cloud enables these customers to be much more nimble without the capital expense and to embrace technology they didn’t have access to. You know, it would have cost a million dollars to do that two years ago. But it’s so relatively inexpensive now that they can really focus on understanding their customer and converting that into real actionable business.

Braunstein: Do you have any—because you’ve been a partner for quite a bit of time and you work directly with us—do you have any thoughts on figuring out how to work with Microsoft? Any advice on that? I think you talked about three things that – – .

Baumgartner: Yeah, the three things that as a partner I’m the most interested in. It’s one of those, like, when I think of these three things, 95% of the things I’m interested in fall into one of these three things. So, if Microsoft can get really smart about helping me with these three things, we will have an amazing partnership. And those three things are a client comes to me in a request that I do not have the capability. How do I grow that capability for my client? The second thing is I need to—I’ve seen the industry change whether it’s systems integration or mixed reality or whatever it is and my competition and my customers are moving on and I’m losing business because I’m not keeping up, So, how can Microsoft help me stay current and, in fact, surge ahead of my competition? And lastly, and we talked about this earlier, is stuff I used to sell I don’t sell anymore. It used to be the mobile app was the thing. Well, now I have to sell ecosystems. So, things I used to sell, I don’t sell anymore. So, help me move into practices and capabilities that will help me scale and grow my business. So, if Microsoft can help me with those three things, then I’m golden.

Braunstein: Do you find, because you mentioned Dynamics, you mentioned the cloud, a lot of those things you’re looking for you can find through the Microsoft Partner Network?

Baumgartner: Yes, absolutely. There’s a number of different models and what’s really interesting is we’re starting to see things that I’m very excited about, I love to see how Microsoft is talking about digital transformation. It’s one thing to talk about it in the ethereal and theoretical. It’s another to give us actual actionable things that we can take forward. I think the more of those actions we can take forward, that’s when we start to really see the power of the partnership come together. We’re also seeing that in how are we developing managed services and packaged IP? Advertising is really interesting in this regard. Advertising is born out of a work for hire model. We go create something. Our customers own it. We really struggled with turning what we create into intellectual property that we can resell over and over and over again because traditionally marketing and advertising agencies just don’t operate that way. So, Microsoft has really helped us start to understand how to package up that intellectual property and create a way to make that an annuity that we can build on year after year after year so that we’re spending that energy that we used to spend in—gosh—we’ve got to go invent something new versus let’s take the thing that we have invented and make it better. It’s less energy and finance and treasure to do that versus trying to gen up and invent a new thing again.

Braunstein: That’s awesome. I come from a marketing agency background and that was kind of a lightbulb in my head to start thinking about it like that. The managed service and ISV. We talk about it. We don’t talk about it so much from an advertising standpoint and I think that’s super, super smart and exciting to see where that will go for VML.

Baumgartner: Yeah. There was a mentor of the company, really brilliant man named John Zweig, gave us a thought problem early in our career. I fully have to admit we were a million miles from nowhere on solving this thought problem. He suggested you could be a billion dollar company with a hundred people. The point being, it was all around intellectual property and how you can operationalize it. How you can monetize it and how you can apply the managed services to that IP to create an ecosystem where it’s just a dynamo of financial power for the organization. So, that’s still that dream out there of how do we as an organization capitalize on that.

Braunstein: I love that. That’s super interesting. So, tell me. Somebody’s listening. They have to walk away with some advice from Eric and from what VML has done. What would you say?

Baumgartner: First and foremost, we are in a customer controlled world. Not our customers. Our customer’s customer. And if you do not understand the end game and what your clients, customers need, game over. Because it’s happening too fast and there’s too many options out there and the competition is more brisk than it ever was. So, understanding your customer’s customer is the most critical thing. And really delving into what their needs are and then crafting solutions around those needs will make your customers ultimately more successful. I’m trying to see how many times I can use the word customer in a single sentence.

Braunstein: That’s perfect.

Baumgartner: I was trying to mix it up between client and customer but you get the gist.

Braunstein: Awesome. Well, thank you, Eric, so much for being here.

Thanks for listening today and check out the podcast description for show notes. Be sure to subscribe and keep in touch with us on LinkedIn, Facebook, and Twitter at MS Partner.