Companies on the verge: Introducing the Emergence Maturity Index

What does it take to become a mature company that can compete full bore in a marketplace? Paul Greenberg's newly hatched EMI will highlight the companies worth watching.

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I'm working on a new index -- yes, another one -- that will track just how close to a breakout an emerging company is. I'm going to call it EMI, which stands for -- wait for it -- The Emergence Maturity Index.

This is really kind of a spin-off of CRM Idol. If you have any idea what CRM Idol is -- well, was -- then you'll know what I mean.

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If not, please indulge me for a moment...

CRM Idol was a contest that industry influencers ran back in the old days. It was a contest that anointed an emerging company that wasn't on the main stage yet, a company most likely to arrive on the main stage if they just got a little bit of a push. They had to show the promise of being a whole company, not just have a quality product.

But the clear majority of the companies were engineering companies that did not really know how to do the things that companies do to grow exponentially. More often than not, they manufactured polished products and beyond that were bereft of other business experience and skills, like marketing, dedicated sales teams, producing thought leadership content and/or the maturing culture that were necessary for them to truly hit the mainstream. They did bits and pieces but the long and short of it is that they produced products and that was about it for a lot of them.

Some, like bpm'online and Artesian Solutions, were exceptions to the rule -- that's why they won the award (in 2011 and 2012 respectively). The whole idea was to put these companies in a real world environment, in front of the most influential members of the CRM community -- be they vendors, practitioners, analysts, journalists, or whatever.

Part of the CRM Idol process was to take this amalgamation of expertise and use it to establish a mentoring program that assigned mentors to each of the contestants at the beginning of the contest. (Mentors includes Bruce Culbert, CSO of the Pedowitz Group who ran huge business practices, or Phil Fernandez, at the time the CEO of Marketo, or industry influencers like then CRM Magazine's Editorial Director David Myron with years of experience in the industry as both an influencer and journalist.) They took the responsibility to help companies build out their businesses as fully evolved companies. CRM Idol became the incubator for several companies who have been successful in the market -- with this being their first exposure to leading thinkers and practitioners.

CRM Idol went quiet in 2015, mostly due to the volume of work that I and the main judging panel -- which incidentally did not include Simon Cowell or Jennifer Lopez -- had to do to keep it going.

But, aside from my idle (get it? Of course you do.) thoughts about reviving it at times, it did get me to thinking about what it took to really become a mature company that could compete full bore in a marketplace.

CRM Watchlist

One other factor came into play around my creation of the EMI -- and that's the CRM Watchlist. I have been running the Watchlist for 13 years -- starting under another name -- The Steppin' Out Awards and, at first, only part of my book, CRM at the Speed of Light. It's become, for reasons I can't fathom but am happy to accept -- a significant industry award. Each year, I've had between 45 - 150+ submissions that had at one point totaled almost 6,000 pages that I had to read -- and I'm the only judge. Several entries each year were/are more than 100 pages.

From time to time, I've flirted with the idea (you saw it in the 2013 CRM Watchlist awards) of identifying emerging companies as up and coming. However, the CRM Watchlist is an award that measures the impact of a company on an industry or industry segment and is geared, by its very nature, to mature companies who know how to do it all. Thus, it is very hard for a smaller company to break out of the pack and show itself up against the big guys. It's beyond exceptional for it to happen.

The typical breakout company has been $100 million in revenue and up if at least my brief glance at first time winners is any indicator of anything. So smaller companies really can't compete, though once in a while -- maybe one or as much as two do win.

This year, I suspended the Watchlist to begin to realign it with the market realities. One of the first changes I'm making is to break out the smaller companies to something else related but separate, that gives them a chance to be identified among their peers as a true potential breakout business that the industry would be wise to pay attention to. The criteria are going to be different and the award will be separate.

The Emergence Maturity Index (EMI) is the first step in that. The EMI will be an assigned number from 1-10 with increments (e.g. 7.25) possible, that will show how close to a real breakout I think any given company is. This will be an ongoing effort, running continuously that will be monitored throughout a year. However, there will be a submission for those who want to participate in a competitive award. I've already established most of the basics for it but have a way to go before I'm willing to announce the award.

Sometime in January 2018, the criteria will be published along with the criteria for the newer more polished version of the CRM Watchlist. By then I assume that I'll have an award name which, for the moment, is place held as The EMI Awards -- or the EMIs (pronounced, you guessed it, Emmys). I may do better and be more creative about naming it -- I may not. I'll see. I'm not sure how I'm going to judge it either. Multiple judges? Me only? I'll keep you in suspense for now, but be ready -- if it matters to you. I've got 3.5 years left in this industry and I'm going to do my damned best to make them worthwhile.

The EMI Prototype: A company worth watching

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In order to make this clearer to you and to use that as an excuse to highlight a company that I truly think is worth watching now -- a company that with a little push here and there will be a breakout company -- I am going to name my first EMI(ish) company.

To be clear, this is not an award -- they will have to submit like anyone else -- and they may not win either... but this is me saying watch these guys because I think they are on to something and going places, though they still have some distance to travel. This will also give you an idea what to expect of the EMI -- at least as a prototype. While I reserve the right to completely change this, what I do and say will give you an indication of what I am thinking re: the EMI and highlight a company worthy of some recognition now.

At this stage, you will see an index number, a short description of why this company got that number and a suggestion or two of where they need to go from here.

So, without further ado, I present to you:

Cogito

(EMI Prototype Score 7.75) (caveat: this score could change when the 1.0 version of the index is ready).

Cogito is one of those companies that shouldn't sneak up on you but does. I must assume that its named after the famous statement of Rene Descartes -- "I think therefore I am" which in Latin is "cogito ergo sum". (For your further edification, Descartes followed this with "we cannot doubt our existence, when we doubt." Cogitate on that one).

Cogito, which represents itself, accurately, as a real time emotional intelligence solution that has horizontal applications like sales and service. They have placed themselves squarely in the face of the customer engagement and CRM value add markets and that is not only a good place to be, but with a product that is distinct in the marketplace, a great place to be. What the solution does is provide in call voice analysis and then provide real time guidance to agents or sales people. They have a proven value proposition that began in the medical world and is now part of the sales, service and health care management worlds.

Using the prototype of the EMI, here is why I deem them a near-breakout candidate:

Why they are:

  1. Great product -- proven to work as promised.
  2. Clear use cases.
  3. Unique market value in established markets.
  4. Their marketing is done very well and focused on the actual value proposition i.e. the outcomes
  5. Hot buttons in the marketing -- "real time emotional intelligence" -- both sexy and also immensely important knowledge for the engagement of customers.
  6. They have the case studies to prove the point.
  7. They are (slowly) increasing their market visibility
  8. Very good management mix with highly qualified people well aligned with what they need to grow -- and with the experience, and the foresight -- to support that growth.

Why they are not:

  1. Spotty analyst relations/influencer relations
  2. Strategy for engagement is unclear
  3. Reach, while improving, isn't sufficient yet to be breakout levels of visibility
  4. Still seem to be niche, even though they truly aren't. But perception means something.
  5. Thought leadership content and public face necessary for mindshare not there.
  6. Visibility in the industries they are in is minimal.
  7. Other reasons that shall remain nameless.

Using the prototype EMI this gets them a score of 7.75 which says real breakout potential, but several things must be done before that happens. Not on the immediate verge but close enough to be of interest to many customers and industry watchers. Including me.

The EMI is a measure of breakout potential and likelihood. It is designed to decide how ready the companies measured are for that breakout. A score of 10 is the maximum and of course that means, coming right now. This is still an early beta in terms of where I think it is in its evolution, but I wanted you to know where I stand with it.

Also, I wanted you to know about Cogito because I am very impressed with them, though I don't have a deep relationship to the company, so there are things I don't know. Even without it, they have made an impression on me that makes me want you to hear about it -- because of its value to your business. And because it's a great example of how the EMI will work.

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The EMI deets will be published along with the new Watchlist criteria in January.

Surprise.

Breaking out, again, in 2018

Whew. That was a handful. This next batch are not emerging companies but mature companies, though at different levels, that are either poised to breakout... again -- to re-emerge, when they have already been emergent. The criteria for my judgment are less scientific here, more, hmmm, observational, but there is solid reason for me to say that I see them coming out strong in 2018 and beyond.

Each of these has been "out" before and now, for one reason or another, is starting to create a market presence in a new way that is meaningful to the industry. Again, this is not an award, some of these have won the Watchlist in the past, but each of them is doing something that makes me want to keep my eyes closely on them as they compete in the market.

Thunderhead - In September 2016, Accel KKR acquired what is now Smart Communications, the division of Thunderhead that was and remains a dominant player in the Customer Communications Management (CCM). The reason that Smart Communications got sold off was so that Thunderhead could focus on the customer journey orchestration technology they do so jaw-droppingly well.

They not only had the technology, unique to the industry in its depth and breadth, but an intellectual framework for customer engagement that was created on the foundation of the increasingly influential model known as Service Dominant Logic (SDL) and service design. They have had a strong AR program, increasingly good marketing, power tech, and the engagement framework.

Now, as of Dreamforce 2017, they have become OEMed as the real-time interaction management (RTIM) layer in the Salesforce Marketing Cloud, with cross-cloud integration as the next stop. They also have a solid relationship with Microsoft and an integration with SAP Cloud for Customer (C4C). In other words, with the OEM deal with Salesforce which will increase their footprint across the enterprise, this company, who I have been an adviser to for years, is poised for a breakout.

Pegasystems - My relationship with Pegasystems has always run hot and cold. I've been involved as a speaker at their conferences, as an analyst at their events and then I wasn't. Then I was, then I wasn't. But what hasn't flagged has been my admiration, not just for the quality of their products -- especially their core CRM products in sales, marketing and customer service, but for how they handled their transition from a company focused on business process management to CRM to customer experience to customer engagement -- without losing a beat in their corporate narrative.

They not only took the story up two or three notches, but built out the technology that effectively verified the story and their transition. Their acquisition in 2010 of Chordiant was the watershed for the company and began their transition -- which has continued seamlessly especially for the last 3-4 years. They have obviously done it right growing to nearly a billion dollars in that time frame. They are poised to re-emerge as a major player in the customer engagement universe -- if they do a few things -- particularly around thought leadership - that will cement the final bricks for this phase in place.

Vlocity - It's funny. You would think that a company that focuses on verticals -- telco first and foremost, but several others too -- and is built on the Salesforce platform, wouldn't be a likely breakout candidate, but here's the thing: They have perhaps the most experienced industry leadership of any company when it comes to industry veterans who not only have the skills, experience, and influencer chops, but also understand the changes in the world and retool accordingly and have the energy to proceed to with those transformative efforts.

Witness the boundless energy of David Schmaier, one of the CRM industry pioneers -- a founder of Siebel, arguably the company that made CRM technology possible. Vlocity spun (kinda) from the model that Veeva formerly known as Verticals on Demand, created -- a specific vertical technology (in their case life sciences) created about a decade ago.

Veeva has proven the value of the model with a market cap at a reported $8.7 billion (though I know that only second hand). Vlocity (which Forbes says supercharges the Veeva model) serves a different set of verticals and and due to the ambitions of the management team, sees the need for further vertically specific applications.

Combine that with a mature CRM market with the remaining greenfields primarily in the verticals , the growth of the still protoplasmic customer engagement universe, and the explosive growth of Salesforce... well, the sky is the limit -- and Vlocity is poised to reach it.

Zoho - This is one of the most peculiar of all companies. They use an outlier model that works -- an engineering driven, as opposed to a visionary or mission driven company. They have a focus on the SMB market, yet have an enormous portfolio of products -- and the market eats it up. They have a new pricing model called Zoho One that gives you access to all of the products for a tidy $30/mo per user (as they like to say, "a dollar a day") and it works.

They are in the public eye and yet, there is a lot of mystery to how they actually work, what their revenue is etc. But, man, do they have it going. They have penetrated the pores of small business technology. Their technology is well-integrated -- as you would expect from an engineering company. I'm not the only one who thinks they are on the verge again either. Listen to major league CRM industry analyst and influencer Brent Leary about them.

"Zoho's approach to offering business applications in the cloud is closer to the business models of Amazon and Facebook than to Salesforce, Microsoft and other traditional industry vendors. And they've created created a corporate culture and philosophy that allows this approach to work for them, and places them in a unique position in the industry that is very hard to replicate -- and it really is paying off.

Their ability to organically churn out a variety of business apps at the price points they offer is really incredible. But in order to keep building on their successes and scale this to a whole new level, they'll need to focus on creating even better user experiences and more guidance/best practice support across their application portfolio. And if they're able to add those pieces they have a shot of really disrupting the status quo."

As far as I'm concerned, they are poised for a much bigger breakout if they do three things. Eliminate even the semi-stealthy stuff, start providing thought leadership rather than just products so that they become a trusted adviser to their customers, not just a product provider, and stay away from the petty bashing of Salesforce. They do that, and BOOM, the mic will drop -- and knowing their engineers -- will be repaired ten minutes after it is dropped, but you might not never know that.

That's it for now. In Part II, I examine the current status of the Big 4 in a few paragraphs -- technically violating my pact with myself to not write about vendors until 2018 but at the same time not in the depth that I normally write. Coming next week...

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