CDS Global: changing with the times – Malcolm Netburn

CDS Global is undergoing a process of transformation. What are you trying to achieve?

Malcolm Netburn: It is fascinating being an American company trying to successfully execute transformation in an ever-changing world. Lots of readers will be going through the same thing and, as a business outsource provider, we are an interesting example. We are deeply rooted in the US Midwest and have developed to become the leading outsource service provider to the media industry. We are strategically evolving to become the leader in other industries, too.

The transformation also takes on another form. We handle people's payments and data, a process that has changed radically from hard touch to soft touch. We used to buy a magazine subscription by sending away a card and six weeks later the first issue would arrive. Now the expectation is that the magazine will come within 30 seconds and be accessible on an iPad or Amazon Fire. These are the two clear matrixes.

How do you decide which values and ideas can be transferred into these new markets?

Lately, I've been studying the history of American Express. Originally, the company moved valuables by stagecoach to places where they could not easily or safely get to. People trusted the company to get their goods safely from one destination to another.

What values have made us successful in one industry that are really enduring? If you ask someone from American Express today, they will tell you that the most important things are integrity and trust, the same values it had in 1850, even though the services are completely different.

We handle about a billion transactions annually, and while customers are paying us to handle that process efficiently and cost-effectively, by outsourcing their customer lists, they are also buying into a company they feel they can trust with their money.

Also, they know we have integrity. They are taking a core piece of their business - interaction with their customers - and giving it to a third party that will not disclose that information and will treat the customer like their own. These things are essential as we diversify from being a dominate player in the media industry and look to serve multiple industries that have similar needs.

Which other industries do you think would make a good match?

We are becoming a particularly strong player in fundraising; for example, the American Red Cross has millions of people who donate money to it. As well as believing that we can handle its donation processing, record payment data and information about the donor, we can enhance the relationship that American Red Cross has with its donors.

Lots of people diversify out of necessity or because the market says they have to grow. Our view is that you only diversify when you can really deliver something unique to another industry. You can only do it when there is a compelling value equation that shows you have delivered things in one industry that are highly valued in others.

So, you have to make sure the values of the customer are understood by employees?

Absolutely. I sometimes joke among our people that they are not working for CDS Global, rather they are working for the client that they are assigned to. They are living and breathing that company. They learn to understand the objectives, values and anything that the public might think is good or not good about that client. We've learned that from over 40 years of working with our media customers.

A 17-year-old girl who reads Cosmopolitan is going to be very different from a business person who likes Forbes. You can't treat them the same way. If you do, then you will have two very unhappy clients.

How have you been able to derive insight into the more unique features of new markets?

Great transformation sometimes looks like it just happens, but there were probably 10,000 hours of work behind it. Some values are common and extractable, but there are many that are new and require intimate understanding.

We created a whole department of what we call solution directors. They weren't experts in our service, but in the industries that we serve and are growing into. That has made a huge difference.

There are two important things going on that are contradictory on the surface: the need to customise combined with the advantage we can offer in terms of economies of scale. Say a utility has a water bill for 200,000 people in its district and it does the billing itself. We tell the firm that we can do it a lot more efficiently. We've made investments in equipment and people who know how to process all of that much faster. We take a service, make it more like a commodity and do it less expensively.

The other end is that we can treat those customers better than the utility can - this is what we do for a living. The main function of the utility is to get water to the community, not billing that water or handling customer services whenever there is a problem. We can treat each customer as if they are absolutely unique, even if there are a million of them. We have technology and people (solutions directors) who understand the industry from the inside out.

Presumably this is facilitated by advances in the use of metrics and data?

Yes. Historically, companies like CDS Global did a great job of just processing information. So much rich information emerged from the process that, with our technologies, we can now be much more effective.

That's metric-based decisioning. It's the ability to make smarter decisions based on the availability and usability of large amounts of information. In the utility business, for example, we might know that historically or geographically there is a lot of bad credit card usage in a particular area. We can incentivise certain individuals in that region to pay in a different format.

Another area that is particularly relevant, especially to fundraising or consumer organisations, is the ability to profile your existing customers and identify potential new customers who fit that profile. You see that with Amazon and its recommendations. Although it's a great company, I think their decisioning is pretty basic compared with what we do.

How long will the transformation process take?

The transformation process is well established and under way as we have released components over each quarter of 2011 and will continue to do so over the next 24 months. We've just been authorised by Hearst, our parent organisation, to reinvest $12m into
our technology.

These technology solutions will help solidify our position as a knowledge-based company. This is important because the value of our services is less about processing and more about analytics and business intelligence.

Also, within that time we will be fully diversified into our target industries. This is healthy - we will be more diversified and less directly affected by the ups and downs of any one industry. You wouldn't put all your money in stocks, gold or bonds - you would hedge your bets.

Our tag line is 'fast, focused and fearless'. You need to be fast in this time of constant change and focused because you can't do everything. A client once asked me, 'What do you want to be famous for?' You can do a lot of things, but what are the things that only you can do?

Fearlessness is important because you can't predict all the ways in which events are going to unfold. You can spend a lot of time, money and effort trying to map it out and will still probably miss out on that 'black swan event'. You are on the path, but have to be willing to go off it. Maybe you only heard the sound a mile away, but something might be there and we are going fearlessly down that path.

This all ties into the fact that, today, you have to be great. We want people to say, 'CDS Global was really good before, but this just blows my mind'.