THE BLOG
11/23/2014 02:02 pm ET Updated Dec 06, 2017

NBA Owner Vivek Ranadivé: Welcome to Civilization 3.0

"A little bit of the right info, just a little beforehand, is more valuable than all the info in the world, 6 months after the fact." - @Vivek

What does a software-run businesses and a professional basketball team have in common? According to Vivek Ranadivé, CEO of the software company Tibco and lead owner of the Sacramento Kings, a lot. Ranadivé believes that every business is a social network - an ecosystem of customers and fans where all of the products are perishable. Whether you're selling basketball tickets, airline tickets, hospital beds, hotel rooms or consumer electronics, they're all perishable - they decline in value. Ranadivé believes that companies of the future are going to use technology to engage and capture and expand that social network on the one hand, and then marry that to all of that perishable inventory on the other.

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Vivek Ranadivé - Twitter (@vivek) | CEO of Tibco, Owner of NBA Sacramento Kings

However, there is one big difference that sets enterprise businesses and professional sports teams apart and that is the fact that the first has customers and the latter has fans. "Fans will paint their face purple. Fans will evangelize 24/7. Fans are engaged, and fans are talking about the Kings all the time," says Ranadivé, who feels that every business is striving to be a business that can convert its customers into fans. This is where the technology comes in to allow businesses to engage and give people exactly the right offer, at the right time, at the right place - a concept that is showcased at the Sacramento King's new smart arena which is 100% powered by Tibco software.

Ranadivé describes how to use real-time Fast Data to convert customers of any business into fans and turn your business into a social network.

5 Ways to Convert Customers into Fans using Fast Data:

1. "Uberize" your business with civilization 3.0 - Ranadivé believes we are entering a new and exciting era which he calls Civilization 3.0 - a time when the world's largest bookseller has no book stores, where the world's largest music seller has no music store, where the world's largest taxi company owns no cars and where the world's largest hotel company owns no hotel rooms. In Civilization 3.0 the individual contributor can now reach large audiences and companies have to understand and harness the five forces that are driving this new era -extreme service, mobility, the rise of social platforms and the growth and expansion of Asian economies.

But what do these five forces mean for your business? Ranadivé says that every business looks like his basketball team. To people that ask why he spends so much money on his basketball team, he says he thinks it's undervalued: "It's really not a basketball team, it's a social network and it's a type of perishable inventory," he says.

Ranadivé says that businesses like Uber have cracked the code, and he likes to talk about how every business will get "Uberized" in the future, noting that in Civilization 3.0, the cost of supply is free and the cost of your demand is free. When you're able to do that, then you've created a Civilization 3.0 company.

2. Recognize the power of the two second advantage - Ranadivé is converting customers to fans in all types of businesses with the two-second advantage. A simple premise that Ranadive writes about in his New York Times Bestseller, the two-second advantage is based on the fact that a little bit of the right information, just a little bit beforehand, is more valuable than all of the information in the world six months later.

Ranadivé asks: "What's the point of knowing that you've lost a customer after the customer has gone? What's the point of knowing that there's going to be fraud committed after you lose the money or that there's going to be a power outage when you're already sitting in darkness?" This is the idea behind the two-second advantage, it's really about getting that right information beforehand and combining it with historical insights and then being able to take advantage of opportunities or prevent disasters and the Tibco technology helps to do just that.

3. Convert sentiment into retention using perishable inventory - Ranadivé says that it's the backend that matters. Sure, the front end has to be fun and engaging and something that people want to use, but the "secret sauce" is the backend. "The backend is where you can look at each person and create a profile of that person and the predictive and the prescriptive - all of that is what I call the psychological router," says Ranadivé.

The psychological router refers to the place where companies are able to pick up sentiment and ask what things they must do to convert that sentiment into retention. Ranadivé provides us an example of how they are doing this with Kings fans: "If you are at one of my games and you Tweet that you had cold pizza, then we would pick it up. But then we would also know that you are there with your family and that you are coming to the next game and you don't yet have parking. We have access to VIP parking, which is perishable. We would also know that it's late in the first quarter, and it turns out we have too many hot dogs for the game and we are not going to be able to sell them, and your kids have historically liked hot dogs. So even before you have a chance to become unhappy, we'll give you parking for the next game and we'll give you some hot dogs. It's all perishable inventory and it will make you happy."

4. Big data is important, but fast data is where the magic happens - We are living in a time where it's all about the data, but while there is a need to collect a lot of data all the time, a lot of it is transactional data. Ranadivé says that often times the real-time data is much more valuable because that's what gives the data greater context, for example knowing if a customer is walking towards a store vs. walking away from the store or being able to see that a customer is not with their usual group but instead is with a bigger party - all of this information could be important context.

"The measure of intelligence is the ability to change." ― Albert Einstein

Fast Data is all about delivering the right information at the right time. "What we do is what I call Fast Data, when you are looking at real-time data and then combining that with historical context to then come up with the exact right thing," says Ranadivé who believes that you need that real-time data to make it extremely contextual, because if it is not contextual then it ends up just being spam.

"The same software that we use to discover what combinations of drugs will cure what different types of cancer is the same software that is being used to figure out how to give fans a great experience by making them relevant, real-time offers so that they become raving fans," says Ranadivé.

5. Maintain the 'Fire in your eyes' - When Ranadivé was a little start-up, his first big deal was with Salomon Brothers and he was involved in a bakeoff where he competed with big companies like IBM. At the final meeting, the head of technology asked him to come to New York to have lunch with them. Ranadivé was asked why he should be given the order. After stating many reasons that did not elicit a positive reaction, he said, "Those are not good reasons, there is only one reason why you should give me the order - because I have fire in my eyes. Go and look at my engineers who are on the trading floor and you are never going to find people who are more passionate, who are going to work harder and who are going to be more committed to your success than we are." That's fire in the eyes, and Ranadive advises entrepreneurs to have the fire and keep the fire and to be successful.

In closing, Ranadivé gives us a glimpse of what the rapidly-evolving world might look like in 15 years. He says that there isn't an industry that will not be disrupted: "I predict that in 15 years most medical diagnosis will be done by a computer. I predict that many of the diseases that we are facing today, Aids and Ebola, Malaria and so on will actually be behind us." He believes the planet will become a significantly better place in 15 years. I believe it will take the collective work of visionaries like Ranadivé to help make the world a better place.

You can watch the full interview with Vivek Ranadivé here. Please join me and Michael Krigsman every Friday at 3PM EST as we host CXOTalk - connecting with thought leaders and innovative executives who are pushing the boundaries within their companies and their fields.