Rules. We have lots of them. Some are more important than others. Very important rules are called laws. Less important rules may be referred to as corporate policy. Unimportant rules are called rules of thumb. Many rules strung together may be known as a methodology. If not documented, they may just be called best practices.

As children, we hated rules. As teenagers, we did whatever we could to break the rules (or beat the system). As adults, we make or follow rules. If we get into the right position, we can change the rules when they don’t work for us.

In systems development, we use the term business rules – a very powerful combination of words. Business rules are found everywhere. They make our applications work the way we want them to – and they make our applications work the way we don’t want them to.

In the beginning, transaction systems created rules to verify that the user typed in the correct information, received the right answer and was charged the right amount. Although powerful, these techniques did not verify inventory, check credit or make sure the customer was contracted to buy this particular product. These rules mainly helped users make fewer mistakes and transitioned computer systems from simple electronic type with storage into an automated, actionable system.

Example #1

Recently, I lost my wallet. This happens to me about once every two or three years. By now, I am pretty good at cleaning up this problem. I keep old bills handy so I can reference them when I need to cancel my credit cards; I keep a list of other information I keep in the wallet at home so I know what I need to replace; and I make sure my expense receipts are kept in a separate place so I do not have to explain to the finance department at work that I do not have original receipts.

As I arrived at my hotel at midnight after a grueling day of travel, I knew I still had a couple hours of e-mail ahead of me. I had batched e-mails I needed to send while on the plane, and I knew I would have to reply to many that required immediate response. As the model logged on to my Internet service provider (ISP), I hoped I did not have too many PowerPoint presentations that were going to take more than 20 minutes to download. But, just as my e-mail started downloading, I received a message that said my account had been discontinued. Of course, the ISP was trying to access my credit card that had just been canceled. When I canceled the card, they must have discontinued the account when they could not access the monthly fee.

I called my ISP’s call center to give them a new credit card to reenact my service. The representative very politely told me that they could not reinstate accounts after business hours. I asked why not and she told me that "it was a rule." A rule. With a little prodding and a good sob story I convinced her to give it a shot. But no luck. When she got to the screen to enable my account, the enable button was grayed out. This must be a business rule. After hours, no activating of accounts. For me, no e-mail.

Over time, and as we got smarter, we started to invent other business rules. We realized that the operational rules were not really the way we viewed the organization or how it worked. They were merely enforcing a set of policies – but the information did not help us understand the health of the business or significant trends in customer behavior. So, we invented business rules for data warehousing. Sometimes we called them transformations.

These business rules were great. They changed information that either did not integrate with other information or did not represent the real business understanding of the information. This information showed us actual understanding of the business. We were able to print more reports than we used to. We could e-mail reports, fax reports, and cut and paste reports into presentations. Some reports could even be delivered by pager or over the Internet. This is what I affectionately call the "data warehouse love fest." It is the glowing satisfaction that we now had usable information that made sense. Man, if the boss wanted information, he sure could get it now.

My last lost credit card example was extremely trying for me. As our business continues to grow, my travel schedule has increased to three or four different cities per week. This is very expensive, and I realized that I really had only one credit card that could handle this large amount of expenses. All of a sudden, I could not afford to work. The credit card company said it was going to take two weeks for me to receive a new credit card. "Can you FedEx me the card?" I asked. "No, we cannot," they replied. "Can you put a priority on it?" I pleaded. "No, we cannot," they stated. "Can you send me stacks of mail about insurance, magazines and alarm clock deals?" I inquired. "Yes, we can do that," they agreed.

Soon thereafter, I saw a presentation by a credit company at one of our many conference get-togethers. The presenter explained how his company had integrated millions of transactions a day into a database to get a holistic view of the customer. They tracked buying patterns and cross-selling opportunities and they could perform lifetime value calculations as well as individual customer profitability by looking at payment history. This company could perform household analysis by doing name and address matching, and it was all made possible by a set of rules that governed the data warehouse. Those sounded like great rules to me. Meanwhile, I was trying to figure out how I was going get enough cash out the cash machine to pay for my hotel room because my bank has rules about how many times I can go to the cash machine a day and how much money I can withdraw.

Today, we even have customer relationship management (CRM) rules. The rules allow us to treat different customers differently. They are embedded in campaign management tools, real-time personalization and recommendation engines, customer service applications and sales force automation tools. CRM rules are very powerful rules because they allow us to make the customer feel special, the teach us that not all purchasers are created equal, and if I spend more money I will get more value out of my relationship with this organization. Now we see how each rule set in and of itself does not necessarily benefit the customer, but if we string together operational rules, transformation rules and CRM rules we can make a difference. So, in my example, you would think that based on my loyalty and profitability, I could get a FedEx package ("Yes, we can have it to you by tomorrow."), I can get my account back online all times of the day ("Yes, we can reactivate your account after business hours.") and I can get cash out of the cash machine more than three times a day ("Yes, we will up your limit for withdrawals for the next three weeks until you receive your credit card.").

There is one more set of rules I would like to discuss, possibly the Holy Grail of all rules. We need rules that allow us to break the rules. Is it anarchy? Can we do that? How do we do that? This is the true goal of CRM, but it will take a combination of organizational change, new trust in front-line employees and a new set of rule structures that say, "These are the rules per customer segment, and these are the rules if those rules don’t work."

Service representatives especially need some type of authority. If the customer is in the right segment, and the request is within certain limits, representatives need to have authority to make a judgement call that can be audited at a later date. Not audited to see if the representative made a mistake, but to see if the action resulted in retention or stronger loyalty.

Example #2

My wife had a very important birthday the other day. I thought it would be extremely fun if we rode around Chicago in a really large limousine and picked up various friends. I use a limo service every week to get to and from the airport, and many times I use the service multiple times based on my schedule. I knew that they only reserved the very large limos for groups of eight or more, and you needed to reserve the car for the whole day.

I called to check the price of what it would cost to rent the limo for the day. I asked if I could just rent it for a couple of hours. No, they could not do that. I asked what would happen if I had less than eight people. They said I would have to pay the difference. I told them it was for a birthday party. They said that was very nice of me. It was really expensive, but I asked if I could put it on hold (it was a very important birthday). Yes, you can, they said and asked me for my phone number. Pause. "Mr. Goldman," they said, "We would be glad to rent you the car for only the evening, and there will be no charge for less than eight people."

Breaking the rules feels good as an adult, too.

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