Innovation Management Wisdom

Posts filed under 'Facilitating Change'

The Customer Centricity Challenge?

Customer centricity can seem to employees like an abstraction. So, what makes organizations truly customer centric?

“Centricity” implies focusing your attention on someone and responding in a relationship-nurturing way.

Does someone requiring 100% of your attention all day fit in your life? We have to divide our time among spouses, children, bosses, colleagues and friends.

So, when someone hangs a poster in the copy room that says, “We are Customer Centric,” a Dilbert cartoon flashes across my mind.

No one in a corporate office can be customer centric.

If we were, we’d get fired.

Our job descriptions tell us our roles in organizations. Customer centricity might be mentioned. But, most of our time is spent responding to colleagues, bosses and internal deadlines. Not customers, at least not directly.

Imagine a coworker in marketing or accounting who is customer centric all the time. You’ve repeatedly asked him for that report. He’s not actually ignoring you. It’s just that he’s “customer centric”, not you-centric.

How long do you think it would take for this person to be voted off your company’s island?

As consultants, we have to schedule innovation workshops with executive leaders one to three months in advance. That’s because executives’ calendars are chock full of organization centric updates, discussions and emails. That’s not a result of negligence on the part of these leaders. It just reflects the complexities of managing large organizations.

This brings me to my second point.

Customer centricity can only happen for a few, rare moments. You have to make the most of them.

We have worked with more than forty Fortune 500 companies innovating new products, services and experiences. What we have consistently found that no one in them is customer centric all the time. Numerous constituencies, such as coworkers, stockholders, vendors, partners and regulatory agencies, constantly vie for executives’ time.

At best, a handful of executives might devote a few hours each week to customers. Sure, these people are customer centric during those hours. But, for an organization to grow in a customer centric way, there usually needs to be robust, repeatable processes for integrating executive sponsorship, deep customer insight and methods for launching customer-winning ideas.

For most management teams, customer centricity is possible only in fleeting moments. For an organization to grow based on acting on a deep understanding of customers, these moments have to catapult you toward tangible business gains.

For our clients, this catapult usually follows this arc:

1.    Prioritize specific business outcomes and customer behaviors that will drive growth
2.    Learn what triggers desired customer behaviors
3.    Conceive, test and refine new experiences in a fast-pace, agile development process
4.    Show leaders results at every step and sustain executive sponsorship

We operate on several fronts on behalf of our clients: customer experience research, concept design and agile program management, for example…which brings me to my last point.

Executive sponsorship is needed to advance innovation efforts quickly in compressed time frames…otherwise, you won’t get very far.

It’s common for customer centric initiatives to be assigned to teams of mid-level functional managers. Executives take a wait and see approach. These new “customer centricity teams” can come up with some pretty heroic and creative ideas.

But, ideas die quickly.

Ideas evoke mixed reactions among executives, who filter them through their respective lenses. Without clear connections to targeted business outcomes, even the best ideas have little chance of surviving an executive team’s scrutiny.

If you’re committed to improving your customer experience to achieving real business results, please contact us. We’d love to hear from you.

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Whyze Group works with B2B and B2B2C Fortune 500 organizations. The company has been recognized by the Baldrige National Quality Program, business associations and numerous business media as a leader in product innovation. Inquiries: info@whyzegroup.com, (440) 785-0547.

May 22nd, 2012

How to Stimulate Innovative Thinking

Completes assigned tasks. Meets deadlines…Daydreams effectively? Can companies really stimulate innovating thinking?

In the Cleveland Plain Dealer this Sunday, Mary Doria Russell writes about Imagine, a new book by Jonah Lehrer about how creativity really works.

Lehrer writes that creation isn’t a linear process. Innovators are ordinary people who encounter predictable walls. Rather than beating their heads against them, they quit. They find ways to go around them.

Everyone encounters barriers.

Successful innovators who’ve hit walls have something in common: They quit.

They didn’t quit their jobs. They gave up on unproductive lines of reasoning. “They really, truly gave up, often howling in frustration,” Lehrer says.

That’s when innovators “go forward by stepping sideways.” They quiet the linear, rule-constrained left side of the brain. Then, they unleash the conceptual, imaginative, right side. Your right brain soars with your best ideas when you’re just dozing or standing in the shower. The right brain makes unexpected connections. “Suddenly, you just know.”

Another Sunday paper described a painter who abandoned the conventional rules of the art game and built a $100 million a year business. His name is Thomas Kinkade, “painter of light.” Kinkade’s works hang in one out of 20 American homes.

The Sunday New York Times describes how Kinkade imagined a new path to success. He ignored the art critics, targeted consumers who rarely bought art and bypassed art gallery distribution channels. He chose instead to sell his sentimental, mass-produced paintings directly to consumers. He marketed his works through franchise galleries, cable television and online.

If you’re not advancing on the path you’re on, quit. Imagine another route to connecting with customers.

Successful innovation is about connecting with buyers. Kinkade’s lateral thinking coincided with reconnecting with his faith and others who shared it. He said, “People who put my paintings on their walls are putting their values on their walls: faith, family, home, a simpler way of living…they beckon you into this world that provides an alternative to your nightly news broadcast.”

Thomas Kinkade was one man who thought differently. What about when you’re one manager among a team of managers?

Getting managers to agree on a lateral route to innovation requires a special combination of skills.

After you have your eureka moment, how do you get others to follow along? Chances are that others have similar ideas. But, for reasons related to decision making processes or office politics, those ideas don’t get a fair hearing.

Others with different ideas probably feel similarly frustrated. This isn’t a deliberate or even conscious stifling of creative thought. It’s a natural outcome of diverse people working in one organization. There’s a lot of pressure on company leaders to keep everyone’s oars in the water, rowing in the same direction.

As a result, most leadership teams’ approaches to innovation could be described as “satisficing”. They suffice to satisfy key influencers within their organizations. Satisficing usually results in tweaks that customers don’t perceive or don’t care about.

Has satisficing happened in your organization?

Satisficing is a normally occurring barrier to company innovativeness. It has its own inertia. It usually needs to be acted upon by an outside force to change it.

In upcoming posts, I’ll talk about how leadership teams have acquired and applied three critical skills to overcome satisficing and get innovative in ways customers care about:

  1. inhabiting their customer’s frame of reference
  2. Identifying lateral innovation opportunities
  3. orchestrating the delivery of powerful customer experiences

What do you think? Could more companies stimulate innovative thinking? What’s holding some back?

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Whyze Group works with B2B and B2B2C Fortune 500 organizations. The company has been recognized by the Baldrige National Quality Program, business associations and numerous business media as a leader in research and innovation. Inquiries: info@whyzegroup.com, (440) 785-0547.

 

 

 

 

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April 13th, 2012

How Global Birth Rates and Demography Influence Product Development

The sputtering economy is, in part, a symptom of a greater problem—a tectonic shift in global demographics. This shift may change consumers’ consumption and saving behaviors for years.

These changes open up new opportunities for companies that can learn and adapt most efficiently.

Here are six things you should know…

1. Declining birthrates are eroding the economies of developed nations. Their deleterious effects will likely be with us for a long time.

Reputable demographers and economists with the WCF, tell us, “The population of the world, particularly in developing countries, is aging. The baby-boom generation is reaching retirement and will need to be supported by the generations that succeeded them, all of which have had fewer and fewer children. This means fewer and fewer workers paying into the social security, medical and welfare systems of the world. Economies will be strained and governments will slow bleed as relative production dwindles and tax revenues decrease.”

Greece

Last month’s media coverage of worker protests in Greece might leave us to believe that the cause was the Greek parliament’s reigning in liberal social welfare programs. But, Greece’s fiscal math worked before. Not anymore.

The birthrate required to sustain population equilibrium is 2.1 children per woman in Europe. Greece’s birthrate had been declining for years. As of 2004, the Greece’s birthrate was 1.3. Today, there are too few younger workers to pay for the social security of Greece’s retirees.

Europe

Similar problems plague Spain (with a birthrate of 1.3), Italy (1.3) Germany (1.4), Netherlands (1.7), Norway (1.8), France (1.9) and Ireland (2.0). In Russia, the birth rate is so low that the government is paying women to have more children. According to the WCF, Russia is expected to lose one-third of its current population by 2050.

Japan

Japan is facing similar demographic imbalances and economic challenges. According to a market update circulated by Charles Schwab last week, “The problem in Japan is that “cheap money” hasn’t stimulated demand, a liquidity trap exacerbated by an aging population that’s shifting away from consumption.”

United States

Similar challenges exist in the United States, though they are somewhat ameliorated by influx of immigrants, particularly immigrating women, who bear more children on average than women born in the U.S.

2. Deflation is a risk in developed markets.

Schwab’s update continues, “The weight of deflation is also a factor. Consumers believe that prices could be lower in the future, providing little reason to consume or invest today, so economic activity gets delayed. Lower demand results in a drop in production, job cuts and wage decreases, resulting in a reinforcing and detrimental cycle. Global economic growth is slowing, and with the threat of a double-dip recession in Europe amid fiscal austerity, there’s increased potential for deflation, not inflation, for most of the developed world.”

3. As a result, consumers say they are reverting to post-World War II spending and savings patterns.

Recent McKinsey&Company research shows that 90% of U.S. consumers 36 to 65 years old with incomes of $25K to $100K say they are reducing spending. The personal savings rate, which was zero in 2008, climbed to nearly 6% of disposable income in 2009, approaching the 9% savings rate of the post-World War II era.

Less than half of surveyed U.S. consumers believe the stock market will outpace inflation over the next 30 years. Eighty-five percent of consumers ages 36 to 45 believe that it won’t.

Unlike recent business cycles, this downturn appears to be leveling off at range of economic activity that will remain with us for the long haul. Consumers and business leaders looking for help from financial services institutions and governments are finding them bereft of solutions.

4. The future favors companies that efficiently learn and adapt more efficiently in response to customers’ new savings and spending habits.

Learning and adapting sound simple. However, most companies fail to integrate the components of learning–data collection, analysis, knowledge sharing–with the components of adapting–planning and managing change.

5. Change management skills are required to get organizations to adapt more quickly, but change management is a blind spot for most CMOs.

This is where there is plenty of opportunity for improvement.

“CEOs and CMOs agree that the formula for success involves leading innovation, improving marketing’s alignment with the rest of the organization, business strategy and marketing execution. Yet, both CEOs and CMOs agree that marketing is not as effective as it can be,” according to a report by executive recruiting firm, Spencer-Stuart.

6. As we reported in our 2009 white paper, “Bridging the Research-Innovation Gap,” (downloadable from our home page) most companies’ learning and adapting processes are quaint and inefficient.

Companies are attempting to learn and adapt via assembly-line management practices conceived at the turn of the last century. Potentially valuable customer insights are thrown over marketing’s silo wall to next-in-line executives who either don’t understand them, don’t believe them, don’t remember them or are unwilling to use them.

Hundreds of executives and marketing researchers have read our white paper and support our conclusions, which specify 11 ways to bridge the research-innovation gap. The U.S. Department of Commerce cites our paper as recommended reading for U.S. business leaders.

With businesses and consumers becoming more budget and value consciousness, demand will likely continue to shift toward companies that operate more efficiently.

That applies to innovating more efficiently, too.

Over the last ten years, Whyze Group has helped dozens of top companies innovate more efficiently. We integrate customer experience research, design and change management to enhance the innovativeness and performance of companies with which we work.

  • Customer experience research surfaces the influences of someone’s experiences, memories, goals, mental models, perceptions and emotions on their behaviors around brands and products. This understanding of ‘the person’, who has a life beyond the limiting role of ‘customer’, helps us more accurately anticipate how people are going to respond to specific new product and service ideas.
  • Customer experience design uses a workshop approach to designing advertisements, sales processes, products and services, packages and post-purchase events that deliver experiences  customers deem worthy of rewarding with their loyalty and referrals.
  • Change management is applied in creating leadership alignment around what leaders believe and need to learn about the customer experience. Change management is integral in implementing organizational changes needed to deliver the intended customer experience.

 

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Whyze Group works with B2B and B2B2C Fortune 500 organizations. The company has been recognized by the Baldrige National Quality Program, business associations and numerous business media as a leader in research and innovation. Inquiries: info@whyzegroup.com, (440) 785-0547.

 

July 8th, 2010

New Report Raises Bar for Innovation in U.S. Firms

Cleveland, Ohio (PRWEB) June 22, 2009 — The U.S. economy may be under-performing by hundreds of billions of dollars annually due to companies that squander customer information, botch innovation and miss global market opportunities, according to a report published by Whyze Group.

The report, titled Bridging the Research-Innovation Gap, describes eleven factors that determine executives’ effectiveness in leading their companies from the mountains of customer information they collect to innovation pay dirt. It provides ways for managers at all levels to diagnose innovation challenges and implement solutions.

The report comes in the midst of an economic crisis that has raised public skepticism of many company executives. U.S. taxpayers are on the hook for trillions of dollars in bailouts to companies that, among other faults, have failed to innovate products customers want. GM’s former CEO, Rick Wagoner, was ousted by an Obama administration calling for more accountability.

Whyze Group president, Jason M. Sherman, says, “This report gives U.S. managers, investors and employees the tools to recognize barriers to innovation in organizations and respond accordingly.”

Sherman adds, “It’s in our collective interest to assure that everyone who depends on the continued prosperity of the United States participate in making us more innovative and competitive. This report is a primer for those who will make that happen.”

‘Bridging the Research-Innovation Gap’ is the culmination of eight years of analysis of Fortune 500 companies. Whyze Group audited hundreds of strategy documents and conducted thousands of interviews with executives, employees and customers. The report integrates data from the U.S. Commerce Department and observations from thought leaders at top business schools.

The report includes an analysis of how management teams waste billions of dollars on market research each year. Companies use only half of the customer information they acquire. Some customer information is misapplied.

As a result, there is little association between how much companies spend on research and their relative financial performance. Company performance is influenced more by how effectively managers apply what they learn.

‘Bridging the Research-Innovation Gap’ identifies eleven factors that determine how effectively managers apply what they learn. One example is the degree to which executives carve out fiefdoms to the detriment of their organizations. In some companies, managers try to manipulate information for their own personal gain. In others, executives openly share information and work in ways that are more aligned with the interests of customers, employees and shareholders.

Other factors that determine how companies apply what they learn are management teams’ abilities to
–   Correctly identify their own blind spots
–   Stimulate innovation among employees
–   Identify and champion the most promising ideas

The report describes seven additional factors that determine companies’ abilities to bridge the research-innovation gap. Descriptions of each factor are followed by strategies executives can use to make their companies more innovative.

Jason M. Sherman is president of Cleveland-based, Whyze Group. Whyze Group provides qualitative, customer- and user-experience research and innovation workshops to Global 2000 clients. The company has been recognized by the Baldrige National Quality Program, business associations and numerous business media as a leader in research and innovation.

Connect with Jason on Linkedin.

Follow @JasonMSherman on Twitter.

Receive alerts by email.

Email Jason here.

Jason direct: (440) 785-0547.

June 22nd, 2009

The Link Between R&D Spending and Innovation

In this article, we examine the prevailing management belief that more research leads to more innovation.

What’s the relationship between research spend, innovation and business performance?

The Fortune 500 are by far the biggest marketing research spenders in the U.S., consuming the majority of $7 billion in research services annually. Several years ago, we hypothesized that companies among the Fortune 500 would remain preeminent from decade to decade given their advantage of large research budgets. So, we tracked them…

We started with the Fortune 500 list for the year 1990 and then looked at the list ten years later. We expected to see some churn, but not at the level we found. In those ten years, about forty percent of the firms on the 1990 list disappeared. About 200 firms had been displaced, absorbed or tanked at the hands of competitors. In the next four years, between 2000 and 2004, twenty-five percent of the Fortune 500 had churned. These were household names; GTE, Hasbro, Ingersoll Rand, Nabisco Holdings, Paine Weber and Ralston Purina. (Whyze Group internal research, 2005).

While our findings weren’t conclusive, it raised challenges to the notion that more research leads to meaningful innovation and business results.

Later in 2005, Booz Allen completed a study of the top 1,000 R&D spenders among public companies globally. Based on Booz Allen’s analysis, they concluded, “Contrary to conventional assumptions, R&D spending levels within the Global Innovation 1000 had no apparent impact on sales growth, gross profit, operating profit, enterprise profit, market capitalization, or total shareholder return.” (Bordia, R., Dehoff, K., Jurelzekski, B., “The Booz Allen Hamilton Global Innovation 1000: Money Isn’t Everything”, Strategy + Business, Winter 2005, p. 5)

The belief that there is a relationship between research spend and business performance persists, but a growing body of empirical evidence runs contrary to this perception. Another question we asked is, “What’s missing when research fails to improve business performance?”

Why Doesn’t More Research Produce Better Business Results?

We asked managers in client organizations and colleagues in a variety of research firms to give us their perspectives. Among the questions we asked was, “What percentage of marketing research findings are actually applied?” While the answers varied, the most common response from research suppliers and clients alike was, “fifty percent”.

This is consistent with what we see at nearly every client organization that has asked us to facilitate our Customer Experience Management Audit with their management teams.

Most corporate libraries contain reams of well-executed marketing research studies. Most contain nuggets of insight that seem valuable on the surface. To understand the value of these studies, we needed get a view of the context in which these studies were commissioned.

What we found when interviewing managers at these firms is that these research reports often misaddressed key issues that managers were wrestling with at the time. In some instances, we found that the research was misapplied, leading to dangerous actions.

One example was a company that had commissioned dial testing of its new TV advertisements. Dial testing shows how viewers are responding to audio-visual advertisements on a second-by-second basis. It shows emotional high and low points as the ad is being absorbed. What it doesn’t show, and what managers needed to know at the time, was how well this ad positioned the company against its competitors. The dial testing showed high points in the ads where managers wanted them and company made significant media buys. The ad tanked and was pulled at a cost of millions of dollars to this company.

Malcolm Baldrige Stocks Return 300% More than the S&P: Suggests Application of Findings is Key

Our convictions about how customer data translate into improved customer experiences and business performance coalesced further when we looked at the performance of Malcolm Baldrige National Quality Award winners.

Malcolm Baldrige winners achieve superior business results. During a ten-year period, the portfolio of Malcolm Baldrige winners’ stocks outperformed the S&P 500 by a margin of 3-to-1. The graph below compares the 10-year returns on investments of $5,291 in the S&P and in the portfolio of Baldrige award winners.

The Malcolm Baldrige Award isn’t given to companies that conduct the most customer research. It’s awarded to companies that excel at applying what they learn.

There are hundreds of questions in the Malcolm Baldrige application that pertain to how companies apply what they learn. An example of the questions that Malcolm Baldrige applicants answer is, “How do you use voice-of-the-customer information and feedback to become more customer-focused, to better satisfy customer needs and desires, and to identify opportunities for innovation?”

We even interviewed Rick Kolster, Quality Manager at Solectron, a Malcolm Baldrige winner. Rick gave us a ton of insights into what made Solectron a leader in its field. In short, there was a process by which managers were imbued not only with customer intelligence, but a means of applying it over and over again.

Over the last decade, we at Whyze Group have evolved our thinking and our services.  This journal is an opportunity for us to continue learning and to share perspectives with our colleagues around the world.  This particular article serves as foundation for a more expansive white paper on the subject of organizational learning and innovation.

We welcome your reactions, points of view and criticisms.

Jason M. Sherman is president of Cleveland-based, Whyze Group. Whyze Group provides qualitative, customer- and user-experience research and innovation workshops to Global 2000 clients. The company has been recognized by the Baldrige National Quality Program, business associations and numerous business media as a leader in research and innovation.

Connect with Jason on Linkedin.

Follow @JasonMSherman on Twitter.

Receive alerts by email.

Email Jason here.

Jason direct: (440) 785-0547.

1 comment November 12th, 2008

Gyrations in Financial Markets Provide Lessons for Innovators

Unprecedented daily swings in the DJIA are symptomatic of investors losing their gimbals. Negative swings in customer loyalty and profits are similarly indicative of management teams who have lost their bearing.

So here is a parting thought.

Are your company’s innovation efforts determine by what customers will reward…or by what company leaders will reward?  If you’re outperforming similar firms on customer loyalty then it’s both. If it’s only the latter, then you’re company performance looks like the chart for the DOW.

You’ll be interested to know that most companies’ approaches to innovation are dysfunctional.  As a result, 40% of Fortune 500 firms won’t be in the Fortune 500 in ten years.  We’ve consolidated the results of several studies about this.

<a href=”http://technorati.com/claim/hd2ey9i77z” rel=”me”>Technorati Profile</a>

October 16th, 2008

Insurance Company Reorders Marketing and Operations Priorities

A large insurance company had recently entered a niche market that several key competitors had announced they would also enter. Our client wanted to gain market share as efficiently as possible while managing its rate and underwriting risks. The president asked us to develop urgently needed intelligence and make recommendations.

Whyze Group reviewed the company’s advertisements, collateral, marketing plans, agent database and marketing research.  When we interviewed company leaders, we found that they were in disagreement on the company’s market priorities. We also learned that the company’s value proposition included features that exposed the company to risk, but these features were never validated as drivers of brand choice.

Whyze Group facilitated two workshops with sales and marketing leaders to specify the criteria by which the company would prioritize its target markets. We asked the team assign importance weights to each criterion. Using these two inputs, Whyze Group created an easy-to-use market prioritization tool that the company uses as an input to its sales and marketing planning processes.

We conducted 10 focus groups with prospective buyers to develop ideas for improving our client’s value proposition. The company’s product concepts and positioning were refined as we conducted the groups.

We learned that a key feature, which was costly to deliver, was difficult for consumers to understand or appreciate. Several other ideas emerged as potentially powerful differentiators. It turned out that our client was already providing some of these, but wasn’t promoting them.

We also surveyed 400 agents, a channel through which the company generates most of its sales. Agents’ perceptions of our client’s brand were positive. There was one key attribute on which our client was at a disadvantage, however.

Whyze Group formulated specific recommendations designed to dramatically increase agent-channel advocacy and end-consumer demand. We also outlined next steps for building the company’s market intelligence capabilities. This company is implementing a focused set of marketing and operations initiatives based on our recommendations.

October 6th, 2008


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