Does anyone take seriously that poster about customer centricity hanging over the copier?
“Centricity” implies focusing your attention on someone and responding in a relationship-nurturing way.
That ex you dated in school and who demanded your attention all the time didn’t work out. Most of us have to divide our attention among our siblings, spouses, children, in laws, bosses, colleagues…and customers.
So, when someone hangs a poster in the copy room that says, “We are Customer Centric,” I have an out of body experience. I envision myself standing in a Dilbert cartoon.
This brings me to my first point.
No one can be customer centric all the time.
If you were, you’d get fired.
Our job descriptions tell us how we fit in the organization. Customer centricity might be mentioned. But, the bulk of our job responsibilities consist of responding to colleagues, bosses and deadlines. Not customers.
Imagine a coworker in marketing, IT, accounting or production 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. His boss gets the same treatment.
How long do you think it would take for this guy to be voted off the island?
The only exceptions might be sales people and customer service reps. If I have to borrow someone’s watch, I’ll hunt around for a Timex in sales or customer service. Those employees deal with customers every day and know the most about what they go through.
Back to our job descriptions…
We have to schedule client executives for slivers of customer centricity one to three months in advance. That’s because executives’ calendars are chock full of organization centric meetings, projects, emails and reports.
It takes weeks to schedule a workshop. This brings me to my second point.
Customer centricity happens for a few, rare moments. You have to make the most of them.
If this were easy, everyone could do it. I’d be out of a job. It’s not easy. It’s hard because we have limited time to make progress at each step.
We also need to apply several skills simultaneously: customer experience research, change management, strategic planning and business process design, for example…which brings me to my last point.
Delegating customer centricity to people who can’t advance innovation efforts in compressed time frames won’t get your organization very far.
Often, customer centricity is assigned to a functional area with a deep, narrow portfolio of skills. Marketing research, customer service or human resources are common assignees. The new “customer centricity department” will put more meetings on your calendar. They may hang nice posters in your copy rooms. They may report on their heroic efforts, which will delight your executive team.
But, their chances of marshaling organizational resources to innovate anything meaningful to customers are remote…possibly near Pluto.
Customer centricity is a momentary, shared state of empathy with customers. Creating and leveraging these moments depends on unique combinations of skills and methods. They also require that the highest levels of leadership be engaged and energized by rapid progress.
If you’re committed to customer centricity as inspiration for improving your customer experience, please contact me…when you can find a minute.
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:
inhabiting their customer’s frame of reference
Identifying lateral innovation opportunities
orchestrating the delivery of powerful customer experiences
What do you think? Could more companies stimulate innovative thinking? What’s holding some back?
Heard of online focus groups but feeling like you’re old school because you haven’t ever seen one?
No worries. Here’s some info that will help you fake-it-’til-you-make-it as an authority.
The most common format for online focus groups today is the bulletin board. Bulletin board focus groups are great for reaching geographically dispersed participants and participants who’ll respond more openly if they remain anonymous.
Bulletin board focus groups are not like face to face groups where the participants, observers and moderator meet for two hours, then go home. Participation in bulletin boards is “asynchronous,” meaning participants don’t have to be online at the same time. Participants answer questions each day at the time most convenient for them.
In fact, participants don’t have to live in the same city. They can be in different time zones, happily typing their responses from their homes or offices.
Participants usually spend from 15 to 30 minutes each day on the bulletin board. Most groups last three to five days.
Observers can log into the conversation from their homes, offices or on the road. The bulletin board is divided into areas where the moderator’s questions appear, and where a related image, narrative description or video is shown. Participants type their responses in a reply box. Another section shows all participants’ and moderator comments.
Typically, participants type their answers before seeing the responses of other participants. Participants can then discuss their reactions with each other. The moderator can type follow up questions for the group, send private messages to individual participants and interact with client observers through the software.
iTracks, Qualvu and 20/20 provide bulletin board software platforms that are popular today. Each has unique strengths, but operate similarly.
Unlike face to face groups, where moderators can instantly sense confusion and reframe questions in real time, a bulletin board moderator is limited to clarifying questions through posts, emails and phone calls to participants. This can take some time. To avoid having to reframe questions, bulletin board moderators need to be adept at projecting how participants will read and interpret questions.
Choosing a Moderator
This leads me to another important consideration when hiring a moderator: Make sure your moderator can guide your project team as well as customers through this process.
Team members have usually been immersed in an industry for several years. They forget what it’s like to think like customers, who may be engaged for only seconds. This is normal. Without coaching, team members frequently write research questions that are overly complex and jargon-packed. Their questions can be “technically correct” but ineffective in eliciting meaningful customer reactions. They often miss opportunities to surface critically needed insights.
Your moderator not only needs to be a qualitative research expert, but also a coach who can diplomatically nudge team members toward coalescing around meaningful, achievable objectives. His contributions will show up before the groups in the research design process, during the groups and afterward when your team will appreciate sage guidance about what they learned and how to apply it.
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.”
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.
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 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.”
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.
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.
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.