Category Archives: Customer Foresight

This is why every business should have a “Minister for Foreign Affairs”

Flowchart on a chalk board

Recently I interviewed Annalisa Gigante, a Board member of ZIS (Zurich International School) and former Head of Innovation at LafargeHolcim. We were talking about customer-centric leadership and Annalisa suggested that companies could really benefit from a “Minister for Foreign Affairs”. She said today “we need to know what’s going on with the rest of the world.”

I thought about this and realized that the amount of disruption we are facing in our businesses and work lives suggests that we can gain better context on what’s happening, make better decisions, and have a better chance of benefitting from it if we do what she suggests.

In our research and work with companies wanting to become more customer-centric, we have called this factor: Peripheral Vision. That is, the externally focused “wide vision” activities carried out to understand the likely impact on the future business from changes in technology, society, economy, political and legal, and the natural environment.

Many companies seem to have a “Minister for Foreign Affairs”, but like we see in politics, often the learnings and potential impacts of these insights are not widely shared – and consequently not acted upon. In practice, peripheral vision should be built into future business strategies. But in our experience, it is frequently missing.

If you want to know how you can identify if your “Ministry of Foreign Affairs” is effective, find out about how our MRI (Market Responsiveness Index) can help you.

AND if you want to build this capability in your organization check out our MarketCulture Academy.

How customer insight uncovers growth opportunities – Lessons from Nestle Japan

cappucino

Nestle’s customer insight creates a new market in Japan

Traditionally Nescafe was bought in grocery stores and consumed at home. As Nestle Japan searched for new ways to expand its coffee business it found that the economic downturn led to Japanese companies ceasing to supply coffee on the job for their employees. There are about 6 million offices in Japan, most having less than 20 workers and few coffee suppliers were selling directly to offices.

Nestle Japan developed the concept of the Nescafe Ambassador – an office employee with a passion for coffee, interested in collaborating directly with Nestle on behalf of their workplace and acting as an “in-office barista”. The company supplied an in-office Nescafe Barista soluble coffee machine and the Ambassadors ordered the coffee from Nestle, collected money from their co-workers for coffee consumed and forwarded payment.

This innovation came from the insight that Japanese employees liked to have the convenience of having coffee in the workplace. But more than that it was an opportunity to talk with their colleagues, collaborate and catch up with what is going on – it rebuilt their social interaction and a sense of community at work which had been lost in many office environments. Nestle was able to capitalize on this unique understanding of what was happening in the Japanese office environments

Nestle is also looking for new ways to meet the needs of Ambassadors to enhance the atmosphere at their workplaces and facilitate communication between their colleagues.

customer insight

This new business model based on a customer-centric approach to business has been very successful for Nestle japan. The program was rolled out in November 2012 and by early 2015 there were 170,000 Nescafe Ambassadors. Their goal is to establish 500,000 Nescafe Ambassador cafes at the workplace as well as 6,000Nescafe Satellite cafes and Café-in-shops over the next five years.

Source: Kotler Impact, “Mind your Marketing”, Volume 1, October 2015, Business Model Innovation: The Nescafe Ambassador Program, pages 120-121

It’s LEGO, not EGO – collaboration is central to LEGO’s customer-centric culture

The name LEGO is an abbreviation of two Danish words “leg godt” meaning “play well”. It was founded in 1932 by Ole Kirk Kristiansen and remains a family owned company. It has incorporated a number of characteristics specific to the Danish culture, such as a non-hierarchical structure – which translates into a very flat organisation in LEGO. So they look for people who are going to embrace collaboration and have fun. Even in sales teams that are normally very competitive they look for people to be more collaborative to partner and work with their teams to build longer-term customer relationships and brand loyalty.

There is no room for “EGO” at LEGO where employees at every level are expected to challenge their boss as a means of coming up with the best ideas.

LEGO’s CEO, Jorgen Vig Knudstorp says “Blame is not for failure, it is for failing to help OR ask for help.” This is reinforced by the owners of LEGO, who promote collaborative family values.

lego_collaboration_value

David Gauntlett, in his contribution to the book LEGO Studies (Mark Wolf, 2014) sees LEGO bricks (the product made up of interconnecting parts) as a social tool, fostering connection and collaboration spurring the potential of children and adults and their natural imagination. New employees are already customers who use the LEGO system to create new products – in many cases part of the job interview is to design a new LEGO product from a bunch of bricks provided.

Collaboration – up, down and across the organization and with suppliers and customers – is a secret to LEGO’s spectacular growth over the last 10 years. It has given them the capability of customer foresight – a cultural ability to develop and deliver new products that excites their customers’ imaginations and creates incredible loyalty and advocacy.

To find out more about how you can create this culture in your business, read our book, “The Customer Culture Imperative“.

AND if you want to build this capability in your organization check out our MarketCulture Academy.

How to generate customer insights without another survey!

starbucks_ideas

While surveys are useful at collecting information on customers and how they feel about certain interactions, products or services there are other ways to gain meaningful insights.

First let’s define what we mean by customer insights:

Customer Insights Defined: a deep understanding of a customer’s needs and behaviors—both known needs that the customer can identify, and the latent needs that they cannot.

It also helps to begin by framing the type of customer insight you are looking to uncover. There are 4 main categories of customer insights that are useful to driving business performance.

1. Strategic Customer Insights – these are used to inform the company’s strategy by understanding what unique market segments exist in the marketplace. For example in the telecommunications industry there are a wide range of different types of customers with unique needs. Some customers now use smartphones as their primary internet device, their needs will be different from customers that still use cell phones primarily for phone calls and text messages.

A deep understanding of the needs of different market segments allows a company to determine which segments are most attractive. This customer insight also allows a company to identify where it needs to improve its own value proposition in order to attract and retain customers from each segment.

2. Program Specific Insights – these are insights specific to a component of a business strategy. For example, a manufacturer looking to roll out a training program to its retailers would need insight into the most effective methods to educate retailers. Should training be conducted in person, via a webcast or through a self service portal?

3. Product and Service Insights – these are direct inputs into how products or services could be improved. A great example of this in action is “My Starbucks Idea”, an online brainstorming tool driven by customers. Customers share ideas and other customers can vote on them so the best customer driven ideas rise to the top.

4. Insights for Marketing Communications – understanding what media and mediums customer’s use to get information informs how companies can more effectively reach and communicate with potential customers. For example if the customer group in question is predominantly focused on using social media, understanding which social media platforms they are most engaged in will help direct communication resources.

So now to the question of how to generate insights without surveys…

Customer insights can initially be generated from reviewing existing publicly available research and data as well as data internally available to the company. This often involves internal interviews with experts in markets and front line people that interact with customers on a regular basis. While this is useful it is secondary research, a review of what already exists and while it can generate new insights it is more useful for gaining alignment around what the company already knows about customers.

To gain deeper unique insights an ongoing process should be implemented that involves primary research. This doesn’t need to be complicated or only handled by marketing research profession in fact it is more impactful when people across the organization are involved.

Customer Immersion Activities

The most time and cost effective way to generate insights is to simply talk with customers. In today’s world this can include a range of mediums from one on one interviews to focus groups to online forums like the one Starbucks runs or Ideastorm, Dell’s equivalent.

Now I realize that technology products and coffee are highly engaging products with many willing participants, what if you sell toilet paper or a product that inspires less passion?

For these less inspiring categories a great source of insight can be customer complaints. Barbara Buchanan has written a great article titled “Mining Complaints and Negative Social Media May Have Positive Consequences” including some examples from the banking and manufacturing industry. The key is making it easy for customers to complain and provide feedback in real time, in the moment. For example a Hospital in California installed posters around the hospital with a QR codes. Patients can scan the QR code on their phones and immediately send a manager a message about an issue. Managers receive these in the form of text messages and commit to responding immediately and resolving issues as fast as possible. Patient satisfaction has doubled in the past several quarters as a result.

qrcodes_feedback

Going Deeper by Observing Customer Behavior

Ethnographic research can provide deep insights into people’s behaviors and unmet needs by taking a holistic view of customers in their own environment.

This is a more expensive technique but can yield unique insights. A great example comes from a day in the life analysis of  women cleaning their homes in Italy. A US company after failing to gain success with an all purpose cleaner for the home in the Italian market, undertook ethnographic research to understand why the product was failing. It discovered that Italian women spent 4 times as much time cleaning their homes than US women. They were fastidious and extremely house proud. They used specific cleaners for specific jobs as they believed an all purpose cleaner simply would not get the job done. These insights allowed the company to reposition the cleaner to focus on meeting a more specific need – benchtop cleaning. The repositioning resulted in a much more successful launch into the italian market.

Piloting New Products or Services

This involves putting new products or services in front of customers to gain direct feedback. A modern version of this can be seen on websites like Kickstarter, where entrepreneurs and intrapreneurs can essentially describe a product or service and raise funding for the idea. This is really the ultimate way to test concepts, will customers pay for it? One of the most successful products launched on Kickstarter is the Pebble Watch. It launched 18 months prior to Apple announcing their own iWatch. It is now raising funding for its second version and has raised almost $10 million to date.

Mining Social Media

The last incredible source of rich customer insight exists within a wide range of social media including Facebook, Twitter, LinkedIn, Yelp, Pinterest and other online communities. There are a range of different companies that can help mine this online data and distill sentiment and feedback in a meaningful and actionable manner. A great list of the top 50 tools is provided here by Pam Dyer.

While surveys remain a great way to elicit direct feedback on specific topics of interest to the company, there are many other ways to generate insights that should be incorporated into every company’s way of doing business.

The Customer Insight Lab of the Future

Uncovering customer insights

Telstra, Australia’s largest telecommunications company, like other large organizations has a powerful research, analytics and insights hub. Liz Moore, who heads that group in Telstra says

“You need deep seated curiosity to develop insights.”

So she has hired people with those characteristics and developed an operating model that links the data supplier with an “insight manager” and the stakeholder (decision-maker) to solve a particular customer problem and gain real insights into current and future customer needs.

This group provides insights from customer value analysis, churn analysis, market share changes, communication effectiveness of the company and its competitors’ marketing campaigns, financial modeling of key competitors as well as analysis of qualitative customer feedback.

Liz says “In research we have changed from the rear-view mirror to headlights” and with access to a panel of 15,000 consumers whose behavior is tracked, she can put together focus groups within a day of the request. Her group proactively shares analytics and insights on customers and competitors throughout the company using weekly bulletins. It also reacts to requests from decision-makers in the business to research, analyze and develop insights on particular customer and market situations.

Above all this group is action oriented. Liz says “We don’t build anything unless there is a pathway to execution and measurement.”

This really is a great model for the customer insight lab of the future. Rather that seeing this as an isolated research function, forward thinking companies are building a multi-disciplinary team of people focused on using deep customer insight to help move business forward.

Does your organisation know more about customers than your competitors?

Extreme customer service on top of Mt Kilimanjaro

climbing_the_customer_centric_mountain

Source: crewtreks.com

It is amazing where you will find people with a “customer first” mindset and an innate sense of understanding customer needs and how to fill them.

Mt Kilimanjaro in Tanzania, Africa, at 19, 340 feet, is the highest free-standing mountain in the world. Mt Everest stands atop a mountain range. The climb from Everest Base Camp to the summit is between 11,000-12,000 feet depending on whether you start from the south or the north. But the continual climb of Kilimanjaro from base to the top is over 19,000 feet. So, when you start climbing the mountain you climb for a continuous six days increasing your elevation by over 3,000 feet per day. It is not a technical climb, so the biggest danger is altitude sickness, which will effectively end your mission to get to the top.

My friend, John, booked with a Tanzanian expedition company with experienced guides and travelled to Kilimanjaro last December with both excitement and anxiety. He dearly wanted to make it to the top, but could he? Climbing high mountains plays on you both physically and mentally. On the lower parts of the climb he kept hearing stories of how hard it is to reach the summit. He saw people being rapidly brought down the mountain suffering from altitude sickness.

After five days of climbing, John, his fellow climbers and their guides set off at 11pm for the remaining 3000 foot climb to the summit. The oxygen deficit at that altitude impacts the body and the mind. John was feeling tired, but good. The Tanzanian guides were continually encouraging the climbers – “go slow. You’re doing great!” At one point a guide came back to John and suggested he carry John’s backpack for him. John felt OK and said he could carry it himself. The guide persisted and said he would only carry it as far as the next rest stop. When they arrived at the next rest stop, John could see that the guide had carried an additional three packs apart from his own. When John approached him, the guide said he would just carry it a little further for him.

They reached the summit at 7.30am the next morning and the guide was waiting for an exhausted John with his backpack. Who knows whether he would have made it carrying his own pack. But, the guide could sense that John may have difficulties making the top – not only in the first part of that summit climb, but for the last bit of it. He was thinking ahead of his client’s future needs. He was almost literally “walking in the shoes” of his customer. He was checking with his client to understand how he was feeling and sensing what else he could do to help him achieve his goal. Most of all he was thinking of his client as a human being.

John was overcome by a sense of gratitude to his guide. The emotional connection was intense.

Isn’t that what real customer service is about?

Does Intel have the right culture for the future?

intel's_customer_culture

In a question asking him to summarize the Intel culture, outgoing CEO (in May  2013), Paul Otellini said:

“Egalitarian. Merit based. That came from Noyce. Anyone can speak in a meeting, but you must speak with data. That came from Moore. Take risks. Embrace innovation, but do it with discipline. That’s Grove. World-class manufacturing came from Barrett. I’ve added a marketing component.

The other thing unique to Intel, at least in Silicon Valley, is the mix of older and newer employees. Intel has more 20-year-plus veterans than any Silicon Valley company. I’ve been here 36 years. Yet the average age of our global workforce is 25. Tradition and innovation. We like both.”

Intel’s culture seems to do everything to drive facts and reasons ahead of position and formal authority. One of Intel’s values is something like “constructive confrontation”.

Among large technology companies, only Intel has mastered CEO succession multiple times. Founded in 1968, Intel has gone from founders Bob Noyce and Gordon Moore, who both served as CEOs, to Andy Grove, Craig Barrett and now Paul Otellini without losing its status as the world’s preeminent chip manufacturer. It has had some major tests of its culture.

In the mid-1980s Intel’s memory chip cash cow was being wiped out by Asian competitors and its future star, the microprocessor, was still building. Intel faced scandal in 1994 when it mishandled news about flaws in its Pentium chip. In 2006, the newest CEO, Otellini, had to lay off 10% of workers in what now can be seen as a prelude to the Great Recession.

In 2006, when Ortellini took the helm, he tossed out the old business model. Instead of remaining focused on PCs, he pushed Intel to play a key technological role in new  fields, including consumer electronics, wireless communications, and health care. And rather than just microprocessors, he wanted Intel to create all kinds of chips, as well as software, and then meld them together into what he called “platforms.” He went about reinventing Intel as PC growth began to slow.

In addition top to bottom reorganization, he made big changes in the way products are developed. While previously engineers worked on ever-faster chips and then let marketers try to sell them, there are now teams of people with a cross-section of skills. Chip engineers, software developers, marketers, and market specialists all work together to come up with compelling products. Otellini is convinced such collaboration leads to breakthrough innovations.

Otellini has strengthened Intel’s financial performance and maintained dominance of its industry. The challenge facing the new CEO will be to keep pace with the changing mobile, tablet and social media environment. Intel’s culture took a battering with the major staff cuts in 2006 and again substantial cuts in 2011.

Will it be resilient and adaptive enough with a new CEO to strengthen the future focused, customer oriented culture that was a focus of Otellini’s reign? Has it retained its innovative capabilities? Only time will tell.

4 ways Electronic Arts navigated major Tectonic Shifts impacting their Customers

tectonic_shifts_in_technology_and_customer_impacts

Many industries today are experiencing market and technology shifts in their marketplaces that are somewhat like the clashing of tectonic plates that cause earthquakes and tsunamis. Industries including publishing and printing, education, telecommunications, media, advertising, health and retail are all facing massive change. How does an organization navigate a techtonic shift?

Electronic Arts Labels (EA), the world’s leading developer and publisher of interactive entertainment  faced a techtonic shift in 2007 with the rapid change occurring from retail packaged goods products to new digital delivery platforms. The new CEO at that time, John Riccitello, presented his vision as a burning platform – you are in the middle of the ocean on an oil platform that is on fire. You either hold on and ride it down or you jump off and face the unknowns of a swirling ocean.

In his article titled “Getting into your customers’ heads”, Krish Krishnakanthan finds out what EA had to do to navigate this techtonic shift. To transform from a retail products business to a digital supplier using new platforms such as social networks, mobile phones and tablets.

The key success factors:

1)   Measuring and tracking customer usage of games, external gaming-publication reviews (critical review success is linked with sales performance). For that part of the business with direct sales to consumers, they use technology to measure customer interactions and the lifetime value of each customer.

2)   Changes in the competitive landscape with low entry barriers and the emergence of small game developers has required  EA to restructure its business to give decentralized profit and loss control to product line/brand managers to enable them to compete with specific identified competitors.

3)   Enhanced communication and collaboration between development teams and marketing teams to co-ordinate go-to-market strategies.

4)   Scanning the external environment through consumer blogs and social media to identify new shifts in consumer opinion, competitive plays, new technology impacts on customers and economic forces affecting the market. This has required a culture change by EA. One which centers their whole business around the customer. An adaptive, future focused customer culture has enabled EA to cross the chasm created by the techtonic shift they faced.

Staying on the “oil platform’ would have meant riding the business to the bottom – out of business. Is your industry facing a techtonic shift? If so, check where you stand on “customer culture”. Is it strong enough to be adaptive and resilient to the storm ahead?

Is 3M still an innovator? – 3 traits it must have to mobilize growth in 2013

customer innovation culture

3M is one of the most consistent companies on wall street, paying out a dividend for nearly a century. It has a diverse stable of 55,000 products from electronics to health care to renewable energy. 3M has long been recognized as one of the most innovative companies in the world.

It grows and expands its business with organic growth and acquisitions. Organic growth is driven by R&D spending, which has developed products like Scotch Tape, Post-It Notes, and Multi-layer Optical Film. It has a long history of invention and innovation and this has been at the core of 3M’s growth since its inception.

But in the past decade the company has focused more money on acquisitions. Recently, the company has purchased security company Cogent and ceramics maker Ceradyne. These acquisitions, along with dozens of “bolt-ons”, have accounted for a large percentage of the company’s growth since 2000.

But the strategy is shifting to more organic growth, which has been stuck at 3% for the past decade, by increasing R&D spending to 6% of sales by 2017 from 5.3% in 2011.

Dan Caplinger, a writer for The Motley Fool, says 3M’s slowing growth has caused some to question whether the company is still innovative. With a new chief executive onboard, Fool contributor Travis Hoium recently suggested that new CEO, Inge Thulin, could be the one to get 3M’s research and development engines firing again.

Jacob Andersson, a writer with Seeking Alpha, notes in his post “3M is poised to go nowhere fast” that it has experienced slowing revenue growth and in fact has had a decline in revenues over the past three quarters when compared to one year ago. From taking a look at its past few income statements he believes that 3M is headed for a continued slowdown over the next one to two years.

But what will drive 3M into the future is the ability to reinvent itself by creating new products and innovating current products. The biggest question now is whether invention and innovation are still alive and well at 3M and does it have the 3 cultural traits needed to drive successful innovation and revenue growth.

There is only one way to know if 3M businesses have the relevant culture traits across its diverse product and service categories needed to mobilize organic growth.

Measure and benchmark those market-connected cultural traits that drive successful product innovation.

Based on our research there are three future-oriented traits that really count.

1. Customer Foresight: Does the company gather information on potential customers? Does it target them based on its opportunity for competitive advantage? Does it understand and invest in meeting future needs of prospective customers? Does it understand and act on unarticulated needs?

Link to Strategy: Strength in this behavioral trait is particularly relevant to a strategy designed to obtain new customers in order to increase the customer base and grow the size of the business.

Driver of Business Performance: This trait measures a business’s ability to acquire new customers and meet future customer needs and specifically impacts innovation, revenue growth and new product and service success.

2. Competitor Foresight: Does the company consider potential competitors when making decisions? Does it identify market shifts in order to identify potential competitors? Does staff feed in competitive intelligence relating to potential new competitors and how they might affect future customer needs?

Link to Strategy: Strength in this trait is particularly relevant to two types of competitive strategies:

a)    a strategy designed to defend competitive position against new competitors in the medium to longer term in industries experiencing market shifts or

b)   a strategy to increase market share by creating a new competitive advantage in an new emerging market.

Driver of Business Performance: This measures a business’s ability to account for future competitors and their strategies and create relevant new products and value propositions. This behavioral trait impacts innovation and new product success.

3. Peripheral Vision: Does the company monitor, understand, and respond to the political, economic, social, and technological trends emerging on the periphery which could affect its customers and its business? Is all staff encouraged to scan their respective fields of expertise for new ideas relevant to the changing external environment? Does the company act on this flow of new ideas?

Link to Strategy: Strength in this trait is particularly relevant to an innovation strategy reflected in two types of strategies

c)    a strategy based on new products and services as the means for growth and profitability

d)   a strategy requiring a new business model to cope with disruptive technological changes

Driver of Business Performance: This measures a business’s ability to scan, sense and act on threats and opportunities emerging in its external environment and impacts innovation. Those companies that have it show capabilities of effective innovation that drive sales and profit growth from new market opportunities.

Where should 3M start? It should measure and benchmark these 3 traits in those businesses that really require innovation for substantial revenue growth. It can then act to strengthen those traits needed to fuel successful product innovation.

Where is the innovation in American retail banking?

customer_innovation_in_banking

More than 150 nominations representing over 30 countries were received for the 2012 BAI-Finacle Global Banking Innovation Awards for breakthrough innovations that positively impact banks and their customers. Of these, 27 were from banks operating in the US and 4 from Canada.

The awards are designed to recognize banking organizations for game changing products, services and practices in retail banking. The award winners were selected by an independent international group composed of prominent industry thought-leaders, academics and retail banking professionals. The winners were announced on October 12, 2012.

The award for the Most Innovative Bank of the Year went to First National Bank in South Africa.  The Product and Service Innovation winner was the OCBC Bank, Singapore, the Channel Innovation award went to DenizBank, Turkey and the Disruptive Innovation in Banking award was won by Alior Bank in Poland.

Here’s how the judges described the First National Bank, a Division of FirstRand Limited:

“First National Bank was named as winner for its culture of innovation and advancement of retail banking. As part of their innovative culture, the bank holds an internal competition, called “Innovators,” that formally encourages and supports the process of innovation and related competencies. Business units within FNB are empowered to innovate through leadership buy-in and advocacy. As a retail banking institution, FNB takes a top down approach to innovation to embed it into the culture. It shows visible support of innovation through internal programs designed to develop new-to-the-world products and services that provide access to retail banking for all who want it. FNB’s commitment to innovation can best be seen through their annual contest – “Innovators”.

“Innovators” is a companywide initiative that supports and enables innovation with leadership buy-in and advocacy from the CEO and his direct reports. Winners of “Innovators” win real money (up to $120,000 USD) for innovations that meet the test, such as e-wallets and mobile phone offerings, which FNB is known for.

FNB encourages innovation at the lower levels of the organization, too, with its “Minivation” program, which rewards back office employees with “e-bucks” that they can redeem at FNB clients for suggesting more day-to-day, incremental improvements. A minivation is anything that takes less than three months to implement that provides some business benefit.

From an organizational strategy design perspective, there is a bias towards innovation in the FNB overall strategy in that it is both a strategic pillar and organizational value. FNB’s decentralized structure gives discretionary decision rights to business units who are enabled and encouraged to innovate. This top-down leadership and support evidenced through the sheer volume of innovations in all categories at FNB makes them The Most Innovative Bank of the Year. “

Of course, this is not the final word on innovation in American retail banking, but there was only one US bank finalist amongst the 12 finalists in the four categories suggesting that innovative practices can be learned from banks operating in other countries.

But what does successful innovation require?

Sustainable innovation, well described in the First National Bank case above, requires an embedded culture led from the top and supported and recognized at every level and in every group in the organization. To be successful, this innovative culture must incorporate behaviors that focus in 5 areas:

1)   Customer needs, especially foresight of future customer needs

2)  Competitive advantage, especially foresight of future competition

3)  Broader external changes, especially changes around the periphery of the industry

4)  Collaboration, especially internal  across functions and with external partners

5)   Alignment, especially innovation aligned with the company strategy

How innovative is your culture compared with your peers? Do you see strong behaviors noted above that are requirements for successful innovation in your business?