Category Archives: innovation

Customer Obsession: Its a Mindset! Here’s one senior leader’s take on it.

john_stanhope_cfo

I have known and worked with John Stanhope over many years. John had a long career with Telstra culminating as CFO. He is now Chairman of Australia Post. Ever since I have known him he has had a customer mindset. Almost an obsession!

When I spoke to him about the mindset challenges in today’s business he said: “Today the focus must be on ‘customer innovation’. Many companies focus on innovation, but it is customer innovation that counts. At Australia Post our customers want their parcels anywhere, anytime, so we ask: How can we provide a great delivery process that gets better and better over time and do it profitably? Innovation must occur to meet our customer’s need and expectation of ‘anywhere, anytime’.”

He says all leaders must have a mindset that is externally and future-focused. This includes foresight and peripheral vision with future customer needs and changes in customer behaviour as central. This is what drives customer innovation.

To develop this mindset leaders must have a relentless pursuit that everything is about the customer. John says: “There are little signs that tell you. At the start of a meeting ask – Is this about our customers? If not, don’t have the meeting. Another key sign is ‘language’.  How do you frame a problem or an issue? Is it framed in terms of the customer or not?”

I asked John how you get this mindset. He says: “ There are many factors, but I think a key one is that you must immerse yourself with customers. Ask them questions, listen to what they say, observe their behavior and then put yourself in the customer’s position. If I were the customer, what would I want to solve this problem? How would I like to be treated? That applies to anyone in a business no matter what level and what function.”

In every company that is continually successful at innovation, there are leaders and employees that have a customer obsession mindset. Like Amazon, that has developed a customer-obsessed mindset and a customer culture to match, this is required for sustainable success.

The only way to future-proof your business, your leadership or your team is with a strong adaptable, innovative customer culture.

Learn more here

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.

5 ways the insurance industry is being disrupted

Game_Changer_Disruption

The insurance industry is facing a shake-up. The traditional model using specialist agents who communicate with their customers around the time insurance premiums are to be renewed and offer generalist solutions is being disrupted.

  1. Consumer needs and demands are changing. Independent online research sources enable consumers to buy online, compare alternative offers and enhance self-service choices. Insurers will need to offer more personalized products that take account of individual circumstances and provide more transparency in their pricing.
  2. Sites such as Friendsurance enable friends to pool their premiums and is an example of how social networks are bypassing traditional insurance companies. As these grow they will impact incumbents.
  3. Car manufacturers are looking to add value to their offerings and through technology will have the ability to offer tailored insurance based on a driver’s history rather than industry wide statistics. Just as they bundle in car servicing they have the ability to bundle in insurance as an overall car package.
  4. As more car sharing takes place and the number of low frequency drivers increases premiums can be restructured to cover “pay as you use”.
  5. Many new competitors will be pure play online companies as we now see with specialized travel insurance companies like 1Cover. There will be many specialized market niches for them to attack.

Incumbent insurance companies will need to build a cultural capability around customer and competitor foresight – a capability that is attuned to future customer needs and future competitive threats. This will require a cultural agility that enables them to innovate and act before customer changes and new competitor models break the floodgates and seriously erode their businesses and their future.

Is your company being disrupted or a disruptor?

You can read more about what you must do to build customer and competitor foresight in The Customer Culture Imperative.

Is your business model under threat and your survival at stake?

Business Model Threat

In any large successful business today parts of the business are performing well while other parts are ailing. Multinationals like Ford Motor Company and Starbucks are performing well in some countries, but not in others. Samsung and Ikea have high market acceptance of some products, but not others. But, what’s important is to determine if your core business model is under threat. If it is, your very survival is at stake.

Consider what is happening to the traditional postal service corporations like the US Postal Service (USPS), Royal Mail (UK) and Australia Post. Virtually all national postal services originated from government owned and legislated monopolies when letters were the primary source of written communication. These organizations created thousands of bricks and mortar post offices and shops, a large transport infrastructure to deliver letters using thousands of postal staff. The digital revolution has changed all that – letter volumes are declining rapidly, with consequent ongoing and growing losses for incumbent mail services. The business models of traditional postal corporations are under attack from all sides.

Take Australia Post. Like many postal corporations it has developed a growing profitable parcel delivery service fuelled by online consumer purchasing. It is providing new services like its digital mailbox for business and consumers. But profits from these new lines of business are being eroded by losses in the traditional letter delivery business and from competition. Both Singapore Post and Japan Post have purchased courier companies to compete in the Australian parcels delivery market. Also Uber Rush is allowing people to order pickup and delivery of packages using the Uber app. Last year Volvo trialed a service called Roam Delivery that allows retailers to drop off merchandise inside your parked car. All of this adds up to intense competition for Australia Post. Much the same is happening to US Post and Royal Mail as well as other incumbent mail and postal services around the world.

How can organizations like Australia Post survive? They must develop and strengthen a customer-centric culture as the foundation of their organization and as a basis for long-term competitive advantage. This means that they must have strategic alignment with their markets and customers where an understanding of current and future customer needs and current and potential future competitors is factored into their strategies and supported by everyone in the business. This knowledge and mindset must become embedded in all of their businesses and throughout all functions in their organization to enable them to become more agile, competitive and innovative to create superior value for their customers. That in turn will help to drive ongoing growth and profitability.

The postal organizations around the world seem to be at different stages on the journey to customer centricity. New Zealand Post is probably one of the most competitive being one of the earliest to have its mail service deregulated in 1998. It is now two years into a 5-year transformation plan and is showing improvements in overall profitability. USPS lost US$5.5 billion in 2014 despite its growth in package services and has a lot of ground to make up. Australia post is profitable, but profits are declining from the impact of mail service losses and there is now a strong focus on developing a customer culture.

Is your business model under threat? You can measure where you are in terms of customer centricity and what stage of the journey you have reached by exploring the roadmap provided in the award winning book: The Customer Culture Imperative: A Leader’s Guide to Driving Superior performance.

Customer Centric Leadership Practices – Lessons from “the HP way”

the hp way

Source: GIZMODO

In recent weeks I have met several ex-HP employees who told me about the great times they had at HP when the culture embedded by Bill Hewlett and Dave Packard prevailed – a culture of innovation, customer focus and respect for individuals as flesh and blood people.

One told me of his early days as an engineer working in one of the R&D labs in the Test and Measurement Division at Palo Alto. While working on a project at his bench he was expected to watch his colleague working on the next bench and through observation and discussion to see what he was struggling with – then to see if he could solve the problem. If he could, there just might be a lot of other engineers in the marketplace who are struggling with the same problem – and this solution might create a new market.

This practice, or cultural discipline, heightened the awareness of engineers at HP to be looking for problems that their engineering colleagues had that created a sensitivity to the potential needs of their “engineer’ customers. In effect, it made the R&D employees at HP customer focused.

Imagine if accountants in CPA firms or in financial services firms adopted the “next bench” theory. Or IT technologists in IT service firms practiced it. Or HR professionals in large corporations did it. We might just see stronger customer focused cultures emerging organically.

What are the opportunities for “next bench” thinking and practice in your business?

Breaking down company silos with internal social media tools

cross-functional collaboration

In a recent project with a large Energy company, I was working with the senior management and staff to help develop and embed a customer-centric culture. It is their belief and mine (based on extensive research) that a customer-focused business will drive ongoing prosperity. In our research, along with that of many others, we have found that an important factor in enabling a customer culture to become embedded is internal cross-functional collaboration. We found senior and middle management in the Energy company were stymied in their attempts to focus on customers by emails and informational meetings that dominated their work day. Functions were working in silos with very little cross-function collaboration referencing customers and how to increase customer value.

This is typical of so many large organizations.

Don Tapscott, the author of several books on the impact of digitization on our work world, discusses new forms of collaboration in his newest book, Radical Openness: Four Principles for Unthinkable Success.

In an interview in September 2012, recorded in the McKinsey Quarterly, Tapscott described the new social media tools for collaboration:

“How do we get beyond e-mail to these new social platforms that include an industrial-strength social network? Not through Facebook, because that’s not the right tool. But there are tools now: wikis, blogs, microblogging, ideation tools, jams, next-generation project management, what I call collaborative decision management. These are social tools for decision making. These are the new operating systems for the 21st-century enterprise in the sense that these are the platforms upon which talent—you can think of talent as the app—works, and performs, and creates capability.

We had this view that knowledge is a finite asset, it’s inside the boundaries of companies, and you manage it by containerizing it. And this was, of course, illusory, because knowledge is an infinite resource. The most important knowledge is not inside the boundaries of a company. You don’t achieve it through containerization, you achieve it through collaboration.

So, there’s a big change that’s underway right now in rethinking knowledge management. It’s really moving toward what I would call content collaboration, as opposed to trying to stick knowledge into a box where we can access it. E-mail is sort of like what Mark Twain said about the weather. Everybody’s talking about it, and nobody’s doing anything about it. We have to get rid of e-mail.

You need to have a new collaborative suite where, rather than receiving 50 e-mails about a project, you go there and you see what’s new. All the documents that are pertinent to that project are available. You can create a new subgroup to talk about something. You can have a challenge or an ideation or a digital brainstorm to advance the interests of that project. You can co-create a document on a wiki. You can micro-blog the results of this to other people in the corporation who need to be alerted.”

This thinking and these tools apply directly to sharing knowledge about customers and competitors. Effective use of the tools can have a substantial impact on innovation, competitiveness and customer value if they are directed towards sharing across the business a deep understanding of customers, competitors and the changing market environment. This will strengthen an organization’s customer culture which in turn will drive future growth and profitability.

How would you rate your level of cross-functional collaboration? To what degree are you using the new social media tools for internal collaboration? Why not benchmark your level of collaboration and take action to strengthen it?

Your customers are being stolen by the new digital disruptors – Are you fit enough to compete?

digital_disruption

FitNow, launched in 2008, produces Lose It!, the top application in the iPhone’s health and fitness category. FitNow is based on the premise that your phone is always with you and is the perfect platform for tracking your calories. It now has more than 10 million customers.

This business with less than 10 employees is extremely focused on assessing digital customer feedback, revising the app regularly and adding new benefits like social connections among users. It is continually looking at ways to add benefits without increasing costs.

How should Weight Watchers and Jenny Craig respond?

There are a growing band of companies like this – digital disruptors using platforms like iPhone and iPad apps and Facebook to reach millions of people. These new companies have just a few people and move almost at lightning speed. They ignore competition and traditional channels to market and go directly to end customers. Their costs are low, so their margin per customer is high enough to generate profit through volume.

We are all now in a faster moving, more competitive digital environment, no matter what we make and sell. Gear up everyone in your business to understand it and get “fitter” to compete.

So, consider this. If there are no barriers to entry in your business and competitors are easily able to compete with you off a low cost base and from all directions, what would you need to do differently?

Probably a lot of things. Disruption of this type usually needs a transformative change to the way you do things. A good start is to quickly review those things that drive competitiveness, growth and profitability in your business.

You will find that there will be a need to change peoples’ habits around speed of innovation and new products/services to market.

There will be a need to gain greater insight into customers and how their needs are changing. You will need to look for some benchmarks from these disruptive digital competitors. But most of all, you will need to embark on a journey to strengthen your customer-focused culture.

Can Nokia regain its customers and former glory?

nokia_reinvention

As Nokia’s new chief executive, Stephen Elop, took over in September 2010, he faced a formidable task: to regain the company’s lost ground in the smartphone segment of the global phone market, especially in the United States, while maintaining its worldwide dominance as the largest maker of mobile phones.

His biggest obstacle, according to Mr. Hakkarainen, a former manager responsible for marketing on the development team, as well as two other former employees and industry analysts, may well be Nokia’s stifling bureaucratic culture. In interviews, Mr. Hakkarainen and the other former employees depicted an organization so swollen by its early success that it grew complacent, slow and removed from consumer desires.

“Nokia in a sense is a victim of its own success,” said Jyrki Ali-Yrkko, an economist at the private Research Institute of the Finnish Economy. “It stayed with its playbook too long and didn’t change with the times. Now it’s time to make changes.”

Elop’s assessment of Nokia in February 2011:

“We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.
“There is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.”
“The Shenzhen region of China is able to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.”
“Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.”
“We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally”

During the last 2 years Elop has swept away many layers of Nokia’s previous organisational structure. He has refocused the business on leadership (managers taking decisions and responsibility) and markets (innovation driven by people competing in key mobile phone segments). Decision-making has been delegated to local/national teams rather than relying on decisions by an overly-centralized senior management team. Goals and incentives for the senior leadership team are now more transparent. The new strategy brings clarity and a sense of direction to Nokia.

Nokia’s recently launched new 620, 820 and 920 Lumia Windows 8 smart phone range has succeeded in garnering generally positive reviews. It is changing the perception that the embattled company may yet regain its former glory as the world’s premier mobile phone maker says Ray Shaw who provides a review of the pros and cons of Nokia phones compared with its rivals.

But will this be enough? In order to survive and prosper against Apple and Samsung in the smartphone market, Nokia will need a customer-focused culture throughout its entire business (not just at the front end) to drive innovation and sustained growth and profitability. This requires embedded behavior change that goes beyond restructuring, beyond a refocused strategy and beyond decentralized decision making. It requires a completely new mindset where there is an understanding and belief, translated into behavior, that’s what is best for the customer is best for the business.

Imagine your business faces the challenges that Nokia faces. What would your priorities be?

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?