Category Archives: innovation

2 secrets of Salesforce.com’s success at attracting customers

customerculture_at_salesforce

Jamie Greney, a long standing employee says “In my ten years at salesforce.com, I think one of the most important elements to our success has been the corporate culture. We’ve had a consistent vision regarding the end of software. Three of our top values have been trust, customer success, and innovation.”

Alyson Stone, another company employee says “Depending on how you look at it, resolving a customer’s problem is the beginning or the end of a journey. Companies who decide to put the customer at the center of all business strategies and activities are making a commitment to engagement, yes. But more than that they are making an assumption that each customer is a long-term investment with a high rate of return.”

It is clear that Salesforce’s customer culture is embedded in the business and has been central to its ongoing delivery of value to its growing customer base. Salesforce is on Fortune’s 2012 list of the 100 Best Companies to Work For ranked number 27.

In a report titled “Salesforce’s happy workforce”, David Kaplin describes what happens inside the company.

 “There are plenty of reasons Salesforce is cool to work for: its downtown San Francisco vibe, its matchless end-of-the-year revelry, its embedded philanthropy, and its idiosyncratic leader.”

He quotes Marc Benioff, the CEO, “We achieved our market position by being born cloud,” Benioff writes in his book titled Beyond the Cloud, “but we are being ‘reborn’ social … We need to transform the business conversation the same way Facebook and other social sites like Twitter have changed the consumer conversation and created incredible loyalty — and love.”

Kaplan reports that Salesforce’s new social-networking app, Chatter, functions much like a Facebook inside a company — and helps enhance office culture. Whether on a computer or mobile device, Chatter is dynamic and collaborative — e-mail, by comparison, is static and private. In open groups or news feeds like Finance or Sales, multiple employees can share ideas in real time on projects, analyze data, and compare drafts. “I learned more about my company in a few months through using Chatter than I had in the last three years,” Benioff says.

At Salesforce itself — where there are about 3,000 daily Chatter posts, and internal e-mails have decreased 30% since Chatter went live — there are groups designed to get employees across departments and rank talking to each other about work life, including Tribal Knowledge and Airing of Grievances. Kaplan says you can’t post anonymously, so complaints and queries are rather tame. But it nonetheless generates a degree of cooperation unseen at large organizations.

When you think about it, by providing business software on the web as its core mission, the collaborative model that the company has with its customers engenders cross-function collaboration within each customer as they use the Salesforce software.

Success has many elements, but there are two secrets underpinning Salesforce that stand out:

1)   A Customer Culture as noted at the start of this post, is fundamental to Salesforce’s growth and profitability.

2)   Collaboration across functions and with customers fuels trust and innovation resulting in a happy workforce and more value for customers.

How strong are these cultural attributes in your company? What could you do to strengthen them?

How to attain premium pricing in a discount world – Lessons from Starbucks Steel Card

starbucks_premium_steel_card

How do some businesses manage to attract premium prices while others struggle to get sales at any price?

The answer is a combination of branding, customer loyalty and the creation of customer value.

Companies that invest in creating a brand that stands for something and delivers on that are able to attract high prices Why? Customers trust those brands, they connect with them emotionally and feel comfortable working with them. They will pay more for the feeling they get from doing business with those companies, in short they are getting more value and are willing to pay more.

Who would pay $500 for a steel card that only buys $450 worth of coffee? 5,000 loyal Starbucks customers did just that – all within 24 hours. In fact Helaine Olen reported that a card sold for $1074 on ebay soon after.

What drives this behavior? Certainly there is an aspect of “exclusivity and conspicuous consumption” but more than that these are customers that have connected with the value Starbucks offers. Starbucks is part of their lives, it has connected with them on a level beyond a simple business transaction.

Great companies that create unique value for their customers consistently and have a culture that really values customers will attract premium prices.

What can you do to create an emotional connection with your customers?

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?

The Mobile App Revolution – Why Telcos must reinvent themselves or die

mobile app revolution

New Research by Vision Mobile, entitled “The Telco Innovation ToolBox”, suggests that telecoms must reinvent themselves in order to survive. Their research highlights the need for telcos to transform to the new app culture as new solutions kill off traditional offerings.

The report notes that operators must focus on apps, as most mobile users are shifting from phone models that provide basic services to platforms that give versatile functionalities. A typical telecom platform has only four apps, being voice, text, data and camera, as opposed to mobile computing, which hosts over 700,000 applications.

Telecoms companies are being disrupted because the basis of competition in mobile has fundamentally changed. It has changed from “reliability and scale of networks” to “choice and flexibility of services”, driven by the transition from “mobile telephony” to “mobile computing”. The change is fundamental and irreversible.

Applications such as WhatsApp and other mobile chat apps have threatened revenue from text messaging in various markets around the world, prompting the telecom companies to look beyond the basics and provide solutions for the future.

Most telcos know this, but what is needed to reinvent themelves? They must develop peripheral vision as a cultural attribute that enables them to see current and future market shifts. What is even more critical is a market focused adaptive culture in which people in the organization can make the mindset shift as well as the customer focused practices relevant to delivering value to the new markets.

We can think of today’s technology as “toothpaste technology” – every company has it or can get it. What many don’t have is the customer culture needed to reinvent the business. Those that don’t have it or don’t rapidly develop it will die.

Does your company have the market focused adaptive culture needed to survive fundamental market shifts?

How much is the Starbucks experience worth?

The starbucks premium customer experience

“Starbucks represents something beyond a cup of coffee”, says Howard Schultz, CEO of Starbucks. He’s right. Consumers are not quibbling about the new $7 cup of coffee. In fact, it seems to be a runaway success.

When consumers are connected with a brand emotionally, as many are with Starbucks, they are prepared to pay a premium, or in this case a super-premium, particularly if they believe that the product is scarce. The Costa Rica Finca Palmilera beans come from a relatively rare cherry of the Gesha tree. Scarcity is one thing, but the coffee also needs to be distinctively different. Reviewers say the fancy beans, are being dubbed the Sauternes or Sauvignon Blanc of coffee. They have described the taste as “crisply sweet, quietly but profoundly complex.” It sounds a bit like a wine review, doesn’t it? It won’t be long before we have consumers doing blind taste tests and entering coffee tasting competitions to see who has the best palate.

But, it’s even much more than that. Starbucks has created a bond with its loyal customers based on creating a superior experience from the connection with their personal barista in the shop to hanging out with friends over a Starbucks coffee and a snack. It is the consistency of this experience and the trust that goes with it that enables Starbucks to charge a super premium and for a segment of its market to happily pay it.

We see this in a broader perspective if we accept Howard Schultz’s view: “We help customers discover entertainment”.

This is just the tip of the iceberg. Starbucks is pressing ahead to achieve leadership in the tea market with its intent to acquire Teavana. It acquired Evolution fresh in 2011 offering pure juices and natural foods with added nutrition, launching its first shop in California in October 2012. All of this along with massive growth in the number of shops led by expansion in North America and China.

Does your customer experience create an emotional connection with your brand and your company? Is it strong enough for you to be able to introduce premium price products that customers will happily pay for?

Competing for the future – How Australia Post is reinventing itself in this new age of competition

digital post boxAustralia Post recently released its annual results. Revenues from “regulated mail” – standard postage – are $1924 million and falling, and it made a loss of $148 million. “Non regulated parcels and retail” revenues were up 8.5% to $3073 million, returning a profit of $546 million. An important part of its future will be digital services provided to its commercial customers and Australian consumers.

A starting flurry in this new world is the soft launch of MailBox in November 2012 with a full launch to take place early in 2013. Australia Post has announced that several Australian banks, government departments and utilities will use the Digital MailBox. It will be free to all Australians. It will enable consumers to receive and pay bills, track and manage their relationships with their providers and store all of their important documents in one place. It’s accessed with one password, from any Internet enabled device, 24/7, from anywhere in the world.

Enter Digital Post Australia (DPA), a joint venture between Computershare Ltd, Fuji Xerox Document Management Solutions Pty Limited and Zumbox Inc.

Got that? It’s Digital Mailbox from Australia Post, and Digital Postbox from Digital Post Australia. You can see why Australia post is suing Digital Post Australia  over the name. The first court action was dismissed, but Australia Post is pursuing the action.

At the launch of DPA’s Digital Postbox in early December, CEO Randy Dean ridiculed Australia Post’s launch. “Our competitor recently used its trusted and iconic brand to ‘formally launch’ what appears to be a ‘statement of interest’ for their Digital Mailbox Service. We felt Australians deserved to see what a functioning Digital Postbox looks like and how it operates.” Dean invited consumers to preview the service and activate their “secure and free” Digital Postbox.

Dean says Digital Postbox begins a new era of convenient online mail delivery. “Once the consumer’s Digital Postbox is activated, they won’t need to do anything else. Mail will be automatically delivered online and be available on virtually any web-connected device. Consumers can receive, store and manage important documents such as bills and account statements in a trusted and secure environment. Digital postal mail offers businesses an efficient and cost-effective customer channel that can be enabled using their existing business processes and partnerships and can deliver savings of up to 70% per mail item.”

“We have decades of experience in the secure digital processing, storage, management and printing for the largest and most security sensitive organizations in Australia including banks, government agencies and superannuation funds.

The two companies are now readying their products for market, attempting to pre-empt each other with various pre-releases and announcements. There is no love lost between the two, and their sniping and attempts to define themselves and each other are becoming more intense.

But this is not the only competition. Existing systems like BPay, increasingly sophisticated online banking and now the imminent boom in mobile payments systems are making the technology largely obsolete before it is even introduced.

The eventual winners in this digital environment will be those companies that have a strong customer culture – one in which customer insight and foresight will determine the best way to compete, where the future competition will come from, how future profit will be made.

Australia Post, as a government owned organization, still has a way to go to create and embed a customer culture that will enable it to compete profitably in the digital marketplace.

How Amazon’s customer centric culture breeds innovation

Amazon Customer Innovations

Amazon’s vision is to be the world’s most customer centric company and what this means in practice is they are always looking for ways to add value to customers. This year that has meant innovating in the physical world rather than just the online world.

One of the problems all online shoppers face is what happens when I get something delivered and I am not home? Missed deliveries……..

To address this need Amazon has begun expanding its physical footprint in the US by providing the Amazon Locker. This push first started with the 24 hour convenience chain, 7-11.

It recently announced a partnership with Staples to extend its locker footprint to their stores. Customers can opt to have packages sent to their nearest staples store, they are then emailed a code and have 3 days to pick up their package.

Given Amazon’s mission to save customers money, it is a great strategy designed to expand its options available to customers without increasing its costs substantially.

It is potentially an interesting win-win partnership with Staples who competes with Amazon in the online environment. Staples will get a fee and more foot traffic and Amazon a physical footprint to provide more convenience for customers.

From a competitive standpoint this development also makes sense as the major physical retailers get better and blending online and offline purchasing options. For instance more than half of the sales from Walmart.com are picked up at Walmart stores so customers clearly like this option.

The only way to compete in this environment is to innovate around the ever evolving customer needs, does your company have a customer centric culture?

Reinventing your small business with a deeper understanding of customers

If you can develop an ongoing unique understanding of your customer’s needs through discussion and observation you will have a competitive advantage.

A great small business example comes from Lex Dwyer, a Melbourne based fitness instructor who repositioned his services as a result of observing customers for hours at a time.

At first he was providing “light relief” at corporate planning workshops by giving executives tips on how to look after their health. He then added to this, physical challenges for managers working in teams, to achieve a specific goal like building a bicycle without assembly instructions. Each team would have an incorrect collection of parts, which needed to be traded with other teams to complete the task. These “games” added value to the planning sessions by incorporating leadership, collaboration and teamwork principles.

Understanding Customer's Fitness Needs

However, as Lex attended his clients’ working sessions he was able to design physical challenges as games that reinforced their business goals. He did this by listening to their discussions, observing their frustrations and disagreements and understanding their business challenges.

This insight enabled him to design exercises as a real-time responses to their observed needs and tie their thinking together in a more holistic approach. Lex found he had a particular talent for seeing the “big” picture and tying together his games with the client’s strategy. As a result he repositioned himself as a provider of leadership services and now works with corporate clients and with business schools’ executive education programs.

Net result – delighted clients and consumers, higher revenue and making a difference to people’s lives. Lex’s personal vision of “making a difference” is a reality.

To gain deep customer insights, you have to ask questions and observe customers in multiple ways with disciplined processes. Insight comes from integrating different pieces of information and gaining a multi-faceted knowledge of your customers. It is gained from knowledge of how they think and act before, during and after their purchase. It requires knowledge of the entire customer experience.

How you can create killer customer insights

Customer Insights

Customer insight comes from a deep understanding of customers’ needs and drivers of customer behavior at a level well beyond what customers themselves can explain. These needs are understood from what customers tell us, but more deeply from what we observe customers doing and the frustrations they have in using particular products, services and companies.

Richard Branson, when trying to identify industries to enter a new Virgin service, asks the brainstorming question – “What are 10 things that nobody would say about this industry?” He and his team then prioritize those ideas that would create value for customers and profits for virgin. The next step is decide if a Virgin service can be designed to deliver some of these unspoken values in that industry. It is a great example of outside in thinking, starting with the customer’s pain points or needs and working backwards.

At Mercedes-Benz, rather than asking customers “What do you think of Mercedes-Benz?” a standard question that gets the standard answers about high quality, luxury and so on, they reverse the question –

“What do you think Mercedes-Benz thinks of you?”

This unique twist on a common question results in much deeper insights. Many customers responded initially by saying thing like “ you think we are made of money … that we have all the time in the world”. These responses  led the company to find ways of making its car servicing much more convenient for customers and to build in servicing costs to the initial purchase or lease arrangement.

In both cases these are questions designed to get customer insight that goes beyond what customers will normally tell us.

Are you asking the right questions?