10 Innovation Steps For CEOs January 25, 2009
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Innovation.Tags: Fujio Cho, Infosys, N.R. Narayana Murthy, Toyota
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As I’ve described in the 6 new management imperatives, senior executives need to turn innovation into a continuous process. This is even more important in this economic downturn where innovation is sorely needed, but can be easily ignored during cut-backs.
In a book called Innovating at the Top: How global CEOs drive innovation for growth and profit, researchers at INSEAD examined the innovation efforts at nine corporations: 3M, Research in Motion, Genentech, Unilever, SAP, Bosch, Nokia, Infosys and Toyota. The research uncovered ten innovation drivers:
- Appoint the CEO as the innovation champion
- Celebrate an innovation culture
- Engage more innovation partners by sharing knowledge
- Organise diversity to promote positive friction and cross-fertilisation
- Use customer needs to drive simultaneous R&D and Business Model Innovation
- Set high-quality standards and demanding challenges
- Encourage youth and keep a challenger mentality
- Appoint appropriate decision-makers and encourage transparent information-sharing
- Use processes judiciously
- Incentivise people to innovate continuously
Given my focus on customer-centricity, I really enjoyed these quotes:
Innovation, based on the needs (of customers), is faster, cheaper and a more dependable approach.
– Fujio Cho, chairman of Toyota Motor
Unless our researchers realise what the outside world is and what is happening in the trenches, their innovations will have no value for the customer.
– N.R. Narayana Murthy, chairman of Infosys
The bottom line: A recession is a great time NOT to forget about innovation.
PNC Bank Breaks Through Gen Y Blindspot December 3, 2008
Posted by Bruce Temkin in Customer experience, Design solutions, Disruptive customer experience strategies, EBD #1: Obsess About Customer Needs, Financial services, Gen Y, Innovation, Marketing to Gen Y, Online strategy.Tags: IDEO, Online infusion, PNC Bank, VirtualWallet
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Last year I proclaimed that Banks Have A Gen Y Blind Spot. Well, that’s no longer true for all banks. It turns out that PNC enlisted IDEO to help engage Gen Y and created a new offering: VirtualWallet. According to a recent BusinessWeek article, PNC has signed up more than 20,000 customers (70% from Gen Y) and is on track to break even in two years.
Here’s how VirtualWallet is described on the IDEO Website:
[It is] a family of banking products that provide customers with seamless access to their finances and intuitive, tangible, and direct control of their money. Centered on electronic transactional banking, it is designed to both promote and optimize banking activities with features and visualizations that support the mental models and lifestyles of its Gen Y customers
My take: I really like VirtualWallet. It shows what you can do when you explicitly focus on Gen Y. The long-term success will require ongoing nurturing by PNC, but the initial approach makes a lot of sense because:
- It applies a strategy called online infusion. While it’s a financial offering, online features like a money slide bar to graphically indicate available funds, a “Savings Engine” that helps customers establish rules around spending, and a playful instant transfer feature named “Punch the Pig” are core to the value proposition.
- The online experience implements many components of the four strategies we’ve defined for engaging Gen Y: 1) Immediacy, 2) Gen Y literacy, 3) Individualism, and 4) Social Interactivity.
- There’s a mobile component. While this wouldn’t make sense for many banking applications based on overall mobile usage, it’s almost a requirement if you want to target Gen Y; many of whom view their cell phone as their primary digital device.
- The approach starts with customer needs. While this is not novel for projects that involve IDEO, many companies aren’t diligent enough in starting with a solid process for uncovering the true needs of specific customer segments. By understanding Gen Y behaviors, the bank can actually charge fees for anything more than 3 checks per month.
The bottom line: Gen Y will be getting a lot more attention from banks.
Wells Fargo Improves Communications With Ethnography November 5, 2008
Posted by Bruce Temkin in Customer experience, Design solutions, EBD #1: Obsess About Customer Needs, Voice of the customer.Tags: Ethnography, Helene Alunni-Botteri, Robin Beers, Wells Fargo
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Robin Beers (VP of Customer Insights) and Helene Alunni-Botteri (Vice President, Strategic Planning) at Wells Fargo briefed me about a research project in which the bank used ethnographic techniques to examine its written communications. It was a pretty novel approach, so I published a research report about the effort. Here are some of the highlights of their project.
The objectives.Wells Fargo (like all large banks) sends a wide variety of communications, both online and offline, to their customers. Wells Fargo wanted to make sure that the collection of these communications were “customer friendly.” In particular, the bank wanted to see how customers responded to its “Writing With C-A-R-E” (Consistent, Approachable, Resepectful, and Empathetic) guidelines.
The study.The bank recruited 20 customers who matched their three target personas to comment on all of the communications (e.g., account service notification, marketing solicitations) they received from Wells Fargo and other organizations over a 30-day period. These customers called a toll-free number to share their immediate reaction about the documents and they also kept a scrapbook in which they wrote comments about each communication. The bank brought the most engaged customers together to debrief them in-person about their scrapbooks.
Lessons learned. Here are some of the insights that Wells Fargo took away from the research:
- The bank’s communications were meeting the basic needs of customers, but were falling short on the humanistic dimensions of “approachable” and “empathetic.”
- Customers wanted the bank to communicate like it knew them, similar to other communications they received from organizations like AARP.
- Marketing messages, especially those with presumptive language like ”Congratulations!” or “Good News,” were viewed quite negatively; customers used words like “ploy” and “scheme” to describe them.
- The bank could mitigate negative reactions to bad news like a notice of insufficient funds if the communications provided relevant advice.
- Many consumers view the bank’s Website as the primary visual reference point; noticing differences with layout, color, and other design elements in the communications.
- To ensure that the results were actionable, key stakeholders were engaged throughout the process. The findings were “socialized” with 700+ content writers across Wells Fargo during 30+ workshops.
Thanks. Thank you Robin and Helene for sharing this information.
The bottom line: There’s no substitute for the customers’ point of view.
Mattel Showcases Online Listening Community November 1, 2008
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Voice of the customer.Tags: Communispace, Mattel, Think Passenger
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In a previous post I highlighted the 2008 Groundswell Award winners. Given my focus on voice of the customer programs, I wanted to take a closer look at the winner for Listening: Mattel’s “The Playground.”
Here’s an excerpt from Mattel’s submission for the award:
Mattel’s Worldwide Consumer Insights Department created The Playground, a private online community of 500 moms with kids aged 3—10, with Communispace in June 2007 to help them listen to and gain insight into the lives and needs of moms to help drive growth and innovation. During the fall of 2007, Mattel had a series of product recalls on popular toy brands that sent the organization reeling… Moms from the community provided Mattel with insights around how they felt about the recall, how they felt about Mattel, how they felt about China-produced toys, their perceptions of Mattel’s response plan, what their biggest fears and concerns were, and what Mattel could do to help them.
My take: I’ve been looking at social technologies a lot more lately (don’t worry, I haven’t turned into a Web 2.0 fanatic). It turns out that many companies like Mattel are successfully using online communities to get deep customer insight, especially in two of the five levels of voice of the customer program: Continuous Listening and Project Infusion. Here are some things to keep in mind if you’re thinking about creating a private online community for the purpose of customer listening:
- Make the case for an online community based on the speed of getting insight and the depth of the insight
- Use a vendor like Communispace or Think Passenger to provide online community expertise
- Dedicate internal resources to understand how to best use online communities
- Recruit community members that represent important customer segments
- Plan on an ongoing set of activities to keep the community engaged
- Look for feedback across a wide range of areas (e.g., idea generation, product development, marketing messages)
- As with any voice of the customer tool, don’t forget to focus on all aspects of LIRMing: Listen, Interpret, React, and Monitor. (Debi, thanks for reminding me about this one)
The bottom line: Online communities are a key tool for voice of the customer programs.
Recession Strategies From IDEO And Potatoes October 23, 2008
Posted by Bruce Temkin in Customer experience, Disruptive customer experience strategies, EBD #1: Obsess About Customer Needs, Executive leadership, Managing in a recession.Tags: IDEO
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I ran across an interesting article on the IDEO Website called Reframing Recession: Lessons from the potato (.pdf). The article discusses how potatoes became a popular food item in the 1790’s amidst the turmoil of a devastating grain market and repeated crop failures. The potato’s rise to the family table was driven by consumers’ innovation in trying to fill an overarching goal — feeding their families.
The article does a nice job of using this story to frame the reality of poor economic times: There’s still opportunities for growth. Here’s a very interesting observation from the article:
When the economy is down, people look to different product categories to solve persistent needs, making trade-offs that reflect both conscious and unconscious decisions. In the last recession we called this “The Lipstick Effect” – as budgets tightened, women still sought out ways to address their need to flaunt a little and sales of cosmetics went up. Just as in 2002, Estée Lauder’s makeup sales have recently felt an uptick – 11% in the third quarter of 2007.
The article ends up by making the following five recommendations:
- Hang out with your customers. Since customers will be looking to fill their needs in different, cheaper ways, you need to spend time understanding their core needs. This is pretty much the 1st principle of Experience-Based Differentiation: Obsess about customer needs, not product features.
- Watch out for a new breed of unlikely competitors. Just like the potato replaced grain in the 1790s, consumers may turn to new categories of products as substitutes for your offerings.
- Be inspired by extreme value. Look for models to copy, across any industry, where people are getting more value for less.
- Go elephant hunting with a slingshot. Go find opportunities where you can provide a cheaper, simpler solution to replace expensive, complex ones. I like this one a lot. As a matter of fact it’s very close to one of the five disruptive customer experience strategies that I’ve called Ultrasimplicity.
- Don’t be afraid to prototype. Get some changes out in the field and be willing to learn, even through small-scale failures. The article provides this good advice: “Tougher times are exactly when you should give those managers who are closest to your customers the freedom to act on their insight and to experiment.” In the post Keep Customer Experience Momentum In A Recession, I also discuss the importance of innovation in a downturn.
The bottom line: Don’t react to a recession by clamping down on innovation.
Ford’s MyKey Demonstrates Customer Insight October 14, 2008
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Experience-Based Differentiation.Tags: Ford, MyKey
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Ford has a new technology called MyKey which is a safety device aimed at teenage drivers. When the car is turned on by a specific MyKey (give to a teenage driver), the car behaves differently. It will debut as standard equipment on the 2010 Ford Focus coupe and will works its way into other Ford, Lincoln and Mercury vehicles. Here are some of the features of MyKey:
- limit top speed of vehicle to 80 miles per hour
- sound a chime whenever the vehicle travels above 45, 55 or 65 miles per hour
- cap the volume on the car stereo
- mute the radio and chime repeatedly until the driver is buckled up
- light up low-fuel warning earlier than normal
My take: I’m not sure if this particular feature will sell more cars, especially given the economy, but it represents an excellent example of the first principle of Experience-Based Differentiation: ”Obsess about customer needs, not product features.”
What’s so good about MyKey? Ford thought about the needs of a specific segment of customers (parents of teenagers) — beyond the usual automotive features like style, speed, price, and fuel economy. By looking at a more comprehensive set of needs, the car maker was able to identify novel features that appeal to that segment.
The bottom line: Digital features require durable manufacturers to know more about customers.
Best Buy’s Growth Plans Neglect Customers July 24, 2008
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Experience-Based Differentiation.Tags: Best Buy
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Mike Vitelli, executive VP of the Best Buy’s customer operating group, outlined this five point plan for the retailer’s growth:
- Continue to benefit from the CE industry’s steady growth of 6 percent over time.
- Open new stores and develop categories where it presently has limited share. These include Apple computers, a relatively recent brand addition; major appliances, which are benefiting from a differentiated assortment and a dedicated sales force with increased training; and mobile phones, which have been reinvigorated by a new business model developed with Carphone Warehouse.
- Introduce new categories, such as musical instruments. While all Best Buy stores carry a smattering of keyboards and guitars, the company is experimenting with extensive, “top-shelf” collections in several locations around the country.
- Develop completely new business models, such as the planned national rollout of Pacific Sales, the company’s West Coast chain of premium appliance stores.
- International growth. Best Buy has already established itself in Canada, China and Europe, and soon plans to open its first stores in Mexico and Turkey.
My take: None of these 5 points focus on customer experience. So I am very concerned about a degradation of Best Buy’s customer experience.
Later in the article it says: “Separately, Vitelli said the company is working hard to engender more personalized service on the store level in order to combine the scale benefits of a national chain with the hands-on attention of an independent dealer.” But if Best Buy does not see customer experience as one of the core components of its growth, then it will under-invest in this critical area. As it says in the 6th law of customer experience: You Can’t Fake It.
In Forrester’s Customer Experience Index, 2007, Best Buy was ranked #34 out of 112 firms — and 23rd out of 27 retailers on the list. So the retailer needs to adopt the 1st principle of Experience-Based Differentiation: Obsess About Customer Needs, Not Product Features.
I’d like to see Best Buy invest in several areas as a core part of its growth strategy: (1) Product training for employees (similar to The Container Store’s commitment to training); (2) Voice Of Employee systems (to capture and attack problems and issues at the front line); (3) Product selection tools (to help customers make product decisions in major categories); and (4) Improved Web-Store cross channel experiences.
The bottom line: Customer experience needs to be a core objective.
Customer Experience Innovation: As Simple As 1-2-3 February 28, 2008
Posted by Bruce Temkin in Customer experience, Disruptive customer experience strategies, EBD #1: Obsess About Customer Needs, Innovation.4 comments
I just published a research report called “Customer Experience Innovation In Three Steps” which describes the following three-step process for creating breakthrough customer experience innovations:
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Uncover the needs. Let’s start with an assertion: In every industry, customers have a lot of unmet needs. Why else would digital video recorders (DVRs) like TiVo gain momentum when there was no shortage of mature VCR options? The first step in the customer experience innovation process is to understand exactly what current and potential customers really need through end user research like ethnography.
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Design a disruptive strategy. After understanding what customers really want, firms need to define potential offerings. Although ideas for new products and services can come from anywhere, firms should consider designing solutions based on one or more of Forrester’s five disruptive customer experience strategies.
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Evaluate the opportunity. Not all innovations are worthy of investment. To decide which ones make sense to fund, firms can use the R-W-W (real-win-worth it) framework. How does this work? Only go ahead with proposals if you can answer “yes” to all three of the following questions: Is the opportunity real? Can you win? Is it worth doing?
The bottom line: Make sure that innovation is on your agenda.
What Do Customers Want? Professor Kano Knows September 5, 2007
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Experience-Based Differentiation.4 comments
I’m guessing that many of you weren’t sure what this post would be about given the title. That’s because most people have never heard of Professor Noriaki Kano. But anyone who deals with customer experience (or product development) should definitely learn about his work. Professor Kano is probably best known for creating the Kano Model (developed in the 1980’s) that classifies customer preferences into five categories:
- Attractive (unexpected value)
- One-Dimensional (the more, the better)
- Must-Be (need to have these)
- Indifferent (no impact)
- Reverse (negative impact)
It’s critical that companies understand what attributes matter most to customers — and in what way. By classifying product/interaction attributes using the Kano Model, priorities become much clearer. Here’s how you make decisions:
- Meet the minimum requirement for all of the must-be attributes
- Add value with the one-dimensional attributes
- Infuse a few attractive attributes to really enhance the experience
- Make sure that you’re not investing in any indifferent attributes or creating any reverse attributes.
I included the following graphic about the Kano Model in my report ”Experience-Based Differentiation” because I think it’s important for people to understand this classification system. Here’s the graphic (split into 2 Powerpoint slides) that I showed in the report:
The bottom line: Not all customer preferences are equal. Use the Kano Model to (wisely) pick which ones to serve.
Words Of Wisdom: Stanley Marcus On Customers As People September 3, 2007
Posted by Bruce Temkin in Customer experience, EBD #1: Obsess About Customer Needs, Personas, Words of wisdom.add a comment
Stanley Marcus, who was president and chariman of the board of Neiman Marcus, was quoted as saying:
Consumers are statistics. Customers are people.
I think he was telling us that great experiences need to accomodate the specific needs, wants, and aspirations of individuals — who just happen to also be customers.
My take: Unfortunately, many companies don’t seem to understand this concept. I often find that firms either lack any real understanding of their customers or they rely almost completely on analyses of their data warehouses. That’s why I often find myself telling clients…
“Your customers don’t live in spreadsheets; you need to go out and talk to them to understand who they are as people. That is, of course, unless each of your customers is really a 55% female with 2.3 kids who is 48% from a suburb and is 11% hispanic.”
It’s not that analytics are bad (they’re actually quite helpful), but they don’t provide enough of an understanding of “people” to design and deliver great experiences. That’s why companies should use design personas — as I discussed in my previous post called “Get To Know You Customers Persona-lly“
In order to get a sense of what we mean by a design persona, here is a an example from WHITTMANHART that was shown in an excellent Forrester research report called Best And Worst Of Personas, 2007 by Moira Dorsey (Note: This is only a partial view of the persona).
The bottom line: Experiences need to satisfy individual people, not consumers.
