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Zara Bypasses The Gap; It’s All About Customers August 18, 2008

Posted by Bruce Temkin in Customer experience, Disruptive customer experience strategies, Innovation.
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The Spanish retail chain Zara has overtaken The Gap as the world’s largest clothing retailer. That’s amazing since many people outside of Europe probably don’t know much, if anything, about Zara. So what can we learn from Zara’s ascension to the top spot?

First of all, Zara is a division of Inditex, which is a vertically integrated apparel juggernaut. Unlike other large apparel corporations, the company owns all of its retailing, designing and manufacturing operations. This structural difference allows Zara to break some norms in the apparel industry.

Zara offers “instant fashions:” cheap, trendy clothing. In Zara shops, there are two new collections every week, and the company manages to design, produce, distribute and sell each of its collections in just four weeks. Here’s what Professor Isabel Díez Vial from the Complutense University of Madrid, who has studied Inditex, has said about the company:

The customer doesn’t go to the store at the beginning of summer or winter, and see what they want, and think about it and decide later what to buy. Instead, the customer has to go to the shop every 15 days because the collection is refreshed so frequently… This approach leads to a complete change in the production process. Instead of offering products that take a year to plan and sell, you now have a product that the customer demands.

In addition, Zara relies heavily on its front-line employees. Rather than squeezing costs out of its personnel costs, it sees them as a key to its advantage. By analyzing sales data, the retailer increases staff during the periods when there is heavy traffic in the store. Employees are also expected to provide feedback on any fashion trends they see or hear about — including what’s hot, what’s cold, or what’s missing from the current collection.

My take: Zara represents a great case study in how to change the paradigm by focusing on customers. Here are few lessons that others can learn from Zara’s approach:

  • Break supplier-driven paradigms. In many industries you’ll find approaches that are based on some limitation of the companies. These supplier-driven paradigms, like very discrete seasons in apparel, aren’t optimizing customer experience. So there are opportunities to expand your business by challenging the status-quo.
  • Disrupt with service amplification. Many firms view front-line employees as costs; which they try to minimize. That’s why there’s an opportunity for companies to differentiate themselves by investing in their people, like Zara. This approach, called service amplification, is one of the five disruptive customer experience strategies that I’ve mentioned before.
  • Shorten cycle times. If it takes six months to define, design, and manufacture something, then you need to make decisions six months too early. Zara’s ability to cut the cycle times for getting products to market provides it with the ability to respond more effectively to changes in the market. So firms should find ways to cut down the time it takes to make changes in their offerings. 
  • Look to customers for innovation. As I discussed in the post Customer Experience Innovation: As Simple As 1-2-3, companies need to focus their innovation efforts around the needs of customers. Zara’s growth shows that there’s a lot of opportunity to find new and better ways to meet their needs.

The bottom line: The path to the top is always fueled by customers.

Even Dressing Room Experiences Get Better July 27, 2008

Posted by Bruce Temkin in Customer experience, Innovation.
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I just read an article in Forbes about new experiences that stores are designing into their dressing rooms. Here are some of the items discussed in the article:

  • Mitsukoshi, a Japanese department store chain, is experimenting with an “intelligent fitting room” that gives customers the opportunity to check available sizes and styles of the items they are trying from inside the fitting room.
  • Bloomingdales’ New York flagship store’s dressing room registers the items shoppers take in to try on and produces video and images of the merchandise. A touch screen gives shoppers the option to invite friends. By clicking on a url and logging on to a Web site, the friends can see the items being tried on and make comments. The shopper can then click on one of the recommendations, and make it appear in the mirror superimposed over his image, as though he were trying on the garment
  • Prada’s SoHo and Beverly Hills stores have tried responsive mirrors that allow shoppers to simultaneously see pictures of themselves in all the items they try on to help them decide which they want to purchase

My take: It’s nice to see really innovative approaches to an under-served experience like dressing rooms. There are a few key things that other firms can learn from these efforts:

  • There are many underserved experiences. Every company can find a number of “key moments” for customers that currently don’t meet those customers’ needs. 
  • Technology can really help. Over the last decade, consumers have been trained to use digital technologies — from cell phones to Internet browsers. So there’s more of an opportunity than ever to enhance experiences with technology.
  • Let customers drive your innovation. It is easy to throw technology at experiences and end up with nothing more than additional costs. That’s why companies need to focus innovations on the needs of customers.

The bottom line: Find places where technology can wow your customers.

Honda Provides Insights Into Innovation March 20, 2008

Posted by Bruce Temkin in Customer experience, Innovation.
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I just read a fascinating article in Fortune Magazine called “Inside Honda’s brain“ that discusses Honda’s R&D/innovation efforts. Here’s an excerpt:

Honda researchers were curious about how the human brain reacts to images. They found that people recognize faces, especially angry faces, more quickly than other images. Honda has incorporated this research into its motorcycle designs (like that of the DN-01). By designing the front of the bike to evoke the features of the human face, Honda believes that other drivers will recognize the presence of a motorcycle more quickly and therefore lead to greater traffic safety.

My take: This little snippet highlights three elements that can be very valuable in your innovation efforts:

  1. The research goes beyond traditional technical domains
  2. The insights build upon a deeper understanding of target users
  3. The design implementation has a clear purpose

The bottom line: How do your innovation efforts compare to this snapshot of Honda and to Apple’s design process I discussed in a previous post?

A Peek At Apple’s Design Process March 12, 2008

Posted by Bruce Temkin in Apple, Customer experience, Innovation.
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Helen Walters put up a very interesting post called “Apple’s design process” on one of the Business Week blogs. It outlines some comments from Michael Lopp, senior engineering manager at Apple.

After describing Apple’s process of delivering consumers with a succession of presents (”really good ideas wrapped up in other really good ideas” - in other words, great software in fabulous hardware in beautiful packaging), he asked the question many have asked in their time: “How the f*ck do you do that?”

Lopp points to these 4 key elements of Apple’s design process:

  1. Pixel Perfect Mockups: Removes ambiguity from the beginning
  2. 10 to 3 to 1: Start with 10 entirely different mock-ups for any feature, select three to spend months on designing, and then end up with one.
  3. Paired Design Meetings: They hold 2 meetings each week throughout the process: one for unconstrained brainstorming and the other for production details.
  4. Pony Meeting: Everyone has their wants; like kids all want a pony. So they present the best options from the paired design meetings to the leadership team to select their “ponies.”

The bottom line: What processes does your firm have for ensuring ongoing innovation and compelling design alternatives?

Don’t Mistake Innovation For Strategy March 6, 2008

Posted by Bruce Temkin in Customer experience, Innovation.
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Al Reis wrote an excellent article in Advertising Age that captures its thesis in the title: Innovation Should Be Seen as a Tactic, Not a Business Strategy. Here are a few excerpts:

What makes a powerful automobile brand today is not innovation, but a narrow focus on an attribute or a segment of the market…

Innovations outside of a brand’s core position can undermine a brand…

Most brands don’t need innovations; they need focus. They need to figure out what they stand for (or what they could stand for) and then what they need to sacrifice to get there.

My take: I applaud Reis for introducing restraint in a really hot topic area (Look at my posts Customer Experience Innovation: As Simple As 1-2-3 and Trend Watch #4: Business Week “Innovation Predictions 2008.”) Executives get so enamored with “innovation” that they lose sight of the fact that it’s just a tool, not the ultimate objective. Don’t get me wrong, it can be a very powerful tool, but it needs to be used to support the brand strategy. 

As I was thinking about where innovation can help the most, I thought about this Venn diagram that I used in a previous post: 

Venn_CI_BA 

Innovation works best in the overlapping areas on the diagram!

The bottom line: Get more from innovation by obsessing less about it.

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.
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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:

  1. 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.
  2. 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.
  3. 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.

Trend Watch #4: Business Week “Innovation Predictions 2008” January 1, 2008

Posted by Bruce Temkin in 2008 trend watch, Customer experience, Innovation.
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In this Trend Watch, I’m taking a closer look at the following article from Business Week: “Innovation Predictions 2008” While you can see the full list of 14 predictions at the bottom of this post, here are the 7 items that I think are most important for customer experience:

#1) Innovation Consolidation. Excerpt: “One of the big, established consulting firms such as McKinsey, Bain or BCG makes a pass at one of the small design-turned-innovation consultancies-Jump, Continuum, IDEO, or ZIBA-to bolster its innovation practice.”

  • My take: Many of these “innovation consultancies” are going beyond product design and deeper into overall customer experience design — which needs to be a core part of any business strategy (from my point of view anyway). So it makes sense to see the strategy titans trying to expand their offerings in these areas. But I’m not sure if these design firms can survive the post-acquisition culture clash.

#2) B-School Goes D-School. Excerpt: “Business administration focuses on making existing business processes and products better and more efficient. Business design focuses on creating new options for new forms of enterprise.”

  • My take: Design is a loaded word. In some cases it is viewed as a narrow domain. In others, like here, it’s referring to an overhaul of business strategy. However the word is used, keep the three questions of Scenario Design front-and-center: Who are your users?; what are their goals?; and how can you help them accomplish their goals? 

#3) Creative Growth. Excerpt: “As the traditional, cost-cutting workout fails, the private equity firm brings in innovation consultants to shape a growth strategy.”

  • My take: I hope that the private equity firms find creative ways to develop long-term value and not just package the firms up to flip them. A good place to look for creative growth is by applying one or more of the five disruptive customer experience strategies: Ultrasimplicity, online infusion, service infusion, service amplification, and value repositioning.

#5) One Laptop Boomerangs.” Excerpt: “OLPC is criticized as “Western high-tech imperialism.” Governments in Asia and Africa reject the beautifully designed children’s computer because of high costs for installation, repair, and electricity as well as limited local educational content.”

  • My take: I hope that this doesn’t happen. I’m a big fan of the OLPC (One Laptop Per Child) program. But any new and radical effort like OLPC will always find some bumps along the way. Hopefully the OLPC organization can respond to, and correct, any of these potential issues.

#8) Unfriend Me. Excerpt: “People move to gated networks from Facebook and MySpace (NWS), fleeing the commercialization of their personal information and relationships.“

  • My take: Social computing has so much buzz (or should we call it a ”friending frenzy”) that a backlash is highly likely. I know that I  get barraged with invitations to join this network or that network. I think Woody Allen got it right in Annie Hall: “I would never want to belong to any club that would have someone like me for a member.”

#9) Mobile Explosion. Excerpt: “A flood of new applications for the iPhone (AAPL), the newly opened Verizon (VZ) network, and Google’s (GOOG) Android platform generate an explosion of great cell-phone experiences.“

  • My take: I’m not sure that we’ll see a ton of ”great experiences” on cell phones in 2008, but we’ll see some good ones. Companies are recognizing the right types of applications and target audiences for mobile apps. And, the iPhone opens up many new opportunities; I only wish that it was available on Verizon.

#13) The Customer Is King. Excerpt: “Consumers replace competitors as the key reference point for corporate strategy. Reason? Disruptive innovation now often takes places outside the normal competitive environment..“

  • My take: This is music to my ears; and, as many of you know, my mantra. There’s no better strategy than knowing your customers better than your competitors. So I agree, I agree, and I agree. Take a look at the post: “My Manifesto: Great Customer Experience Is Free.”  

14 Trends To Watch from Business Week

Here are all of the trends listed in the Business Week article:

  1. Innovation Consolidation
  2. B-School Goes To D-School
  3. Creative Growth
  4. Presidential Policy
  5. One Laptop Boomerangs
  6. Our Urban Planet
  7. Fly WiFi
  8. Unfriend Me
  9. Mobile Explosion
  10. Kindle Catches Fire
  11. It’s All About Me
  12. Hang On To The Good Stuff
  13. The Customer Is King
  14. Shape-Shifting Enterprises.

Also see: Trend Watch #1: The Economist “The World In 2008 (Business), Trend Watch #2: The McKinsey Quarterly “Eight Business Technology Trends To Watch,” and Trend Watch #3: Advertising Age “Trends To Watch In 2008.”  

The bottom line: Innovation, design, mobile, and customers are hot, but friending and OLPC hit a few speed bumps.