Re-inventing an Industry in Three Parts
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Every organisation is coming upon a crisis of value, yours too. And yet we’ve been content to use customer experience like cheap paint on a rickety old building, all too often investing in small ideas in service of the status quo. With entire enterprises vulnerable to being swept away, it’s time to blow up our definition of customer experience
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Re-inventing an Industry in Three Parts
- 2. A JOURNEY TO CREATE VALUE FOR THIS WOMAN
- 4. 4 2002
- 8. cheaper
- 11. June 29 2007
- 13. better
- 23. more
- 25. COMPETING FOR YOUR HEALTH
- 26. 26
- 28. 28
- 29. 29
- 30. UBIQUITOUS TOUCH
- 31. Doctor Nutritionist Running Partner Health Club lululemon The Dog Organic Grocer Nike| Mechanic | Department Store | Artist | Teacher | Ad INFINITE TOOLKIT
- 32. Continuous intimate engagement Find a yoga class
- 33. THE HEDGEHOG IS DEAD Disrupters enter the market better, cheaper and more customized
- 35. BIG DATA
- 37. 37 Phone – Reservations tonight When? – after sunset Weather – rain Restaurant – lighting report Closet – knows the dress Time arrived home – in a rush Right makeup choice Mirror recognition / guidance Dark table! / Sweat! UPDATE!
- 38. Big. Fast. Devastating Greatest Economic Disruption of All Time Richard Florida
- 41. Serial Value Innovators The time for transformation is cut in half and still falling Larry Downes / Paul Nunes
- 42. 42
- 43. 43 3 READS FOR CREATIVE MARKET DISRUPTION Dan McClure dmcclure@thoughtworks.com
Editor's Notes
- Thank you! I’m thrilled to be here today. This is one of my favorite subjects of all time. How do we create unique and original value for our customers and clients. Today we’ll hear about a lot of amazing technology. Some of it truly mind blowing. But before we do, I’d like to step back and remember what this is all about. It’s about people. So, to begin my talk, I’d like to introduce you to this woman. This is Fernanda Alcocer. She grew up in Mexico City, When she graduated from college, she started her own design firm. Eventually she made her way to New York where she took a graduate degree from Parsons School of Design. Today, I’m pleased to say she’s my college in our Innovation Design Practice. Fernanda is a global Millennial with a diverse and energized life. She is your and my future. Our journey today, and for years to come, is to find new ways to create value for her and all the infinitely varied individuals that populate our 21st Century world.
- It’s a journey that began a dozen years ago and promised to put the customer at the center of all our businesses. It has been shaped by three technological revolutions, each revolution creating a new set of opportunities. It began driven by financial officers eager to reduce costs but it will end as a dramatic industry changing redefinition of what a business is and and what it means to survive in the marketplace. This won’t be any one person’s job. Entire organization will be bound up in the customer driven transformation that is going on today. .
- For me this journey began in earnest more than a decade ago, back to 2002, in New Orleans Louisiana, Before the hurricane, Jazz Festival hot summer evenings. A thousand people had gathered to talk about what seemed like a sudden explosion of interconnected technologies. CRM systems were revolutionizing call centers and tapping into newly forged 306 degree view of the customer databases. IVR units introduced the first elements of customer self service and the Web was finally able to do more than display a corporate brochure. This seeming explosion of technology is a pattern we’ll see again, so let’s take a moment to understand how game changing innovation enters a market. http://upload.wikimedia.org/wikipedia/commons/2/28/Barkkus_-_the_dog_parade_of_Mardi_Gras!.jpg
- Typically, technology driven innovation starts small. A new technology emerges and bands of passionate enthusiasts start experimenting with it. They produce Bright and Shiny Things. Cool demonstrations of the technology that might get you a news article or that are good to wave around at board meetings. However, these are not the kind of things that change the way your business works.
- It’s easy to be a skeptic and sit on the sidelines gently ridiculing the frivolity of Bright and Shiny Things. However, at some point several of these innovations come together. They build on each other. Synergies turn them into a creative ecosystem that results in an explosion of innovation. All of a sudden there are transformational ideas that must be adopted if you are going to stay competitive.
- The ecosystem for our first generation of customer focused value linked maturing internal business systems with robust high bandwidth telecom services. When you add web capabilities that allowed a two way exchange of information and there was suddenly a pipeline opened up between a business and their customers. Suddenly customers who had been locked outside the organization and business data that had been locked inside were linked. Businesses and customers could talk.
- Now all great innovations have the potential to be used for good or for ill. The drive behind this revolution was cost. Following the exuberant 90’s the market was brutally competitive and customer service was seen as an expense. As a result the focus of these investments was on being Cheaper. There was little discussion on whether customers were happy with the change. Lowers costs were what mattered.
- Now as you might expect, this produced something of a backlash. All of a sudden there were all these stories about Customer Delight. My favorite was one told by a colleague of mine. He was passionate brand advocate of Virgin Airways. He loved that airline, and one time he made a point of inviting four of his best clients to fly to London on a Virgin flight. The only problem was that a huge storm ravaged the East Coast of the US, stranding him and his compatriots in Newark New Jersey. Virgin didn’t resond to the challenge very well, and so he called up the Virgin customer service center to let them know the depth of unhappiness with his favorite airline. After hearing the basics of his story, the customer serivice rep said, one moment please sir, I’d like to connect you with someone else. The next words he heard were, Good Afternoon This is Mr. Bransons office. Now this is a great Customer Service Story, but it’s a terrible Customer Service Strategy. You cannot have your CEO be your Tier 2 help desk. http://farm8.staticflickr.com/7228/7268359758_0473075d34_o.jpg
- http://www.nextit.com/business/travel/ Success in this space demands that we continue to push costs down, while at the same time finding ways to increase intimacy. Technology offers the best path forward for reconciling these two seemingly contradictaory goals. An example of this is Next IT. The develop automated assistants,. However unlike Siri and other pure natural language processing systems, these assistants are built on top of contextual knowledge of what people are trying to do and what words and questions mean in those situations. It provides a much more effective set of services to customer at a per unit cost that is effectively zero. So there is exciting stuff still happening here. However, let’s be honest, this Is a pretty tough place to work. The space between cost and intimacy is thin and competitive. It’s hard work to eek out small rewards.
- Fortunately, this happened. On this date, Apple introduced the iPhone. And with the iPhone came an entirely new ecosystem for customer focused innovation.
- This ecosystem started with the Smart Phone, a multifunction platform that anyone could carry around with them. Steve Jobs brilliance is often described in terms of the cutting edge design, but the real strategic play was in the invention of the App Store. All of a sudden it became possible for millions of innovators to add value. When you combine this with the migration of content into digital form … news, music and movies you have the making of a powerful innovation ecosystem that has generated literally hundreds of thousands of applications.
- This new ecosystem enables a different set of opportunities. Mobile devices are ideal for making the services we already provide … better. This is a far more joyous place to work. Instead of being crushed by a demand for lower cost, we can now engage customers with the promise of better experience.
- So, where before we were focusing on the below the line cost reductions associated with Operational Competence, we new have the opportunity to improve offering so that we gain competitive advantage in the market. This being BETTER is about greater value which for commercial operations means more revenue, and higher margin. For non-profits it means a chance to be the preferred provider to your constituency.
- So what does “Better” look like. Shoes of Prey is a fun new company entering the crowded field of retail shoe sales. They understand that there hundreds of online shoe sellers to choose from, so they created a way to deliver better value to customers seeking a really cool pair of shoes. They let you pick the style, materials, color of your shoe …. https://www.shoesofprey.com/3d/designer?p=CBP84
- … designing your own custom made shoe. That’s pretty cool. https://www.shoesofprey.com/3d/designer?p=CBP84
- Of course, there remains a need to deliver on the first promise of customer service. It’s not that Better Customer Experience replaces the need for customer experience. They layer one on top of the other. https://www.shoesofprey.com/3d/designer?p=CBP84
- Of course the competitive battles are not only being fought by retailers. Some of the biggest investments making an experience better are being made by service providers like airlines. Every airline in the world is now engaged in a race to remove points of friction in the flying experience. Delta, has a cool example of this. If yourself seated next to someone like me, who doesn’t fit neatly into the airline seat, you can on the spot find an open seat on your phone and shift your seat selection. Points of pain are falling away everyday as the carriers compete to be BETTER. http://upload.wikimedia.org/wikipedia/commons/d/d6/757-200_Pantallas_Tactiles_Delta.jpg
- In the finance industry is another process rich business that is actively pursuing innovations that make their services more accessible and easy to use. Here’s a interesting experiment by WestPac Bank out of New Zealand, placing mobile banking applications on watch. We’re far from done, but its hard to look at these industries and not feel like we’re going to reach a point of diminishing returns. Eventually we will have capitalized on all the genuine opportunities to make the current things we do, better. http://thefinancialbrand.com/wp-content/uploads/2014/03/Westpac-smartwatch.png My Digital Banking Nirvana November 25, 2013 Westpac New Zealand – Smartwatch mobile app. https://thefinancialbrand.com/37647/best-mobile-banking-applications-nextbank-sydney/ http://techday.com/netguide/news/westpac-set-for-first-smartwatch-banking-app/171741/ https://techday.com/netguide/news/westpac-smart-watch-app-goes-live/172720/ Live in November 2014
- However, there’s good news here. A new bunch of bright and shiny objects has emerged and they promise to create even bigger opportunities.
- This new ecology brings together the flood of big data. Xx terra bytes of data are generated online everyday. To give that some perspective, the all the data for xxxx is only xxxx% of that. This is coupled with rampant proliferation of touch points and all of that is empowered by a community of creators that acts through the Cloud. These are amazing technologies in their own right, but what makes them truly transformational is the way they combine to product Unlimited Insight with an ability to Engage with people Anywhere, in imaginative and unprecedented ways.
- http://upload.wikimedia.org/wikipedia/commons/c/cb/Call_Centre_2006.jpg http://commons.wikimedia.org/wiki/File:Shopper.gif http://fc09.deviantart.net/fs71/i/2012/046/3/4/woman_in_a_coffee_shop_by_edwardislander-d4p9ctj.jpg
- This creates a fundamentally different proposition for our customers. Instead of simply doing what we already do better, we can now imagine brand new ways to create value. We can promise More in their lives.
- We are now challenged to step out of a mode of thinking where we are working within the existing boxes of our business. Taking advantage of these opportunities will require us to reimagine ourselves in bold ways that stretch the role we take in someone’s life.
- Let’s take a look at two companies that have taken on a bold vision … to do more than sell you something … they want to become a partner in your good health.
- The first is lululemon. They are a premier athletic wear retailer. They have really great clothing, and you’d have no problem justifying your purchase based simply on the quality of their products. However, they aspire to be more than a retailer.
- They want a deeper partnership with you. So they offer yoga classes in their store. They actively nurture a community of healthy living, with yogi’s and nutritionists who can help you shape a healthy lifestyle. https://www.youtube.com/watch?v=gQ63nBPHzew#t=11
- To support this deep engagement, they have created a mobile application. This leverages the second generation of customer experience technology which is built around the mobile platform. It’s rather like a store locator for healthy living partners. http://www.lululemon.com/omfinder?mnid=mn;community;om-finder
- Now lets take a look at another company that’s competing to be your partner in good health. Nike’s fuel band creates a steady stream of data about our bodies. It gives us unprecedented insight into our own lives, and is part of a wearables industry that is forecasted to hit $30 billion by 2018. wearable technology is slated to be a $30 billion industry by 2018. interGreen Research Inc. calculates that ear-based wearables alone will account for $1.84 billion by 2016. S http://1.bp.blogspot.com/-j2ePVVC87Bw/UTK_rvSCDEI/AAAAAAAAAC0/xfGyn1FQM_I/s1600/Nike-FuelBand-WM0105_001_A.jpg
- Quite frankly, by itself Wearables are mostly bright and shiny objects. But when you start integrating their data flood for information with all the other touch points that are bursting onto the scene. Well much more becomes possible. I come from Detroit, and have a chance to see first hand the fevered rush of automotive designers to integrate everything with the car. Your’ home isn’t far behind or for that matter any piece or place in your life.
- If Steve Job’s brilliance was creating a Democracy of Developers for the iPhone, the similar secret sauce here is the Cloud. The could makes it possible for anyone with an idea on how to help make your life better to connect with the information they need and to connect with you at the right place and time. This infinite toolkit enables creative Doctors, Nutritionists, even your dog to part of your ecosystem of health. http://1.bp.blogspot.com/-j2ePVVC87Bw/UTK_rvSCDEI/AAAAAAAAAC0/xfGyn1FQM_I/s1600/Nike-FuelBand-WM0105_001_A.jpg https://media.ford.com/content/fordmedia/fna/us/en/news/2014/01/03/ford-offers-sync-applink-for-3-million-more-customers.img.png/1388722465002.jpg
- So now, we have two companies with Big Dreams to partner in your good health. Lululemone has leveraged technology in the form a traditional mobile device. Nike has laid the groundwork to engage an entire ecosystem of data, touch points, and value creators. In the en which seems like it is best positioned to grow into the future. For my money, I’m voting on this new ecosystem (Nike).
- Now for a long time we’ve been told by our management consultants that organizations need to focus on a core source of value. We need to be like the Hedgehog who knows something and does it very well. So we either need to be a premium product, a low cost offering, or a more customized offering. This new ecology will kill the Hedgehog. The barriers to knitting together bold new sources of value are falling in this new world. And as a result, disrupters will come in with a proposition that beats you on all three dimensions. Better, Cheaper, More Personal. Way more personal. https://farm1.staticflickr.com/62/182814612_ed83adf218.jpg
- We remain in the early days of this market transformation. But let’s take the seeds of one of these opportunities and see how it might play out with a little imagination. We’ll start with set of unlikely partners. In recent years Sephora has claimed a premium position beauty retailing. They have paired with a company that should have been bankrupt a decade ago. Pantone has long been the experts of color for physical printing http://www.marchpr.com/blog/2012/07/a-big-data-beauty-secret/
- . Printing is to say the least, not a growth business. So its intriguing to see how they have combined their big data about color with Sephoras big data about faces to create a color chart for all the skin tones of our world. http://www.marchpr.com/blog/2012/07/a-big-data-beauty-secret/
- With this information it is possible for Fernanda to scan her skin tone and then receive an iinsightful recommendation about which makeup is right for her. So we have a good use of big data here, but she still needs to come into the store and no one besides Sephora is taking advantage of those insights. http://www.marchpr.com/blog/2012/07/a-big-data-beauty-secret/
- So let’s try to stretch that vision. Fernanda is leaving work and gets an invitation to dinner tonight, which of course her phone knows about and can share. Since we know when and where the dinner is supposed to be, its easy to determine from public data in the cloud if the sun is down and what the weather will be. The restaurant will have a building automation system that can easily publish its own plans for lighting levels. And then when she reaches in the closet, the dress she grabs can announce what color it is and the type of fabric it is to the closet, which relays the information to her mirror, Which then takes into consideration that she’s arrived home late and needs to rush before making a makeup recognition and then guiding her in fine points of the application. And if, when she arrives at the restaurant her wearable device detects that she’s been seated at an unexpectedly dark table, and maybe that she’s sweating a bit with nervousness, then her hand mirror can discreetly offer advice when she heads to the ladies room. If this all sounds a bit fanciful, its worth noting that there is very little here that is not possible to do right now. Plus, because this network of value is so easy to stitch together, the barriers to creating something like this are very low.
- And that is what’s going to mess with our world. Richard Florida, who identified the economic impact of the Creative Class, describes the coming era of innovative change the Greatest Economic Disruption of All Time. New entrants will cobble together value propositions that are Big, Fast and Devastating to existing market players who are relying on traditional views of product and service. Their More will trump your Better. http://www.siteselection.com/onlineInsider/images/Florida-The-Rise-book-cover_3.jpg
- Now why is this so fundamentally disruptive? Here’s how we’ve made money since the beginning of the industrial capital driven revolution.. Early on we invest some money to invent something new, and then we spend the rest of a very long product lifecycle optimizing our efforts at harvesting profits from the market.
- But ecologies of disruption create new competitive and replacement offerings at ever faster rates. Obsolescence comes sooner, and so the opportunities to capture value from our innovations is dramatically reduced.
- We’re seeing this play out in the marketplace. The time required by new competitors to displace incumbants is falling dramatically. Our ability to treat innovation as something that we do once in a while and within narrowly defined product offerings is vanishing. http://cdn1.yourstory.com/wp-content/uploads/2014/03/LarryDownesPaulNunes.jpg
- Instead, The organizations that thrive in this new world of More for our customers will be masters at repeated innovation. Inventing and harvesting as a core capability for their organization. It’s a world that is alternately exciting and terrifying. I for one am thrilled to see what emerges from the tumultuous possibilities.
- I’d like to leave you today with three reads that talk about these challenges and opportunities. Big Bang Disruption explores the key drivers behind this move to Serial Innovation. Resilience talks about the changes in the way we approach solutions needed in a this kind of volatile, rapidly evolving world. And finally, the Lean Enterprise talks about how an Enterprise can begin to rshape itself for the journey ahead.