Thursday, February 4, 2016

Innovators, Imitators, and Idiots

Image courtesy of Skley
Do you know about the "Three Is?" If so, which one describes your company?

I was watching an episode of Shark Tank recently when Mark Cuban said, after one of the entrepreneurs failed miserably in attempting to lure a Shark to invest in part because of a gross over-valuation: First come the innovators, then come the imitators, then come the idiots.

This quote is an abbreviated version of what Warren Buffet said to Charlie Rose in an interview about the financial meltdown of 2008:
Charlie Rose asked: “Should wise people have known better?”
Of course they should have, Buffet replied, but there’s a “natural progression” to how good new ideas go badly wrong. He called this progression the “three Is.” First come the innovators, who see opportunities that others don’t and champion new ideas that create genuine value. Then come the imitators, who copy what the innovators have done. Sometimes they improve on the original idea, often they tarnish it. Last come the idiots, whose avarice undermines the very innovations they are trying to exploit.  
The problem, in other words, isn’t with innovation itself — it’s with the imitation and idiocy that follow. “People don’t get smarter about things as basic as greed,” Warren Buffett warned Charlie Rose.
I totally agree with his three Is. We see this when it comes to customer experience. I've written about innovation and imitation in the past, but I haven't written about the idiots - well, not in so many words.
Almost all absurdity of conduct arises from the imitation of those who we cannot resemble. -Samuel Johnson
Here's where I think this - the idiot/greed part - applies to the world of customer experience: (1) focusing on acquisition, and (2) focusing on maximizing shareholder value.

Focus on Acquisition
When companies focus on acquisition (over retention), it's all about more, more, more. At all costs. They might talk about a great customer experience or advertise a great customer experience, e.g., "Better than Amazon!" They've jumped on the lingo bandwagon because they've heard "customer experience" is important. Maybe they've even tried to imitate others (culture, business approach, customer focus) but have failed miserably. They do all that in hopes of attracting more customers, of growing the business. Except they fail because there's no real stuff behind their fluff. It's not based in reality. It's not based on their business, who they are, and their own culture and way of doing business.

Focus on Shareholder Value
When companies focus on maximizing shareholder value, they aren't focusing on the customer experience or making it priority #1; they're not innovating or imitating. We know the purpose of a business is to create and to nurture a customer. We need to forget about that 1970s mindset, that the purpose of a business is to maximize shareholder value. Being customer-focused and customer-centric translates to shareholder value. Focus on the customer, on creating customers, and the profits will come. It might take a little longer, but it will happen.

I love a recent Forbes article that outlines the problems with focusing on shareholder value. I think you'll be able to see very easily how this focus leads to the idiocy that moves companies far away from innovation (bold is mine):
  • pervasive short-termism;
  • diverted human and financial resources from needed investments in innovation;
  • dispirited both employees and managers, leading to pervasive disengagement
  • generated “bad profits” that undermined customer loyalty;
  • caused excessive “financialization” of the economy, making it vulnerable financial crashes;
  • incentivized CEOs to become financial engineers and companies to lose their entrepreneurial mojo;
  • led firms to pursue the extraction of value, rather than the creation of value
  • undermined the economic recovery from the Global Financial Crisis;
  • drastically reduced rates of return on assets and on invested capital;
  • appropriated gains that flowed from workers’ improvements in productivity; and
  • led to secular economic stagnation and increasingly unsustainable economic inequality.
Customers come before shareholders. Understand their needs, your own customers' needs, not your competitors'. Do your own thing. Nobody wins when you imitate. When there are clear, differentiated choices of products, services, and/or experiences in the marketplace, the decision is made easier for your customers. Bring your own unique value to the table. When customers' experiences with one company stink, they have the ability to go purchase from someone else. Let them decide.

Be at the top of the food chain! Lead the pack. Innovate. Don't imitate. And certainly don't be an idiot.

The first generation builds the business, the second makes it a success, and the third wrecks it. -(often attributed to Andrew Carnegie)


Tuesday, February 2, 2016

On Being Average...

What's so special about average?

My kids used to be in a bowling league. Bowling is all about the averages. Some games are good, some are bad; if your average keeps improving or increasing, consider that progress. The score matters; and as long as the general trend is up, you're in great shape.

In bowling, inconsistencies in your performance can lead you to not even achieve your average every time you play. But the average doesn't tell you the reason behind the inconsistencies or what the issues were with your game.

That experience and the weekly focus on the average got me thinking about what's so special about averages. I have two trains of thought when it comes to this topic:
  1. the metrics angle, and
  2. the "being average is boring" angle
In some ways, they go hand in hand.

The Metrics Angle
On average, our retention rate is up 5% in the region this quarter.

That's not very helpful. Which states or cities were up? Which were down? How did different segments fare? What were the percentages by month? Which weeks were better/worse? And why?

The average temperature in Phoenix is 87 degrees.

Sounds pleasant enough, but that's not very helpful, either. I know that the temperature in Phoenix can reach the 120s in the summer; and in the winter, I know temperatures can be half of that. What are the extremes, and do I want to endure either of them?

If you're reporting your metrics (satisfaction, effort, etc.) as mean scores, they can be meaningless because they are just that, a mean or an average, i.e., an aggregation of many different ratings divided by the number of responses. The same mean can be achieved with different sets of numbers, e.g. the average of 9+9+9 is 9, but then so is the average of 10+7+10. Because of that, it's actually more meaningful to look at the distribution of ratings/responses to get a real understanding of your customers' diverse sentiments. If you report means, be sure to look at distributions (and comments), too. Otherwise, you might miss some nuggets hiding behind the mean, like, are there outliers and why?

The other thing that can happen as a result of only looking at the mean is that it often becomes just a metric, a number to chase. But as I pointed out, you can achieve that metric in many different ways. So bypassing the mean and looking at the distribution (and the verbatim explanations) allows you to take the focus off the metric and put it on the customer, again, the varying sentiments across the response base.

Perhaps these quotes help to illuminate the flaws of averages:

Being average means you are as close to the bottom as you are to the top. -John Wooden

Never cross a river that is, on average, four feet deep; you will drown. -Simon Lyons

If you have one foot on burning coals and one foot in a bucket of ice water, on average, you are comfortable. -Unknown

Averages just don't give us enough detail. About the series of individual responses that comprise them. Or about the why.

"Being Average is Boring" Angle
Nobody wants to be average. Right? Being average means that you're, well, middle of the road. Mediocre. Some brands are better; some are worse; some are average: a level that is typical of a group, class, or series; a middle point between extremes (per Merriam-Webster).

Typical. That doesn't sound unique or remarkable or memorable. It sounds, well, average.

Nobody raves about average. -Bill Quiseng

What does it take to consistently be above average? Hard work. Persistence. Listening to customers. Understanding your customers and the jobs they are trying to do. Understanding their differences, needs, and desired outcomes. Doing something unique and special for your customers that's specific and unique to your brand. Every day.

The best are just a little above average, but above average all the time. -Shep Hyken

But...

By definition, it is not possible for everyone to be above the average. -Jim Collins

We know that not everyone will land there, at that level. But wouldn't you rather be on the positive side of average than just average? Or worse, on the other side?

I am only an average man but, by George, I work harder at it than the average man. -Theodore Roosevelt


Thursday, January 28, 2016

Customer Experience Improvements - A Series of Baby Steps

Image courtesy of Dell's Official Flickr Page
I love talking about the customer experience; I could sit for days, answering questions and discussing the finer points of this topic.

So, as you can imagine, I was honored when Paolo Fabrizio asked me to be a guest on his Social Antipasti podcast series to answer some of his questions about customer experience. As the conversation often goes in a podcast, it was fast moving and filled with lots of great conversation.

During our chat, Paolo explored some high-level concepts of customer experience for his audience. The following is an outline of the questions Paolo asked me; we covered a lot of territory in 20 minutes.
  1. Who is Annette Franz? Tell me about yourself and what you do.
  2. Imagine you're talking to somebody who doesn't know anything about customer experience. How would you define it in the simplest way?
  3. Do you think that customer experience is important for any kind of business or industry? If so, why?
  4. In your LinkedIn bio, you say that "the customer experience is an ever-evolving journey." Can you please explain this concept from a brand's perspective? (This response causes me to contemplate changing the name of this blog!)
  5. What should brands do in order to deliver a great customer experience?
  6. In your article Treat Employees Better than Customers, you put employees first, then customers. Why do you consider building a great employee experience a priority?
  7. What are your big projects for 2016? (I throw something out into the universe. Will it become a reality this year?)
Paolo provided some quick highlights of the podcast on LinkedIn, or you can go straight to listening to the podcast.

Thank you!

There is no one giant step that does it. It's a lot of little steps. -Peter A. Cohen

Tuesday, January 26, 2016

Is Your Customer Experience the New Normal?

Image courtesy of micahb37
Is the customer and his experience ingrained in your organization's DNA?

A while back, I wrote a post titled, What the Hell is Customer Experience?. The basis for that post was a story about fish responding to the question, "How's the water?" - to which the fish responded, "What the hell is water?" Reason being, water is what they live in every day; it's part of their environment, just natural for them, to the point that they don't even think about it as being separate from who they are.

That aligns well with Google's definition of DNA: the fundamental and distinctive characteristics or qualities of someone or something, especially when regarded as unchangeable.

Fundamental qualities. Unchangeable. Like the water.

That's how I think about customer experience when I talk about the customer and the customer experience being ingrained in the company DNA. It's part of who you are. And it's unchangeable.

I think Neil Lindsay, Amazon's VP of Advertising, Device Sales & Marketing, said it best when he talked about how Amazon makes the customer its top priority: their focus is to create an experience so magical “… it disappears into our customer’s every day as their new normal.”

In other words, what the hell is customer experience?

So, how do we get to that point? How do we deliver an experience so magical that it really becomes the new normal?

I'll get to that in a second; first, though, here's the challenge with making that the new normal (and let's be clear; we're talking about a good new normal, not a frustrating one):
  • Some say that you can (or should) never really try to delight customers, that you should just focus on reducing effort and meeting the current expectation, the current normal. 
  • Once you actually meet that current expectation on a consistent basis, customers will want you to elevate the experience to a new normal. It's a moving target, and you should just focus on a static target.
But, I digress. That's a more-detailed post for another day. Let's focus on getting to that magical experience, the one that becomes the new normal. Besides, does anyone hate what Amazon is able to deliver? I don't!

On to the question at hand: how do we get to the point of the magical experience being the new normal? what are the inner workings of the organization that drive that experience? how does the customer and the experience become a part of your company's DNA?

First and foremost, know that it's a lot of hard work, and it takes a long time. Dare I say, it's a journey.

Let's start with some of the fundamental necessities.
  • CEO buy-in and commitment
  • well-communicated CX vision and strategy
  • employee experience as a priority
  • employee commitment, alignment, and clear line of sight to customers
  • Chief Customer Officer* (or similar) and a governance structure
  • understanding customers
  • a culture of outside-in thinking
  • a customer-obsessed workforce and mindset
*Note that some say that once the customer experience is ingrained in your DNA, the CCO role is no longer necessary. That's a true "what the hell is customer experience" culture.

To build that customer-centric culture, to get the entire organization to live and to breathe the customer, here are some adoption techniques to consider:
  • brand your initiatives, even name a character/mascot after it
  • deliver ongoing education about customer initiatives, expectations, new products, etc.
  • communicate openly and transparently about issues, financials, customer initiatives, and more
  • hire the right people; culture fit is definitely important
  • set expectations during onboarding and through continuous communication and education about who the customer is and the experience to be delivered
  • share customer feedback and insights throughout the company via intranet, monitors, weekly standing meetings, 1:1s with employees, etc.
  • create a customer room and encourage employees to visit frequently
  • create a customer experience wall, which is not that different from a customer room except that some companies don't have a room to spare or may find it more accessible and more effective to line walls with customer journeys, customer feedback, personas, and more to ensure the customer is ever-present in the employee's mind
  • use persona cutouts strategically place around the office to keep those key personas front and center at all times
  • develop awards and recognition programs for random acts of kindness and exceptional experiences
  • tie the experience (via key metrics/KPIs) to compensation (be wary of gaming and other detrimental responses/behaviors)
  • talk about the customer and his experience in all meetings
  • place an empty chair at the table in all meetings; the chair represents the customer
  • or designate one person in each meeting to represent the customer
  • bring the customer and the customer voice into all decisions (outside-in thinking), design meetings and discussions, and development efforts; ask questions like...
    • what would the customer say?
    • what would the customer think of that?
    • how would that make the customer feel?
When customer-thinking is part of your culture, when delivering a great customer experience is ingrained in the DNA, when everyone speaks "customer," then you've achieved the "what the hell is water?" level of customer experience maturity, your new normal. How ingrained is the customer and his perspective in your company's DNA?

Our DNA is as a consumer company - for that individual customer who's voting thumbs up or thumbs down. That's who we think about. And we think that our job is to take responsibility for the complete user experience. And if it's not up to par, it's our fault, plain and simply. -Steve Jobs


Friday, January 22, 2016

4 Voices That Could Pull Your Company Out of the Innovation Rut

Image courtesy of Thomas Hawk
I originally wrote today's post for Intradiem. It was published on their blog on August 20, 2015.

How do you drive innovation within your organization? Do you think outside of the box to think outside of the box?

When you're designing or redesigning your customer experience, it's critical to listen to - and understand - your customers, what they are trying to do, and how well it's going. (And then act on what you hear and let them know what you've done.)

I recently wrote about the many voices of customer experience, all important to total customer understanding. Those voices come from customers, partners, employees, and customers through employees. Additional, less familiar voices are those of the business (financial and operational data and metrics) and of the market (brand and competitive data).

A couple weeks ago, I came across a book by Wayne C. Burkan titled Wide-Angle Vision: Beat Your Competition by Focusing on Fringe Competitors, Lost Customers, and Rogue Employees. It's on my reading list, and I hope to get to it in the coming weeks, but he poses an interesting idea: to break out of your shell, to break away from the herd (mentality), to get out of the rut your business may be in, to innovate and to succeed, you need to listen to those on the edge.

What does that mean?

He says every company has a mainstream and an edge. Your mainstream consists of your established customers, best employees, and biggest competitors. Success is defined by growing your customer base and having competitors imitate what you're doing. The mainstream is all about today. He defines the edge as those who see the world through a different lens and are dissatisfied with today's solutions. They're not better or smarter; they just have different needs. They're not trying to be difficult; they're only trying to solve their own problems.

I think we're all pretty clear on what's mainstream and which voices would fall into that category: they'd be the ones I've already mentioned above.

But what about the edge?

Burkan says the following are classified as the edge: lost customers, rogue employees, fringe competitors, and fringe suppliers: he claims they are your best source of information to drive innovation.

Let's step away from the book for a minute, and I'll give you my thoughts on each of these voices.

Voice 1: Lost Customers
Let's start with lost customers. They fall into three buckets: (1) complaining customers are those who might be lost customers eventually because you cannot - or can no longer - meet their evolving needs or solve their problems; they complain because they hope to influence product decisions or enhancements, not to be difficult; (2) those who were customers and left because they gave up on you; and (3) those who were prospects but selected a competitor because you couldn't quite meet all of their needs.

Lost customers from any one of these buckets are good for identifying where the market may be headed because they came to you for something they liked but then you weren't (or were no longer) able to solve their problems or meet their growing, emerging needs. It's important to capture their feedback and track all of their enhancements, requests, and needs that you can't currently meet, as some day they will become their expectations - whether you deliver them or someone else does. Perhaps they are lost customers because you just aren't prepared to meet their needs today, but if you listen, you'll be able to figure out where your products need to be sooner rather than later.

Voice 2: Fringe Competitors
The crazy thing about competitors is that everyone wants to be like them. We think that we're losing customers to competitors because they're doing something innovative or cool that we should be doing. Maybe. But maybe they're listening to all of their customers, all of the voices. Maybe they're doing a great job of understanding their needs, today's needs along with emerging trends.

Fringe competitors are made; they are not born. Remember those lost and complaining customers? These fringe competitor companies were created as a result of them - because they couldn't find a solution with those mainstream companies. So, fringe competitors were created by you, in a sense. They had a better idea or a better solution.

Voice 3: Rogue Employees
Burkan states that rogue employees have two traits: (1) they are opposed to - or question - everything (policies, procedures, plans, etc.), and (2) they are never team players. They see things differently, but they see them clearly and can't understand why others don't/can't.

We know that employees are (often) your best source of information and ideas. It's worthwhile to listen to all employees, even those that are misunderstood. While their viewpoints may be different, their ideas challenge a system that often needs to be challenged. Why do we continue to do things this way? "This is how we've always done it" is not an acceptable response to rogue employees. They are rebels with a cause; they buck the system and question the status quo because they know there's a better way. They may not always be right (and probably often aren't), but if we don't listen to them, we'll never know.

They may infuse some fresh thinking, and that's not a bad thing. Don't stifle or squash new ideas just because they aren't what "you usually do." Stop the trend of the blind leading the blind. Get out of the rut and start asking some serious questions. Listen to your rogue employees.

Voice 4: Fringe Suppliers
Many companies select strategic partners or preferred providers as a way to secure price breaks and other relationship benefits. These partners often are (or become) no more than extensions of the company, a mirror of what the company already does and believes in - dare I say, "yes men" who lack creativity and become complacent with the way things are (because, hey, they are getting paid) rather than suggesting better or different solutions.

Rogue or fringe suppliers or partners often offer different and innovative business approaches and solutions, but because they don't align with your approach are cast out and ignored. I've worked with clients who say they don't want a "yes man" as a partner. To them, I say "Bravo!" You just really have to mean it; in the end, don't say it if you don't. Some of those same clients also beat me up until I agreed to just say "yes." Not good! Your partners should challenge the status quo and help you identify ways to be better overall.

Can these four voices change the shape of your future, the shape of your organization?

I know you can't listen to everyone. And some voices drown out others, while others may carry more weight. Just don't be afraid to listen to different voices. If you're stuck in a rut and looking for ways to innovate and grow and be different, have a listen to those on the edge. You might just be surprised by what you hear.

Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. -Apple Inc.