Do you really care about your customers?

You know what our customers are buying, where they go on holiday, and how much they spend on groceries each week … but do you really care?

Being able to empathise with others is all about connecting with other people on an emotional level. From a customer experience perspective this is something of a holy grail, and is supposed to lead us into deep insight about what motivates people to do the things they do. If we are lucky, we might even develop previously unrecognised insight leading us to create solutions to problems no-one else knows about.

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Service Innovation Examples

Yesterday I wrote about Customer Experience Innovation, an approach to service design in which specific consideration is given to customer ‘jobs to be done’ and the constraints of service delivery within the design context. I thought I would add a few examples to illustrate these points.

A Delightful Customer Experience

This example is taken from Frog Design, one of the most well known service design agencies in the world.

Frog’s brief was to re-imagine the now antiquated pay phone. Taking a design view based around a communication hub built within and for the local community Frog have designed a truly delightful take on the humble phone. Apart from the snappy voice and gesture control (so you don;t have to take your hands out of your pockets presumably) and the directional microphone (so it actually works), we now have geolocated  advertising down to the city block. Expected in 2014, these devices look set to fit right in amongst the New York streets.

Insight Re-focuses Service on Customer Jobs

This case study is taken from Frontier Service Design. During their brief, Frontier were advised that designer customers bought into the Veroproof service because it was cheaper than competing offerings. How wrong they were. On further analysis it turns out the speed of service was the true deciding factor. Know this and you have a completely different direction for any service enhancement.

Service Blueprints in Action

I couldn’t really find an example of services redesigned with and without consideration for the implementation capability of the organisation. But, this example of a service blueprint for a self service DVD kiosk shows some of the key elements. Whilst there is a lot of customer experience design in the top layers, the service blueprint goes on to map the end to end service interactions all the way into he back end systems and processes required to make it all happen. Without consideration of these backstage elements, we risk designing services with no substance.

Customer Experience Innovation

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Customer Journey Mapping

I started looking at customer journey mapping late last year. Whilst a great deal has been written on the topic my favourite so far has been by the UK’s HM Government, now sadly archived and somewhat difficult to find*.  Consensus seems to be that customer experience mapping starts by mapping out the sequence of touch points between a service provider and a customer, and goes on to form a level of insight into what happens at each touch point and how the customer feels about this interaction. Solid insight can help to identify the highs and lows of a customer’s experience of our service, and therefore the opportunities for service improvement. Follow this up with some good design and the service provider should be well on their way to re-inventing a more delightful experience.

Solving customer ‘jobs to be done’

In lean terms, all services are underpinned by a central value proposition of helping a customer to ‘get jobs done’. The more essential the customer jobs to be done, the more essential the service. I wrote briefly about understanding the value proposition  some time last year. Applied to customer journey mapping, we should be able to use this level of insight to design services which are not only delightful, but essential as well.

Service Blueprinting

At this point I thought I was on to a pretty compelling service design concept. But something was still missing. It turns out that whilst design agencies are very good at providing advice on how to re-invent the customer journey, they are not so good at actually implementing the customer journey. Worse, the re-invented customer journey may not actually be implementable at all if the service providers internal operations cannot cope with the change. Enter service blueprinting.

The basic idea is to start with a customer journey, and map it to the underlying service delivery infrastructure (systems and processes mostly). When considered during the design phase of the ‘to be’ customer experience, we now have a ‘reality filter’ to apply to our prototype services.

Customer Experience Innovation

Combine all three, and we have (i) delightful customer experiences, (ii) focused on essential customer jobs, (iii) which an organisation believe they can actually implement within an acceptable timeframe.

Declaration of interest

I am currently developing this as a service offering on behalf of my employer, a Brisbane based management consulting group. I am posting here for feedback, as a sounding board, and because I am the author of this and other innovation services. Please contact me through my linkedin profile if you want to discuss further.

A note on HM Government

* Luckily, I managed to download the complete series of PDF’s previously made available by HM Government, which I have reposted here. They are excellent resources and well worth a read.

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Bootstrapping by any other name

This article about the rise of Los Grobo, an innovative farmer using a fully outsourced business model, introduces the term Jugaad, hindi for bootstrapping. Making things happen by any means necessary, using your own ingenuity to get around resource scarcity. It’s a great story, and a fabulous example of driving innovation out of nothing.

It brought to mind another story I heard recently from the CEO of what is now Brisbane Materials, a company making antireflective coatings for solar panels. In a previous incarnation the business used a lot of startup capital to fund the equipment that would apply their surface to solar panels,rather than partnering with firms who already made this type of equipment for a living. With little to show for their investment the firm were critically exposed to funding risk, and so a few jittery investors brought down the company. Having learnt their lesson (don’t invest in anything that isn;t going to add value to your business model), they now partner with EVG group – the people who build silicon wafers for samsung and the like.

What can we learn form this?

1. Only invest what you need to, you’d be surprised what you can make do without

2. If you are going to invest in innovation, make sure you are adding value to your business model

3. If at first you don’t succeed, try something different (there are no prizes for failing to learn from your mistakes)

 

Disruptive Innovation

I thought I had a pretty good understanding of disruptive innovation, as a new product that is so different to what is currently on offer that the market place is forced to change quite significantly in order to remain competitive. Discussions focus on the formation of new markets and new customer segments at the expense of existing business models.

In this crystal clear talk from the father of disruptive innovation, Clayton Christensen, the term is described as follows:

  • most industries start out with a complicated, expensive and largely inaccessible product
  • first the product is disrupted with something simple and cheap
  • then the business model is disrupted making the core product available to the masses

Clay tells us that disruptive innovation is not about new products at all, it is about finding new ways to solve existing customer problems cheaply and effectively. What interested me here was the response to how businesses come up with and execute new business models. Using the example of IBM, we are taken through a real life business reinvention in four simple steps:

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Ask Forgiveness not Permission

An intrapreneur is someone who acts like an entrepreneur whilst working within a large organisation. This basically means you get to leverage the corporate brand and resources, whilst taking on the risk and responsibility of launching a new product or service. It also means doing things without being told. I’m not sure if being put in charge of a new project counts, so there needs to be an element of flying under the radar.

I read an anecdote once about an intrapreneur who’s proudest moment was being given an award for ‘flagrant disregard for authority’ by his company…after having ignored their repeated requests to stop trying to launch an idea and going ahead and launching it anyway (it worked, which helped).

So how does this help the rest of us? Particularly those of us who want to keep our jobs? Perhaps this is where the lean startup can help. Rather than trying to filter off funding for your new venture, what if you could work within existing budgets, using existing resources (or close to), and in small enough chunks that you can react to change before the damage is done? This is what the lean startup is all about, here’s how it might work for an intrapreneur:

  1. Think through your idea and come up with the basic concept. Try filling out a lean canvas to keep you focused
  2. Develop clear hypotheses to validate your business model. These should help you identify (i) the problem to be solved, (ii) the people who want the problem solved, (iii) a first solution which solves the problem
  3. Develop your tests, and a minimum viable prototype. Run it through with some potential customers. Iterate your solution and your business model until you have something that works
  4. Keep at it

If you’re going to seek forgiveness instead of permission, going lean should go a long way to keeping your consumption of resources down whilst also giving you a validated business model. If you still want to seek permission, at least do it for a partly validated business model

When Schools Learn to Share

Do teachers know how to share? How about when those teachers are in different schools, or districts?

I’ve been looking at collaboration across the school system recently. Whilst this may seem a little off topic from my usual posts on innovation, creativity and business modelling, I believe there are some important lessons to be learned. Innovation rarely happen in a vacuum, and the image of the lone inventor is now largely consigned to the shopping channel.

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Customer Discovery

It’s time to move beyond finding the next big thing. We need to find the next big reason. If you really want to know if your winning business idea will work, you need to connect with your customers and find out what they really want.

This is the last of three articles on why business plans often don’t work and what to do about it. In part one we saw the risk of relying on an untested business plan, whilst in part two we saw how the business model canvas can be used as a simple, visual tool to bring clarity to your business model as it moves through a number of pre-launch iterations. Today’s piece is on the discovery mindset that is needed to move beyond analysis and towards reality.

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Design patterns #3 – Open and Long Tail

There is an image of the inventor as the lone tinkerer, jealously guarding their ideas and keeping their work ‘top secret’. This attitude has carried over into the boardroom, backed up with the concept of intellectual capital as a key resource. How may businesses today focus their innovation efforts on the capture and protection of Intellectual Property?

Today’s post continues my summary of business model patterns put forwards in Business Model Generation, focusing on open innovation and the long tail model for reaching out to customers.

Open Innovation

When Henry Chesborough challenged the notion of self reliance, the idea that we don’t need to come up with all the ideas by ourselves, he was met with some resistance. An initial look at definitions of open innovation can be a bit confusing. There is a lot of talk about internal and external paths to market, or about sourcing ideas externally. Here it is in simple terms:

“You don’t need to have all the ideas yourself, you just need to figure out how to use them”

There are essentially two key approaches to open innovation, often referred to as Outside In and Inside Out. Again, here it is in simple terms:

  • Outside In: It’s okay to source ideas from outside the organisation, as long as you figure out how to pay for them and use them effectively. That last bit about paying for the ideas you source can be a real stumbling block for corporate attempts at crowd sourcing, see below.
  • Inside Out: One person’s trash is another person’s treasure. It’s okay to sell off ideas you haven’t been able to make work internally, sometimes others will find a way where you failed. This mostly seems to work with patents being sold externally, as businesses generally don’t seem to have figured out how else to retain a stake in their ideas. Glaxo Smith Kline is cited as an example of a business selling off patents they don’t have capacity to exploit, but which others might.

A quick note on crowd sourcing. I’ve seen a lot of businesses treat the outside world as some sort of free resource for ideas. This doesn’t work. Putting out a non targeted request for solving your company’s problems, particularly with no obvious intention of paying for it, is unlikely to work. Ask yourself, “would this work if I walked outside my office and asked a bunch of random people in the street?”. If the answer is no, you probably need to work out your approach a little more.

Two really great examples are given for companies finding channels which work when sourcing ideas externally, InnoCentive and Procter and Gamble. Here are the main channels for getting that gold:

  • Innovation Competitions: part of the InnoCentive core business model, seekers post a challenge (and a cash prize) with solvers competing to win first place. There are variants which reward second and third place entrants, or which set about forming teams to collaborate and put forwards collective answers. But the central idea is to run a competition and purchase the best idea(s).
  • Research Partnerships: P&G and others are using formal research relationships with universities as a source of breakthrough ideas or short term access to expert consulting. Others set up R&D labs staffed by multiple organisations. In either case contractual arrangements for risk and gain share are likely to feature high on the agenda, with particular focus on IP retention and licensing arrangements. Personally, I don’t see anything new here but it is worth mentioning as an obvious channel for acquiring ideas.
  • Alumni Programs: P&G have extended access to their internal suggestion box to retired employees, again not particularly innovative but worth mentioning as surprisingly few businesses really manage to retain effective links with their alumni.

Other work has been done around what sort of collaborative structures work well both within and between organisations, particularly in the field of social network analysis. Not much has been done around what sort of business structures can be setup to generate and exploit ideas (as far as I can tell), particularly around virtual organisation structures. For example, we have discussion forums and collaborative communities for creating ideas and we have crowd funding networks starting to form in order to take business plans to market … but there isn’t much to turn an idea into a business plan. We’re still to frightened of letting go of our precious ideas and learning how to share the profits equitably. I’ll come back to this in a later post.

Long Tail

The long tail is that part of mass production that tends towards a market size of one. Up until recently, a particular problem with the supply chain (particularly with products) was with the good old fashioned economy of scale. For most products, it simply isn’t viable to run a production line for a market size of one. Even exotic cars tend to prefer 20 or so as their minimum order. So who are the challengers?

  • Customisation: take a vanilla product and provide a way to personalise it. Works well with t-shirts, mugs, photo frames and other products finished off with a cheaply uploadable image provided by the end user.
  • Pledge first, ship later: crowd funding initiatives post a product concept, to be shipped once a critical mass of buyers have pledged cold hard cash.
  • Pay now, ship later: catalogue sales of old and e-business in general has this a a core principle, pay up front and we’ll ship it to you real soon. Amazing what reducing the cash flow cycle will do for profits.