Tag Archives: executives

The One Thing Missing for Innovation

“Innovate or die,” the saying goes. But as companies try to sharpen their competitive edge with new product and service ideas, many don’t realize that their efforts are fundamentally misguided.

That’s because their innovation process is often missing one essential ingredient: their customers.

Companies establish innovation incubators and idea labs. They hold brainstorming sessions and ideation off-sites. They produce and analyze reams of market research.

But if you wander through any of these innovation-fostering instruments, you’d be hard-pressed to run into an actual customer. What you would see are lots of executives and employees discussing what they think customers need and what products or services will help them.

Seldom, however, do companies directly include customers in the innovation process, and that is a dangerous misstep.

The most brilliant customer insights—the ones that drive game-changing innovation—rarely come from focus group rooms or market research surveys. They come, instead, from observing customers in their natural habitat.

Nothing—not the most intense ideation session nor the most robust market research report—can compare with what you learn by simply going out “into the wild,” watching and listening to customers as they navigate through their day, as they use your products and services and as they (sometimes) bastardize those products and services to accommodate their needs.

Automobile manufacturer Chrysler owes its dominance in the consumer minivan market to this concept of customer observation (technically called “ethnographic research”). For more than 30 years, the company has been the U.S. minivan sales leader, a position fortified over the decades by a tradition of customer-centric innovation.

That approach was perhaps best exemplified by Chrysler’s 1996 introduction of the Dodge Caravan, the first U.S. minivan with two sliding doors. Previous models were equipped with only a passenger-side sliding door.

Whereas other auto manufacturers just asked customers if they’d like a second sliding door (and didn’t sense much interest), Chrysler sent a team into the wild to see with their own eyes what minivan owners struggled with but might never have thought to share in a focus group.

In a 2012 interview, Chris Theodore, one of the lead design engineers for the 1996 Caravan, recalled his team’s approach to the project:

“We really had a great time. We looked at customers. We visited customers. We videotaped customers at rest stops, truck stops and lumber yards. That’s where we came up with all the ideas. From cupholders to tissue holders to rollout seats to the fourth door, these were all things that we saw the customer needed but didn’t volunteer when asked.”

As Theodore and his team witnessed firsthand, when you observe customers in the wild, you discover things that even the best internal brainstorming sessions might not have revealed. But they also saw the inherent limitations in merely asking customers for their opinions, because people tend to have needs and frustrations that they would never think to vocalize to a market researcher.

A great example of that comes from OXO, maker of popular houseware products like Good Grips. As Alex Lee, president of OXO, recounted at a 2008 conference, when the company was considering reinventing the measuring cup, it went to consumers and asked them straight out: “What’s wrong with your measuring cup?”

In response, people mentioned things such as how measuring cups are often made of glass, so if they drop the cup, it breaks. They talked about how measuring cup handles get slippery when your hands are greasy, and how the cup itself can get hot depending on what’s poured into it.

And that was pretty much all people had to say.

Then the OXO team made a simple request of the consumers with whom they met: Show us how you measure with a measuring cup.

And they saw people go through a ritual with which we’re all accustomed. They pour something into the cup, then bend down to check the measurement markings. Then they pour a little more and bend down again. Over and over.

Yet no consumer mentioned this as a problem. It’s an aspect of the measuring cup user experience that was so ingrained in everyone’s psyche that no one thought to question it—except the team at OXO. By observing people actually using the product, they exposed inefficiencies in the customer experience that indicated the measuring cup was indeed ripe for reinvention.

That led to the launch of OXO’s now famous “angled measuring cup”—a cup that lets you read measurement markings by looking straight down, obviating the need to repeatedly fill, bend and check. The company sold millions of these cups in just the first couple of years they were on the market.

It’s worth noting that both OXO and Chrysler, when they sought to incorporate the customer perspective into their innovation efforts, did so by observing and questioning consumers of their product.

Both companies at the time relied heavily on distribution partners (houseware retailers and auto dealers)—entities that they might even have viewed as customers. Yet when it came time to look at the world from the customer’s perspective, while they may have engaged distributors in the exercise, it was never done to the exclusion of the end consumer.

This is a critical point for any company that works through sales intermediaries but wishes to foster customer-centric innovation. You can’t define “the customer” as simply the next person in the distribution chain. By doing so, you might very well miss out on important insights that are difficult to capture in any other way.

While lots of companies tend to exclude customers from their innovation efforts, the oversight is probably even more pronounced within the insurance industry. Many industry executives are puzzled at the idea of observing customers. After all, insurance—unlike cars or housewares—isn’t something people use every day.

Even though insurance may be a relatively low-interaction business, there are still plenty of opportunities to observe customers “using” the product. The key is to reject the traditional and very parochial view that customers only use an insurance product at claim time.

The insurance customer experience is shaped by many types of episodes and touch points: research and purchase, underwriting and issue, online and offline service, billing and payments, premium audits, loss control reviews and, of course, claims.

These are all examples of customers interacting with their insurance product, and as such, they afford meaningful opportunities to observe and learn.

If insurers ever do try to incorporate the customer view, it usually happens relative to product development. And while that’s commendable, true customer-centric innovation requires a broader view around when and where to solicit an external perspective.

That means spending time observing customers when, for example, they receive their initial policy package. Or watching when they try to interpret a premium billing notice and then pay it online. Or seeing what steps they go through to prepare for a premium audit. Or witnessing every stressor they’re saddled with when their business is interrupted or their home is flooded.

Great things happen when you break free from the four walls of your office, venture into the wild and immerse yourself in the customer experience. You see things from an entirely new vantage point. You gain insight into how to enhance your products and services. You spark ideas for satisfying not-yet-obvious customer needs.

There’s no single right way to cultivate innovation within a company. However, no matter what ideation approach you employ, the important thing is to make sure customers are included.

And not just included in a cursory way, with a few focus groups or research surveys. It’s about including their perspective in an immersive way, by observing customers in their natural habitat, as they interact with your products and services.

Once you do that, your company’s innovation engine will really start to fire on all cylinders.

‘War for Talent’ Is Not Necessary

Everyone is talking about the war for talent. Must there be a war? Or can your organization accomplish what it wants to (needs to) by fighting the battle for retention quietly, within its own borders?

There’s only so much a company can manufacture with its brand to catch the attention of top talent. Smart candidates understand that the truth about you is displayed by your existing employment base. Your employment brand is much less the result of intentional messages created for an external audience than it is the result of the vibe your existing employee base creates in the marketplace. Social media has increased the volume of this voice exponentially.

To retain the talent you have and to make that social voice work for you, you should:

  1. Make sure existing talent knows it’s being treated fairly in terms of pay and recognition.
  2. Make sure each employee leaves work for the day, week, month with a sense of achievement.
  3. Make sure your processes continue to improve. Smart people don’t like working with dumb processes.
  4. Make sure each employee has at least a small sense of camaraderie.
  5. Relate all work to the customer experience. Most employees would rather work for customers than bosses!

Brilliant people or brilliant processes?

In some cases, employers believe they need brilliant employees because they are the only ones who have been proven to find their way through the maze of terrible processes. Often, employers don’t even realize this is the reason they’re looking for talent. A well-known Japanese company’s leader once said, “In America, you have brilliant people working with average processes; in Japan, we have average people working with brilliant processes.” Something to think about.

Lets face it. There are only so many brilliant people to go around. Most of us are closer to average. Given this, is it really smart to fight a war for talent? Or would it be smarter to work on processes — remove waste (things customers wouldn’t pay for), minimize the things customers do have to pay for but would rather not (things normally required by law) and spend time working on processes that create value? It’s about the customer.

The focus of everyone’s work must be on creating value for customers. The message should be, “Shoot for referrals, settle for retention.” The entire workforce should be motivated by this. Common purpose builds workplaces worth working for.

Unfortunately, it has been my experience that it is easier to convince a janitor of this than it is most executives. Executives make a lot of money. There’s a lot of temptation to protect their domains, their technical areas of work, their lines of business, their territories, etc. What these executives need to understand is that customers flow horizontally through the spectrum of work performed by each executive’s area of influence. The thicker the borders between those areas of influence, the harder it is for employees who want to satisfy customers to get their jobs de. These employees, especially the smart ones, eventually leave the organization. They definitely don’t recommend their own workplace to people they care about.

What if you actually won the war?

So before you begin to fight a war for talent, my recommendation is to think internally. If you did win the war for talented people, what kind of environment would they be working in? What kinds of processes would they be forced to work with? Are your best employees already recommending others to work at your company? If not, why not?

Don’t just sit there, ask them!

4 Tips for Creating a Culture of Action

More than a decade of creating and leading insight teams has taught me that two aspects of culture are critical for customer insight teams to make a real difference to the wider business. One is collaboration between the different technical disciplines (to deliver holistic customer insights). The other is action-orientation, galvanizing the team behind a vision of driving change in the real world. This goes beyond delivery of technical analysis or Powerpoint, to focus on the decision and action needed to deliver commercial results and improved experiences as judged by your customers.

As with most cultural challenges, this one takes time, determination and consistency in leadership. Mostly through getting it wrong first, which seems to be how I’ve learned most of my leadership lessons, I have discovered a few tips that help embed this action-oriented culture. None is a panacea, and each needs to be practiced consistently and equitably, so they become assumed and just embedded in the “the way we do things around here.”

Anyway, enough soap-boxing from me: here are those four tips from the trenches for building a culture of action:

1. Filter out requests that won’t drive action.

The most sensible place to start with culture change is at the start of new work processes. It’s important to train and support your analysts in challenging new requests for work and, importantly, using incisive questioning to drill down to the real need. By focusing on what the internal stakeholder really needs, not just what he wants, it should be possible to uncover the real motivation. An analyst should make clear that the reason for this questioning is two-fold: (a) to better understand the real need so as to identify the most appropriate solution (across a number of potential technical approaches) or identify that existing work could meet that need; (b) to check what action will be taken as a result of answering the question. The latter is what is critical to this culture change. If such questioning reveals that it’s really just of academic interest to another leader and that there is no commitment to take action on the results, then you should back your analyst in declining. Customer insight work only adds value if it is acted upon, and you cannot afford for costly technical resource to be tied up satisfying someone else’s intellectual curiosity or desire to appear smart.

2. All output must include recommendations.

Once the technical work has been completed, the important work of writing up the results and telling a compelling story to engage the business begins. Any customer insight leader should make clear to the team that this output (often in PowerPoint) must include clear recommendations for action. Wherever possible, this should include decisions or actions that the business can take promptly, even if they are only interim steps before a final solution. Even if the insight work has simply identified the need for more data or further work, that must be drawn out as a clear recommendation, alongside any investment or change needed in the wider business to avoid being in this situation again. Consistently requiring clear recommendations that force the business to take decisions, including sending work back to analysts as unacceptable, will drive change.

3. Refocus your progress updates on action taken.

Regular update meetings or calls are a feature of most insight teams. Depending on your organizational culture and personal management style, you may do these weekly, fortnightly or monthly and may favor “morning prayers,” mid-day meeting or end-of-the-day “wrap ups.” However you do it, as a leader what you choose to focus on in these meetings often conveys more in terms of culture than your words. Requiring updates to be structured in terms of the action they are aimed to drive (i.e. improvement in commercial metric or improvement in customer experience scores) and protecting time to check in on progress with the required business decisions and actions needed to achieve these, will speak volumes to your managers and team. It is key to make clear that, in assessing everyone’s performance, you want the acid test to be what change they have driven in the “real world,” not just the efficiency of the process following or delivery of great-looking slides. This does raise the bar and require your team to influence stakeholders in other teams, attend key meetings and even “walk the floor” — but getting out there is great for showing to the wider business and your team that you care about the difference being made.

4. Communicate to the top table with final outcomes.

I’ve shared previously some tips for influencing once in the boardroom or executive committee. A key part of engaging these directors is communicating in terms of what matters to them. Here, leveraging the regular updates you receive in terms of action being taken and communicating in terms of the outcomes being driven (improved incremental income/profit or improved net promoter score (NPS), et al.) can make a huge difference to how customer insight is perceived. I have seen many a director over the years turn from skepticism to passionate support once she experienced that the customer insight leader doesn’t just want to bore with jargon but rather is actively engaged with how insight is improving the key commercial numbers and ensuring better customer experience. Coupled with visible cooperation with marketing and operations, to ensure that the insight “baton” is safely passed to those teams owning taking action and that you continue to run with them to ensure things work in practice, can build positive impressions that deliver support in the boardroom .

I hope those tips help. None is rocket science and I’m sure only serve as a reminder of best practices you know already, but I hope that’s a good thing, too.

As a final comment, just let me say that an orientation toward action also has benefits for your customer insight team members. Almost every analyst/researcher that I’ve employed over the years wants to make a difference. They want all those hours in the office to count for something — to result in an improvement they are proud of. So, although it can seem like more work for them to start with, I have seen delivering the above culture also be welcomed by a team who start to sit up straighter and believe in themselves more. The sense of pride they experience in being a key part of your business and not just being good at what they do but delivering insights that really matter, is a huge benefit. In these days of so many businesses struggling to recruit and retain analytical talent, the difference can also be a real source of competitive advantage.

In fact, working on your customer insight team culture could be a far better investment than the latest shiny software or more external data. It might just be your only sustainable competitive advantage in the coming talent wars.

6 Trends Signaling Major Opportunity

Last year, I decided to pursue a career transition as a full-time occupation. I’ve been out in the market for the past six months, assessing business opportunities as I network with executives in financial services, healthcare, media and retail, as well as with VCs, private equity investors and advisers.

What’s been great is that invariably any role in any organization, however broad, will be framed by the priorities that drive the business, which may be using a short-range lens defined by the annual plan, or one that doesn’t offer much of a peripheral view.  Transition-as-occupation offers full permission to set the aperture and depth of field for insight-gathering and exploration.

What has also been remarkable is not only the generosity of many people at the top of their respective fields to share perspectives, but also how I’ve been able to help others by playing the role of connector among people who may not normally meet up with each other, but who are excited to understand how others are addressing common questions in a complex and changing environment.

Here are six connected trends on the collective mind of the leaders with whom I’ve met. They represent a snapshot of what I am hearing. Within them are opportunities to be realized across this industry:

  • Customer-centricity – is it talk or walk? C-suiters certainly verbalize that “customer-centricity” matters, but few teams demonstrate that empathizing with the customer is bedrock for viable, win/win relationships, growth and profit improvement. The phrase has as many definitions as (or more than) the number of people defining it. Most significantly, the connection to concrete, quantifiable business priorities is generally missing. For those who get beyond the buzzwords, there is tremendous tangible value, even disruptive opportunity, in being a customer-focused player in this sector.
  • Old norms don’t work…digital and innovation are essential. Businesses are faced with redesigning processes, structures and metrics, recruiting more agile learners who are also able to deliver and overcoming legacy infrastructure to adopt new technologies. This level of change in the way businesses operate is not for the faint-hearted. The companies that take on these real implementation requirements will gain ground.
  • Yes, technology truly is changing everything. Even with greater efficiency, there is no growth without compelling offerings that meet big market needs. For companies engineered to serve baby boomers, serving the millennial generation requires profound change, not just a digital coat of paint. The implications go way beyond having a social media presence, cool apps and clever advertising. The millennial generation is inheriting a different world, re-shaped in good and bad ways by prior generations.  The starting point for progress is to be truly insight-led, and not presume you know what people want and need.
  • The marketing bar is being raised. This discipline has been disrupted, and more is being demanded. Traditionally viewed as “support” people, marketers are now being held to results that require a different seat at the table, a different talent profile, processes and resources and an entirely new set of connections with colleagues and external partners. Begin by redefining relationships, especially with product, IT and sales internally, and with the advertising and media agencies as key outside partners.
  • Two tales are playing out within financial services. Legacy institutions remain heavily focused on regulation, compliance, expense reduction and cyber security…while fin tech is hot, with capital flowing into payments, wealth management, consumer lending and related start-ups pursuing market disruption and reshaping the industry. Start-ups are doing great things in this sector and will keep incumbents on their toes, as well as representing potential acquisition opportunities as a strategy to modernize. Alignment around a clear strategy and a collaborative culture are at the foundation of leading change vs. playing defense.
  • Healthcare disruption is creating opportunities, but the pace is slow. Payers and providers are aiming to address Affordable Care Act and other government, employer and consumer-driven impacts.  Using electronic medical records, controlling employer healthcare expenses and enabling patient accountability for medical care decisions are just three of many big and complex challenges. The road to change will be long and slow given the sheer complexity and fragmentation of healthcare delivery. As in financial services, new entrants are leading innovation with solutions that address elements of the ecosystem. As in financial services, there is room for incumbents to realize opportunity with the right strategic and cultural conditions.