Tag Archives: harvard business review

The Key to Digital Innovation Success

More than a half century ago, Ted Levitt transformed the strategic marketing agenda by asking a seemingly simple question. In his classic Harvard Business Review article “Marketing Myopia,” Levitt declared that truly effective executives needed the courage, creativity and self-discipline to answer, “What business are we really in?”

Were railroads, he asked, in the railroad business or the transportation business? Are oil companies in the oil business or hydrocarbon or energy business? The distinctions aren’t subtle, Levitt argued, and they subverted how companies saw their futures. Marketing myopia blinded firms to both disruptive threats and innovation opportunities.

Levitt’s provocative question remains both potent and perceptive for marketers today. But my research in human capital investment and “network effects” suggests that it, too, needs a little visionary help. Increasingly, successful market leaders and innovators – the Amazons, Apples, Googles, Facebooks, Netflixs and Ubers– also ask, “Who do we want our customers to become?”

That question is as mission-critical for insurance and financial services innovators as for Silicon Valley startups. The digitally disruptive influence of platforms, algorithms and analytics comes not just from how they transform internal enterprise economics but from their combined abilities to transform customers and clients, as well. Successful innovators transform their customers.

See also: The 7 Colors of Digital Innovation  

The essential insight: Innovation isn’t just an investment in product enhancement or better customer experience; innovation is an investment in your customer’s future value. Simply put, innovation is an investment in the human capital, capabilities, competencies and creativity of one’s customers and clients.

This is as true for professional services and business-to-business industries as for consumer products and services companies.

History gives great credence to this “human capital” model of innovation. Henry Ford didn’t just facilitate “mass production,” he enabled the human capital of “driving.” George Eastman didn’t just create cheap cameras and films; Kodak created photographers. Sam Walton’s Walmart successfully deployed scale, satellite and supply chain superiority that transformed “typical” shoppers into higher-volume, one-stop, everyday-low-pricing customers.

Similarly, Steve Jobs didn’t merely “reinvent” personal computing and mobile telephony; he reinvented how people physically touched, stroked and talked to their devices. Google’s core technology breakthrough may appear to be “search,” but the success of the company’s algorithms and business model is contingent upon creating more than a billion smart “searchers” worldwide.

The essential economic takeaway is that sustainable innovation success doesn’t revolve simply around what innovations “do”; it builds on what they invite customers to become. Simply put, making customers better makes better customers.

Successful companies have a “vision of the customer future” that matters every bit as much as their products and services road maps.

Insurance, fintech and insurtech industries should be no different. The same digital innovation and transformation dynamics apply. That means financial services firms must go beyond the “faster, better, cheaper” innovation ethos to ask how their innovations will profitably transform customer behaviors, capabilities and expectations.

In other words, it’s not enough to answer Levitt’s question by declaring, “We’re in the auto/property/life insurance business.” The challenge comes from determining how insurance companies want their new products, innovative services and novel user experiences to transform their customers. How can insurance companies invest in their customers in ways that make them more valuable? Who are they asking their customers to become?

So when insurers innovate in ways that give customers and prospects new capabilities — like Progressive’s price-comparison tools and Snapshot vehicle-usage plug-ins or Allstate’s mobile-phone-enabled QuickFoto claims submission option — they’re not just solving problems but asking customers to engage in ways they never had before.

Who are these companies asking their customers to become? People who will comparison shop; allow themselves to be monitored in exchange for better prices and better service; collaboratively gather digital data to review and expedite claims. These are but the first generation of innovation investments that suggest tomorrow’s customers will do much more.

This is of a piece with how a Jeff Bezos, Steve Jobs, Mark Zuckerberg or Reed Hastings innovates to make their customers — not just their products — more valuable.

Today’s Web 2.0 “network effects” business model — where a service becomes more valuable the more people use it — are superb examples of how smart companies recognize that their own futures depend on how ingeniously they invest in the future capabilities of their customers. Their continuous innovation is contingent on their customers’ continuous improvement. Call it “customer kaizen.”

How rigorously and ruthlessly fintech, insurtech and insurance companies champion this innovation ethos will prove crucial to their success. Being in “the blockchain business” is radically and fundamentally different than asking who we want our blockchain users to become.

See also: ‘Digital’ Needs a Personal Touch  

Giving better, faster and cheaper advice on risk management via digital devices is different than fundamentally transforming how customers perceive and manage risk. It’s the difference between “transactional innovation” and innovation based on more sustainable relationships of mutual gain.

The insurance industry needs to transform its innovation mindset. Start thinking how innovations make customers and clients more valuable. If your innovations aren’t explicit, measurable investments in your customers’ futures, then you are taking a myopic view of your own.

Today’s strategic marketing and innovation challenge is how best to align “What business are we in?” with “Who do we want our customers to become?”

4 Ways to Manage Remote Workers

Very few entrepreneurs can go from idea to success without a team of people supporting their projects. Besides hiring people in-house for human resources, marketing, production and service jobs, they may need to hire virtual employees and contractors to fill these positions. Either way, they need to create and foster a team-based environment to create a feeling of accountability and responsibility within the shared goal of success.

Creating a team atmosphere can be very difficult with virtual staff, whether employees or contractors. It’s a growing issue because technology opens up so many options for people around the world to work together as a team. According to Gallup, as many as 37% of workers were telecommuting as of 2015.

But there’s more to teamwork than simply working together on the same project. Teamwork involves a sense of camaraderie, support, respect and cohesiveness that can’t always be manufactured simply by the process of a shared project.

See also: The Keys to Forming Effective Teams  

Remote teams are not at a disadvantage in terms of overall performance. In a study conducted by MIT, it was found that teams of dispersed, remote workers often outperformed teams composed of workers within the same location. In part, this is due to the increased productivity that employees and contractors enjoy while working on their own, within their own ideal environment.

But to truly harness that productivity, entrepreneurs with dispersed teams must learn to effectively manage those teams and create a sense of teamwork within them. This can be done by:

  1. Having at least one face-to-face or screen-to-screen meeting. Even virtual face-to-face communication, such as through sites like Skype, helps build relationships and foster trust within the team. People like human contact.
  2. Encouraging collaboration. There is a difference between true collaboration and simply working together. Collaboration allows the team to get excited over a shared goal and inspiration, rather than simply doing their part to achieve an end to a project. Schedule occasional brainstorming chats or conference calls to foster a collaborative environment.
  3. Being clear about expectations, guidelines and standards. One of the best ways to undermine a team is to give every member a different set of rules to play by. Assume that your team members are going to talk and share information outside of scheduled meetings. Keep all their expectations, guidelines and standards uniform so there is no jealousy, competitiveness or implied favoritism.
  4. Giving the team a place to collectively debrief. Create a “virtual water cooler” so that remote employees and contractors can talk, exchange ideas and have an informal place to bond outside of meetings, Harvard Business Review suggests. You can do this by setting up a private group on a social networking platform or by using a program that has group chats or forums.

In a world where more and more employees are working remotely, it is important to take extra steps like these to create a team environment among people who don’t work in the same location. The result can be a sense of community and loyalty that cannot be quantified. Feeling like you’re part of the team leads to lower employee turnover, greater job satisfaction and higher productivity and creativity.

See also: How to Pick Your Insight Team  

So why not schedule that weekly team call? And allow the same technology that enables us to work apart to bring us together.

You Must Break Free of Your Culture

By my definition, culture is the house rules. An edgier definition comes from David Balestracci: “Quite simply, culture is created by what is tolerated….Your current processes are perfectly designed to get the results they are already getting.”

In any case, culture is the most powerful force in your organization. It can bring greatness, or cause your failure as you move away from yesterday, through today, to tomorrow. As more and more organizations need to move to the transformational change that is tomorrow, their culture (if it is an addiction to the status quo) becomes the greatest challenge they face.

I’ve been speaking on this subject for many years. Slowly but surely, I’m moving from theory to reality. Early on in my consulting career, I’d proudly state, “we’re going to change the culture.” After having my rear end handed to me after each unsuccessful attempt at cultural change, I retreated to a more realistic but no more possible approach, suggesting that to “change the culture” you must “change the people (educate, rehab, motivate, etc. each individual) or change the people (start anew – with new folks).

See also: Does Your Culture Embrace Innovation?  

In late 2015 and early 2016, I enjoyed an aha moment. Working to rehab a very troubled organization (its culture), filled with good and talented people who had become divided and moved to their lowest common denominator, I realized the best hope was to agree on a purpose (why), shared values and a unifying vision. With this as the starting point, progress continued as each team member individually committed to grow her skills (abilities) and as all members of the group chose collaboration (improved communication/relationships) on common goals and tasks.

In the April 2016 edition of the Harvard Business Review, the cover story reinforced my theory by stating, “You can’t fix culture, just focus on your business and the rest will follow.” I now say, “Amen! Vindication!” (HBR will never quote me, but I am delighted to be able to quote them.)

In 2012, a graphic artist created a cultural continuum slide that I could use to demonstrate the evolution of organizational culture. The slide was formatted on Maslow’s Hierarchy of Needs Pyramid.

From the base of the pyramid, the five levels (steps) are: physiological (survival) needs, safety (security) needs, belonging (acceptance) needs, esteem (achievement) needs and, finally, at the pinnacle of the pyramid, self (actualization) fulfillment need.

To facilitate the “story of culture,” I chose an individual or couple who best personified each step on the pyramid. I also added one action word that supported the culture created by the personality styles of the individuals or culture.

What follows is the rest of the story:

  1. Survival – Fred Flintstone – React. Fred was a simple leader right for a simple time. His goal was survival for himself and his family. Planning wasn’t important. Being able to react was. When he came face to face with a sabertooth tiger, his ability to react was all important. His family followed his lead.
  2. Security – Jim Anderson, an insurance agent (played by Robert Young on Father Knows Best) – Do. Jim was the personification of the OWG (old white guy in charge) in the post-WWII business place and community. The Greatest Generation fought for our security and came home to work hard to create the economic security we all so desired. If you worked for Jim and did as you were told, you would be secure (taken care of). You could work 40 years and get a gold watch.
  3. Acceptance – Archie Bunker – Think. Remember, this show came at the beginning of the social revolution where baby boomers fought the status quo — as a group and as individuals. Remember the Vietnam war protests, Woodstock, civil rights, demands for both race and gender equality, assassinations (MLK, JFK, RFK, etc.) and the chants of “Hell no, we won’t go!” and “If it feels good do it.” Archie in the stereotype was the next generation of Jim Anderson. He wanted to be the “boss” (to think for his family). Unfortunately for Archie, his followers changed. Dingbat, Meathead and Little Girl were not compliant (they wanted to think on their own). Archie’s clan demanded freedom at the risk of security. Archie’s frustration and anger (I believe) resulted from the fact that he did not enjoy the resources nor respect that was given to Jim Anderson.
  4. Achievement — Cliff and Clair Huxtable — Create. This was the feel-good story post the social revolution of Archie’s day. Cliff and Clair represented the hope and change of a more diverse world. Their drive was to ensure their children had every opportunity to be all that they could be regardless of place, color or gender. They were the hope that remains on the horizon of our country and world. They were creating a new social order: new culture, new possibilities. Creativity provides much greater possibilities than does discipline/compliance. A hundred years from now, people will know that Bill Gates understood technology and created computer operating systems that made him and Melinda Gates the richest and most generous people in the world.
  5. Self-Fulfillment – Jane and George Jetson – Imagine. George and Jane lived in a future that we are only now starting to imagine, hoping that what their life was can be real. George and Jane, their daughter Judy, son Elroy, Rosie (their robot maid) and Astro their dog lived large in the universe they occupied. Theirs was a “futuristic utopia.” George worked two days a week about one hour a day. Travel and technology were their world. If it could be imagined, it could be done. Understand that in a century people will reminisce about Steve Jobs, who imagined the possibilities in technology and artificial intelligence and forever changed the world!

Know that your organizational culture can be the most powerful force available to you in the competitive marketplace and the world as it is going to be. If you can leverage your culture for good and change, you will enjoy great success. If you are unable to break the stranglehold that some organizational cultures exercise over their own status quo, your future will be lost in a world of transformational change.

See also: How ‘Cascades’ Can Build Work Culture  

The lesson, in my opinion, to be learned here – is that your culture is defined by its performance and its people. Be certain that both are the best that they can be. As a leader, one of your most important responsibilities is to keep toxins out of the environment in which you live and operate. Don’t ignore reality just because things are going well.

Culture can make you or break you! Keep your finger on your organization’s pulse! When something doesn’t look or “feel right” discover the truth. Address problems. Don’t ignore the painful. Your brand and your culture can be your most valuable assets.

What Trump Means for Best Practices

On Tuesday, Nov. 8, 2016, the majority of a major minority of the people in this country opened the window, stuck their heads out and yelled just as Howard Beale instructed in Network: “I’m mad as hell, and I’m not going to take it anymore.”

The rest will be history. Power to the people!

As you and your organization move from yesterday, through today (2016) to tomorrow (2020), will you complete this “first term” into the future, be thrown out before your term is complete or be reelected by a landslide? The choice will be made by the marketplace.

Your performance is determined by your clients and prospects — your voters — not your measurements of “best practices” and “peer studies.” Best practices are the judgment of our peers comparing us with our “superior” peers. Best practices are inside baseball. They’re all about us – our industry.

In Tuesday’s election, despite all the best practices and peer studies that meant all the media “knew” that Hillary Clinton was the winner – SHE LOST!

The media knew she would win not from some impulsive whim but rather through history, polls, the wisdom of the elders of their tribes (Democrats, Republicans, independents) and those who had grown up in the industry of government – lobbyists, consultants, pollsters, elected officials, etc. As a practical matter, 16 of the most successful players in the Republican party scoffed during the primaries at the idea that a reality-TV star should be taken seriously.

On the other side, the Democratic party in its arrogance ignored millions of outsiders (the children of their insiders plus many of the alienated members of their tribe) who marched in protest behind and beside democratic socialist Bernie Sanders.

See also: What Trump Means for Workplace Wellness  

Now do you understand? THE MARKETPLACE HAS CHANGED!

Enough about politics. Let’s get back to real life – marketing in a dynamic and divided world. Tomorrow is not about the mass market of yesterday. It is about the narrow niches of tomorrow (left-handed diesel mechanics who smoke, or some other affinity group you’ve never considered), their affinity and your knowledge of and intimacy with them, their wants, needs expertise, culture, etc.

I recently worked with a non-profit organization that had it all: good people serving a marketplace that their peers would “die for,” plus a membership group with sophistication, economics and education that any niche would envy. The organization included a successful history of 50-plus years and, unfortunately, the baggage and culture problems that nearly always accompany such success. The organization had become “dumb, fat and happy,” focused internally in their comfort zone, and they had let their finger slip off the pulse of their individual members.

These very good folks in this organization had done what far too many folks do after an era of success. They existed in their comfort zone versus working to ensure that their clients were comfortable! Conversations about the “good old days” outnumbered asking “what if,” “what now,” and “what next?” They were looking internally at each other versus at the future!

Don’t believe me: Test this on your team! Gather your team or a cross section of your team for a futuring group meeting. Draw a circle large enough to hold the assembled group. Ask them to stand on the circumference of the circle to discuss the future. What will happen? Will most (or all) face each other, or will they turn their back on the “history” inside the circle and look at the possibilities on the horizon?

Whether you think the above is silly or provocative, the reality is this: Your current processes are perfectly designed to get the results they are already getting.

Twenty-three years ago, I naively suggested we “change the culture.” After I tried this a few times and had my rear end handed to me, I learned that to change the culture you must change the people. But this is a foolish fantasy in a world filled with humans with free will and the ability to sabotage change. (Remember Maxine’s wisdom, “Change is good as long as I don’t have to do anything different.”)

I then evolved to a more real model suggesting you work to maximize the results that can be obtained in the culture you have. Now with decades of scar tissue, I know better. In fact, Harvard Business Review in its April 2016 cover story, agreed with me – YOU CAN’T FIX CULTURE; just focus on your business, and the rest will follow.

See also: What Trump Means for Business  

I’ll wrap up this monologue with three slides from a recent planning retreat that acknowledge that you can’t fix culture — but that you can do other things:

  1. You can’t fix culture, but EACH OF US CAN GROW!
  2. You can’t fix culture, but ALL OF US CAN COLLABORATE BETTER!
  3. The final slide included seven words and one picture. The picture said it all, with a young woman with a “sad face” looking down and back over her shoulder to a yesterday of hurt and a “happy face” young lady looking up and out at the positive possibilities on the horizon! The words – “IT’S ALL ABOUT WHICH WAY YOU LOOK!”