When Your Head Is Buried In Your Product, Your Ass Is Towards Your Customers

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When your head is buried in your product – your ass is towards your customers

It is true that without your product or service you would have no business, it is why your business exists. At some point, someone spotted the business opportunity to develop the product or service, and around that, the organization grew and became the business you know.

It is no wonder that your universe revolves around your product.

It is also true that without your customers you would not have a business, without them there would be no need for your product or service. And your customers’ universe revolves around them – not you.

Many companies, even entire industries, are in danger from adopting complacent thinking – if they haven’t already adopted it. Too many do not see the need to operate any differently than they have always done. Why rock the boat?
Think about banking, or insurance, or even many retailers out there – for years nothing much has changed in the way they operate. Why should they change? People need banks, insurance, and shops right.

Yes, people need banks, insurance, and shops – they just might not need yours.

While you were busy optimizing your processes and justifying increasing prices while decreasing service, you did not pay attention to your customers. Suddenly it hits you like a ton of bricks, your customers have started banking with the small local bank, or they are shopping online instead of into your stores.

Don’t become the next BlackBerry

We are in the age of the customer – and that goes for both business-to-consumer and business-to-business. Before you even meet your customers, they know your products, your service, your pricing, and your reputation. And so does your competitors by the way – there is nothing stopping them from copying or undermining your products and your go-to-market strategies.

No industry has realized this predicament more forcefully than one of the newest industries out there – software-as-a-service. This business model relies on customers keeping their subscriptions for long periods of time. It is not uncommon that breakeven on CAC happens after a year or more. It is therefore imperative for these companies to keep retention rates high.

There are two main strategies for retaining customers, you can increase switching costs, which virtually locks-in customers, or you can create products that your customers truly love.

Increasing switching costs is tempting and very effective – at least in the short-term. But remember, your reputation is public knowledge, and few things are more frustrating for your customers than experiencing high switching costs. When customers feel you are intentionally making their lives difficult by placing barriers that limit their ability to move freely, it creates a great deal resentment. Ultimately, it can lead a customer to not only leave you for good, but also warn everyone else from entering into business with you.

Creating products that your customers truly love is easier said than done. Love is fickle – just because you gained their love ones, doesn’t mean you’ll keep it for long. Just ask BlackBerry, they had tremendous success and lost it all because they failed to understand the fickle nature of customers’ love.

The worst part about the BlackBerry story is that it wasn’t a matter of not asking customers what they wanted. They did ask, but they believed they knew better and therefore didn’t act on what they heard.

Taking the first step on the road to customer love

Understanding your customers’ experience with your company holds the key to igniting and maintaining their love. I mean the entire experience, not just the moment of sale. Understanding every touch-point between you and your customer offers insight into many less obvious areas with room for improvement.

Does your website claim white-gloved delivery service, when in fact it’s just two guys with a truck? Do you say you deliver in weeks, and then it ends up taking months? Do customers misunderstand your billing and call your support in frustration? There are undoubtedly many areas within your business that could benefit from being analyzed from a customer’s perspective.

Forrester Research authors; Harley Manning and Kerry Bodine, have written an excellent book on the customer experience discipline of thinking Outside In (also the title of the book). One of the tools they highlight is using a customer journey map to build a visual representation of all the channels and touch-points that make up what they call the customer experience ecosystem.

For every interaction between a customer and your company, there are a number of activities that take place behind the scenes. Without mapping the entire customer journey, you could easily lose sight of the forest for the trees. Problems affecting customers’ perception of your company often involve several departments within your organization to be resolved.

For example, increasing the level of customer service in your retail outlets, could involve implementing new hiring policies in your HR department, screening new candidates better for positive service attitudes. Or maybe your legal department’s policies are so restrictive it is preventing your service technicians from fixing customer problems efficiently. Outside In features a case study in which technicians could not help customers because they were not allowed to touch customer owned hardware.

Customer journey maps exist in all shapes and sizes, and there is no one right way to make them. From the Ideation inspired wall of sticky notes, to the pristinely designed slide deck, all that matters is you decide the format that works for your company and you take the first step.

Here are a few resources that can help you get started:

Start by watching this video featuring Kerry Bodine talking about customer journey maps at MozCon 2014

Canvanizer – a great FREE tool for creating sharable and great looking customer journey maps

Why “Why” Matters

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Why do you go to work every day? To pay the rent? Because no mullah no fun? Really… is that it?

We spend nearly 90.000 hours of our lives working. That is likely more time than you’ll spend doing anything else. And most of us seem to believe we do it for money.

So is it worth spending so many hours of our lives chasing money? Behavioral Psychologists have studied the effect of money on things like happiness, performance, and sense of fulfillment. Funny thing about money is that it works, to a degree, then it plateaus and the effect from there on is minimal, actually some things get worse.

No money certainly sucks

When you have no money or little money, gaining some will certainly make you happier, you will feel less stressed and therefore be more productive and have a greater sense of fulfillment in your life.

There is a saying that money doesn’t buy you happiness, but that is not entirely true, there is a clear correlation between having money and feeling happy. Money affords you a certain level of peace of mind, and that is indeed very valuable. But more money does not equal more peace of mind or more happiness.

Daniel Kahneman, a renown psychologist, actually found the dollar amount that correlates with the highest marginal utility of money in terms of income. The magic number is $75.000, after that every extra dollar has less and less impact on overall happiness. Of course, the amount varies depending on where you live and how much $75.000 is going to get you. As with all things in life, this too is relative.

Another famed psychologist, Dan Ariely, studied the effect of money on motivation and performance. The results showed that sure enough, if you dangle a carrot in front of people, they work harder to earn it. But the quality of their performance decline with the increased size of the carrot. It simply becomes much harder to think creatively and critically, because the carrot is stealing the focus.

People become much more prone to unnecessary risk-taking and lack perspective in their decision-making. Sounds familiar? Hello financial crisis! No wonder Ariely was not invited back to speak at the annual bankers’ conference after he presented his findings on this.

So if money can only make you so happy, and only make you perform so well, is that enough value to warrant spending 90.000 hours chasing after it?

Well most of us don’t really have a choice. Gotta bring home the bacon right!

And that is why this word is so incredibly important – Purpose. The reason we do what we do. The stuff that gives stuff meaning. The big WHY.

Why money is not enough

Most people can tell you what they do, they can likely also tell you how they do it. But ask them why they do it, and an awkward silence tends to happen followed by lack-luster replies like “I do it because it is my job” or “I do it to make money”. Not terribly inspiring replies, not the kind that makes you think “wow – I wish I had your life”.

To give people a more satisfying and fulfilling sense of why they go to work, we need great leadership. Leaders that are able to communicate why our work is meaningful, inspire us to find our own sense of purpose. When we feel we are part of creating something together, something none of us could accomplish alone, and we know our contributions counts – and of course we are adequately and fairly compensated, that is when work makes perfect sense spending 90.000 hours on.

Too many leaders mistakenly believe the purpose of business is making money. Following that logic, then the purpose of life should be eating or breathing. Yes, businesses need to make money in order to survive and thrive, the same way humans need food and air to survive and thrive, but it is hardly the purpose of it. Purpose is something bigger and more meaningful, it has substance.

We do not all need to work in some fantastically innovative field to find inspiring answers to why we work. Imagine you made nuts and bolts for a living, not the sexiest thing in the world. But what if you did it because your nuts and bolts made sure airplanes were assembled so they can bring people safely from A to B. Suddenly, your nuts and bolts have a clear and meaningful sense of purpose and you can feel proud of your contribution to aviation security. It’s just an example, but you get the point right.

I love the vision statement from Toys R’ Us “Our Vision is to put joy in kids’ hearts and a smile on parents’ faces.” Now if that doesn’t give you a sense of purpose, I sure don’t know what would.

Of course great leadership is more than a heartfelt vision statement. If it only pays lip-service then it has little to do with leadership to begin with. But if it is the foundation and the reason why every person in the company do what they do, then it is inspiring, unifying and altogether awesome.

Great leaders show us the path, they give us a map with a desired destination, and instill the confidence in us that together we can make it there.

Simon Sinek, an American business consultant, says that people don’t buy what you do, they buy why you do it. The same is true for your employees. They do not love their jobs because of what they do, they love their jobs because of why they do it.

And that is why “why” matters.

Still competing for the future

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The Future

I recently read the business classic by Gary Hamel and C.K. Prahalad “Competing for the Future” and even though the book is 20 years old, a lot of its wisdom resonates with me today.

20 years ago was back in the day when Bill Gates was viewed as a computer industry challenger, where CNN was the radical innovation and where Motorola was king of mobile. Perhaps not the labels you would adhere to them today, but still they have each had a tremendous impact on their industries and on virtually every person on earth’s lives.

I want to share some of Hamel and Prahalad’s wisdom with you – and save you reading some 330 pages.

Lesson nr. 1 – Learn to forget

A fundamental life lesson really, is the ability to not become a prisoner of ones past experiences, an ability that can dramatically enhance your life, and an ability that for business managers can mean the difference between existing tomorrow or become categorized together with tyrannosaurus X.

Every manager carries around in his or her head a set of biases, assumptions and presuppositions about how their industry is structured. How one makes money, who the competition is, what the customers want, what technologies are available and so on. On top of that comes the cultural mental framework of beliefs, norms and values. Together these preconceived notions of “how we do things” can form a bomb under the very survival of a company if they are allowed to become too settled, too ingrained, too much part of a company’s dna.

In 1994 Microsoft might have been the new kid on the block, but by 2007 they were famously the old “stuck in their way” company that laughed at the iPhone because it didn’t have a keyboard. Business is always changing, fall asleep at the wheel, and you will surely crash.

As, Peter Drucker, another revered business scholar has expressed the need to learn to forget “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

Learning to forget is incredibly hard, but fortunately businesses can learn to do this and re-code their corporate genetics.

Lesson nr. 2 – Be a rebel

Do not allow industry conventions and best practices to go unquestioned, to re-code corporate genetics managers must dare to ask questions about everything. Including questions about themselves.

Managers have a knack of elevating their own knowledge to equal fact, believing that what they think and do is, by virtue of their status, inherently correct. And when managers gather they are incredibly adept at confirming this notion with one another, spawning a general acceptance of business as usual and delivering little more than a blurb of sameness.

This creates the perfect opportunity for a rebel to make his or her mark. Companies that create the future support these rebels. They encourage their subversive behavior and celebrate their passion for breaking the rules. It’s the rebels that spot the white spaces and the blue oceans, because they are not prepared to accept established dogmas and traditional industry boundaries. Back in 1994 it was companies like The Body Shop or Swiss watchmaker Swatch that celebrated these rebels, today it’s companies like Google and Airbnb.

Lesson nr. 3 – Dare to sound a bit wacky

Since customers are notoriously lacking in foresight, companies have to lead the way. To re-code company genetics, managers must become leaders. They must be able to envision the distant future and communicate their vision, even when the response is rolling eyes and ridicule.

In the book, Hamel and Prahalad provides their 1994 contribution to visionary thinking by proposing that, instead of having to drive all the way to the supermarket, hike across vast parking lots, wander endless aisles and wait impatiently at the checkout, why can’t the supermarkets just mail us a weekly cd on which we can wander a virtual supermarket and place our order? Now in 1994 that was CRAZY talk. Now, in 2014, of course the only crazy part about that is the cd! I buy 50% of my groceries, 80% of my shoes and 100% of my books online.

Companies that create the future offer more than incremental innovation and feature enhancements, they amaze customers with new products that they didn’t even know they wanted. Not saying that listening to your customers is not important, of course it is, it is vital in order to stay in business today, but to carve a path to the future you need incredible foresight.

To me it seems the recipe for foresight is one scoop deep industry knowledge, two scoops knowing your customers and three scoops of imagination. It’s a fine art being able to balance knowing what could potentially be possible and recognizing the limits of it. Rush off in some headless burst of innovation enthusiasm and you could find yourself hurtling over a cliff. On the other hand, stay constant and watch your business become obsolete. Boy, business ain’t easy!

Lesson nr. 4 – It takes a village

As the saying goes, it takes a village to raise a child, so too does it take a community effort to bring innovations to life. Hamel and Prahalad speak of a company’s strategic intent as being the underlying point of view that emanates throughout the company, a shared belief in the company’s long-term vision and a communal sense of direction.

Lacking a compelling sense of direction, few employees feel an urgent sense of responsibility to contribute to the company’s future competitiveness. Most people won’t go the extra mile, if they don’t know where they are heading.

Unfortunately businesses are too often caught up in a quagmire of bureaucracy, designed to keep checks and balances and preventing people from turning left and right. Bureaucracy blocks initiatives and creativity by constraining the range of available tactics. Managers become frustrated by orthodoxies about which channels to use, the definition of products and markets and the lack tactical freedom.

The point is; companies have to trust their employees enough to give them a map marked with a desired future destination, and then let them discover the best way to get there. Appeal to every person’s internal explorer, let them relish in the joy of discovery, and you will cultivate a sense of destiny in your employees that will make them feel like they are part of building a legacy – something that is bigger and more important than anything anyone could accomplish on their own.

I think Hamel and Prahalad are as relevant today as they were 20 years ago. I am fortunate enough to live in a country that celebrates freedom and work in a company that celebrates the team as well as the individual.

Still every day I think about how we can become a lot better at daring to do different.

What’s the deal with Innovation?

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Innovation Idea

It sounds sexy so it must be good

Innovation is the business equivalent of sex. Everybody wants it, many claim to be doing it in abundance, only few actually are and if you are not careful it could end up killing you (bye bye Blockbuster, Kodak and Motorola)

Innovation is confusing. It seems to mean something different to everybody and it’s practiced in a million different ways. If you search Amazon it will deliver 61,733 books with innovation in the title and Google serves up a discrete 250,000,000 results.

So what’s the real deal with innovation? What does it even mean and is there some way of making the topic at least somewhat manageable?

Let’s start with definition. The word innovation originates from the Latin word innovare, which means to alter, renew or restore. I find this puzzling; the definition is not as dramatic or action packed as I thought it would be. If all that is required to innovate is to alter something, then no wonder every Tom, Dick and Harry are prancing around claiming to be doing it.

All innovation is not created equal

Innovation seems to be suffering from hyperinflation; the reason for this is to be found in the immensely lucrative promise of this word. Some of the world’s largest and most successful companies have risen to their stardom on the back of innovation; think Apple, Google, Amazon.

Who wouldn’t want a piece of that pie? Unfortunately, the desire to be associated with this kind of success has led to the extensive overuse of the term. When innovation is treated as a commodity, its meaning becomes diluted and the respect this fine art deserves dwindles.

Fortunately we do not all have to be a Steve Jobs, Larry Page or Jeff Bezos to be innovative, but we do have to actually contribute with something new that creates value in order to rightfully apply the term to ourselves.

The operative word here is value. Innovation without value is “just” an invention. Try searching “most useless inventions” and you will get a very long list of more or less bizarre contraptions from shoe umbrellas to baby-mops. I’m sure the inventors thought they were fantastic, but the market decided they did not provide sufficient value to become viable products.

Innovation is all about the practical application of inventions; it is about making the most of already invented technologies and making them better. “Better” can be many things, it can be smarter, faster, cheaper, tougher, simpler, easier etc. “Better” means supplying new or additional value to consumers.

If a product fails to deliver new or additional value, then consumers will reject it and it will not be an innovation.

The Innovation Map

Consider innovation as a map with four corners, four directions a company can take their innovative processes in. Imagine that North and South represent the innovations that aim to either create new markets or aim to manage existing markets respectively. Then imagine that East and West represent the amount of alterations used in the innovation, ranging in the East from minor change to, and sometime even a reduction of, technology, to the West where there is an extensive change in technology taking place.

Innovation Map

In the Disruptive North-East corner, we find the innovations that come sneaking into well established industries and disrupts them. Often by offering very similar products or services, but in a simpler and/or cheaper version, effectively making it possible for a completely new segment of consumers, who previously either couldn’t afford them or found them too complicated, to use the products.

In the Radical North-West corner, we have the innovations that dramatically change industries and/or societies. These are the true game changers, they take how things are usually done, and turns them on their heads, creating new market opportunities with new technologies and new products.

Then we have the South-East corner, if any position on the innovation map has a lesser status, it must the this corner. This is where Incremental innovations take place; the daily battle for survival for many companies, where innovation can seem like an overexerted attempt to remain relevant in the eyes of the consumers. Every new flavor, scent, color and shape that companies spew out of their production lines fall into this corner.

In the last corner, the South-West, we find the Sustaining and sometimes Breakout innovations. This is where good products are made even better. It is a bit of a tricky corner; the innovations that land here are the ones where the added value in terms of new technology is too great to be considered Incremental but not different enough to be labeled Radical.

The Innovation Map is a guide that can help you locate a particular innovation. Bear in mind that innovations by nature are ever evolving creatures, therefore products may well wander from one location on the map to another over time. For example when the first Smartphone saw the light of day, it was a radical innovation, it changed the mobile phone into a computer. But every new version of Smartphones since then have been innovated in order to manage the existing market, it has mainly done so by adding more and more features to the products, therefore the placement of the Smartphone has changed from initially being Radical to now being Sustaining.

I hope the Innovation Map will help you get some clarity on the subject of innovation and I would love to hear your take on it.