The Customer is Always Right

The customer is the boss! Repeat after me: the customer is the boss. Never in the history of business has incumbency or leadership in technology been so irrelevant. A company that wishes to create sustainable value must consider the infinite world of opportunities in customer-centric innovation. We are in the midst of dramatic changes in marketing and sales where social technologies provide barn-sized opportunities for innovation and growth of companies.

Target-oriented innovation management

The matter is not the innovation itself but the entire playbook of innovations that a company executes over time. Innovation management (IM) has two major roles in ensuring success in marketing and sales. First, it ensures that innovation to consumers is not an occasional effort but rather a systematic and repeatable process. There is this illusion that a company must find the next big idea, but this is a delusion. It is like trying to find the magical pot of gold at the end of the rainbow. A target-oriented IM ensures that ideas, small and large, are systematically translated into innovations. It ensures that a company has a system for winning in the market place. Second, IM makes sure that innovations are not merely product-driven, but rather the full spectrum of innovations come to play when launching new products or services. It integrates different perspectives from functional silos – from marketing, finance, operations and R&D.

Beware of missed opportunities for innovation

The biggest reason for missed opportunities is past success. Success does not beget success, it begets failure. The more successful a company is the more it sees opportunities from its own perspective, its own capabilities, its own products and services. This perspective narrows the focus of the company to existing customers and existing products. The more successful you are, the more you don’t see the biggest opportunities in plain sight.

The Role of Social Media

We are moving from social media to social business. Now companies recognize that social media is not just about Facebook, LinkedIn and Twitter activities. Companies doing it right develop an enterprise point of view about social technologies and networks. As part of this new perspective, companies integrate these technologies and networks into every aspect of the mix from consumer insights generation, to branding, to customer service and customer experience management, to market research and more. We are in the midst of a sea change of what social really means in companies. It is about integration, and moving social out of the silos. Social should not exist in a marketing or PR bubble of a company. A social program needs input from every area of business to be successful. And yes, every company does have to be active in social. No question about it.

The next great wave in the current sea change of marketing

We live in the midst of three major trends: the growing ubiquity of devices, the infinite amount of storage capacities, and the growth of networks beyond the Internet. These three trends are creating the most drastic change in the last sixty years of marketing. The big word is not push but pull. Consumers are interacting with brands in the most seamless way ever, and this will be increasing. Consumers will choose to be part of brand networks and ecosystems – and the experiences these brands create. Consumers are curating their involvement with brands and they will deselect those that don’t live up. The brands that gain permission will intersect in the daily life of consumers in the most seamless way ever – through all sorts of technology including mobile, location-based, visualization, new search technologies and more.

I strongly believe that marketing’s role is to create a customer (Peter Drucker). It is what I call an outside-in perspective. I believe companies fail with innovation again and again if they look at the world of customers in terms of targets. I hope that target-oriented IM does not suggest that consumers are the target!! Customers don’t want to be targeted. They are not standing at the end of the shooting range, waiting for you to position your messages towards them.

Companies who wish to innovate successfully must view the opportunities in the outside world today — never forgetting that the customer is the boss.

Upon taking the stage of the World Innovation Forum 2011, Daniel Pink lit up the audience immediately with candid, dry humor. Much of his message reverberated Hsieh’s philosophies, pointing to a sign of the times. While there were many excellent presentations, these two thought leaders emphasized purpose in order to bring about innovation.

In reference to another panelist’s presentation the previous day of the Forum, Pink started in with his opener. “Yesterday a suggestion was made to the audience – to be able to innovate, major in physics and philosophy.” By a show of hands it was made clear that near to nobody in the audience majored in physics. Yet, Pink reminded us, we still know a lot about it. Simple laws of behavioral physics are innate knowledge that we use to deal in the world with our boss, family, and most everything else.

He referenced 50 yrs of research into one paragraph, a study conducted by two famous economists in India and Massachusetts. The results from all this study:

If you want people to do mechanical, routine, algorithmic tasks (turning screw same way in an assembly line or shuffling paper) then the “If then” motivators work.

Yet,

when solving more conceptually-challenging tasks, the “if you do this, then you’ll get this…” motivators proved useless.

The lesson learned? Those “if then” motivators don’t’ work for creative, conceptual, problems where answer isn’t obvious.

To explain further, Pink pointed to a study that proved artists’ commissioned works were significantly less creative than non-commissioned works.

Artists give the world something they didn’t know they were missing, hence the freedom from constraints is a necessity.

Considering the room was full of executives, not artists, he got to his key message by pointing our: there is no non-commissioned work in work (in business).  Therefore where is the room for creativity, for innovation?

Consider for example Andre Geim and Konstantin Novoselov. These are two physicists who won the Nobel Prize in Physics on a project they developed on “Friday Evening Experiments” which is when they’re not allowed to do any of their “official/commissioned” work.

Non-commissioned Work vs. Commissioned Work = Autonomy vs. Management.

Ok, so its 2011. We’ve upgraded our technology, so why haven’t we upgraded our approach to management. According to Pink, “Management is about compliance, a technology for compliance – getting people to do what you want people to do, the way you want them to do it. But we really need is engagement. We don’t engage by being managed, controlled. We engage by gaining our own steam, by being self-directed.”

Any organization that wants to be innovative, must carve out some time for non-commissioned work. This will become the norm, those who move first will come out on top.

Alongside that notion, Pink urged business leader to question the FACT that money is a motivator. He suggests to pay people enough so that money is not an issue. Reduce the salience of money and people can focus on their work.

Reverberating Tony Hsieh’s message, he suggested questioning the profit motivator more. Profit is a good thing, but look closer at the purpose mode. When profit and purpose mode become distangled, bad things happen.

His final message, twitter-friendly, complete within 140 characters, and room for a hastag:

Carrots and sticks are so last century. For todays challenges and for true innovation, think autonomy, mastery, and purpose. #WIF11

“Most people are better at creativity than we give them credit for.” – Dan Pink

Hsieh started Zappos in 1999. When Amazon acquired the company in 2009, he and his team managed to work into the deal that the company maintained all its practices and approach. Thank goodness it did, for Zappos is a sparkling example of innovative practices and a relentless commitment to those practices.

His presentation began with a video of Zappos staff touring the US in a bus with the intent of “bringing happiness”. The team visits various charitable organizations and stirs up a lot of fun. The film was narrated with a hip-hop song written by a Zappos staff member, and they seemed to be having a lot of fun doing good. What they weren’t doing was giving out shoes.

That could be because even though Zappos is most well known for selling shoes at good prices in a user-friendly online environment, they are actually what Hsieh calls, “a service company that sells shoes”. Zappos is in the business of service, so it doesn’t matter what they are selling. Hsieh mentioned 10 years from now you might find yourself riding in a Zappos airplane, something akin to Virgin America (record stores and an airlines reverberating branding). But while Virgin is about being hip and cool, Zappos is about offering the best customer service.

During the recent economic downturn, the company not only stayed strong but also saw growth year after year. Hsieh attributes this success to serious brand loyalty: repeat customers and word-of-mouth.

This was no accident. Zappos is constantly inquiring: What do customers expect? What do their customers actually experience? What emotions do customers feel? Staff members are trained to stay with a customer as long as needed to make them feel right. One staff member had an 8hr, 23 min phone call with a customer recently.

All staff train in customer service at the beginning of the process & help during holiday season to avoid hiring temps. And the No.1 priority of the company is actually culture – new hires must fit in the “culture” no matter what the position. They offer an incentive of $4,000 for hired employees to leave after training; because they want staff that care to work there, not just those who want a paycheck. It’s a way of life, not just a job. Zappos has 10 “committable” core values, which means they live these values at work and away from work as well. ,

Tsieh reminded us that what unites us, a trait that all humans share is the desire to be happier.  And simultaneously we are all bad at diagnosing what will bring us more happiness. But after pondering this question consistently for years while growing a business, and by constantly asking why, Hsieh and his team realize that offering employees meaning and a higher purpose to the work, works.

Two key points that he left us with:

For your company, think how to: “Chase the vision, not the money…” Ask, what is your company’s higher purpose? What is your higher purpose?

For your employees, think: what is the bigger motive beyond the money? Recognition and incentive works, but inspiration is even more powerful. Employees will respond when your company actually practices the values ascribed to by leadership and/or democratically.

In summary:

PROFITS,

PASSION,

PURPOSE…

Are all needed to grow a sustained growing business.

Zappos, though, has concentrated on combining pleasure, purpose, and passion – interesting how profits have found a way into that paradigm anyway.

- Reframe the question (or the problem), not the solution.

- Go for Quality of input rather than Quantity.

- Get buy-in with the masses first and prove a solution’s worth it from the ground up, rather than implementing immediately upon conception from the top down. Be serious about building trust with mid-level management and ground level workers, and combine that with at least a little bit of budget on your side to ensure success before going to the top with an innovative idea.

-  Get data first rather than proof. Its often a long time before you can formulate a strategy. Said another way, identify what you don’t know by collecting data rather than trying to smart it out.

HENRIK WERDELIN, the wildly successful startup founder and strategist, presented his ideas on how corporations can emulate startup business conventions in order to innovate faster and better. Here is a recap on his message.

Startups are changing product innovation by approaching product development different from traditional big business practices.

1)   Tech startups develop products by identifying people’s problems and then anchoring the product in the solution to that problem. As a result, the product is likely to have a more user-centric construction and a greater likelihood of fulfilling an existing need.

2)   Startups almost always begin with something small rather than something massive. “All great companies start with a feature”. He suggested, “instead of asking what is the portal, consider the nugget.”

3)   Test products with people, not in a boardroom. In this age of consumer-centric, customer-driven development, we at Vivaldi Partners consider this one a necessity actually.

4)   Corporations tend to be front-end focused, or what Vivaldi Partner refers to as the “Inside-Out Approach”– asking the questions what do we have and what can we build on top. Think instead about the need. Innovation often starts from scratch, and it’s risky to only innovate in your comfort zone.

Werdelin urged corporate leader to keep in mind that all things that happen in the offline world are being modified to happen in the online world.

5)   A methodology used frequently in the startup world is that of the Lean Startup. Consider the minimal viable product by finding a balance between the minimum – too feature poor for people to use – and the viable – too feature rich to build quickly. Test frequently and iterate, fail faster.

6)   Corporations always try to find the right people for the right project, but startups look for interpersonal dynamic over big accomplishments, a true entrepreneurial spirit. They’re also more willing to try out more junior employees who are eager for experience and less risk averse.

7)   Reverberating some of Jordan Cohen’s advice, and premeditating points made by Tony Hsieh and Daniel Pink in the World Innovation Forum the following days, Werdelin also made the suggestions to:

-     Pitch the process over time.

-       Amplify learning

-       Empower the team

-       Test core thesis against real users

-       Support right brain thinking

-       Think less, do more

-       Build-in structured time for side projects (like Google’s 20% rule)

He left us with an applicable definition of “virality,” the buzzword that all marketing executives have at the forefront of their minds. Something becomes viral with the ability to tell a story that someone else can easily retell – while sounding like he knows what he is talking about.

Original, thoughtful presentation with real-life applications, thanks Henrik. We would love to hear your thoughts, please share in the comments below.

Paddy Miller presented surprise guest Jordan Cohen – the idea architect of Pfizer Works: Building the Office of the Future. Cohen demonstrated how he investigated the problem more clearly by sharing how he created a new way of structuring work internally at Pfizer.

Some of his suggestions:

When seeking new solutions, build a narrative around an individual in your business, and how you can change the circumstances for her – and you’ll have a new solution.

- Mobilize to get the masses behind a project instead of getting the CFO onboard who then forces the masses to adopt the project and new processes involved.  What you want at the ground level is the ability to improvise, you get different people in the organization to try it, and make it work. Get it right by lots of testing before going to top-level management.

- Often it takes time to effectively frame your message.  He gave the same presentations 100’s of times until he received enough feedback and reactions to perfect it, in order to get stakeholder buy-in.

- Show your team the film Gladiator. Well, that was appropriate to specific project. Essentially, use metaphors!

- Get your hands dirty. He went to the field, to India, to see first-hand the applications of the solutions in development.

Image from: IESE Video Series ‘ Jordan Cohen at pfizerWorks: Building the office of the Future

Last month a diverse group of individuals ended up in New York’s Times Square for the The World Innovation Forum – referred to in the twittersphere as #WIF11. We offer highlights and reflections from the Forum in the following posts.

Vivaldi Partners, along with IESE Business School kicked off the week a day early with the Innovation Architect Workshop. We brought together business leaders from number of global organizations to break down the concept of innovation. The presenters offered practical ways to replace repetitive thinking with new ideas in order to develop solutions for their business challenges.

PADDY MILLER, professor at IESE Business School and Author of “The Information Architect” kicked off the day with a surprising, contrarian urge to attendees:

“Your problem is not that you need to be a better innovator!”

His learning from decades of experience with big companies across the world is that global businesses have been focused so hard on innovating better. But that is an ineffective approach.

His business colleagues in China even banned the word “Innovation” because they’ve been there, done that. It is overused. Using the same process time and again is not creating new perspectives. Miller presented his goal clearly and passionately – his focus is guiding companies on practical approaches to breaking this process.

Miller had a sense of urgency about him – he was certainly not prepared to let this audience off the easy way. He wanted some deep diving. He urged us to “escape from Brainstorm Island”.

But first we had to visit the island. Thomas Wedell-Wedellsborg was our guide to this stormy place. On Brainstorm Island we generated lots of ideas, from the obvious to the absurd and plenty in between. But did we come up with the ideal solution? Which one was the best, how do we know which one to use?

The problem was clear. All too often in a brainstorm we have a moment where we found the fruit that we came to the island to pursue! But once we leave the island we’re no longer certain.

The problem is not the fact that we didn’t find the right fruit, but rather that we are not sure exactly what kind of fruit we needed in the first place.

Now off the island, back into the business world, we would be wise to reconsider: What is the sole problem we’re solving?

Let us investigate the problem, not the answer because the answer is in the problem, not away from it. The more we understand the problem, the clearer we see the answer.

Favorite Paddy Miller quote of the day:

“Sometimes you read something and you go “wow”. What have you done about that wow? What have you done with that flicker – that flame?