Helge Tennø | jokull.io Customer Strategy | Customer Insight

THE CUSTOMER OSWHY DIGITAL ISN’T DIGITAL AND CUSTOMERS HOLD THE KEY TO YOUR FUTURE

My back story: I. There are no lack of headlines trying to explain the future with words such as «transformation», «digital», «Internetification» etc.. But these terms have no context or explanation - they are just there to help people who don’t understand what is happening sell that they do.

II. I was baffled when I, in my talk at the end of a three day workshop on «change», asked participants what was changing? And nobody had a valuable answer.

III. I made my goal to dig underneath the superficial surface and help organizations and teams articulate what they were seeing around them. To help them develop a common understanding and shared language enabling them to work better together going forward.

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growing complexityPART 1

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«PEOPLE HAVE CHANGED MORE THAN THE BUSINESS ORGANIZATIONS THEY MUST DEPEND UPON FOR CONSUMPTION AND FOR EMPLOYMENT» - Shoshana Zuboff

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Every century or so, fundamental changes in the

nature of consumption create new demand patterns that

existing enterprises can’t meet.

- Shoshana Zuboff -

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A MUTATION IN CAPITALISM ITSELF It would be easy to construe these as isolated cases of innovation and industry

change, but I believe they represent much more: a mutation in capitalism itself.

What’s the difference? Innovations improve the framework in which enterprises produce and deliver goods and services. Mutations create new frameworks; they are not simply new technologies, though they do leverage technologies to do new things. Historically, mutations have superseded innovations when fundamental shifts in what people want require a new approach to enterprise: new purposes, new methods, new outcomes.

Creating value in the age of distributed capitalism By Shoshana Zuboff http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/creating-value-in-the-age-of-distributed-capitalism

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- CHRISTIAN MADSBJERG AND MIKKEL B. RASMUSSEN, HBR.ORG, AN ANTHROPOLOGIST WALKS INTO A BAR

The biggest challenge CEOs face is the so called complexity gap.

CEOs see a lack of customer insight as their biggest deficit in managing complexity. .. And rank “customer obsession” as the most critical leadership trait.

THE

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To explain what is happening.. We are not talking digitization or transformation, we are talking

What does that mean?

mutation.

this happens …and so

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appens

People reach their goals through their behaviors. They hire products and services because of the processes these offer that allows different types of

behavior. These processes are themselves limited to what the current technology can offer. And hence people’s behaviors are limited to the

technology that is available.

PERSON GOALPROCESS BEHAVIORTECHNOLOGY

PRODUCTS AND SERVICES

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What happens when the technology changes?

But…PART 2: This H

appens

What happens when the technology changes? What happens when people’s goals change?

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appens

"In the old model things didn't change very fast, it was predictable and so you built for predictability. It was like saying; 'go find this object in a well lit room’."

- Aaron Dignan -

A Well Lit RoomIt used to be…

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appens

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- In a well lit room these factors are all very predictable -

PERSON GOALPROCESS BEHAVIORTECHNOLOGY

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New technology invites companies to find new processes creating new behaviors for people

Slow moving societal change like the increase in higher education,

standards of living, social complexity and longevity etc.

changes people’s mind in regard to what they find valuable

Dark RoomNow it’s more like…

PERSON GOALPROCESS BEHAVIORTECHNOLOGY

- Aaron Dignan -

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Companies tend to over invest in keeping the current processes intact rather than exploring how technology can enable new processes and consequently new behaviors - allowing customers to achieve their goals in new ways.

Where it all breaks down:

- Clayton Christensen -

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- Helge Tennø -

«IT IS NOT ABOUT OLD PRODUCTS OR SERVICES BECOMING TOO COMPLICATED OR TOO SLOW, THEY BECOME IRRELEVANT.» link

There was a time when TV content was best organized into linear channels - this was the premiere possible solution at the time. But, then the technology changes and what was

the optimal solution only becomes an option in a menu of opportunities.

It doesn’t make much sense anymore to hold the customers hostage to a very limited set of processes and behaviors if our job

is to help them utilize content to achieve their newfound goals.

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so…this might be your future in three to five years …

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ight be your future

The customer is not in the driver seat. It is us that no longer understands what they find valuable to pay for.

Willingness To Pay

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ight be your future

IdentityPART 3: So this m

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Massconsumption lowered prizes and opened massive new

markets to people who wanted goods but couldn’t afford it.

IndividualZero marginal cost of customization makes possible the production of individual services at the same low price

points as if it was mass produced. People will pay for the ability to get their personal product (their liberation from the hostage taking of mass produced goods). They now set the

premise and tailor every detail to themselves.

e.g. There are no two Google search results, Facebook feeds or Amazon product pages. Every smartphone is unique two minutes after you boot it for the first time.

1900 2000

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identity + individualization

Increased willingness to pay

Finds / opens / creates new markets

This might be your future in three to five years …

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ight be your future

choice…and how not to see it..

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hoice and how to not see it

freedom of choice, not voice.The democratization of the Internet has led to

If everyone is offering the customer the same processes and infrastructure customers are only given a choice between logos and colors.

But, if a provider offers the same or competing value with different processes and / or no infrastructure. Then the customer has been given a real choice and there is a real threat to the incumbents.

ChoiceNo Real Choice

KEYWORD: DIFFERENT PROCESSES & INFRASTRUCTURE

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hoice and how to not see it

Common market reaction to real threat:

the threat to make it dissapear

e.g. Insurance companies understand the importance of insuring against damage or loss to people’s physical property. But in regards to intellectual property they don’t see their role at all. This is strange.

Given that if you loose your computer the stuff on it is far more valuable than the box itself. What business are the insurance companies really in?

The insurance industry avoided any problem by just renaming the whole problem. Insurance of intellectual property is now called cloud storage.

re-namePART 4: C

hoice and how to not see it

Re-naming is a sickness plaguing industries - because it suffocates companies by protecting them from real growth. Companies shrink and suffocate until they end up as commodities or infrastructure.

Companies don’t die they suffocate

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Over time companies and industries seem to forget their understanding of the market, their CVP. They become prone to unconsciously hold a very limited view of their future. Seeing the world from a technology, market or product perspective creates a very narrow frame of reference where new

wealth opportunities are easily overlooked.

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Time

Creating a market by seeing it from the perspective of the customer value proposition [CVP] The original technology and processes end

up becoming a commodity or infrastructure

Competition is openly let in to offer the same CVP due to difference in

technology and process

Market in terms of Customer Value

THE CUSTOMER OSOperating in the market from the perspective of its Customer Value Proposition

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It is always easy to explain the world in hindsight, so lets try foresight:

It is becoming increasingly clear to banks that where FinTech proposes no real threat WeChat and other social life-platforms do.

How/why?

FinTech proposes to better one or a few components in the banks value chain - but the chain itself will remain in the banks control.

Life-platforms turns this on its head. Suddenly banks become the component and life-platforms become the chains.

Banks, with their processes and infrastructure suddenly, and very visibly, are becoming irrelevant.

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Companies aren’t disrupted, components in their value chain are. This is comparable to the theory of disruption where Clayton Christensen argues that an industry is ripe for disruption when its core technology is stretchable. “Its core technology” being a component in the value chain essential to the nature, protection or capitalization of the industry.http://www.180360720.no/?p=5070 link

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Foresight (2015):

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hardware as an opportunity

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Customer OS as a hardware /management problem

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Companies are designed to

out!customerskeep

VIA CHUCK COKER ON FLICKR.COM

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efficiency COMPANIES CARE ABOUT

this harmonizes poorly with unpredictable customer who want nothing more then their own surplus

& standardization

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Companies become internal bureaucracies

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«the process of work becomes work itself»

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Is Delighting The Customer Profitable?Delighting the customer through outside-in innovation is not just profitable. It’s hugely profitable. That’s ultimately why it has become a business imperative. It explains why its conquest of the business world is inevitable.

It’s not because the customers are more contented or because the people doing the work are happier or because it extends the life expectancy of a firm, generates jobs and fuels the growth of the economy. It does all those things, but the real driver of its inevitability is that it makes more money.Is Delighting The Customer Profitable? Steve Denning http://www.forbes.com/sites/stevedenning/2011/04/01/is-delighting-the-customer-profitable/#273e04c2151b

Just look at the ten-year share price of exemplar firms like Apple [APPL], Amazon [AMZN] and Salesforce.com [CRM], with increases of around ten times to fifteen times. Compare

that to traditional stalwarts like GE [GE], Walmart [WMT] and Intel [INTC], which struggle even to hold their share price

constant.

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«At a high level, banks make money out of two things. One is net interest margin. The other is kicking you

when you’re down.» - Ricky Knox, Founder Tandem -

Some industries are so fundamentally customer hostile, it would need a reboot in order to fix it.

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-ism or -ism

Is your company following

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«Let me give you an example of how expensive that can be. A decade ago four of the most powerful technology companies in the world were Intel, Dell, HP and Microsoft. And yet all four of them completely missed the single biggest shift in the generation in their industry. And that was the shift to wireless. The mobile opportunity was not an existential threat to their core business.

We continue to over concentrate power in our organizations. When you give a few people at the top the power to set strategy and direction you are giving them the right to hold the organizations capacity to change hostage to their own personal willingness to adapt and change.»

«[successfull companies] fail when their leaders fail to write of their own depreciating intellectual capital.»

- Gary Hamel

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«We were caught of guard»Senior Management in some of Norway’s biggest media companies after ignoring

the warnings from their talented employees for years.

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The old management model is a control mechanism subdividing talent into compartments where top-management destroys their ability to create value.

Enabling companies are driving information rapidly out to front-line self-organizing teams in order for them to operate autonomously and react

instantly to changes in customer demand patterns. Employees given the opportunity to use their talent unleash massive wealth for the corporation. 

Cases in point: Salesforce, Netflix, Patagonia, Zappos, Tesla, AirBNB, Morning Star, Etsy, Nest, Spotify, Valve, Google, Burtzorg, Haier, Gore Technologies, DSM, GE Health, Whole Foods, Zara, Telus, Uber, Amazon, Facebook, Apple

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«Even the worlds most efficient hierachical, linear organization was unable to keep up with the speed of this distributed network»

- Chris Fussel, Stanley McChrystal Group -

Graph / slide from Mike Arauz / aug.co

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«The problem set for an organization usually changes every week.»

- Chris Fussell, Managing Partner at McChrystal Group -

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software as an opportunity

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Customer OS as a software /insight problem

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- CHRISTIAN MADSBJERG AND MIKKEL B. RASMUSSEN, HBR.ORG, AN ANTHROPOLOGIST WALKS INTO A BAR

The biggest challenge CEOs face is the so called complexity gap.

CEOs see a lack of customer insight as their biggest deficit in managing complexity. .. And rank “customer obsession” as the most critical leadership trait.

THE

PART 6: Softw

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n Opportunity

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In 2003 the customer was in sixth place in regards to strategic influence. Ten years later they are second only to the c-suite.

IBM Global C-Suite Study -

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Companies who give customers a voice at their c-suite table perform 15% better on average. The more weight the customer is given the better the result.

- “The Chief Marketing Officer Matters!” by Frank Germann, Peter Ebbes, and Rajdeep Grewal -

Harvard Business Review:

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Being overconfident in regards to customer insight is a challenge

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do you know that youHowknow what you need to know?

THE UNKOWN UNKNOWN

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Ed Thompson, an analyst at market research firm Gartner, says: “Between 5% and 10% of companies truly have a customer culture at their core, but the rest have been forced to care because all other means of differentiation have been eroded over time. That’s why it is currently a hot topic and has been very high on CEO agendas for the last three years or so.”

In many consumer sectors, it has become increasingly difficult for organisations to really stand out from the crowd in terms of pricing, products or services.As a result, the last great bastion of differentiation in recent years has become that of customer experience – and that seems unlikely to change any time soon.

“THE REST HAVE BEEN FORCED TO CARE BECAUSE ALL OTHER MEANS OF DIFFERENTIATION HAVE BEEN ERODED OVER TIME.”

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linkCath Everett, ComputerWeekly.com Customer experience is big differentiator for organisations

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IS CUSTOMER INSIGHT EVEN THE RIGHT APPROACH?

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«We tend to throw out the most meaningful and most revolutionary if we ask people about their preferences»

- Malcolm Gladwell -

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Know Your Customers’ “Jobs to Be Done” Clayton M. Christensen, Taddy Hall, Karen Dillon, David S. Duncan

https://hbr.org/2016/09/know-your-customers-jobs-to-be-done

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«THEY CAN PICK OUT THE BEST CREDIT RISKS, IN AN ECONOMY WHERE INFORMATION ON CREDIT-

WORTHINESS IS, SHALL WE SAY, A BIT THIN.»- Nicholas Lardy, a longstanding expert on China’s financial sector at the Peterson Institute for International Economics -

http://www.ibtimes.com/mybank-vs-webank-chinas-internet-giants-go-head-head-new-online-banking-sector-1941380

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in conclusion

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PART 7: In conclusion

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«Customer Strategy means gathering, cultivating and distributing knowledge about the customer throughout the organization. So

that any talent and every team instantly can make their own decisions based on emerging customer needs – not having them depend on or wait for an organizational structure designed to

preserve itself or its players.»

- Helge Tennø -

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«The measure of a successful company is its ability to let its customers and employees liberate it.»

- Helge Tennø -

PART 7: In conclusion

- Thank you -

THE FUTURE IS ONLY COMPLEX IF YOU FAIL TO UNDERSTAND IT FROM THE PERSPECTIVE

THAT IS DRIVING THE CHANGE.

Helge Tennø | jokull.io Customer Strategy | Customer Insight

«When others look at you and think you’re nuts, it’s because they are looking at it from their perspective» - SwimRun Competitor, Norwegian In-flight Magazine -

Helge Tennø | jokull.io Customer Strategy | Customer Insight

Follow me or even better, join my knowledge network on LinkedIn