Performance Management: Proactively Keeping Score

Performance Management: Proactively Keeping Score

Key Fact #1: Performance management keeps companies agile.

“Performance management” is a vital part of any business, since it keeps people and processes in-line with strategic objectives and serves as a clear indicator of problems and adjustment requirements. It’s not just a nice-to-have. It’s what keeps companies agile in a fast-advancing global economy. Without performance management, a company is doomed to slide backward toward obscurity.

“You can’t manage what you can’t measure,” as the expression goes, but very often companies lose sight of what needs to be measured and what metrics to use. Measurement should lead to analysis, discussion, revision, and further action. Tools like the balanced scorecard ensure that improvement opportunities do not go by the wayside through tunnel vision or through a lack of established goals and standards.

Performance management leads to the identification and selection of targets. These must be sufficiently rigorous to stimulate performance improvements while being simultaneously attainable. They must fit with the regional corporate culture, to remain a force of positive change that is acceptable to all workers. For example, problems can arise when politics or territoriality come into play, with separate departments or even individual managers modifying the metrics or the incoming data for their own specific reasons.

Key Fact #2: Performance management must be both top-down and bottom-up.

Thus, no matter how large a company is, a wiser approach to performance management is to ensure a single source of truth that is distributed from the top across all departments and siloes equitably and simultaneously. This would be something that allows all employees to understand the overall performance of their company, not just their individual contributions, through town-hall meetings, online notifications or both.

Leadership is vital in establishing and communicating performance management initiatives. This not only refers to the traditional positive strengths that leaders are traditionally expected to demonstrate, but also that they themselves take responsibility for missed targets, failures and the repair period to follow. Furthermore, leadership should never be a solely top-down undertaking. Some organizations perform better when employees are allowed to take a greater role in goal setting, with management regularly dropping by, not to “inspect,” but to learn, listen and show respect.

Communication is also vital and should be regular and open. In addition to town halls, time should be assigned to kaizen (continuous improvement) activities, mentorship opportunities, and reinforcement of positive achievements. These activities all require time and should be done regularly and consistently, but it is time well-invested.

Picking Up the Pace

Key Fact #3: Proactivity is the name of the game in successful performance management.

The best companies build performance management strategies that are proactive; that is to say they do not wait for market data or output reports that show what has happened. Change based on past indicators tends to come too late. Change and comprehension of performance must be more of a real-time activity, using data and technology to pull together and prepare information in as close to real time as possible, with interpretation, decision-making and deployment following quickly after.

Standardization of Process

Standardization makes performance management easier by establishing standards for every task and activity, giving people the awareness and skills to adhere to those standards, and ensuring regular proactive monitoring of performance against those standards.

Standardization can be difficult to adjust to, but it forms the basis of measurable performance. When this is paired with constant internal contact, communication and a breakdown of silo-based management sustainable performance improvements become eminently achievable.

Key Impacts

  • Tools like the balanced scorecard ensure that improvement opportunities do not go by the wayside due to tunnel vision or through a lack of established targets and standards.
  • Targets must be sufficiently rigorous to stimulate performance improvements while being attainable.
  • Leadership is critical but communication should permeate the whole organization and should travel in all directions.
  • Change based on past indicators tends to come too late. Change must be a more real-time activity.
  • Standardization forms the basis of measurable performance.

Performance Management: Moving Beyond First Impressions

Performance Management: Moving Beyond First Impressions

Key Fact #1: First impressions are powerful, but they can also lead to a downfall.

As a leader of a team, or as someone who interacts with customers or clients on a regular basis, you probably already know how important first impressions are to customer experience (CX). But they are equally important to your internal clients – your employees and teams, and as such form a vital component of performance management strategy.

But first impressions come with a dark side. The moment you slip below the standard of expectations that the first impressions have established, you stand a good chance of generating disappointment, and the memory of disappointment lasts much longer than the pleasure of the first impression in the hearts and minds of people.

Here’s a small-scale example, but see how easily it translates up to larger organizations in any industry, both externally to customers, as well as internally with employees:

Key Fact #2: Excellence must be maintainable and sustainable.

A new restaurant opens with great fanfare. New and exciting dishes are presented, and management and staff do everything they can to welcome patrons and ensure everything is to their liking. Their goal is to make an excellent first impression so that the customers will want to come back and dine again.

But two weeks later, when customers come back, they notice things have slipped a little. The food selections are not quite as good, the staff is less attentive. The sparkle has gone out of the experience. This might be because the restaurant now has bills to pay, and management is more focused on the bottom line and saving money where it can.

In this “new restaurant” scenario, a bad thing is happening. The opening night visit may have exceeded expectations, but in so doing, it established a level of expectation for the future. The restaurant must now match or exceed that first night’s experience, or it will partially fail in the eyes of the customer. This is because the emotional impact of disappointment is stronger than that of surprise and elation. A nice surprise is a pleasant experience, but a bad situation speaks directly to every human’s instinctive fear. Something bad is happening (even if it is just disappointing service), and this will imprint itself upon memory far more strongly.

Consistency is Better than First Impressions

Key Fact #3: To understand consistency of experience you must always keep data from past experiences in mind.

Very few organizations can regularly exceed customers’ expectations. You can do it once, perhaps, but outperforming yourself regularly requires a great amount of money, time and insight. Apple was able to do this for a while, largely under the guidance of Steve Jobs. Every year, its products, like the iPod, the iPad, and the iPhone, surprised the world with new innovations and ease of use. But even Apple has not been able to sustain such a tradition. The Disney Corporation and Tesla both seek to continually amaze and are good role models to observe. Tesla, and Elon Musk’s other ventures have had their setbacks, but their attitude of “fail forward” puts these in an interesting new light.

For most organizations, though, it is more important to place energy and focus upon consistency of experience, which involves maintaining a more manageable level of excellence that people can rely on every time.

Going back to the restaurant example, when a customer comes back to the restaurant that second time, and the service was as good as the first, they will be cautiously impressed. If they return a third time and the service and food continue to be as good, there’s a strong chance they will become loyal customers and ambassadors of the business. The same applies to professional services and companies of any size.

But what is often overlooked in management consulting literature is what the definition of excellence really means in terms of consistency of experience. It requires a forward-looking definition of excellence, certainly, but it must also factor in the data from customers’ past experiences, because that’s what the customers will be judging against.

It’s a hands-on, continual exercise, not a set-it-and-forget-it type of thing. It requires metrics, feedback from customers themselves (either direct via survey or questioning, as well as indirect via social media discussions) thorough planning and involvement of people at all levels including the senior executive.

Key Impacts

  • Excellence should not be defined as “the best you can be.” It should be “the best you can maintain.”
  • Analyze and measure performance by keeping in mind a customer’s past experiences not just their future ones.
  • Even in this digital age, people are still guided by basic instinctive emotions, including fear and comfort.

Artificial Intelligence – Is It Finally Here?

Artificial Intelligence – Is It Finally Here?

Key Fact #1: AI is already here. It is becoming cheaper and more available daily.

Anyone who has browsed Amazon, YouTube or Google recently might be totally unaware of the amount of artificial intelligence (AI) that they have just used, as they decide to pursue a recommended video or look at a recommended item to purchase. In these scenarios, the algorithms used to assess your past activity and influence or predict your future actions have blended into the background to become part of the experience. The same goes for consumers who use smart thermostats and alarm systems in their homes. These devices observe behavior, and build an understanding of the user, allowing for an improved experience with fewer errors or failures.

In truth, these technological achievements aren’t exclusive to AI. They are a hybrid of techniques whose abilities cross the boundaries to collectively serve their owners. These other techniques are machine learning (ML), which makes the observations and corrects actions accordingly, and the internet of things (IOT), which helps ensure communication between devices over the internet – something that up until now was restricted only to computers and smartphones.

Is It Intelligence or Just Fast Computing?

The term intelligence might be subject to debate and is influential in both the acceptance of and resistance to progress in this area. The true basis of AI is the capacity for high-speed, in depth computation. This is what makes facial recognition a reality, for example. Although humans are far better at recognizing a face in a crowd or inferring an emotion, AI-based facial recognition programs can compare millions of existing facial records in milliseconds, even accounting for variation in light and angle.

AI is not a single thing. It can be based on a combination of learning techniques such as:

  • Supervised learning, in which machine learning is guided by data such as a database of phonemes that would help a text-to-voice application learn how to better synthesize human speech.
  • Unsupervised learning, which lets computers detect patterns to build its own database of facts.
  • Reinforcement learning, which uses rewards and punishments, to help a computerized system learn essentially through trial and error.

Recently an AI-based art algorithm created a portrait, entitled the Edmond de Belamy, that it designed after observing over 15,000 portraits painted by humans over the past 600 years. It sold at Christies for almost half a million US dollars.

On a more pragmatic front, AI algorithms are being used for purposes such as predicting patient recovery based on medication interactions, family histories, and geographic location. Millions of AI applications already exist within a range of industries.

Jobs Are Not Disappearing, But They Are Changing

Key Fact #2: AI doesn’t eliminate jobs, but it does change them.

Even in the absence of true intelligence, AI is already changing the business landscape. Travel agents, for example, represent one line of business that has already been substantially impacted by AI-based travel sites that have access to far more real-time data about destinations, hotels and flights, and which can tailor the options based on data about each customer that it has already obtained from the customer or from a third party.

Jobs Are Not Really Disappearing

Jobs of all types will follow suit. This might mean the elimination of certain types of jobs, but that is not the same as destroying jobs. For example, many food store/supermarket chains now use self-checkout terminals, which use AI to help individual shoppers scan their groceries and cross-check the weight of these items against inventory and pricing databases. These devices appear to threaten the livelihoods of cashiers, however, each zone in which a self-checkout device is used requires human beings to take care of security (anti-shoplifting), helping customers with checkout problems, unjamming or overriding processing problems, and, further up the supply chain, designing, programming, delivering, installing, and maintaining the devices.

The jobs are not disappearing, but they are changing. Some will require additional training, but this has been the case in any industry for hundreds of years.

Jobs are Modularizing

AI also allows companies to modularize their hiring or team-management processes according to more accurate assessments of skills and availabilities. A new trend among large companies is to extend the concept of remote work by individuals to the use of remote teams. This consists of individuals, either employees or freelancers, who are pulled together as needed to work on a specific project for as long (or as short) as needed.

This dynamic team-based approach forms part of what is called the gig economy, which is best maintained and optimized through an AI interface that calculates the availability and productivity potential of freelancers as individuals and as part of the team. It is not new per se. Contractors and vendors have always been part of any economy. But it is the dynamic and highly mobile way in which it is now done that is different.

This changes the dynamic of hiring and employee retention, potentially reducing fixed payroll and benefit costs while ensuring access to qualified teams at short notice and on an as-needed basis.

The Rise of Predictive Analytics

Key Fact #3: AI, paired with predictive analytics can change a customer’s future.

One of the most beneficial outcomes of AI is the capacity for proactive services through predictive analytics. Sensors connected to the Internet of Things, paired with machine learning, allow for refined activities such as improved routing of trucks and ships, deployment of timely service calls for machinery, and the ordering and stocking of goods based on customer traffic and numerous other influencers. It is also better able to anticipate undesired events such as machine failures.

Predictive analytics helps move entire industries from reactive to proactive, ensuring that customers’ needs are met before any gap in service occurs.

How Can Organizations Embrace AI?

It is important that organizations avoid considering AI as one single event. It is equally important that the related concepts, machine learning, the Internet of Things, and predictive analytics are understood in the context of their individual abilities, but also in how they work together. Deployment of these techniques is ultimately more successful when approached as a continuous process.

Leaders and decision makers need to be able to observe their processes and their customers’ needs through the prism of innovation: How could we do this better? Where are the gaps? What are our customers doing with their time, actions and money? This, then needs to be applied to the second question – what can AI and related technologies do to improve things?

Currently, industry acceptance of AI is comparatively low, being in its early stages. Leaders and teams struggle to envision just how these technologies might fit into the status quo. In many situations, the business case is still not there – not enough information or vision is available to help paint a picture of how AI would service a business profitably in the coming years.

There is also a skills gap. Not enough people are sufficiently skilled in AI technology to reliably deliver and maintain a platform in-house.

Thus, awareness and training are key. Although AI itself is computer-based, it needs human beings in decision-making and deployment positions to ensure the system becomes a viable, going concern.

Enhanced Cognitive Skills Are Still Needed

In assessing the future of work over the coming 15 years, numerous think tanks point to an interesting parallel to AI, being the need for enhanced social and intellectual skills in the workforce. As the need for basic mechanical and functional skills is answered by intelligent automation, there will be a heightened demand for higher level cognitive abilities such as critical thinking, entrepreneurial skills and emotional intelligence.

As the intelligence of our computing machinery grows, so too will the intellectual capacities of the humans working alongside them. For example, an IT specialist who writes code has traditionally not been expected to excel in negotiation skills or organizational intelligence. A coding position has traditionally been seen as an engineering role, dealing with data, functionality and construction in a very objective manner. Yet as IT experts get called to the table to discuss security or strategy with senior management, their abilities in code writing must now be paired with the ability to discuss and influence at a much higher level.

This turns into a responsibility for companies to ensure they are delivering the types of education that will groom employees for these positions.
Building an AI platform ultimately demands that companies recognize the value of data as a dynamic, and not static, element of business, and that they set their companies and their people up to make the best use of it.

Key impacts

  • Artificial intelligence is a combination of resources including high speed data processing, Internet of Things, machine learning, and predictive analytics
  • Jobs will change to address heightened technological and social skills
  • Embrace AI by observing customer need and questioning how it can be addressed.

Transforming into a Performance Culture

Transforming into a Performance Culture

Key Fact #1: A company that simply tries to maintain a status quo will slip backward toward mediocrity.

Companies generally do not find it easy to maintain a culture of superior performance and ongoing improvement. Even when a company “stays the course,” or “treads water,” maintaining a level of performance that they have recently worked hard to develop, they will slide backward toward mediocrity simply due to the relentless pace of change.

And it is change that is both the problem and the solution. No organization can expect to survive for more than a few years by resisting or ignoring the changes that are happening either outside or inside their walls. Outside, of course, we are seeing vast and swift changes to commerce, communication, world politics, and many other forces. Inside, companies change simply by growing – from a brash, fearless start-up, to a maturing company with shareholders and boards of directors, to older companies who acquire their competitors and struggle with the inevitable clash of cultures.

Change is both a natural an unnatural thing. Living creatures evolve and adapt to changing environments simply to stay alive. But that very same primordial worry also stands in the way of the desire for change. Individuals and companies will resist anything that appears different, out of fear of a loss of control, a loss of face or simply losing their place in the race.

Making Space for Health

Key Fact #2: Performance at the exclusion of health will not work, at last long-term.

Part of the reason for failure in achieving top performance comes from focusing on it too much; to the exclusion of longer-term goals and overall company health. Health is a less concrete term than performance or sales. It consists of a collection of subjective and cultural elements, including morale, trust, management practices and management behaviour.

There is no single definition of organizational health, in just the same way that no two people share the same metabolic attributes. There are similarities, certainly, but every person must follow their own regime for health and growth and would do themselves a disservice by following another person’s regime too closely.

An innovation or habit change that looks ideal on paper will manifest itself quite differently when it encounters any company’s actual culture. Typically, an organization will embrace – either naturally or through its leadership – one of four cultures: collaborative (doing things together), creative (doing things first), controlling (doing things right), or competitive (doing things fast). These values are essentially exclusive. Applying a change template to any one of them will result in very different and sometimes surprising outcomes.

Therefore, management theory and how-to books should be used as rough guides only. There is no one single magic solution for attaining sustained performance. Companies need to look at and understand their leadership practices, their employee base, their approach to knowledge and learning, and their understanding of the marketplace – both their specific industry, but also global trends and developments.

They should pay heed to the fact that the most logical and practical approach to doing things is seldom the one that humans choose. Emotion, politics, and tribal alliances step in to firmly drive a wedge between cold logic and real behaviour.

Project Managing a Performance/Health Success Plan

Key Fact #3: Performance and health are attained through project management and continuous improvement.

The ideal approach to building a successful performance/health plan is to take from the classic wisdom of the school of project management, combined with that of continuous improvement – the kaizen or Deming cycles. This comes down to sufficient and adequate planning paired with regular review of how goals will be achieved and then improved upon.

  • First, it is vital to set some goals – a roadmap that identifies performance and health objectives simultaneously. Performance objectives might include understanding customer needs and market trends. Health objectives seek to identify new standards of company health as defined by both management and employees. This is a good time to set goals that are not too far ahead in the future as to appear unattainable. It is also a time to establish a tradition of regular update, reward and celebration, to ensure all members of the company feel ownership of the positive change and will be given the opportunity to celebrate small wins along the way.
  • Second, there needs to be an assessment of an organization’s readiness to take on change. This stage is often underestimated or is ignored due to the novelty and optimism that lofty goals can often present. This can also be divided between performance and health. Health will look and closely assess the culture of the organization and peoples’ individual readiness to embark on change. The performance side of the equation will zero in on specific functional areas, like marketing, to identify the needs and readiness for change within those spaces.
  • Thirdly, every project requires clear steps along the path that include a clear understanding of the effort required, along with contingencies and risk assessment. The performance side of this equation once again focuses on departments, to include steps that lead to cost savings, quality improvements, productivity gains and other measurable activities. Project managing the change process requires the careful deployment of a change management model, like Kotter’s eight-step method or Janssen’s Four Rooms of Change, to successfully broach complacency and replace it with one that accepts and then embraces change.
  • Fourth, as the initiative rolls forward, it enters the control phase of project management, in which morale and vision must keep pace with the actual evolving changes. There needs to be metrics established to measure progress on both the performance and health fronts. Keeping people engaged and connected during a period of change may require a variety of techniques: some that are directly instructional, while others focus on allowing individuals to take ownership of the change.
  • Finally, the culture of performance and change that this project has sought to establish must be able to hand off to one of ongoing maintenance and improvement. It is never enough to seek change and establish it; change management must become a constant pursuit, a part of the culture itself.

Companies vary in size and mission, but they all use human skills and motivation to progress. Identifying and developing performance culture is a multifaceted act that must directly involve the health element, and that must be tailored to the specific culture and needs of the company. Although a path is needed, there is no common path. It is truly a quest that each organization must take on by itself and for itself.

Key Impacts:

  • No organization can expect to survive for more than a few years by resisting or ignoring the changes that are happening.
  • Staying at status quo guarantees a slide backward toward decline.
  • Focusing on achieving top performance should not be done at the expense of longer-term goals and overall company health.
  • Just like with people, a company’s health is a very specific thing. Improvement plans must be tailored accordingly.
  • Performance and health are attained by combining project management and continuous improvement.

The Digital Management Mindset

The Digital Management Mindset

Key Fact #1: Management of change starts with clear and perpetual top-to-bottom communication.

It is of little comfort to hear the phrase “change is a constant” when you already know you are surrounded by change. It is often a source of frustration for managers to recognize just how difficult it is to keep pace. Those who consciously wish to embrace change and push their companies forward tend to find themselves in a “no man’s land” bordered on one side by excess choice (“which new technology or trend should we embrace?”) and on the other by legacy challenges, including silos and insufficient support – or even outright reluctance – from the c-suite.

This results in a change process that happens in fits and starts, with small modifications or improvements dictated reactively to a problem that has already happened, by regional or departmental priorities, with short time horizons, localized budgets, and even a degree of territoriality. Such changes limit the results to a small and often insulated segment of an organization and do little to create long-lasting solidarity, momentum, and achievement.

Isolation does not merely restrict the successful deployment of change initiatives; it can also fragment the language needed for common understanding. The very definitions of terms such as digital or omnichannel take on their own lives depending on which department is using them. Without industry-consistent and company-wide agreement, progress – in terms of language and action – resembles horses set loose in a field, each running at their own pace and in their own direction.

The Relationship between Ransomware and Change Management

Key Fact #2: Change Management is not just about improvement. It’s also about defense.

A typical example of the schism that plagues so many companies can be seen in the concept called ransomware. Those organizations who find themselves victims of a ransomware heist suddenly find themselves in a flurry of panic and confusion. Typically, when a crisis of this type hits, senior management, IT, and average end users do not know how to talk to each other and do not have a viable action plan in place.

Hindsight might show that a ransomware event happened due to employee error (using an easy password or clicking on a phishing email link) and continued due to a lack of preparedness, including insufficient data backup protocols. But the root cause of the problem goes much further than that and points to a cultural gap in which senior management fails to see IT as a department worthy of a place at the strategic table. Given that a company lives and breathes through its computer technology, moment by moment communication with IT is vital for proactive activities such as planning and contingency awareness. This schism happens even in organizations that have a Chief Information Officer (CIO), Chief Data Officer (CDO) or Chief Technology Officer (CTO).

Should You Be on the Leading Edge or Behind the Curve?

A related challenge that springs from this cultural schism is the propensity for senior management to pursue a flavor of the month solution based on inadequate research and discussion. Currently, for example, a company that joins up with a blockchain provider might be doing so based on recent news about the impact of blockchain on the supply chain, or perhaps out of a fear of missing out on a cryptocurrency venture. A hasty leap into this type of digital world is fraught with danger, even if the initial instinct to join it is well-placed. The same mistake can happen in other areas of business too, such as hiring or work-life-balance/flextime policies, manufacturing, or marketing efforts.

The key here is to ensure the mindset that makes the decisions to move ahead with a venture is a collective one, a digital one, involving experienced members of the team who represent a broad and up-to-date selection of a company’s priorities.

Where should a company decide to place itself in relation to its competitors and to the marketplace? Is it more advantageous to be first out of the gate, being first to market with the product that everyone wants? Or is it wiser to place a company behind the adoption curve, allowing a competitor to make the mistakes, and giving time for the market to decide what it truly wants?

Both options have merit. It depends on a variety of factors that themselves depend on input from a collection of internal experts: the type of experts that need to be around that c-suite table.

Centralizing the Knowledge Base

Another place that companies often fall behind in terms of the digital mindset is in a revised and flattened approach to the internal sharing of information. This has traditionally been an area dominated by silos – with information about a particular department and its operations stored tightly within that department.

A better approach is an application of the Wikipedia model – an internal knowledge base that any employee can contribute to. The strength of Wikipedia on the internet relies on dual principles: 1. that anyone can contribute; and 2. that corrections and clarifications will be pursued by a collection of diligent volunteers.

In a corporate context, an internal wiki represents a place in which information remains vibrant and up-to-date, and which can include audio-visual components, a concept still vastly underused in enterprise generally.

Having a wiki demands a digital mindset that accepts the wiki concept, and this, too, is something that many in senior management have failed to grasp, out of distrust or simply a lack of direct experience in using Wikipedia beyond anything more than occasional Google searches.

Looking Beyond the Immediate Competition

The digital mindset is one that factors in a broader intake of best practices beyond simply analyzing the competitor across the street. For example, a significant transition is occurring in the field of adult education and professional development, as more and more employees turn to online learning modules to replace full-day in-class education. The modular format is more convenient, more mobile, and more easily conformable to an individual’s needs than is traditional teaching.

Traditionally a discussion about employee learning and professional development would be siloed into the HR department. Any new best practices might be embraced there and even deployed there, but the discussion would go no further.

The digital executive mindset, however, would open this concept up to a question: how might the modularization of education translate to our approaches in manufacturing, sales, quality assurance or delivery? In an age where automotive companies like Ford are redefining themselves from “car companies” to “transportation companies” or “mobility companies,” could there be any potential in extrapolating a change in the way education is being delivered, and applying the lesson to your company?”

Every industry is facing significant change, and catalysts of that change can often emerge from seemingly unrelated places. Any company whose executive is not ready to see beyond the delineations that were in place thirty years ago is potentially facing a quick decline into irrelevance.

Capitalizing on Data

Key Fact #3: Data is the fuel of the digital economy.

Data is king. Like the story of the goose that lays the golden egg, a customer’s data delivers the potential for a long-term relationship involving many transactions. From a retail store through to a B2B enterprise, there is more to be gained from data than a simple cash sale. For example, a company that sells compressed air to industry stands a better chance of ongoing viability by actually giving the air compressor to a customer and focusing on selling the air and services that support it, as well as consolidating customer data for up-sell, cross-sell, and loyalty opportunities. This is, in essence an extension of the model that has been used by men’s shaving products companies for years: give away the handle and make money on the blades; or home office printers – sell the printer at below cost and sell toner and online business services to that same customer.

Data is the fuel of the digital economy. The digital mindset makes it possible to see the many ways it can be used and re-used. If Management exhibits fear or resistance towards change in general or towards digital in particular, this can be mitigated through education at the highest level paired with testing and evaluation at the production level.

The Digital Mindset is About Keeping Pace with the Future

In short, the digital mindset, on an executive level is about ensuring that approaches to leadership, change, and strategy all embrace the willingness to keep pace with the current and future trends, in real time. Although five-year plans and long-term vision are vital components of an executive leadership portfolio, they must be balanced by a willingness to review a company on a much more frequent, day-to-day basis as well. As the Uber and Airbnb models ably demonstrated world-changing innovation can come out of the blue, and it can hit the marketplace very fast.

Key impacts

  • Change is more of a constant than ever
  • Create a culture of constant vigilance and communication
  • Learn from the achievements and crises of others in your industry
  • Learn from the innovators in unrelated industries
  • Build a team that covers all your company’s key activities, including IT
  • Use social media-inspired tools like Wikipedia to consolidate and use your employees’ experiences and wisdom
  • Watch the leading-edge curve of change and decide where on that curve you want to be
  • Focus on data as the currency of the future

The Airlines’ Next Assignment: Bring Assets Back Under the Roof

Key Fact #1: Overall, global profitability for airlines is negative and always under threat.

One of the most visible industries on the planet – airlines – has long been one of its most troubled, in terms of overall sustainability and profitability, and substantial changes in management strategy must occur for things to change.

Over the past few decades we have witnessed numerous amalgamations and acquisitions in which major players absorb their competitors in order to gain access to the most lucrative routes. Longer range, more fuel-efficient planes made of lighter materials have been added to fleets, and codeshare agreements have become a standard method for expanding an airline’s impression of reach and flight frequency.

Despite these innovations, the industry faces significant challenges.

Volatility in the price of fuel, route restrictions and excessively high landing fees at major airports represent typical and ever-increasing operational costs. A more profound and far reaching impact can be seen in the changes to the way flights are selected and booked, largely through online travel services. These have substantially reduced per-seat-per-kilometer profitability by opening the market wide and forcing airlines to compete directly against each other for every reservation. Many business travelers are opting to replace their flights with video conferencing. And while all these changes happen, the airlines themselves must commit to purchasing planes that tend to have a long lead time – months or years in terms of manufacture and delivery – a particular Achilles heel in an economy that now marks time by the minute.

In short the margins can be razor thin.

Key Fact #2: Online technologies threaten profitability, but can also be the source of the solution.

Social media must also be recognized here as having a substantial impact on profitability. One of the most notable examples of this was the 2017 incident on United Airlines flight 3411, in which a passenger, Dr. David Dao, was forcibly removed from his seat after declining the airline’s request for four people to surrender their seats for crew. The altercation was captured on cellphone video and the resulting public backlash wiped one billion dollars off United’s books in the immediate news cycle period, with the longer-term loss being adjusted to $250 million. The flight 3411 incident might have been one of the most infamous, but many other incidents involving airport construction/expansion snafus (London Heathrow Terminal 5 for example), mishandled passengers, animals and luggage, and major industry developments like the grounding of the Boeing 737-MAX have all had significant impacts on the bottom line.

Global Variances in Profitability

Being a thoroughly global industry, results can vary from region to region, while averages tell a different story. For example, in 2018, quite a few U.S. based airlines reported significant profitability, with the top four, United, American, Delta, and Southwest averaging $2.66 billion in profits that year.

Elsewhere in the world, especially the Pacific rim, airlines continue to struggle to return their cost of capital.

According to the International Air Transport Association, many of those who profit from the airline travel business are on the logistics side. Freight forwarders, ground handling and air navigation services tend to recognize profit year-over-year, while travel agents, airlines and airports do not.

Interestingly, when one looks at the most profitable airlines globally, they are not all U.S. based, nor are they all among the elite, top-tier service airlines like Singapore Airlines and Fly Emirates. In fact, Ireland’s low budget airline Ryanair routinely occupies a place at this table.

The Metrics of Customer Experience

Key Fact #3: Understanding and addressing consumers’ desires through data and communication will remain vital to an airline’s prosperity.

Airlines and airline travel will never vanish from the consumer marketplace, but specific airlines and jobs might. It is important for airlines to understand the changing needs of their customers. Do they prefer the lowest price? Frequency of flights? Loyalty/points programs? Comfort, such as extra legroom? Better baggage options? Personalized service?

As such, it is vital that ongoing research remain a key priority. Surveys, follow-up calls from contact centers, and analysis of social media chat can help draw a clearer picture of the items and experiences their customers like and dislike. The same goes for using mystery shoppers to experience the quality of customer service first-hand. Teaming up with other vendors, even those in unelated areas to pull and analyze demographic is vital, and transparency – both in terms of fare structure as well as public relations/corporate communication goes a long way to ensuring long-term trust.

Where Will They Go Next?

The future of the airline industry will likely lie in procuring assets once again. Over the past twenty years, much attention has been given to breaking up the operations of an airline into a service model, outsourcing IT, leasing equipment, and focusing on short term expenditures in place of long-term asset value.

Key Fact #4: There is potential in strengthening the procurement role and bringing assets back in house.

Now opinion is starting to move in the other direction, with industry experts suggesting that the same technologies that threaten its livelihood (online travel sites and “software-as-a-service” suppliers) be used to maximize an airline’s procurement budget through techniques like clean sheets and auctions.

In short, this signifies a reversal of the trend that has dominated the e-commerce boom – of disintermediating all the elements of the business through leasing and outsourcing in order to focus on a company’s main mission. The most obvious example of this type of outsourcing across all industries is the move to the cloud for storage and mission critical infrastructure. Basically, moving key parts of an enterprise out of the house and into the hands of professional third-party managers.

Given that the data now shows that for the airline industry at least, such an approach has made winners out of the supplier organizations, at the expense of the airlines, there may be some wisdom in inviting the procurement team to sit at the strategy table much earlier in any fiscal cycle, to bring assets back under one roof. Times are different than they were twenty or even ten years ago. So, bringing assets back in house should not be thought of as a mindless pendulum swing, so much as the next step forward in the context of a quickly changing global economy.

Key Impacts

  • Airlines remain on a razor-thin profit model in general despite better technologies and reduction of competition
  • Profitability (or lack thereof) is not universal, but varies significantly by region
  • The most consistently profitable airlines are not all from the same sector, like ultra-luxury.
  • Understanding the individual customer through surveys, mystery shopping, data analysis and direct experience will be more important than ever.
  • Procurement of assets in place of full-scale outsourcing, managed by more modern techniques may be the next opportunity.

The Customer Experience Challenge: The Evolution and Sophistication of Customer Care

In recent years, the customer base of any company has both expanded and contracted, and this means traditional approaches to customer care must be seriously reviewed and revamped. How can a customer base expand and contract at the same time? It expands because of greater reach. Companies can now connect with people all over the world, through an array of technologies including social media, smartphone apps, and messaging, and new activities like gamification. But at the same time, each of these millions of potential customers expects to be cared for in a highly personalized manner. In short, we have entered the age of the audience of one.

Key Fact #1: Traditional call centers will be fewer and more specialized

Any location where customers and companies interact, such as call centers, help desks, email, or the shop floor, must substantially change its game. Customers know they hold more of the cards. They are free to comparison shop and fact-check directly through their phones, and they also know that their voice can be heard through social media and review sites.

Abandonment is a constant fear among businesses of all sizes. If the customer does not receive instant satisfaction, whether from an onscreen app, call center, or in-store checkout, they will leave and not return. They are seldom willing to offer a vendor a second chance.

This presents companies with a double-barreled “CX” situation. CX can represent customer experience, but it can also denote customer expectation, and the two exist almost hand-in-hand. From the moment a potential customer discovers a company, and all the way along their journey, these two elements will color their perceptions. Those who make the decisions for their companies must be fully aware of the intricacies of every interaction and transaction and must have a dynamic and flexible approach to customer service that includes human and automated features.

They must recognize the need for significant changes to the way customer service calls are handled, with much of the conversations handed over to chat-bots using artificial intelligence (AI) and machine learning (ML), leaving humans to handle more complicated, and far more individualized cases. This will force companies to refine their customer service training models to factor in:

  • higher levels of quality and personalization among human interactions
  • the proportion of human-led customer service that should remain in-house versus being reliably outsourced
  • the degree to which customer service can be handed over to computers.

The Customer Journey has More Milestones Than Ever

Although it is vital to observe a customer’s journey as being a flowing event rather than a sequence of individual chapters, it is equally important to recognize that within this journey there will be more touchpoints than ever before – places where the company might reach out with a fact or a question through phone-based SMS, email or other means.

Key Fact #2: Today’s customer is more empowered, yet expects more high-touch contact.

In past decades such excessive customer hand-holding appeared to offer little in terms of ROI. Management of brand and reputation have always been important, but high-touch care was often delivered less frequently due to its cost.

Today, however, data is king. Data is essentially worth more than any single cash transaction since it helps build a knowledge base of customer preferences and habits that can be used in myriad ways. Even a complaint call must be seen this way: it is an opportunity to learn more about a customer, and that means data, which means value. Hence the need for specialized customer service representatives who are skilled not only in complaint resolution but also in data gathering. Where once a customer service rep might have been trained to upsell the customer to purchase an additional service, they must now replace or at least complement that with data gathering opportunities.

Companies need to develop more sophisticated methods of segmenting customers. They need to identify and quantify each customer’s short-and long-term value as well as their potential as influencers within the larger community.

What Can Customer Service-Focused Companies Expect

  • A significant reduction in the volume of inbound customer service calls for simple transactional activities – these will be replaced by automation and social media channels.
  • The change in demographics will continue, with an increasing proportion of the customer base expecting and demanding automated customer service to reflect their lifelong comfort with interactive, mobile technology.
  • A blending of roles – live customer service specialists will need to be experts in problem-solving, sales and data collection, rather than leaving these responsibilities to separate silos.
  • Routing of callers to specialists will be based as much on the personality of the caller as the topic of the call.
  • Investing in new technology will be essential, including delivering enhanced interaction opportunities between live agents and customers.

Building a New System

Key Fact #3: Data is king. Companies must focus customer service efforts on data collection.

As formidable as these changes may seem, there is good news in the fact that the development and deployment of intelligent customer service options are easier and more affordable than ever before. Modular technology supported by “as-a-service” providers means there is no longer a need to build a system from scratch only to keep upgrading it as time goes by. This can now be taken care of by a cloud-based supplier of turnkey operations.

Innovations such as these are vital for those established companies seeking to retain their market share, in light of startups and pop-ups that aggressively seek to move into the space.

Agility Generates Stability in All Markets

The modern commerce environment demands that companies become and stay agile, actively using the data collected from customers and the marketplace in general. In place of five- or ten-year plans, they must be ready to interpret incoming data and respond to it quickly. This includes dynamic training and retraining of customer service specialists to match quickly changing conditions.

It would be easy to assume that this urgent need for a revised customer service strategy is only applicable to the retail sector, which is based largely on face-to-face interaction with customers. But this is not the case. It is equally applicable to much larger public-facing enterprises, such as utilities, as well as in B2B and government. Here are three quick examples:

  • Key Fact #4: Dynamic customer service applies equally to private and public sectors.

    Utilities for most consumers, the power company has always been a faceless organization, holding a monopolistic position over everyone who consumes its resource. This is now changing along several lines. First, they are recognizing that by understanding customers better, they can automate many of the most straightforward activities such as paying bills through a range of media including smartphone apps. This frees up the customer service specialists to work with customers on a more personal level to solve their problems intelligently and expeditiously. Secondly, in many markets, utilities now have more competition, from providers of renewable energy or even small startups. In addition, some customers can even generate their own power through solar collectors, selling their excess back to the utility and inverting the relationship.

  • Business-to-business (B2B): Companies that sell to other companies in an industrial market recognize that the same customer service activities can be applied, for example, to mobile technologies that automate processes such as incident reporting, or that use smart contracts and other cloud-based documentation to speed up the process of low-complexity transactions. This allows specialists, using augmented reality technologies to assist in more sophisticated problem-solving.
  • Government: Governments recognize greater opportunity to relate to their public and encourage greater cooperation by breaking down the walls long held together by red tape. Initiatives such as the Kingdom of Saudi Arabia’s Vision 2030 project seek to increase government transparency and maximize the country’s potential through increased communication, innovation and relationships with the public and companies.

It is up to those companies and institutions who have their eyes on the future to lead the way in changing the customer experience dynamic. This must be done by learning how to focus more on customer expectation and leveraging new technologies to ensure thousands or millions of individual relationships are each managed optimally.

The Performance Measurement Index

The Performance Measurement Index

Key Fact #1: If you can’t measure it, you can’t improve it.

Pursuing excellence is a noble undertaking, but it can be a wasted effort when there are no metrics to track its progress. To align an agency’s mission with its operations, an organization must ensure there is a scorecard system in place – and one that is respected and used by the teams. As Peter Drucker famously wrote, “If you can’t measure it, you can’t improve it.”

Such an undertaking is not just for individual companies. Countries and governments, too, can commit to sustained progress and improvement, as is the case with the Kingdom of Saudi Arabia’s Vision 2030 initiative. Overall, Saudi Vision 2030 strives to reduce Saudi Arabia’s dependence on oil by opening up its economy to other opportunities and expanding public service sectors such as health, education, infrastructure, recreation, and tourism.

To establish the required performance culture, a dedicated agency called Adaa — the National Center for Performance Measurement – will provide the tools, frameworks and educational support to enable measurement and development. A central pillar of this initiative is transparency of reporting and data.

As the director general of Adaa, Husameddin AlMadani states, this initiative uses “outcome-based key performance indicators: Measuring the progress toward Vision 2030’s approved targets and objectives; execution level data; collecting data on milestone achievements of Vision 2030 realization projects and initiatives; service-level data; and measuring and collecting data on beneficiaries’ satisfaction with government services.”

A Formalized Approach to Performance Measurement

Although the business community is routinely awash in management techniques and buzzwords, performance measurement has its roots firmly entrenched in the world of project management, which makes sense, given its need for effective measurement and quantification of tasks. It is beneficial not only in a proactive mode such as establishing standards, but also “reactively,” by helping organizations improve upon a traditional bad habit: failing to use existing performance information to manage their internal operations.

The concept of performance measurement was given a substantial boost during the Obama administration in the US, which placed a high priority on transparency and accountability in government. With ever-advancing improvements in the use of data to track every aspect of business activity, a formalized approach is becoming essential to every company or government seeking to do business in the global economy.

A performance measurement index works like a scorecard that helps management compare actual performance against predetermined targets. This helps identify areas where improvement is needed. Because it uses weighted values, it also encourages regular review to ensure each program continues to align with an agency’s priorities, funding levels, and mandates.

“Performance monitor aims to boost transparency in Saudi national projects,”

Performance Measurement Development and Implementation Process

The image below, retrieved from an article posted at the Project Management Institute (PMI.org), illustrates the sequence of steps required for each activity to ensure it aligns correctly with an agency mission. An agency calculates scores at each step.

As described on the PMI.org page, “each component of the index is weighted to reflect the impact of the underlying programs or project areas on the agency’s overall mission score. Performance targets are set at the performance measure level, based on budgeting and resource allocations. Index scores are generated by calculating achievements against targets and applying the component’s weight. Achieving a high overall index score requires strong performance in the measured program areas. As a result, agency leaders will likely work together more often as a group to support mission priorities and meet or exceed targets.”

To make this work, a company needs guidance on how to both frame the right questions and execute the right actions, all within the context of how they define and measure success.

Cassidy, J. & Kendis, S. (2011). Performance measurement: an index approach for federal agencies. Paper presented at PMI® Global Congress 2011—North America, Dallas, TX. Newtown Square, PA: Project Management Institute., retrieved from

Benefits of Using an Index to Measure Performance

Key Fact #3: A tiered approach keeps people talking.

In addition to encouraging discussion about, and measurement of activities and operations, a performance measurement index helps to do the following:

  • Establish a common platform for communication and understanding. People who work in teams are often left in the dark when it comes to strategies, plans, or subjective definitions like excellence. This can lead to morale and quality issues. Having an index that is clearly visible and understandable helps people see beyond their immediate tasks and gives them part-ownership of an organization’s future success.
  • Connect performance targets and resources: An agency can set performance targets within a budget, and the performance measurement index scores will reflect the impact that resource and funding have had on those targets.
  • Improve project tracking:The multi-layered structure of the performance measurement index helps stakeholders to track progress according to their roles, needs, and priorities. This includes adding enough granularity for project managers and teams while giving clarity to higher-level strategic reporting, as well as any detail in between for other types of stakeholders.
  • Eliminate subjectivity: Individualized interpretation of data or priorities can be dangerous to the successful deployment of any project, especially one focused on large-scale improvement. Data, placed within a matrix, gives people a clear, indisputable vision of itemized tasks and assessment of the success of its completion in line with its objective. Thresholds of performance success or failure can also be identified.

Case Study

One example of successful performance measurement comes from a not-for-profit organization that had a problem with performance appraisals, in that no one was doing them. HR spent much of its time urging managers to complete forms, while the managers found the process frustrating and time-consuming. Employees observed that the appraisals were meaningless since everyone got the same raise regardless. The system was universally hated.

Their solution came from getting the process under control through automation. They deployed an affordable performance management solution, and managers immediately found the process less time-consuming. Automatic reminders paired with electronic records in place of paper shifted responses substantially towards a majority of on-time submissions, which resulted in the following benefits:

  • With the administrative logjam cleared, the performance management system was better able to tie compensation to performance.
  • Goal setting was taken seriously, and the fact that people could see one another’s goals led to better alignment.
  • Managers were better able to make salary decisions based on improved access to data.

By pairing automation with a set of data goals, the organization was able to deploy the concepts behind performance measurement thoroughly. Automation led to participation and buy-in, which led to outcome-specific activity.

Paraphrased from Creelman, David. (2012). Six Stories of Successful Performance Management. Retrieved from

How Does a Company or Country Commit to Performance Measurement?

Performance measurement is a business process similar to that of Six Sigma or Total Quality Management, in that it is an institutionalized approach to excellence, based largely on data and communication. Managers who are interested in learning about the success criteria for performance measurement would be well advised to first talk with a consulting firm familiar with the process, but also to review some of the case study material available in Six Sigma and TQM and not just performance measurement. An organizational change of this magnitude has a significant number of hurdles to overcome, specifically around people and processes. Correct planning and deployment of the performance measurement initiative itself is as important as the day-to-day activities that it entails.

Understanding Digital Transformation and Digital Disruption

The first thing to recognize about digital transformation is that it is neither a new thing or a single thing. One could argue that it has been going on for 60 years or more since the advent of the very first computers. Since that time, business and industry have been evolving, using computer and communication technologies to make every facet faster, more profitable, and more practical.

There is no single moment of change, like turning on a light switch. Instead, digital transformation is marked by progressively steeper points on a line representing virtually any indicator: speed, accessibility, usage, revenue, data throughput, or capacity for productivity.


The relative speed of change as a function of key technological innovations.

Each development builds on its predecessor. The internet could not have existed if computers had not been able to connect to the ARPANET, the earliest incarnation of the internet, which itself was a project of the U.S. military. Companies like Google and Amazon redefined information processing at a moment when consumers discovered the joy of mobile technologies. Reliable high-speed wireless internet connectivity cemented the mobile, instantaneous nature of life, paving the way for a new generation of minds to reinvent the system once again using the decentralized communication of blockchain.

Such achievements can be plotted as a logarithmic scale, and there are many other smaller points that could be added along the line.

Is Transformation Disruption?

The term disruption connotes chaotic and unwelcome change, which is not an accurate description of the types of adjustments that companies have embraced along the history of digital transformation. It is used as a dramatic buzzword, an implication of chaos and instability.

What people take to be disruption is actually innovation; new techniques and technologies that make life easier for people in all areas. Take, for example, the native mobile app.

Imagine walking into your favorite shop, whether it be for clothing, hardware, sporting goods, or anything else. As you approach, the shop’s app on your smartphone alerts a sales associate who briefly reviews your past purchases, memorizes your name and face and greets you personally as you enter. Knowing more about your preferences, the sales associate delivers a heightened level of service making the entire shopping experience even more pleasant, while winning some business away from the shop’s online competitors.

This native mobile app is innovative. It is also disruptive, changing the nature of the relationship between shopper and sales associate and redefining issues around privacy. It must be mentioned that these native mobile apps will only function in this way with the shopper’s permission. Yet for some, this disruption causes worry and concern, while others embrace it wholeheartedly.

It must also be mentioned that the same types of personalized service translate directly into other areas of business such as industry and consulting. It’s all about using data and technology to further a commercial relationship.

Interestingly, though, if one were to question where the term disruption is most appropriate, it is with those who decide upon management strategy for their organizations, and for whom these changes pose a significant threat. It is not the technologies themselves, but the friction between current management philosophy and a market pressure to advance.

Disruption Example: The Ransomware Crisis

Key Fact #1: The C-Suite remains isolated.

Since the earliest days of using computers (IBM mainframes in the 1960s), the IT department has operated as a separate entity, with roles and priorities that few other people understand. This is a practice continues to this day. IT is vital to the operations of an enterprise, yet it tends to work at arm’s length from senior executives and decision-makers. In recent years, specific areas of IT’s domain, including cybersecurity and blockchain have made it essential that its presence at the C-Suite table be enhanced. Although most corporations already have a Chief Information Officer (CIO) and/or a Chief Technology Officer (CTO), the interaction with, and attention from the rest of the executive goes lacking, often due to insufficient comprehension of IT related issues and the seriousness of their impact on the company’s life.

Take ransomware, for example. Ransomware is a process by which access to a company’s vital online files is captured by an external agent who then demands payment to unlock them. Entire companies have been ground to a halt as their data becomes inaccessible. Most often, the bad actors gain access and implant their ransomware software through simple actions performed by the staff themselves, such as inadvertently clicking a link on a phishing email and releasing a virus into the system.


Just one of many charts available from a range of sources highlighting the growth of ransomware. Whichever source you choose, the data always plots in the same trajectory: upwards.

Traditional (pre-disruption) thinking would identify this as an IT problem since it involves data, computers and the internet. But the reason for the initial infection was due to employees being overly busy and distracted, which leads to mistakes. This means the true cause of the ransomware event is in fact HR and skills-related. Employees do not have the knowledge or time to practice proper security hygiene.

Secondly, there is the issue of data backup. Ransomware is far less effective if a company has a thorough, real-time backup policy. This, however, can be expensive, and is either dismissed as unnecessary by the executive or is insufficiently understood.

Finally, there is the policy of how to react to a ransomware event. Many organizations buckle and simply pay the ransom. A recent study by IBM revealed that 70 percent of impacted businesses will pay up quickly. This emboldens cybercriminals and points to a lack of policy in understanding the overall impact of a ransomware attack in terms of brand management and security. The lack of advance anti-ransomware preparation paired with an inadequate or missing crisis management plan leaves a company to deal with panic reflexively and not strategically.

Key Fact #2: Inadequate policy for transformation.

The political decision to bring IT across the line and embed its representatives at the highest level of corporate strategy has yet to be made in most boardrooms.

The Root of Disruption: Inertia

There are many very smart managers and executives in business, but all, regardless of country, gender, or age, share a similar human weakness: people tend to judge changed based on preconceived notions, dating back decades. Many adults, for example, feel less technologically capable than their children or grandchildren, yet they still find themselves in decision-making situations. A manager or executive whose career started in an age where invoices and contracts were printed and sent by postal mail will inevitably have trouble understanding the concepts behind a viral meme, a pop-up competitor, or an employee who wishes to work from home and send a virtual presence robot to attend a meeting.

Executives are busy people with many other priorities to take care of. It seems only natural to leave IT issues to the IT department. But inertia or even slow change threatens to push a company even further towards the back of the competitive horserace.

Example: The Meeting

Meetings have been a staple of business for centuries. That’s because up until the age of digital transformation, meetings have been the only way for a person to share information with a group of other people, that is to say, everyone must be physically present in the same room at the same time. The introduction of conference calls and video technologies made it easier for some to participate remotely, but the notion of the need for a real-time meeting persists.

More aggressive, disruptive companies will have recognized by now that in many cases, a meeting does not have to happen at all. Online document editing applications, paired with collaborative chat environments allow work and information to be shared dynamically from anywhere, without the need for as many formalized meetings.

Those companies that embrace a more dynamic, distributed approach to communication will attract the better employees and the better customers.

Example: The Accounts Payable Process

Many companies use an accounting department to pay their bills. Accounting is an arm of the business that is much more closely tied to a company’s monetary assets than IT would be. Hence it is given greater leeway in pursuing habits that have been in practice for centuries.

Key Fact #3: People are reluctant to update procedures.

One of these is the “net 60” form of payment. This practice, along with similar time periods, like “net 90,” allows companies to protect their cash flow by delaying payment to suppliers for a period of weeks. This makes sense from a risk perspective, but not so much from that of digital disruption.

Using smart contracts, secure transaction methods, and online bookkeeping practices, it is physically possible for a supplier to complete work and receive payment immediately, should a company wish to pay that quickly. However, most will not.

The net effect, however, of maintaining traditional delay tactics in a modern digital economy, is that the better suppliers will drift toward those customers who have evolved into more prompt and efficient payment relationships. This will leave more traditional companies to pick from lesser quality suppliers who are willing to accept a more archaic and inconvenient payment structure.

The speed of digital transformation brings along a necessity for agility within strategy, with immediate deployment of newer best practices, to ensure customers and suppliers alike continue to support the company’s wellbeing.

What Should You Do?

Every manager or executive should question – every day – whether the company is doing enough to keep pace. This requires regular SWOT analysis (strengths, weaknesses, opportunities, and threats) paired with a desire to keep or at least stay aware of new innovations and best practices.

It means bringing a wider range of experts to the C-suite table, recognizing that their particular areas of activity – IT, HR, accounting, etc., – are changing quickly and have an immediate impact on the company’s bottom line. As technology advances, silos and walls continue to fall.

It means recognizing the need to speed up and to keep speeding up. A five or ten-year plan is not the same thing as it was two decades ago. It cannot be in an era where everything, social, commercial, and political, is changing so fast.

Digital transformation is an ongoing process, but one that can be embraced by management for the opportunities it presents. But transformation means change, and human beings have great problems facing change, which means that disruption, as a negative impact, may continue to happen to those who are not prepared to understand it.

The Power of Data in Customer Experience

The Power of Data in Customer Experience

Although much of the world’s attention is focused on the explosion of technologies such as the Internet of Things, mobile devices, and the blockchain, it is vital for executives and senior decision makers to recognize that these tools are primarily drivers of a much more powerful force – customer experience. Globally, marketplaces have expanded and connected, giving access to innovations and direct customer transactions on a much larger scale. Yet with that expansion comes a fascinating counterpoint. For all the hundreds of millions of people that your company can potentially reach, each of those people expects to experience your brand on a uniquely personal level.

Time is of the Essence

Key Fact #1: Senior Management must recognize the power of data

The first thing to take note of is the speed of customer expectation which translates into one of the central pillars of customer experience. No matter what sector you look at – retail, services, industry, the theme is the same. Customers expect immediate feedback and consistent, high-quality service.

To know what they want and to deliver it accordingly requires an intelligence rooted in data and supported by a policy that clearly states: no customer must be forced to wait. This opens up the fields of artificial intelligence (AI), machine learning (ML) and predictive analytics as tools to directly affect customer experience and business success.

Data is King

The most direct way to understand how to shape superior customer experience is by ensuring there is enough data, and that the data is being used reactively and proactively.

Some obvious sources of data include:

  • Tracking customers’ online browsing habits as they explore your website
  • Observing analytics on search words and country of origin
  • Keeping records of purchases made by each customer

But there are many less obvious and more subtle ways of collecting data, for example, using AI to parse unstructured data, such as comments within blocks of text. These include:

  • emails
  • blogs
  • questions submitted by online form
  • reviews
  • commentary on social media such as Twitter and Facebook

There is also a rich payload of data to be harvested from in-person interactions that orbit around the idea of “free” or “freemium” services. In these situations, products or services are provided at no charge in exchange for customer data. In this sense, this means they are not being given away at all. It’s a matter of the currency involved. Old-school commerce mindsets might focus primarily on cash as the currency of choice, but newer approaches recognize the long tail of data as an equally valuable asset.

In the following example, observe how something as simple as a Customer Returns Desk represents an ongoing opportunity to learn something about a customer, enhance customer experience, and improve your brand:

EXAMPLE: THANK YOU FOR ASKING FOR A REFUND

When a customer brings an item back to the shop it was purchased from, some retailers view this as a costly failure: a dissatisfied customer, an opened package, and the potential for confrontation and disappointment. But nothing could be further from the truth.

Every interaction with a customer becomes an opportunity to collect data, and that data gives businesses heightened understanding of each customer’s needs and preferences, such as:

  • How much they spend per year
  • What promotions motivate them to buy
  • What products they purchase
  • What products they do not purchase

Every retailer wants the customer to be happy, but something that is much better than a one-time happy customer is a long-time happy customer. The smart retailers are the ones who reward a customer for visiting the returns desk. The value of the data collected in this interaction far exceeds the cost of the returned sale.

This retailer return desk story also applies to business-to-business (B2B) and professional services.

Opening up the Aftermarket

Many companies define their traditional markets and stay within those boundaries, leaving spinoff activities to unassociated aftermarket companies. A simple example is that of the relationship between automobile manufacturers, petrol stations and coffee/restaurant chains. For decades, a car was built, marketed, and sold solely as a mode of transportation. Car owners made their own choices regarding where to buy fuel or stop for food.

But with the advent of wireless technology, the car has become a mobile lifestyle system, complete with full entertainment and communication technologies, both onboard and compatible with its owner’s own devices. This opens at least two major aftermarket opportunities.

  • The first is directly with the customer, using apps to steer customers to specific brands of fuels and restaurants, offering points and loyalty incentives in exchange for their business. Once again, data can be collected at every moment in terms of customer purchases, but so too, proactive AI can detect slight errors in driving ability brought on by fatigue that spurs a prompt to the driver to pull over and rest, while offering a discount on coffee and food as an incentive.
  • The second is the parts and service aftermarket. With cars, and similarly with industrial machines of all types, servicing and supplying the device with the parts required for its ongoing use has largely been the choice of the customer. But advances in the Internet of Things and predictive analytics help a manufacturer capture much more of the aftermarket by having the machine itself speak up about its upcoming needs.

No matter what type of marketplace a business is in, the diligent use of data powered by mobile technology has opened vast new areas of opportunity.

The Customer is Mobile – in Two Ways

Key Fact #2: In retail and industry, the individual customer has the power.

It is plainly obvious that customers in retail and business-to-business (B2B) turn to their mobile devices to do everything. They are mobile in the sense that many of their activities can be done from anywhere via dedicated apps and centralized, cloud-based data. This changes the rules of the game for a range of activities within any business cycle. Take contracts for example:

EXAMPLE: CONTRACTS ARE GETTING SMARTER

Contracts are just one of many types of documents that need no longer be signed in triplicate back at the office. The growing expectation is that all kinds of documents now must be mobile and cloud-based, signable on a smartphone or tablet on location, wherever that might be.

Added to the existing security that allows these documents, which also includes manifests, purchase orders, and operation manuals to be instantly accessible and usable, is the concept of sealing them within a blockchain. Blockchain is a new technology that records and locks transactions immutably inside a global ledger that has no single point of failure. This allows contracts to evolve from static documents to smart “scenarios” that will deploy and become enforceable once a set sequence of activities has been met and proven, usually via mobile technology.

Customers are also mobile in terms of knowing that they have the power to switch suppliers quickly and with little effort. The idea of customer loyalty has taken on a sharper edge in an era where shoppers or corporate buyers can comparison shop through their smartphone. The marketplace is entirely in the hands of the customer.

The Journey is More Important than the Points

This mobility revolution means that the process of attracting and keeping customers in business relies on a vital understanding of the fact that their relationship with you is a journey and not a series of discrete events. It is more like a flowing narrative, from the moment of early awareness and interest, through first contact, the purchase experience, the usage experience, and finally becoming an evangelist or supporter of the product.

These transitions should not be specific points along the customer experience timeline, but instead, periods of transition as they move along the path.

Key Fact #3: Customers are on a journey, not a sequence of steps.

This makes it essential for a business to place that journey experience at the center of a sequence that starts with the refinement and retooling of your internal cultural organization and ends with constant, intelligent analysis of customer experience metrics.

Data drives action throughout the organization. A properly prepared culture focuses on customers and puts them at the center of its philosophy. It then prepares to collect and curate data throughout the journey. Concepts such as change management are converted into real-time, continuous activity, and traditional silos between departments are converted into more open concept collaborative spaces.

Five Core Dimensions

At GICC, we believe a customer experience strategy should be built around five core dimensions:

  • People
  • Operations
  • Technology
  • Control
  • Intelligence

Each of these delivers a set of procedures to support the strategy, that pairs intelligence and application and helps it to flow along the journey. For example, in the people need to be trained. Training is a collection of facts and rules that transforms into engagement, which is an emotional connection to the quality of work. The same even applies to technology, which moves from data-based architecture to the development and deployment of solutions for the customer.

EXAMPLE: PAYING A UTILITY BILL

Most adults alive today have lived their whole lives (up to this point) knowing that utilities were singular and all-powerful. The electricity bill, for example, had to be paid to the electricity company – the one and only electricity company that provided all the power to homes and businesses in the area.

This, too, is changing, as deregulation meets up with more dynamic modes of delivering power, water, or natural gas, that have allowed smaller, more agile suppliers to break the monopoly.

In fact, it is becoming common in several markets for the traditional consumer of electricity to be able to generate more of their own, through solar power and advances in battery storage, cooling management and heat retention techniques. Any excess electricity generated by a household that exceeds its usage or storage needs can then be sold back to the utility, essentially turning a consumer into a prosumer – a seller, with the utility becoming the buyer.

This major reversal of a century-old model further reinforces the notion that even the most invincible of enterprises – utilities and banks – must pay close attention to customer experience – not just collectively, but individually, focusing on the experience of each and every customer’s journey.

Summary

The twenty-first century is nothing short of breathtaking when it comes to the speed and the breadth of business, as well as the opportunities still available to those who are sufficiently fleet of foot to capture them. Data and metrics are central pillars of one of the most essential parts of business – the customer experience.

It is up to senior managers and decision-makers to recognize this and factor it in quickly to their current strategies. Across the globe, from Uber and Amazon to DiDi and Alibaba, agile companies have already changed the landscape of commerce, wrestling ownership away from those whose models were built in earlier decades and have not change much since.