The Question of Control v Disruption

Everything we do, whether in business or in personal life, can be broken down to two simple categories – those that are in our control and those that are not. This could apply to people, market situations, business processes, economic factors, social dynamics, or anything at all.

Two questions emerge from this approach:

1.       Should we only focus on things within our control just because we are sure? And,

2.       Should we disregard the rest as falling within ABC (Areas Beyond Control)?

Quite often, we get into a state of “let’s focus on things that we can control, rather than waste time and resources on those we cannot” because we have been made to believe or even taught to do so.

Instead, what if we were to look at things we regard as ABC with a view of “uncharted territory that must be explored”, would that help us understand things better and perhaps even move it to our basket of controllable items? A great example of something not in our control is Consumer Behavior.  It is something that even big companies with their big money on big data analytics haven’t quite nailed it.

So I am going to try mashing concepts from Zen, Michael Porter and McKinsey to provoke thought on how we could better understand things that are ABC to get them into the controllable category and optimize them to possible success.

There is a Zen philosophy called the “Zen of Not Knowing”, specifically the Zen notion of “Not always so.” that can be applied to consumer behavior, of which no one can claim to have complete knowledge or control. Why adopt this attitude? Because when we are certain that we don’t know, by embracing the idea of “Not always so”, we get an opportunity to look things again more carefully and see what other possibilities there might be in the situation. This kind of thinking would also help us develop alternative thinking and newer perspectives combined with better utilization of technologies that could lead to disruptive and path-breaking strategies.

McKinsey, in this report - Why your marketing Planning Process is Broken … say that marketing executives often fail to clearly distinguish between things they can control and things they can’t. They also raise the very pertinent questions, “How can we maximize the impact of things we can control and reduce the impact of those we cannot? And, how can we improve the interaction between the two?” Their take is that Business Analytics must do more than just tell you what happened; it must also tell you why, so that you can then develop a perspective or model that might help quantify and analytically link consumer behaviors with drivers of growth.

So, to summarize:

1.   Define what is in your control and optimize the processes within

2.   Don’t disregard things outside your control. Study them to see what disruptive opportunities can be developed

3.   Don’t look for ways to relate consumer behavior with drivers for growth, but define growth drivers to link with customer behavior and customer expectations. After all as Michael Porter said, “The essence of strategy is choosing what not to do”.

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies and clear inefficiencies.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more.

Hey Start-up: Are you losing Focus?

Why did you found your start-up business? Was it to:

·         Deliver some benefit to your potential customers?

·         Fulfill your desire to be a successful entrepreneur?

·         Because you didn’t want to work for someone else?

·         Gain an elevated status in the society or among your peer group?

·         Make boatloads of money for yourself and your co-founders?

·         Or because you had a disruptive idea that you know would be a killer?

Whatever the reason, you had a solid motive and, perhaps, even greater commitment. The reason didn’t matter; it was only a spark that ignited the fire in you. What you did have was the burning desire to do it and you went about like a crazy person, thinking about it in the waking hours and dreaming about it in the sleeping hours.

And so, you got yourself some money through Friends, Family and Fools and set yourself up in a rental office to start & grow your business. You had high regard for people and great respect for your co-founders and co-workers. You believed in them as much as you believed in yourself. You knew that your idea is brilliant and that you, along with your little start-up, are going to just arrive in the market place with a big bang. You worked tirelessly in making that idea come to fruition, focusing totally on what needs to be done to make it a success.

But then, what happened? You got yourself some real money through VC investments and suddenly, your focus seems to have shifted. Somewhere along the line, you seem to have forgotten that you are playing with other people’s money. Don’t you know that they didn’t give you those millions because they love you? They gave it because they saw the potential in you & your idea, and they invested their money to increase its value and their worth.

So, what are you doing throwing those investors under the bus, instead of focusing on growing your Business? Wouldn’t you be better off estimating uniqueness, demand, benefits, utility, affordability & most importantly, serviceability of your product or service rather than taking your investors head on? The former is your strength whereas money is the investors’ strength. Do you recognize that?

You don’t want to fall into the trap of the “Dunning–Kruger cognitive bias” where you suffer from an illusory superiority (in an area that is not your strength) and too headstrong to realize it.

Go, focus on creating and delivering value, not destroying it!

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies, create value and deliver profitability.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more

Understanding Value Creation

You would agree that it is very difficult to pin down customer value to specific aspects simply because there is no one definition and also because the perception of value differs from person to person. And, one could very well be creating (or destroying) value even without knowing that one is doing so!

Therefore, rather than trying to define value, the entire process of creating value creation would perhaps become more meaningful & efficient if we were to look at what Internal (employees, partner companies, associates), External (individual, retail, B2B) and the Community recognize as value creation factors or value added factors? Somewhat of an extended VoC (Voice of the Customer)? Perhaps then, we could use these feedback to identify, align, monitor and refine value creation factors to drive customer-centricity, engagement, loyalty and profitability.

In the words of Bob Thompson, CEO of CustomerThink Corp., an independent research and publishing firm focused on customer-centric business management, and Founder/Editor-in-Chief of CustomerThink.com, there are 9 most relevant and (statistically) significant CX (Customer Experience) practices linked to better business performance, that he groups into three broad categories:

Listen

1. Understand Customer Loyalty Drivers
2. Get Feedback From Multiple Sources
3. Close Loop from Feedback to Action

Empower

4. Hire “Customer Friendly” People
5. Support with Tools, Info & Resources
6. Train to Deliver at “Moment of Truth”

Delight

7. Identify High Impact Interactions
8. Understand Role of People vs. Systems
9. Proactively Plan to Surprise Customers

He also adds a 10th one - "Managers setting a good example"!

Also,

You can use technology to get information about your customer, but do you really know your customer? Do you understand what makes them buy your products or services and what makes them leave you and go to the competition? Read about it here --> Do You Know Your Customer?

In the real world, the decision-makers are not companies but rather people within those companies. And, when value capture objectives are not aligned within a company, the result is inconsistent behavior and frustration. Conversely, a shared sense of what must be achieved creates the climate for productive cross-functional collaboration. Read about this here --> Critical to Align Value Capture Objectives.

Do You Know Your Customer?

If you were asked this question, do you come up with a quick answer that goes like “Yeah, we have a powerful, state of the art CRM technology that integrates data analytics into our Customer Services and Support System which provides us a rich understanding of the who, what & where of our customers so that, in turn, we are able to provide customer delight”, or something along those lines?

Now let’s just turn this question around and say that a salesman walked into your conference room and made a presentation that promised “a high end, state of the art system that would integrate your existing CRM with powerful predictive data analytics and an advanced Customer Profiling System that would provide you with comprehensive customer insight that enables you to deliver rich customer experience”. How would you react?

“Interesting, but do you know our customer? Heck, even we are not sure”, right?

You can use technology to get information about your customer, but do you really know your customer? Do you understand what makes them buy your products or services and what makes them leave you and go to the competition?

Studies show that while product and attractive pricing are key, most customers defect primarily because of unhappiness with the way they are treated by the service. According to Arthur Middleton Hughes, in the telecom industry roughly 75% customers leave, while another industry survey says that over 90% of those leave, do so without any warning! We all know how much it costs to acquire a new customer; hence, when a customer leaves, you lose not only the future revenue from this customer but also the resources spent to acquire the customer in the first place.

So, how do you ensure zero customer defection?

And, how do you benchmark customer value so that you can improve customer focus?

After all a business cannot ignore profitability and customer defections have a great impact on the bottom line. Therefore the natural question that pops up is “how can you be customer-centric and increase customer life-time value”?

It is common knowledge that businesses are run with great excitement, self-belief & “customer data” in the belief that their idea or product is going to be the next killer in the marketplace. That is a good place to start, however, self-belief, customer profile and self-confidence are hardly the only factors that will help you implement your ideas and deliver value to your customers. You need more than that to keep you on top of the game and the competition!

For example, a Delaware-based credit card company, frustrated by letters from unhappy customers, assembled all employees and announced that they would focus on a stratagem to satisfy and keep each and every customer. The company started gathering feedback from defecting customers. And it acted on the information, adjusting products and processes regularly. As quality improved, fewer customers had reason to leave. Eight years later, the defection rate became one of the lowest in its industry. Without making any acquisitions, their industry ranking went up, and profits increased sixteen fold. (Source: Zero Defections: Quality Comes to Services by Frederick F. Reichheld and W. Earl Sasser, Jr. in HBR, September–October 1990 Issue)

There is no magic formula or marketing magic wand that will do it, because one of the most critical aspects of business is consumer behavior, which is neither completely understood nor entirely within your control. However, there are some strategies that can help.

1.       Perception (#PerceptionKey)

How do customers see you and how does your business relate to them? Is your idea something that is “hot” only for you, or is it something that your customers can relate to as appealing, meaningful and beneficial to them? Keep in mind what is interesting to your customer, as opposed to being self-absorbed about the product or idea that you hold. Once again, some of the thought processes of the earlier question can help you.

So, go through some trials of asking whether the potential customers see your company or startup as, for example, “An exciting lifestyle company making haute-couture products that is so cool and attractive”.

There are also some practical considerations such as whether the customers have to do something differently to consume your product like learn how to use it, the impression of good quality, affordability, after sales service, etc.

In effect, how customers see your business has to be in sync with the identity that you have established.

2.       Market Presence (#MarketPresenceKey)

This is an interesting aspect of doing business because it doesn’t really matter if you are a multinational behemoth or a startup operating out of a garage. It is, simply, how you stack up against the competition. By this it doesn’t mean how big an advertising or marketing budget is or how many celebrities endorse you.

Industry experts, trade publications and technology blogs are always favorable to small businesses and startups with what they think is a “killer idea” or “game changer”. They may well use their social and digital media following to showcase your product as the “next big thing”. And, their considered opinion will far outweigh the marketing muscle of the giant businesses!

 If you rank high in terms of what you represent (Identity) and the market insight of what you stand for is positive (Perception), then your first steps in creating a market presence are taken.

3.       Difference (#TheDifferenceKey)

How are you different and what is so special about your products? This is not a simple thing to wrap your head around, because it is not about your business or services or product being better or less expensive or easier to use or of higher quality or more robust in the various parameters of comparison. It is about innovation or a new way of solving an old problem or an efficient way of doing something or a completely new way of life!

Difference is what matters to the customer because without that, they might as well continue to use the same product or service or doing what they are doing the same way!

4.       Customer-centricity (#TheCustomerKey)

Find out what drives your customer. How do customers explore, discover and purchase products or services and what are you doing to facilitate this process? How can you personalize and make this process interesting so that their experience helps resonate with your product. How can you develop customer focus internally in the organization so that you are able to increase customer value externally? Annie Gherini, head of marketing at StumbleUpon, says, “The age of departmental silos is over, and the unified efforts of all functional teams ensure that everyone is reading from the same playbook, resulting in an awesome user experience.” It is, therefore, important to keep an open dialog with the customer, but don't leave it to them to talk to you!

*** Added on April 21, 2015 ***

Gautam Mahajan has a great article that adds to #TheCustomerKey, called "Are We Blowing in the Wind?" and he talks about how you can implement Customer Value culture in your organization. Tap here to read.

*** 

To summarize, these four basic but critical questions will provide the framework and some finer detailed questions relating to customer focus and value. And answers to these questions will flesh out the framework and help you stay ahead in the marketplace.

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies and clear inefficiencies.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more

5 Keys for Success in 2015

2014 is almost gone and 2015 is knocking on the door, but are we ready to face the New Year yet?

Here are some basic steps that can help you design, plan and put in execution what could turn out to be a great 2015!

1.       Figure your Objective

This is what you want to achieve in the year 2015, not a list of things that you want to do. Don’t clutter your mind or objective with the how, what and details of your objective. Keep it simple, just what you want to achieve in 2015 for example, “I want to be healthy”. Here is some reading material - Make 2015 Your Breakthrough Year.

2.       Develop the Process

Once you have figured your objective (hopefully, just the one and not a laundry list!), you should start developing the methods and procedures to achieve that objective or target. You can use a mind map or just a simple list to note down the processes and refine them. Using the above example as an illustration, the processes to “Being healthy” according to you could be “run / jog / walk”, “light workout”, “mediate”, “eat well”, “balance work and life”, etc. This post also gives some interesting insights - 7 P’s Leaders use to Achieve Goals

3.       Define the Metrics

In this step, you list out the milestones and what stage in your objective that you should have progressed to. Again, using the example above, you could say “walk 5 miles a day, 4 days a week”, “lift 10 pounds twice a week”, “meditate 20 minutes every morning”, etc. You should also have some timelines attached to these processes like “I should have lost x pounds in 3 months”. These metrics will help you monitor and make course corrections, if required.

4.       Assign Responsibilities

In this step, it is easy to collapse all processes and metrics and assign the responsibility to yourself and be done with it, especially if the objective is personal, but don’t do that! Even where it looks like the responsibility is yours, make it look like the task is “assigned” to someone else. For example, if you have a running or walking partner, then make it look like the task is assigned to that partner!

5.       Monitor and Improve

The objective is known and even made into a poster and stuck on the wall, the processes are well laid out and metrics are meticulously defined with roles and responsibilities assigned. But all this would count for zip if you don’t monitor diligently at the deadlines and refine or make course corrections as required. So, make the calendar of milestones and deadlines count, and if required and you think would be a great idea, involve an advisor or mentor or partner to sit with you to go over the milestone achievements.

In summary, these five simple steps will provide an effective strategy of processes and a framework to achieve your objective. Focus on the now and commit to the processes. Initially, the objective will seem far away and unattainable, but like the Chinese Bamboo, if you keep doing the processes right, your goal will be automatically achieved in the targeted timeframe.

Good luck and a Happy New Year, 2015!

Kall Ramanathan

@KallRamanathan

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ValueStrat Consulting @ValueStrat helps businesses understand where they are currently and what they need to do to get where they want to go. For this, we provide essential strategic plans and approaches, called “Keys”, to enable businesses to open up competencies and clear inefficiencies.

ValueStrat gets to the DNA of business - Desire, Need and Ability - to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in for more