The New Holy Grail – In Pursuit of Customer Success

“The problem with average is that other people are better at being average than you are”. Seth Godin

As discussed previously here and here, the future of successful businesses seems to rely more and more on the organisations’ reinventing themselves and aligning their value propositions to customized customer solutions.

Even for products of little monetary value the opportunity for customization is sometimes mind boggling e.g. think of how many options one has for buying a pair of jeans or a box of cereal.

It has now become apparent that “Customer Satisfaction” is merely the beginning, the new average, what MAY allow you to begin the interaction with the customer but, very unlikely what would win you the deal. As Seth Godin very eloquently explains with his maxim above, “other people are better at being average than you are”. So, if Customer Satisfaction is no more the right target to built a successful business on, what is?

It is becoming apparent that the future of successful business will be all about pursuing Customer Success.

Screen Shot 2015-04-11 at 9.04.08 pm THE PURSUIT OF CUSTOMER SUCCESS AS THE NEW HOLY GRAIL

I first came across this idea i.e. the trend of shifting away from targeting Customer Satisfaction towards pursuing Customer Success, in the much acclaimed and highly recommended classic book from Tom PetersRe -Imagine”. In the book, Peters views Customer Success as the necessary target of what he calls the Experience Economy.

Paraphrasing from the book:

Peters reflects on Four Different Generations (evolving as of the 1940s).

  1. 1940: The Raw-Materials economy: e.g. grandma spends about a buck to buy flour, sugar, and other raw materials. Using those raw materials, Grandma produces a birthday cake ($1)
  2. 1955: The Goods economy: e.g. Mom goes down to the local supermarket, spends a couple of bucks, and makes the cake from a packaged industrial good. Betty Crocker cake mix ($2)
  3. 1970 – The Service Economy: e.g. Bakeries are available to ordinary folks, not just the rich and super-rich. Mom heads to the bakery at birthday time and shells out $10 for a professionally baked cake ($10)
  4. 1990: The experience economy: e.g. Dad is in charge of the kid’s birthday now. And the kid lays down the law: “I am having a party, Dad. It’s going to be at XYZ venue and I’m bringing my pals.” Dad obliges and forks our a C-note for the experience. ($100)

For these four Generations the organisational measures and targets vary widely.

More specifically,

  1. In the Raw-Materials economy: The measure is the effective tangible output i.e. the Raw Quantity  (A very practical measure)
  2. In the Goods economy: this is the era of e.g. Six Sigma, process design.
  3. The Service economy: is the one where Customer Satisfaction is prevalent.
  4. The Experience economy: though moves forward to target Customer Success.

Just to make the notions of service and experience a bit clearer, think the notion of service as a transaction.

Experience though, goes further to be holistic, encompassing, transforming and emotional.

Lou Gerstner, the CEO of IBM in the 1990s, who is responsible for the complete culture change of the company declared:

“You’re headed for commodity hell if you don’t have services” Lou Gerstner

Paraphrasing Gerstner, I feel that his advice can now be updated as follows:

“You’re headed for commodity/service hell if you cannot offer memorable, emotional experiences capable of moving people enough to become your brand’s evangelists”.

Do you see this shift in your industry?

How can you translate the Pursuit of Customer Success in your business?

 

George Vrakas

 

 

Photo Courtesy of Eddi Van W.

What will the Future of Transport and Logistics look like? (Transcript from my presentation at the CILTA AGM in Sept. 2014).

What will the future of transport and logistics look like?

This was the theme of a presentation I was asked to participate in at the CILT Australia September 2014 AGM meeting in Melbourne. Below is the transcript of my presentation including the references and necessary links for further reading.

Thanks to CILTA for the invitation and for the participants for their thoughtful and engaging questions that followed.

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THE FUTURE OF TRANSPORT AND LOGISTICS – 3 MAIN ELEMENTS UNDER DISCUSSION

There are many things one can discuss when contemplating the future of Transport and Logistics. Today I will focus on Shipping and in particular on three elements that are becoming part of our everyday discussions and which, I think, have the potential to change the industry forever:

  1. Energy Consumption and Carbon Emissions
  2. Crewing
  3. Size and type of vessels.

LEADERSHIP IN THE 21st CENTURY – ENERGY CONSUMPTION AND SHIPPING

Reflecting on the subject I came across Rachel Kyte’s interview to Fran Kelly (Radio National, 29th August 2014). Rachel is the VP of the World Bank responsible for Climate Change. While discussing Leadership, Rachel gave her own definition as follows:

“Leadership in the 21st century is about getting the economic fundamentals right so we drive carbon out of our growth” Rachel Kyte

The Global Financial Crisis (GFC) brought about many devastating effects for economies all around the world. However, the refocusing on fundamentals also brought about new thinking around energy consumption. The vessel charter rates dropped and with fuel been the major expense, shipping lines had to think about new ways of reducing that cost.

So, shipping lines trialed Super Slow Steaming which is the running of a ship’s engine with extra slow revs (MCR as low as 10% – see here). This has its challenges as the engine needs to be cooled down constantly by an air blower so, special arrangements and special agreements and clauses needed to be developed to allocate the risk for this to become reality. Well, this worked and more vessels were introduced in the routes which elongated their lead times and reduced their running cost by reducing speed lower than any such endeavor made before.

The price of Heavy Fuel Oil (which as quality is close to bitumen) keeps on increasing and this trend may well continue (in the mid term) due to the refinement process becoming more efficient leaving less and less fuel for the shipping world (i.e. when LPG, petrol, Jet fuel, Diesel oil etc are drawn from the refinement process a smaller and smaller percentage of Heavy Fuel Oil remains – see here for a diagram of the the refinement process).

So, in 2010, the Classification Society Germanischer Lloyd signed an agreement with Japanese shipbuilder IHI to jointly investigate and develop solutions for large LNG-fueled container ships.

You may be aware of the Searoads built vessel in the Melbourne-Tasmania route which uses LNG and also shipping lines such as CMA CGM who is developing dual fuel vessels (able to burn Heavy Fuel Oil and LNG) and is investing in research for LNG type vessels. The technology is becoming more and more mainstream as Natural Gas becomes available at more locations fast, its price is becoming more competitive, it has good energy density and it offers clear environmental benefits i.e. “elimination of SOX emissions, significant reduction of NOX and particulate matter, and a reduction of GHG emissions” (see here).

In the mid to long term, Nuclear energy will become more prevalent. Cleaner and safer technologies are been developed now. Apart from Uranium, extensive research is been done in Thorium (see here), pebble-bed reactors (see here) etc. Focusing on next-generation nuclear energy solutions that result in minimal or none toxic waste and have reduced risk of meltdown in case of an accident is going to drive the perceptions about safety, as well as, our risk/benefit view to levels that allow for this technology to be used more extensively than ever before.
Solar is also coming into our lives as a form of energy for supporting smaller though vessel types. It has been reported in 2012, that the MS Turanor PlanetSolar yacht completed it tour around the world using exclusively solar energy (see here). It is unlikely though that Solar will be able to support the mega commercial vessels we nowadays see sailing our seas.

All of the above means that carbon emissions are going to reduce (and are already reducing) with shipping lines reporting significant reductions in their carbon output. e.g. CMA CGM reported 40% reduction of CO2 emissions between 2005 and 2013 and also that they are on track for the target of 50% reduction by 2015 (see here).

Apart from the GFC and the obvious economical advantages of developing and introducing alternatives energy sources, legislation has disincentivised the continuation of the current energy consumption styles e.g. ECA Zones in the North Sea and the Baltic sea (see here).

One thing is for sure, that the vessels of tomorrow will be more efficient than today and the carbon emissions (CO2 g/TEU-Km) will reduce.

Furthermore, assisted by Climate Change and the melting of the Arctic Ice, the Northern Sea Route, with particular interest to the shipping lanes connecting Asia and Europe, has started to open allowing vessel navigation.
There have already vessels transiting mostly with the assistance of icebreakers. Utilizing this route means that the distance between key markets in Asia (e.g. Shanghai) and Europe (e.g. Hamburg) reduces by approx. 1/3. This of course means less energy consumed for transference of the goods on the biggest current market route (see here).

wheel

CREWING – UNMANNED NAVIGATION

It is evident that the global fleet of vessels that carry around 90% of world trade is ever increasing. For the last 10 years the International Maritime Organisation (IMO) has raised alarms for the lack of enough able crew members that can man these vessels as well as the quality of seafarers has been reported to be on the decrease.

At the same time, we see driverless trains, airplane drones controlled with joystics and driverless cars been developed. In Australia, we have semi and fully automatic terminals running already e.g. the Patrick Brisbane Auto strad terminal has been successfully running with Australian developed technology for years.

Sea navigation seems to be more traditional than other industries but it has become apparent that we are reaching a point where shipping will have to consider again the risk/benefit equation and with the technology of today to venture into unmanned navigation.

Today, the European Union is funding 3.5m euro into the MUNIN project (Maritime Unmanned Navigation through Intelligence in Networks). This project will produce a prototype for simulated sea trials to assess the costs and benefits by 2015 (see here).

Moreover, Rolls Royce has entered the discussion (see here). They believe that unmanned navigation vessels may be introduced within a decade in regions such as the Baltic (although global expansion may be slower).

Automation of movement of all means of transportation seems closer than most people think as the technology is presently available and is been refined fast.

cargo1

SIZE AND TYPE OF VESSELS

The third trend we have been seeing in ship design is the fact that vessels become bigger and bigger. Containerisation started in the mid-1950s with ships that could carry only approx. 50 TEU (Twenty Equivalent Unit). By 1970, 1700 TEU were present and by 2010 13,000 TEU vessels were in the water.

Now, we have the mega vessels of 18,000 TEU and already a 21,000 TEU vessel is been built. The trend will probably continue taking into account that the new upgraded Panama Canal will be able to cater for 13,000 TEU vessels going through, Nicaragua appears to be starting their own project to compete with Panama (an endeavor that has raised many questions), Malacca strait is constrained and the Suez Canal is considering opening a parallel canal to the Suez Canal to ensure constant two way traffic.

The current crane technology been developed has an outreach of 70m (taking into account that the beam of the 18,000 TEU vessels is 59m) there is still scope for growth although limitations of ports to cater for these will make certain ports hubs (e.g. Shanghai) and others, feeder ports (e.g. Melbourne with its ability to effectively only cater up to 7000 TEU vessel designs).

There are of course, many questions to be answered. The answers to which will define the pace and the priorities for innovation and change and the centers of innovation of tomorrow (see Richard Florida’s excellent book The Rise of the Creative Class on a current innovation map of the world).

Which are going to be the markets of tomorrow? At which point will Europe come out of the recession and how much will the demand grow? When will the Chinese economy surpass the US and the Intra-Asia trade lanes surpass the rest? Will the current economic model continue unimpeded or will the global derivatives “bubble” (see the Bank of International Settlements report which reflects their notional value in June 2014 at around the 700 trillion $USD) burst. Will globalisation continue the expansion and how will the creation of the BRICS equivalent “IMF” affect the global trade?

Finally, will 3-D printing take off and if so, will we see less finalised products moving in containers making bulk cargo vessels the next growth area as raw materials will be in demand and large workshops will be used close to the end customer to make the actual product?

When reflecting on topics like this, I remember a story shared by Charlie McDonald, in one of his presentations when he was discussing about how to view the future. The story goes like this:

In 1905, the wise men of London gathered to discuss how London can best equip to face the challenges of the future. It is worth noting that the car had been invented at that time. However, after serious deliberations the wise men came up with three key questions that needed to be answered:

  1. Where will the horses “park”? (horses was the prevalent transportation of cargo and people medium at the time and the demand was increasing).
  2. How will all the horses be fed?
  3. How can the horses s..t be taken care of (as they were becoming a health hazard).

Well, I hope we have learnt our lesson.

The technologies and the questions are today more apparent than the ones contemplated back in 1905 (hopefully). The answers may vary but I believe that the above suggestions and thinking indicates what is likely to happen in the not so far future.

George Vrakas – 24th September 2014

Most Popular Blogposts on georgevrakas.com for 2014

Thanks to all those who read, commented, joined, queried, challenged and enjoyed my blog in 2014.

This year, apart from the themes of Procurement, Team Development and Organisational Design, I also focused more on the multiplicity of use of philosophy and innovation within the procurement and contract management profession and beyond.

Moreover, the blog hosted its first interview in an effort to spread the word of the developing nature of the Procurement profession. 

Recapping the year, below are the top 5 blogposts that readers found most useful for 2014.

I hope they do to you too! Read it now, or pin for later.

The top 5 blog posts for 2014 were:

1) Procurement and a Differentiator

“In 2020, company leadership will likely look at procurement not as a group that focuses on sourcing raw materials, goods and services, but rather as one that sources ideas. Creativity will involve engaging stakeholders in new, innovative ways” -Deloitte, Charting the Course, Why Procurement must transform itself by 2020
Over the recent years, the procurement profession has started going through a….read more
Innovation Anna betts

Image courtesy of Anna Betts/ www.flickr.com

2) Procurious – Behind the scenes – An interview with Chantelle Genovezos

5 months ago Chantelle Genovezos announced to the Australian Procurement community (click here to see full article) that she and her team were working on establishing an “innovative online community called Procurious” by May 2014.

Following the successful launch of the Procurious web community site, I caught up with Chantelle to find out more about this project and the value this aims to deliver to the Procurement community….read on

Procurious logo

Image courtesy of Procurious

3) How to perform a mid-year Procurement review

Constant reviews are part of every effective system. As Peter Drucker mentioned, every so often, it is crucial to do the “Feedback Analysis” in three steps:

1. Whenever you take a key decision or action, write down what you expect to happen.
2. Review results at regular intervals and compare them with expectations.
3. Use this feedback as a guide and goad to reinforce strengths and eliminate weaknesses.

                                                                                                                         Peter Drucker

The end of the Financial year (in Australia) and reaching the mid-calendar year point in other parts of the world, makes for a great opportunity to review the progress made so far…..read on

Alexander Knight

Image courtesy of Alexander Kaiser, pooliestudios.com / www.flickr.com

4) 6 Additional Pitfalls to Avoid during a Negotiation – Cognitive Biases

It was Richard Feynman who gave the most profound warning: “The first principle is that you must not fool yourself — and you are the easiest person to fool.”

Following my post which highlighted the importance of identifying Logical Fallacies and showcased the 6 most prevalent ones with practical examples, I feel that it is time to also  touch upon another significant field that can become a pitfall in a negotiation, that of “cognitive bias”.

Read on if you want to find out and become conscious of 6 prevalent tendencies to self-deceive yourself by restricting into thinking in a particular way i.e. fall a victim of cognitive biases. 

Gaining consciousness of this “bad reasoning” will assist to…read on

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5) What Aristotle and Plato have to say about Team Development?

This post focuses on two basic principles that assist us to conceptualize Team Engagement (analyzed before herehere and here) starting from an interpretation of Ancient Philosophy that seems more contemporary than ever. 

Read on if you also want to get some tips on how to go about to achieve this within your teams…..read on

Aristotle and Plato

Plato and Aristotle

CLICK HERE FOR A FULL CATALOGUE OF ALL PUBLISHED BLOG POSTS SORTED BY THEME

Cheers to a wonderful holiday season and a joyous and prosperous 2015.

Kindest Regards,

George Vrakas

What is your Excalibur? Power Sources in organisational settings – an enhanced model!

“One of the things about powerful people is they have the ability to make it look easy” Ice-T

Which are the sources of power in an organisation setting? 

Are the previous studies’ outcomes regarding organisational sources of power still relevant? Will these be still relevant in the 21st century setting? 

Do the current organisational goals allow the same thinking about power to flourish or is there additional sources that we need to consider as more relevant in this age?

This article will argue that, as I have mentioned here and here, the skill-set of a good “questioner” i.e. someone that has a well-developed inquisitive mind, is the additional source of power that needs to be added to the existing lists. Let’s have a look why.

Excalibur

BRIEF HISTORY IN THE RECENT RESEARCH OF SOURCES OF POWER

1959: French and Raven’s Sources of Power:

In 1959, John French and Bertram Raven (American Sociologists) published an article called “The Bases of Power”. This is regarded as the basis for classifying power in organizations.

They identified five sources of power, namely: coercive, referent, legitimate, expert and reward power. These were defined as follows (reference from Paul Merchant’s article “5 Sources of Power in Organisations“):

 

1. “Coercive Power is derived from a person’s ability to influence others via threats, punishments or sanctions.

 

2. Referent power is derived from the interpersonal relationships that a person cultivates with other people in the organization.

 

3. Legitimate power is also known as positional power. It’s derived from the position a person holds in an organization’s hierarchy.

 

4. Expert power is derived from possessing knowledge or expertise in a particular area.

 

5. Reward power arises from the ability of a person to influence the allocation of incentives in an organization”.


1982: Hersley and Blanchard’s addition to the model

French and Raven’s model was expanded in 1982 by Hershey and Blanchard’s publication titled “Management of Organizational Behavior”.

In it, Hershey and Blanchard added two more sources of power namely:

6. Connection power which is derived from the ability to connect people and also from the width and breadth of one’s network (within and outside the organisation)

7. Information Power which derives from been able to gather, process and turn relevant data into information and knowledge. This source may or may not coincide with the Legitimate or Expert power source. The internet has flattened the information field and so, expertise and/or position may not be the only indicators for up to date and relevant / useful information nowadays.

 

SUMMARY OF POWER SOURCES

We can summarise and possibly simplify this list in the below broader categories i.e. Power because of:

i) Position (Coercive, Legitimate, Rewards, Referent),

ii) Relationships (Connection, Referent)

iii) Information (Expert, Information).


TODAY AND TOMORROW

We currently see that the 21st century brings along a different type of complexity. In the most dynamic and fast changing landscape we have ever experienced the skill sets for breaking down and working through complex issues based on critical thinking and good logical skills become more and more in demand.

The Customer base is becoming increasingly astute, as there are many more tools enabling it to compare and find out a highly customised solution.  This is the new norm.

Moreover, social media allows for information to spread rapidly throughout the world. It has been mentioned that, through social media, it now can take less than 20 minutes for an event to spread globally.

As I have discussed here, our ability to combine knowledge and invent solutions to the new challenges encountered can be a very strong differentiator in the marketplace.

“Thinking outside the square” becomes a skill heavily sought after.

Learning how to deal with new issues and organising your analysis, plans and actions towards effectively breaking down a situation and seeking solutions thus, becomes a critical skill.

Just think, when was it last that you had faced a “new” challenge, a more complex situation that you had not encountered before? Who did you seek advice from?

It is possible that you weren’t necessarily looking for a person with the power source described above but for someone who could guide your thinking through the maze of the problem’s elements and potential solutions towards effective mind mapping.

I firmly believe that this is a new source of power that is slowly evolving and establishing itself as a key for the future. We can call it “Effective Questioner” Power.

Organisations by default have positional power figures. The more successful organisations also have relational and informational-experts that deliver results.

How many though have implanted the critical thinking skill-set as a requirement in their Human Resources strategy? I believe that the successful ones of the future will.

Finally, the above plethora of power sources means that we now have more ways to differentiate and add value in an organisation. Like King Arthur who by searching and finding the Excalibur embraced a unique Power and privilege to rule, you now have to consider and reflect on your source of Power and answer the question:

What is your Excalibur?

OTHER RESOURCES 

Previous blog posts on critical thinking, logic and innovation.

  1. 8 must know question types for Effective Leaders (link here)
  2. Innovation: SCAMPER- A Practical Guide
  3. Top Tips – Avoiding Common Negotiation Pitfalls (link here)- First published in TheSource e-news
  4. 6 Additional Pitfalls to Avoid during a Negotiation – Cognitive Biases (link here)
  5. The Future of Learning – Are you part of the Learning Revolution? (link here)
  6. How to Conquer tomorrow? (link here)
  7. Conscious Communication – A paradigm for the 21st Century! (link here)
  8. In pursuit of Best Practice – Intrapreneurship (link here). First published in www.procurious.com
  9. The Leader’s Role is Setting and Keeping the Tune (link here) – Two inspirational Videos included.
  10. How to develop a winning organisation today! An inspiring talk (link here)
  11. “All Models Are Wrong, But Some of Them Are Useful” (link here) – First published in Procurement and Supply Australasia


 

 

 

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