The New Holy Grail – In Pursuit of Customer Success

April 11, 2015

“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 Peters “Re -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.

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Filed under Continuous Improvement, Contract Management, Effective Communication, General Tagged with , , ,

6 additional pitfals to avoid during a negotiation: Cognitive Biases

August 17, 2014

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 identify them and so, improve your negotiation skills.

250px-Kaninchen_und_Ente

Do you see a duck or a rabbit?

DEFINITIONS

Cognition is the mental action or process of acquiring knowledge and understanding through thought, experience and the senses.

As per the Webster’s Dictionary (Consice Encyclopedia)

“Cognition includes every mental process that may be described as an experience of knowing (including perceiving, recognizing, conceiving, and reasoning), as distinguished from an experience of feeling or of willing”.

So, a cognitive bias is a tendency to commit certain errors in the process of reasoning.

How is this different to a Logical Fallacy?

“A [Logical] fallacy is an actual mistake in reasoning. A cognitive bias is a tendency to commit certain sorts of mistakes. Not all fallacies are the result of cognitive biases, and having a cognitive bias doesn’t guarantee that you’ll commit the corresponding error”. AskPhilosopher’s

6 COGNITIVE BIASES TO WATCH OUT FOR

There are many cognitive biases (see list here).

The below 6 form a useful reference list of some fairly common ones that you can identify even on a daily basis:

1) Forer Effect or Barnum Effect 

This describes the effect when individuals believe that general enough statements that could apply to a wide range of people are supposedly specifically tailored for them.

This effect can provide a partial explanation for the widespread acceptance of e.g. astrology as well as, some types of personality tests.

Below is a interesting video highlighting how this effect works:

Screen Shot 2014-08-15 at 11.59.33 pm

2) Bandwagon effect

The tendency to do (or believe) things because they are popular at the time. This is also known as herd mentality or groupthink.

Examples can be found in politics and consumer behaviour. Look at how the “cool” product, a popular leader or the latest fad attracts consumers – until the next one comes along. For example:

A political party holds a rousing rally, with music, speeches and much cheering. Those who go are encouraged to ‘keep the faith’ and ‘bring others on board’ and otherwise keep the bandwagon going. (changingminds.org)

Popular diets, popular books and popular “5 step to success” schemes may fall in this category.

3) Framing effect

Drawing different conclusions from the same information, depending on how or by whom that information is presented.

“This course of action has a 20 percent failure rate,” few managers would approve. When that same solution is presented as having an 80 percent success rate, the same manager is going to consider it more deeply—even though a 20 percent failure rate means the same thing as an 80 percent success rate! The frame changes the decision’.” Stever Robbins – The Path to Critical Thinking

4) Pareidolia

This is a psychological phenomenon during which vague and/or random stimuli (often an image or sound) are perceived as significant.

e.g. seeing a face in the clouds, the face on mars, and hearing non-existent hidden messages on white noise or on records played in reverse.

Face-on-mars

5) Stereotyping

This is the expectation that a member of an ethnic, religious, geographic, gender or other group has certain characteristics just because they belong to that group, without having more information about this person.

As an example:

What comes to mind when you hear the word economist? Probably a male figure of some sort.

Substitute the word “economist” for “nurse”, “teacher”, “scientist” or “doctor”.

Well, there you have it.

6) Halo effect

The “what is beautiful is good” effect.

The Halo effect describes the tendency we have to form perceptions of one’s personality (or other characteristics) based on a particular likeable or unlikable element such as the person’s physical attractiveness.

“One great example of the halo effect in action is our overall impression of celebrities. Since we perceive them as attractive, successful, and often likeable, we also tend to see them as intelligent, kind and funny”. (psychology.about)

The above six cognitive biases are just a small sample of the wide variety of bad reasoning out there. However, these are a good start on the journey to establishing integrity in thinking towards a successful negotiation.

How many of them can you identify in your daily interactions?

Image courtesy of Wikipedia

“The rabbit–duck illusion is an ambiguous image in which a rabbit or a duck can be seen….. The image was made famous by Ludwig Wittgenstein, who included it in his Philosophical Investigations as a means of describing two different ways of seeing: seeing that/seeing as”.

Filed under Effective Communication, Effective Negotiation Tools series, General, Procurement Tagged with ,

The Leader’s role in setting and keeping the tune!

December 10, 2013

Recently, Julian Barson posted an interesting remark about the changing nature of business and the role of leadership (post can be found here).

I have posted before about Leadership (here) in the form of a jungle story. Reflecting on Julian’s remarks I believe that there may be another way to think of a leader though.

East Stroudsburg University

Leadership has been resembled by some to conducting an orchestra in terms of conducting a well tuned symphony. I think this is a good start but not the whole story. We should remember that

Excellent pre-work is what ensures the successful performance.

THE SUCCESSFUL ORCHESTRA

Imagine a very prolific conductor of an orchestra who is also the executive producer. She has the passion required, a limited budget and the whole genre of music to choose from, whilst she is operating in a rapidly-changing hypercompetitive environment.

Starting with a vision of where the orchestra should go towards (the so called, True North), putting a competent team together, setting the goals, selecting the orchestra’s target market (which involves the musical genre and particular segmentation and selection), identifying the value proposition and communication channels including frequency and style and ensuring that the “product” is differentiated enough to attract audiences as well as, ensuring that the resources available are best utilised and lobbying is performed for acquiring new resources are, only the start.

Then, the conductor/producer needs to select the orchestra instruments, the right orchestra performers, position them right, select the compositions to be performed, select the venues, the style of music, the time of the performance, keep the orchestra attuned and also get the orchestra to set its own tune.

Setting your own tune

Discussing music, the orchestra’s journey of setting its own tune is a big challenge as, unless there is some kind of familiarity the audiences may not attend.

It is thus worthwhile remembering that:

“We enjoy the familiarity of old tunes as we comfort in the security of the subsequent verse”

On the other hand though, the conductor needs to surpass this familiarity by differentiating the orchestra’s value proposition enough, to keep the audience captivated.

Perform and Delight

And as the saying goes “you are as good as your last performance”.

So, the pressure is on and the expectations need to be set high for audiences to attend. And then, expectations need to be met and hopefully exceeded, creating the much required sense of delight to the audience so that, these come back for more next time.

Continually adhering to these principles means that the conductor will lead the orchestra to success.

Examples

A great example of differentiation, as well as, transformation of a whole industry is, the paradigm of Cirque de Soleil, (you can read more in the now classic book “Blue Ocean Strategy” by Kim and Mauborgne) (a snapshot can be found here).

As Hubbard et al. detailed in another great book titled “The First XI” the “attunement” or alignment of key elements in an organisation is a key for organisational success.

Specifically,

“Alignment of External Environment, Strategy, Capabilities, Culture, Systems, People, Leadership, Structure, Communication, Perceptions” is a key to a winning organisation. – The First XI: Winning organisations in Australia. Hubbard et al.

ORCHESTRA OF ONE

A final note to consider.

Each of us can and should choose our own tune to orchestrate. A fantastic initiative from the Melbourne Symphony Orchestra highlights this point. Enjoy the video below:

Each of us can and should aim to be an orchestra of one. Remember in an orchestra the conductor is the Leader but for example, you also have a lead violin and you can have solo performances equally captivating (see Zoe Keating’s one woman cello band).

As the saying goes said:

Life is not to be spend on the spectator’s seat, get on stage.

It is important to aim to Lead something of importance to us. And if we are in such a position to enable others to become leaders themselves (see here, here and here my posts on team engagement and enablement).

I do believe that the successful companies of tomorrow will be companies of Leaders. Each employee should aim to become a leader on a particular field and will be enabled by a Leader/Conductor who will be setting the tune.

What have you Lead lately?

[Image courtesy of East Stroudsburg University / www.flickr.com]

Filed under Future Trends, General, Leadership Tagged with , , , , , ,

Top Tips – Avoiding Common Negotiation Pitfalls

November 3, 2013 1 Comment

This is my full article contribution as published in TheSource e-news earlier this week.

Fail to prepare and prepare to fail! Negotiation is often 90% preparation and 10% execution and so we have enlisted senior procurement professional George Vrakas to give us his top tips on avoiding common negotiation pitfalls.

When you use logic as your approach to conduct a negotiation, the human element of the process still needs to be considered, and thus you need to be able to identify and avoid common errors in reasoning (the so-called logical fallacies) to ensure a successful outcome.
Here are George’s top 6 tips on dealing with the most common logical fallacies:

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1) AD HOMINEM (go against the person not the argument)

Definition: This is encountered when someone tries to counter a claim or a position by attacking the person rather than addressing the argument.

Example: “The current system is ineffective; the vendor who implemented it was only bothered about saving costs.”

Attacking the vendor because of their alleged motives does not address the issue. What is meant by “ineffective”? What were the specifications we gave the vendor? What can be done about it? Is the system used properly? What you need to remember is that character flaws are not evidence of the validity of an argument.

2) FALSE DICHOTOMY (either/or)

Definition: This is encountered when someone reduces the possibilities in a negotiation to a simplistic dilemma i.e. it is “either black or white.”

Example: “Japanese car makers must implement green production practices, or Japan‘s carbon footprint will hit crisis proportions by 2020.”

This is a logical fallacy because it assumes there are only two options: either Japan implements green production practices or Japan will have a disastrous carbon footprint. This logic fails to consider that there may be other reasons that contribute to the carbon footprint. It also limits our thinking e.g. focusing solely on green production we may miss out on another solution such as the increase of use of public transport.

3) SPECIAL PLEADING or ADHOC READONING (the rules don’t apply as I am special)

Definition: This is encountered when someone suggests that he/she has special privileges that do not or could not apply to others.

Example: In 1996, Steve Jobs exercised a special pleading when he, misquoting Picasso, stated that “good artists copy, great artists steal,” and continued, “we have always been shameless about stealing great ideas.”

Subsequently, Apple went on with a lawsuit against HTC for allegedly infringing on 20 of Apple’s patents. Thus, this is a logical fallacy because what Steve Jobs implied is that Apple can “copy” or “steal” ideas as good artists do, but HTC cannot.

4) APPEAL TO AUTHORITY (It is correct because he/she said so)

Definition: This is encountered when someone appeals to an “authoritative” person or agency to support one’s claims. i.e. “Manager X believes Y, Manager X speaks from a position of authority, therefore Y is true.”

Example: The Swissair airline was once so financially solvent it was called the “Flying Bank.” However, they began to believe they were invulnerable and as a result of failing to question poor decisions and gross mismanagement, and the airline eventually went bankrupt.

This case strongly implies a case of “groupthink.” Instead of looking at the data and the shifting conditions, Swissair executives seem to have been persuaded that top management knows best, and so, did not challenge this notion until it was too late.

5) NON SEQUITUR (It doesn’t follow)

Definition: This is encountered when someone reaches a conclusion which does not necessarily follow the premise of the argument.

Example: “This is new, therefore it is better.”

The fact that something is new and shiny does not mean that it will be better. New processes are generally an enhanced version of older ones, but before you make a decision, you will still need to investigate on whether: a) there is value in changing; b) the process is suitable for your specific needs; c) there are no inherent flaws etc.

6) APPEAL TO TRADITION (If it ain’t broke, don’t fix it)

Definition: This is encountered when someone claims that because something has been done in a particular way for a long time, this is the correct way of doing it.

Example: “We do not need a new ERP system. We have been doing alright using excel spreadsheets for years!”

Quite simply, there is definite value in looking to change the ways we go about things – new technologies (e.g. ERP systems), new processes (Six Sigma, Lean, TQM), the list goes on. Appealing to tradition is particularly prevalent during change management processes when people who are resistant to change raise this argument again and again.

The above six logical fallacies are just a small sample of the wide variety of bad reasoning out there. However, these are a good start on the journey to establishing integrity in logical arguments during a negotiation.

Now, put them to the test in your next negotiation!

[Image courtesy of Les Haines / http://www.flickr.com/]

Filed under Effective Negotiation Tools series, General, Procurement Tagged with , , , ,

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