Three reasons to tackle the hard problems, right now.

It’s common for businesses to prioritize solving the easy problems while delaying the greater efforts needed to solve the hard problems. It’s usually a low-risk (at least short-term), low-effort and low-cost approach that can return incremental advantages within a single budget cycle. The collective and cumulative effects of that habit are that we usually witness the emergence of parity stop-gap solutions across an industry. Eventually parity leads to price comparisons and margin reduction until some entity finally takes on the risk of investing enough time and treasure to take on the hard problem.

The question here is does it make sense for a business to take on a high-risk/high-reward strategy of taking on the hard problems in our current environment? At this moment in time, making sense of any business risk associated with innovation or change is saddled with the added calculus of considering the impacts of a global pandemic, an economic downturn and potentially massive social change. A short-term perspective might point you away from taking on any additional risk in this environment, but I’d suggest, there are powerful reasons to consider taking the long view and making significant moves, even now.

1. “The best chance to deploy capital is when things are going down." - Warren Buffet

While Buffet was referring to purchasing a controlling share of corporations, the philosophy applies to an investment in your own enterprise. The underlying driver of buying on the way down is an understanding that markets are cyclical and if there is a sound business model supporting long-term viability, it makes sense to buy/invest when prices are low. 

Today, we can find an historically low cost of capital, supply exceeding demand for externally sourced goods and services (excluding cleaning products, PPE and ventilators, et al), and, given the general slowdown of commerce in most sectors, little in the way of opportunity costs. 

Meaning, in short, your dollar can potentially go a lot farther in a down market and return a much better multiple when markets return. Contraction, or waiting for the markets to return to normal, simply drives your realized returns to zero in the short term, increases the cost of the same improvements in the future and lowers your ROI.

2. If you wait until everything comes back, you’ll be in a long line.

Contraction is happening at an unprecedented level. The resulting and pervasive fear is causing a lot of businesses to simply pause until they understand what’s going to happen next. On the face of it, that sounds like prudent risk management. But there’s a flaw in the logic. There is never a moment when anyone can say with any real certainty what will happen next.

Let’s assume, for argument’s sake, that your market demand will eventually shift back to pre-COVID-19 levels. When that occurs, the impending feeding frenzy amongst you and your competitors will likely be as unprecedented as the great pause that preceded it. It will be a battle for share. There will be competitors whose offerings remained stagnant. There will be competitors who spent the time during the downturn actively responding to changing market conditions, gaining a better understanding of the changing needs of their customers, and improving their offering, their features, or customer experience. We believe the latter will be prepared to take a greater share, command a higher margin, or both. The question every business needs to answer for themselves is which of those future positions is a better bet, today?

3. If the math works, why wait?

I want to be clear that I am not advocating for blindly taking on risk. Just the opposite, actually. What I am saying is businesses should also not blindly avoid risk because general conditions are, at least for the moment, frighteningly bad. Obviously, no matter what potential investment or transformation you might be considering, these are exceptional times and evaluating any investment requires exceptional diligence. 

That being said, when I was in business school, one point drilled into our heads was if you can engage your resources and return even $1 of profit, you should. Unless, of course, there is an alternative opportunity that will return more than $1. They also taught us the time value of money—that a dollar in your hand today is worth more than that same dollar at some point in the future.  

So, for many businesses, now might be the best time to look seriously at options for making major improvements —even if they require a different operational approach, a sizable investment of capex, or a longer-term expectation of market recovery. If you can create a reasonable proforma, based on valid well-researched assumptions, that projects a positive value for your project, why are you waiting? 

Practicing what we preach.

It’s time to refocus our efforts around innovating new products and services, developing digital transformation strategies, and designing and build new user experiences that address our most difficult business challenges. Admittedly, in this great economic pause, we are all facing challenges. But we should not be pausing to wait and see what might happen. We should work and invest in our people and our businesses to build new capabilities, explore new platforms and technologies, and create a more relevant offering for the very different market we see emerging over the horizon.

Brainstorming vs. Ideation

Brainstorming and ideation are different tools for different purposes.

You’ve undoubtedly been in brainstorming sessions. Some of these sessions have likely been fruitful, others disappointing. I often get asked how ideation is different from brainstorming. A very smart and talented friend of mine, Matt Phillips distinguished the two types of sessions by asserting most brainstorms are simply “meetings… with better food.” But beyond that perhaps undeserved jab at brainstorming, there are several aspects that separate brainstorms from formal ideation.

First, what is an ideation session, anyway?

Before I jump into the difference between a brainstorm and an ideation session, I should provide some context for anyone unfamiliar with this process. In traditional design-thinking, the ideation phase is often the most exciting step within the process. The ideation session itself is the organized gathering of minds within that step where the litany of ideas is generated against some highly defined problems or desired outcomes. These ideas range from the possible to the seemingly impossible given current organizational constraints.

A time and a place.

For what it’s worth, I love a good brainstorm. They’re fun, engaging and often produce creative ideas. They are collaborative and aid in generating new ideas to improve internal processes, develop creative campaigns, share ideas, etc. This is all important work.

But let’s remember that ideation is the third step in a more formal design-thinking process and should be treated as such. It should be informed by learnings emerging from the Empathize stage, address specific challenges outlined in the Define phase and, finally, create a starting point for the Prototype and Test phases.

Ideation is about not only generating ideas but also systematically upending and exploring the mental models surrounding those ideas, assessing recurring themes, evaluating ideas through a variety of lenses and, ultimately, converging and consolidating various branches of thought into manageable future areas of innovation. Ideation, to that point, also requires more time, commitment, homework and buy-in from stakeholders. 

Ideation may be utilized for a multitude of business challenges. Some examples include:

• Developing new product or service directions

• Exploring new business strategies and revenue streams

• Finding new business angles by solving complex customer-centric challenges

Leave it to a professional.

When led by a trained moderator, ideation sessions get users beyond the myriad obvious solutions often generated in traditional brainstorming sessions. The session moderator leads participants through a series of carefully structured exercises designed to create an abundance of ideas and then explore, build on and refine the most viable. There is a substantial amount of exercises out there (this site is a nice repository for a number of tools and methods), but understanding which exercises are best suited to address your particular challenge is a skill honed through repetition and experience. Having a moderator who can teach or lead your team through the effective use of these tools is equally as critical as wielding them in the first place. 

A successful session leader will help you:

• Ask—and answer—the right questions

• Break through organizational constraints to view challenges in a new light

• Keep your “hero” user’s needs and behaviors at the foundation of your innovation

• Rise above the obvious solutions to increase innovation potential

• Identify and leverage different perspectives to uncover unexpected angles for innovation

There’s definitely a team in “I.”

In ideation, fielding the right team is critical. Sure, brainstorms usually include teams. But, yet again, ideation is different. It’s important to bring in the right expertise and perspectives to maximize the value of a session. A diverse group of resources is the most effective, from internal subject matter experts and designers to trend experts and sometimes potential customers. The diversity of expertise within the group can be critical in creating and enhancing groundbreaking ideas, ensuring all angles have been explored, examined or exhausted.

It’s always a matter of time.

In addition to being internally focused with little structure or outside perspectives, most teams dedicate an hour or two for a brainstorm. Little thought or prep work is required. Ideation, on the other hand, is a commitment—session preparation, session execution and idea refinement. To be successful, most sessions require a time commitment of one to two business days.   

Just interesting people kicking back, sharing a beer and developing a breakthrough innovation?

If only it were that easy! The truth is, while they may be fun and stimulating, ideation sessions are hard work. When done right, most participants leave both stimulated and exhausted.

TL:DR?

Here’s a quick snapshot of the difference between a brainstorm and an ideation session.

Brainstorm

• Often a standalone meeting based on a singular objective

• Used to generate new ideas

• Good uses of a brainstorm include:

  • Improving internal processes

  • Developing creative campaigns

  • Naming exercises

• Often unstructured with takeaways delineated at the end of the meeting

• Often include homogenous teams

• Time commitment: 1–2 hours

IdeationSession

• The third step in the design-thinking process: informed by gathered insights and defined challenges to solve

• Used to generate ideas and explore what surrounds those ideas, assess themes and evaluate ideas

• Good uses of an ideation session include

  • Developing new product/service directions

  • Exploring new business strategies and revenue streams

  • Finding new business angles

• Highly structured with pre-work and post-session refinement

• Includes diverse perspectives and internal and external resources

• Time commitment: 1–2 days

What is futurecasting (and why should you care)?

No one can predict the future. But smart innovators still try.

There are two paths to innovation. One resides in our timeline just beyond now—solving a problem that exists today with technologies and resources available today. For comparison’s sake, let’s call it simple forecasting. The other path resides in our timeline years into the future—solving a problem that is, at least according to the tea leaves of trends and R&D pipelines, imminent, using technologies or resources that may not be currently available. That’s futurecasting.

Why would an organization spend time and resources today solving a problem that may not exist for years? 

For starters, it aids in long-term strategic planning. Simply informing your forward-looking opinions with as much research and forethought should add an increased level of confidence in those opinions and resulting decisions. Second, and perhaps more important, preparing for that predicted future you’ve so meticulously mapped out might take substantial research and development. 

Further, you may require the entirety of that time span to be prepared to offer the most relevant product at the right time. But you won’t know what you’ll need or how to get there unless you spend the time speculating, planning and resourcing today. So, as we navigate the innovation path long into the future, what are the steps we need to ensure we’re heading in the right direction with the proper resources?

Futurecasting using the Narrative-Based Innovation process

Narrative-Based Innovation was created to maintain continuity of purpose and clarity of vision throughout any design-thinking project. It’s an extraordinarily useful framework for something as fraught with uncertainty as futurecasting.

1. Empathize — Understand the core human needsWhether you perform deep ethnographic research, conduct focus groups or scour secondary research sources, do whatever you can to understand the breadth of factors, conditions and influences that drive people’s emotional motivations for engagement in whatever industry or category for which you intend to innovate. Understand what they’re getting from current transactions—satisfaction and disappointments alike. Understand what jobs they’re hiring your product or service to do today. Understand what drives decisions around alternatives and substitutes. Of course, you should document the behaviors and transactional WHATs of your market, but for futurecasting, the more important aspects to understand are the emotional WHYs that might inform the need for a new solution in the future. Now, document those drivers and motivations. You’ll need them when drafting your narrative!
   

2. Personify — Create your hero(es)At this step, you should have a decent understanding of the type of person(s) who is, or might be in the future, engaging with your innovations as well as what emotions are driving their decisions and engagements. In this step, start to build a day in the life narrative for these heroes. Systematically think through and document how these heroes might experience the world before, during and after engaging with your business.
   

3. Project — Set a time frame, consult your road map, map out trends Understanding exactly how far out into the future you wish your innovation to exist is critical to the potential success of your process. As anyone in technology or fashion will tell you, timing is everything. It’s also critical to managing scope within your project.So, pick your time frame—two, five, 10 years—and focus exclusively on understanding what will (or probably might) be different about the world, your customers, your markets, technology, etc., at that specific moment. Do you have projects in your R&D pipeline that should be in the market by then? How are the breakouts of consumer segments predicted to have shifted in your markets and the general population? How will social, economic, cultural norms have shifted?Every business or industry would have a unique set of factors and drivers they would need to consider. The point here is to build as much dimensional understanding of the prevailing environment and motivations influencing your heroes’ decisions.The outputs of this step can take many forms. You could write a series of “headlines from the future.” You could create a “top 10 list of things every time traveler should know” about your specific date in the future. You could write the CEO a letter from your company’s annual report for the year prior to your future date. No matter what format you choose, give those predicted values and trends as human a face as you can imagine.
   

4. Build & Define — Walk your hero(es) through your future worldHere, you’ll want to envision emerging challenges or opportunities your hero might encounter in the world we just predicted. What of the factors you mapped out might have an influence on your heroes’ behaviors, motivations or ability to engage with your business? What are the basic human needs driving those behaviors and motivations? And what within those challenges or motivations might represent a foundation for innovation? Here, you’ll write the beginning of our hero’s journey (or heroes’ journeys) as they navigate this future world. You’ll want to explore how they encounter the challenges you’ve defined/predicted.Walk them through a typical day. As you document the what and where of their day, dig into the emotions and motivations that directly and indirectly affect the hero’s relationship to their surroundings. What personal or professional relationships matter to them? Bring them from their general world to a moment of joy or frustration that represents a solvable moment for you to innovate around. Can you make a great moment better? Can you reduce friction or eliminate some form of frustration entirely?Hold the story here and use that moment to craft your “How might we…” statement to use as the fuel for your ideation, coming next.
   

5. Ideate solutions for those challenges. Now that we have a narrative beginning to build around our hero and the challenges they face in the world at the specified future point in time, it’s time we do that hero a favor and imagine all of the ways we might solve for whatever challenge we envisioned in the previous step. How to conduct an ideation session is a bit out of scope for the level of detail we are covering here, but within that session, all participants should have suitable familiarity with the hero and the circumstances that led them to require our collective problem-solving. But coming out of the session, you should have a shortlist of prioritized solutions to serve as the foundations for the next chapter—the prototype narrative.
   

6. Create the (prototype) narratives of the heroes’ encounters with the solutionIn this step, you can use a story to work through the most important moments of engagement between the hero and the solution(s) imagined in the ideation phase. Don’t skimp on the details here. It’s critical that the full experience be considered, described and rationalized. The trick is to be thorough enough in the telling of the encounter that anyone with no prior knowledge of the solution should be able to envision the experience and make a rational judgment as to its potential desirability because next, we share and test those solution narratives to begin to quantify what the viability and market prospects of these solutions.For testing, you may want to create prototypes that take the form of text-based stories, storyboards, explainer videos, dramatic enactment video, etc. What level of fidelity and production value will depend on the level of confidence you expect to glean from the outcome. Generally, the broader the concept you’re testing, the lower fidelity your prototypes need to be.
   

7. Share/Test—Testing can take a number of forms. If you want to understand raw market potential, you may do more quantitative testing, like an online survey. If you’re looking for more nuanced evaluations and feedback, something qualitative, like focus groups, individual interviews or dyads, makes more sense. In any case, present the narratives and document the response. Is this a concept people find desirable or, given the unexpected nature of some of the ideas you’re likely to present, even believable?
   

8. Iterate — No one should expect to get every innovation right on the first try. If you’re creating something new, unexpected issues or reactions will always arise. Hence that whole testing phase. If you think, after testing, that you’re still confident in the problem as defined, take stock of the feedback received in testing and circle back to the ideation phase and have another go! If the feedback points to a rethinking of the problem itself, circle back to the definition phase and re-craft your “how might we…” question and, once again, head back to ideation. Rinse and repeat until you have a clean answer to your hero’s challenges.
   

9. Craft the happy ending — As you envision your hero at the end of the story, having experienced your solution, document in your narrative how you expect the hero would feel. What expectations have been met? What needs have been satisfied? How might they express the engagement from their own point of view?

Even the future deserves a good first draft.

It would be great to say that the inevitable result of this process would be an ironclad road map for what’s next, but it’s more likely that the process acts as a great compass for pointing toward what direction to wander, and, more importantly, where your competition might be heading as well. I’ve said before that the best way to be wrong is to try and predict the future. But I also believe the best way to improve your odds is to create that future yourself.

Tesla’s innovation is in the doghouse

And that’s a good thing.

Watching the world’s automakers respond (or not, as the case may be) to Tesla, has been interesting, to say the least. I find it fascinating to see an established market watch a competitor waltz in and secure a beachhead in a successful new category, with a near-zero response from the established powers for years. 

All the while, the upstart works hard, establishes a brand, creates a supply chain and builds out proprietary charging infrastructure, not to mention (at the time of this writing) amassing the largest market capitalization of any US automaker. Even today, some of the largest, most advanced automakers are projecting they won’t be fully engaged in the electric market for another 2–3 years. So what does Tesla know that seems to baffle other automakers? Well, after having had the opportunity to drive a Tesla Model 3 for a few weeks, one thing hit me.

The difference between cats and dogs.

A genetic study of cats showed cats are basically unchanged from their feral ancestors. Meaning, they’re not technically domesticated. Well, they’re domesticated as much as they choose to be. And while people may derive a great deal of enjoyment and feel a great deal of empathy for their cats, the relationship isn’t in any way truly servile. In fact, it’s probably more accurate to say people are in service to the cats. Dogs, on the other hand, are the most genetically domesticated animal on the planet. And while not totally selfless, they are, for the most part, living in service to their owners. Why do I bring this up? Well, for almost a century, owning an automobile was more like owning a cat. It may be a rewarding relationship for many people, but ultimately, the human was the last consideration in the design, basically placed by the engineers into the mix in service to the machine. The car would do what it was asked, but it was, itself, never much help in the process. The innovation that differentiates Tesla is to design the car experience to be more like owning a trained dog. It’s a car in service to the driver.

Obviously, in that sense, self-driving comes to mind. But that’s not, in and of itself, what I’m referring to. Traditional automakers seem to start the design process by thinking about the machine itself—achieving a level of performance, adding a feature, etc. Tesla seems to have started at the experience and worked back to the machine needed to satisfy the vision for the experience.

For example, when the driver enters a Tesla, the car remembers and restores positions for the driver’s seat, driver’s sideview mirror and steering wheel steering mode, regenerative braking preference, mirror auto-tilt, instrument panel layout, performance preferences and all touch-screen display preferences, just to name a few. Pretty much anything you can set to your liking will automatically switch to suit you the moment you get into (or rather, your phone gets into) the car. The car adjusts to you.

When the car needs charging, not only will it remind you, it will show you where the nearest supercharging stations are, and, assuming you paid for the (inaccurately named) auto-pilot software, like a sled dog, will effectively assist you in getting there.

Enter the big dog.

The latest example of this perspective is the deeply polarizing Cybertruck. The first reaction most had to its unconventional design was of shock, even horror in some cases. However, when one considers the user experience as the main driver of the design process, a certain beauty emerges. The utility that the Cybertruck is poised to deliver is currently unmatched by any traditional truck maker:

• Up to 14,000 pounds of towing capacity (tri-motor version)

• 120- and 240-volt outlets that can be used to supply power tools without the use of a generator

• An onboard air compressor for tools

• Adaptive air suspension

• “The vault”: A motorized rollout cover that secures the bed; Tesla claims a solar-panel version should be available in the future, providing up to 15 miles of charge in a day

• An innovative tie-down system that allows you to insert anchor or mounting points in various positions

• Zero to 60 mph in less than 2.9 seconds (tri-motor version), 4.5 seconds (dual-motor) or 6.5 seconds (single-motor rear-wheel drive)

The whole announcement reminded me of a movie from the early ‘90s, “Crazy People,” starring Dudley Moore as an advertising executive in a midlife crisis. In the film, he pens what he considers an honesty-based headline for Volvo, which read: “Volvo: they’re boxy, but they’re good.” I have a suspicion Elon Musk would be quite happy with that headline, with perhaps the exception of wanting something more superlative, possibly incorporating a few well-chosen explatives in place of “good.”

I have a hard time imagining the Cybertruck coming out of the design shops of any of the major automakers. Though I also imagine those same automakers are having a hard time understanding how Tesla received more than 200,000 pre-orders for the vehicle within days of launch.

Empathy is an evolutionary advantage

Recent studies suggest empathy is what led to dogs being the most successful domesticated animal on the planet. And it seems that is what’s driving Tesla’s market success today. It will be interesting to see if the traditional automakers reveal themselves to be more akin to the dinosaurs or a pack of wolves waiting for their moment to pounce.

Three reasons Uber should never have invested in self-driving technology.

R&D and innovation are not the same thing.

There’s a classic Venn diagram generally attributed to Ideo’s Tim Brown that points to the reality that for an idea to be considered an innovation, it needs to satisfy three criteria: desirability (people would want it), feasibility (it is something that can realistically be created) and viability (it can be made and offered in a way that makes financial sense for the business). Academics or inspired home tinkerers may be satisfied with any combination of one or two of these qualities, but a business, especially a publicly held business, needs to satisfy all three.

Viewing Uber’s sustained autonomous vehicle R&D efforts against this framework, I think we can safely question the reasoning that led to this endeavor. That’s not to say that I disagree with the underlying premise that self-driving vehicles will ultimately take over the role of your cousin Tommy who earns a little extra cash driving for Uber or Lyft, now. I just question whether Uber did the smartest thing for its business or its investors by taking on the Herculean task of developing the technology themselves. 

The liabilities are potentially massive.

The National Transportation Safety Board (NTSB) just released a report outlining the results of their investigation of a fatal accident involving a pedestrian pushing a bicycle and a self-driving Uber vehicle. The NTSB chose not to find Uber criminally liable for the accident. But according to new documents released as part of the investigation, the software inside the Uber car in question was not designed to detect pedestrians outside of a crosswalk, and the self-driving car, in general, failed to consider how humans actually operate.

I have to think this was likely Uber’s one and only free pass. As we have seen in corporate liability cases lately, juries are quite willing and capable of doling out judgments in the multibillion-dollar range. One might argue that even that risk would be worth it for Uber to reap the rewards of working autonomous driving technology long term. But, as we’ll see in point two, one might be overestimating Uber’s ability to reap those rewards in any significantly advantageous fashion.

Long term, there is no competitive advantage.

In 2018, Uber spent nearly $500 million on transportation research. Of course, all of that was not on driverless vehicle research. Some was on autonomous delivery drones. The point here is that massive R&D budgets should be at least theoretically correlated with massive payouts—as in risk and reward should be expected at equal levels. But the potential rewards seem unlikely to be Uber’s alone, if theirs at all. It appears that if Uber does, somehow, develop working autonomous driving technologies, it’s unlikely they will be alone in doing so. And as it stands today, Google is more likely to win the race to market, and perhaps more germane, Uber will most likely have to license much of their self-driving tech stack from Google, anyway.

So, let’s assume Uber eventually figures out self-driving. They already know they will be multiple billions in the hole, day one, on the software front. But now they’ll need a fleet of vehicles. I have doubts Uber is poised in any way to become an auto manufacturer as well, so they’ll need to purchase a fleet built to run their software. Meaning, the costs they’ll need to recoup on capital expenditures will be disproportionately higher than a competitor who simply buys vehicles that will most certainly be available through any number of auto manufacturers who will license Google’s tech directly.

It seems like a scenario that has Uber “winning” this competition would need to be based on the assumption that customers have such goodwill toward Uber that they would be willing to either pay a premium for their services or that Uber would be able to once again operate at a loss for an extended period of time while they roll out the service. Both seem unlikely, especially the latter, which brings me to point three.

Short term, they simply cannot afford it.

Scale is a funny thing. It’s either on your side or it’s not. And in Uber’s case, it is not. At least not yet. In their earnings report for the third quarter of 2019, bookings, or total rider receipts before expenses (like paying drivers), grew to $3.7 billion, a 29% increase over the same period in 2018. Total net loss, however, grew to $1.1 billion—18% more than the same period of 2018. So, losses are positively correlated with revenues. Not good. Since that report, the stock has fallen by nearly 10%. Now, we cannot attribute all of their losses to the investment in self-driving technology, but it is a significant portion of that. It will be seen in the next few quarters whether the market believes those losses are an investment in a more lucrative future or another outsized Silicon Valley wager. Obviously, from my previous point, I fall into the latter, more pessimistic camp. Further, in the past few weeks, we’ve seen states coming after Uber with massive employment tax bills. If the courts side with any of the local and state governments, you can be sure every other state and municipality will get in line to file a suit of their own.

A lesson in sunk costs?

While one would be hard-pressed to find fault in the reasoning that prompted Uber to begin researching autonomous vehicles (it is undoubtedly the future of on-demand transportation), in my humble opinion, it’s time they reconsider their internal calculus on the build-or-buy question. Would Uber potentially lose face by abandoning the project? Potentially. But I think if the company accelerates its transition to profitability, they will be in a more competitive position, with no shortage of “buy” options when the technology matures.

Looking for big corporate innovations? Think small.

Image source: https://upload.wikimedia.org/wikipedia/commons/thumb/6/66/Cabin-Like_Tiny_Home_in_the_Woods.jpg/1024px-Cabin-Like_Tiny_Home_in_the_Woods.jpg

What most people forget about the most game-changing innovations is that, more often than not, they satisfied some unmet basic need in a simple way. The breadth and complexity of the effect of that innovation came later, as more and more people found more and more ways to utilize that innovation to address some variation of the original need. Keeping that in mind, if you’re charged with corporate innovation, there are a lot of reasons to focus on simple, small innovations. Let’s explore!

A small solution can have a massive impact.

The perfect example of this phenomenon is the World Wide Web. According to, The Birth of the Web (wow, that was that the most meta link I’ve ever created), “The web was originally conceived and developed to meet the demand for automated information-sharing between scientists in universities and institutes around the world.” Pretty simple. If you authored an academic paper, and cited prior research papers, HTML and a browser made it possible to quickly access the original cited paper and all of the papers cited in that paper, etc. Hence the term, “web.” 

No one intended the web to be the de facto backbone infrastructure for virtually every modern consumer experience and business transaction. That came later as untold coders, entrepreneurs and global enterprises thought of new things to connect and invented new bolt-on technologies with which to make more complex connections and transactions possible.

Small helps manage exposure to risk.

Ask any scientist about experimental design and the first thing you’ll hear out of their mouth is “controls.” Controls are how you know that what you think is contributing to the results of your experiment is actually the thing contributing to the results of your experiment. If you change too many factors at once, it becomes difficult, if not impossible, to truly understand the impact of any single factor. 

This is incredibly important to understand when you are evaluating and testing innovative products or experiences. By limiting the number of attributes around which you’re innovating (staying small), you’ll improve your ability to isolate and quantify underlying factors affecting desirability or adoption. Increased accuracy and specificity can only improve the confidence levels of your pro forma projections and risk assessments.

Small improves time to market.

In virtually every large organization, increased complexity of the innovation being proposed equals increased development and approval times. It makes sense. Every department that needs to make, approve or design some sort of change will be a potential source of delay. It’s not through ill will or stubbornness; it’s simply the result of increasing the number of interdependent decisions and actions required for completion.

Early on in your evaluation of any proposed innovation idea should be a full life-cycle resource assessment. How does the innovation differ in materials or labor cost? Are their operational changes that need to be made? Is there retooling required? Are there digital infrastructure or software updates or changes necessary? Does it affect distribution outlets, costs or partnerships? Try to create the corporate narrative of this new product or service coming to market. The smaller the number of players you need to invoke in your story, the sooner you’ll be likely to launch.

Small is an easier sell.

Initiating change in any enterprise takes a lot of selling. Selling the idea up to management. Selling the idea laterally to enlist the support of peers managing other departments affected by the change. And, depending on the visibility, selling the idea to every employee to ensure their buy-in and/or adoption of new language, behaviors or procedures. Small ideas, by nature, are easier to understand and consequently easier to encapsulate into actionable sound bites. Simpler messages are easier to analogize. They are easier to evaluate in the abstract.

Innovation of any size is always a win.

Regardless if your innovations are ultimately small and evolutionary, or massive and revolutionary, the most important thing for anyone responsible for driving corporate innovation should commit to is the continual drive to make the business more competitive, one small step at a time. 

How to Develop a Digital Employee Experience Strategy

Image Source: https://pcsite.co.uk/2020/03/10/the-best-free-graphic-design-software-2020/

The shoemaker’s children deserve nice shoes.

It’s a time-worn cliché. Businesses are so busy serving customers that they often neglect to improve the experiences of their own employees. Enter Digital Employee Experience design or DEX.

So what’s the formal definition of DEX?

Simply put, DEX is the sum total of the digital interactions between an employee and the business. As a design practice, it covers the implementation of technology and tools deployed to enhance how employees interface with the company—from how they are recruited and hired to how they are onboarded, how they find and manage resources and how they interact with each other and the business at large. DEX is about using technology to improve the overall employee journey and to support the corporate culture.

Why does DEX matter?

In general, the concept of improving thee mployee experience, digitally or otherwise, seems like an obvious point of focus. If done properly, it benefits employees, operations and HR, alike. In reality, employees are often faced with learning and navigating multiple disparate systems. That could encompass intranets, HR and benefits platforms, shared file storage and management, multiple communications platforms (e.g.,email, Slack, etc.), business intelligence platforms, marketing automation andCRM, basic office productivity suites and more. And those myriad systems were likely sourced and implemented from different departments.

As a result, according to a report from PWC, 90% of the leaders choosing those various software solutions believe they are making their selections with the employees’ benefit in mind. However, only 53% of the staff in those companies perceive that to be the case. A similar mismatch occurs between IT and employees. 95% of IT professionals believe they are providing the digital tools employees need to be successful, but 42% of employees report they do not, in fact, have adequate tools.

But what about companies that are doing it right? According to data presented by VMware, companies who rate highly for digital employee experience are perceived as being more competitive by their employees, index 60% higher for annual revenue growth and engender a 41% higher net promoter score.

So what are some key focus areas in an effective DEX strategy?

The first rule of DEX strategy is that youMUST talk about DEX strategy. You need to generate understanding at the highest levels of the company of the benefits of a smart DEX strategy and the risks of maintaining a less-than-desirable experiential status quo. There’s no shortage of research on the potential ROI emerging. That being said, one way to understand where a solid DEX strategy might improve company performance is by viewing it through various stages of the employee journey:

1. Recruiting, onboarding and HR
   It’s easy to overlook the fact that the first experience most employees have with your culture or environment occurs well before they’re actually hired. How frictionless is it for a potential employee to understand the position being offered? To evaluate their own qualification for that position? To submit an adequately detailed application for consideration? On the enterprise side of the transaction, how smoothly can HR managers sort, sift, search or categorize submitted applications? Once hired, does the digital entity the employee populated during the interview process migrate seamlessly into the digital entity they are now, as a new employee? How automated, convenient, intelligent and personalized is the onboarding? Can every employee easily review and select benefits offerings? How can they navigate approvals of PTO or family leave? A great recruiting, onboarding and HR DEX allows for increased autonomy, self-management for employees while maintaining governance, record keeping and control for the enterprise. A win-win for all.

2. Culture and collaboration
   It used to be the best one would hope for in this arena would have been access to an employee intranet, email and shared network file storage. Thankfully, there is any number of enhanced tools available, from group messaging platforms, like Slack or Microsoft Teams, to cloud-based document collaboration and storage platforms, as well as videoconferencing and telepresence conference rooms. Each, individually, a massive improvement. But any advanced DEX strategy should take into account how those systems might seamlessly integrate, whether through a unified interface or portal.

3. Assessments, skills training and education
   A recent survey showed 70% of employees indicated that job-related training and development opportunities influenced their decision to stay at their job. As part of any comprehensive DEX strategy, you should consider tools for employees to more easily assess their current skill levels; quickly discover what training is available to improve those skills and how that training relates to their career growth; and generally take greater control over their development.

Establish your vision first. Measure second.

According to a recent globalDEX survey conducted by Australian consulting firm Step Two, responsibility for driving the DEX initiative in most companies was distributed across multiple departments, from IT to intranet teams, internal comms, HR and senior leadership, among many others. Given that result, it should come as little surprise what those same companies cited as the greatest challenges to implementing a successful DEX—organizational complexity, competing priorities and a lack of clear vision, to name a few.

To improve your chances of success, it isn’t necessary for a single department (e.g., IT, HR or Comms) to own the DEX strategy. But it is important to have an agreed-to vision of what that DEX will offer employees, how the experience supports broader business goals, what indicators define success and how you’ll objectively measure those indicators.

How can you improve your chances of a successful DEX?

As with any experience design project, the most successful begins with a deep understanding of the needs of those using the solution—in the case of DEX, obviously the employees. But they are not the only stakeholder you need to pay attention to boost your chances of success.

Create an interdepartmental task force.

As we’ve already seen, successful DEX strategy and implementation requires the efforts and input of stakeholders from across the company. You should establish, in advance, formal understanding of how those departments will be consulted or informed, work together and be held accountable for their success.

Engage senior leadership early and often.

Inevitably, creating, deploying and supporting a new DEX will require financial and human resources, as well as interdepartmental coordination. Having buy-in and support from senior leadership from the outset will unquestionably accelerate decision-making and conflict resolution along the way.

Dive deeply into the employee experience as it is today.

Empathy is the foundation of any truly innovative or transformational design project. Before you begin to draft solutions, you should understand the high points and low points of the experience employees undergo today. What they like or dislike about the available tools. What they might want or need to make their work more efficient or rewarding. Interview existing employees. Pore over any available analytics from your current intranet. In the end, you should have a general employee journey covering recruiting, onboarding and day-to-day interactions with current digital tools—all empathy mapped, with positive and negative moments of interaction around which your strategy should prioritize.

Craft a vision for what tomorrow’s experience should accomplish.

As with any project, understanding what success looks like is critical. Crafting a vision statement for your DEX delivers a number of advantages. First, creating a coherent narrative for what the DEX will accomplish for employees and the greater company helps build consensus. Further, there are literally thousands of decisions that will be made throughout the strategy, planning and implementation phases of crafting your new DEX. A clear vision provides an objective standard against which to evaluate or prioritize opportunities and challenges as they arise.

Determine key performance indicators (KPIs).

Your DEX should improve the everyday experiences of employees. And that improvement should be objectively measurable. The best DEX strategies define in advance what improvements will be measured. Those measures could span such indicators as employee satisfaction, retention rates, hours of training completed, etc. There are no default indicators that apply to every DEX or business. You just need to align those indicators with those measures that serve the goals of the employees and the business, alike.

So, why are we all suddenly talking about DEX?

Despite the recent surge in media attention, digital employee experience isn’t a new issue. It’s simply that we’ve reached “peak digital.” Meaning, the digital experience in the workplace is for most employees their primary work experience. How you experience the digital tools and environments provided are how you experience your job. Amplifying employee expectations is the reality that, unlike older generations whose digital lives were confined to the stationary PC or terminal on their desks, today’s workforce is fully immersed in a digital life outside of the office. So, those employees expect the same level of human-centered interaction design and effortlessness they feel when engaging with Lyft or Amazon as they do when trying to schedule a meeting room, navigate a shared document library or adjust their medical benefits. The companies that can deliver that same level of experience will always have an advantage.

The three most important trends in health care experience design for 2019

Image source: https://www.flickr.com/photos/mmmswan/49708427927

We’ve seen 30+ years of shifting trends. And one underlying constant.

Over the past 30+ years, I’ve had the pleasure of working with clients across a variety of industries—from health care to hospitality, industrial equipment to medical devices, household cleaning products to sporting goods, dining cruises to the world’s most highly traded financial derivatives contracts, just to name a few. Each engagement has broadened our collective perspectives while confirming one underlying truth: Regardless of emerging trends, ongoing changes in technologies or the idiosyncrasies of individual markets, the fundamentals of human nature remain constant.

While we are continually working at the forefront of experience design trends, we believe the inspiration for real innovation comes from respecting those trends but also, more importantly, looking to find a deeper understanding of the foundational human motivations fueling them.

To that point, there are three fundamental elements that drive all trends—basic(human) needs, drivers of change (shifts in technology adoption, population changes, etc.) and innovation (newly available tools or methods). But it is perhaps more accurate to say that motivation stems from the tension occurring at the intersection of those forces.

To understand those intersections, we rely on a variety of resources and quantitative and qualitative research methodologies, from ethnography to focus groups, individual interviews, secondary research reviews and data analysis.Further, depending on the scope and time horizon of the project, we may utilize tools such as the trend framework, consumer trend radar or consumer trend canvas. We also consult market research reports and publications from organizations like MINTEL, Kantar, IRI and Nielsen, among others. Ultimately, we design research and analysis strategies and plans that are unique to every project, challenge and budget.

As survey the greater market environment, we see the dominant customer experience trends, regardless of industry category, surround three main thematic pillars: consumer control, data ethics and privacy and automation/personalization. In health care specifically, we must layer onincreased demand for access to care, the democratization of health information and the drive to lower costs (from both the consumer and provider sides of the equation). Specifically, in health care, we see these trends expressed in the following ways:

Consumer Control:

Consumers expect health care experiences to be as frictionless and simple as hailing an Uber … sort of.

Consumers want access to health information and care whenever and wherever they need it.But there’s a catch. While consumers are increasingly expressing the desire to manage their own care, the technologies that enable that control have varying levels of adoption among different generational cohorts. For example, newly available telemedicine solutions that should, in theory, provide increased levels of control and access, have varying degrees of acceptance depending on age and generational and conditional differences. To state it more colloquially, the older and more informed the patient, the less likely the patient is to prefer a technology solution over consulting a physician directly.

Simultaneously, consumers want increased transparency and choice, ostensibly in order to more actively shop for their best care options and control costs. However, it has not been shown that lower cost and improved proximity are as powerful an influence over care decisions than a physician referral.

In short, currently, control-enabling technology is best suited to enhancing personal connections in a health care journey, not replacing it. But that balance should move more toward the replacement side of the equation, as the balance of the population shifts to younger generations.

Data Ethics and Privacy:

Data privacy issues are moving beyond HIPAA.

For perhaps the first time, general concern over data privacy is on the consumer radar. Thanks to HIPAA, privacy rules surrounding traditional medical records and health information are clear and established (albeit under constant review). But the entrance into the market of consumer fitness- and health-related technology companies is creating a new privacy gray area for consumers and health care companies, alike. Quasi-medical devices, like sleep and fitness trackers, heart rate monitors and fitness trackers, while creating a compelling feedback mechanism for consumers, are a vector for data leaks and privacy violations. These products and the data they create should enable a more holistic, long-term understanding of patient well-being and enhance the customer experience. But health care providers and organizations need to be aware of vulnerabilities and create increasingly secure integrations.

Further compounding data privacy issues is the increasing role of caregivers. It’s been estimated that there are more than 40 million family members acting as unpaid caregivers in the U.S., and the number may increase in the coming decade. Among the many challenges in creating a seamless health care experience, a significant challenge arises around allowing caregivers to provision access and permission for personal health information and electronic medical records while respecting the patient’s privacy and security.

Automation/Personalization:

In health care, every patient represents a distinctive market of one.

Health isn’t a simple product or service that can be transferred to a consumer. Each consumer is physically and emotionally unique. Therefore, there is no all-things-to-all-people solution to providing the optimal customer experience.The industry will need to use emerging technologies to provide the right experience for each customer, based on that customer’s needs at any specific point in time. No small challenge, especially given the privacy restrictions mentioned above.

Thankfully, technologies for privacy-compliant extreme personalization are advancing rapidly. We foresee technologies like blockchain increasingly supporting interoperability and personalization while maintaining sufficient control over data leakage. Ultimately, the trends suggest patients should realize higher-quality care experiences such as blockchain and competing crypto-technologies allow seamless sharing of medical records across health care providers while maintaining privacy and control.

The success factor no one talks about in Presidential debates.

As early 2020-election-season rhetoric swells to a roar, obviously the future of health care is a large part of the stump speech for every candidate. All of the candidates talk about the broad brush economics of how a change in the way we as a society pay for health care might affect our pocketbooks (not to mention our individual survival). What you don’t hear is how we might really improve the health care experience beyond cost and basic access. Whether or not we will see universal health care implemented, equal consideration should be given to the quality of the experience itself as will be given to how the money changes hands. That’s surely where the long-term successes or failures of any future system lies.

What is business design thinking (and why should you care)?

Don’t let the name fool you.

To those new to the concept, the term design thinking may seem like something that only designers could, or should, do. But nothing could be further from the truth. Business design thinking is the utilization of the traditional design-thinking methodology to conduct a more human-centered examination of a product, service or experience, to define what aspects of those things might be improved, to imagine and prototype solutions for addressing those improvable aspects, and to test and refine your solutions.

We’ll briefly cover the specifics of these steps in a moment, but suffice it to say, for now, this methodology is an equally powerful tool whether you’re looking to create a new web application or to increase the efficiency of budget approvals. Basically, any time you find yourself asking, “Could we do this a different, better way?” you would be well served to undertake a little business design thinking.

So, for starters, what are the five steps of design thinking?

There seem to be as many flavors of design thinking as there are consultancies in the world. But most of those flavors are variations on five common design-thinking steps: Empathize, Define, Ideate,Prototype and Test.

Step 1: Empathize

The purpose of this step is to thoroughly understand the people or customers for whom you want to improve a product or experience. It’s all about observing, interacting or immersing yourself into their world. Get into their heads. Walk a mile in their shoes. Pick your cliché. Just do it. The real benefit here is that you uncover how things really are experienced versus how they are assumed to be.

Step 2: Define

Here, you process the findings from your observations and interactions and synthesize a point of view as to what challenge you want to solve for and what moments in the customer experiences you wish to improve.

Step 3: Ideate

Now that you know what you’re solving for, explore the widest variety of possible solutions to your defined challenge(s). You should then begin to prioritize which of the ideas generated are at once desirable (people would want to engage with the solution), feasible (the solution is technically possible) and viable (the resources required to deploy the solution don’t outweigh its value to the company).

Step 4: Prototype

Find some way to make your proposed solution real—or at least real enough to evaluate. That could be something as simple as an artfully arranged collection of Post-it notes to a fully deployed test-market product launch.

Step 5: Test

You’ll want to put your prototype into the hands (minds) of people and evaluate whether you’ve created a satisfactory solution to the challenge you originally defined. From here, you might go forward with the “real” version of your solution, go back to any of the previous steps and iterate, or abandon the effort altogether.

You should understand that despite the linear presentation of these stages, you may find yourself circling back to any early stage, from any later stage, as greater levels of insight, nuance and plain old unforeseen issues reveal themselves. So how might applying design thinking within your company offer any real business advantage?

Design thinking can help improve every business process.

As useful as business design thinking can be in forwarding an enterprise-level change-management initiative, it scales perfectly well to small tasks like improving a work intake form or how invoices are routed for approval.

Design thinking increases decision-making transparency.

Integral to the design-thinking process is documentation and sharing of learnings and outcomes along the way. Empathize helps everyone know exactly who the solution will help. Define provides an objective challenge around which to build consensus, early. Ideation documents and lays bare all of the solutions in contention. Prototype and Test provide objective and empirical evaluations of ideas. So, when someone in another part of the company or who was simply not involved in the process asks why or how decisions were made, you’ll have a record.

Design thinking gets to solutions in a repeatable way.

A common issue facing many is that people aren’t always sure how to get started. Business design thinking provides a common starting point as well as a path forward. Further, the more that everyone in the organization understands the practice and value of the methodology, business design thinking can provide an accelerative influence over process improvement.

You can start right now.

While there are certainly greater benefits to formal business design-thinking training or working with a design-thinking firm, simply introducing the discipline of the methodology of design thinking can improve your business decision-making today.

Who should own the digital customer experience? Marketing or I.T.?

It’s an age-old debate.

In a perfect world, every department within every company, and all of the incentive packages of everyone working in every department making up those companies would be aligned around delivering a seamless, amazing digital customer experience. But in our professional experience, there are frequent debates (some of them quite fierce) about what department or group “owns” it.That debate arises from a number of factors. The most common, as you may have guessed from reading the opening line of this post, is misalignment between budget authority, project accountability, and controls.

It’s not a people problem. It’s structural.

Often, I.T. teams are incentivized to get a digital property launched quickly, at the lowest cost that satisfies the technical and functional requirements. Just as often, marketing teams are incentivized to envision amazing experiences that customers will love and that drive conversions and revenue before they consult about the resource ramifications of their decisions.

In that situation, inevitably the two teams get so far down their respective planning paths before coming together to explore opportunities and evaluate compromises, that each sees the others’ goals as an impediment to achieving their own. Without a massive change in incentive plans and budget controls, how can a company remedy these issues?

Your customers should own the experience.

The first step in answering the question of what department owns the customer experience is to understand the question itself is a distraction from the real purpose of what you’re building. The customer should own the experience. Or, at least, what it takes to make their journey as engaging and emotionally satisfying as possible, in a way that is also lucrative for the business. Elevating the customer to the theoretical position of owner forces decisions made by all involved parties to be evaluated on their experiential value as opposed to their relevance to departmental incentives.

You should create the vision statement together.

Continuing with the idea that you should establish evaluation criteria for project elements based on their experiential value for the customer, a vision statement provides just such a guidepost. This can be a statement as simple as, “To minimize the number of clicks required to find and purchase a product,” to something that is complex enough to cover the emotional requirements of multiple target audiences, or specific parts of the journey.The main purpose is to raise the bar of expectations jointly, so that every interested party—from Marketing to I.T., Customer Service or the C-suite, understands that when the inevitable new opportunity or compromise discussion comes up, everyone has a uniform standard of reference.

You should designate ambassadors.

Creating any substantive digital property, whether it’s an app or a website, can be a long, detailed process. It’s not practical to expect full teams to jointly handle major decision-making regarding every detail. But you can designate one or more people from each department to be on call to attend meetings where those major decisions are being made. It helps to ensure a balanced dialogue around the table, even if it’s not an actual vote.

Ultimately, customers don’t care about governance. They only care if it’s bad.

It’s easy in an enterprise, or any size company for that matter ,for the same incentive structures that help the company manage budgets and drive efficiencies to create unintended barriers between departments. And it is not unusual for those barriers to manifest in a series of small decisions that create larger issues for the customer experience. So, just remember, the customer owns the experience, and the rest of your decisions can only lead to amore fulfilling experience for them and a better business outcome for everyone in the company.

3 Counterintuitive Tips for a Successful Digital Transformation

3 counterintuitive tips for a successful digital transformation.

Digital transformation seems to be the catchphrase of the year. More and more, we receive requests from potential new clients asking for assistance with just that. But as it was with SEO in 2010, or apps in 2012, many of those requesters treat the idea of a digital transformation as something of a one-off effort. A box to be checked. Mostly a digital property purchased or redesigned. The truth, however, is that when done in a truly transformational way, the process of getting to real transformation is anything but box checking. If you’re tasked with leading your company’s digital transformation, following these three seemingly counterintuitive tips could dramatically improve your chances of success.

Stop using the word digital.

The phrase “digital transformation” implies something separate from the normal business of the company. It’s the kind of mental compartmentalization that we find leads to that check-box mentality. Try to substitute more meaningful words in place of “digital”—like, “business,” or “customer journey”, understanding, of course any truly transformative change will likely require a digital solution.A simple reframing like this increases lateral thinking and prompts more substantive conversations. In other words, you stop focusing on how you can improve systems within the business and start asking how you can improve the business itself.

Try writing the first draft of your plan without mentioning specific technology.

Technology is, in and of itself, a means to an end, not the end itself. And transformation, in and of itself, holds no inherent value for the business. Writing your plan—objectives, strategies, goals, KPIs, timing, expected returns, customer experience benefits, et al—without listing specific technology implementations forces you to examine and evaluate the business implications on their own merits.

At Magnani, this is part of our narrative-drive design thinking methodology. We explore and document the expected qualitative and quantitative outcomes of a successful transformation. We create a story about motivations and expectations, not hardware or software. We have found that once you build consensus around what that experience should feel like and deliver, the story can serve, throughout the process, as a touchstone for evaluating and prioritizing proposed technology implementations. Will this technology deliver the experience we outlined in our story as optimal for the business and its customers? How might it compromise that vision. Is any potential tradeoff worth it?

Try to disrupt your own business.

A few posts back, we outlined three proven paths to disruptive innovation. The point of that post applies here. Disruption is imminent. Technology is lowering barriers to entry in every industry. Emerging generations have little tolerance for adapting to cumbersome experiences. They expect and demand better.

If you can envision the most desirable customer experience, technology always finds a way.

If you’re charged with plotting your business’ path through the digital transformation process, you’d be well served to look beyond the traditional limits of an IT or Marketing department project. Start by creating a vision for an unsurpassed customer experience, then back your way into the technology. And ultimately you should presume succeeding in the challenge might boil down to two main choices: disrupt, or be disrupted. We advocate, unreservedly, for the former.

Looking For a Path to Growth? Change Your Perspective.

Whether simply beginning to map out long-term product or technology roadmaps, examining areas of exploration or innovation, analyzing channel strategy or simply wanting more from existing customers, every company would be well served by asking

What are my customers really buying?

The first big mistake most companies make is believing their customers are buying a thing—a specific product or service. Meaning, your basic widget manufacturer thinks they are satisfying a consumer's desire to own a widget. That frame of mind works well enough in most cases. You can survey the market fairly efficiently and determine the total current market for widgets. You can do a bit of google searching and know how many other widget manufacturers are out there. And finally, you can do a bit of math and quickly determine getting more or less of your reasonably fair share of the market. The problem with that perspective is that it tends to limit the range of growth ideas to those defined by their widgetness. Better widgets. Bigger widgets. Cheaper widgets.

Harvard Business School Clayton Christensen views consumer transactions from a different perspective. In his book, Competing Against Luck, Christensen posits products are not purchased, but rather “hired” by the customer to do a specific job. And if a company can unravel the relationship, it gives them more and better avenues along which to innovate—creating better candidates for the available job.

One example he cites in his classes at HBS is that of a milkshake company that hired Christensen and his team to help boost sales. Through a series of post-purchase interviews with customers at the milkshake purveyor’s retail outlets, Christensen was able to determine that for most buyers, the job the milkshake was hired for wasn't sustenance or even pleasure, per se, but rather a distraction during a long commute home. That the physical challenge of pulling a thick shake through a straw was the perfect distraction to help make the long drive more tolerable.

The company used that insight to create a new line of shakes, both thicker to last longer, and more entertaining through the addition of fruit chunks and other bits to deliver additional joy and keep drivers more “shake engaged.” Changing perspective and understanding what their customers were really buying—entertainment and distraction—opened new avenues for product innovation and growth.

Does my business really have to work this way?

The second big mistake many make is assuming the way you’re currently doing business is the right way and that the logical path to follow leads to doing more of it. As soon as you resign yourself to a specific channel strategy, technology platform, distribution model, et al, you close yourself off to potential opportunities and open opportunities for new market entrants.

Case in point: Casper mattresses. Prior to Casper, the mattress retail experience adhered to a few fairly strict experience guidelines. First, the buyer had to be able to try out the mattress in a retail showroom before purchase—usually under the watchful eye of sales associate. A mattress was too large a purchase to make blindly. Adding to that risk was guideline number two—retailers would do just about anything not to have to take returns on mattresses. And three, selling mattresses direct, online, wouldn’t be financially viable, due to the shipping costs.

In 2014, Casper turned literally every aspect of the purchasing process upside down. The mattresses ship to a customer’s doorstep in a highly compressed in a box of only 19 x 19 x 41 inches—keeping shipping reasonable. Customers are free to sleep on the mattress in their own home for 100 nights. If they return it, Casper picks it up and donates the mattress to a local charity. Truly a disruptive entrant. An article from Fortune nicely encapsulates the dangers of the incumbent being too wedded to their model:

At first, big mattress companies dismissed the “bed-in-a-box” trend as a niche phenomenon, hardly worth acknowledging; but that was before the startups grabbed 9% of U.S. market share. In August 2016, Sealy launched Cocoon by Sealy, a bed-in-a-box brand boasting minimalist fonts, an uncluttered scrolling webpage, and a price point half that of Casper’s. “It’s been a delayed reaction, but now they all have bed-in-a-box products,” says Seth Basham, senior vice president of equity research at Wedbush Securities. As for Casper, Basham adds: “They’ve already got a foothold. Now it’s a matter of how big they’ll grow.”

In what way are you failing customers?

Sometimes the toughest act for a company, or an entire industry, is to take a honest look in the mirror and document the flaws, warts and all. That means really taking the time to understand the end-to-end customer experience and cataloguing every point of friction, pain or frustration. Then looking at those points and asking, “If these flaws, no matter how insignificant they may seem, were critical enough to put me out of business tomorrow, how would I, and to what effort would I put forth, to solve it?” History has shown US market entrants who address issues that companies imagined were trivial can radically alter the competitive landscape. Sometimes that thing can be as small as an emoji.

Starting in 2010, Domino’s Pizza started looking in the mirror and being honest about what it saw, or rather, tasted. It admitted that its pizza was, shall we say, “less than tasty.” So, their first action was to admit it. To themselves and to the world, through their advertising. The second, was obviously to reformulate. Setting aside whether you subjectively agree that the outcome of that reformulation was an improvement, objectively the market began to take notice.

Continuing the examination, Domino’s started to look at every aspect of the ordering experience, leading ultimately to what I would say is the most frictionless ordering experience in their industry, the emoji order. Once you are in their system, your mobile number registered, the only thing between you and a fresh hot delivered pizza is one texted pizza emoji.

Was ordering a pizza via phone, the web, or a mobile app really a “fail”? Easy enough, right? Maybe. But given the number of pizzas ordered by those under the influence of any number of chemical substances every year, something as simple as an emoji just might substantially increase their chances of a completing that order successfully. And it’s a pretty entertaining experience for everyone else, too.

And addressing those seemingly minor, “fails,” has had a major positive impact on their stock price.

Ultimately, try to think like a customer… from another planet.

It’s never easy to see past our experiences or biases. But when a company can be deliberate about the process of self-examination and inquiry, and take on the perspective of an objective observer, opportunities reveal themselves.

Riding the Wave of AI

The wave of automation and AI disruption is coming. Is your business ready to ride?

We see new advances in digital automation and artificial intelligence (AI) nearly every day. Much like industrial robot technology reduced the number of available manufacturing jobs in the U.S. in the 1980s, the combination digital automation and AI is poised to disrupt virtually every industry at some point in the coming decade. The question is how can you position your company to be the disruptor, not the disrupted? 

Ask how a competitor using advanced AI could beat you at your own game.

Diagram your complete path to purchase on a white board. Evaluate every part of your business for any moment along that path where automation or AI facilitated decision-making could reduce process time, costs and user frustrations. Also look for any part of your path to purchase where customers drop off or fail to convert, and try to re-imagine those points with AI or automation assist. Take time to explore emerging technologies that could directly or indirectly affect your market, long term.Now, look at your market and ask, regardless of organizational, technical or monetary constraints. What would the ideal experience for the majority of your customer look like? What do your customers value/like/dislike about everyone’s current offerings?Finally, get your smartest people—from operations, sales, marketing, admin et al—and design your worst competitive nightmare. What special expertise would they offer? What advantages would they have over your business? How would they price? What capital expenditures would they need to build their infrastructure, I.T. or facilities? 

Figure out what it would take for them to get off the ground.

Once you decide how your new competitor would operate differently to steal your business, try to document what it might take to get a company like this going. What resources would be needed? What infrastructure would be required? What would the employee mix look like? How quickly would they be able to steal your business? How could they offer a parity or better product or service than you do now, cheaper than you can? 

Create a script outlining what they would say to sell against you.

Be brutally honest. Talk about where your business is vulnerable. Ask what potential benefits of this new competitive offering that your customers would respond to that you aren’t able to match. 

Surprise, you just outlined a business plan.

In those three (obviously multifaceted) steps, you’ve outlined the product/service design. You’ve begun to outline a viable financial model. And you’ve laid the foundation for marketing and sales messaging. 

Remember: if you can imagine this, so too can a real competitor.

With every new technology, it’s only disruption when you’re the incumbent. For everyone else, it’s simply opportunity.