Monthly Archives: June 2012

The Disruptive Innovation Machine

Identify, Differentiate & Interact with… Everything

Look out your window. Thanks to four disruptive forces, everything you see has the potential to be a business opportunity, if you keep three words in mind: Identify, Differentiate, and Interact.

The Disruptive Innovation machine lists these four disruptive forces around the edges (not coincidentally where disruption happens first) and has three empty boxes for you to add a phrase to correspond with each essential word.

That is, what can disruptive innovation help your customers IDENTIFY? How can it help them DIFFERENTIATE this person… place… thing… idea… event from all else? What options can it offer them to INTERACT with it?

Let’s walk through an example of how you might use the Machine.

You could start by thinking of a specific segment of customers. For this example, let’s imagine you run a busy doctor’s office and the segment you are targeting is busy tech-savvy patients.

The Machine will help you figure out how your office could leverage wireless devices and one or all of the disruptive forces that are starting to rip apart existing business models. These forces (Digital Sensors, etc.) are shown at the outer edges of the Machine.

Write a noun in the first box, which stands for Identify. You are trying to combine three words to describe an innovative new service you could provide to your patients. Let’s use “DIET.” This means your service will be identifying proper diets for patients.

Now, we need an adjective for the Differentiate box, which means on what basis will you be helping patients differentiate between diet options? We could write easiest or cheapest, but for now we will write “HEALTHIEST”.

Finally, we need a verb for the Interact space, which represents how patients will access the results. You could write demonstrate (for video demonstrations by a nurse). Let’s stick with “DEMONSTRATE”.

As you use this tool, try various combinations, and try to include the disruptive forces in your answers. For example, a doctor’s office could list different ways to use Digital Sensors (noun, in the Identify box) to better serve patients. It could encourage certain patients to wear a wristband or other device that monitors the patient’s health and reports any anomalies to the healthcare provider.

Likewise, the physician could leverage Pervasive Memory to utilize patient’s sensors data over a period of months and years. This doesn’t have to involve more work for the doctor; numerous apps are flooding the market that accomplish such feats. The trick is mostly for healthcare providers to recognize these disruptive forces and incorporate the best of them into interactions with patients.

The Digital Innovation Machine can produce countless possible innovations, and many of them will generate millions or billions in profits over the next few years. At first glance, you might underestimate the power of this tool. We’d be happy to discuss it, if you like. This sort of thinking is also described in detail in our book.

Reward Employees

Does Your CEO Want to Be Smart?


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In the interest of efficiency, predictability and cost savings, CEOs have allowed the mind-numbingly frustrating treatment of customers to continue unabated. Whenever we mention the title of our book – Smart Customers, Stupid Companies – heads immediately nod. Everyone knows that companies act stupidly.

Smart wireless devices could change this, but haven’t. Why? Because such devices have been embraced by customers but resisted by companies. They’re not uniform, not bulletproof, not officially approved by IT.

Plus, smart wireless devices alone can’t change the archaic compensation systems that reward division managers for competing against each other rather than cooperating to best serve customers. They can’t communicate with company databases that live in silos, or that are hamstrung by outdated software and/or design.

We could go on, but here’s the point. Unless and until your CEO says, “Acting smart is our #1 priority,” it won’t happen. This is not something that can be achieved by mid-level managers lacking a mandate or a budget.

Acting smart will require massive changes. It will require your firm, no matter how large, to act like a startup.

But if your CEO isn’t on board, you’re just going to have to get used to the Land of Stupid.

Disruptive innovation

Is Your Firm Ready for Simultaneous Change?


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One of the biggest challenges in looking forward two, five, or more years into the future is that everything changes at the same time, not just the elements on which you are presently focused. Social media experts think social media will change everything. App developers think apps will change everything. But in reality, everything is changing at once.

Here’s the safest prediction we can make: Everything will get smarter.

How you react depends on your industry and your company. If you wish to compete on price and sell low-quality commodity products, then you can safely ignore much of what we have written in Smart Customers, Stupid Companies. If you wish to maintain your margins and be a market leader, you will need to act smart, to leverage sensors, to support the emerging Physical Web, and to develop a strategy for interacting with customers while they simultaneously interact with everyone else.

You will need to replace your dumb touchpoints with smart ones. You will need to become obsessed with saving your customers time, money, and effort. You will need to provide customized services. You will need to do all these things, most likely in a radically different way.

Most importantly, you will need to focus with laser-like intensity on the intersection of initiatives that benefit your customers and benefit your firm.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Disruptive innovation Modularize Products and Services Pervasive Memory

7 Ways to Tell If Your Company Is Stupid


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For our new book, Smart Customers, Stupid Companies, we spent eighteen months studying the growing chasm between smart customers and stupid companies. The former are increasingly empowered by wireless technologies, computers and sensors that are, well, everywhere. The latter mistakenly think they can get away with the same old sullen and slow approach.

Truth is, our whole economy is changing radically because of disruptive forces like digital sensors and the spread of the Web from computer screens to the physical world.

Here are seven tip-offs that your company is acting stupidly:

1.) Two employees in a row ask the same customer for his or her account number. Any company that can’t figure out how to pass an account number from one representative to another won’t be able to deliver innovative service.

2.) Your company can’t record or remember what a customer says. Customers tell us how often they get the sense that the customer service rep or sales clerk is only listening to them with one ear. They notice that she has no way to record or share your comments. Why would a customer waste their breath talking to a firm that’s too stupid to remember what they say?

3.) Your company spends more money selling than serving. Do you spend more money on advertising than service innovation? In today’s era of radically higher customer expectations, that’s stupid.

4.) Your products come with instructions longer than a postcard. Sufficiently advanced technology is indistinguishable from magic, said science fiction writer Arthur C. Clarke. A toddler can figure out how to use an iPad, because doing so is intuitive. A product that needs lengthy instructions isn’t worth money.

5.) Your company closes, ever. We are not talking about a cute little standalone gift shop. But if a 5,000-person company can’t figure out how to help a customer solve a problem at 2 a.m., you don’t understand that 24/7 wireless access means “always open.”

6.) You hunt customers like prey. Pretty soon, companies will be able to track customers everywhere, even inside their own homes. With great power comes great responsibility; a smart firm remembers information for customers, not about them.

7.) Your team doesn’t even know how to spell “personalization,” never mind practice it. Smart companies have figured out how to deliver personal service for the same price as mass-produced products. By the way, personalization is the reason you won’t give your wife your cell phone when she loses hers.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Anticipate Customer Needs Disruptive innovation

Don’t Close, Unless You Want to Close Forever


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There are still many businesses where customer service and support is provided only during certain hours: if you call after, say, 7 p.m. Pacific Time, technical support is closed. Seriously? Does the firm really expect that none of their products are installed or used after 7 p.m.?

“CHANGE IS THE LAW OF LIFE. AND THOSE WHO LOOK ONLY TO THE PAST OR PRESENT ARE CERTAIN TO MISS THE FUTURE.”
— PRESIDENT JOHN F. KENNEDY

These sort of time-based restrictions are going to disappear for companies that successfully embrace the changed notion of customer service and customer experience.

Not because it suddenly becomes profitable to stay open 24/7. But because when you compete with firms like Zappos, which operates their warehouse 24/7 even though it’s not the most efficient way to do so, the notion of being “closed” will become suicidal from a competitive perspective.

Competitors like Zappos recognize that the value of delighting customers who order after midnight with a shipment that shows up on their doorsteps literally hours after being ordered can’t be measured by “maximized picking efficiency.”

They’re measuring the value of providing “a wow experience, which (their) customers remember for a very long time and tell their friends and family about.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

7 Ways to Radically Improve Customer Service


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What if …

1. Your customers booked customer service time through an online calendar, and reps contacted the customer at the scheduled time?

2. When customers opted to leave a message rather than wait on hold, they could choose a specific call back time (and actually get called back)?

3. You connected each product customers used to an analytical service at the company, so that reps could more quickly diagnose problems and offer customers relevant guidance?

4. Using such a service, you solved customer problems remotely, minimizing or eliminating the need for a call? Even better, you solved problems before customers were aware of them.

5. You could eliminate data silos, so that all customer information is instantly accessible to any rep?

6. Ratings and specialties of specific service reps were posted online, allowing customers to choose (and rate) who serves them? What if rep compensation was tied to these ratings?

7. Voicemail trees were posted online, and you allowed customers to click at a specific point in the tree to initiate the call, thus skipping the entire navigation process?

Of course this list could be much longer, but this gives you the basic idea. Now that you have a starting point and a roadmap, where can you disrupt your industry?

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Three More Ways to Disrupt Your Industry


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Sensors make dumb products smart, gathering information from the environment that you can use to gain competitive advantage and to better serve your customers. Through sensors you can learn how customers actually use your products, and guide them in gaining greater benefits from them. For example, instead of just building a thermostat to control the heat in a building, you could add additional sensors to determine the way air circulates through the building and identify energy inefficiencies.

Sensors can detect minor problems in your products before they become major problems, and allow you to fix a problem before your customer is even aware of it. This could reduce your average response time for a problem from four hours down
to immediately.

Sensors can create additional revenue streams from existing products. An appliance company could add weight sensors in a refrigerator and create a new business automatically replenishing food items as soon as they run low. A B2B manufacturer could install sensors in its distributors’ warehouses and do the same.

2. Let customers make or assemble their own products.

The disruptive forces we write about in Smart Customers, Stupid Companies push each industry closer to personalization, because tailoring services for customers is just part of acting smart. The closer you move production to a customer, the greater the opportunities to personalize.

Lego toys have often been used as an example when explaining mass customization, since standard pieces can be combined in unique ways to create unique products. But even Lego realized some years ago that it could allow customers to design their own products online, then have the necessary piece shipped to them. The more modular you make the pieces that combine to create your products, the greater your ability to allow customers to combine individual parts in unique ways.

There’s a whole spectrum of possibilities. You can manufacture a product yourself, and then allow the customer to superficially customize it. You can make a product and design it so that customers customize it in a substantial manner; this describes perfectly how customers install apps on smartphones, tablets, and computers. The challenge is to conceive of ways to leapfrog your competitors and generally accepted industry standards.

At the same time, technologies such as 3D printing raise the increasingly real possibility of locating mini “manufacturing plants” at the customer’s location. You could literally have your customers make the entire product.

3.) Sell an ongoing service, not just a product.

In recent years, printer companies shifted their focus from selling printers to selling ink. But most customers still have to remember to buy more ink. What if printer companies sold printers that never ran out of ink, and charged on a per page basis?

Our not-so-secret wish is for a smartphone service that sells guaranteed phone service, rather than a phone that stops working eight months before your contract expires or the phone is “eligible for upgrade.”

Many people would gladly pay 30 cents a mile for car transportation, rather than have to buy a car for $35,000.

From your company’s viewpoint, selling a service locks in an ongoing relationship and revenue stream. In many industries, the manufacturer has no relationship with the end user and simply makes a sale every few years, at best.

This is an extremely vulnerable position in which to be, and turning products into ongoing services may offer significant benefit not only for your customers but also for your firm.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

A Perfect Storm of Disruptive Innovation


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Smart customers want to talk to, access, interact with, and ask questions of your company. Right now. From wherever they may be.

We live in a world in which whether you are out in the woods, at a client’s business, or in your living room, you can connect information and processing power with people and devices that need it right here and right now.

This is a giant departure for everything that has come before in business, life, and the world. Today, unless there’s something wrong with our phones or computer, we are almost never without access to guidance, to others, to ideas, and to possibilities.

As the word “disruptive” suggests, this change is not happening in a steady and predictable way, but rather in a manner that most threatens established organizations, which are slower to change. The main question is pretty simple: Can your firm anticipate the impacts of these forces so that it gets smarter faster than competitors and customers?

These four forces are not operating in isolation…the opposite is true: They are building on each other. This creates countless opportunities – but also dramatically raises the bar for delivering “ideal” (much less truly differentiated) customer experiences:

▪ Social Influence means that the opinions and experiences of countless other people come between your firm and its customers.

▪ Pervasive Memory makes it inevitable that companies will begin to profitably leverage the data generated by the trillions of interactions and transactions made through digital devices.

▪ Digital Sensors expand exponentially the scope of actions, events, and behaviors firms can sense…and to which they can respond.

▪ The rise of the Physical Web has begun. Today, we are linking objects and locations in the real world like we do on the Web.

These forces will require every business to rethink, and in many cases reinvent, their business models. They are not unpredictable, but potent and unavoidable.

“What level of customer experience must we provide, and how will we do it?” becomes a life or death question for senior executives, and the time to answer it is now.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon.]

Smart customers

Smart Customers Acquire Superhero Powers!


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Any customer with a portable digital device and the right combination of free or low-priced applications can now be something close to:

All-knowing…

having instant access not just to facts, figures, prices and product specifications, but also trillions of sensors around the world that help us understand better everything that happens in our lives.

Multilingual…

able to communicate in any language.

Omnipresent…

able to respond instantly as products and opportunities become available that match pre-set triggers we have instructed our applications to watch for.

Incredibly insightful…

spotting patterns in data and emerging trends because we have immense computing power at our fingertips and because we can literally immerse ourselves in this data in dozens of different ways.

Ultra-aware…

using devices to augment what we see, hear and smell so that we can deepen our experiences and better pursue our goals.

Super sensitive…

noticing sights, sounds and changes that happen far away – on far larger and far smaller scales than customers could ever have noticed before, thanks to the sensors we described above.

Smart customers are here right now

We’re not talking about sometime in 2018. Smart customers are here right now. They can “see” traffic jams two miles ahead – and avoid them. They can “sniff out” delicious food being prepared 5.4 miles away – and reserve a table at that top-ranked restaurant in an instant. They can “hear” the falsehoods in the voice of a pushy, unethical salesperson and recognize the precise factual errors he has stated – and locate elsewhere exactly the price, features and delivery we require.

You haven’t seen anything yet

At present, most customers are content to leave a trail of personal data behind them. They give Facebook permission to not only store but also broadcast vast amounts of data in their personal profiles. They give online merchants permission to remember their credit card number, transactions and web browsing activity. They don’t remove cookies from their browsers, making it possible for advertisers to track their moments online and target them with specific advertisements.

But what happens when customers take control of their data? This is inevitable, because there is a huge (Google/Amazon huge) opportunity for a new entity to be 100% on the side of customers, making it possible for them to share – and take back – all of the data related to their activities.

Imagine selling a $100 item to a customer online, but being prohibited by both the customer and the law from storing any information about that transaction. Your firm will be flying in the dark, having to start each quarter from scratch, not remembering to whom you sold products last quarter.

A perfect storm is approaching. The technology exists to make data portable. The profit incentive exists for venture capitalists to fund aggressive start-ups who see the immense potential of giving customers full control over their data. Most importantly, the majority of established companies don’t use customer data to benefit their customers. They sell instead of serve.

When this storm hits, numerous companies will be disintermediated. Entire industries will be transformed. Some companies will go from having superficial relationships with their customers to having no relationships. For them, loyalty will be a thing of the past. Since it is easier to establish a culture from scratch than reinvent the culture of a large organization, new competitors will surface that possess cultures that are truly customer-focused. These cultures will invent new services that no inward facing, self-absorbed, siloed enterprise could imagine.

[Adapted from the book Smart Customers, Stupid Companies by Michael Hinshaw and Bruce Kasanoff, available now on Amazon. Image by Flickr user rr_graphic_design.]

Disruptive innovation

7 Ways to Disrupt Your Industry

Thousands of readers have shared our book excerpt at FastCompany, 7 Ways to Disrupt Your Industry. So we decided to make life easy for you and create this handy wallet card.

Can a wallet card really be disruptive, you ask? Good question.

Anything that keeps you focused on building services for smart customers is disruptive. If it helps to have something to pull out and look at a few dozen times a week, so be it.

If you really want to build something big and profitable, we explain ten – count ‘em , ten – disruptive ideas in Smart Customers, Stupid Companies.