Three More Ways to Disrupt Your Industry


Outsmart your competitors. Buy the book


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


Outsmart your competitors. Buy the book.

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!


Outsmart your competitors. Buy the book.


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.

Reward Employees

CVPS Smart Grid, Stupid Paperwork

How to Annoy Customers While helping Them

The smart grid is coming to Vermont, and Central Vermont Public Service Corp (CVPS) has offered rebates to its customers who use either Rate 11 or Rate 13 power-saving meters. These are older technologies that will be rendered useless unless a new device is added, so CVPS is reimbursing customers for the expense.

So far, so good.

To get the rebate, you have to fill in a rebate form and mail it with a copy of your expenses. But if you use both Rate 11 and Rate 13 meters, you have to fill out two different rebate forms, with exactly the same information.

By the way, only one of these forms is available on the CVPS web site.

Why is CVPS forcing customers to essentially fill out the same form twice? Because, says one of their customer service reps, “We need both forms.”

Thanks for the explanation.

(In the spirit of complete disclosure, CVPS has some very nice people working there, and in most cases they are very accommodating.)

Digital Sensors

Throw your keyboard out the window

200 times more accurate than Kinect?

Leap Motion, a San Francisco startup, just pre-announced its 3D motion control system. It sits on your desk or counter or table (in the photo, it’s that little thing in front of the laptop) and allows you to control your computer with your hands. No keyboard or mouse needed.

They say it is 200 times more accurate than anything else on the market, which means Microsoft’s Kinect for Xbox 360. It seems to detect tiny motions made by the tips of your fingers, which would allow you to write, draw or paint in thin air – or to highlight very small sections of a page.

And thus the race to reinvent the world begins.

Put one of these in a store, and customers no longer need to touch the same surface as 400 people before them.

In the same way that toddlers often figure out how to use the iPad immediately, using your hands to control a digital device can become utterly intuitive.

If you like something, touch it, grab it, pull it, or slide it into a bucket. Don’t like something? Swat it away.

The device will cost $70 and should be available “early next year.” You can pre-order one now.

Leap is looking for developers.

Nuff said.

Anticipate Customer Needs Reward Employees

JPMorgan Chase investor/customer disconnect

Who matters more: investors or customers?

“Just because we’re stupid doesn’t mean everybody else was,” said CEO Jamie Dimon in announcing that JPMorgan Chase had lost at least $2 billion in some very big, very stupid “hedges” against risk.

During the bank’s annual meeting yesterday, Dimon was generally supported by investors. One even told Dimon, “We think you are doing a fabulous job.”

But I suspect customers might not agree.

If you have your life savings of $27,408 sitting in the bank, it might not comfort you to hear the CEO simultaneously say a $2 billion loss was manageable and argue against regulations designed to force banks to take less risk.

You might yearn for the days when bankers were cautious, and community-minded, and perhaps even humble.

You might wonder how a bank could lose that much money protecting itself against risk.

You might wonder what could happen if a crisis happened unexpectedly, when the bank can incur losses this big even as our economy slowly gets better.

You might wish the bank spent less time trying to make even more money each quarter, and more time protecting your savings.

But most of all, you might yearn for better service.

Saving Best Buy

How to turn imminent failure into lasting success

Last week, RetailCustomerExperience.com interviewed me for an article on Best Buy, and it got me thinking about the retailer’s plight.

Best Buy’s biggest mistake has been to fail to look far enough down the road, and this is a problem that it shares with most management teams. They did not realize how fast disruptive forces would turn their stores into liabilities instead of assets.

Their second mistake was failing to segment retail customers. The big box retail sales model will increasingly only work for the customer segment that could be called Premium for Now. That is, they are people who will pay a premium to get an item now.

But all the other customer segments – and there are many potential segments – are now using Best Buy as a showroom for Amazon and other merchants. In fact, Best Buy is doing Amazon a great service by accommodating the needs of segments such as See Before I Buy.

Innovator or not?

Best Buy has been the leader when it comes to succeeding in a category that is doomed. They are the best at selling electronics through big box stores. Their fate may be similar to those of the former best suppliers of dry ice, kerosene lanterns and black and white TVs.

It’s a mistake to think of a company as being innovative when in fact they have been superb at execution. Innovation and execution are at opposite ends of the spectrum. Innovation requires the ability to ignore convention. Execution requires the ability to ignore distractions.

Best Buy focused brilliantly on its business model, but has not spent enough time thinking outside of the “box.”

How can Best Buy better compete with the Amazons of the world?

Best Buy has to segment its customer base, and develop value-added services for each segment. For example, they might convert some stores into membership clubs for the Premium for Now customers who will pay more for instant access to products. For cautious or nervous buyers, they could offer Instant Replacement of any product that breaks. They could become a Learning Center at which customers could learn programming, edit videos, or even play games against each other.

This would require a massive cultural shift, from that of mass market retailer to a nimble and highly responsive customer experience provider. It’s not at all clear Best Buy can accomplish this change. But cursed – or blessed – with their real estate holdings, this is what Best Buy has to do to thrive. In other words, they have to start acting a lot more intelligently about the needs of their customers.

Anticipate Customer Needs Reward Employees

Welcome Baseline readers

How stupid companies treat customers

Baseline Magazine did a great job of turning some of our key messages from the book into a web-based slide show.

Take, for example, their #5 slide, shown at left.

I’ve been extremely disappointed to see many companies use CRM as an opportunity to automate old marketing strategies, instead of launching more effective new strategies.

I once helped conduct a study of CRM that was sponsored by CFO Magazine. We learned that the number one indicator of CRM success was whether a particular CRM initiative had specific benefits to customers.

This may sound obvious, but it turns out that financial executives concluded most CRM initiatives have zero benefits for customers. Those that do, succeed. Those that don’t, fail.

It really is that simple.

Digital Sensors

50 sensor applications

50 examples what you can do with digital sensors

Want to better understand what your company could do with digital sensors? Libelium has a solid list of 50 sensor applications.

The applications fall into the categories of Smart Cities, Smart Environment, Smart Water, Smart Metering, Security & Emergencies, Retail, Logistics, Industrial Control, Smart Agriculture, Smart Animal Farming, Domestic & Home Automation, and eHealth.

The list is a bit slanted towards B2B applications; there are countless more applications that could be of service to individuals. But it’s a great start, and the list has numerous links to related articles.