Why is it that most processes in companies are build to what I would call: ’mitigate the negative behaviour of bad customers’??
Let me explain this one. You all know these scenario’s: Before somebody can become a customer, she has to pass a complicated credit scoring system. This system is build not to help identify the ‘good’ customers, but to weed out the ‘bad’ ones; We set up control mechanisms, so customers can not combine 2 types of promo; You let them sign a 10 page contract; We make huge costs to divert customers to an online portal not because they have 24/7 access, but because it is cheaper than connecting them to a call agent. We have huge disclaimers to avoid complaints, refined dunning processes to get the money back from non-paying customers, triple identification,…
The problem with this is, that the majority of your customers are not trying to screw you. So you end up with a customer experience that is designed to rule out surprises for your company coming from 5% of your customers, but causes huge delays, frustration, waiting periods,… for the 95% of your good customers.
Result: huge loss of money, your good customers don’t feel threaded as they should and your organisation ultimately becomes build around fear and ways to avoid issues instead of creating added value.
What customers do you want to work for every day?
Reading ‘Reinventing organizations’, I stumbled upon a remark by Jean-François Zobrist (FAVI) between the difference between Complicated systems and Complex systems.
Although the difference is quite straightforward when you think about it, we often tend to mix them up with a huge impact on business.
Let me use the metaphor used by Zobrist to explain the difference:
An airplane is a complicated system. There are millions of parts that need to work together seamlessly. But everything can be mapped out: if you change one part, you should be able to predict all the consequences.
A bowl of spaghetti is a complex system. Even though it has just a few dozen “parts”, it is virtually impossible to predict what will happen when you pull at the end of a strand of spaghetti that sticks out of the bowl.
Now what is the impact on business you say?
A lot of businesses are organized to cope with complicated systems. When we talk about complicated systems, we talk about ‘predict & control’. Organizations that are build to predict the future, to create an upfront strategy, to allocate budgets based on this strategy & to follow up KPI’s and the budget by committees and controllers on the road to the predefined goal.
Nothing wrong with that if you are indeed working in a complicated system.
Everything changes when you are operating in a complex system, with lot’s of uncertainty in the ecosphere and within your company. Predict & control proves to be a really bad way of acting in these systems. Evidence points towards a more ‘sense & respond’ way of working in these systems.
Which system do you think your business is really in? And how is your business adapted to it??
Odds are that you invest a lot of time & people (or money on strategy consultants) to dig into historical datasets, in order to craft a great strategy. Nothing wrong with defining where to put your money & effort in the coming years based on objective figures you say? No it’s not. But what happens a lot in reality is that these figures are more used to ‘prove’ that the strategy that already has been chosen is the right one. And then there is the main question: do you really believe that the past is a good reference for the future (your +3 year plan) ? Forget about innovation when you go for this approach!
On the other hand, when companies shift to the delivery part, they seem to forget that here customer behaviour is a good proxy for new customer behaviour. This is due to the fact that all other variable are much more stable because they occur at the same time: You offer the same products, your customer base operates under the same economical conditions, your competition base is constant,…
So stop over-proving your strategy with analysis and put your bright data-analysts & managers on customer data analysis for ‘run’ purposes.
Nice extra : these effort will start having an impact on your bottom line today, instead of in 3 year.
A lot of companies set up a dedicated innovation department, expect the world of it and then… get disappointed by the results.
The reason is simple: typically these departments are organised to work on business changing and money generation projects which tend to be… well large.
To make it very clear: they should be there and they should be filled with some of your best people, but innovation is more than only this. It is also about your team member having an idea on how to get your insights faster to the sales team, on how to save 1000 Euro by doing something different, on just testing out that new product tweak with a real customer (yes, he might be surprised, but he will not kill you for it), on trying to use a new tool to get organised better, on sharing that one thing you learned from that book/blog you read.
Innovation is about going out their, alone or with your team and challenge the status-quo of your day to day operations.