By name for NewVoiceMediaBy Maria McCann, Co-founder and Chief Venturer at JoHo Ventures, for NewVoiceMedia

Innovation and Growth:Testing for Success

Think of any industry today and it is difficult to find one that hasn’t been disrupted in the last 5 years.

From how we watch TV to how we book a holiday; how we monitor our health and fitness and even how we order a taxi. Every market is going through rapid change.

As consumers, we demand the tools to do the things we want for ourselves but also immediate support when we need it; we expect constant improvement that is delivered in a way that is friction free; and we want a seamless experience from the brands we engage with, peppered with just enough reminders of how important we are to them.

Technology plays a crucial role. Thanks to leaps of innovation from bi-decade in the 1960’s increasing to every 5 years, the cycle of innovation is more rapid, resulting in falling costs for better tech, in this digital age.

Sell more. Serve better. Grow faster.

It’s worth remembering the iPad that spawned a new way of communicating and using devices had its 5th birthday this April.

It’s not just technology that is causing this seismic shift in consumer behaviour. Mary Meeker, of Kleiner Perkins Caufield and Byers, has coined the phrase the ‘Internet Trifecta’ ; the critical mass of Content, Community Engagement, and Commerce that are now primary influencers in consumer choices. Meeker highlights the success of US brand Houzz as an example of this new model of engaging with customers to drive revenue and growth.

4/12

70K

400K

120K400K

5.5MM

23MM

3.2MM2.5MM

Consumers Content (Photos)

Commerce (Products)

Active Professionals

7/12 10/12 1/13 4/13 7/13 10/13 4/141/14

Source: Houzz, Consumer defined as unique monthly users, Active Professional defined as active users of Houzz with a business profile

Houzz - Content (Photos) / Community (Professionals + Consumers) / Commerce (Products), 4/12 - 4/14

It is this shift from a traditional market relationship between a business and its customers into a new era of a social relationship, primarily played out in the digital space, that is causing Organisations of all shapes and sizes to realise they need to adapt and innovate in order to survive.

Source: Market vs Social Relationship Model

Supply Chain

Costs

Profit

Sales

Transactions

Brand

Market Components

Trust Confidence

ViralityEngagement

FamiliarityLoyalty

Social Components

So what does all this have to do with Customer Engagement?

The new world relies on a mix of delivering content in the right context at the right time, enabling Consumers to connect with the Organisation as well as other like minded Customers, and the ability to transact seamlessly across their channel of choice.

One could therefore argue that Customer Engagement is the cold fusion for customer loyalty with innovation as the energy force that is driving it.

The starting point of innovation: Understanding it betterWe like to think of innovation as one person having a unique idea that changes the world, but in reality innovation comes from a human desire to solve a problem and the ability to bring it to life. Most of the ‘game-changing’ products, features or services are the result of many people collaborating.

However, innovation is regularly throttled due to Organisational structures that are designed to safely guide long term operational efficiency and profitability. HBS Professor, Clayton Christenson has written about the ‘innovators dilemma’; How to balance the need for an Organisation to continually innovate and iterate, with operational stability. Both are needed in order to survive.

In a customer service environment, innovation is often driven by either budget challenges, or a need to differentiate from competitors but the basic desire to solve a problem and break new ground remains.

Japanese Academic Noriaki Kano highlights the need for continual innovation in the customer experience in his ‘Kano Model’. Based on the principles that a customer proposition will possess ‘hygiene’ components that will reduce loyalty if they are absent and unexpected ‘delighting’ components that will result in a surge in positive consumer behaviour if they are present.

Presence of CharacteristicsAbsent

Dis

satis

fied

Satis

fied

Fulfilled

Must Be (Hygiene Factors)

Expected Delighters eventually move to

Performance & then Hygiene

Unexpected (Wow Factors)

Perform

ance Satisfiers

Del

ight

ed

Cus

tom

er S

atis

fact

ion

Source: Japanese Academic Noriaki Kano's 'Kano Model'

Kano’s model recognises that ‘Delight’ components will reduce in satisfaction over time and become hygiene, therefore driving the need to continually produce something more than existed before.

Key Ingredients to Cultivating Successful Innovation in Customer Engagement

1 Fall in love with the problem

Using something like a Kano Model can help identify blockers to delivering the important hygiene and delight characteristics.

But identifying the problem isn’t enough; we need to understand the problem enough to articulate it in simple succinct terms. If you can’t tweet it, you probably don’t understand it enough!

2 Set a clear and testable hypothesis

Once you have a handle on the problems you want to solve, its time to set a hypothesis.

For the purpose of proving a concept, a hypothesis is usually more preferable to a business case, mainly because the outcome is binary. Either we prove or disprove something and we aren’t, at this stage, binding it to a theoretical Net Promoter Score or Revenue Point.

An example of a service-related hypothesis might relate to a new practice, process, channel or technology.

I would also encourage creating hypotheses around the employee experience as this often has hidden gains. Take an everyday problem; the amount of toggling between systems a typical Customer Service Agent has to do.

Source: NVM

8%

27%10%

21% 34%

One

TwoMore than four

Four Three

A hypothesis should be a statement of the desired outcome and be testable. If the problem I am trying to solve is to increase time spent with customers, then I might use this as a general hypothesis:

‘If CS Agents don’t have to toggle between systems, they will spend more time with Customers’

Creating a clear hypothesis can galvanise a team into having a connected purpose for creating an innovative solution.

A testable hypothesis would look like this:

‘CS Agents will speak to more Customers if we remove toggling between systems’

3 Have clear solution design principles

Having clear principles from which to design your solution is crucial to its success. Without them the solution runs the risk of being vague and ineffective.

This is an example of a design principle stack used to build a prototype ‘smart contact centre’.

It shows what the solution should deliver from the start, what it could deliver over time and what should be avoided.

Source: JoHo

From Start

Never

Over Time

Smart Notifications

Key Results

Qualified Agent

Autonomy

Collaboration

Marginal Gains

Agile

Key Partners

Mobile

Averages

Simplistic Metrics

Instructive Skill Training

Annual Objectives

Hierarchy

Silos

Long-Transformations

Cubicles

Legacy Servers

Paper

Retrospective Data

Contextual Relevance

Intrinsic Motivators

Quantified Team

Personalised Learning

Aggregated Benefits

Ambidextrous

Connected Cloud

Service Platform

Smart Machines

Data-Driven Telepathy

4 Nurture your chosen solution

Often the hardest part of proving a concept is to turn it into a reality. Based on the Rogers adoption curve model new practices or processes are often not rapidly adopted because the implementation was poorly considered.

Silicon Valley has a famous story about Xerox and their failure to capitalise on some of their innovations. They were considered pioneers in the 1970’s pioneering a plethora of personal technology products including the mouse and the personal computer. But soon after Xerox scaled switch to a big focus on mass-delivery. It skipped the nurture stage. Apple picked up the helm and is today credited with converting those products into both an innovative and a commercial success.

Key to building and incubating a proof of concept is taking an agile over a traditional waterfall approach. The Stanford School of Design advocates to ‘start building’ as soon as possible. The longer we plan for all possible variables, the more we reduce our options to create a truly innovative solutions.

Time

Innovators

Early Adopters

Early Majority

Late Majority Laggards

16%34% 34%13.5%

2.5%

Source: Based on the Rogers technology adoption model

5 Cultivate an Autonomous Environment

Without people, innovation simply cannot happen. It relies on the ability to use experience and insight to make connections that will yield new ideas.

Empowerment only goes so far to address this, in part because it is usually a set of pre-defined powers handed from manager to employee, usually to manage a cluster of processes. Again something that can throttle new ideas.

Autonomy starts from the other end. With an individual able to apply a purpose they are connected to, skills that are continually honed and information they can analyse to help drive their decisions.

Many fast-growing companies recognise that giving their employees time to work on new ideas can create an organic innovation hub at a relatively low cost. Google has been doing this for a number of years, enabling their employees spend up to 20% of their time working on solving problems that were important to them. The result? Google Maps, AdSense and Gmail.

6 Agility is more important than moderate success

There is no doubt that the Customer Engagement arena is in a phase of disruption. Just looking at the channels by which customers are choosing to engage are changing rapidly. Social Media is the current poster child of this shift with a recent Salesforce survey highlighting that 70% of Organisations expect this channel to increase in the next year.

It’s very rare for innovation to have a linear path to success. Reacting to rapid change means having the mechanisms to quickly and efficiently dispose of practices that aren’t working.

Using data and insight to understand the impact of the practices that drive positive and negative customer contact is key to success. If the cost outweighs the benefits, its time to let it go!

The biggest barrier to agility can be seen in a recent report from the Economist insight unit where almost 50% highlighted a lack of qualified staff as a barrier to delivering good service.

Source: Salesforce.com Figures have been rounded up for simplicity and ease of viewing.

How are inbound channels changing?

Social Media

SMS

Email

28% 43% 22% 6% 1%

Telephone (Live Agent)

Letter

Web Chat

Telephone (Self Service)

Other

Fax

25%

20%

11%

10%

8%

4%

5%

2% 31% 20% 47%

34% 37% 25%

22% 61% 11% 2%

35% 52% 2% 4%

24% 67%

23% 30% 32% 5%

55% 23% 2%

33% 38% 4%

Decreasing Greatly

Decreasing Slightly

No Change

Increasing Slightly

Increasing Greatly

Source: JoHo

Agility is like a muscle and it needs regular exercise. If Organisations are to keep confidently ahead of their customers, developing their agile employees is key.

Q: What are the top barriers to delivery of good service in your industry? Which do you expect to be the top barriers in 2020?

2%

17%

6%

8%

15%

17%

7%

50%

39%

4%

Other, please specify

Insufficient capacity to handle customer demand

Lack of investment in staff / training

Difficulty in matching customers in-store experience with virtual experience

Lack of clearly defined service standards

Lack of investment in technology

Poor staff morale

Increased complexity of products / services

Lack of clear service goals and processes

Lack of qualified staff

15%

2%

15%

9%

13%

17%

23%

26%

47%

29%

2020

2011

agents fail to answer customer questions 50% of the time.

50%

7 Linking innovation to Organisational Assets

Once we have proven our hypothesis and nurtured our solution through to proving it works, its time to build the case to commercialise its success.

According to a poll by Harris Interactive Customer Service agents fail to answer customer questions 50% of the time.

One could argue that 50% of those Customer Service resources are spent managing problems that yield no return. Imagine if we could convert 5% of those resources into identifying and designing solutions to half those problems. Suddenly the value that Service team creates has increased evidentially.

Traditional metrics such as AHT and Cost per Contact are important links. However its also worth looking at bigger Organisational Metrics such as retention, loyalty, revenue and virality. Other emerging metrics to consider are Reputation Index, Data Equity, ARPU and Customer Neediness.

1. The new generation of brands recognise the importance of innovating in customer engagement

2. More structured Organisations need to actively cultivate an environment where Innovation needs to be exercised in order for it to be successful

3. The best solutions are well understood problems with unwavering principles behind their design

4. An agile approach is key to iterating your innovation

5. Link Organisation Assets to your solution

In Summary:

And remember…...it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that is able best to adapt and adjust to the changing environment in which it finds itself.

(Charles Darwin, Origin of Species)

About the Author

Maria McCann, Co-founder and Chief Venturer at JoHo Ventures, has built regional and global customer service experience strategies and operations for a range of well-known brands. Maria is known for delivering at a strategic and operational level against a backdrop of hyper-growth or change.

About NewVoiceMedia

NewVoiceMedia powers customer connections that transform businesses globally. The leading vendor's award-winning cloud customer contact platform revolutionises the way organisations connect with their customers worldwide, enabling them to deliver a personalised and unique customer service experience and drive a more effective sales and marketing team.

For more information visit www.newvoicemedia.com.

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