Allow Users to Experience Magic

At our weekly business breakfast meeting, we had a new member - a seasoned entrepreneur who provided some great insights to our discussions. While telling us a little about himself - he described how a number of years ago he started following a childhood dream of being able to fly his own plane and got his pilots license. He made a great comment (I am paraphrasing):

"Sometimes I get nervous about when people ask me about what type of engine I have in my plane. To be honest, I don't know, and don't really care. Flying is not about the technology, its that magical feeling of leaving the ground."

This comment made me think about how companies should view their products/services. Its not about whats under the hood but the customer need that it is satisfying (basic utility, emotional needs, social needs etc) Some will want to know and see whats inside, but most just want to make their lives, job, task better through its usage. Think about how you can make a product that allows your customer to experience the 'magic of leaving the ground'.

The Right Channels to Your Customer

The Pew Internet & American Life project has published a new study about the growing digital divide across America. According to John B Horrigan, 31% of America fit into the Elite tech user category, but almost half (49%) fall into the category of 'few Tech Assets'. So for all the hype about Web 2.0, many still do not use it or even care to use it.

Obviously age and other demographic differences play into how people slot into the different groups, but still, in an age where internet advertising is growing rapidly, are companies leaving a large portion of their consumers on the advertising table? There are more channels than every before to reach consumers. As a business, its important to not just follow the hype about internet growth. Be sure you understand who your customers are and how you can best reach them. Second - treat this as an opportunity do draw these customers into a meaningful conversation through new media channels. If they see value in using more interactive channels provided through Web 2.0, they they will begin to use them.

From Brand to Lovemark

This concept has been around for some time, but I just found it, so I am sure that their are others out there like me. It is called Lovemarks and is what Kevin Roberts considered what happens beyond the brand.

•Lovemarks are built on Love and Respect.
•Lovemarks inspire Loyalty Beyond Reason.
•Lovemarks are owned by the people who love them, not by companies.
•Lovemarks aren’t just Irreplaceable. They are irresistible.
•Lovemarks can be everything that people care deeply about.
•Inspirational Consumers decide what’s a Lovemark

In the new economy as more people are taking control of content, and media the concept of lovemarks is something for every business to think about. As stated in Kevin's bullets above, its not something you can just put in the budget for this year, on on next quarters goal list. Its something you have to work at one customer at a time, but think about the payoff.

User Control Balanced With User Capability

In the new economy it seems like giving users more and more control is the way to enrich the user experience. Although mostly applicable to software, I feel that this is happening in many business outside of software, but often users find out that more control isn't exactly what they need.

In our business we just started a new development sprint that includes the start of some new functionality that we have been hashing through for a few weeks now. Its not a technical problem but a business problem, where we are trying to build functionality meant to handle the needs of different types of users through a single model. The architecture to support the model wasn't near as difficult as trying to determine the most effective business model and whether or not the model would/will work for our customers since there are no existing frameworks in this space.

A post by Kathy Sierra entitled How Much Control Should Users Have sums up much of our more recent conversations along with efforts to strike a balance between over-engineering and flexibility to handle different user needs. Its a great post which I encourage you to read, but a key take away for me was the following summary statement:

So we should be trying to give users more capability and control...and encouraging them to take it. But we must balance that with the learning they need to take that responsibility without being overwhelmed.

Like everything else, it all comes back to user education. The more we help them learn and improve, the more control they can handle... and appreciate. By putting the user first, it's our job to give them the responsibility they want, but only when we know they're ready to handle it.

This is exactly what we are facing - this balance between building functionality that will enable them to feel empowered and control, but also not confuse the heck out of them when their first see it. In our case we have had numerous discussions about how to help ease users during their transition. Some of the items we came up with in a short brainstorming session were the following:

1. online help driven by user wants over forced usage (similar to how turbo tax works where they explain what a function will do, and then asks you if you need this, and want to know more)
2. interactive demo/help to walk them through actual business scenarios - not technical functions
3. building the application so that the user is not required to use the feature to get up and running.
4. have the application do some of the work by default until they are ready to take more control on their own.

Its not the results here that are important - its the practice of actively going through this exercise. I feel that the same type of exercise can and should be performed in all businesses - especially services based business. We often assume that the user is always right and/or wants full control over decisions, but there is a difference between being empowered and being in control. If they wanted full control they likely wouldn't not have hired you in the first place.

Think about your users and different needs they may have so that you can strike the right balance between control and capability, and how you can recognize traits associated with these needs to ensure the highest level of value to your user/customer.

The Franchise Model Is Not The Only Model For Growth

I am currently about half way through The E Myth Revisited by Micheal Gerber. The book published in 1995 is considered a classic read for the entrepreneur, and while I have found many concepts in the book to be right on, I feel that others are showing their age and/or don't work as well in the new economy.

One of these items is his concept of the turn key revolution, and franchise model to grow your small business. In the (only) presented model the goal of course is to design repeatable processes and procedures for the lowest common denominator. Yes, this has worked well for companies like MacDonald's, but these concepts do not apply as well for business in the new economy. Yes, if you are trying to create and grow yet another fast food business, grow a carpet installation business or other manual labor based business this book will provide you some decent guidance, but unfortunately the running dialog with a woman who is trying to grow a pie baking business just doesn't ring home to me and likely any other entrepreneurs building thought/knowledge-based businesses.

Profitability does not have to mean growth in numbers, and being forced to build a business that can be executed by the lowest common denominator. Remember that small is the new big in the new economy and business model innovation is what is propelling the next wave of profitable companies. Think about ways you can grow without having to create a huge unskilled labor force following procedure manuals. You don't have to look at technology companies - think about successful companies such as Southwest Airlines. Yes, there are procedures, but the employees are taught to be entrepreneurial, and solve problems on the front lines that satisfy and create value for their customers. Even in our startup we selectively implement process and procedures in certain cases as we grow and depending on the skill of the people doing the work, but the goal is not to build a turn key/franchise. It is to create efficiencies and build business value with the smallest team possible - not create a monotone business model that can be 'stamped'.

Seth Godin blogs about a concept he calls sheepwalking. I think of it as the lemming effect. If you hire people to just follow the procedures thats all you get. If that is all it takes for your business to be successful, great, but in the new economy I would like to find a company starting up that will be successful with this model. Compliance doesn't alway create exceptional customer server and definitely does not create new innovative business value for your company. Gerber states that the franchise model is how you as a small business owner/entrepreneur get away from having to do the work yourself, but in times when innovation is what is driving successful companies and you have built a shop or franchises full of lemmings, ultimately you are still stuck in the driver seat forced to be the one that helps the business grow. No you aren't doing the physical work, but if everyone is taught to follow the manual, who is left to innovate to take the business to the next level?

Growth doesn't have to always come from adding bodies, and building to the lowest common denominator so you can expand a business of flat thinkers that follow the status quo. Look for rhythmic thinkers. Those that eb and flow with the melody of business. Those that don't get frazzled with a sudden change in tone or pitch, and quickly adjust if they fall out of key. Those that can beat to your drum, but also know how to adjust when the song changes.

Internet Evolution

Putting the Web into numeric releases has become very popular to indicate a new evolution on the Internet, although somewhat of a misnomer. It implies a specific point in time for transition (like a software release), when it seems more like a loosely defined time period (like geological periods) characterized by the by the thinking and technology of the time. Maybe we should come up with names that are less finite, however until that happens we seem to be stuck with numbers. Web 2.0 is the current period of evolution that we are in and although there are still Web1.0 companies around, most are either evolving or will become extinct, as newer breeds of applications take over as survival of the fittest takes hold.

The next evolution known as web 3.0 is also thrown around, and often by people that have no idea what it really means (mostly people in the media), but is it their fault or a fault of the people that are supposedly driving the evolution? Maybe the technical people driving the next evolution forward need to come up with better ways of describing it, or maybe they shouldn't be driving it at all... For example - Web 3.0 has also been called the semantic web. I consider myself a technically savvy person, and have done some research into this arena, but in the beginning I had trouble understanding it once you get beyond the elevator pitch, [Websites that are smart about what they are and what they contain], and I still have trouble describing it to others in any type of detail. It sounds great, but what does it really mean? These evolutions need to be described in ways that communicate to people the value that future evolutions can offer, which will in turn likely move us in that direction more quickly.

Seth Godin, talks about Web 4.0. No - its not something you will find exhaustive writing about in the WC3, however after reading his post, although I am not a big fan of the 'release notation' I feel like I have a better idea of what 4.0 could be. He describes it not with a definition statement or a long white paper, but with a series of needs that he (and likely many others have) that could be solved by a future evolution of the Internet.

... it is about activity, not just data, and most human activity takes place offline....

Example of one of his listed needs:
I'm booked on a flight from Toledo to Seattle. It's cancelled. My phone knows that I'm on the flight, knows that it's cancelled and knows what flights I should consider instead. It uses semantic data but it also has permission to interrupt me and tell me about it. Much more important, it knows what my colleagues are doing in response to this event and tells me. 'Follow me' gets a lot easier.

As a whole, its not clear nor succinct, however to me a list of needs does a better job at stimulating thought, than any technical definition someone could come up with, primarily because it give businesses and entrepreneurs a starting point for innovation. Who needs a definition really and besides, why try and box in the future? If we move to create business value, the evolution will happen and we can worry about creating a definition for it after we get there.

Customer Value Stream Thinking

Michael Porter first came up with the concept of a value chain framework as a model to help analyze specific activities through which a firm can create value and competitive advantage. Value creation however is often vague ... value to whom, or from what perspective? In a world focused on customer value, we should be thinking about a customer focused value stream. But how do you do that?

1. Define your customer. With many companies today, the term customer is used very broadly. Robert Simon says in his book Levers of Organizational Design "By labeling everyone as a customer, the organization becomes confused about its purpose and whom it is designed to server". He states that organizations can be effectively designed to only serve one master. I like his definition of a primary customer as a group that routinely transacts with the company through open markets (and therefore has choice), and two, finds value in the firms outputs. Although other groups are important, having one primary customer allows the firm to make appropriate trade offs.

2. Now that you know who your primary customer is, think about the typical value chain where you have inbound logistics (inventory, receiving etc) at the beginning and Marketing, and Service at the end. Then, try flipping it around, where you may have your customer facing components at the beginning of your stream instead of at the end. This will help you think about your value stream in terms of a pull model (based on customer needs), instead of the traditional push model.

3. Think about your value stream components in terms of if, and how they deliver value to your customer. To do this, first use some LEAN principals to understand value-added processes - Suppose your customer had a complete view of all processes carried in your company... which ones would they be willing to pay for as part of the end product cost, and which actually contribute to the value (product or service) delivered. Next, think about an objective statement for each of the components. Often companies think about process objectives from an internal perspective, so try and shift your thinking to that of a customer. For example, lets take a typical value stream component such as 'marketing'. A traditional objective for this component might be "Sell products to our customers". Flipping the value stream in reverse as noted in #2, you might think of marketing as "Identify and Stimulate Demand". This is better, but still an internally focused objective. What might be a customer focused objective for marketing? Possibly something like "Effectively communicate offers (product & price) that are relevant and the appropriate to my needs".

This task can often be challenging. For instance, I once worked for a business unit in a large financial institution where we focused on offering unique products to customers for paying down bad debts. These customers would often rather not pay at all if given a choice, so trying to think about customer objectives on debt collection processes was an interesting exercises, but one that gave us a new perspective on the 'value' we were offering our primary customer. I might also point out that we were not only market leaders in the debt recovery space, but also had customers who were often happy about paying down their debt. I attribute this highly to customer focused thinking within the organization.

So let me present an example of what I have just talked about. I was doing some business strategy work for a friend who owns a small financial services business, and started to think about a potential value stream for him with customer focused objectives. To the right you see the sample value stream model I created. It is more than a one-time thought exercise. It can also help instill the right kind of thinking in your organization, and act as guidance when decisions are being made, and trade offs being evaluated as the organization carries out its business. Does what you do meet your customer objectives?