Research
Adapt or Fail: The New Business Imperative
At the heart of business agility is customer experience, and that will drive organizations forward and guide them to adapt (or fail)
January 09, 2018
Research
At the heart of business agility is customer experience, and that will drive organizations forward and guide them to adapt (or fail)
January 09, 2018
For many businesses, the ability to adapt more rapidly to market changes is existential: adapt or fail. Dramatic? Not necessarily. Only 12 percent of the Fortune 500 from 1955 were still around in 2016. Over 50% have disappeared since 2000.
To understand the current state of business agility and the role customer experience leaders and practitioners play in existing efforts, we surveyed members of the Customer Experience Professionals Association (see Methodology). Three themes emerged from the survey results, which provide guidance for organizations and customer experience professionals seeking to accelerate and mature their organization’s adaptive advantage.
When we asked CX leaders and practitioners about the strategic importance of increasing business agility, 61 percent said their company’s ability to quickly adapt is a top strategic priority.
Even more respondents (71 percent) expect greater agility to translate into improved customer experience. And the top benefits of “agility” are faster time to market (52 percent) and increased innovation (47 percent).
When asked about who owns a company’s efforts to improve velocity and adaptability, arrows pointed everywhere—but mostly to the fact that there is little consistency in ownership. Top contenders include the chief executive officer, chief operating officer, and customer experience leader, but no single role topped 28 percent. For nearly a quarter of organizations, no one owns the effort to improve adaptability.
There is significant buzz around agility, but that appears to be limited to talk and not much actual practice. Only 17 percent of survey respondents thought their company’s efforts to increase business agility were mature. The efforts that do exist are mostly new, emerging within the past three years. Nearly of half characterized their company’s efforts as “preliminary.”
About 3 in 4 respondents said that fewer than half of their company’s teams use any sort of method to accelerate business agility.
When we asked about the maturity of basic elements of a business agility framework such as strategy, process, and culture, most remained at a relatively low level.
Respondents pointed to culture, inflexibility of legacy systems, and lack of leadership alignment as top challenges their companies face.
It’s folly to quickly deliver things customers don’t care about or won’t pay for. CX teams spend a significant portion of their days trying to understand the ins and outs of how customers think, and what they need – not only from the company, but also in the broader context of their lives.
When focused on internal problems like increasing sales, reducing churn, or cutting costs, companies tend to craft self-serving rather than customer-serving solutions. Customer experience professionals solve issues by focusing first and foremost on customer needs. Additionally, because customer experience design processes borrow heavily from design thinking and Lean methodologies, they inherently focus on rapid experimentation and testing to refine ideas, fail fast, pivot, and succeed more quickly with less risk.
This helps create alignment and accountability across an organization. Techniques like customer journey mapping help to visually show how different departments, from back office to front, as well as third parties that are part of the service ecosystem, come together—or don’t—to deliver customer experiences. Without that systematic perspective, agility efforts simply get derailed because the interconnected parts do not work together.
While organizations may struggle with business agility, most CX leaders have built the foundational capabilities for creating an adaptive advantage. In particular, there are five things CX leaders are already doing today that can help their organizations accelerate toward agility—but the efforts may be hiding under different names or longstanding practices.
Gone are the days when an annual or bi-annual relationship survey was enough to provide firms with a pulse on customer or client sentiment; the world is moving too fast. By increasing the speed at which companies gather and use customer insights, CX leaders can use those insights more quickly to make better business decisions.
Fortunately, CX pros have an increasingly powerful set of tools to help their executives quickly understand how customers are feeling and test the success of any initiative. Modern Voice of the Customer (VOC) systems like Qualtrics, Medallia, MaritzCX, and Clarabridge allow rms to collect, analyze, format, and distribute real- time customer feedback—sliced, diced, and mixed with operational data. Vendors like these enable firms to evolve from only capturing transactional or relationship insights (for example, how did the call go?) to monitoring “journey analytics” that shed light across entire end-to-end customer journeys. Insights about the journey from the customer perspective across touchpoints drive overall experiences and brand advocacy.
Additionally, text-mining capabilities in tools like Clarabridge and Verint enable firms to unlock a goldmine of insights hidden in contact center transcripts, CRM notes, social media, and other repositories of customer commentaries about a company and its products and services.
Even real-time guerrilla research on a budget has become easier, faster, and cheaper. The CX lead at a food services firm used Google Docs to conduct a rapid “diary study” that provided her company with very actionable insights into the motivations and experiences of different persona types. Online community panels from Vision Critical, Fuel Cycle, and Lithium allow firms to very quickly gather feedback from actual customers prior to and during a design process. Want to go beyond existing customers? Tools like Google Surveys and Amazon’s Mechanical Turk give researchers access quickly and orderly to individuals who will provide feedback on ideas.
Finally, a broad range of digital tools give CX and other teams rich feedback earlier in a design process that expose potential failure points and increases the likelihood of successfully meeting customer needs. These tools include, Tandem for persona development and journey mapping, Axure for digital prototyping, and UserBob to capture user video.
One of the quickest and most powerful steps to increase business agility is to empower front line employees to immediately take action on insights. How? Simply distribute insights from an enterprise voice-of-the- customer (VOC) system and establish a “closed-loop” process (e.g., follow up with customers according to established thresholds). Most modern VOC tools have robust, built-in capabilities for distributing that information automatically and then managing follow-ups. Informing and empowering the field and frontline employees with that data allows them to respond and adapt behavior based on how customers have perceived previous interactions—and avoid making things worse by cross- selling to an already unhappy customer whose problem has not been adequately resolved.
All these tools give CX pros a powerful arsenal to rapidly unlock known and unmet customer needs across a design process, whether that’s a Lean process or web site redesign, a new product launch, a marketing campaign, or a new contact center functionality.
Perhaps the biggest challenge for firms with so much information about customers is translating those insights into meaningful action and getting leadership alignment.
Respondents noted their company’s decision-making process for funding initiatives was high on the list of challenges to becoming agile. Lack of alignment was mentioned as a challenge for 41% of survey responders.
There are three powerful ways that CX leaders succeed in creating meaningful motion.
While many basic CX programs have established closed-loop programs based on transactions, more advanced efforts like those at Barclaycard and Lloyds Bank focus insight collection and follow-up at a customer journey-level. This ensures overall customer success that typically transcends a single transaction or channel.
A broader way to boost business agility is to establish a governance model based on customer journeys. When CX leaders provide a view of a firm’s processes and capabilities through the lens of the end-to-end journey a customer takes to accomplish a goal, it sheds tremendous light on gaps and opportunities for improvement. Firms like USAA, Barclaycard, ING, and Lloyds Bank are using this approach as a lens to provide context and direction for teams, as well as hone the allocation of resources and strategic investments. From this, organizations can align scrum or other cross-functional teams to these journeys.
A third way to enable action is to re-invent the project management office (PMO), moving from “project-based” work to “outcomes-based” work. Projects presume that one can determine the right answer up front. In reality, as ING’s CIO states, “It’s not just about moving from A to B, because once you hit B, you need to move to C, and when you arrive at C, you probably have to start thinking about D.” Outcomes should be broadly defined within the governance group and the organization’s North Star. “Fall in love with the problem you are trying to solve, rather than any given solution,” as design guru Karen Hansen puts it.
A well-crafted North Star is critical to any effort to increase business agility because it binds teams together in chaotic, dynamic, and resource-constrained environments with a common purpose and end-state vision. A good North Star represents what leaders want to achieve and why.
It provides a touchstone for ensuring that activities and decision making about resource allocation stay focused on desired outcomes and enables more effective collaboration across diverse teams.
A good North Star provides a few critical elements: 1) a purpose that transcends products and services to focus on customer outcomes; 2) inspiration to employees and external partners; and 3) measures of success that customers would use to judge overall performance.
Aging, monolithic systems can hamper a company’s agility and speed to market. Inflexibility of legacy systems was the second-highest challenge mentioned. But, it is costly and time-consuming to build new services.
A “high-performance architecture,” accelerates a company’s ability to benefit from evolving technology by building products and services in ways that enable disparate systems and data sources to communicate adaptively.
CX leaders should partner with IT to build a high- performance architecture with three key characteristics:
DevOps is a culture and process that helps firms deliver digital services to the business faster with lower risk. It works to break down traditional silos and speed delivery with cross-functional collaboration, automated testing, and shorter development cycles.
This kind of modular architecture enables the continuous development and delivery of digital services required in a rapidly evolving world. It structures business process or service applications as a collection of loosely coupled, independent services. This enables small, autonomous teams to develop, deploy, and scale their respective services independently.
The event-driven architectural concept is key to building Internet of Things (IoT) solutions that capture, distribute, and innovate around events and data from distributed devices such as smart meters, servers, watches, fitness trackers, and many others. It manages and orchestrates communications and dependencies between components of architecture. These events can represent anything from a customer updating a profile, to an HVAC system triggering a maintenance report, to a printer cartridge indicating it is low on ink. Services can evolve over time and subscribe to events that are relevant to them. If a service organization within the company has access to event data, such as a low ink cartridge, it can trigger an action—in this case, a reorder.
Ongoing leadership engagement and change management are the linchpins of any transformation to agile operations, so it’s no surprise that culture was the top concern for companies to become more agile. Leaders need to set an example by continuously communicating the strategic goals and tactical needs to make agile a successful effort in their enterprise. For example, Symantec’s leaders were trained in agile and ran the management team in an agile fashion because they felt they were moving too slowly and becoming a bottleneck to change.
The real magic, however, comes from transitioning from reactive mode to a proactive culture that experiments incessantly, testing ideas with customers and iterating across processes. A “change agent” program can help fuel such culture change, and so can the use of multidisciplinary “teams” or “squads” that break down traditional silos. Many organizations are building such teams of five to 10 people who can create sprints around aspects of the customer journey. Humana takes this concept a step further with a CX innovation lab that includes close to 100 people from across the organization.
If third parties beyond the company influence customer experience, it is important to engage the broader ecosystem early in the design processes. A prime example of this is in the health insurance industry, where the doctors in the network can influence a patient’s insurance experience. If someone has a bad experience with a doctor, it can reflect on the network. CX leaders such as Audi and Häagen Dazs engage the ecosystem’s third-party partners from the beginning when designing what a good experience looks like.
The survey results were clear: Greater business agility is a strategic priority, but efforts to improve agility are immature, and there is little consistency in organizational leadership for such initiatives. For almost a quarter of companies, no one is in charge. This presents an opportunity for customer experience professionals to step up, engage the organization in creating adaptive advantage, and illustrate how core CX initiatives can lead the way.
Customer experience professionals are in a good position to lead progress to improve corporate agility. Chances are, the initiatives they already have in place or are developing—from listening to the customer, to studying and influencing customer journeys, to creating the right technology infrastructure—are among the most mature efforts within companies today. Placing CX at the helm of creating adaptive advantage reinforces the importance of putting the customer at the center of a company.
In July and August 2017, West Monroe surveyed members of the Customer Experience Professionals Association about their perceptions of efforts to improve business agility. Approximately 85 members responded. Respondents classified their primary roles as being customer experience (71 percent) and customer insights (23 percent).
Founded in 2011, the Customer Experience Professionals Association is the premier global non-profit organization dedicated to the advancement and cultivation of the Customer Experience profession. Its more than 4,000 members represent all major industries.
When focused on internal problems like increasing sales, reducing churn, or cutting costs, companies tend to craft self-serving rather than customer-serving solutions. Customer experience professionals solve issues by focusing first and foremost on customer needs.