Monday, February 24, 2014

Why customer experience is the ultimate innovation

In Maslow's hierarchy of needs, food, shelter and clothing are much more important and fundamental than self-actualization.  That is, it's hard to reach nirvana if you lack the basic essentials.  But is the opposite true?  If you reach self-actualization, do the basic essentials remain as important?  There are certainly a number of deep thinkers in several religions or belief systems who will stress the importance of self-actualization over the basic necessities.

Is there a corollary in innovation?  The simplest innovation to pursue, the most basic, is product innovation.  Almost anyone can dream up a new widget or a new feature for a widget.   This means that product innovation is the most well-understood, the easiest to understand and implement.  And the easiest to copy.  Meaning it is rarely sustaining or fulfilling.  A company that focuses only on product innovation steps on to a treadmill that never ends, and in fact only accelerates over time.  Any good innovator must climb the innovation Maslow's hierarchy, moving from product innovation to service innovation to business model innovation, and then to the ultimate self-actualizing innovation, customer experience innovation.  Why is customer experience innovation so profound?

Products, services, even business models can be copied and reproduced, but a company that truly understands customers and creates experiences that matter to those customers becomes a virtual extension of those customers.  The company that creates meaningful and valuable customer experiences gains trust and acceptance, they move from being a "vendor" of replaceable products to a partner of valuable experiences.  They gain trust and acceptance. 

Further, truly engaged customer experience is exceptionally difficult to copy.  It has to be part of the DNA of an organization, sustained over time.  It isn't cheap and may require the firm to do things on occasion that don't make sense to the short term bottom line.  Look around at how few firms have a truly unique, valuable and differentiated customer experience, and the value proposition it drives.  Compare for example my recent experience with Windows 8, with the new "tiled" experience.  While I'm not crazy about the "look and feel" the issue that really disappointed me is that Microsoft expects me to create a Microsoft Account for every app that I want to run on my device.  This is a truly negative experience, and it causes confusion and frustration rather than trust and delight.  Add to that the fact that my device, while expensive, still requires me to acquire a word processor or office suite for a princely sum, and fight to add my favorite applications.  Why would you make it difficult for an experienced user to acquire and use your new products?

Compare that with Nordstrom's, perhaps the king of customer experience.  Nordstrom's, and other customer experience innovators understand that customers vote with their feet, and that firms need to win the right to call a customer a partner or consumer.  Far too many companies take customer needs for granted, much less trying to understand the experiences customers crave.  How many processes and internal frameworks does your organization have that are focused on efficiency?  How many of those processes or decision frameworks are focused on customer experience and delight?  I'll venture to wager the ratio approaches 99:1.

Everyone wants to be unique and different, yet they all pursue product innovation, the simplest form of innovation and the easiest to copy, when what they need to do is win customers.  And while customers are fickle and want the latest products, many are just as interested in experience and may even sacrifice some product delivery for a better experience.  I know I will.  I'm currently delayed at an airport waiting for Delta to take me to a client site.  And tomorrow I'll receive an email from Delta's customer satisfaction system.  They don't ask about my customer experience, don't want complaints or feedback, just want me to complete the form.  Check the box and move along.

If you want to be really different, really unique and have an unassailable differentiator, focus on delighting your customers through their interaction and experience.  Yes, you still have to get the products right, but you need to do that anyway.  That's table stakes anymore.  What many firms can't see and don't understand is that products aren't the top of the value solution.  Customer experience is.
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posted by Jeffrey Phillips at 2:27 PM


Blogger Gary said...

This all sounds good. But, for a company that is new to innovation (at least as a formalized process) can the leap be made straight to customer experience innovation? Or should companies build their innovation skills first by focusing on product and service innovation and then moving to business process and finally customer experience innovation after they have built strong innovation capabilities?

4:54 PM  
Blogger ChrisM said...

I don't see it as a hierarchy at all - just different components of an ecosystem. Sometimes you may have a great experience but find you're getting beat on features. What's critical is an understanding of which parts of the ecosystem are your strengths and which parts are most valued by your customers, then decide where you want to focus your innovation energies.

5:17 PM  

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