All Posts in Strategy and Tactics

|In: Industry Commentary|Last Updated:

Here’s an adjective/noun/object combination I never expected to type: I just read an excellent analysis by McKinsey.

Usually, when I read something by McKinsey my reaction is how useful it would have been five years ago. Not this time.

The article in question is: “Raising your Digital Quotient,” by Tanguy Catlin, Jay Scanlan, and Paul Willmott.

While you should read the original, as a public service here are some key takeaways:

  • Not every company can transform global marketplaces: Thank you! It’s easy to spot a business that’s succeeded in spectacular fashion, generalize from its success, and then recommend everyone else do the same thing. Temptation and good logic, though, rarely coexist.

The magic buzz-phrase I most often read about “digital” (and when did “digital” become a noun?) is that it “enables new business models.” Strikingly absent from most of these sources are examples of truly new business models. Even the oft-mentioned Uber is little more than a broker … a business model best described as ancient.

McKinsey’s advice for most companies is to figure out how digital stuff make them better at the business models they currently rely on.

  • Customers: McKinsey points out, and KJR completely endorses the notion that one of the most important aspects of digital disruption is how digital stuff affects or transforms how customers research and decide on products and services. Digital strategy should be built around determining how a company can best integrate itself into this new pattern.

Simple example: The big deal about Uber is supposed to be how easily you can book a ride by clicking on a mobile app. In the Minneapolis/St. Paul metro area I easily book taxis with an app called iHail … and I get a ride from a fully insured driver who has a chauffeur’s license. Had the U.S. taxi industry figured this out instead of relying on lawsuits and lobbying, I wonder if Uber would have made the inroads it did.

  • Culture overcomes: Without taking anything away from the importance of the digital technologies themselves, a “strong and adaptive culture” can overcome a lot of lacks.

The more I consult, the more convinced I am that no matter what the business change, culture is the lead story, not one factor among many in reducing an organization’s resistance to change.

  • Integrating the unintegratable: Not really unintegratable, but almost always unintegrated, are data about customers from internal systems and data about customers from the social web. Put them together — demographic and purchase history from your internal systems, combined with search patterns, consumption data, and psychographic tells from customers’ on-line behavior — and you can predict what customers are likely to want to buy far better than with either in isolation.
  • Process automation: McKinsey is more diplomatic about this than what follows:

Once upon a time, before the reign of “internal customers” put a halt to IT’s habit of provided technology leadership, conversations about the role of computers was how to automate business processes.

Whether or not there’s truly a causal relationship between the two events, at roughly the same time internal customers became IT’s reason for being, process optimization disciplines like Lean and Six Sigma supplanted the assumption of full automation.

It’s time for the past to become the future. For true processes (regular readers will recall KJR’s ongoing crusade to distinguish between processes and practices), everyone involved should assume full automation is possible, and design the process accordingly. As part of the design, kick out exceptions for human intervention when needed.

But assume you can fully automate at least the 20 percent of the cases that account for 80 percent of the work. This will inevitably reduce cycle times by orders of magnitude, reduce error rates to trivial fractions of their former selves, and cut incremental costs to the bone.

What McKinsey also doesn’t say: Do not, under any circumstances, let savings fall to the bottom line. Either use them to reinvest in your business, or to reduce product pricing. Like that annoying song about poker, it isn’t time to count your money yet — you’re still playing the game.

  • Agility applies to more than just Agile: Apply incremental “test-and-learn” (to use McKinsey’s phrase) everywhere. Or if you, like me, prefer OODA theory, increase the speed and reduce the scope of your loops. There comes a point when evidence trumps analysis. So emulate direct marketers — stop theorizing and test, test, test. It’s cheaper, and it works better besides.

There’s much more to the McKinsey paper than this. Take the time to read the whole thing.

Even though it lacks the inordinately valuable commentary I’ve added in the above summary.

Comments

|In: Office Politics|Last Updated:

I’m writing these words in Denver International Airport. It’s 8:50pm. My flight, scheduled to leave for Minneapolis an hour ago, is delayed until 10:20pm.

Last week I wrote unkind words about the International Air Transport Association and the airline industry in general. They wouldn’t stoop this low to get revenge. Would they?

This isn’t another diatribe about the IATA, although I do have one more suggestion: Instead of tinier carry-on bags it might consider setting a seat engineering standard. What it is: Movable seats and a pay-by-the-inch ticket price. Pick your seat, pick your legroom, and seat spacing dynamically and automatically adjusts to fit.

Okay, there are probably less expensive ways to achieve the same goal, but this would be really cool, don’t you think?

Speaking of preferring really cool for cheaper solutions that achieve the same ends, how much is your Marketing Department spending on social media analytics to find out what your customers are saying about your products and services?

I’m not saying this is a bad investment. Far from it, although I’m far from unbiased. My employer, Dell, has been a pioneer in mining the social web to understand what customers are saying — so much so that Dell Services offers this as one of its consulting specialties.

So: Want to understand what your customers are saying about you? Great idea. Using analytics to do so? Call me.

But before you invest another dime in social media analytics, with us or anyone else, start with a cheaper, easier, and more reliable data source: Customer Service.

Customer Service is the Rodney Dangerfield of business departments. It gets no respect. Way too often its key metric is minimizing the cost per call, and as a result it’s too-often the place your customers go to be turned into your competitors’ customers.

It could and should be a lot more: The place Product Management goes to find out how to perfect your company’s products, and where Marketing goes to turn dissatisfied customers into your company’s best social media evangelists.

Once upon a time there were two semi-reasonable excuses for not doing this. The first was organizational: Customer Service doesn’t usually report to either Marketing or Product Management. I lied about it being a semi-reasonable excuse

The second was that it would have been way too labor intensive, a matter of listening to a statistically significant sample of all of those calls that are “recorded for quality assurance purposes.”

Which isn’t exactly untrue, merely too-limited an explanation. They’re recorded to improve the quality of the Customer Service department, not of the products Customer Service services.

Okay, I lied about that being a semi-reasonable excuse, too, because the only labor needed would have been to ask every Customer Service agent to forward links to the recordings of those calls Marketing and Product Management might find useful.

But imagine this isn’t feasible for some reason. This is, what, 2015? And you’re what, IT? Have you got a deal for them.

See, in 2015 all those recorded-for-quality-purposes conversations between customers and customer service representatives are digital data, and the technology for transcribing them to text isn’t all that expensive. It isn’t perfectly accurate, but you don’t need perfectly accurate. You need accurate enough.

Accurate enough for what? For mining the text, of course. You don’t even need a lot of sophistication to mine it. Mostly you need a list of key words and phrases Marketing and Product Management can use to draw inferences.

This isn’t rocket science. It isn’t even data science. Yes, it’s a couple of blocks outside IT’s comfort zone of databases, screens and reports, but this being 2015 and all, any IT department that limits itself to databases, screens and reports is limiting itself to the ante in a game of winner-take-all poker. And any CIO who waits until Marketing or Product Management asks for something like this has mistaken the job for order taker at Denny’s all-you-can-eat breakfast buffet.

Why does this even have to be said?

The tragedy of IT history took place in the early 1980s, when CIOs believed the so-called thought-leaders who told them IT’s job was to be “business-driven” and as a result stopped doing their best to drive the business.

News flash: The ’80s are over. They’ve been over for 35 years. From this point forward (the only direction worth heading), the CIO’s job … and not only the CIO, but the job of everyone in IT … is suggesting ways technology can address business situations, not waiting for the phone to ring.

It isn’t that the phone won’t ring. It most assuredly will.

It will just be someone else’s phone.

Comments