Customer first without compromise

3. The Spirit of Silicon Valley In mid-September 2013 we (Peter Hinssen & Steven Van Belleghem) organized an inspiration journey to the American West Coast. The goal of the trip was to gain a better insight into the method of working and entrepreneurship in Silicon Valley. In this paper we’ve written down our conclusions and vision. The paper is based on our visits of the following start-ups and big successful companies: Taco Bell, Quid, Salesforce.com, Google, Evernote, Apple, BlueKai, LinkedIn, Disney, Stanford, Yammer, Yahoo, Microsoft, Starbucks and Amazon.com. Customer First without Compromise

4. Our conclusions can be summed up in a few words since they are all based on the same principle: putting the customer first to an extreme degree. The customer is truly at the heart of the philosophy and any form of compromise at the Customer first without compromise expense of the customer is out of the question. Successfully implementing this modern customer approach requires a flexible, networked organization. Marketing, HR, IT and general management must share a network. The hierarchy can remain in place but doesn’t have to be respected. Keeping things moving, making real-time decisions and continuously The Network organization optimizing the customer relationship are the goals shared by every level of the organization. And finally, the network needs a purpose-driven culture to get everyone on the same page. Instead of talking about their products, Silicon Valley companies talk about how they are going to change the world. Purpose driven culture We will now examine each of these three steps in detail. Customer First without Compromise

6. Customer First without Compromise Successful companies reinvent the relationship with their customers. Modern organizations build a structure that truly puts the customer first: customer-centricity without compromise. For example, Evernote could make bigger short-term profits by charging their customers for downloading their app. However, they would never do this because they would reach fewer customers that way. LinkedIn could make lots of money by commercializing their network data but they’ll never do so. Customer-centricity without compromise means keeping the customer at the heart of things, even if this goes against the bottom line in the short term. Customer First without Compromise

7. Inspire & Delight The theme of our visit with Apple was their extreme focus on all details that impact the customer relationship. Apple wants to surprise its customers and exceed their expectations in every detail. They do this not just through the next disruptive innovation but also by optimizing the existing customer relationship in the extreme. Yahoo, a company in a major turnaround, wants to improve the consumers’ daily habits. The Yahoo weather app (winner of a 2013 Apple Design Award) is a case in point. There are many weather apps but Yahoo displays stunning photographs of the featured cities and has created a very user-friendly interface. The philosophy to surprise the customer in every detail has brought about a change in the organization’s culture. If it’s not good enough it’s not put on the market. nui7711 / Shutterstock.com Customer First without Compromise

8. Short Feedback Loops & Real-time Improvements New products should be released faster. The trick is to work with short feedback loops and improve products in real time. Traditional companies conduct months of market research prior to releasing a new product. After the launch, the product has to remain viable, even if the objectives are not met. In other words, subsequent to the launch, all they do is wait and tweak the marketing strategy from time to time. The new model shortens the time to market for new products. Those products are improved very rapidly thanks to real-time feedback from staff and social media. Modern product launches are an iterative process, thereby turning the launch into the start of a new process. We heard about restaurants that change their menus and instantly know what customers think thanks to the feedback they give the staff. This information is shared internally via Yammer, an internal collaboration tool. Shortly afterwards, the product is updated. Products that are not up to standard are immediately discontinued. Customer First without Compromise

9. Real-time Insights & Personalization through Big Data Big data is the buzz word right now. All companies use context. Nowadays a modern marketer looks for ways of data to enhance the customer relationship. Modern using data to boost his sales figures. technology allows us to focus on the desires of individual customers and not just those of the average customer. Big data predicts what a customer wants before the customer himself is aware of his desires. Instead of real-time solutions we are now looking at “before time” solutions. Companies can offer their customers today what they will need tomorrow. For instance, Taco Bell Nike’s Fuelband is another example of a big data tool. uses big data to predict the success of product launches. Users of this digital bracelet provide Nike with tons of They can tell with 90% accuracy how successful or free personal info. Nike knows where you are, how far you unsuccessful a new product will be. Data is the marketing walk, how often you work out and what your heart rate is. department’s new secret weapon. Data can not only be In theory, Nike could have a new pair of trainers delivered used to predict the chances of success but also to make to your doorstep at exactly the right time. It would be the right message appear at the right time. Evernote, the ultimate proactive service a brand could offer its a free app to create notes and record voice memos, is customers. Thanks to big data, companies know what you convincing consumers to switch to their paying version need before you do. by presenting commercial messages in the appropriate Customer First without Compromise

10. Angry Birdization Everyone knows Angry Birds, the most successful mobile game ever. The game’s success can be explained in three words: fast, easy and fun. The new challenge will be to make your relationship with the customer meet the Angry Bird rules. Do new applications have a short time to market? Are they easy and fun? It’s not an “or” question, it’s an “and” question. Consumers are accustomed to the ease of use of Apple and Google. Customers’ expectations usually evolve faster than a company is able to make changes. That is why it is necessary to subject every product launch or new online feature to the Angry Bird test. Davy Kestens, the founder of Twitspark, feels that investing in patents is a waste of energy. “They stand in the way of innovation. When faced with copycats we simply need to improve our products even faster”. Customer First without Compromise

12. The Age of Networks All around us, thanks to the extreme effects of digitization, we’ve started to shape a society that is entirely based on the concept of networks. Networks of information, networks of knowledge, networks of entertainment, networks of friends, networks of enterprises. Everything we see around us is based on the concept of networks, fueled by digital technologies that are making our society a more connected and networked system every single day. We won’t be able to understand, or leverage, the age of networks if we don’t start to think about our world, our businesses, our companies, and our markets as complex, internetworked systems. We have to understand the new language of the age of networks if we want to reinvent our companies. Customer First without Compromise

13. The Advantages of Networked Thinking Networks may seem complex and hard to manage at first, but there are a number of advantages in networked thinking: • Information flows faster in networks. Companies need information on their markets in real time to make decisions faster than ever. Networks turn information ponds into rivers, flowing through the organization. • Intelligence filters faster in networks. With so much information around, it’s increasingly difficult to distinguish important data from rubbish. Networks distill information so the relevant information sticks out. • Innovation flows faster in networks. By combining the intelligence of more people inside (and outside) an organization, without hierarchical boundaries, good ideas will thrive faster. Just look at how start-ups function. Customer First without Compromise

14. Rethinking Organizations for the Age of Networks What will organizations look like in the age of networks? What will companies look like in an era of total and complete fluidity? • The Network doesn’t care for hierarchy The world has shrunk to six degrees of separation, so why should employees care for a structure and a hierarchy that has too many managers between them and the CEO? The next generation has learned to live in the network, make connections in the network, and advance through the network. For them it’s not ‘up. It’s not ‘horizontal’. For them it’s all in the network. It has become a vertical playing field. The vector points to the network. • The network rewards people who can contribute Information is only valuable if you share it. If you want to advance ‘in’ the network, you have to feed the network. You have to supply information, share information, and facilitate the velocity of information in the network. Networks live on information that is spread. • The network is a pure meritocracy You earn your rights in the network based on what you do, what you provide and what you share. Not on some badge of honor, stars or stripes that make sense in the hierarchical world, but not in the network. This will truly change the way we work. The way we build organizations for the future. The way we think about ‘companies’ for the next generation. Customer First without Compromise

15. From Control to Fluidity The new world of work will require a complete rethinking of the engagement of people to your company, based on the philosophy of the network. And we might have to throw away many, if not all of the tools that we have used in the past, when companies were still very much based on the ancient model of the hierarchical structure. The central element of this transition to the age of the network, is that the static structures of today will have to be reinvented for the age of fluidity. This is a completely new paradigm. Careers will have to be reinvented and replaced by much more fluid thinking, but also the way we will reward people for their efforts will have to be completely overturned. The fundamental shift is that we’re replacing the notion of ‘loyalty’ by the notion of ‘relevance’. The company structures of the past were completely based on control and loyalty mechanisms. If companies are going to behave in a network-based society, they will have to become networks themselves. Customer First without Compromise

16. Coexistence In the era of fluidity, we have to adopt this structure-network duality. We have to build organizations that are capable of behaving like a structure and as a network at the same time. That when we need to drive for efficiency, we need to push on the structure, and when we need to drive for innovation and creativity, we need to push on the network side of the organization. Adam Pisoni, the CTO and co-founder of Yammer puts it like this: “Of course companies should have structures and org-charts. But it doesn’t mean companies should work that way. They should understand the network dynamics of their organization”. Yammer has a structure, and an org-chart, but as Adam says: “We just don’t use the structure. We use the network”. The power of the network is forcing companies to change their organizational culture and structure. On the surface, we see this new way of working as technology and tools. But deep down, it’s a cultural thing. Starbucks is not just a corporation, it’s really a network. Their headquarters aren’t really headquarters, they are the central hub that supports the network. That philosophy is a deeply cultural phenomenon. Customer First without Compromise

17. Extreme Focus Michael Porter once said that “the essence of strategy is choosing what not to do”. We found this mentality has really permeated Apple’s organization. If an Apple employee comes up with a new idea then this idea can be launched on condition that an old idea is made obsolete in return. Apple has the highest value of any company in the world and employs “just” 25,000 staff (not counting retail). Apple has fewer than 100 product marketers. This is made possible by their strong focus on a mere handful of products. Extreme focus is a necessity in a network organization. Without focus the network would be ruled by chaos. Customer First without Compromise

19. Clear & Inspiring Purpose Most CEOs understand the power of purpose. A purpose is a “higher goal” for the organization. Starbucks says it best: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. Starbucks is not about selling coffee but about bringing people together. When you visit the company, this mentality is palpable in every corner of the building. Every employee breathes this mentality. Yahoo doesn’t say: “We make apps and we make people happy”. Instead, Yahoo says: “We make the consumer’s daily routine easier and more enjoyable”. Evernote doesn’t say: “We make software so you can make notes”. Instead, Evernote says: “We make our customers more efficient”. At a product launch, none of these companies talk about the product itself. What they do talk about is their philosophy. A philosophy projects passion and enthusiasm. It ties the staff to the organization. Thanks to the philosophy, employees are glad to go the extra mile. Customer First without Compromise

20. Everybody Lives the Purpose A purpose is great but it is worthless when it is not carried by the staff. We felt this clearly during practically all of our visits. The people working for these companies are proud of what they do and they believe in their employer’s purpose. No one makes products in Silicon Valley, they are all changing the world. We were all affected by the drive, the passion and entrepreneurship these people exhibited. Purpose and passionate staff are motivating factors. Customers feel this and it incites them to buy. Yammer is the perfect example. The founder of Yammer, Adam Pisoni, gave us a fantastic presentation about the organization of the future. At no time did he mention his product. Instead, he shared his vision and his passion. The result was wonderful: nearly everyone was interested in buying the product. If he’d given a product demo, the outcome probably would have been less spectacular. Customer First without Compromise

22. Details and Passion The power of a company is in the passion and the details. Details make a crucial difference in the customer relationship. Every organization has major processes to keep their customers satisfied. However, these processes often ignore the little details and the interactions between the various contact moments. Customer satisfaction is made or broken by details. Besides details, passion is the prime ingredient of success. Self-confidence, pride and passion are contagious. We visited companies big and small but they all shared the same pride and passion. In fact, we found that the more passionate they were, the more enthusiastic we felt about our visit. Modern organizations are faced with huge challenges. The external clock ticks faster than the internal one. Consumers’ attitudes towards companies are becoming increasingly demanding. The world is evolving at breakneck speed. A modern company has no choice but to adapt to this evolution. Darwin said that “it is not the strongest of the species that survives, nor the most intelligent, but the most responsive to change”. Today that Darwinism is being taken to extremes. The way to adapt is: customer first without compromise! Build an organization that can deliver on that promise: a network organization driven by a strong sense of purpose. Customer First without Compromise

23. Peter Hinssen Steven Van Belleghem Peter.Hinssen@a-cross.com @hinssen linkedin.com/in/phinssen facebook.com/hinssen Steven@VanBelleghem.Biz @StevenVBe linkedin.com/in/stevenvanbelleghem facebook.com/theconversationmanager