Posts Tagged ‘Apple’

The technology experience finally comes of age

Sunday, November 7th, 2010

I was recently at the Technology Services World (TSW) Conference in Las Vegas, organized by the Technology Services Industry Association. For the first time, there may be help on the way for people who, like me, experience technology as a giant frustration.

Every big technology firm seemed to be at the conference, except Apple. Apple may be afraid that competitors will figure out their secrets if they show up, but it seems to me they follow a pretty simple recipe that goes something like this: Let customers choose how they establish contact with Apple people, either physically through stores, or through any other means of their choosing (Internet, community, call center). Either way, encourage them to come. If you help customers figure out how to use the stuff they’ve bought from you, they’ll become better at it. As they learn, they’ll buy new software and new hardware. They’ll upgrade their machines faster. They’ll become loyal to your brand. They’ll sell other people on the merits of your machine. And you’ll get very wealthy.

All other companies have historically been on the opposite track, following a logic that goes something like: We hope you won’t contact us because you cost us money every time you do. So we’ll set up an obstacle course that protects our people through fragmented Internet sites, semantic moats, and tech-speak land mines. If you survive this, our Customer Service will be waiting to convince you that you’re no longer under warranty and get you to agree to pay for a service you’re not yet sure you need, or cross-sell you a more advanced version of the application you don’t understand, which is why you called in the first place. Along the way, you may get to visit with Henry in Hyderabad, Martin in Manila, or Lenny in Lesotho. As the experience becomes worse, customers buy less and less, managers cut more and more cost, and the company turns into a bleaching carcass in the desert of technology.

The Apple system starts with experience – the customer’s and the Apple employee’s experience. It then allows them to develop their own interaction in the store, through the phone, or on the website. Each interaction is co-created; the customer brings her problem, and the employee figures out with the customer how to weave a unique interaction between them to solve the issue. The issue is not even characterized as training, support, warranty management, or anything else until the conversation starts. There is no typology of issue, no segmentation of customers, no preordained process or metric constraining them.

For all other companies, everything starts with the process and the operational scorecard associated with that process. The conversation is about First Call Resolution – where resolution is defined as “If you haven’t called back to complain, we must somehow have solved your problem” – Average Handle Time – how long it took for the agent to get rid of you without hurting your feelings too openly – and Customer Satisfaction – where you are deemed to be happy if you reluctantly whisper “yes” to the agent’s throwaway question at the end inquiring whether your call was better than a root canal.

But things may be changing. At the TSW conference, I saw some senior executives begin to take responsibility for the customer experience produced by technology companies. Denise Rundle, who is Microsoft’s Vice President in charge of the Consumer Service and Support experience, went as far as to say she’s come to realize that having all her indicators be green on her operational scorecard fell quite short of offering a good customer experience. (Full disclosure: I am a consultant to Microsoft through my relationship with PRTM and shared a keynote presentation with Denise at TSW.) She even challenged other members of the PC ecosystem to come and join her in jointly constructing the future PC experience as an ecosystem. For the first time, I saw a high-level technology executive talk about the issue from the perspective of her own experience: wanting to be proud of what she does. And people responded. When she came down from the stage, many people were waiting for her, wanting to sign up in her ecosystem army.

It is a bit early to figure out this will go and whether the PC experience will one day be as much fun as Apple’s. But at least someone cares enough to get going. That, in itself, is the beginning of redemption.

Animating the Disney experience

Thursday, October 15th, 2009

Disney is a bit like root beer or green jello. You have to be born on American soil to like it.

The most annoying thing about Disney people is how revered they are for the “experience” they provide in their theme parks.  But the Disney experience is entirely staged by them. Not an ounce of customer co-creation there. If I’m a customer puppet whose strings are drawn by Disney designers, am I much more than Pinocchio longing to become human?

If you ever attend a class from the Disney Institute – yes, they have an Institute – they’ll teach you all about their view of experience. I’ve now been there three times, invited by companies who think the Disney Institute will teach the basics of experience in the morning and I’ll show them the future of experience as co-creation in the afternoon.  And then my agony starts. A Hollywood executive once described the role of the producer on a movie project as watching a director make love to the girl of your dreams and having to pretend you like it. This is the way I feel listening to Disney teach about experience.

The class itself is offered by a teacher who only asks questions with ‘right” or wrong” answers. When you answer “right”, he gives you a small Disney character to take home. The last time in Orlando, my neighbor collected four of them. He reminded me of the dolphin being fed after every trick I had seen the day before at Seaworld. You’ll learn everything at Disney has been studied for you. The sidewalks of the theme park are red because they look good on pictures. The alley veering to the right is one or two feet larger than the one veering to the left because more people naturally go right than go left. Responding to a question during a tour of the underground premises, our guide volunteered that the characters don’t talk because “Disney would lose the ability to control the quality of the customer experience in an improvised dialogue”. Imagine the risk of it all, if Mickey could respond to the little girl in pink with her balloon (by the way, Mickey is a teamster, and his union contract may not include talking).

The intensity with which Disney focuses on experience – the manufactured kind – creates the very obstacle that prevents the company from moving to co-creation of that experience. Having been anointed as experience experts by pundits, why would Disney exhibit the humility to let customers design their own experience? By and large, this phenomenon extends to the entire fast-moving consumer goods industry, where companies such as Procter & Gamble and L’Oreal have blazed the experience trail, but have become laggards on the co-creation of the consumer experience.

Well, before I write Disney’s co-creative abilities off completely, let me point to two developments that show Disney may be coming off the experience ice age after all. Last Wednesday, the Epcot Center at Walt Disney’s Disney World opened a new attraction called Sum of All Thrills which lets kids design on a computer their own roller-coaster, bobsled track or plane ride, then actually experience that ride through virtual reality. Two other attractions in other theme parks – Toy Story Mania and Cyberspace Mountain – also exhibit personalization features of the same type.

Even more importantly, Disney is revamping its stores, coached by Steve Jobs who now sits on the Disney board through the Pixar relationship. The main idea behind the renovation is not particularly co-creative in that it involves making the stores into mini-theme parks providing kids with “an experience”, as opposed to the dolls warehouse that they are today. The co-creation comes in the process of developing the new store concept. As Apple did it in the development of its own store format, Jobs has talked the management of Disney Stores into opening a pilot store in a warehouse to figure out the right interactivity between customers, store personnel and the physical merchandise and store. He’s also coached them to consider community activities in the store, rather than focus on one-on-one sale.

The European cynic in me will probably never convince himself that going on a ride of It’s a Small World After All provides an authentic global experience, but Disney’s willingness to let customers participate in its value chain is encouraging. Slowly, Sleeping Beauty may be awakening after all.

Co-creation as cost reduction

Sunday, September 13th, 2009

Co-creation is getting other people to do the work and love you for it. While most people think of co-creation as a way to innovate and change the competitive rules, it is also a way of cutting cost. Why is Apple so profitable? Among other reasons because it gets its customers to market to each other. If my friends sell me on the latest Black Eyed Peas release by sharing their play list with me on iTunes, Apple doesn’t have to spend marketing dollars to promote it to me. And by the way, my friends love selling me on this new release because it allows them to show how far ahead of me they are in their understanding of latest trends in rock music. Why is IBM able to reduce its R&D cost? By setting up “collaboratories” where its partners not only bring their expertise in specific domains, but also underwrite some of the cost of that research. Not only do these partners do what would have been IBM’s work in the past, but they also see unique value in engaging IBM in a proprietary development from which they will benefit.

Many companies are in retrenchment mode in this down-cycle. In their renewed attention to cost, they are reverting to the quality and re-engineering paradigm of the last century, attempting to take cost out by streamlining business processes, shortening cycle times, or implementing enterprise resourse planning software packages. While this approach is helpful to create a performance baseline, the traditional efficiency reserves in most organizations have been tapped out. Most of these companies will die completely healed.

A more fruitful avenue is co-creation. In general, organizations bite off more than they can chew. They think of themselves as having to control and optimize a wider set of one-sided processes than is necessary. They want to single-handedly deliver predictable outputs from those processes using only company resources, failing to recognize that people at the receiving end of those processes no longer want to be passive, but want to engage in the design of the process and the co-creation of their experience. And they’re willing to do the work required to get there, therefore allowing companies to externalize some of that cost. The cost saving opportunity lies in letting go.

The two areas best known for co-creation are at the two extremes of the value chain: in customer-facing processes (like Apple) and in the product or service development area (like IBM). We routinely see companies able to cut their marketing, advertising, sales, or customer service costs by 30% or more by involving customers in the design and delivery of those processes. We witness the same order-of-magnitude improvement when companies engage third-parties in their product and service development processes.

Ultimately, though, the greatest gain lies in applying the principles of co-creation inside the company. Individual functions inside a company suffer from the same evil as the company as a whole. They try to do too much on their own, attempting to create value by defining themselves as “process owners” responsible for delivering a repeated and predictable output to their “process customers,” typically another function in the firm. Whenever sourcing views manufacturing as its client rather than as a co-creation partner, it inevitably generates too much cost for itself and for manufacturing, and destroys some experience value for both. The same is true when an actuary in an insurance company views marketing as its client, when a chemist formulates a product “for” marketing, or when the Human Resources department views the management team as its client for coaching services. Most cost to be “engineered out” lies at the intersection between company functions.

Eliminating this cost requires setting up platforms that engage both parties in a dialogue where the processes on both sides are made transparent, enabling a new dialogue between them and leading to the development of new experiences beneficial to both parties at a fraction of the cost. Unlike in the old re-engineering and quality paradigm, these platforms do not attempt to create a deterministic process that optimizes the flow of goods and information between functions based on some perceived need. Instead, they enable faster, more contextual decisions that dramatically reduce cost and improve cycle time by tapping creativity on both sides in continuous fashion. These platforms sometimes require some form of information technology investment, but they often involve a simple reconfiguration of basic day-to-day interactions between people.

In that sense, co-creation is the new frontier of productivity.

Does Apple do co-creation?

Tuesday, July 7th, 2009

Perhaps the most frequently asked question when it comes to co-creation is whether Apple is the best or the worst example of co-creation. The answer, of course, is yes.

If we think of co-creation as the process of involving customers and employees in the design of the next generation product, the co-definition of any customer-facing process, or God forbid, the opening of the firm’s governance to outside stakeholders, Apple is the worst student in the class. “More secretive than Apple, you die”, a French trade journalist once wrote, frustrated by the KGB-like approach of the firm. Give them an “F” in the “Co-Creation as a Process class”! (Dear Steve Jobs, you may be devastated reading this evaluation, but don’t despair; I have encouraging words for you later on).

If we define co-creation as the extent through which the customer experience that is delivered day in, day out by Apple allows a two-way contextualization of that experience, Apple fares better. The play list on my iPod or iPhone is uniquely mine. I may not have designed iTunes (Steve Jobs and his team did that), but iTunes sure allows me to create a personalized play list, so much so that my two sisters emphatically acknowledge this play list is “uniquely me” (this opinion came with a recommendation not to publish it on iTunes, but rather to keep it “exclusive to the family”; my sisters can be over-possessive sometimes). My ability to browse through products at the Apple Store on my own terms, or to dialogue with the repair folks at the Genius Bar, are also quite co-creative. Of course, many elements remain ferociously controlled by Apple, including price and distribution access. In the Allowing Customers to Co-Create their Experience class, Apple might get something like a “B-“ or a “B.” (Told you, Steve, it would get better).

With the advent of the App store, Apple has decidedly crossed the co-creation Rubicon. Being old enough to remember the early insistence of Apple on keeping software proprietary, it is nothing short of remarkable that Apple would allow independent software writers to sell their products on the iPhone platform today. They now even advertise the App store as the key feature for the iPhone, for goodness’ sake! In the “Getting Partners to Co-Create with the Firm class”, Apple may well come close to an “A.”

O.K., Steve, you’ve been improving steadily. Now, work on that Co-Creation as a Process thing. You have all the makings of a good businessman. I believe in you.