(Originally published on IT Forum 365 in Portuguese)
The market has been repeating this new mantra of “digital transformation” without a clearly accepted definition. Clarity around a definition would enable leaders to tell a story that helps their employees make better decisions. Importantly it would allow leaders to create success metrics that would incentivize the desired transformational behavior.
Today it feels like companies reach for transformational results but only evaluate those results through the lens of yesterday’s metrics. Let me share an example.
Companies main struggles have been to try to fit old metrics, such as ROI, into new processes and expect innovative results. For example, a team wants to justify creating an API platform. Measured by ROI, they therefore need a revenue on the front end – which leads to the belief that they should charge for the API. Unfortunately, we know that most pay-for-play API solutions (for example) don’t achieve what open API platforms accomplish (building a platform and creating a community).
As executives keep pushing their teams to be creative, collaborative, and agile without providing new success metrics, employees turn to tried-and-true optimization processes to succeed. In the prior paragraph, an ROI analysis and business case is an example of the old process optimization that doesn’t always work for an experience-driven economy. An ROI analysis doesn’t capture the value of creating a platform on which innovation is brought to market. An ROI doesn’t capture how relevant a company will be in the next evolution of technology.
Companies are never going to consistently obtain new answers unless they also create new metrics for defining success. In the Experience Economy the right metrics would be in areas of how to engage more people, or how to deliver more world-class experiences.
Data is a commodity (or will be)
The old way of coming up with product ideas (which are often technically product extensions) is to look at the data. Who’s buying? How are they buying? Maybe a different bundle of an existing product would meet needs better?
The thing is, in the world of cloud computing and “as a service” solutions, with data scalability technology available to anyone and API access simplifying data sharing, data becomes a commodity. Analyzing data without applying know-how won’t create insightful ideas. With data as a commodity and no special know-how, results across the industry will not have much variance, creating the opportunity for innovative-disruption. In this example, disruption will come from the application of know-how (experience) to data to derive an insight. The insight about customers drives ideas around improved experiences delivered, of course, through software.Disruption will manifest through the application of know-how to data, used to derive an insight. Click To Tweet
Instead of data, cultivate creativity
Stop using a production line labor approach for delivering creativity
The truth is we are still used to creating processes that will ensure outcomes, allowing employees to work the same way and deliver what is expected of them anywhere in the world. We are using a production line approach to delivering creativity. The goal with production is to minimize variance, to ensure product consistency. The techniques used to do that also kill creativity.
Experience is not rote process adherence. Creativity demands autonomy and hiring people with the right skills who will be able to apply insights as they let machines and artificial intelligence do the rest.
An easy way to understand this is to think about social media marketing. Everyone wants a campaign to “go viral”. However, there isn’t a formula for virality. There are things one can do to improve their chances for sure, but there aren’t guarantees. It’s the same with creative output. I argue that creative output is a prerequisite for success in the experience economy.
People often say they just had this amazing idea in the shower, or have finally solved a tricky problem while out on vacation. Yet still we hold employees hostage in their offices for 8 hours a day, all week long, busy with back to back meetings and expect them to be productive! When productivity was defined as adherence to a process, that schedule made sense. Now, when it’s defined as maximally creative it doesn’t make as much sense. The original 40 hours work week was designed to accommodate physical labor. It was related to the amount of work our bodies could sustain and remain productive.
Now that we work with ideas and data, are we giving our minds the time they need to create?
Creativity will be more successful with diversity
The next good question is not how to progress linearly but how to collect parts that can be assembled to create something bigger. This is truly what the Shared Economy is about, it’s comparative advantage applied to the age of computing. Many companies have proven that it is possible to be open source and make APIs available and yet be highly profitable. That’s because they understand that it allows them to connect to others in order to deliver a unique experience that can only be created collectively.
Another change relates to understanding the customer. The moment companies start thinking of user experience, they notice they need to offer totally different products for a specialist and a layman. How many banks offer separate apps for people who like numbers and those who don’t? Why don’t they? They don’t because they’re still thinking about their own processes – checking, savings, mortgage – and not the customer experience of paying bills, building wealth, or buying a home. The problem for large companies with existing processes and traditional metrics is that they can’t justify multiple apps (and the commensurate development teams and infrastructure). They quickly realize that they would need to design even more solutions to fit various profiles of users, up to the point when it becomes impossible for one company to do it all. They retreat from the impossible rather than explore the uncomfortable – collaborating and cooperating with others.
A Face-to-Face Request Is 34 Times More Successful than an Email (HBR)
Companies look at younger generation’s disinterest in physical stores and think technology should replace human contact. It’s exactly the opposite. Technology should help us get bureaucracy and process out of the way so that it allows us to have the time needed to make personal connections with customers. Today, technology does the opposite. It eliminates the personal connection, which is one reason why loyalty is weaker than in the past.
In the Experience Economy everybody wants to feel like a VIP, and that requires time and talent to accomplish. When a bank, for example, talks about giving you a mortgage – that’s their process. Young buyers have heard enough of your products. They want to have their own experience. Talk to them about their new home instead, and you’ll build loyalty.Co’s look at millenials, think technology will replace human contact. The opposite is true. Click To Tweet
Bottom line is consumers don’t really care about the source of their services as opposed to the value they are getting out of it. People don’t want to write checks, they want to pay bills. They don’t want to invest, they want to build wealth. And the easier it is for them to get things done, the better their experience is, especially if they trust who’s handling it for them. Companies need to change their mindsets and ask different questions to reach disruptive outcomes. They should let technology do what it does best while they give human talent time to arrive at breakthrough insights and build outstanding relationships.