Over the last two weeks we’ve started exploring the Twelve Shifts of Digital focusing on how businesses are creating new forms of value by rethinking their business models and engaging with others in the ecosystem.
This week we focus on the customer. Businesses have always existed to serve their customers. But in today’s digital era, business leaders are recognising the need to shift from pushing products to responding to real customer needs.
Introducing the new customer context
The world used to be simple. Many people followed the same linear path through life (school, job, marriage, house, kids, retirement). Linear paths also pervaded buying decisions and the sales journey. You saw an advert or heard about something from a friend, you went out and you bought it.
But the modern world has changed the way consumers behave. Their lives are becoming less and less linear. And in the digital era, their buying decisions are doing the same. Consumers have more information at their fingertips than ever before and businesses are less able to have total control over the messages their customers receive.
Business leaders in the digital era have had to flip the traditional model of developing and marketing products.
First, comes an obsession with understanding their customers’ lives, motivations and contexts. Then they develop products, services and experiences that meet those needs and, finally, realisation of the business value in doing so. This customer centricity sits at the heart of design thinking.
These businesses, adopters of design thinking, really are realising business value – creating emotional engagement with promoters who love their products, making it easy for customers to do business with them, and uncovering new valuable opportunities. The results are compelling. The Design Value Index, a portfolio of publicly traded stocks from companies considered to be design-driven, systematically outperforms the S&P 500 with more than twice the returns.
Applying customer centricity
Digital leaders are engaging with customers across three altitudes of human needs:
- Transact – Digital leaders have realised the importance of crafting individual interactions around user needs to both get to “brilliant basics” (classic example: gov.uk ) as well as “digital delight” (classic example: Monzo) to exploit today’s competitive advantage. Users will gravitate towards services that delight them and serve the basic human need to swiftly complete any transaction at hand in a frictionless, transparent, proactive, safe, tailored and empowering manner.
- Hire – Digital leaders have realised they must constantly work for their products and services to be hired by customers. Customers don’t want to be herded through a sales funnel to be locked down in contracts and then be forgotten about. They hire your organisation as long as they trust they will get value from your relationship, or they will fire you at the first opportunity. There is no one-off transaction; constant work is required to orchestrate experiences across channels and end-to-end journeys to build trust and relationships with customers, to influence behaviours that will drive sustainable business outcomes. For example, customers will forgive a telco’s service outage if they were informed pro-actively in a way that suits them, involvement required is tailored around their day and they are compensated for inconvenience once service is restored. This approach builds trust with the customer and makes them much more likely to stay with - and potentially become advocates of - your service.
- Inspire – Digital leaders have understood that in order to stay relevant in tomorrow’s market they need to deeply understand consumers’ innate human values. They need to anticipate, uncover and inspire unspoken needs. Customer co-creation labs, sandbox environments and rapid prototyping have become common vernacular in digital businesses. Adopting design methods to form hypotheses, run experiments, and learn fast with customers is enabling businesses to reduce uncertainty and waste in shaping future value territories. For example, Unilever’s insight team famously seeks to “inspire and provoke to enable transformational action”, playing a strategic role in driving the business’ move to customer centricity and securing its future.
Starting the shift
We believe there are three key elements to begin shifting an organisation towards being design-led:
- Instil a culture of design thinking: Embedding design into the DNA of an organisation requires leaders to understand the role and value of design and customer centricity. Only then can the cascade of conversations shift to those grounded in customer empathy, and behaviours shift towards the role modelling of experimentation, learning and iteration.
- Unlock latent talent: We find organisations tend to have a lot of latent design talent – people that are naturally curious and brave but trained into corporate straightjackets. By recruiting the right research and design expertise into any number of teams, organisations can tap into this talent pool, and drive development of skills and tools in the right crafts: be it strategy, journey improvement, proposition development, or digital interfaces.
- Get started and evolve: Adopting a lean approach means starting with some research and evolving through proof of value and learning. Target an opportunity from which to embark on customer research, and immerse the most senior leaders in the voice of their customers. From there, build a reusable library of design assets such as customer insights, personas and principles to challenge and inspire traditional organisational beliefs and norms.
We encourage you to shift your organisation to one designed around a deep understanding of, and obsession with, customers, to define solutions around real human needs and to evolve based on learning and feedback.
Join us next week as we delve deeper into how digital organisations are applying this customer focus to shift from producing commoditised products to valuable, intelligent services.