Customer As Strategy

1. Helge Tennø | jokull.io Customer Strategy | Customer Insight .customer strategyWHY DIGITAL ISN’T DIGITAL AND CUSTOMERS ARE HOLDING THE KEY TO YOUR FUTURE as

2. .preface

3. “TO MANY MANAGERS, THE PRODUCT IS THE BUSINESS” - NIRAJ DAWAR, TILT “Firms continue to spend inordinate amounts of time, effort, and resources on their products. In fact, businesses are structured around their products. Companies have product divisions and product managers, and proﬁtability is generally measured by product (not by customer). But the answers to questions like ‘Why do customers buy from us?’” don’t reside in products. As Dawar points out, they “reside almost entirely in the interactions that take place in the marketplace. - Steve Denning, CES: A User's Guide To The New Economy http://www.forbes.com/sites/stevedenning/2015/01/14/why-the-consumer-electronics-show-is-dying/#1443d21222cb Planning meetings and budgets are product-based, incentives and bonuses are tied to product volume moved, and the managers’ hopes and aspirations are pinned on product innovation and the new-product pipeline. Building better products, conventional wisdom in these companies holds, is their pathway to a better, less price-competitive future. .preface

4. For the customer the experience is the sum of all transactions with the company PRODUCT SERVICES COMMUNICATION .preface

5. TECHNOLOGYDISTRIBUTION .preface CUSTOMER VALUE You start of by identifying the customer value you are going to create, and then ﬁnd the distribution and technology

6. .growing complexity PART 1 PART1A:GrowingComplexity Image by NASA Goddard Space Flight Center on ﬂickr.com

7. «PEOPLE HAVE CHANGED MORE THAN THE BUSINESS ORGANIZATIONS THEY MUST DEPEND UPON FOR CONSUMPTION AND FOR EMPLOYMENT»- Shoshana Zuboff link PART1A:GrowingComplexity

8. Every century or so, fundamental changes in the nature of consumption create new demand patterns that existing enterprises can’t meet. - Shoshana Zuboff - link PART1A:GrowingComplexity

9. link PART1A:GrowingComplexity .the premium puzzle Based on articles and talks by Shoshana Zuboff, and Gary Hamel EARLY CONSUMERS PROPRIETARY CAPITALISM MASS CONSUMERS MANAGERIAL CAPITALISM NEW SOCIETY OF INDIVIDUALS DISTRIBUTED CAPITALISM ZONE OF INNOVATION 1890 2005 1915 2020 2050 ZONE OF INNOVATION MIGRATION PATH MIGRATION PATH ZONE OF MUTATION ZONE OF MUTATION ELECTRICITY INTERNET MOBILE BIG DATA IOT CLOUD + + COMBUSTION ENGINE Zero marginal cost Every century or so, fundamental changes in the nature of consumption create new demand patterns that existing enterprises can’t meet.

10. http://www.180360720.no/?p=5227 We are living in the age of mass individualization. No two people get the same Google search result, see the same products on amazon.com, have the same Facebook feed or iTunes catalogue. Every smartphone is unique two minutes after its ﬁrst boot. We are living in an age where the new mega industries have all become personal services industries and the old incumbents are still struggling to put out a mass product at almost no margin or cost (e.g. digital news media, insurance, banks, bikes, cars, tooth picks etc.). PART1A:GrowingComplexity

11. PART1A:GrowingComplexity discuss: Is there a / is there a looming premium puzzle in your industry? What is it? In pairs of two for three minutes:

12. PART1B:GrowingComplexity

13. .there are no maps, you are the mapmaker We are increasingly moving from a world of predictability and standardization where there are simple problems, single solutions and best practices. To a world that has complex problems with multiple solutions which only emerge after they are influenced by an input variable. Continuing along the vector of the current paradigm. Becoming a highly efficient component in a different value chain. a. What customers find valuable to pay for is changing  b. Technology is changing how   people do stuff leading to a mutation of processes   (e.g. SMS and payments   become the same process)   c. People organize in multiple immediate networks, lasting from seconds to months or years. These networks are distributed, they don’t have a plan and only react when input hits them. Companies are the input variable. People are developing new demand patters our current business organizations can’t meet Enkle Komplisert Komplekst Kaotisk We’re facing new types of problems Entering new paradigms, offering new processes to help the customers progress. Establishing new value chains. There will be a natural separation between format (the processes+tech. firms offer) and resource (what is valuable to people), where the existing format stops being inseparable from the resource and becomes an option. .mutations .infrastructure We need new types of organization s around new types of data PART1B:GrowingComplexity - Shoshana Zuboff

14. .progress, struggle understanding customers’ PART 2 and circumstance PART2A:UnderstandingCustomers’progressandcircumstance

15. PART2A:UnderstandingCustomers’progressandcircumstance

17. PART2A:UnderstandingCustomers’progressandcircumstance ACTIVE VS. PASSIVE DATA THE DATA DELUSION:.the fallacy of SURFACE GROWTH CONFORMING DATA .the fallacy of.the fallacy of

18. link PART2A:UnderstandingCustomers’progressandcircumstance After decades of watching great companies fail, we’ve come to the conclusion that the focus on correlation— and on knowing more and more about customers—is taking ﬁrms in the wrong direction. What they really need to home in on is the progress that the customer is trying to make in a given circumstance—what the customer hopes to accomplish. This is what we’ve come to call the job to be done. Know Your Customers’ “Jobs to Be Done” Clayton M. Christensen, Taddy Hall, Karen Dillon, David S. Duncan https://hbr.org/2016/09/know-your-customers-jobs-to-be-done

21. PART2A:UnderstandingCustomers’progressandcircumstance CUSTOMER STRATEGY / THE CUSTOMERS JOB JOB DESCRIPTION WHAT JOB? DESCRIBE THE CUSTOMERS CIRCUMSTANCE, PROGRESS AND STRUGGLE CIRCUMSTANCE IDENTIFY THE SITUATION WHAT MOTIVATES ME? PRIORITY PRIORITY PRIORITY HELGE TENNØ JOKULL 180360720.NO | JOKULL.IO SOURCE, The canvas comprises the thoughts on customer-jobs-to-be-done presented through a series of articles: - Finding the Right Job For Your Product, Clayton M. Christensen, Scott D. Anthony, Gerald Berstell and Denise Nitterhouse, http://sloanreview.mit.edu/article/ﬁnding-the-right-job-for-your-product/ - Giving Customers a Fair Hearing, Anthony W. Ulwick and Lance A. Bettencourt, http://sloanreview.mit.edu/article/giving-customers-a-fair-hearing/ - Mark Johnson @ the Business Design Summit in Berlin 2013, http://www.businessdesignsummit.com - The Innovator's Secret Weapon, Bill Ding, Jian Sun, http://bit.ly/1IoGyR4 WHAT PROGRESS, STRUGGLE AND CIRCUMSTANCE IS THE CUSTOMER HIRING THE PRODUCT / SERVICE FOR? FUNCTIONAL GOAL WHAT AM I TRYING TO ACHIEVE? SOCIAL GOAL WHAT DO I WANT TO ACHIEVE IN THE INTERACTION WITH OTHERS? MOTIVATIONAL GOAL

22. PART2:UnderstandingCustomers’progressandcircumstance discuss: What progress, struggle and circumstance is the customer hiring the product/service for? In pairs of two for three minutes:

23. Over time companies and industries seem to forget their understanding of the market, their CVP. They become prone to unconsciously hold a very limited view of their future. Seeing the world from a technology, market or product perspective creates a very narrow frame of reference where new wealth opportunities are easily overlooked. .customer OSOperating in the market from the perspective of its Customer Value Proposition link PART2B:UnderstandingCustomers’progressandcircumstance Competition offering the same CVP is conciously let in as they are using different core technology or core business model Creating a market by understanding the customer’s progress, struggle and circumstance (customer value proposition) The original technology and processes end up becoming a commodity or infrastructure

24. Common market reaction to real threat: e.g. Insurance companies understand the importance of insuring against damage or loss to people’s physical property. But in regards to intellectual property they don’t see their role at all. This is strange. Given that if you loose your computer the stuff on it is far more valuable than the box itself. What business are the insurance companies really in? The insurance industry avoided any problem by just renaming the whole problem. Insurance of intellectual property is now called cloud storage. renamethe threat to make it disappear PART2B:UnderstandingCustomers’progressandcircumstance

25. PART2:UnderstandingCustomers’progressandcircumstance discuss: What are the advantages of the different approaches to understanding the market: - Core technology - Core business model - Customer job / progress and circumstance In pairs of two for three minutes:

26. .mutation PART 3 Technology is changing how people do stuff, leading to a mutation of processes. (e.g. SMS and payments become the same process) PART3:Mutationofprocess of process

27. People reach their goals through their behaviors. They hire products and services because of the processes these offer that allows different types of behavior. These processes are themselves limited to what the current technology can offer. And hence people’s behaviors are limited to the technology that is available. PERSON GOALPROCESS BEHAVIOR TECHNOLOGY PRODUCTS AND SERVICES PART3:Mutationofprocess

28. .but What happens when the technology changes? PART3:Mutationofprocess

29. What happens when the technology changes? What happens when people’s goals change? .but PART3:Mutationofprocess

30. "In the old model things didn't change very fast, it was predictable and so you built for predictability. It was like saying; 'go ﬁnd this object in a well lit room’." - Aaron Dignan - A Well Lit Room It used to be… link PART3:Mutationofprocess

31. PART3:Mutationofprocess link

32. - In a well lit room these factors are all very predictable - PERSON GOALPROCESS BEHAVIOR TECHNOLOGY PART3:Mutationofprocess

33. New technology invites companies to ﬁnd new processes creating new behaviors for people Slow moving societal change like the increase in higher education, standards of living, social complexity and longevity etc. changes people’s mind in regard to what they ﬁnd valuable Dark Room Now it’s more like… PERSON GOALPROCESS BEHAVIOR TECHNOLOGY - Quote by Aaron Dignan - PART3:Mutationofprocess

34. New technology invites companies to ﬁnd new processes creating new behaviors for people Slow moving societal change like the increase in higher education, standards of living, social complexity and longevity etc. changes people’s mind in regard to what they ﬁnd valuable PERSON GOALPROCESS BEHAVIOR TECHNOLOGY PART3:Mutationofprocess

35. - Helge Tennø - «IT IS NOT ABOUT OLD PRODUCTS OR SERVICES BECOMING TOO COMPLICATED OR TOO SLOW, THEY BECOME IRRELEVANT.» link PART3:Mutationofprocess

36. PART3:Process discuss: Are we in the business of solving a customer problem or selling a customer process? To which consequence? In pairs of two for three minutes:

37. PART 4: PART4:Thismightbeyourfutureinﬁveyears your future this might be in three to ﬁve years …

38. The customer is not in the driver seat. It is us that no longer understands what they ﬁnd valuable to pay for. .willingness to pay PART4:Thismightbeyourfutureinﬁveyears

39. PART4:Thismightbeyourfutureinﬁveyears

40. Identity link PART4:Thismightbeyourfutureinﬁveyears

41. MASS STANDARDIZATION IDENTITY INDIVIDUALIZATION THE WILLINGNESS TO PAY A PREMIUM IS CONNECTED TO IDENTITY INDIVIDUALIZATION UNLEASHES NEW MARKETS AND WEALTH PART4:Thismightbeyourfutureinﬁveyears

42. «We want to make a personal Google for each and every user» «We made Google search for everyone and today we made Google Assistant just for you» Sundar Pichai, CEO Google 4th October 2016 PART4:Thismightbeyourfutureinﬁveyears Microsoft wants to "democratize artiﬁcial intelligence" and bring AI to systems that everyone uses. http://arstechnica.com/information-technology/2016/09/microsoft- merges-bing-cortana-and-research-to-make-5000-strong-ai-division/

43. «THEY CAN PICK OUT THE BEST CREDIT RISKS, IN AN ECONOMY WHERE INFORMATION ON CREDIT- WORTHINESS IS, SHALL WE SAY, A BIT THIN.» - Nicholas Lardy, a longstanding expert on China’s ﬁnancial sector at the Peterson Institute for International Economics - http://www.ibtimes.com/mybank-vs-webank-chinas-internet-giants-go-head-head-new-online-banking-sector-1941380 «We’re connecting 10,000+ data points per customer to build a new kind of credit score. It's working in a way that the world has never seen before.» - tala.co THE UNBANKED AND THE UNDERBANKED DATA HVILKEN DATA KAN VI SAMLE OG HVORDAN KAN VI BRUKE DENNE? PART4:Thismightbeyourfutureinﬁveyears

44. discuss: What would identity and individualization look like in your industry? Is it already here? In pairs of two for three minutes: PART4:Thismightbeyourfutureinﬁveyears

45. PART 5: choice. freedom of PART5:Freedomofchoice

46. .freedom of choice, not voice The democratization of the Internet has led to If everyone is offering the customer the same processes and infrastructure customers are only given a choice between logos and colors. But, if a provider offers the same or competing value with different processes and / or no infrastructure. Then the customer has been given a real choice and there is a real threat to the incumbents. ChoiceNo Real Choice PART5:Freedomofchoice

47. Customer Expectation GAP-graph / Richard Trovatten Time Customer excpectation «Innovation over time ads layers of new customer expectations» Layersofinnovation PART5:Freedomofchoice

48. Companies aren’t disrupted, components in their value chain are. NEW VALUE CHAIN TRANSACTION COST = PROCESSING INFORMATION AND COMMUNICATION TRANSACTION COST = PROCESSING INFORMATION AND COMMUNICATION COMPONENT REMAINS UNCHANGED COMPONENT BECOMES INCREASINGLY IMPORTANT TO CUSTOMER- COMPANY KEEPS AVERAGE ADVANTAGE NEW COMPONENT EMERGES - COMPANY CHOOSES TO IGNORE EMERGING CUSTOMER DEMAND COMPONENT IS REMOVED FROM THE VALUE CHAIN. VALUE CHAIN BREAKS UP. NEW COMPONENT EMERGES. VALUE CHAIN BECOMES HORIZONTAL. COMPANY IS UNABLE TO COMPETE WITH ASSYMETRIC COMPETITION NEW COMPONENT EMERGES - DATA DRIVEN CLOTHING XXX INTRODUCES NEW DELVIERABLE AS INCUMBENT VALUE CREATION BECOMES INFRASTRUCTURE MAP STRING OF COMPONENTS WHICH COMPONENTS ARE INTERNAL AND WHICH ARE EXTERNAL? IDENTIFY THE COMPETITIVE LANDSCAPE [DISPLAY LOGOS] WHAT IS CUSTOMER VALUE AND WHAT IS INFRASTRUCTURE? WHICH COMPONENTS REPRESENT YOUR COMPETITITVE ADVANTAGE? WHICH COMPONENTS REQUIRE A HIGH DEGREE OF FLEXIBILITY TO MEET THE CHANGING AND DIVERSE NEEDS OF THE MARKET? WHICH COMPONENTS ARE RIPE FOR DISTRUPTION? WHICH COMPONENTS ARE KEY WHEN MUTATING TO OTHER INDUSTRIES? - HOW DO WE ORGANIZE FOR THIS? HOW DO WE FUEL THE ORGANIZATION? ca. Mu. cv.infr. ﬂex D. VALUE CHAIN MAPPING: PART5:Freedomofchoice

49. PART5:Freedomofchoice Encyclopedia Education

50. PART5:Freedomofchoice discuss: What are the core components in your value chain? Are they stretchable? In pairs of two for three minutes:

51. PART5:Choiceandhownottoseeit..

52. It is always easy to explain the world in hindsight, so lets try foresight: It is becoming increasingly clear to banks that where FinTech proposes no real threat WeChat and other social life-platforms do. How/why? FinTech proposes to better one or a few components in the banks value chain - but the chain itself will remain in the banks control. Life-platforms turns this on its head. Suddenly banks become the component and life-platforms become the chains. Banks, with their processes and infrastructure suddenly, and very visibly, are becoming irrelevant. link PART5:Choiceandhownottoseeit..

53. PART 6: .hardware PART6:Hardware What are we organized to accomplish?

54. Companies are designed to out! customers keep VIA CHUCK COKER ON FLICKR.COM link PART6:Hardware

55. We were designed to engage in a predictable environment, which requires that [the customers] are similarly designed. But, [the customer] network didn’t have a ﬁve year strategic plan, they didn’t have a linear hierarchy or centralized authority. We had to understand that we were ﬁghting against a complex, movable, continuously changing decentralized and distributed network. And these networks would last for six months or twelve minutes. - Paraphrasing Chris Fussell & Rachel Mendelowitz - [I removed references to Al Qaida and changed them with the customer] @responsiveconference.com, 20.aug.16 vs. PART6:Hardware

56. efficiency COMPANIES CARE ABOUT this harmonizes poorly with unpredictable customer who want nothing more then their own surplus & standardization PART6:Hardware

57. link PART6:Hardware

58. «Let me give you an example of how expensive that can be. A decade ago four of the most powerful technology companies in the world were Intel, Dell, HP and Microsoft. And yet all four of them completely missed the single biggest shift in the generation in their industry. And that was the shift to wireless. The mobile opportunity was not an existential threat to their core business. We continue to over concentrate power in our organizations. When you give a few people at the top the power to set strategy and direction you are giving them the right to hold the organizations capacity to change hostage to their own personal willingness to adapt and change.» «[successfull companies] fail when their leaders fail to write of their own depreciating intellectual capital.» - Gary Hamel link PART6:Hardware

59. link PART6:Hardware

60. «We were caught of guard» Senior Management in some of Norway’s biggest media companies after ignoring the warnings from their talented employees for years. PART6:Hardware

61. «Even the worlds most efﬁcient hierachical, linear organization was unable to keep up with the speed of this distributed network» - Chris Fussel, Stanley McChrystal Group - Graph / slide from Mike Arauz / aug.co link PART6:Hardware

62. «The problem set for an organization usually changes every week.» - Chris Fussell, Managing Partner at McChrystal Group - link PART6:Hardware

63. The old management model is a control mechanism subdividing talent into compartments where top-management destroys their ability to create value. Enabling companies are driving information rapidly out to front-line self- organizing teams in order for them to operate autonomously and react instantly to changes in customer demand patterns. Employees given the opportunity to use their talent unleash massive wealth for the corporation. Cases in point: Salesforce, Netﬂix, Patagonia, Zappos, Tesla, AirBNB, Morning Star, Etsy, Nest, Spotify, Valve, Google, Burtzorg, Haier, Gore Technologies, DSM, GE Health, Whole Foods, Zara, Telus, Uber, Amazon, Facebook, Apple link PART6:Hardware

64. PART6:Hardware discuss: How are we best designed for the customer? In pairs of two for three minutes:

65. .software PART 7: The execution is never better than the strategy we put in, and the strategy is never better than the data, insight and experience it is built on top of. PART7:Software

66. - CHRISTIAN MADSBJERG AND MIKKEL B. RASMUSSEN, HBR.ORG, AN ANTHROPOLOGIST WALKS INTO A BAR The biggest challenge CEOs face is the so called complexity gap. CEOs see a lack of customer insight as their biggest deficit in managing complexity. .. And rank “customer obsession” as the most critical leadership trait. THE link PART7:Software

67. PART7:Software

68. PART7:Software

69. IS CUSTOMER INSIGHT EVEN THE RIGHT APPROACH? PART7:Software

70. .disorder complex complicated simplechaotic Cause and effect: understandable in retrospect but do not repeat Probe - sense - respond Cause and effect: Detectable but seperated over time and space Sense - Analyze - respond Cause and effect: Repeatable, perceiveable and predictable Sense - Categorize - respond Cause and effect: Not detectable Act - Sense - respond Unordered context Ordered context The cyneﬁn sensemaking framework Making sense of the world so we can act in it - Dave Snowden, SenseMaker PART7:Software

71. The customer is not a segment, she is a signal PART7:Software

72. link In short, mutations that upend industries can come from anywhere, and conventional forms of market analysis and competitive strategy will miss those mutations. PART7:Software - Shoshana Zuboff, Creating value in the age of distributed capitalism - www.mckinsey.com/business-functions/strategy-and-corporate-ﬁnance/our-insights/creating-value-in-the-age-of-distributed-capitalism

73. What can the customer teach us? - progress and circumstance - input variable - complex - signal - mutation PART7:Software discuss: In pairs of two for three minutes:

74. </end of digital> PART 8: new models and practices PART8:</endofdigital>

75. THE CHANGING CONTENT OF CAPITALISM «the speciﬁc kinds of business models and practices that create wealth in any given era» MERCANTILE CAPITALISM Venetian merchants and Dutch traders PROPRIETARY CAPITALISM Factory and workshops of the British Empire MANAGERIAL CAPITALISM American modelled mass consumption DISTRIBUTED CAPITALISM Apple, Alphebeth, Facebook, Amazon 2000 -190018001600-1700 PART8:</endofdigital>

76. A MUTATION IN CAPITALISM ITSELF It would be easy to construe these as isolated cases of innovation and industry change, but I believe they represent much more: a mutation in capitalism itself. What’s the difference? Innovations improve the framework in which enterprises produce and deliver goods and services. Mutations create new frameworks; they are not simply new technologies, though they do leverage technologies to do new things. Historically, mutations have superseded innovations when fundamental shifts in what people want require a new approach to enterprise: new purposes, new methods, new outcomes. Creating value in the age of distributed capitalism By Shoshana Zuboff http://www.mckinsey.com/business-functions/strategy-and-corporate-ﬁnance/our-insights/creating-value-in-the-age-of-distributed-capitalism link PART8:</endofdigital>

77. DISTRIBUTED CAPITALISMCOMPANIES WHO OWN THE MEANS OF DISTRIBUTION OWN THE PIPELINE TO PEOPLE WE NOW LIVE IN AN AGE OF ALIBABA, WECHAT, KAKAO, LINE FACEBOOK, APPLE, AMAZON, GOOGLE PART8:</endofdigital>

78. MASS STANDARDIZATION IDENTITY INDIVIDUALIZATION THE WILLINGNESS TO PAY A PREMIUM IS CONNECTED TO IDENTITY INDIVIDUALIZATION UNLEASHES NEW MARKETS AND WEALTH PART8:</endofdigital>

79. «The measure of a successful company is its ability to let its customers and employees liberate it.» - Helge Tennø - PART8:</endofdigital>

80. PROTOTYPE FLEXIBLE TECHNOLOGY AND SYSTEMS Q.: Which demands do we need to put on our technologies and systems? KEYWORDS: - Flexible, agile and dynamic platforms - Rapid iterations and user testing - Individual services and experiences - Immediate, real-time and distributed data - Machine learning / AI for individualization - Capture all structured and unstructured customer data - Multiple solutions running at the same time FUELING THE 21st CENTURY ORG. Q.: Where and how can we start to understand different circumstances and progress? Where can we learn the most for the least amount of time and money? How do we get to the first data point? KEYWORDS: - Fast realtime feedback loops, smaller probes in parallel - Cluster on actual behavior - Direct contact between the decision makers and raw data. Without interpretative layers - Continuos learning and adaptability RESPONSIVE ORGANIZATION Q.: How do we organize to match the customers’ distributed networks? KEYWORDS: - Decentralized teams and decision making - Information is open - not protected - Organize around customer problems - Immediate and continuos deployment APPROACH / MINDSET Q.: How can we make better sense of the problems we face, how do we solve different problems? KEYWORDS: - Adopt complex problem approach in addition to already established simple and complicated approach - Capture customer data to understand causality / problem - Strong opinions loosely held Understand customers problems PROGRESS AND CIRCUMSTANCE 21st CENTURY VALUE & REVENUE STREAMS CANVAS FOR DISCUSSION: APPROACH / MINDSET, TECHNOLOGY, ORGANIZATION AND BUSINESS: 21st CENTURY THIS MODEL IS JUST A THOUGHT EXPERIMENT. ANY FEEDBACK WOULD BE MUCH APPRECIATED. EXPLANATION: This model is a suggested sense making tool to help organizations develop a shared language and understanding as they are figuring out how to move from the existing model to a new OS / operating system more fit for the 21st century customers and mutating markets. SELF-ORGANIZE: The model is not linear, it does not have a start or an end. The team uses the framework to inspire a discussion on the topic. Q.: How can we better identify the different customer circumstances and aspiring progress? Q.: What type of value should we measure and where do we find new revenue streams? HELGE TENNØ JOKULL 180360720.NO | JOKULL.IO WHAT NOW? PART8:</endofdigital>

81. Helge Tennø | jokull.io Customer Strategy | Customer Insight Follow me or even better, join my knowledge network on LinkedIn