Those are the two feelings that I have when thinking about the last four years in Iberia Airlines that I’m now closing.
It is curious how life makes “connecting the dots” easy in retrospective and how difficult it is to do it when looking to the future.
How I fell in love with airlines…
It was June 1991 and a twelve years old Alberto was flying for the very first time ever in a huge American Airlines 767 from Madrid to Dallas. I was alone, on my way to an exchange with a family to improve my very limited English language at that time. The feeling of flying was amazing, and I was writing down every single detail of my customer journey in a notebook: noticing how the flaps were moving, the noise of the engines, all the menu and inflight entertainment details. If I only had known that 30 years later I would be responsible for designing that journey for Iberia 😉
The route map that the captain gave me when arriving to Dallas as they noticed that I was paying so much attention to everything happening in the aircraft:
My notebook full of comments about what I was experiencing up in the air:
Fast forward to Iberia…
Back in 2018 I decided to transition from a wonderful role at 3M creating value by delivering new innovative products in B2B industries in West Europe, and embrace a new venture project at Iberia Airlines. I had a conversation with Gabriel Perdiguero and Nacho Tovar where they told me how Iberia was managing a sound transition and becoming a fully digitally connected airline. That really blew my mind and I can never be grateful enough for it.
I had no experience in the airlines industry apart from flying more than 25% of my work life time, but it was very obvious for me that the mission was going to be a step-change in terms of participating in a very ambitious transformational B2C initiative in one of the most complex business that I have ever experienced.
We had to build an Innovation powerhouse, embracing the vast amount of knowledge and expertise that the very talented Iberia employees had, and helping the organization prepare for a new world in which Digital was the new enabler to deliver high customized valuable experiences to our customers.
Managing the Incremental Innovation and Service Design practice, followed by managing Digital Customer Experience afterwards, gave me the opportunity to interact with more than 300 professionals, learning so much from every one of them.
Somehow, I was closing the loop that I had started 30 years before, and the little boy travelling alone to the US, was now a “forty-something” professional doing his best to prepare Iberia for a digital future.
And then, disruption came…
At the beginning, it was just some news from China and Italy. We thought we would be suffering a couple of months and then everything would be back to normal and we could recover our roadmap ahead. We were soooooo wrong !!!
These last 2 years dealing with the pandemic have been among the most challenging professional years that I have ever experienced. “Transformation” was not only a strategic desire but a necessity. Changing the services, adapting them to the new reality, making them work under very severe operational restrictions, discovering the new pains that our customers had,… I can’t really think of a period of time where the whole World was so much upside-down, and airlines were absolutely disrupted.
The good news was that we had progressed so much in terms of preparedness. All the internal digitalization that we had just went through made easier for us to adapt to the new ways of working, and we could leverage on some key digital assets to better serve our customers.
We had also built a high performing team, combining the talent that existed before and some new people that brought new ways of doing business and a solid customer-centric vision.
So all together, I think these last 2 years have been very stressful, strange and uncertain, but I also think that were the ones that have produced a bigger learning both personally and professionally not only to myself but to all of us. We are now stronger, and wiser, and we are better prepared.
Cross-check complete, and prepare for departure:
And now that the most sever part of the crisis is over and after these amazing 4 years at Iberia, I believe the cycle has come to an end. I have enjoyed participating in building the Transformation unit from the ground, creating a talented team of Service Designers, handing-over to my team most of what I know about change management and preparing for the future.
The whole industry has bottomed and it is now time for recovery and growth, and I’m totally convinced that in 2022 and 2023 we will see outstanding digitalization initiatives in Iberia, managed by my former team and the new talent that they will for sure incorporate. They have the skills, they have the attitude and they have a great roadmap ahead.
I’m now moving to a new industry, where I’ll bring everything that I know, and where digital change management is also so much needed. Servant leadership is a key element of my personal and professional toolkit, and I’m looking forward to helping again an organization full of talent, in a pivotal situation like the one Iberia was back in 2018.
Every time I’ll see a “bird” with a red and yellow tail above my head it will bring me memories of the outstanding experience with Iberia and the joy I had working there. And it will remind me the marvelous friends that I made, and how we dreamt together about transforming the industry.
“Alberto, what do you think about the current war for talent?” a good friend asked to me.
Wow, that’s a big topic and I’m afraid although I have hired, trained and coached many talented teams in my life, I would only have a partial view on it. So, what I proposed him instead, was that I would approach his question from within my area of expertise:
1. I would start a series describing the skills and mindset needed for several roles where I have expertise on. The first post was about becoming a “Marketing Hero”. Today I’ll be touching on what’s needed to be a great “Service Designer”, and soon I’ll be reflecting on how to become an excellent “Product Manager”.
2. I would then try to close the loop by describing how a team of Marketers, Service Designers and Product Managers would address the global talent issue if they were responsible for it.
So, let’s talk today about “Service Design”:
Service Design sits within the fundamental architecture of a company
Service Design is not a function, a role or a department. It is ultimately a collective team sport where small decisions taken by many stakeholders within a company result in an experience for customers interacting with that corporation.
Eventually, in any organization, you will see there is a “Customer Experience” unit, or a “Service Design” team. Although they will play a fundamental role in shaping how a product or service is delivered to customers, the real experience that they will enjoy or suffer will very much depend on a wider stakeholders footprint. From the training that front line agents interacting with customers had, to how the payment process was wired or how human resources hired employees, all those activities will have a fundamental influence on the service the customer experiences.
So, what is exactly Service Design?
A service is something that your company provides to a customer to deliver value. It very often includes a core product/service which is the fundamental element of the value proposition, but has many “satellite value drivers” as great usability, streamlined payment options, excellent delivery, outstanding customer care support, fabulous onboarding, …
A first challenge that companies face when crafting a new service proposal is that they need to reflect on a few topics:
· Who are the customers (customer base)?
· What are the core needs from those customers (pains/gains)?
· How those customers would like to engage with my service (channels)?
On top of that, services are made of things that customers experiment themselves, but they are also supported by a huge amount of processes that are just below the tip of the iceberg.
In this circumstances, Service Designers are the professionals at the cornerstone of service definition, from the pure customer experience perspective as well as how the company craft such a value proposition and deliver it to the customer in an efficient and effective way.
Service Design is responsible for the overall end-to-end experience that customers have over time, where bites of value are delivered along their journey.
You never start with an empty white sheet
Unless you are launching a company from scratch, chances are high that Service Design practice must be adaptative, playing with the existing assets and processes that the company already has.
Whenever we start thinking about how to deliver as product or service, several decisions have been made already in the company, from the organizational chart, to budget allocation or strategic initiatives definition or the culture style. All of them have a massive influence in which services can be delivered, how they are offered, and the value customers can get out of them.
Although this is quite frustrating for inexperience service designers, having some kind of restrictions very often is a nudge to creativity and great service designers embrace them as an advantage.
What are the building blocks of a Service?
There are five elements that define a service:
1. The “Core” Service: this is what we as a company offer, the technical characteristics of our service, the price and commercial conditions, the range,… In my view, it has three fundamental elements that a great Service Designer should address:
· Value proposition: how our service relates to addressing the pains that the customer has or the uplift in the gains that the customer can get by using our service. (e.g. in an airline it would be for example the flight schedule or the seat comfort).
· Quality / Reliability: how solid our service performs, how strong our reputation is, why customers should work with us. (e.g. in an airline, the punctuality).
· Customization: how customers can embrace our service, plugging it within an existing routine, customize it to make the most out of it. (e.g. in an airline, the flexibility to change the flight).
2. The “Delivery”: this is about how our service arrives to the customer, and very often has a more relevant impact than the core service itself.
· Speed: how effective we are delivering the service where and when the customer needs it. (e.g. in an airline, how streamlined the checkin at the airport is).
· Usability / Accessibility: how easy it is for customers to interact with our company and get access to our services (e.g. in an airline, how easy it is to book a flight in the website).
· Friendliness: how we let customers feel when exposed to our services (e.g. in an airline, how responsive customer-facing staff is).
3. The “Processes”: services do not happen “out of the blue”. There is a massive work to be done around creating an operative model that supports the value delivery.
· Technology: which technological tools we use to operate the service (e.g. in an airline, the booking management tool).
· Governance: how different departments interact along the customer journey (e.g. in an airline, how Handling suppliers and Ground operations work together).
· Data: how customer information is shared among different business units to support a consistent experience (e.g. in an airline, the Customer Relationship Management CRM tool).
4. The “Support”: no matter how strong the service design is, disruption will happen sooner than later. Internally generated disruptions are normally easier to control and manage (e.g. internal systems degradation), but there are hundreds of potential external phenomena that can impact how our service operates (e.g. weather, regulatory changes…).
· Channels: which channels are we offering to our customers for attending them when in a disruption (e.g. in an airline, call centers, chatbots, online formularies, agents at the airport…).
· Response time: how fast we are reacting to the disruption and offering an alternative to our customers (e.g. in an airline, accommodating customers in an alternative flight).
· Empowerment: how easy can customers adapt the service to the new environmental conditions (e.g. in an airline, self-management tools to choose alternatives).
5. The “Ecosystem”: a company never operates in isolation. Competition and collaboration are the bread and butter of business, and that is great because it requires Service Designers to never stop innovating and envisioning what’s next.
· Competitors: not only the most obvious ones delivering similar services but also alternative ones competing for the same “share of wallet” (e.g. in an airline, other carriers or high-speed train providers).
· Partners: other corporations delivering services in adjacent territories from the customer point of view that could help us to craft superior services by merging complimentary value propositions (e.g. in an airline, hotel accommodation providers).
· Suppliers: other companies providing services that we can integrate within our core service definition (e.g. in an airline, inflight entertainment suppliers).
What tools do Service Designers use?
There are hundreds of tools that Service Designers can use, and I believe the most talented ones are great choosing from the whole toolkit, those tools that are more effective for the purpose. Although the service design process is iterative, there are some fundamental steps that are great to follow. The tools used for each step are slightly different, but ultimately oriented to designing the right things and designing things right:
· Researching: card sorting (organize content in a way that suits users’ mental models), empathy map (share key assumptions around user attitudes and behaviors), journey map (describe how the user interact with the service, throughout its touchpoints), personas (narrate the different types of users, based on clusters of behaviors and needs), stakeholders maps (identify the role of each stakeholder, and relation dynamics).
· Ideation: experience principles (identify a set of guiding principles to inspire the design of a specific service experience), brainstorming (first diverge and generate as many idea as you can, then converge around solid concepts), evaluation matrix (prioritize ideas based on the most relevant success criteria for the project).
· Prototyping: user scenarios (explain the envisioned experience by narrating a relevant story of use), user stories (detail the features that need to be developed in the form of user interactions), rough prototyping (quickly mock-up ideas using simple assets and materials, already available on the spot).
· Implementation: business model canvas (plan and understand in advance the business model and constraints of the service you are designing), value proposition canvas (describe the value offered by the service in simple words), service blueprint (map out the entire process of service delivery, above and below the line of visibility), service roadmap (plan the service execution over time, from a minimum set of functionalities to delivering the full experience), success metrics (define a set of KPI to measure the project outcomes and service success).
So what skillset is needed to become an outstanding Service Designer?
Well, we have covered what Service Design is, the building blocks of Service and the toolkit that designers should master. But what makes a great designer, orchestrating all of it together?
They need the capabilities to navigate the organization, diagnose the parts that are blocking a service meeting user needs, and collaboratively craft a strategy alongside domain experts on how to improve this and execute it fully.
Depending on their role within the organization (individual contributors, team leaders), the balance between different skills may vary. I would say although individuals could be spiky, teams should be well-rounded.
I will divide the skillset in four different clusters:
· Cognitive skills: The ability to leverage user feedback in all its forms (from casual conversations to formal research) to understand how customers engage with the service, make better decisions and drive meaningful outcomes to the business. Define an overall vision of the service that connects to the strategy of the company and deliver a clear roadmap of highly prioritized features that deliver against that vision.
( System thinker / Process orientation / Research pro / Financial literacy / User Centered Design / UX Fundamentals / UI Fundamentals / Problem Solving / Experimentation / Strategic vision / Bias free )
· Social skills: The ability to connect with customer needs, empathizing with their pains and gains and translating them into actionable and high impact service features. Proactively identify stakeholders and work with them building services that deliver meaningful business outcomes. Manage and mentor direct reports with the goal of enabling them to continuously improve against service design competencies.
( Facilitation / Empathy with users / Story telling / Stakeholders management / Mobilization across the organization / Team building )
· Technological skills: The ability to understand how technology can support crafting services with a strong and positive customer footprint while they improve overall operations within the company. Embrace Data as a key element of service continuous improvement.
( Technology acumen / Data literacy / Agile software development knowledge )
· Self-Management skills: The ability to understand and contribute to the overall business strategy, making the most out of the company assets and position Service Design as a fundamental workstream to survive under high volatility and ambiguity.
( Citizen of the world / Massive curiosity / Fast decision making / Growth mindset / Comfort with extreme ambiguity / Resilience / Results driven / Business outcome ownership )
Putting it all together
Well, who said that Service Design was easy? It is rare that you can find everything above in any single individual. I was lucky enough to work with a number of them during the last years, and when it happens, the progress made in an organization towards customer centricity is massive.
If you are lucky and find one of these “unicorns” ever, try as much as possible to keep it, support the development and create a cultural safe environment for them to flourish. Your customers will very much appreciate it 😉
* Effectiveness / Efficiency * Real / Win / Worth * Design the right things / Design things right * Value creation / Value delivery * Experimentation / Exploitation
Thanks a lot, Iztok, for challenging me with such though provoking questions
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“Iztok, I love your new podcast series. You had an airline digital talk. Then you did an airline data talk. What’s next?”
This is what somebody asked me recently on LinkedIn. For me, the next step was obvious: next in line was an airline innovation talk.
Why an airline innovation talk? Because recently when I was thinking about innovative solutions, I started to think, where does innovation really happen? Can you point a finger at one department, one area in a company? Are innovation departments the solution?
In my opinion, innovation happens when you combine insights from different areas and different people: data and analytics, digital experience, UX/UI, experimentation, customer research, customer service, product design, etc. To do innovative things, one needs to know all these areas and understand how they fit together. You need to know how to leverage insights from these areas to understand your customer’s pain points and build innovative solutions to address those needs. And this is what marketing should be all about: how to provide value for your customers.
As I was thinking about all these things, I remembered a great post about marketing and innovation I read a while ago. The article was titled “Marketing Hero“, and it was written by Alberto Terol Conthe. So, the guest for our airline innovation talk was a no-brainer.
Airline Innovation Talk with Alberto Terol Conthe, Head of Customer Experience Design and Development at Iberia
Marketing (Value) + Innovation (Creation) = Value Creation
Alberto opened his article with one of my favorite quotes by Peter Drucker: “Business has only two basic functions, marketing and innovation.” So, my first question for him was, how do marketing and innovation fit together?
I always have thought that they are all together. I’m a marketeer. I started as a marketeer at 3M. Previously I was working in Accenture consultancy as well. But I would say my main business school was marketing, and then moving into innovation, I think they are very close fields. I tend to think marketing is about value, is about understanding customer needs. It is part of the discovery, the research, and understanding the pains and gains of the customer, and innovation is more about creation – bringing some new ways of doing things and new processes and new technologies.
If you put them all together – value creation, marketing, and innovation – they go so well together. It’s turning an idea based on some customer pain or gain into a solution and executing it and providing value from the customer perspective. So they go together. And I think the skills of good marketeers and good innovative people are quite similar. They are around curiosity, questioning everything, bringing the what and the how and the when and the why to every conversation.
Alberto mentioned that execution is an important element of marketing. Recognizing your customer pain points and figuring out innovative solutions is not enough.
I think a fundamental element, as well, of marketing and innovation is the execution. I have had a lot of discussions with certain designers and people from innovation like, “We created this beautiful PPT, and now it’s a matter of the execution team to execute.” My point is that unless a product or a service is crafted and then deployed into the market and it’s being consumed by a customer, there is no success at all. It’s just an idea.
In Successful Companies, Innovation Sits Very Close to the Business
The way Alberto talked about marketing and innovation made a lot of sense to me. But what I see in most companies, especially the big ones, is that marketing is still mostly about advertising – or, in the digital marketing case, it’s mostly about taking care of the website, ecommerce, and digital advertising. Why do we often see a separate innovation department?
I think marketing is very wide. My background is product marketing. You mentioned all the branding and channel management and stuff, and that’s part of marketing. But maybe what I would compare more between marketing and innovation is product management. There, I think it’s very close to each other.
Another example I would bring to you is that I think innovation teams in large companies sometimes are located in the HR people area because of all the change management needed and all the transformation efforts and so on. I think sometimes, very frequently – and I think nowadays even more frequently – they belong to the IT and technical organization, because it’s very much leveraging technology.
Alberto has recognized a pattern when it comes to innovative companies:
The examples I have seen as more successful normally are those in which these companies put the innovation function – the initial innovation function, because I think it has to embrace the whole organization – but let’s say the team mobilizing innovation from the very beginning sits very close to the business. Therefore, again, I see the link between marketing – which for me is value creation and value delivery, which is basically business – very much related to innovation.
Doing The Right Things Vs. Doing Things Right
One other part of Alberto’s article that I really liked was the distinction between two key areas of marketing. One is execution; Alberto calls it “doing things right.” The other part is more about forward-thinking, strategic foresight, and business modeling, and that’s what he calls “doing the right things.”
That’s a sentence [distinction] that we use very much in our service design team. I think both steps are needed. It reminds me a little bit of the Double Diamond in service design, the divergence and then the convergence. I think these two elements – designing the right thing, for me it belongs more to marketing. It’s discovering the underlying customer need, the pain, the job to be done, and so on. It’s designing the right thing.
Source: Alberto Terol Conthe (LinkedIn)
When it comes to figuring out what the right thing is, Alberto mentioned an interesting “Real, Win, Worth” framework.
In 3M we had a heuristic that we used very frequently in designing the right thing, which is Real, Win, Worth. Every time we wanted to address if an opportunity was worth it for 3M, we would first envision if it was real, if there was a market, if there was a customer pain or need to be addressed. Is this opportunity real? The second one was, can we win? Do we have the capabilities in our company to achieve a successful business out of this opportunity? And the third one would be worth. Is it worth it, or would it be so costly or I would have to hire talent that I don’t have? Okay, so there’s opportunity, we could potentially win it, but it’s not worth it. Or it would not support our strategy or whatever. So for me, that’s the designing the right thing – deciding what you’re going to design and what’s out of scope as well, which is also very important.
And then we moved into designing things right. There is more the world of service design, designing a product and service that matches those needs that you have discovered in the designing the right thing. It has much more to do with UX, UI, choosing the right platform for delivering that product or service, choosing the right partners. It’s more the delivery part of the value. You can be very strong in value creation, but you can be very poor in value delivery. Again, execution becomes fundamental in the second part. We always, as service designers, try to keep both areas balanced – designing the right things, choosing the right fights to fight, but then deciding something that was worth it for the customer and appealing.
Top-Down or Bottom-Up?
To me, this concept of doing the right things and doing things right was really interesting. My background, my experience, and also our Diggintravel Airline Digital Optimization research is more about doing things right – how to be agile, how to do growth marketing, how to do digital optimization and conversion optimization. But if you do systematic digital optimization right, with agile loops of analyzing customer needs, managing data, doing structured analytics, trying to find solutions and designing digital products to address those needs, you’re basically moving up to doing the right thing. So, I asked Alberto: how are these things connected?
It’s iterative. You could eventually start defining an arena that you want to fight for. That’s the design the right thing. Then you move into design things right, and then you discover that it’s impossible to deliver value in that field. Then you may decide to reassess if you are fighting for the right opportunity, or you could move into an adjacent opportunity or so on.
I think it’s an iterative process, and moreover, I think when you launch a product – and this is something we very often forget as service designers; we forget about the product when it’s being delivered. I think especially in those first weeks and months and even years after the launch, they should be in hyper-care, and we should be reconsidering every time, every week, following the KPIs, the metrics, and improving the product.
Alberto recognizes the value of applying the principles of experimentation and being agile to the overall business model and overall products, not just the digital side.
I had once a boss that always came with the question, “Are you 100% sure that this product will be successful?” I said, “Come on, I’m not, but this is the Pareto principle. I’m pretty sure that’s the case. I would say I’m 80% confident that it’s the right product for the right market segment. But let’s launch and let’s learn on the go and adjust and adapt.” So I’m very fond of experimentation and agile launching of new products. Otherwise, it’s paralysis by analysis.
Finding new solutions versus optimizing existing ones
A systematic loop of digital optimization is great for incremental improvement, but you have to know whether you’re optimizing the right things.
I think the other element – because you start with A/B testing and improving and these incremental improvements – the reason I was mentioning that designing the right thing is so important is because very often, especially these days, there’s obsession with efficiency. “We have to deliver efficiency gains.” My point is that there’s nothing so useless as doing something very efficiently which is not usable at all, or that we shouldn’t have done at all. We can be executing something beautifully, it’s very efficient, but there is no customer need or there is no market to be addressed. I think therefore we need to keep balance on both aspects.
But experimentation, rapid prototyping and so on – in fact, we had a discussion earlier this week about prototyping. We were discussing research and we want customer research in which we would envision what customers want for a specific product segment. My point was that customers would never come with a solution. That’s the job of the product owner, of the marketeer. Eventually, by prototyping and showing them some mockups, we can show them, “This is the size and the color and the shape that this would have. Are we working in the right direction, or is this something that doesn’t resonate with you at all?” I think all this rapid experimentation makes perfect sense with any product launch.
Source: Visual Summary of “Testing Business Ideas” by David J Bland and Alex Osterwalder
Innovation Is More About Attitude and Culture Than It Is About Skills
One of the key insights Alberto shared in our airline innovation talk was in regard to his key learnings. The first thing he mentioned was attitude:
I thought that innovation was more about skills. I think over the years, I’m discovering that it’s far more about attitude. That’s the approach when I’ve been hiring marketeers in 3M, or now service designers at Iberia: bringing people with curiosity, with this sense of observation, with customer obsession – and when I say customer obsession, it’s spending a lot of hours with customers, interacting with them. Not focus groups, which is a controlled environment, but observing customers dealing with our products and services.
Then Alberto mentioned another interesting aspect of innovation and culture.
I would say another totally different topic which is relevant for progressing with innovation in companies is how managers get measured. Maybe in the vision statement in a company, it says that “we would like to be the most innovative.” Okay, let’s go into the KPIs that managers are using. Are they being measured by the business as usual or by exploring the next big thing? Very often, that tells you the culture of innovation which is happening in the company.
I mentioned culture. For example, something I loved about the American approach to innovation – and I experienced that in 3M, but I’ve been talking with friends from HP, Salesforce – I think in American corporations, there’s emotional safety within the teams for putting some time for exploring and trying to discover things out of business as usual. The famous rule of the 15%. There are many different mechanisms for making the teams work on something which is enriching the total knowledge within the company, and they can openly share their findings, and mistakes are allowed and so on. That cultural aspect is fundamental as well.
“Business has only two basic functions: Marketing and Innovation”
Peter Drucker
Having devoted my working life as a Strategist and Marketer to Innovation in a number of companies and sectors, I can’t be more aligned with the father of modern Management, Peter Drucker, when he said that without a customer, no business would ever exist. Therefore the fundamental presence of Marketing and Innovation in my professional career resonates so much with what I believe makes businesses possible.
A couple of weeks ago I got a phone call from one of the most relevant Spanish business schools. They wanted me to provide them with insights about the content that a new B2B Marketing executive program should include. So I started reflecting on my early years at 3M as a Marketer and later as a Strategist.
I would like to capture in this post a framework and a vision on how I would create an innovative Marketing unit from scratch if I was given that mission today, and the capabilities a modern marketer should have in my view these days.
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Let’s start with the basics. I do believe there are two fundamental dimensions in Marketing:
Doing the right things – Doing things right
A Marketer has to focus on what matters first, doing the right things. But when those things are clear, he has to make sure that execution is flawless. Both capabilities are fundamental and finding someone who masters the two of them is quite unique. I have seen brilliant “thinkers” – “strategists” and outstanding “doers”, but normally they are not the same animal.
Exploitation – Exploration
A Marketer has to master short term execution (“exploitation”) while at the same time he must find bandwidth for envisioning what it is to come (“exploration”). Again, it is difficult to find individuals who can perform both roles, and from the cognitive standpoint I strongly believe the brain cannot handle playing both roles together at the same time. Allocating time and energy for each of the two disciplines is key.
If we would merge the two dimensions together, we would end up with a matrix like this one, with what I call the 4 fundamental capabilities an innovative Marketing team should have:
Strategic Foresight
Business Modelling
Operational Excellence
Technology Acumen
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So now we have a framework so we can move on and dig deeper. The question then would be: what Marketing disciplines are expected under each of those 4 fundamental key capabilities of a modern and innovative marketing team? Let’s review them together:
STRATEGIC FORESIGHT (Doing the right things + Exploration)
Someone once said that “the best way to predict the future is to create it”. Understanding what the future will bring, the new market trends and how value platforms and ecosystems will be reshaping, gives an advantage to every marketer with the ability to explore the future.
Competitive intelligence and Customer Research will help to anticipate market dynamics and how key purchasing drivers are changing, therefore creating new opportunities to capitalize.
Predictive Analytics will leverage the power of Data and will anticipate the probability of future competitive scenarios. Propensity models, customer retention alarms, up-selling and cross-selling opportunities discovery, content personalization,… are just a few of the possibilities Data bring to marketing organizations.
Understanding Value Ecosystems Maps (complementing Michel Porter’s Value Chains), assessing potential coopetition opportunities, exploring alliances and partnerships to deliver added value to the customer,… moves the competitive paradigm from a “zero-sum game” to an endless world of possibilities.
Futures Thinking or the systematic study of the “possible, probable and preferable”, provides marketers with a semi-structured approach to better understand what the future may bring.
BUSINESS MODELLING (Doing the right things + Exploitation)
While the term “business modelling” can also be used for exploring new disruptive business opportunities, I am referring to it in this cluster associated to everything related with the classic and fundamental marketing skills: creating and delivering value for the customer.
The Marketing 4 Ps described by Kotler are now frequently replaced for new paradigms in Marketing, but I do believe they are still 100% valid. Product is the cornerstone of the 4 Ps, as delivering a strong product and a powerful value proposition related to it (addressing customer pains and opportunities), is a foundational element of business success. Optimal Pricing plays a pivotal role in achieving profitable growth. Dynamic pricing, value pricing, price elasticity,… are just basic concepts a modern marketer must deeply understand. Promotion and brand management are necessary elements of the communication with the customer. Understanding market dynamics, channel management and Placement, very often differentiates the marketing rock starts from the others.
Portfolio management (new product introduction, product discontinuation,…) is the bread and butter of a marketing strategy. Most successful companies are very often those who shine in this discipline (e.g. Apple, Zara, 3M,…)
Strong market segmentation capabilities and Customer Lifetime Value management will tell you if everything done in Performance Marketing was worth the effort and a recurring business has been achieved, or acquisition costs have been wasted.
[ Keywords: Business Model / Product / Price / Placement / Promotion / Portfolio / Channel / Distribution / Research / Design Thinking / UX / Human Centered Design / Market Segmentation / Brand / Product Life Cycle / Customer Lifetime Value / Partners / Cost Structure / Revenue Streams / Value Proposition / ABM Account Based Marketing / Inbound Marketing / Content Marketing / Affiliate Marketing ]
OPERATIONAL EXCELENCE (Doing the things right + Exploitation)
This capability is about flawless execution at scale. Priorities have already been defined and now it is time for performing like hell. This is one of the most relevant levers in native digital businesses, while it is being widely adopted by legacy companies as well.
It is also the discipline of Marketing Automation, to ensure the right proposition arrives to the right customer at the right time, supported by strong automation platforms and solid customers and leads databases with a sharp segmentation (CRM).
Strong Loyalty schemes frequently improve customer retention and increase the yield of the existing customer base.
In companies like start-ups where there is not a solid track-record or a historical business to manage, Growth Hacking is frequently a discipline and an attitude where “growth” is the mantra and funnel conversion KPIs are like the North Star.
[Keywords: CRM / SEM / SEO / Display / CRO / Loyalty / Growth Hacking / Analytics / Marketing Automation / CPC / PPC / CPA / CPM / Trade Marketing / Inbound Marketing / Social Selling / Employee Advocacy / NPS / Customer Satisfaction / Service and Aftersales]
TECHNOLOGY ACUMEN (Doing the things right + Exploration)
Technology has always been an accelerator for change. There are two approaches to technology from a Marketing perspective: utilize it for the benefit of operational excellence (e.g.: RPA Robot Process Automation, Marketing Automation,…) or fully embracing it to incorporate it as a fundamental element of your product / service offering (e.g.: cognitive assistants, AR / VR experiences,…). I am covering here the second, when technology is not an enabler for your product offering but an element of it. In that situation, marketers need to understand and explore the possibilities of technology to incorporate it as an essential element of the value proposition.
While pure tech players will drive technology as a core competence and will develop it internally, if you are a marketer in a non tech industry chances are high that you will need to search for it outside. If that is the case, there are a number of possibilities (externalize R&D, embrace Open Innovation initiatives, acquire technology to incorporate to your product,…)
[Keywords: RPA / AR / VR / AI / Cognitive / Voice / R&D / Open Innovation / Corporate Venture Capital / Startup / Intrapreneurship]
So… are these capabilities above everything that a Marketing team should have? No, I have been just focusing on the pure marketing practice, but I would strongly recommend to complement the Marketing team with these other disciplines as well:
P&L literacy: knowing how to build and action a profit and loss statement and how different revenue streams and cost drivers affect to the overall profitability of the business.
Project Management skills: from classic project management to agile and scrum basics, in order to be effective and efficient when managing the business.
Soft skills: Negotiation expertise, team management mastery and strong empathy with customers and stakeholders.
Sensitivity towards environmental sustainability: understanding how sustainability is reshaping the whole business landscape and drives customer willingness to interact and buy from corporations.
Having reflected about all these capabilities required to run a solid Marketing team these days, I’m curious about the feedback that my colleagues and friends will provide. Are you missing something? Do you have another view on everything above?
Having worked for 3M for most of my professional life, transitioning from Product Design to Service Design almost a couple of years ago was a pivoting time in my life.
Ever since then, I’ve been reflecting on the skills, methodology and attitude that 3M taught me and helped me so much during my transition to Iberia Airlines.
Some days ago, I decided to merge the talent of my current Service Design team at Iberia with the vast Innovation knowledge from my former colleagues at 3M by visiting the 3M Innovation Center in Madrid. It was a highly pleasant evening and it was beautiful to see that, when in 3M facilities, I still feel at home.
The following lines are a distilled and very personal view on what makes 3M such a massively powerful innovation engine. Why has 3M been an Innovation paradigm for so many years?
1. Embrace failing as part of succeeding
Nowadays this attitude is a kind of mainstream mantra. It’s always quoted in “manager wannabes” airport business books. But when it comes to real business life, very few companies stay strong holding this principle.
3M has been one of those companies from the very beginning. One of the most influential 3M executives, William McKnight, has a number of quotes that are not surprising when formulated by modern executives like Steve Jobs but were absolutely innovative at McKnites time back in the 50s.
“As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women, to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way. Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs. Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.”
Back in my 3M days, I have to say I never felt scared of committing any mistake as empowerment from senior managers was always a key cultural pillar.
2. Avoid the “silo mentality”. You are as strong as your network is
Back in 1968 Dr. Spencer Silver was trying to find a super powerful acrylic adhesive without much success. But he managed to understand the quite unique characteristics of the adhesive he had just created: it left very few residues and it was pressure-sensitive.
Years later, another 3M researcher called Art Fry thought about Dr. Silver adhesive when trying to attach the bookmarks he used for guiding himself along with his hymnal while singing in the church choir. Post-It had been accidentally invented.
Shouldn’t Silver and Fry been in contact nor their investigations available to each other, Post-It would have never been conceptualized and this iconic product from the ’80s and ’90s wouldn’t have existed.
During my time at 3M, I always felt supported by a massive network of colleagues just at my fingertips. It was a matter of calling or emailing them and I always got some kind of help.
3. Ensure pivoting is in your DNA
3M is the acronym for “Minnesota Mining Manufacturing”. The company started as a mining corporation, exploiting corundum. But soon the founders discovered that the mineral coming out of the mine was of much less quality and decided to pivot and produce sanding paper. Sanding was at that time dangerous as the particles created were inhaled by the workers. So 3M invented “Wetordry”, a waterproof paper that eliminated dust from the sanding process. The mineral that was not valuable from a mining perspective had become a key ingredient of the sanding paper industry.
A key lesson from this 3M beginning is the power of pivoting on your core strengths and embrace change when needed.
Ever since then the story of 3M if full of key investments and exits from businesses that were not fully aligned with core competencies.
While in 3M, I had the opportunity to reinvent myself a number of times: businesses, geographies, roles and responsibilities. Every 2-3 years a beautiful opportunity emerged and pivoting was possible.
4. Understand that there is no Innovation without customer demand
A former Sales Manager at 3M always said that “the best product sample is the one a customer buys” meaning that there is no way to understand customer propensity to buying by giving free products to them. Or like the old Marketing quote says “don’t tell me what you would buy, just show me your ticket”.
Customers lie every time. Sometimes intentionally and sometimes without purpose but just because we are all biased when confronting a “would you buy this?” type of question during customer research.
The only way to check customer demand is in real life, and 3M always had very clear that without customer demand there is no valuable innovation.
Coming back to the Post-It story, a very clever movement that Art Fry made was probing his boss that there was a real demand for his product. He gave free Post-It samples to assistants in several business units and when they were running out of samples they came back to Fry asking for some more. He then told them to ask their managers for the product and that way he probed the company that customers were really willing to use the new product.
When working at 3M for every new product launch I would build the RWW Real-Win-Worth model while analyzing the P&L potential impact by answering these questions: Is the opportunity Real? Can 3M win with it vs. competitors? Would it be worth it in terms of profit?
5. Co-create with customers all the time
Customer co-creation is now mainstream within the Service Design playbook but back in the 30s of the twentieth century was something absolutely new.
Most of the more powerful 3M inventions were conceived by working hand to hand with real users, shadowing them while they were performing their daily tasks and performing ethnographic research (e.g.: masking paper, Scotch tape,…).
There is no lab work powerful enough to replicate the real working conditions of a customer so observation in real life becomes crucial.
During my 13 years at 3M I estimate I have visited more than 500 customers from many industries (automotive, retail, industrial, electronics, public health,…) and countries. Every day in the field was a massive creativity boost.
6. Embrace a full international vision
Most companies claim to have an international vision, but very few manage to create a full international culture embracing at the same time the key central values of the corporation and the local uniqueness.
As markets and product categories evolve at a worldwide scale, leveraging the power of an international network (labs in more than 36 countries, business in more than 60 countries) is mandatory and facilitates anticipating megatrends and attending global customers demanding a unique value proposition independently from the business site.
Regionalization at 3M has occurred a number of times, adapting the organizational design to the geographies that make more sense from a business perspective.
When traveling around different subsidiaries, I always felt the regional flavor while acknowledging a unique culture of innovation and management.
7. Invest in Technology Platforms
3M devotes around 6% of the Sales to R&D (1.7 $B), which is not much comparing to other well-known innovation companies. Why this limited investment result in more than 3.000 new patents every year and new products accounting for more than 40% of the total revenue?
The secret is the “Technology Platform” approach to new product invention. Scientists in 3M bring in technical knowledge in more than 46 fields (e.g.: adhesives, additive manufacturing, micro-replication,…) which is later mapped to specific customer pains in what is called “Applications development”.
The beauty of this strategy is that investment in technology platforms development pays off in a number of applications in many industries creating massive synergies.
I still remember my first day at 3M, when I called my wife saying: “Honey, this looks like the James Bond lab, full of inventions with hundreds of applications”.
8. Fall in love with the problem, not with the solution
With such a bright technology available at your fingertips, it would be easy at 3M to come with a sophisticated technical solution to address a customer pain that was proven later that was not a pain at all.
Design Thinking was always in 3M DNA, with Marketers and Technical communities obsessed with “solving the right problem” before moving into “solving the problem right”.
I remember like if it was yesterday when a senior executive killed my initial product positioning strategy for an automotive aftermarket product family. I was then in love with in my view the smartest solution to an eroding business, but revisiting the issue while calling on additional customers absolutely changed my mind about what the issue really was. The outstanding performance of the product was useless as customers threw it away far ahead reaching its full potential. It was not a product technical challenge but a customer perception challenge.
9. Creative problem solving is key
“What if…” approach to key customer challenges is a fundamental technique at 3M. The most obvious solution is not always the better one. Exploring other paradigms, embracing technologies from other business practices, calling a colleague from a different sector always pays off.
Moon-shot thinking creates a mindset that defers judgment and creates the right atmosphere for addressing the underlying customer issues and opportunities.
I had the opportunity to participate in several product launches where creative problem solving was applied. For example, car painting is difficult because matching the original paint color is a challenge under interior car body shop light conditions, so why not bringing indoor the natural light tone created by the sun with the support of a “sun light” device?
10. Hire the best technical community in the World
3M has been led a number of decades by a strong technical community. Managers are necessary to manage, but technicians are the core of 3M innovation powerhouse.
There is not an easy balance between Marketing (responsible for targeting customers) and R&D (responsible for creating outstanding applications), but when squads of both communities worked together, magic happened.
Until now, I have sound respect for the technical community at 3M, always willing to help and create outstanding products to bring value to the company.
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I’m absolutely in love with 3M, as much as I am with my current employer. My new role in Service Design in an airline makes me approach the question “what does 3M need to do in the future to stay at the front line in terms of being an innovation power house?” with new insights from the Service Design industry.
If I would need to choose three elements, it would be:
1. Embrace ecosystems and Open Innovation
As intelligent as your own employees may be, by definition there will always be more talent out of your company than inside of it. Why would you lose the opportunity to embrace such talent in an “Open Innovation” scheme where internal 3M talented individuals would work shoulder on shoulder with bright corporates and start-ups around?
I guess the fear of losing IP on the technology has prevented 3M from this exposure to the external ecosystem, but I believe it has come the time to open themselves to the bright future that external talent can represent.
2. Boost talent as the key competitive factor
Products and services are not any longer the key competitive factor of a company. They can be bought, copied, replicated, … while individuals cannot.
In the start-up world teams are very often the reason why investors support venture initiatives, as they know the product will very possibly change but the talent of the team will make pivoting fast and cheap possible.
3. Have an eye on the long run
Strong pressure to meet quarterly earnings targets can result in compromising the long-run strategy. Innovation needs some space to flourish, and fostering such conditions requires senior management to counterbalance short term goals with building the right capabilities for the future.
What was once one of the 3M management principles: “If you put fences around people, you get sheep. Give people the room they need.” needs to get traction again.
“The only true wisdom is in knowing you know nothing.” — Socrates
There is a number of reasons why “The Pricess Bride” became an iconic film in the 80’s. If you were not in love with Robin Wright (as Buttercup) or moved by the outstanding soundtrack created by Mark Knopfler it’s quite possible that you had no heart.
But the other reason why this modern fairy tale became so popular was the script, containing a number of scenes difficult to remove from our childhood memories. One of my favorites is “The battle of the wits between Vizzini and Westley”.
Vizzini captures Westley’s true love Buttercup, and Westley challenges the Sicilian in a battle of wits to the death. Westley, places two goblets of wine on the table, and informs Vizzini that one contains deadly «iocane powder.» Westley says, «The battle of wits has begun. It ends when you decide and we both drink and find out who is right… and who is dead.»
Vizzini then tries to guess Westley’s reasoning, pretending to figure out his strategy when placing the poisoned goblet.
To make the long story short, a number of cognitive biases while trying to figure out Westley’s strategy, push Vizzini to the wrong decision making. He drinks from one goblet and at the next minute, he dies. Apparently, Westley placed the deadly iocane powder in both glasses, but he had built up an immunity along the years.
Cognitive biases refer to the systematic ways in which the context and framing of information influence individual judgment and decision-making. They are mental shortcuts (known as heuristics) which are systematically used my Marketers and Service Designers everywhere in order to design killer product and services that are difficult for a consumer to resist.
The power of these biases is that no matter how conscious you are of their existence, it is quite difficult to avoid them when someone faces decision making in real time. They very often lead us to the wrong decision making in terms of rational choices but as the famous American psychologist Dan Ariely says, we Humans are by nature “predictably irrational”.
So why do humans have cognitive biases?
Most of our mental biases date back to a time when quick decisions determined our survival.
We should not judge the negative impact of humans developing cognitive biases as we evolved in the past based on the negative impact of them in current societies. This human brain characteristic made our ancestors survive in stressful situations where “fight or fly”where the only options and they had to react fast (almost instinctively) without much thinking. If our predecessors had to carefully analyze if a mammoth was about to attack or not, they would probably die.
But can we fight them?
Even the most trained people find it difficult to find the cognitive biases behind their reasoning. Some of the most popular technics though are:
· Take your time: Set up a time to sit down and reflect before making big decisions, whether this means writing down your thoughts or just meeting with others to flesh some ideas out.
· Avoid decision making under stress: Our body releases a cocktail of adrenaline and cortisol, which increases our heart rate, dilates our pupils and triggers tunnel vision. Every decision is better made after a single, deep breath.
· Use decision trees: Evaluating the pros and cons for every decision being made and the cascade effects for each of the options.
· Leverage mental models, although sometimes can be confused with cognitive biases, they are a different animal. A mental model is a representation of how something works. We cannot keep all of the details of the world in our brains, so we use models to simplify the complex into understandable chunks.
· Have a “decision journal” and periodically review the most relevant decisions you made, when you made them, what were the outcomes and what info was available by the time you made the decision.
· Purposefully surround yourself with people who are different from you and who have different opinions than you do.
· Study them to acknowledge when you are being affected by any.
Why understanding cognitive biases is so relevant for Service and Product Designers?
Researchers Amos Tversky and Daniel Kahneman conducted a number of studies on cognitive bias and found that framing identical information differently (i.e., presenting the same information differently) can lead to opposing decisions being made. This means that cognitive biases play an important role in information design because they influence users or customers decision-making. How we present information on webpages and user interfaces can affect how likely users are to perform certain actions, such as purchasing a product or service.
How cognitive biases kill Innovation?
Known broadly as the “curse of knowledge” (or effect of knowing), biases rely on our experiences and ways of applying prior knowledge, particularly in decision-making. The more previous success you have had in applying that knowledge, the harder it is to imagine alternatives. This helps explain why older team members tend to struggle most to think divergently. Most decision making is instinctively guided and controlled by these rational short cuts, without us even being aware of it consciously. The result can be a negative impact upon creative and innovative thinking (especially in divergent ideation and conceptualization phases) where key decisions about what to take forward are made. Not keeping them in check can also mean you end up trying to solve the wrong problems whilst ignoring critical flaws only to repeat the same patterns again for future projects.
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Please find below a list of frequent cognitive biases affecting our decision-making:
· Confirmation bias, the tendency to seek out only that information that supports one’s preconceptions, and to discount that which does not. For example, hearing only one side of a political debate, or, failing to accept the evidence that one’s job has become redundant.
· Framing effect, the tendency to react to how information is framed, beyond its factual content. For example, choosing no surgery when told it has a 10% failure rate, where one would have opted for surgery if told it has a 90% success rate, or, opting not to choose organ donation as part of driver’s license renewal when the default is ‘No’.
· Anchoring bias, the tendency to produce an estimate near a cue amount that may or may not have been intentionally offered. For example, producing a quote based on a manager’s preferences, or, negotiating a house purchase price from the starting amount suggested by a real estate agent rather than an objective assessment of value.
· Gambler’s fallacy (aka sunk cost bias), the failure to reset one’s expectations based on one’s current situation. For example, refusing to pay again to purchase a replacement for a lost ticket to a desired entertainment, or, refusing to sell a sizable long stock position in a rapidly falling market.
· Representativeness heuristic, the tendency to judge something as belonging to a class based on a few salient characteristics without accounting for base rates of those characteristics. For example, the belief that one will not become an alcoholic because one lacks some characteristic of an alcoholic stereotype, or, that one has a higher probability to win the lottery because one buys tickets from the same kind of vendor as several known big winners.
· Halo effect, the tendency to attribute unverified capabilities in a person based on an observed capability. For example, believing an Oscar-winning actor’s assertion regarding the harvest of Atlantic seals, or, assuming that a tall, handsome man is intelligent and kind.
· Hindsight bias, the tendency to assess one’s previous decisions as more efficacious than they were. For example, ‘recalling’ one’s prediction that Vancouver would lose the 2011 Stanley Cup, or, ‘remembering’ to have identified the proximate cause of the 2007 Great Recession.
· Availability heuristic, the tendency to estimate that what is easily remembered is more likely than that which is not. For example, estimating that an information meeting on municipal planning will be boring because the last such meeting you attended (on a different topic) was so, or, not believing your Member of Parliament’s promise to fight for women’s equality because he didn’t show up to your home bake sale fundraiser for him.
· Bandwagon effect, the tendency to do or believe what others do or believe. For example, voting for a political candidate because your father unfailingly voted for that candidate’s party, or, not objecting to a bully’s harassment because the rest of your peers don’t.
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