Trends 2017: Six Operational Excellence Trends That Will Dominate Customer Experience Management
In my last post, I identified a strategic focus on operational excellence that will drive business leaders responsible for business transformation and customer experience (CX) management in 2017. Business leaders want to move beyond experimentation with emerging technologies. And they definitely want to end budget-blowing overruns on large scale projects, like omnichannel, which can cost upwards of one million dollars yet still fail. Starting last year and continuing into this year, executives want to focus squarely on building operational excellence into the business transformation journey.
Six key trends in operational excellence for customer experience in 2017 will shape strategies and investments:
- Trend 1: A concerted focus on organizational change management will bolster CX initiatives that could otherwise fail. Change management is such a perennial problem that it could be on the trends list every year. What’s different in 2017? The answer is that many organizations’ strategic CX initiatives haven’t made a dent in their customer care culture – so it’s time to focus on the real problem. Leaders now realize their CX investments will only go so far without overcoming employee and mid-management resistance, in 2017 and beyond. But that’s not even half the battle: most companies are stuck and don’t know what to do next. For example, do they ask HR to lead an internal initiative (probably not); do they engage a change management firm to help (maybe); do they call their favorite management consultants (possibly); do they retain or hire individuals who specialize in change management methodologies (definitely); do they hire leaders who’ve driven successful initiatives at other firms (probably) – just what do they do to get unstuck? The 2017 trend will be to shine a spotlight on change management approaches, lessons learned, best practices, methodologies, and techniques; then, doing something about it will be the big challenge.
- Trend 2: Efforts to nurture, drive and support innovation will systematically surface creative ideas that will change the organization’s customer experience deployments. Global surveys of CEOs over the past five years have shown a remarkable, sustained focus on customer experience investments in digital. But technology alone is not the whole story; leaders are now emphasizing the need for innovation because it takes more than digital and culture change to beat the competition. For example, an idea as simple as contextual commerce that allows customers to buy products in the moment with one click, without having to go to the shopping cart or check-out, is a powerful creative concept. To surface similar ideas in 2017, companies will systemize how they identify innovations that delight customers. Employees will be given time to collaborate and brainstorm, and will be incentivized to bubble up new, differentiating ideas. Executives will be compensated on innovation, and new processes will operationalize the ideation efforts.
- Trend 3: Operational excellence will align outside-in and inside-out thinking. There are two ways to transform the organization. Most firms start their “outside-in” approach by looking at engagement from the customer’s point of view. They map the customer’s digital and physical experience across devices, channels, brands, business units, etc. so the business delivers delightful experiences at all times, under all circumstances. The other approach, “inside-out,” looks at internal business processes. Most inside-out efforts tend to focus on efficiency, lowering defects, and improving quality, and are less customer-centric than outside-in.
- These two approaches often move in parallel but separate universes without encountering one another, even when the organization is pursuing both approaches. In reality, outside-in and inside-out are two sides of the same coin; it’s just a question of where the teams start and where they end up. Marketing favors outside-in, while operational excellence teams typically look inside the organization, relying on Lean and Six Sigma, and business process management (BPM). In 2017, more outside-in and inside-out teams will realize they are reverse mirrors working on different aspects of the same processes and will begin to join forces. This trend will be a slow, steady movement that won’t happen overnight. That’s because putting the two world views together will take senior leadership, significant effort and skills, and a substantial organizational change management effort.
- Trend 4: Analytics everywhere will drive virtually every operationally excellent customer experience initiative in 2017. The march toward ever-greater analytics usage began several years ago as companies focused on personalization, attribution, visualization, journey management, next best action, and predictive responses to customer behavior, requests, requirements, preferences, usage, and expectations. This trend will continue unabated in 2017 as executives seek to leverage customer data to deliver a better, more relevant experience for the customer. New, esoteric uses for analytics are also surfacing at a fast clip: piloting drones that serve customers, steering driverless cars, and laying the foundation for sentiment and emotion analysis. However, these more cutting-edge initiatives will be experimental and prototyping rather than the steady march to operational excellence by using analytics.
- The reliance on analytics everywhere will have staffing implications that cannot be ignored. This will include centers of excellence so that expertise and best practices can be shared and used across the organization, and project teams can tap internal consultants for their expertise. It will also include power users — businesspeople with an aptitude for technology and information management–who spread expertise and knowledge around the organization without waiting for formal learning initiatives or external consultants. And finally, organizations will need more investment in that rare breed, data scientists, who provide knowledge and rigor about how to use data when building analytical applications.
- Trend 5: Cognitive computing will tap artificial intelligence (AI) in 2017 to power smarter tools in the office and home. As much as executives want to focus on pragmatic, operationally excellent, results-driven customer experience initiatives that exploit proven technologies, they cannot ignore groundswell of cognitive computing/AI products poised for business and home use. Firms will experiment to see how much these new technologies can change the customer experience. Examples include conversational, machine-learning chatbots for the contact center and elsewhere, digital assistants whose reach spans multiple platforms, and smart home devices (that customers will use to engage with companies) running AI-fueled interfaces, such as Amazon Echo, Google’s Jibo, and Samsung’s Viv. 2017 will start a gradual, five-year trend to chip away at the mighty smartphone’s exclusive perch as the only desirable conversational interaction device. Companies will experiment with AI for delivering better, more contextual and relevant, experiences. Two key questions they will need to answer are: 1) is the technology capable of understanding nuance, tone, and accents from multiple individuals in a household? and 2) how significant are the privacy issues that are involved? (It could be substantial and more than a little bit scary.)
- Trend 6: CMOs and other C-leaders have no choice–they will start collaborating with chief risk, security, and information officers in 2017. Without question, the leaders typically responsible for risk, security, and IT will finally start collaborating on cybersecurity measures in 2017 – typically they do not work well together. Now, they have no choice. But that same risk to the corporation’s networks, computers, data centers, and information also impacts customer experience and operational excellence leaders. The question is, will business executives take their seat at the table or will they naively keep letting the “techies” work on cybersecurity issues? Hopefully, they will take a seat at the table. Although business leaders don’t have technical chops in security and risk, they are critically important stakeholders. With personalization, analytics, cognitive computing, customer preferences, and so forth, business leaders now own highly sensitive, confidential, trusted customer data. If a breach occurs, risk and security officers tend to send terse communications to customers advising them of their exposure. CMOs would cringe if they saw how some security and risk officers engage with their most valued customers following a high-profile security breach (such as those at Anthem Blue Cross Blue Shield, Sony, Target, and the U.S. Office of Personnel Management). Business leaders cannot go AWOL by ignoring their central role in ensuring the privacy, security, and trust of highly sensitive, privileged customer data. This is particularly true in Europe, where the legal and regulatory focus is much greater on data protection and privacy, and the General Data Protection Regulation (GDPR) is on track to go into effect in May 2018.
One final note about these trends. Companies generally spend four to six times more on professional services than the cost of the software purchase alone. The spend on services clearly reflects the reality that achieving success is both an expensive venture and substantially more complicated than simply installing technology, “turning it on,” and hoping for the best. When implementing customer experience technology, particularly cutting-edge technologies like cognitive computing or AI-based conversational platforms, it’s imperative for leaders to spend even more time than usual vetting their professional services partner(s). The measuring stick should be how well those partners perform in ten core competencies (listed alphabetically):[i]
- Business process management (BPM)
- Business strategy
- Content strategy
- Customer data/intelligence
- Experience design
- Organizational change
- Physical & digital
- Technology fluency
- User research
It will be interesting to see which companies thrive and which companies miss the mark in 2017, as the focus shifts from experimentation to practical implementations with operational excellence at the heart of customer experience management.
This topic is particularly germane as we look toward the 18th OPEX Annual Business Transformation Summit, in Orlando Florida, January 23-27 and the Operational Excellence & Risk Management Summit in Houston, Texas, February 7-9. I will be at both events. These forums bring business leaders together to discuss the thorny issues and obstacles that hold organizations back from achieving real transformation and excellence, and surface valuable lessons learned for what is proven to really work. I attending my first OPEX conference in 2007 and look forward to these events every year as a place to hear straight talk from business leaders.