Boxed In By Efficiency ?

Interesting discussion over the weekend with a few friends with C level responsibilities. People were cursing their past efficiency drives, that have boxed them in so much, that transformation costs look prohibitive as they attempt to do things different. Two things are constant : Change and Efficiency. How does one drive change in an environment that is running efficiently, and meeting customer expectations? At the outset the question sounds quiet ridiculous. If your place is running efficiently, and your customers are not complaining, why change ? We narrowed down the reasons for change in an efficient environment:

1) Aligning with eco-system changes

2) Meet the ever changing customer need that most of times goes unstated or not captured

3) Differentiate yourself from competition

Most of the guys at the bar counter cited reason 3 as the biggest driver to initiate change. Once a pioneer innovates and institutionalizes the processes to the extreme to drive inefficiencies, you have a tightly boxed in system that works like an well oiled assembly line with no need for any maintenance. It does not take much time and effort for your competition to observe and replicate. Giving the innovator the benefit of doubt, lets assume that competition does run the process less efficiently, at the end of the day, the innovator is no different from the competition anymore. They all offer the same service. Perils of service industry. One Tequila shot later, much to my delight,  most of the people came around to a consensus that reason 2 is the trigger for change and not 3 - work on the customer , not your competition! More like the 3 idiots philosophy of run after excellence, success will follow. Apologies for digression, but this is how the discussion actually went into a tangent and a couple of us brought the prime issue back on the table. Does the efficiency drive kill your ability to change at reasonable costs?

Sometimes, the BI folks, who are generally at arms length from the nuances of business operations dynamics, come up with head turning stuff that becomes compelling to contemplate the change. Really good ideas that are disruptive and transformational, need the core processes to be uprooted and an invasive surgery done on the business operations to put an idea into action. To mitigate the risk of failure one decides to prototype and pilot. The costs associated with such an implementation approach are quite taxing on organizational bandwidth, time and coffers.

I though the cloud is a good way to offset some of these costs (non HR related costs). Lets say, the BI folks come up with a unique and different way to restructure mortgages that may/may-not deliver additional delight to your customers, but defiantly adds to your bottom-line without taxing the customer any more that status-quo . Your existing systems and processes are run at the best possible efficiency levels and hence are tightly coupled with the eco-system to deliver the results. How will you implement the prototype to test the concept without executing all the changes to the existing systems and processes? Will you ask your eco-system partners to participate in this change, and at what cost?

I would implement the challenger process on the cloud as a service. The only changes I would make to my IT setup would be to add integration points on my ESB to connect the service on the cloud to my data. This way I could get both the challenger and the campion process to work on the same data set ; and I now have an environment where :

1) Both the challenger and champion processes can run at the same time enabling more accurate comparison

2) They both run simultaneously on the same data set and hence I can compare results

3) I do not change my existing eco-system and hence offset the risks

4) In the event the challenger proved itself to be far more exciting and since I did not invest in changing my IT
   eco-system to create the prototype, maybe I now have a more amicable scenario where one could discuss
   the merits of running the process in-house or outsource it!

Some elements of investment cannot be shied away from. To implement the prototype, there will be investment needed on re-training, re-structuring and job role re-definition. Since this is a prototype, the scale is much smaller and change management easier. Walking thru this prototype experience also sheds light on the merits/de-merits of outsourcing a successful challenger prototype.

This approach requires building the challenger process from scratch and this could be done in a loosely coupled manner. If indeed outsourcing a successful challenger seems a good choice, since the prototype was built from scratch without tinkering with the incumbent mix of legacy/non-legacy / soon-to-be-legacy systems, you have a complete BRS that could just make the RFP really informative. One could look at using the prototype build as a bargain-able asset during negotiations with the RFP contenders.

I have not had the opportunity to walk this path as yet, but it seems a good concept and a framework to keep at the back of my head.

To Track OR Not To Track !

In the absence of physical connect with the end consumer, the only way to understand your customer behavior is to analyse the way customers react to you solutions, their appreciation of your products and services and their affinity to your brand; all based on data from digital interactions. While most of this feedback is postmortem and /or near real time, almost all remedial actions are after a postmortem analysis. With systems getting integrated for meaningful service delivery, the IT infrastructure is more or less in a position to deliver real time analytics results that could be acted upon. We see this behavior in a lot of web properties. 

Many organizations are gearing up to structure their digital assets to be need-aware and sense customer requirements. This happens thru having business tie-ups with digital properties with high footprint and then gauge customer's content consumption and subsequently drawing conclusions from the same. This way when a customer comes onto your portal, you are aware of the customer's browsing pattern and are in a position to personalize the portal experience. Selling becomes easy if you put your customer through a collage of content and track their behavior and the time spent with the content; before you prepare your selling pitch through personalization.

Most of the digital advertising world banks on customer's click stream information as the core constituent of their pricing model. Some models are based on clicks and some on views depending on where you are advertising. Many portals subscribe with third party digital advertisers rather than run their own setup, with customer click stream data being the basis of the billing models. With Microsoft pioneering the Do Not Click feature in IE10, the enterprises, specially the marketing guys, will have to really work hard to make the digital advertising world and the CRM strategies effective. While I am not touching upon the ethics part of tracking a customers behavior online in this blog, I am merely analyzing the challenges this will pose to the enterprise and the effect on technology strategies related to CRM. 

Most organizations would love to anticipate customer needs without having physical contact with their customers, and most of this exercise on the ground today is all about what the organization thinks the customer needs rather than what the organization knows whats going on in the customer's mind. Most of the need anticipation data is an out come of analytics results based on the data an enterprise has on their customers wallet, life stage information and life style information. What's going on in the customer's mind is a result of what the customer is seeing and reading in the virtual world on the sites with whom the enterprise might have no business relationship. The only way to read the customers mind is to track customer browsing pattern and time the attention span given by customers to the content that is served up. I land on  XYZbank.com after having ogled at the three new SUV models launched, the bank better know that and serve up interesting car loan offers on  SUV. I land on XYZbank.com after having browsed thru news portals where the highlight of the day/week is the terrorist strikes and accidents that have taken place; the bank better know that and serve up insurance protection plans. I browse thru some interesting pictures on scuba diving, mountaineering and land on XYZbank.com; the bank better know that and serve me up some content that offers personal loands for holidays. To strike the iron when its really hot, information on my digital consumption is so very essential. 

With Do Not Track, these challenges get a little more complex. While my view is that DNT is a flag that you can ignore if you choose to, but that mounts to getting pesky calls and SMSs on your cell phone after having registered for DND. If enterprises start asking customers permissions for tracking their behavior in order to serve them effectively, I am not sure how many customers will consent. Time will tell. For most advertisers life has become now more interesting and they will need to re-look at their basic business models to protect revenue. A consumer today cannot exercise similar choices on billboard ads, print, television and radio ads. They just ignore them or devote time based on their mood and need of the hour. Maybe the same makes sense in the portal world too. DND is essential on telecom side as SMSs and calls are an invasion of privacy on personal devices, where your phone buzzes insensitive to what you be engaged in at that time. Email spam is an invasion of privacy and the you could painfully unsubscribe to each unsolicited content that turns up in your inbox or clean SPAM folders from time to time. But, I guess digital advertising on portals could be treated the same way as billboard, TV and print ads, where consumers will ignore or pay attention based on their interest levels.