Creating New Value

By Gary Hamel  |  Posted 08-01-2001 Print Email

Creating New Value

Years ago, I was working with some of the top managers at Ford Motor Co. I think they've now caught up, but at that time, Ford was way behind the Japanese in producing 16-valve, four-cylinder engines—the high-revving, fun-to-drive engines that you could find in a Honda Accord. Why? These Ford executives told me that creating a 16-valve engine would cost $65 over what an 8-valve engine would. And, of course, my response was that any 18-year-old kid out there would gladly pay you another $250 to have an engine that revs up like that. The punch line was that these executives knew everything about cost and nothing about customer value.

I think that's true for most CIOs. They know everything about the cost of a particular transaction, but they don't know very much about what it costs when you frustrate the customer, when you waste his time and get him angry.

I go to a store like Home Depot, and the first thing that strikes me when I walk in is that I am utterly confused by the layout of the store. It's as big as several football fields, it has shelving that runs from floor to ceiling and it keeps tens of thousands of items in stock—of which I only want three. What occurs to me is that they know where all those items are because they put them there, but I don't know where they are when I come in. Where's the kiosk that would let me type in what I want, and then immediately show me a store map and give me the aisle number and the shelf number—and then tell me how to get there? And better yet, wouldn't it be helpful for this kiosk to find out whether I'll need help—so that a store clerk could meet me in the designated aisle when I get there?

Take it a step further. If I wanted to build a deck behind my house, why can't I go online, look at several different plans, tell Home Depot what my budget is, what the style of my house is and the amount of space I have to work with? And why couldn't they then generate a set of potential plans online that I could look at? For example, if I choose the plan I like, the site could then generate a materials list. I could then check off the things I already have, like a hammer and a saw. But the rest of the things I need but don't have could be delivered to me the next day, on a pallet, ready to go. Why can't they do that? I think there are many examples of where we have not yet understood how to use technology to enhance the customer experience. Most IT people don't really spend much time deeply understanding the customer experience, nor think very creatively about how to change it.

So what's the problem? By and large, IT has been seen as an inward-facing function where IT people take on the objectives defined by other people in the organization—by someone in marketing or in procurement or senior management. But these objectives seldom involve putting IT people into deep conversation with customers.

Over the next decade or two, every industry is going to be reinvented from the customer backwards. It sounds incredibly trite to say that in a world where people talk about being customer-focused and customer-led, but I believe that there's hardly a business in the world today that has really been thought through in a customer-backwards way.

Here's how to get started thinking more creatively about the customer. Imagine a list of all the good ways a customer can feel about a product or a service experience. They can feel informed, trusted, amused or involved. Then imagine all of the not-so-good ways a customer can feel—mistrusted, confused, alone, misinformed and so on.

When I'm trying to get organizations to think more creatively about using technology to change the customer interface, I take a diagonal slice of an organization and identify people from top to bottom. I ask those people to pick what they would regard as the five or 10 best service experiences in the world. That might be staying a night at the Four Seasons Hotel, or it may be a day at Walt Disney World. Then, I ask those people to live in those experiences—for a day or two. I ask them to note along a time line any point at which they had one of these very good or not-so-very-good kinds of feelings and experiences. And when it happens, I ask them to take a picture with a digital camera or write a note and tell me what happened. For example, let's say I'm at Walt Disney World and my little one falls down and bruises his knee and starts crying. Mickey Mouse comes over and tells my kid that they're going to put him in front of the parade this afternoon, whatever it takes to make him feel better.



 

Submit a Comment

Loading Comments...