The Purpose Of A Corporation, Redefined

This week, almost 200 CEO’s agreed to an updated definition of “the purpose of a corporation.” The statement was made by the Business Roundtable, a very influential group chaired by Jamie Dimon, the CEO and chairman of JPMorgan Chase.

The new definition starts like this…

Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.

This new view on purpose pulls from the community of “conscious capitalism” which has been pushing for companies to recognize a broader responsibility to society, which requires considering all stakeholders (not just shareholders) in its decisions.

My take: I totally agree, it’s a long overdue shift in leadership thinking.

For many years, I’ve argued that management viewpoints have become woefully outdated.  As I wrote in a 2009 post “Fundamental Flaws In Management Education” which captures some ideas from an amazing paper written by Sumantra Ghoshal in 2005:

Management focus has been driven by economists like Milton Friedman who argued that corporate officials have only one social responsibility: making as much money as possible for their shareholders. But the value that a company creates comes from a combination of resources contributed by different constituencies. In most cases, the contribution of knowledge and skills of employees is more important to the success of the company than the contribution of capital by shareholders. And since most shareholders can sell their shares easier than employees can find new jobs, they are actually taking on less risk. So it does not make sense to maximize the returns on only one of those resources, especially the shareholders’ financial capital.

Even Jack Welch, the ex-CEO of GE who really championed the notion of shareholder value during the 1980s and 1990s has updated his thinking and said, “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy.”

To me, the purpose of an organization is very simple… “to create value.” All of the participants in an organization, including employees, investors, suppliers, and the communities in which organizations operate, are dedicating some of their scarce capacity to an organization. The output of those contributions should deliver value for all of those stakeholders beyond what they’d gain from dedicating those resources to other options.

The key to success is to redefine “value.” Instead of thinking of it as a stock price or monetary valuation, consider value to be a broader set of returns that come from enhancing the lives of all stakeholders.

The bottom line: Let’s define our purpose as adding value to people’s lives!

Five Recommendations For De-Emphasizing Benchmarking

Benchmarking, benchmarking, benchmarking… it’s a popular subject.

I’ve been publishing CX benchmarks for more than 10 years, so you might be surprised by my point of view on the topic: benchmarking is often overused and misinterpreted. I’m not saying to give up on the entire activity, but people often spend too much time and energy focusing on industry comparisons that aren’t necessarily an accurate reflection of the genuine customer experience.

Let me start by saying that benchmarking is a perfectly good activity. It makes sense to periodically evaluate your performance relative to competitors, especially as an input to your strategy. And it’s also healthy to look at your performance relative to companies from other industries.

While benchmarking provides value, people often let it distract them from more important activities. So here are five recommendations on how to think about benchmarking:

  1. Focus on improving, not comparing. When it comes to the use of your insights activities, it’s critical that an overwhelming majority of your efforts are aimed at finding opportunities to improve — not scorekeeping. Many executives seem to feel as though a benchmark provides a security blanket of sorts—one that shows their remit within the business is in line (or better than) the competition. Whether it’s from internal metrics or external benchmarks, knowing where you are and where you’ve been is not nearly as valuable as knowing where you should be heading. Companies often use up a lot of their feedback capacity to ask customers (and employees) questions solely for the purpose of fueling a benchmark. My advice: Optimize everything you do on driving improvements, even if it means dropping some benchmarking questions.
  2. Obsess about customers, not competitors. One of the risks of relying too much on benchmarking is that it can mask your performance when there are shifts in the market, such as new competitive options or evolving customer requirements. You may be doing well against current competitors and with existing customers while the market is slipping away from you. Your critical strategic question should be are we delivering the right experiences to the right customers?, not how are we doing versus our competitors?
  3. Compare data within studies, not across them. Every industry benchmark is based on a specific methodology, with it’s own target audience, sampling approach, timing, collection mechanism, questions, and calculations. Each of these items has an impact on the results. As I often say, sampling patterns really, really matter. It’s often ineffective to compare results across different studies unless you control for all of those items, which can be very difficult. So don’t spend too much time trying to reconcile an industry benchmark with internal results.
  4. Set goals around key drivers, not necessarily industry benchmarks. As you think about setting goals for your organization, don’t fall into the trap of relying on benchmarked metrics just because the data exists. You should be setting goals for the items that drive the overall performance of your business, which may or may not look anything like the industry benchmarks. What’s unique about your brand and what creates a loyal customer? We recommend following five steps for creating a CX metrics program, starting with higher-level goals and working your way down to metrics on key drivers.
  5. Rely on internal insights, not external data. While external benchmarks can provide a high-level snapshot of relative performance, they lack the depth and adaptability to dig into critical company-specific topics such as the needs of target customer segments and your performance during key moments of truth. The additional value of internal insights are also dramatically amplified when you combine experience data (X-data) with operational data (O-data). The ability to dig into key questions and find more meaningful insights makes building internal insights capabilities a much more valuable endeavor than digging into external benchmarks.

The bottom line: Choose actionable insights over competitive comparisons… everyday!

Talking Employee Experience and XM With Ben Granger

Our team joined Qualtrics last October to create the XM Institute, and one of the great things that we’ve found is that there are many people across Qualtrics who are experts in different aspects of Experience Management (XM). So I decided to interview one of them, Ben Granger.

1907_BenGranger

Ben is a Sr. Principal for Global EX Strategy. He spends his days thinking about and helping organizations design leading-edge EX programs. Like many of the subject matter experts across Qualtrics, Ben had a strong background prior to joining the company. He has a PhD in Industrial Organizational Psychology and has worked in EX at Verizon.

Here’s our Q&A:

Q1: We describe experience management as a discipline where organizations “continuously learn, propagate insights, and rapidly adapt.” Based on our your work with companies, what do you think that looks like for a company that is really doing well with EX?

Ben: This shows up in the mindset that the organization has around employee experience. Namely, the belief that they will never get it perfect, that EX is a moving target and that they should always look for ways to improve. It’s ironic, actually, that some of the most mature EX programs I run into are run by organizations that seem to always feel like they are behind. They have this thirst to keep pushing things forward. Companies like Quicken Loans and Rogers Communications come immediately to mind – they are always very humble about the current state of their programs but in actuality, their programs are well ahead of others in their industries. I think this is because those organizations or either intentionally or unintentionally treating EX as a discipline.

Q2: We recently defined Six XM Competencies, LEAD, REALIZE, ACTIVATE, ENLIGHTEN, RESPOND, and DISRUPT. Can you share some best EX practices you’ve seen in one or two of the competencies?

Ben: Firstly, I should say that I am a big believer that the “best practices” organizations employ should be heavily dependent on their maturity. 

1907_6XMCOmpetencies3Some of the practices that highly mature EX programs use could backfire if an organization has never done formal employee measurement before. So that is always a consideration we make when we advise our clients. 

That said, one competency that I really like is “Activate”, which is about building the skills, support and motivation for EX. This is where many organizations get stuck in a rut. Leaders see the inherent value of measuring and improving EX but when they think about increasing the measurement of EX, it sounds very daunting because of the way that EX or engagement has been measured in the past. They are jaded by the old school process. So to “Activate” the organization, you really have to change leaders’ mindsets. You have to reframe what “action planning” is, which sometimes involves calling it something different! Basically, instead of handing leaders a dense report of data and charts, give them short and prescriptive readouts that are focused on “what they should do to improve EX”. Instead of forcing them to add “action planning” to their list of things they have to do, provide the EX insights in the same tools and systems they already use. These simple practices show leaders that it can actually be simple to leverage employee insights. 

Another that is a lot of fun is “Enlighten” which is about providing actionable insights across the organization. For this one, I like to borrow the principles and practices from the customer experience side of the house. For example, if you compare how organizations structure their employee surveys and their customer surveys, there is usually a huge difference. The CX surveys tend to be shorter, more conversational, more in-the-moment, and built into the apps and systems that the customers use. On the other hand, the EX surveys are quite the opposite – they are long, tedious and oftentimes require employees to completely leave their work environment to provide feedback. And to be clear, this is absolutely ridiculous and there is no reason why this has to the case! So when we are building the enlighten competency for our EX clients, we focus on those consumer-based principles – simple things like shortening surveys, giving employees multiple avenues to provide feedback (e.g., on their mobile phones), making the survey items more conversational, integrating the feedback into the systems that employees are already using to make feedback part of the process. 

Q3: When you run into companies that are just starting their EX efforts, what are the type of things that you typically recommend that they start with?

Ben: Employee engagement surveys have been under attack in the popular press recently but honestly, I think this is one of the most practical and reasonable places to start on the EX journey. So when I work with organizations that really have never done formal EX measurement in the past, I usually recommend starting with this approach. 

1907_EmployeeFeedback4I think this is important for a couple of reasons: (1) it gives the organization an opportunity to explicitly ask their employees for feedback. I borrow that line from professor Ed Batista because I think it summarizes how important it is for organizations to “explicitly ask their employees for their feedback, (2) it gives everyone in the organization the opportunity to give feedback, and (3) it gives the organization time to build some of those competencies like “realize” and “activate” without overburdening employees or leaders.

For example, if an organization has never done employee surveying before, then before jumping to frequent pulsing, for example, they have to build trust among employees that their feedback won’t be used against them, and that their feedback matters. And on the flip side, you have to build manager capabilities to understand and act on feedback. If this isn’t a natural activity for them, it will take time to build these capabilities. And a traditional engagement survey is a great way to start building that trust among employees and those capabilities among managers. And (4) this is the progression that most organizations have taken. So it’s a well worn path and we know exactly how to evolve EX programs from that starting point. 

Q4: Thinking about the future, what are some of the things that you imagine companies will be doing with their EX programs that they are not typically doing today?

Ben: I mentioned this earlier but I think that we will see a lot more consumer-based principles make their way into EX programs. We are already seeing it happen in mature organizations but this will accelerate in the next few years with the field of XM and the continued war for talent. 

Another that I think we will see more and more of is passive listening. For example, collecting employee experience data from social media and combining those insights with insights from formal, active surveys. We have some clients that are already doing this and it appears to be highly effective so long as organizations don’t misuse them and are transparent with their employees about them. 

And of course, I definitely see much more integration across the pillars of XM. We are only scratching the surface of what’s possible today. The linkage research across EX and CX is nearly 20 years old now and yet, there hasn’t been much in the way of progress in the field since. That will change and that will change quickly. Organizations are going to move well beyond the simple link between things like EX and CX and begin to have a sophisticated understanding of the interrelationships among practices that improve EX, downstream and long term CX outcomes, the brand experiences those practices create and how those brand perceptions, in turn, impact their ability to attract and retain employees and customers. And by the way, my guess is that this whole chain of events and experiences starts with EX!

Q5: When organizations are actively trying to improve EX, what are some of the obstacles that they really need to watch out for?

Ben: Trying to move too fast – this is a self-imposed obstacle in a lot of cases and it is completely avoidable. It is very tempting to want to go from nothing to best-in-class overnight. But this is rarely (if ever) a good idea. As I mentioned earlier, you have to first build trust among employees and capabilities and buy-in among leaders. This takes time to do. And business leaders can get impatient – they invested in improving EX and they want to see returns…today! I try to set my clients’ expectations – EX programs are kind of like diesel engines – they take a little while to get going but once they are running, they just keep on going.

Making assumptions based on anecdotes – this also is super common and avoidable. The point here is that organizations should not bypass legitimate measures of EX in favor of one-off anecdotes or examples. Within XM, we talk about experience gaps and oftentimes, these gaps exist between what organizational leaders “think” is happening and what employees or customers really think. There is nothing wrong with leveraging personal anecdotes and examples but using those as the sole source of information to drive actions or processes intended to improve EX is a terrible idea.

A quick example – I was working with a large retail bank a few years ago and one of the consistent themes that came out of their annual survey was that call center employees were not happy with their “career progression” opportunities. At the time, their survey was not sensitive enough to dive deeper into what employees meant by this. A few sr. leaders reasoned that the way to fix that was to build a formal career progression program to give employees line of sight into their next move. But we suggested that before they did that, we should really try and understand what the employees meant by career progression. And sure enough, we did a follow-up survey and looked at their open ended comments and the employees were actually much more interested in stretch projects and having more autonomy in their day-to-day jobs and opportunities to do different jobs in different departments. This obviously made a huge difference in what the company implemented…and saved them a ton of money by the way.  

Q6: What most excites you about the emerging category of Experience Management?

Ben: I mentioned it a few times but I am super excited about what we can learn and leverage from the CX space. I have learned so much from my CX counterparts over the last few years.

I also legitimately think XM is going to make the business world much more human. If you think about it, what XM essentially states is that it’s actually better for business if you do right by your employees, your customers and your stakeholders. Imagine if the opposite were true or if organizations perceived the opposite to be true? IF that were the case, our lives would be much worse! 

But luckily that is NOT the case. So XM will continue to prove this to be the case and eventually the organizations that provide the best experiences will be the ones still standing…and that is a great thing for all of us!

Q7: Now for something a bit more personal, what is your favorite quote from a movie, and why does it resonate with you?

Ben: “Where we’re going we don’t need roads” – Doc Brown from Back to the Future II.

First of all, this is one my favorite movie trilogies of all time – I could watch the first two movies over and over and never get tired. 

But tying it to EX, it really resonates with me that we often think about the future in terms of what we’ve done or what we’ve had to do in the past. Like when leaders immediately get scared of something like lifecycle feedback or pulse surveys because they immediately think about how painful running that one annual survey was in the past. Sometimes, we have to forget the past and imagine what it could/should be like. 

Operationalizing XM: The Report

I’m super excited to announce the publication of new research from the Qualtrics XM Institute, “Operationalizing XM.” It describes how organizations can tap into experience management (XM) to continuously learn, propagate insights, and rapidly adapt—capabilities that can be used by just about every organization. It’s a must read (and a free download) for anyone who cares about or is just interested in XM.

1907_FreeReportXMI_Button_v1

The report outlines the XM Operating Framework, and goes into detail on Six XM Competencies.

1907_XMOFand6XMComps

Here’s the executive summary of the report:

An ever-increasing flow of information is shifting power from institutions to individuals, while new technologies are redefining business models and shortening product lifecycles. To succeed in this environment, organizations need to adopt a new approach that focuses more on the experiences of human beings throughout their ecosystem. How? By developing a discipline called Experience Management (XM). This report introduces this new approach and provides details around:

  • The XM Operating Framework, which is built on a combination of competency, technology, and culture.
  • The six XM Competencies—LEAD, REALIZE, ACTIVATE, ENLIGHTEN, RESPOND, and DISRUPT—that organizations should focus on to improve their XM capabilities.
  • The five stages of XM maturity that companies will progress through as they master the six Competencies: 1) Investigate, 2) Initiate, 3) Mobilize, 4) Scale, and 5) Embed. This report also includes an XM Competency & Maturity Assessment organizations can use to calculate their own maturity levels.
  • The XM Diffusion path that companies should follow as they expand their XM efforts across their entire enterprise.

Reflecting On 6 Principles Of Success

Given the recent closing of Temkin Group, it seems like a good time to reflect on what I’ve learned over the last decade or so of building a successful business, creating a world-wide association, and nurturing the CX movement. Looking back, here are six principals that have helped me succeed:

  1. Actively Simplify. When faced with new situations, it often seems easiest to add layers of rules or additional concepts. In other words, the natural flow of an organization supports increasing levels of complexity. This added complexity can cause enormous unforeseen problems, such as misalignment internally and confusion externally. As a matter of fact, I think complexity is one of the most severe, yet under-appreciated issues within large organizations. I’ve tried to address this by constantly pruning our offerings to things that we could deliver well, and rationalizing all of our content into simple, connected storylines.
  2. Tell Stories. There’s nothing more memorable than a good story. I love this quote by Jonathan Haidt, the “human mind is a story processor, not a logic processor” and this one by Philip Pullman, “Thou shalt not’ is soon forgotten, but ‘Once upon a time’ lasts forever.” That’s why I’ve always obsessed about the storyline in our research, content, training, and speeches. As a matter of fact, I spend a lot more time thinking about the storyline in my speeches than I do about the core content.
  3. Embrace Reality. One of the most impactful moments of my career was when I worked for General Electric and I heard Jack Welch say, “deal with the world as it is, not how you’d like it to be.” I’ve adopted this concept as one of my core beliefs. All too often, I see people conflate what they hope was happening with what was really happening. This leads to bad decisions based on inaccurate assumptions.
  4. Have A PoV. I consider myself a full-time student of experience design, organizational dynamics and human behavior. I’ve found that the fastest way to build knowledge is to “softly” lock into a strong point of view (PoV), and use it as a frame to examine the world. I learn by strengthening my PoV when I find things that fit into it, and adjusting or even abandoning it when I find things that don’t quite fit. That’s why the content we created has always been heavily focused on helping people develop and shape their POVs, rather than listing a bunch of tactical activities.
  5. Be Transparent. Throughout my career I’ve tried to be brutally honest. People around me know what I’m thinking, and they can trust that I am sharing my true feelings. While it’s not a good strategy for poker, it’s an approach that helps in many ways. First of all, I don’t need to expend the energy to keep track of multiple narratives. Second of all, it forces me to make better decisions. I’ve coached executives to assume that people will eventually find out what they’re doing, so they should make decisions that they will be comfortable defending in the future. Transparency also helps people anticipate how I will make decisions in the future, so they can proactively align with my direction.
  6. Care About People. Everything succeeds or fails because of people. As an extreme introvert who started his career as an engineer, it took me many years to learn this lesson. I’ve had the opportunity to build new organizations and help leaders change behemoth companies. No matter what I’m working on, I always try to empathize with the human beings who are leading the new strategies, employees who need to change what they do to make the strategies come to life, partners who need to buy into a shift in direction, and customers who will hopefully opt-into and get value from new experiences. Of all the things that I’ve been able to do, I’m most proud of the positive impact that I’ve had on people, whether I’ve met them or not. Caring about people is not only more motivating to me than driving business results, but it is also often the best path for achieving those business results.

The bottom line: I hope my lessons—from simplifying to caring—are helpful.

Goodbye Temkin Group Website…

Well, it has finally happened. After being acquired by Qualtrics this past October, we have decommissioned the Temkin Group website. And yes, I have mixed feelings. To quote a line from Winnie-the-Pooh…

How lucky I am to have something that makes saying goodbye so hard.

It’s hard to say goodbye to a site and a brand that we built and nurtured since May 2010. Over the last eight years, we’ve been blessed with the opportunity to work with the greatest team and to support the most wonderful clients anyone could ever ask for.

Temkin Group’s success was built totally on word of mouth. We never had anyone on our team with any sales responsibilities or sales goals, and we never made any outbound calls to sell our services. Here’s another interesting factoid: over the entire lifetime of our company, we never had to write off any revenue as uncollectible. Every one of our clients paid all of their invoices.

We enjoyed each and every day with Temkin Group… thank you!

And for the sake of posterity, I’ve captured a final image of the homepage.

Screen Shot 2019-06-27 at 12.30.48 PM

On the other hand, I’m absolutely thrilled.

The decision to join Qualtrics looks even better today than it did when we originally made it. The SAP acquisition of Qualtrics was certainly a curveball, but we’re even more excited about the future of Experience Management (“XM”) and the role that our team and the Qualtrics XM Institute we are creating will play in bringing it to life.

In addition, this was also a big win for the followers of our content. We are now offering almost all of Temkin Group’s recent reports FOR FREE on the Qualtrics XM Institute page. That’s very cool!

Screen Shot 2019-06-27 at 4.33.23 PM

I invite you to continue to follow our team’s journey; not as Temkin Group, but as the Qualtrics XM Institute.

The bottom line: Goodbye Temkin Group. Hello Qualtrics XM Institute!

My History Of Enterprise Transformation And XM

I’m frequently asked to share my views about the evolution of experience management (XM), so I’ve spoken (and written) about topics such as CX establishing the foundation for XM. For some recent speeches I’ve combined my personal introduction with a broader overview of the evolution of enterprise transformation.

After several requests, I’ve captured the content in this short (5 minute) video. It’s a recount of my professional experience and observations from decades of working with many large enterprises. It’s “based on a true story,” which means it’s not meant to be a comprehensive historical dissertation.

As you’ll see in the video, the world of technology and processes has changed radically in a relatively short period of time (by historical standards). Existing business models, however, haven’t come close to addressing these fundamental shifts:

  • People inside and outside of the company are now connected directly to processes and technology within the company.
  • People used to be viewed as participants in processes and users of technology, but are now being recognized, as they should be, as human beings who are driven by their needs and emotions.
  • Research used to consist of periodic studies that resulted in slides and reports, but companies are seeing the power of more continuous collection of data and wide distribution of insights.

1906_BDTHistoryStory_v3 [Autosaved]

In this environment, XM’s combination of intelligence and humanity across the entire value chain provides a powerful catalyst for change. There’s enormous opportunity for organizations to apply this discipline to realign how they operate—and to focus more intensely on how human-beings think and feel, using continuous insights across a network of digitally connected people inside and outside of the company.

Over the next decade and beyond, XM will be the foundation that organizations use to differentiate themselves by redefining their operating models to deliver more human-centric experiences.

The bottom line: I’m really excited about the future of XM.

Service NSW Tops My Worldwide XM Tour

I’m on my way back from Australia; the end to a very long, but wonderful road trip.

I’ve had a busy couple of months, delivering speeches and training in Salt Lake City (twice), London (twice), Orlando, Madrid, Sydney, and Melbourne, in addition to remote sessions in Paris and Philadelphia. What have I been speaking about?

  • Operationalizing Experience Management (XM). As I’ve discussed, XM will drive transformation across organizations for the next decade. But how do you turn XM into a discipline? By mastering 6 XM competencies (Lead, Realize, Activate, Enlighten, Respond, and Disrupt) and 20 XM skills. That’s been the core of my message. Stay tuned, you’ll be seeing a lot more on this topic!
  • The Human Experience Model. To deliver breakthrough experiences, it’s important to understand how people process experiences. That’s what the Human Experience Cycle is all about.
  • Five For The Fight. One of the most inspiring things we do at Qualtrics is to support 5 for the Fight, a foundation to put an end to cancer. It was center stage at all of the X4s, and I incorporated it into my discussions whenever possible.

My latest trip was to Australia, where I spoke at my third Qualtrics X4 Summit (on a third continent) this year. I really enjoyed the trip, except for the grueling flights. Why can’t we just get to Oz by clicking our heals three times?!?

Unlike my first trip to Australia a few years ago, this one was all about work (except for some nice meals with friends). But I’m not complaining. As you can see in the pictures, I got to experience Vivid Sydney, got close with some local wild life, enjoyed some good cuisine, and kicked up my heals in the Sydney office while enjoying the amazing view of Sydney Harbour.

Of course, the best part of the trip was getting to know my Australian colleagues at Qualtrics. It’s a dynamic, scrappy bunch, and they’re doing a fantastic job helping companies across the region adopt XM.

I was also able to visit several companies in Sydney and Melbourne. My last visit was with Qantas, which was a great way to end the trip. It was energizing to review their plans and to see how focused they are on XM. I’m really looking forward to seeing what they’ve accomplished during my next visit.

IMG_9152.jpegBut the most surprising part of my trip was a visit to two government offices. That’s right, government! I had the privilege of meeting with the newly appointed Minister of Customer Service for NSW, Victor Dominello. What an inspiration! He has a robust vision for improving how government operates, and is already changing the way that NSW interacts with citizens.

During our visit, he pulled out his mobile dashboard that keeps track of feedback from citizens across many government services. He not only cares about the how citizens are treated, he tracks it and holds the different agencies accountable for it.

Dominello’s aspirations are supported by a fantastic team at Service NSW. which is the organization responsible for interfacing with citizens. Their offices are cramped as you might expect in a government building, but the walls are filled with artifacts that make it look like you’re in a world-class design agency.

The team is applying leading-edge XM practices to understand citizen behavior and design experiences that help the government achieve its goals. It’s more than just improving service, the group is using XM tools to achieve objectives like better serving underprivileged groups.

While I enjoyed my entire trip, I’m happy to be heading back to Boston. Oz is great, but there’s no place like home!

The bottom line: XM is gaining momentum around the world, even Down Under!

Stop Obsessing About Organizational Alignment

I was recently asked a question that I hear a lot, how do we get alignment across our large, complex organization? This is an important question since the path to Experience Management (XM) often requires large-scale change.

I’m now just saying: Stop focusing so much on it. Instead of trying to gain full alignment before you begin, build it over time in an iterative manner that I’m calling Agile Alignment.

When people think about transformation, they often make a false assumption that alignment is required prior to change. They believe that it’s a prerequisite to get all of the key stakeholders on the same page. It isn’t.

If you have limited bandwidth (which is the case for just about everyone I’ve ever worked with), then you have to make trade-offs on where you spend your time and energy. At a simplistic level, you will be faced with deciding between trying to build alignment with people who are not pre-disposed to supporting your efforts, or focusing on driving some elements on your change agenda. My argument is that, on the margin, the latter can be much more productive than the former.

We often assume that alignment is a precursor to change. But let me introduce a new thought: Successful change is the precursor to true alignment. In other words, you may be able to get people passively on-board with your plans, but they aren’t truly on-board until they see something is working and on the path to success.

The ideal approach for driving transformation, therefore, is an iterative process that I’m calling Agile Alignment. It goes like this:

  1. Identify key stakeholders who are actively aligned
  2. Drive successful change initiatives with those aligned stakeholders
  3. Build alignment with a larger group of stakeholders
  4. Go back to step #2

This way, you keep expanding the scope of your efforts and the breadth of your alignment over time.

The bottom line: True alignment follows success.

 

 

Is NPS A Dubious Fad?

Okay, it’s that time again. Every few years someone ignites the debate about whether Net Promoter Score® (NPS®) is a great or terrible thing. A recent article in the WSJ (The Dubious Management Fad Sweeping Corporate America) has sparked the discussion this time.

Rather than write something entirely new, I decided to share something I wrote in 2015 that addresses the issue. Before I share that post, I also suggest you take a look at these:

Below is the 2015 post, Is Net Promoter Score A Savior Or A Demon?

**********

Every couple of years, I get a resurgence of questions about Net Promoter® Score (NPS®). These surges typically coincide with research that shows how NPS is either an excellent predictor or a terrible predictor of company performance. That data often ignites a religious battle between the NPS lovers and NPS haters.

Well, it’s one of those times.

Let me start by saying that I’m an atheist in this NPS battle. We’ve had the opportunity to study and work with hundreds of companies that use NPS. I’ve recommended to some companies that they adopt NPS, to others that they stop using NPS, and to others that they start with a totally different set of metrics (see our VoC/NPS resource page).

Let’s look at what we know for sure about NPS…

The reality is that the metric itself is much less important than how it is used. I’d rather use a sub-optimal metric in a way that drives positive improvements across an organization, than have a perfect metric that doesn’t result in as much impact.

Here are some quick answers to key questions:

  • Is NPS the best indicator of customer loyalty and business performance? In many cases, no.
  • Can other metrics be used to drive positive change? Yes.
  • Does NPS provide an easy to understand metric that can be widely adopted? Yes.
  • Can NPS be used to make an organization more customer centric? In many cases, yes.
  • Will a company improve if it increases promoters and decreases detractors? In many cases, yes.
  • Can NPS be used inappropriately? Yes.
  • Can any metric be used inappropriately? Yes.
  • Would I ever recommend NPS for every touch point? No.
  • Should companies consider their specific business when selecting metrics? Absolutely.
  • What’s more important, the metric or the improvement process? The improvement process.

The bottom line: NPS is neither a savior nor a demon.

P.S. In case you didn’t know, NPS® and Net Promoter® are registered trademarks of Fred Reichheld, Satmetrix, and Bain & Company.

 

Six Categories Of X&O Data Insights

Last week I attended SAP’s SAPPHIRE and CX Live events in Orlando. It was great to see 35,000 or so of my new friends. As you might expect, Experience Management (“XM”) was a dominant theme. Just about every SAP or Qualtrics keynote speech discussed XM, and it was a topic at many of the concurrent sessions. I really enjoyed seeing the XM message come to life in so many different ways.

One of the cornerstones of XM is the combination of operational data (“O-data”) and experience data (“X-data”). While each type of data can provide valuable insights on its own, the combination can unlock new levels of intelligence across an enterprise. These more inclusive datasets will increase in value as organizations expand their use of predictive analytics, as the combined data is inherently more insightful.

To help you think about where you can find valuable opportunities to combine X- and O-data within your organization, we identified the following six categories of use cases:

  • X Why: Find something happening in O-data and look for an explanation in X-data
  • O Drivers: Find something happening in X-data and look for operational situations that are causing the situation
  • X&O Predict: Build projections based on an analysis of X- & O-data
  • X&O Personalize: Adjust how you treat people based on a combination of X- & O-data
  • X&O Alert: Send alerts and other proactive information based on a combination of X- & O-data
  • X Value: Measure the value of improving experiences by examining the impact that those changes have on business results

1905_CategoriesOfXODataInsights_v2

The graphic above provides some customer experience (“CX”) and employee experience (“EX”) examples, but it’s not meant to be an exhaustive list of use cases. Hopefully the table provides you with a good sense of the insights that can be unlocked with the combination of X- and O-data.

Now that you understand some of the ways for gaining insights from X- and O-data, think about how the combination can impact your organization. If you have some ideas or examples of how it’s worked for you, leave them in the comments section of this post.  I’ll try and highlight some of the most interesting items.

The bottom line: Combine your Xs & Os to unlock more insights.

 

CX to XM: Propelling Humanity & Intelligence

As you have hopefully seen, I’m now running the Qualtrics XM Institute, where we will be producing easy-to-consume, compelling content and training that both inspires business leaders with experience management (XM) possibilities and helps them drive value from their programs. Many people have asked me recently about why we’re now focusing on XM instead of on customer experience (CX).

The quick answer is that we are still focusing a lot on CX. It will continue to be a critical component of our work. The longer explanation for this CX-to-XM transition requires me to first break down how these two domains work together.

I’ve had the opportunity to lead the CX movement for many years now, and I’m very proud of what we’ve been able to accomplish together. While CX still has a lot of room for improvement, the discipline now has a robust set of repeatable skills and practices, which are being used by a growing—and increasingly capable—community of CX professionals. We’ve come a long way over the last decade!

When I take a step back and think about how CX has changed the way leading organizations operate, it’s really reshaped their behavior along two key dimensions:

  • They have made human beings the center of focus
  • They continuously generate and act upon insights

We unlocked something powerful in CX. By combining an intensified understanding of how people think, feel, and behave with our dramatically improving capabilities to uncover and act on those insights, we’ve created an entirely new set of best practices. In fact, I believe that this combination of humanity and intelligence will form the basis of how organizations compete in the future. It will be the fundamental component that defines success or failure.

But the power of humanity and intelligence is valuable beyond just our interactions with customers. We need to take what we’ve learned in CX and extend it across the entire enterprise, from suppliers, to employees, to partners, to customers. Every part of our organization should be built on a platform of humanity and intelligence.

That’s what XM is all about—Propelling humanity and intelligence across an enterprise.

Think of CX as the initial use case of XM. Yes, there’s still a lot to do in CX, but there are many other use cases that we should be thinking about as well, such as employee experience (EX), product experience (PX), and brand experience (BX). And all of these different experiences should be built upon the same XM foundation.

Our CX efforts have already been extending to XM. Customer journey mapping has led the way to employee journey mapping, voice of the customer programs have defined the model for voice of employee programs, and the understanding of behavioral economics and the use of experience design is being applied across many new areas.

If you’re a CX professional, I hope you’re just as excited about XM as I am. Not only will it generate even more demand for your skills and capabilities, but it also gives us the opportunity to take all we’ve learned from CX and apply it in a myriad of interesting new ways.

The bottom line: XM expands the humanity & intelligence uncovered by CX.

Complexity Is An Experience Killer

I just spent two days in Miami with a great group of executives who are part of the SAP CX Client Advisory Board. One of their presentations described the company’s technology transformation, and included a stream of activity around “decomplexing.” I loved seeing that!

Complexity ends up oozing its way into all types of experiences. Complex products, prices, or processes lead to ill-prepared employees and confused customers. A complex set of benefits leads to ill-prepared HR representatives and confused employees. A complex brand positioning leads to erratic messages and a confused marketplace.

The problem even goes beyond confusion, as complexity causes people to make mistakes — or even to think they made mistakes when they hadn’t. It generates large numbers of unproductive interactions, as people try and sort through the complexity to figure out what they want to, or need to do.

People often try and mask complexity. And while that may be effective in some situations, it ends up failing almost all the time. Why? Because complexity oozes its way into everything. It’s extremely hard to contain. A complex pricing structure can be masked with a configurator, but customers end up being confused about why they have to buy something, the price associated with the purchase, or the information on their first bill.

Organizations have a natural tendency to create complexity. They add rules and processes on top of of other rules and processes. That’s why decomplexing is a great thing to work on. It requires an explicit focus and an ongoing discipline. Making things simple is often much harder than continuing to make them complex.

Decomplexing is worth the effort.

The bottom line: Simplification is a wonderful enabler of great experiences.

The Human Experience Cycle

As you think about your experience management (XM) efforts, it’s important to understand  how people flow through the experiences in their lives — as customers, employees, patients, fans, citizens, students, etc. To help deepen that understanding, I’ve created a simple model, the Human Experience Cycle (HxC). As you can see in the chart below, the HxC is made up of five elements:

  • Expectations: What a person anticipates will happen during an experience.
  • Experiences: What actually happens to a person during an interaction.
  • Perceptions: How a person views an experience based on their expectations.
  • Attitudes: How someone feels about the organization.
  • Behaviors: How a person choses to interact with an organization.

1903_HumanExperienceCycle2

Here are some implications of the HxC:

  • Experiences are in the eyes of the beholder. How someone feels about an experience (their perception) is based on their expectations along with the actual experience. So the exact same experience can lead to different perceptions for different people. That’s why you need to think about the expectations you’re setting prior to an experience, and consider delivering different experiences based on people’s expectations.
  • Experiences are judged by the emotions they create. Our memories aren’t like video cameras, they’re more like an Instagram account where we take pictures whenever we feel strong emotions, and then we judge that experience in the future based on reviewing those pictures. That’s why it’s critical to proactively think about which emotions an experience is likely to generate, since those are the elements which will most drive perceptions.
  • Attitudes are important... Many organizations measure attitudes (e.g., a relationship Net Promoter Score) as part of their overall metrics program. This is an important area to understand, because it represents an accumulation of multiple perceptions and can often be a leading indicator of behaviors. That’s why many successful XM programs prioritize their efforts around the experiences that most highly affect attitudes.
  • …But behaviors are the goal. The success or failure of an organization is driven by what people actually do, their behaviors. Over time, you need to make sure that the attitudes you’re measuring have an actual impact on the behaviors you really care about — is NPS really driving future purchases?, or is our employee engagement measurement predicting attrition? If not, look for different attitudinal measurements that are more predictive of those important behaviors.

The bottom line:  Align your efforts around the Human Experience Cycle.

Tapping Into The Power Of Experience Management

Last week, I gave two presentations at the Qualtrics X4 Summit that focused on how to adopt experience management (XM). Here’s a glimpse of that content…

First of all, let’s get aligned: what do you expect to see in the future?

  • More or less demanding customers? (I say more)
  • More or less demanding employees? (I say more)
  • More or less access to data and analytics? (I say more)
  • More or less time to respond to changes? (I say less)

Attendees at X4 almost universally agreed with my point of view. If we’re accurate, then organizations that succeed will have to operate differently in the future than they do today. As you’ll see below, they’ll need to adopt XM. That’s great news for X4 attendees, because it means there will be an increasing demand for XM professionals.

The Future Requires XM

How will XM help organizations compete in this changing environment? By creating the capabilities to:

  • Continuously Learn. Organizations need to more effectively sense and interpret what’s going on all around them, collecting and analyzing signals from the actions and feedback of employees, partners, vendors, customers, and even competitors.
  • Propagate Insights. Organizations need to put actionable intelligence in the hands of people across their ecosystem who can use it, creating seamless access to the right information in the right form at the right time.
  • Rapidly Adapt. Organizations will need to act on the insights they’ve uncovered at an increasingly faster pace, finding ways to create new experiences and renovate existing ones.

XM can’t be an afterthought or a veneer. It also isn’t something that one or two departments think about. For an organization to succeed in an environment with more demanding customers and employees, more access to data and analytics, and less time to respond, XM must be woven into its operating fabric.

The XM Value Pyramid

To operationalize XM, you need to understand the XM Value Pyramid. It’s made up of three components:

1903_XMValuePyramid

  • XM Platform: Your organization needs to be instrumented to collect and analyze experience data (X-data) and operational data (O-data), and then distribute the insights to facilitate action. At X4, Qualtrics announced more than 40 of these new instruments to add to our industry-leading technology. We’re increasingly applying AI and machine learning to accelerate the discovery and actionability of insights.
  • XM Practices. Organizations need to change how they operate their business in order to leverage the increasing capabilities of the XM platform. This requires a new set of competencies and activities for creating leading-edge customer experience, employee experience, brand experience and product experience. The Qualtrics XM Institute is working on a competency model to help organizations master XM Practices.
  • XM Perspectives. The combination of XM Practices and the XM Platform will help you develop strong capabilities. But you won’t gain full value unless your organization’s culture and mindset embrace the new XM operating model. At X4, I introduced five XM Perspectives listed in the next section.

Five XM Perspectives

During one of my presentations at X4, I discussed these five XM Perspectives:

  1. Lead With Purpose. Purpose aligns, motivates, and empowers customers and employees, so leaders need to communicate and embrace a consistent vision and set of values.
  2. Make Change A Habit. Organizations naturally embrace the status quo and resist change. So they need to create an environment that embraces ongoing improvements and innovation.
  3. Propel Insightful Decisions. The value of and access to analytics is growing, but people don’t often embrace the potential of these data insights. Organizations need to create a mindset for using XM data to run their business, and evolve well beyond just looking for a readout of metrics.
  4. Magnify Key Moments. Not every interaction is equal, so organizations must be comfortable identifying and disproportionally focusing on the most important ones. To understand how to improve those key moments, you need to look at them through the lens of a person’s journey.
  5. Always Focus On People. Experiences are created and consumed by human beings (customers, employees, and partners), so cater to how they think, feel, and act. People are complex, so we identified six key traits of human beings to focus on.

Charting Your XM Future

I hope that you’re as excited as I am about the power of XM. I believe that it will be the core area of organizational transformation for the next decade. Companies that thrive will embrace XM to continuously learn, propagate insights, and rapidly adapt better than their competitors.

We’re at the very early stages of XM, so there’s a lot to do. Companies won’t master XM overnight, it will take a multi-year journey to understand and embed the required platform, practices, and perspectives. That’s why we’re creating the Qualtrics XM Institute, to support you along the way.  Here are some ideas for accelerating your XM journey:

  • Build single experience skills. You can can establish XM capabilities by starting or enhancing your customer experience (CX), employee experience (EX), brand experience (BX) or product experience (PX) efforts. Look to evolve from sharing actionable insights to redesigning processes that incorporate the insights.
  • Combine CX and EX efforts. Across our research, you’ll find that CX and EX are inextricably linked. We’ve found that engaged employees are a fundamental building block to good CX. If you combine those two areas, you can build on a common platform, and establish a strong, combined set of practices and perspectives. Along these same lines, you can also add PX and BX to existing efforts.
  • Build up centers of excellence. To master XM, you’ll likely need to develop new practices and perspectives across your organization. So identify one or two to start building. Here are some good areas to consider: experience design, advanced analytics, and developing a change-minded culture,
  • Engage a strong partner. Companies that embrace XM will go through substantive change over many years. And we all know that transformation isn’t easy, or linear. Rather than trying to do it alone, look for a partner that can help you go through the transformation. Start by checking out these great companies that can help.
  • Pick a strategic XM platform. As you think about your organization’s path towards XM adoption, you’ll be able to build skills faster and deploy change more effectively if you lock into a single platform. Not surprisingly, I strongly recommend Qualtrics. While there are good point solutions in the market, there aren’t any providers that come close to Qualtrics when it comes to overall scale, architecture, trajectory, and R&D investments—components that are critical for supporting a successful long-term journey.

The bottom line: To thrive in the future, embed XM into your operating fabric.