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Which Work Areas are Going to be Affected the Most by Automation in Future?

12 Nov

Disruptive technologies are helping companies automate work. Robotic Process Automation and Artificial Intelligence are taking up jobs which were in the past earmarked only for smart humans. Driver-less cars, automated check-in kiosks at airports, and autopilots steering the aircrafts are just few instances of how automation is transforming our world.

However, automation presents unique challenges that organizations need to identify and mitigate appropriately. These include costs associated with job losses; confidentiality of data; quality and safety risks stemming from automated processes; and regulatory implications.

Other critical factors to consider before investing in automation are adoption, pace of development of automation, and readiness of organizational leadership in redefining processes and roles to support automation.

The key question is how automation will impact our work in future. Should we anticipate benefits — e.g., efficiency gains and quality of life improvements — or dread further disruption of established business and job cuts?

Research by McKinsey suggests that Robotic Process Automation will impact 4 workplace areas the most:

  1. Workplace Activities
  2. (Re)definition of Work
  3. High-wage Jobs
  4. Creativity and Meaning
https://flevy.com/browse/flevypro/impact-of-robotic-process-automation-rpa-3980

Now, let’s discuss the first two key areas in further detail.

Workplace Activities

Research findings (based on the US labor market data) reveal that the future does not likely hold complete automation of individual jobs, but rather automation of certain activities within specific occupations. The assumption that only routine, codifiable activities can be easily automated — and those that necessitate implicit knowledge will be unaffected — is misleading. Automation has already reached (or surpassed) the median level of human performance in some cases.

Capital or hardware-intensive industries — under stringent regulatory control — are slow and expensive to automate and need more time to reap return on investments. Whereas, the sectors where automation is mostly software based (e.g., financial services) may create value at a far lower cost and within rather shorter span of time.

(Re)definition of Work

The current level of automation can potentially transform a number of occupations to a certain level, but it requires redefinition of job roles and activities. Research reveals that only about 5% of occupations can be completely automated with the current level of technology.

In spite of this, automation can boost human productivity even in the highest paid occupations by taking care of repetitive daily tasks — e.g., analyzing paperwork, reports, data and evaluating applications based on criteria — and freeing up time for people to focus more on high value work that involves human emotions and creativity.

For instance, Automation and Machine Learning can automate diagnosis of common ailments, thereby enabling the doctors to concentrate more on acute or complicated problems. Likewise, lawyers can employ data mining tools to sift through piles of documentation to isolate the most relevant cases for their review.

Interested in learning more about the other key areas most impacted by Robotic Process Automation? You can download an editable PowerPoint on Impact of Robotic Process Automation here on the Flevy documents marketplace.

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You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

7 Key Imperatives to Design a Breakthrough Customer Experience

1 Nov

The constant advancement in technology has raised the expectations of customers in terms of their interaction with companies.  This digital disruption is also forcing businesses to develop new capabilities and explore innovative ways and means to deliver improved Customer Experiences.

Organizations can overhaul their Customer Journeys by embracing latest digital insights and practices.  To develop a truly exceptional, breakthrough Customer Experience, organizations should work towards adopting 7 key imperatives:

  1. Develop Customer Empathy
  2. Design the Complete Customer Experience
  3. Reinvent the Customer Experience
  4. Lead the Way with Industry Rules
  5. Become an Agile Organization
  6. Continuously Improve and Iterate
  7. Foster a Culture of Collaboration

An organization does not need to execute all 7 of these imperatives—it varies from case to case depending on the circumstances, market, and customer requirements.

Let’s, now, discuss the first 4 imperatives in further detail.

Develop Customer Empathy

Many firms use surveys and face-to-face interviews to gather firsthand customer insights to enhance their Customer Experiences.

However, when designing Customer Journeys—in addition to customer data—companies need to understand their customers’ behaviors deeply and put themselves in their customers’ shoes.  This entails knowing the complexities the customers face during various journeys and developing new ways to understand Customer Journeys—for instance, by making researchers accompany customers while shopping, by asking customers to report their activities and provide feedback as they interact with various offerings, and involving customers to provide their input on early versions of proposed offerings.

Design the Complete Customer Experience

Most people consider that design pertains only to good artwork, outlook, and appearance of products.

However, it involves not just the look and feel of a product but also the way it operates.  To render breakthrough Customer Experience, companies need to fundamentally shift the way design is perceived—not just the user interface design rather designing the overall Customer Experience.

Great Customer Experience design encompasses crafting every interface the customers have with the provider from the minute they consider a purchase.  It warrants enrolling all people that can make a difference to the customer (especially from the operations and IT units), mapping out customer touchpoints, and transforming fundamental systems and processes.

Reinvent the Customer Experience

Improving current Customer Journeys enables achieving incremental cost reductions and quality enhancements.

However, to improve Customer Journeys there is a need to shift the way Customer Journeys are perceived—from merely addressing the issues in a Customer Journey and streamlining a process to completely transforming the entire Customer Experience.

This should be done by carefully deliberating on and thoroughly analyzing all journeys from a customer’s perspective, drawing inspirations and studying benchmarks from other industries, and addressing customers’ needs.

Lead the Way with Industry Rules

Financial institutions are, to this day, quite cautious of utilizing technology to verify customers’ identification documents for deposit account opening.  Compliance teams at these institutions often resist the efforts to transform customer account opening journeys, as they exercise extreme care to ensure regulatory compliance.  Some banks make the customers fill their applications online but ask them to visit a branch with the completed paperwork, resulting in a cumbersome Customer Experience that is no longer acceptable as we enter the Fourth Industrial Revolution.

Leading organizations strictly adhere to laws but demonstrate to the regulatory authorities how technology has helped them break the status quo surrounding regulatory compliance and develop innovative solutions to manage risks and compliance better.

Interested in learning more about the other imperatives key to developing a breakthrough Customer Experience?  You can download an editable PowerPoint on Breakthrough Customer Experience (CX) here on the Flevy documents marketplace.

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You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

In this Digital Age, Are You Ready for Digital Reinvention?

31 Oct

“All you need is your own imagination
So use it that’s what it’s for (that’s what it’s for)
Go inside, for your finest inspiration
Your dreams will open the door (open up the door)” Madonna

Madonna is a perfect example of reinvention. A very versatile actress, Madonna has the ability to adapt to new trends; someone that can send a lesson to companies struggling with their own digital revolution.

In this digital age, change is rewarded while being static is being punished. Companies must be open to radical reinvention to find new, significant, and sustainable sources of revenue.  Incremental adjustments or building something new outside of the core business can provide real benefits and, in many cases, are a crucial first step for a digital transformation. But if these initiatives do not lead to more profound changes to the core business and avoid the real work of re-architecting how the business makes money, the benefits can be fleeting ad too insignificant to avert a steady march to oblivion.

Discovering Digital Reinvention

Reinvention is a rethinking of the business itself.  Based on a Digital Quotient Research, reinvention requires significant commitment. First, the investment must be aligned closely with strategy at a sufficient scale. And second, digital leaders must have a high threshold for risk and must be willing to make bold decisions.

Digital Reinvention is not a throw-it-all-out approach. If you look at Apple when it moved from a computer manufacturer to music and lifestyle brand, it has reinvented itself while continuing to build computers.  Likewise, this is the case with John Deere.  John Deere is the brand name of Deere & Company that manufactures agricultural, construction, forestry machinery, and others. It continued to sell tractors and farm equipment while reinventing itself into a creator of online services for farmers.

Digital Reinvention is an innovative approach to laying the foundation for future growth while continually pushing improvement targets.

Approaching Digital Reinvention

Digital Reinvention will put new demands on leadership. Hence, an organization must have a strategic approach to Digital Reinvention: The 4Ds of Digital Reinvention.

  1. Discover. The primary goal of Discover is to develop a tight business case for change based on facts. Organizations must discover what your digital vision is based on where the value is. This will shape your digital ambition, strategy, and business case.
  2. Design. Designing, creating, and prototyping breakthrough experiences is the main focus of Design. It is reinventing and developing new capabilities and breakthrough Customer Journeys.
  3. Deliver. This is the third phase where organizations need to gather speed and scale necessary for reinvention. Its primary focus is to deliver and develop a network of partners who can rapidly scale your ambition. There is a need to activate an ecosystem to rapidly deliver at scale.
  4. De-risk. The 4th D, it is focused on structuring the change program, resources, and commercial model to reduce operational and financial risk. It is essential for senior leaders to focus on structural and organizational issues that can hamper the organization’s ability to manage cyber risk.

Having a good handle of the 4Ds of Digital Reinvention will prepare leaders towards Digital Transformation and new challenges.  It will be able to come up with the right answers to key questions that will arise in preparation for Digital Reinvention. Coming up with the proper answers to these crucial questions can guide companies to reinvent themselves ad stay in the game.

Interested in gaining more understanding of Digital Reinvention? You can learn more and download an editable PowerPoint about Digital Reinvention here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

Are You Able to Maximize Impact of Customer Experience on Value Creation?

30 Oct

Digital-savvy startups are disrupting markets and threatening conventional businesses.  They are doing this by utilizing technology to offer new products and services and providing tailored yet uncomplicated experiences for their customers.

Likewise, large traditionally-run firms will have to keep evolving their Customer Experience approaches to secure additional avenues of revenue and to stay competitive.  To accomplish this, they will need to develop capabilities to effectively utilize insights on customer preferences and design offerings as per the customers’ preferences.

Many organizations, today, are undertaking Digital Transformation programs to improve their Customer Experiences.  However, a majority of these Digital Transformation initiatives fall short of securing their maximum value potential due to focusing only on improving specific touchpoints instead of confronting the entire customer journeys—spanning across several departments and channels.

To make their Customer Experience sustainable and to become Customer-centric Organizations need to clearly transform their ways of doing business, operations, and employee behaviors.  It is critical to improve these fundamental support processes before embarking on initiating any Customer Experience optimization initiatives.

Customer Experience optimization facilitates in gaining more satisfied/paying customers, additional value, and better retention rates.  Research reveals that the companies that have higher Customer Satisfaction levels can achieve four times growth in value compare to those that rank lower in Customer Satisfaction.

Customer Experience (CX) Approach to Value Creation

The following pragmatic 5-phase approach to Customer Experience Management and Value Creation is of great benefit to organizations aspiring to enrich their Customer Experience, achieve clear-cut differentiation, and capture the most potential value:

  1. Understand What Customers Value
  2. Simplify and Streamline Offerings
  3. Link Customer Value to Operational Drivers
  4. Focus on Most Important Customer Journeys
  5. Adopt Continuous Improvement (CI) Thinking

Let’s now delve deeper into the first 3 phases of the approach.

Understand What Customers Value

Ascertaining the key drivers of Customer Satisfaction is the foremost step in improving Customer Experience.  A flawed approach—that many companies still employ—at the onset of a Customer Experience optimization initiative is to reduce costs associated with internal processes and exploring customer pain points.  This doesn’t assist in maximizing Value Creation.

Customer-centric organizations, on the other hand, devote their time in developing a clear understanding of what really matters to their customers.  This helps in deciding where to focus, rationalizing their processes, and creating new experiences for the customers to generate additional value.

Great Customer Experience necessitates much more than just satisfactory interactions.  Customer Satisfaction should be mapped along the entire customer journey—spanning multiple functions and channels—as customers use various channels to communicate with companies before making a transaction.

Simplify and Streamline Offerings

Alongside rationalizing the processes, it is equally important to carry out a detailed analysis of the brands, offerings, and price structures is essential to tap value from Customer Experience.  After all, even the most pleasing Customer Experience cannot offset an unpredictable or exorbitantly expensive product.

Once these fundamentals are in order, organizations should investigate which interactions and Customer Journeys carry the most significance in a Customer Experience; evaluate how the organization is rated in each journey; identify and focus on the operations that need to be overhauled to improve the overall Customer Experience.

Link Customer Value to Operational Drivers

Technology and customer input provides the stimulus to streamline offerings and Customer Experience.  However, the real value comes from linking the Customer Experience to core operational processes.  Seeing journeys from the customer perspective aids in focusing on what they need and linking internal processes, structures, and KPIs to customer facilitation.

This necessitates deeper insights on elements that are of most value to the customer across a journey, pinpointing drivers of business costs and revenues, and—most importantly—inculcating the right mindsets across the organization.  This detailed evaluation of customer journeys facilitates in determining operational improvements that bear the most positive effect on Customer Experience.

Interested in learning more about the other phases of the approach to managing Customer Experience?  You can download an editable PowerPoint on the Customer Experience (CX) Approach to Create Value here on the Flevy documents marketplace.

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Finding Corporate Philanthropy a Challenge? Let This Primer Guide You

29 Oct

“To give away money is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power nor an easy matter.” Aristotle

Corporations can be a source of grant funding. Corporations and local businesses donate grants because they care about some particular issue or issues to the point of wanting to get involved. They have the financial capacity and they want to contribute to the community or society and see positive outcomes.  Oftentimes, these efforts will be aligned with their Corporate Social Responsibility programs.

Corporate grant programs sponsored by large, multinational corporations may look identical to the grant programs run by foundations. This includes a formal application process and well-defined programmatic areas. Other companies choose to limit their giving to a handful of local nonprofits with support consisting of one-time cash gifts or in-kind donations of goods or services.

Organizing Corporate Giving Programs require serious study and consideration. Companies have to properly define their objectives and the reasons why it plans to come up with giving programs. Setting up a Grant Funding Program requires having sufficient understanding, knowledge, and systems in place to make it run successfully.

Corporate Philanthropy: Taking the Right Journey

Corporate Philanthropy is the act of corporation in promoting the welfare of communities through charitable donations of funds or time. Corporations must be clear on what type of support it will offer and the ways of promoting these programs. When this is done, it is most effective for the company to establish its Corporate Giving Program and set the right direction for its Corporate Philanthropic Journey.

Having a good understanding of the types of Corporate Philanthropy can better guide corporations to take a good start in its Corporate Philanthropic Journey. Corporations can have a choice of whether they provide cash gifts, non-cash or donations of goods and services.

Either way, corporations initiate giving programs to achieve specific objectives and reasons. Corporations differ from foundations. Foundations make grants to further a mission that has a social good at its heart. On the other, corporate donors make gifts to complement or advance business interests.

Jumpstarting the Corporate Philanthropic Journey

Every corporation dedicated to undertaking its Corporate Philanthropic Journey wants to give it a good start. Hence, it is important for corporations to engage in various ways to promote its Corporate Giving Programs. Creating awareness is essentially important as it creates interest from target beneficiaries and moves them to action.

Corporate Giving Programs can also be promoted through partnerships and collaborations. It is a tactical way of directly informing target proponents of the company’s Corporate Giving Program.

Creating awareness of the Company’s Corporate Giving Programs can be achieved using six strategic approaches.

Interested in gaining more understanding of Corporate Philanthropy? You can learn more and download an editable PowerPoint about Corporate Philanthropy Primer here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

The 8 Most Critical Levers to Pull to Manage & Sustain Change

28 Oct

Most Transformation initiatives fail to achieve their anticipated objectives.

Change Management is all about engaging and rallying people — at all levels in the organization — to make the transition and sustain that change. It is critical to ensure that the entire workforce is eager and ready to embrace the required new behaviors. More often than not, the technical side of a change initiative is well planned, but it’s the implementation part that fails — particularly, changing the mindsets and behaviors of the entire workforce to enable change to stick.

Managing change is not an occasional affair; it is an iterative process that works on motivating human behavior to accept and adjust to a desired state of mind. The process is naturally evolving as it adapts in accordance with the feedback from the people.

Change Management demands a thorough yet organized approach to enable the “people side” of change to work — essential for accommodating and sustaining Business Transformations. This entails assisting people incorporate new mindsets, processes, policies, practices, and behaviors.

A methodical approach to make the entire workforce accept and support change constitutes 8 critical levers:

  1. Defining the Change
  2. Creating a Shared Need
  3. Developing a Shared Vision
  4. Leading the Change
  5. Engaging and Mobilizing Stakeholders
  6. Creating Accountability
  7. Aligning Systems and Structures
  8. Sustaining the Change
https://flevy.com/browse/flevypro/8-levers-to-change-management-3847

Now, let’s discuss the first 4 levers in detail.

1. Defining the Change

The first step entails outlining the rationale, scope, and results of the change initiative for the enterprise, key departments, and roles. There is a need to define critical elements, including the requirements from the initiative, the execution planning, and the adjustments needed to encourage people to work better.

The project sponsors need to clearly outline the essence of the proposed Transformation initiative, to realistically embed Change Management into the design of the program, and develop effective Change Management plans. An initial baseline of the expected effect of the program on people should be performed. The baseline also helps analyze the impact of the change program — in terms of skills inventory, head-count indications, adjustments in accountabilities and relationships, shifts in incentives and pay structures, and future learning needs.

2. Creating a Shared Need

Once the change and its impact has been delineated, the next thing to do is to create a shared understanding of the rationale for Transformation across the organization. To create a shared need for the Transformation endeavor, the change sponsor needs to build awareness of the necessity for change amongst the senior team, key stakeholders, and the entire organization; demonstrate to the people the benefits of change; and set up a feedback mechanism across the organization. The alignment afforded by developing a shared need for change helps build a strong footing for Transformation.

3. Developing a Shared Vision

An essential element of implementing transformation entails delineating a clear vision that outlines critical actions and the anticipated outcomes. It helps in encouraging and involving the workforce in the Transformation initiative, giving them a sense of purpose by becoming a part of something bigger. The vision of the organization after Transformation should be coherent with the company values and mission.

4. Leading the Change

This lever entails developing change leadership and implementation skills needed to drive and enable sustainable change. Engagement and commitment of senior leaders is essential for leading change. They are responsible for planning their and the entire workforce’s actions, demonstrating or role modeling the new mindsets and actions, designating program sponsors — e.g., business unit leaders who are enthusiastic about the Transformation initiative and also act as change agents — motivating others to support transformation, and setting up a road map for the change leaders to steer the organization to achieve the anticipated performance milestones.

Interested in learning more about these levers to Change Management? You can download an editable PowerPoint on 8 Levers to Change Management here on the Flevy documents marketplace.

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How to Achieve GREATER VALUE in M&A? Do the Fundamentals of Post-merger Integration

28 Oct

Going into a Merger and Acquisition (M&A) is never an easy task. The process of M&A is like trying to complete a large puzzle when your right hand and your left hand have never worked together. In fact, Mergers and Acquisitions revolve around a plethora of moving parts. Going into this direction can be complicated. Suddenly, there are two companies and additional stakeholders that now need to fairly and seamlessly work and communicate together in order to bring the deal to completion.

But what happens after the deal has seemingly crossed the finish line. When this happens, there is the Post Merger Integration or M&A Integration. After the financial transaction, Post-merger Integration (PMI) is the process of bringing 2 or more companies together with the aim of maximizing synergies to ensure that the deal lives up to its predicted value. However, easy as it may seem, there are problems in Mergers and Acquisitions that can often cause deals to fail. Companies do not want a deal that only looks good on paper or results in a semi-integrated company.

To be able to live up to predicted value, a Post-merger Integration Planning must start right at the beginning of the deal.

Understanding Post-merger Integration

Post-merger Integration (PMI) or M&A Integration is the process of bringing 2 or more companies together.
It is what happens after the deal has crossed the finish line. In the PMI, our objective is to maximize synergies to ensure that the deal lives up to its predicted value.

In starting the PMI, Post-merger Planning should be done at the beginning of the deal and must be established before the deal closes. Any problems that may arise in Mergers and Acquisitions must be dealt with immediately since failure to properly address them can cause deals to fail or unable to extract true value from deals.

The 4 Types of Post Acquisition Integration

It helps a lot if we have a good understanding of the different types of Post Acquisition Integration to better manage deals.

Understanding the different types of Post Acquisition Integration will give the organization a better idea of what direction to take when it comes to Mergers and Acquisitions. It is best for companies to have a good hold of where they want to go and want to achieve taking into consideration current conditions and business considerations. When these are all laid out, greater are the chances that the right type of Post Acquisition Integration is undertaken.

Taking the Right Step Forward to Mergers and Acquisitions

Taking the road to Mergers and Acquisitions requires organizations to keep away from common mistakes. This is possible with the use of M&A Integrated Solutions.

The use of M&A Integrated Solutions and Post-merger Integration Tool allows organizations to increase the chance of a successful Post-merger Integration. With the use of these tools, users are enabled to plan properly from day one and the very beginning of the diligence process. Teams have access to all files and data prior to the deal closing to spot areas of concern and plan accordingly. Further, users can set cross-stream dependencies across multiple functions.

With M&A Integrated Solutions, it facilitates the use of a better process that maximizes deal value. Organizations just need to have a good understanding of the Post-merger (M & A) Integration Process to get the greatest value.

Interested in gaining more understanding of Post-merger Integration? You can learn more and download an editable PowerPoint about Post-merger Integration (PMI) Primer here on the Flevy documents marketplace.

Are you a management consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

Aiming to Become a Customer-centric Organization, Then Where’s the Customer Department?

26 Oct

Transforming a product-driven firm to a customer-driven enterprise is inevitable in order to stay ahead in today’s extremely competitive markets. The days of mass marketing, mass media communications, and little-to-none direct interface with customers are long gone. The emphasis, now, should be on maximizing customer relationships and becoming customer-driven organizations rather than merely selling products. The technological advancements of this age offer potent tools for organizations to utilize in order to engage with the customers directly; gather and mine information; and tailor their products and services appropriately.

Leading organizations are making huge investments in data analytics and transforming their strategies to focus on the customers’ evolving needs. They are striving hard to improve their customer retention and deepen their relationships utilizing rich customer insights, tailoring products according to the personalized needs of the customers, and presenting the offerings in a variety of store formats.

The Customer Department

To become customer-centric organizations, companies need to transform their traditional marketing function into a new unit called the “Customer Department.” The Customer Department should be created to deliver maximum profits to the customers and nurturing customer relationships instead of pushing products.

This necessitates transforming the organizational structure, culture, strategy, and reward programs in line with the shift in focus from managing transactions to cultivating customer relationships. Specifically, there is a need to add the position of Chief Customer Officer (CCO) — under the CEO — and various Customer Managers underneath the CCO. The roles and responsibilities of these positions should be:

Chief Customer Officer (CCO)

The most prominent shift in a customer-centric organization is replacing the traditional Chief Marketing Officer (CMO) role with the Chief Customer Officer (CCO) role. Reporting to the CEO, the CCO is primarily responsible for devising and executing the customer relationship strategy, directing all the client-facing roles, and fostering a customer-driven culture in the organization. The main tasks of the CCO position include ensuring smooth flow of customer information, increasing productivity utilizing various metrics, and regularly interacting with the customers to understand their concerns.

Customer Managers

In a customer-centric organization, the Customer Managers (CMs) are in charge of various customer segments. They are accountable for enhancing the value of a customer relationship by ascertaining customers’ product needs. To make this role effective, there is a need to realign resources — people, budgets, authority — from product managers to the CMs.

The main tasks of the CM position include defining customer needs, extracting and interpreting customer insights utilizing various sources — e.g., mining customer forums, blogs, and online purchasing data — , and striving to improve the lives of the customers.

Additional Responsibilities of the Customer Department

Customer-centric organizations make the Customer Department accountable for some of the critical customer-facing functions which were once considered an integral part of the Marketing Department. These functions include:

  1. Customer Relationship Management (CRM)
  2. Market Research
  3. Research & Development (R&D)
  4. Customer Service
https://flevy.com/browse/flevypro/customer-centric-organization-the-customer-department-3860

Customer Relationship Management (CRM)

Traditionally, the CRM function belongs to the Information Technology Department owing to the technicalities involved in managing the CRM systems. The function demands evaluating the customer requirements and behaviors — which is a core function of the Customer Department alongside gathering and analyzing data necessary to execute a customer-development strategy.

Market Research

In customer-centric organizations, the Market Research function goes all the way from the marketing unit to other units that deal with customers — e.g., Finance for payments, Distribution for delivery. These organizations take a more granular view of customers’ behaviors, and gather and incorporate clients’ feedback to further improve customer lifetime value and equity.

Research & Development (R&D)

The R&D function should also report to the Customer Department, as, nowadays, the traditional R&D-driven new product development models are conceding to creative collaboration between the client (users) and producers. It’s not a good idea anymore to pack tons of features into a product and cause feature fatigue to customers. What’s more appropriate is to seek and incorporate customers’ input into product features by involving them into the product design process.

Customer Service (CS)

CS is another function that should be handled by the Customer Department to guarantee quality of service and to nurture long-term relationships. This important function isn’t worth outsourcing overseas as this often causes negative impact to the clients and organizations alike, due to poor customer service.

Interested in learning more about Customer Metrics, Customer Department, and Customer-centric Organizations? You can download an editable PowerPoint on Customer-centric Organizations: The Customer Department here on the Flevy documents marketplace.

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When Sustaining Stakeholder Interest Is Essential: The Importance of Corporate Social Responsibility (CSR) Sources of Value

25 Oct

Companies face increasing pressure from governments, competitors, and employees to play a leading role in addressing a wide array of environmental, social, and governance issues in a company’s supply chain. It could range from climate change to obesity to human rights.

For the past 30 years, companies have responded by developing corporate social responsibility or sustainability initiatives to fulfill their contract with society by addressing these issues.

However, gathering the data needed to justify sustained, strategic investment in programs can be difficult.  Yet, without this information, executives and investors often see programs as separate from a company’s core business or unrelated to its shareholder value. While there are companies that have made progress tracking operational metrics or social indicators, they have difficulty linking such metrics and indicators to a real financial impact.

Needless to say, there are companies that are creating great value through environmental, social, and governance activities.  Increased sales, decreased costs, and reduced risks are being achieved.  Environmental, social, and governance programs can create value in many other ways. We just need to know where and how.

What is Corporate Social Responsibility

Corporate Social Responsibility (CSR) or sustainability initiatives are undertaken to fulfill contracts with society to respond to environmental issues. Environmental, social, and governance refer to a broader set of CSR Programs.

Sustaining strategic investments in CSR Programs can be a challenge but there are already leading companies that are generating real value through environmental, social, and governance activities.

The Dynamic Ways of Creating Value

CSR Programs can create shareholder value. It is just important that companies must broaden their legitimacy in societies where they operate.

  1. Growth. As a source of value, Growth can be expressed in terms of New Markets, New Products, New Customers, Market Share, and Innovation. When this is created, it can deliver higher brand loyalty, reputation, and goodwill with stakeholders.
  2. Return on Invested Capital (ROIC). ROIC is generated when there is operational efficiency and workforce efficiency. When this is achieved, it can result in better workforce skills and increased productivity through participation in ESG activities.
  3. Risk Management. Risk Management is a source of value. It can be achieved when risk is lowered when compliance with regulatory requirements are achieved.  Public support is achieved and the ability of your company to secure consistent, long-term, and sustainable access to safe, high-quality raw materials and products are established.
  4. Management Excellence. Management Excellence can have an impact on leadership development, adaptability, and long-term strategic view. These are 3 key areas that investors consider most important when evaluating potential partnerships.  With Management Excellence, a value can be generated from these areas.

A Look at IBM: A Clear Example of CSR as a Source of Value

IBM has been recognized globally as one of the leading companies when it comes to Information Technology.  In creating new markets, IBM used Small and Medium Enterprise (SME) Toolkit to develop a track record with local stakeholders, including local governments and NGOs.  Free web-based resources on business management were provided to SMEs in developing economies. A total of 30 SME Toolkit sites were developed in 16 languages.

As a result of this initiative, IBM’s reputation and relationships in new markets improved.   Likewise, the relationship with companies that are potential customers was developed.  The strategic approach of IBM in creating markets through its CSR has provided IBM much value in creating and developing relationships which are essential in new markets.

Interested in gaining more understanding of sources of value to CSR programs? You can learn more and download an editable PowerPoint about Corporate Social Responsibility (CSR): Sources of Value here on the Flevy documents marketplace.

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Nudge Theory: An Effective Way to Transform Negative Behaviors

24 Oct

Changing the behaviors of people is the foremost issue with every transformation initiative.

Nudge theory is a novel Change Management model that underscores the importance of understanding the way people think, act, and decide. The model assists in encouraging human imagination and decision making, and transforming negative behaviors and influences on people. The approach helps understand and change human behavior, by analyzing, improving, designing, and offering free choices for people, so that their decisions are more likely to produce helpful outcomes for the others and society in general.

Nudge theory helps reform existing (often extremely unhealthy) choices and influences on people. The theory is quite effective in curtailing resistance and conflict resulting from using autocratic ways to change human behavior. The model promotes indirect encouragement and enablement — by designing choices which encourage positive helpful decisions — and avoids direct enforcement. For instance, playing a ‘room-tidying’ game with a child rather than instructing her/him to tidy the room; improving the availability and visibility of litter bins rather than erecting signs with a warning of fines.

Organizations are increasingly using behavioral economics to optimize their employee and client behavior and well-being. Nudge units or behavioral science teams are being set up in the public and corporate sectors to influence people to address pressing issues. For instance, to increase customer retention by changing the language of support center staff to motivate customers to consider long-term benefits of a product; or to make employees to follow safety procedures by placing posters of watching eyes to remind them of the criticality of the measure.

An effective Nudge initiative necessitates much more than deploying a few experts in heuristics and statistics. The senior leadership should lay out a conducive environment for successful behavioral transformation. This entails assisting the Nudge unit to focus, place it appropriately, create awareness, train and de-bias people, implement effective rewards, and follow high ethical standards.

The leadership needs to think about and prepare to tackle 6 key challenges Nudge units face when implementing effective behavioral transformation initiatives:

  1. What should be the focus of the Nudge unit?
  2. Should the Nudge unit be placed at the headquarters or at the business unit level?
  3. Which resources be made part of the Nudge unit?
  4. What are the critical success factors to consider for the unit?
  5. How to communicate the results and early wins?
  6. What should be done to tackle skepticism and resistance to change?
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Leaders who are able to confront these challenges improve the chances that the unit’s nudges will cause real change in the organization and in its productivity.

Let’s, now, dive deeper into the first 3 key challenges.

What should be the focus of the Nudge unit?

The foremost action in creating a Nudge team is to clearly spell out the value proposition for the unit. The leadership needs to define the purpose of creating a Nudge unit. They need to clearly outline whether the Nudge team will focus on employees, on customers, or on both. For instance, the purpose of its creation could be to deal with workforce motivation, to make better decisions in boardrooms, to increase the internal capabilities, or to improve the behavior of employees. The focus on customer issues, for example, entails encouraging better pension provision, inculcating behavioral science into the marketing mix, or to analyze the experiences of customers and employees — e.g., in-store service initiatives, digital operations, and HR processes.

Should the Nudge unit be placed at the headquarters or at the business unit level?

The second challenge is to decide where to deploy the Nudge unit. The placement of the Nudge unit depends on the strategic purpose of creating the unit. At some companies, it is housed centrally within the corporate headquarters as a global Nudge operations center; a few have accommodated the unit within the R&D or marketing department; some have benefited by moving the unit away from the corporate center so as to be closer to products and services; whereas other practitioners believe that the customer-focused behavioral science team should sit within the product management domain.

Regardless of where the Nudge unit resides, its flexibility and assimilation with other methods of behavioral change — e.g., cognitive neuroscience, social psychology, and personality-trait science — are critical.

Which resources be made part of the Nudge unit?

Another critical element for the success of the Nudge unit is hiring and deployment of right resources. At the commencement of the program when key capabilities are typically not available in-house, most organizations hire people from the outside for their Nudge units. A few companies have recruited solely from the in-house due to the criticality of institutional knowledge and the long learning curve required to acquire it, whereas some have recruited across different geographies. On average, the unit comprises of 3 to 8 members, however, larger organizations can have more people scattered globally.

The ideal composition of the Nudge team is to include behavioral scientists and specialists in psychology, marketing, and advanced data analytics. The team should include people with the right attitude and abilities — e.g., curiosity, can-do attitude, problem solving, entrepreneurial mindset, ownership, and communication skills.

Interested in learning more about the Nudge Theory? You can download an editable PowerPoint on Nudge Theory: Key Challenges here on the Flevy documents marketplace.

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