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Is Your CX Strategic? Part 4 | Customers, Etc

Is Your CX Strategic? Part 4 | Customers, Etc
By Ben McCormack • Issue #21 • View online
We wrap up our series on “Is Your CX Strategic?” by putting ourselves in the shoes of the customer. If you’ve joined me throughout this series, I’d love to know what you thought of it.

“But although such competition produces absolute improvement in operational effectiveness, it leads to relative improvement for no one.”
I disagree. We’ll look at why I disagree in a bit, but first, let’s go back in time.
Can you remember back to when the realities of COVID sunk in? There was a bit of a build up, of course. Some unsettling news out of Wuhan, then Italy. Work conferences were cancelled. Then all work travel was cancelled. Hand sanitizer seemed to be hard to come by. Things continued to build, then BAM!, we went into full quarantine mode, practically overnight. Schools were closed, all work became remote work, and we started using vocabulary like “new normal” and “unprecedented times” with uncomfortable regularity.
I have this thing where when I’m anxious about something, I over-plan, over-prepare, and just in general, over-stress my wife the hell out. So when things started getting real, I went into crazy planning mode. I cancelled unnecessary subscriptions, shuffled money between bank accounts, and sent my wife on an errand to Nam Dae Mun to buy beans and a hundred pounds of rice. I would have gone myself but I was at Walmart—which was already out of rice!—buying canned chicken, salsa, and other foodstuffs. Quarantine wasn’t going to taste particularly good, but we were going to survive.
After the news broke that schools and offices were closed, our shopping habits completely changed. Go into a physical grocery store? With coronavirus-breathing humans? Not a chance. We’ll stick to Kroger click-list, thank you very much, even if it means waiting 3 days to pick up our order and knowing meat won’t be in stock. In the first few weeks, 100% of our shopping shifted to be online. When I needed a new rake, I ordered it from the Home Depot mobile app and picked it up without stepping foot in the store.
A positive outcome from all the chaos we’ve experienced over the past six months is that businesses are being forced to provide better digital experiences for their customers. As consumers, this is awesome. What might have taken several years is starting to take shape now. This is a welcome change, which is why I take issue with the quote from Porter.
Photo by Wesley Tingey on Unsplash
Photo by Wesley Tingey on Unsplash
The Customer Benefits
If you’re new to Customers, Etc., this is the last week in a four part series on “Is Your CX Strategic?” (1, 2, 3), a reflection on Michael Porter’s 1996 Harvard Business Review article, “What is Strategy?”. The first three parts in the series are intended for the customer experience professional trying consider if and how their work in CX is strategic. Each of these was written from the perspective of being inside the business. Today’s newsletter is from the perspective of being outside the business, that is, of being a customer. How do we think of customer experience and strategy when we’re the customer?
It’s worth revisiting Porter’s thesis that “operational effectiveness is not strategy”, which we looked at in week one:
[O]perational effectiveness is “necessary but not sufficient.” His argument…is that if competitors all strive to be operationally effective in the same way, solving the same problems for the same set of customers, businesses will start to look the same, in a process he calls “competitive convergence.”…
Competitive convergence necessarily leads to lower profitability for each competitor. For each competitor, having maxed out operational effectiveness independently, the only remaining way to become more operationally effective is to merge with a competitor or be acquired, but even this doesn’t guarantee profitability, only the hope of lower cost as redundancies are eliminated…. What this means is that even if you’re maxing out operational effectiveness in every area—you have a finely tuned sales machine, a great customer success team, the best-run engineering organization in the business, etc.—all of this could still lead to reduced profitability in the long term if your competitors are all doing the same thing. The piece that is missing, if you’re only focusing on operational effectiveness, is strategy.
Yay strategy.
I mean, I agree with Porter’s thesis here from a business perspective. If you’re the same as all your competitors, why should someone do business with you instead of one of your competitors? You really do want to find your strategic position. What starts to rub me the wrong way is the notion that no one benefits from improvements in operational effectiveness. Re-quoting what I shared at the beginning (emphasis mine):
“But although such competition produces absolute improvement in operational effectiveness, it leads to relative improvement for no one.”
No one? I mean, when every single retailer starts offering a better digital experience practically overnight, it seems hard to say that “no one” benefits.
Okay, okay. I’m equivocating on the phrase “no one.” Porter is talking about a group of competitors. I’m talking about the group of collective humanity. Besides, later in the same paragraph, Porter states (emphasis mine):
“But the resulting major productivity gains are being captured by customers and equipment suppliers, not retained in superior profitability.”
I’m having a hard time being too bothered by that? Sure, Porter’s talking about groups of competitors, but isn’t it okay to zoom out and look at the big picture?
When we think about the basic model of a business, which includes shareholders, employees, and customers, most of the relationships I personally have with businesses are as a customer. If the net effect of businesses investing in operational effectiveness is that digital experience get better for everyone, I’m all for it¹. As a consumer, I don’t care if companies have figured out if investing in digital experience is “strategic” (uh, it is). I just want a better experience for myself and everyone else.
Will the "shift to digital" be strategic?
If every business is making the shift to digital at the same time, that’s more in the area of operational effectiveness than strategy. Sure, it seems strategic in the short term (if we don’t do this, we’ll go out of business), but once the move has been made and all (remaining) businesses are now providing better digital experiences, how will we know if the shift to digital was strategic? The same questions we looked at in the first three parts of the series will still apply to businesses making the shift to digital.
Is CX (now DX) a differentiator? For some businesses, having a unique and value-adding digital experience absolutely will become a differentiator, but for many, having a DX that simply delivers on expectations will suffice. Still, for new entrants in the DX space, just delivering on expectations may be an incredibly high bar.
Does your CX have a fit between activities, doubly so now that more interactions happen digitally? This is a big one. Companies are going to trip over themselves “investing in digital” while completely overlooking the touch points where the physical and digital connect. Remember that Home Depot order I briefly mentioned at the beginning of this newsletter? What I didn’t share was that even though I was able to pick up the order without walking into the store, two of the four items I ordered were incorrect, and I had to drive back to the store and figure out how to do a “contactless return”. It was a mass, wiping away a lot of the ease I had experienced in the original mobile order. No amount of investment in making the mobile app better is going to improve that touch point in the customer journey if the order isn’t picked correctly. This requires an investment in DX that looks at the entire customer journey, not just the digital parts of the journey.
Does your new DX align with your company’s strategic position? Right now, most businesses making new investments in DX are probably in the phase of “just getting it out there.” If you didn’t have online ordering before, there’s a period of time where all of your energy is spent just getting online ordering up and running. At some point, you’ll want to ask how your DX aligns with your company’s strategic position, that is, the thing that makes your company unique and different. What needs to be unique and different about the digital experience you provide to customers so it better aligns with your business’s overall strategy?
As a consumer, it’s an exciting time. Some businesses are going to make investments in digital experience without much sense of strategic direction, and this will still be better for customers than what we had before. But for those businesses that view their investment in digital experience as strategic, we as consumers are going to be beneficiaries of truly great experiences.
Etc.
I mentioned a few weeks back that I started reading Frederick Douglass: Prophet of Freedom and I’m slowly making my way through it. We live in a time where, despite our continued struggles with racial inequality, it’s at least a settled debate that slavery is an evil that belongs in America’s past. But in 1845, when Frederick Douglass had written his first autobiography, slavery was not a settled debate. Americans debated whether Americans should be able to own other Americans and the extent to which slavery should expand or exist in America’s future. In order for the debate to be settled today, Douglass was compelled to take up the debate in his time, at the risk of life, liberty, and property, for he was still an escaped slave.
Some other things I’ve read:
  • [video] Sometimes you need to know when to disappoint your customers. A reader shared this after a recent newsletter and this short HBR video provides a helpful reflection about how your strategic CX is necessarily going to work for some customers but not others. Trade-offs.
  • We all need to think about becoming a more patient leader right now. Every leader everywhere is dealing with incredible resource constraints right now. We have increased pressures on our systems (perform! survive!) yet limited resources as workers balance the continued disruptions due to Covid. When systems have increased pressure and decreased resources, something that has to give. By being more patient, you and your team can make better choices about what has to give.
  • Do things that don’t scale - This article from Paul Graham is only 7 years old, but I suppose in internet years that makes it a relic. I love “do things that don’t scale” as a mantra because it has a way to get you to focus on outcomes, not just what you think is possible. Choose the right outcome, then figure out how to scale to get there.
Footnote:
  1. My position isn’t entirely altruistic. I work for FullStory, which is a solution that helps businesses improve their customers’ digital experience. Proverbially speaking, we’re selling pickaxes during the gold rush, which is a pretty good place to be. Still, I really do just want better digital experiences everywhere.
Did you enjoy this issue?
Ben McCormack

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