Ronin Research

Almost 49 years ago, President John F. Kennedy stood at a podium in the divided city of Berlin where he proudly proclaimed that the wall that divided the city was an affront to basic human freedoms, that it was a symbol of the failure of communism and its ability to effective govern nations. Twenty-four years later, President Ronald Reagan stood in front of the Brandenburg Gate to encourage Soviet leader Mikhail Gorbachev to “tear down the wall” that divided the city and the world.

Though that wall was eventually torn down, today new walls are being built that restrict the freedom of expression and the free flow of information. Twitter announced that it will willingly begin, when asked by countries, to censor the flow of information by withholding specific content to users in that country. They have offered a side note that they will let users in that country know that the content is being withheld. Essentially, Twitter has bowed to the demands of censorship.

In all honesty, this isn’t something new. Twitter has been removing content for a while now under the DMCA. What has changed is now that this can happen in countries other then the US and for questionable reasons. Google has also been doing this for a while.

What makes this unique is the ability to remove it just for people within a certain country based upon IP address. It does increase Twitter’s ability to expand internationally into countries with much stricter content and media rules. And Twitter will likely be working with Chilling Effect to provide transparency into what requests are made. But it is censorship. And if they they are censoring the tweet, then there is a high likelihood that they won’t be able to see what is posted on Chilling Effect.

In the end, if you live in the U.S., this probably won’t affect you today or tomorrow and it probably isn’t something to worry about. But it is an indicator of the what is coming.

Note: This is also cross posted at the Altimeter Group blog.

Note: I am going to be doing a series of posts on what I see going forward when it comes to disruptive technologies for the areas I cover.  This is the first of those focused on government.

Government used to be a sure bet for technology adoption. Yes, government was and remains slow in its adoption, but it is pretty sure to try out just about any technology. So what will be the top technology trends for government that CIO’s, line of business leaders, and others in government will be looking at, learning about, and implementing in 2012? My top six are:

1) Budget. 2012 is going to continue to be a difficult budget year and I don’t expect anything to change in this area for another three to five years at least. On top of that, government is still having a hard time driving value from IT investments at many levels. In 2012 expect to see budget to be an even larger issue with vendors and efforts with more around trying to do more with less. Also look for government to be willing to do more shared risk and reward efforts where there is a revenue stream such as toll roads and other efforts.

2) Social government. Social government is more then Gov 2.0, more then agencies increasing their presence on twitter or Facebook, and more then a better Web presence. It is about building a collaborative community agency to agency, government to government, government to business, and government to citizen. It is what real democracy is about. The key trends for government in 2012 will include what mobile means to a social government, integrating social into already existing efforts, appropriately managing the risk issues, watching and integrating new social platforms and technologies as they emerge and as citizens adopt them, and then to begin to build a real collaborative community.

3) Digital election. Politics isn’t government, but the US election in 2012 will definitely affect government. Things to watch include the candidates statements on technology and how they would like to use technology to make government better, their stands around key technology legislation such as SOPA and PIPA, and then how they use technology in their campaigns. These will all be indicators of what we can expect to see when they are elected.

4) Big data and analytics. Government has more data, both public and private, structured and unstructured, then any other industry out there. And there is only going to be more tomorrow from the net, from sensors, from interactions, and just from devices. But what to do with it? How to drive value from it for both government agencies, business, and citizens? This is where big data and analytics come together. The issues for government (which are not all that different then the private sector) with big data in 2012 are going to be what data to make public, how to integrate multiple data types from multiple sources, and then just putting together an architecture that allows value to be derived from the data. It is also going to require large shifts in the government culture away from historical data driven processes and reporting that government is known for to a more realtime, predictive, dashboard driven culture to drive better decision making.

5) Cloud. The cloud seems to be on almost avery agency and government’s list. The great thong about cloud is that it offers the opportunity for government agencies to lower costs and even in some cases switch to a pay-as-you-go model and to make access to new capabilities earlier and easier. The problem is that government is still trying to figure out how to take advantage of the cloud environment – how to bring together both private and public cloud services, what data and services to keep in a private cloud and what to keep in a public cloud, how to integrate cloud with mobile, and how to develop cross agency clouds. What will be key for government in 2012 is working through the security issues, finding the right delivery model, and dealing with migration where cloud is the best solution.

6) Security and privacy. The White House and almost every other government agency has said that cybersecurity is a critical issue for government – for both national security and economic reasons – and one that we are no where close to being prepared to handle. What is going to be critical issues for government to be working on in 2012, besides the cloud, social, and mobile issues already mentioned, are the increasing threats targeted at government, infrastructure, and our economic structure, continuity and the ability to deal with different disasters, and compliance down to the employee and contractor level. Government is going to be forced to look at the end-to-end security aspects of the organization including the integration of logical and physical security in a new way in 2012.

There are other trends such as mobile technologies, sustainability, and improving the citizen experience that will affect government in 2012, just not to the degree that the above seven will. What do you think will be affecting government in 2012?

There are so many different ways for organizations to structure themselves – silos, dandelion, lines of business, industry orientation, hub and spoke, and others. But how does the structure of an organization affect the customer experience? That is one of the questions I am looking at and came across a fascinating article by Chiku Malunga titled The Beehive As A Model Organization.

Malunga describes the hive as one of the most ‘effective’ organizations in existence. How bees come together for the social good in ways that move the organization forward including taking care of the queen, producing food for the group, and constructing and repairing the hive as models for organizational effectiveness the potential to be a great foundational ideas for how companies organize around and for the customer.

Malunga lays out seven factors that organizations can learn from bees. All of these factors are also applicable to how organizations structure themselves and then interact with customers. What can we learn from bees that apply to customer experience?

• Focus and concentration: When it comes down to it, every organization is probably really good only at a couple of things.  For excellent organizations, one of those has to be the customer experience.
• Leadership: Leadership is key, and the leader has to be the customer. When the customer is actually present or there in the form of a persona, they point the direction forward for the organization.
• Structure: Not every person in an organization has to have direct contact with the customer, but everyone has to keep support of the customer at the forefront of their efforts.
• Internal relationships: It may take a while for teams and organizations to come together and develop a rhythm, but they all have the same goal and support each other in achieving that goal to the benefit of the whole organization.
• Self-development: As an organization matures, the level of knowledge about the customer should become deeper. The organization needs a process to continue its self-development to match the changes in the customer.
• Sustainability: Just because customers are the center of the effort doesn’t mean that an organization should keep every customer if it costs more resources to keep the customer then the benefit of that customer.
• Relationships with stakeholders: Your primary relationship that we are talking about is your relationship with your customers. The key is adding value to both sides of the experience.

If you are looking for a new way, especially with including social media into how you service and work with your customers, then adopting some of the ideas around how bees work may prove useful.

Question: Which of these are most applicable for your organization?

Bottom Line: Bee hives provide an interesting model for customer experience. What can you learn from the bees?

When I think about it, apps are pretty cool. By apps, I mean mobile applications that are essentially software applications that are designed to run on smartphones and tablets like my iPhone 4 and my iPad. From a customer experience perspective they have changed the way we interact with content and are on the verge of changing it even more.

Most software revolves around how we interact with content – data and information. When you think about it, the high level progress of software has essentially been from mainframe applications that run on a terminal to desktop applications to internet applications. We went from interacting with data and content through the terminal to the desktop and then through a web browser has been a significant transition where the boundaries of the interaction within the application have continued to broaden.

But now apps are changing that. How? By narrowing and targeting the breadth of content we interact with and making the depth of that interaction potentially even deeper. But is this change really taking place? Consider the convergence of the mobile and desktop OS and the sales numbers.

• The desktop OS and the mobile OS are becoming one. You just have to look at what Apple has done with Lion and the new iPhone OS to recognize that the desktop OS and the mobile OS are on a path of convergence. Or even Windows and Windows Mobile. It is just a matter of time.
• People like apps. People like working in apps and are willing to pay a small amount for the experience. As of October 2011 there are over 500,000 apps for sale in just the Apple App Store. And my friends over at Gartner have predicted that the sales of apps across all stores will result in over $5B in revenue in 2011 and over $58B in 2014.

But even more interesting, apps are changing the way we interact with content by narrowing the breadth of the interaction, deepening the depth of the interaction, and are dominating what we are buying.

Now I am not a software analyst but a customer experience analyst and part time strategic thinker. I think that apps have the potential to significantly alter the customer experience. How? If you follow Jacob Nielsen’s thinking about useful, usable, and enjoyable apps have the ability to improve all three of these criteria while maintaining a Web page to meet the broader audience needs.

But how will apps change customer experiences? By making interactions more simplified, outcome focused, and targeted. With an app, interactions are more:

• Simplified. The experience within an app is simplified compared to the equivalent experience in a browser. For example, I would expect to be able to check my bank balance on an app but probably not surf for the best mortgage rates – unless that was another app. I might not be able to look back over 90 days worth of account data, but I probably don’t have to. Apps make the experience more simplified.
• Outcome focused. When you open an app, you are there to do something – there is an outcome you want to accomplish.  You can’t just go in and browse in an app like you can in a Web page.  You may go on to check your balance, buy a book, or check a score. you are in the app for a reason.
• Targeted. You are probably not going to be reading mounds of content through an app. Apps are targeted to accomplishing a specific set of outcomes unlike a Web page which can target a broader set of outcomes and interactions. For example, I can’t do everything on my banking app that I can on their Web page, but then again I wouldn’t want to.

Bottom Line: This shift isn’t going to happen overnight, but it is going to happen and happen quickly. Apps will quickly redefine how we interact, much as the portal did. If you want to reach customers tomorrow, you need to have an app strategy.

Question: How do you see apps changing the customer experience? What could cause this not to happen?

What comprises a great customer experience – is it the interface, the person at the other end, the process? Is it simply a good customer service or is there more to it? It is hard to evaluate a good customer service because it is different for everyone. When it comes to evaluating a customer experience, I fall back on two paradigms – that of Jacob Nielsen and another that is covered in the acronym VIDC.

Jacob Nielsen’s paradigm was originally focused on improving the user experience for an application, but the elements in it apply to both digital and non-digital experience. Nielsen’s framework is built around three concepts – Useful, Usable, and Enjoyable. The second framework I used is expressed in the acronym VIDC – Valuable, Intentional, Different, and Consistent. There is definite overlap between the two paradigms but there is enough differentiation between the two that there is value in using both paradigms. I am just going to use Nielsen’s paradigm today and will write on VIDC another day.

One company that provides a great customer experience is Patagonia clothing company. Patagonia was started by climber Yvonne Chouinard in 1972 to provide better clothing and equipment to climbers. Patagonia is also a company with a social conscience and contributes to numerous environmental efforts and non-profits.

I purchased a Patagonia hard shell but had to take it back to the store for repair due to an issue with the zipper. So even though I had purchased it online, I took it back to my local store. When I got to the store, I spoke with an associate at the counter and explained the zipper issue. He took a look at the jacket and offered me two solutions. First, they could send the jacket in for repair and I would have to wait three to six weeks for my jacket. The second option was that they could just issue me a refund for the price I had paid for the jacket and I could buy a new one.

Since the jacket was three years old and not wanting to be wasteful, I chose to have the jacket repaired. So it was sent off to be repaired. Approximately a week later I received a call from the repair center saying that they didn’t have a matching zipper and were issuing me a credit for the original cost of the coat. So I ended up getting a new coat out of the deal even though I tried not to.

Let’s look at how this experience matches up to Nielsen’s paradigm of Useful, Usable, and Enjoyable. First was the experience useful? Yes. What I wanted most was to have a jacket that worked. My preference was getting my old jacket repaired, but a new jacket accomplished the same thing. And in some senses it was more useful in that my new jacket will likely last longer and I got a jacket quicker then waiting for the repair.

Second, was the experience usable? Yes, it was. First, it was channel agnostic. I could have dealt with this issue in person (like I did), over the phone, or over the internet. Second, during all of the touch points, the representatives from Patagonia had complete information on the issue going all the way back to when I had purchased the jacket. Third, it was actually fairly easy to do. Yes, I could just have mailed it back, but dropping it off at the store was easy too.

Lastly, was it enjoyable? How do you rate enjoyable? By the customer service rep cracking jokes? By the store associate inquiring in to what sports I enjoyed and why I purchased the jacket? The repair associate assisting me in picking the best replacement jacket?  All of these were fun and I enjoyed each interaction, so yes.

Now there are number of systems, processes, and corporate values that are foundational to this experience – from a good CRM system to a good return process including evaluating issues against a set of corporate values to employees actually believing in and living those values, but the end result was a customer who is going to purchase from Patagonia again and again.

A good customer experience is always in the eyes of the beholder, but there are some simple characteristics that are a part of all good customer experiences. In this case, and in previous interactions with Patagonia, the brand has always met its brand promise of providing great gear and great interactions.

It seems the world is in a content flux of change these days. Whether it is the Arab Spring, the breaking up of Motorola, the occupation of Wall Street, or the new version of Facebook, as the Greek philosopher Heraclitus said more then 2,500 years ago nothing endures but change.

Right now, it happens to be Wall Street taking it on the chin. But Wall Street won’t be the end of this. Other large events are likely to establish themselves. Heraclitus’s tenant holds true even more so in the digital space – change is constant here. Remember Prodigy, DEC, WordStar, Palm Pilot, and other innovations that were going to change the world, and may even slightly did? They are all gone now, swallowed up by the constant state of change that we are dealing with. So the question isn’t if change will come, but when will it come and what will it be? And your corresponding question should be how do I prepare to deal with change?

A crises is really just a disruption of a speed and size that we weren’t prepared for. As I explained before in the Ven of Disruption, we tend to view disruptions as singular events even in the technology space. The problem is that they aren’t singular events. Taking a systems perspective, there are always preceding events that influence the next event. Within the construct of the evolutionary system of Technology, Organization, and Society/Market, there are events or catalysts that constantly cause changes within each of the three components. This rate of change can be classified as either slow or fast, and when looked at over time the impact of the change can be either small or large (see Figure 1).

Figure 1: Understanding The Size And Rates Of Change

So taking this lens and applying it to the current crises in existing in social media around Occupy Wall Street and around the pressure being applied to financial services firms over the changes they are making in account terms such as new fees, what we see is a significant flow of information and energy between each of the three elements of disruption. Wall Street firms, after nearly collapsing, recover and make large profits with the perception of little value being returned to the US economy, a Market Disruption. A group of people, angered and annoyed by what Wall Street did bring their issues and sleeping bags to Wall Street, a Cultural Disruption. To communicate about their ire, they turn to technology and the social space to communicate and relate using the same sorts of methods that were used during the WTO and IMF protests, thus spilling a disruption over into the social channel which is a Technology Disruption. Add in the immense amount of entropy that exists within this system because of all of the separate nodes (people, groups, firms) and it gets really messy.

There is no real way to predict where this is going and where it is going to end, and this is not a one time event – it is likely that this will happen again and again as these three components continue to evolve and be disrupted. So firms and government agencies that are thinking that they can just wait this one out need to rethink their strategy – this is the new normal.

How should you prepare and respond

Too many CEO’s are going to want to say that this is a crisis communications issue and deal with it that way. I think that way of thinking is a mistake. This is the world we live in now and we need to be prepared to deal with it. Being a former Boy Scout, I appreciate the motto of Be Prepared more now then I ever did when I was in Scouts. And I think the same holds true for firms dealing with social media and similar crises. You need to start withe the Principles of a Response.

Figure 2: 11 Response Principles

So when a crisis or disruption hits or hopefully before, how should you be prepared? By following the first six of the Principles of a Response (see Figure 2).

• Gut check your culture – Is your culture ready to deal with an event like this? Some of the more traditional organizational cultures are not able to deal with crises like the current crises going on – they don’t want to interact with protestors and detractors. You need to be willing as an organization. If not, you probably have bigger issues.
• Have a strategy in place - It is impossible to be prepared if you don’t have a strategy. Build a strategy for dealing with this before and run scenario exercises to check it.
• Gather intelligence – It is important to always be gathering information and data. In the case of social media, you should always be using monitoring and listening tools.
• Have an established brand presence already in place - If your company is getting slammed in social media, it is a bit late to be setting up a Facebook page and a Twitter feed. Make sure that you have the proper channels set up and running before.
• Set the ground rules - If they are coming to your Facebook page or your blog, you get to set the rules. Think of it as home court advantage. Make sure that you set the rules to your advantage, but be reasonable.
• Bring your friends – The old maxim that the best time to have friends is before you need them  is true in the social media world. Build an advocate platform and cultivate these advocates before you need them.

If a crisis still catches you unaware and not prepared, you still need to respond. How? By following the last five Principles.

• Respond quickly but don’t overreact – You need to respond quickly, in most cases within 24 to 48 hours, but don’t overreact by telling people they are wrong or blowing the issue out of proportion.
• Acknowledge the situation - Acknowledge that the situation exists, be honest in your analysis of the situation, and be open to other opinions. Also acknowledge it on the channel where the issue is taking place.
• Respond personally - Yes, you are in a corporation, but crises like these require a personal response and not a lot corporate speak. Put a human face on it and a human voice to it. Respond directly to a person when possible.
• Move the discussion – Just like you wouldn’t want to talk about the issues you are having with your teenager in the middle of a dinner party, you don’t want your primary channels to be clogged with complaints and unsubstantiated issues. You need to have a an equivalent secondary channel already established and ready to roll. If you don’t already have one set up when the crisis hits, get one set up quickly.
• Use crises to drive innovation. There is a reason people are annoyed or the disruption happened. Use that to your advantage to gather value out of crisis, and the way to do that is by using crises to drive innovation. How? By gathering information you can drive change and innovation.

Bottom Line: Disruption, change, crisis – what ever term you use, it is going to happen again in the social media space. And you need to be both proactive and reactive in your response. Understand what you are up against and adopt the 11 principles.

Question: What other principles would you add?

Buyers, investors, and press are confused. When it comes to digital customer experience solutions, they can’t tell X from Y, and it’s only going to get worse. What they want is a single place to track all the vendors, and I’m going to take a stab, and get your help via submissions to keep it updated.

There are new technologies and strategies that are impacting the customer experience. Technologies like customer analytics, customer experience management systems, and even HTML 5 all impact the customer experience. Additionally, how platforms like Facebook and Twitter will be a part of the customer experience landscape is still up in the air along with what role different vendors like Adobe, IBM, Molecular, RightNow, and others will play in this market.

The problem is that it is difficult to keep track of all of the vendors and who does what. According to one vendor I had a briefing with, even the vendors themselves are confused (for example, while writing this it was announced that NICE would acquire Fizzback). The list that follows is a broad list of today’s primary customer experience vendors. It by no means covers every single agency or consultant who works on customer experience, but in my research and discussions I have tried to ferret out as many as possible. I have also tried to split them out according to a simple marketplace taxonomy. Like all markets, the customer experience market is not clear and clean-cut, so there is some overlap. My goal is to reduce the confusion. I won’t be able to eliminate it totally as it is an evolving market, but with your help we can reduce it as much as possible. Any mis-categorization or failure to include is simply a mistake that I would appreciate your help in correcting.

What I would like to encourage you to do is either publicly in the comments or privately if necessary send me your thoughts on the list. Are the companies positioned correctly? Are their critical companies I should have included but missed? Is the categorization and taxonomy wrong?  I will use your responses as an input to keep an ongoing view of the customer experience market ecosystem.

Note: All companies in each section are listed in alphabetical order.

Customer Experience Analytics/Analysis. Customer experience analytics are those technologies that allow for the measurement and analysis of the customer experience. Often this overlaps with customer intelligence, customer data, and other similar technologies.

Clarabridge
ClickSquared
Cognos (IBM)
Coremetrics (IBM)
Coveo
Foresee Results
Medallia
NetBase
NICE Systems
Omniture (Adobe)
Oracle
Prediction Impact
Radian 6
SAS
Unica (IBM)
Vivisumo
Webtrends

Customer Experience Agencies. Customer experience agencies cover those consultants and agencies that have a practice or deep expertise in customer experience beyond the traditional communication/PR/marketing aspects of agencies.

Acquity Group
Adaptive Path
Andrew Reise Consulting
Blast Radius
Concept Farm
Edelman
EffectiveUI
iCrossing
Isobar
Juxt
Ogilvy
Peppers & Rogers
Razorfish
Rosetta
Roundarch
SapientNitro
Siegel+Gale
Siteworx
Strativity
Universal Mind

Customer Experience Management. Customer experience management (CEM) are a collection of technologies, strategies, and processes that are used to manage the cross-channel interactions with a brand or a company. These often overlap with CRM and SCRM systems but are different in that the focus of a CRM system is the enterprise and the focus of a CEM system is the customer.

Axicom
Adobe
Clearaction
Consona
Endeca
Isobar
Kana
Medallia
RightNow
Satmetrix
Sitecore
Tea Leaf

Voice of The Customer/Customer Feedback. VoC technologies are in-depth processes and strategies to capture an individual or class of customer’s expectations, preferences and dislikes.

Allegiance
Attensity
Confirmit
Fizzback
Get Satisfaction
iPerceptions
Kampyle
OpinionLab
Overtone
PeopleMetrics
PowerReviews
RightNow
Satmetrix
Strategex
Vovici (Verint)

Customer Loyalty. Those technologies used to measure and potentially increase a customer’s loyalty through a better customer experience and a communications cycle.

BrandKeys
Corsential
Foresee Results
Gallup
Kampyle
Strategex

Bottom line: This is just the beginning of this effort and obviously needs your help, so I am hoping for your feedback. Again, any omission or mis-categorization is not intentional and I would appreciate your help in correcting. Thank you!

Question: What do you think? What is missing, What should be taken out? What is wrong with it?

If you are one of the vendors above or a vendor who should be on this list and would like to brief us, please send an email to alan (at) altimetergroup (dot) com. Thank you!

Note: I will be constantly updating this post as I speak and get briefings from companies on this list and note it here.

Please read our disclosure policy.

Note: Sometimes WordPress confounds me. I originally wrote and posted this on Thursday, not realizing until Saturday that it wasn’t actually showing up in my feed – thanks JKO. I am not going to bore you with the long details of what the issue was and what gyrations I went through, but let’s just say I have learned my lesson about writing posts in Word and then posting them to WordPress without cleaning out all of the extra junk Word adds to a document.

Most of us are constantly throwing acronyms and terms like KPI, ROI, CBA, performance measures, business case around without being cognizant that these mean different things to different people. For example, KPI will likely mean something very different to someone from the CFO’s office then someone who is in a line of business position. This is even truer when it comes to deeply nuanced subject areas like customer experience, social technologies, and marketing. But I still hear and read the terms ROI and KPI being used almost interchangeably by a number of people and often in the wrong context.

I was recently speaking with a friend of mine who still works for the Federal government and we were talking about building business cases, performance measures, budgeting, and aligning everything. After decades of attempting to align performance with budget as part of the annual planning process, they were giving up and going back to separate reporting on performance and budget. Why the change? His take was that it was because of issues around understanding the difference between performance indicators and ROI specifically with measuring interactions and engagement with citizens (customers) through social media. He wanted to know how do we reconcile performance indicators and return on investment for something like this. Then asked the key (or dumb) question of what are their overall business goals and their specific goals for citizen engagement. The deafening silence told me everything I needed to know.

Key performance indicators are just that – indicators of performance to measure success or failure towards a specific goal.  You build your performance indicators based upon your overall business strategy and your area specific goals. (I have laid out what I call a strategy waterfall below that demonstrates this.) For example, with disruptive technologies like social media, mobile, games, and others you need to define the specific goal(s) that you want to accomplish – better customer experiences, more sales, more new customers, etc, before you develop your KPI’s. If you want higher levels of customer engagement, then your performance measure should be the measurable indicator of your progress towards that goal.

What should not happen is that performance indicators should not dictate business goals. Too often I have seen performance measures (what is measurable) determining the specific goals for an effort. I had a company recently say that since they could measure the number of likes on Facebook and the number of followers on twitter, their goal was to increase the number of likes and the number of followers on twitter. When I asked how this related to their overall business goals, the answer was everyone else was doing it so they had to do it. Not a good business goal.

The reverse holds true too. If you have a business goal, you need to have measures towards accomplishing that goal. I was speaking with another end user about their customer experience strategy and effort. They explained to me their overall goal about improving customer experience through the use of social media and the development of a mobile application. When I asked how they were measuring their success towards those goals, they related that they were using standard measures like number of comments on Facebook, retweets on twitter, etc. When I asked how those were indicators towards those goals, they honestly replied that they really weren’t but it was all they had.

Bottom line: Building a strategy architecture is hard work with the hardest part likely putting the right key performance indicators in place. You have know what your business goals are, how specific areas contribute to those goals, how you decide on the right performance measures, and then putting in place the right strategies and tactics towards that goal. Focus on working from the top down, realize that there will be gaps, and continually test measures to address those gaps.

Question: Have you built a strategy architecture that included a disruptive technology aspect? How did that work?

When it comes to the stock market, weather, and technologies, wouldn’t you like to be able to predict the future? When it comes to the stock market there all kinds of models – from throwing darts to stochastic models. But for most investors, then best they can hope for is matching the market.

When it comes to weather, I always think of the old joke – Weathermen are the only people I know who are wrong more the 50% of the time and still able to keep their job. Yet predicting the weather, again with all of the complicated models, is still as much art as science.

Technology innovation and how it may impact your business is just as hard if not harder to predict.So why do we even try? Because what we really want to do is not predict when Apple will hit $500 a share, or if it is going to rain today, or even what will replace Facebook, but what we want is to reduce risk.

Just a few days ago I experienced my first earthquake. I spend a lot of time in California and had never been through an earthquake. So I got to experience my first earth shaking not in the Bay Area but instead sitting at my desk in my house. Did you know that Virginia is a big earthquake zone? Neither did I nor the USGS. The earth shaking was totally unexpected in DC and resulted in a number of people running from their buildings and out on to the streets. Was it predictable? Yes, actually it was since Virginia is an active tremor zone. Did we know when it was going to happen? Or how big it was going to be? No, of course not. Why does all of this matter? Because we make choices based upon risk. It is the same with technologies.

When it comes to emergent and disruptive technologies, when we do pay attention it is often because we want to reduce risk. Some people would argue that it isn’t risk but opportunity, but aren’t these just different sides of the same coin. We want to reduce the risk of a disruptive technology unexpectedly marginalizing a current technology we use, a market we are in, or customers that we have. To reduce that risk we have to identify them as early as possible, chart the projected maturation cycle for the technology, and then identify ways to work within the new context. Starting at the beginning, how do you identify potentially disruptive technologies? Three methodologies that I have used and seen used that are drawn from the area of risk management are:

• Taxonomy identification - A taxonomy methodology partitions a body of knowledge and then defines the relationship between the parts. In this case, the body of knowledge around consumer use of mobile devices might be partitioned, relationships defined, and the gaps or weak links identified. Technologies that appear to identify these gaps have the potential to be disruptive.
• Disruption charting - Disruption charting is type of what-if exercise. In a simplified form the business model, the underlying technology, and the corresponding and tangential markets are all run through a series of what-if exercises which can expose areas that are ripe for disruption. The results from these exercises are often matrices that list the aspects of the areas being examined, potential disruptions, factors which may impact the severity of the disruption, and the potential consequences of the disruption.
• Scenario identification - In a scenario identification exercise, a series of scenarios or alternative paths are constructed based upon achieving a specific objective sometime in the future. Each of these scenarios are then analyzed for current or potential technologies that could disrupt progress alone that path. When the same technology is found on multiple paths, it is scored as a higher risk factor.

Bottom Line: Identifying potentially disruptive technologies is never easy, but when you realize that the wealth of the Virgin companies and its CEO Sir Richard Branson was built upon identifying areas ripe for disruption and exploiting them, the you realize it is a worthwhile exercise.

Question: What types of processes and methodologies does your company have in place for identifying potentially disruptive technologies?

Whether it is surveys, buying behaviors, customer feedback or data gathered through listening on social channels, there is a lot of data out there about your customers – who they they are, how many people are in their household, how much money they make, what they spend it on, etc. Some of it is qualitative, such as customer comments, but a large majority of it is quantitative – numbers that represent quantity of purchases, zip code, size of household, average spending, mortgage.

Most businesses are able to only use a small amount of this data to try better target customers and also in some cases to provide a better customer experience. But even with all of this data, most customer experiences are marginally good and a large number border on intolerable. It takes solid qualitative data to provide a great customer experience, and most companies have not invested the large amounts of resources it takes to gather the data. There is a large disruption just over the horizon coming for customer experiences – the ability to use large amounts of qualitative data to fill in the gaps in quantitative data at a relatively low cost.

I grew up in a small town. It was so small that we only had one traffic light and you could be all the way through town before you counted to ten if the light was green. We had some great small stores in that town. The two that stand out most to me where the coffee shop and the hardware store. Why? Because whenever I went in either store, they always knew who I was, what I was working on, and went out of their way to take care of me. The provided a great customer experience.

They didn’t have huge spreadsheets, CRM systems, EFM systems, VoC programs, etc. Their quantitative data was usually limited to a small card at the hardware store that became the bill at the end of the month. What they did have was a large qualitative knowledge of who I was, who I was related to, how I worked, what I liked, what I didn’t like, what projects I had done and were working on, and more. When I came into the hardware store and asked for more fencing staples, they already knew that I was in the process of putting up a new barbed wire fence and what kind of staples I needed. When I went into the coffee shop on Saturday mornings, they already knew I wanted a glazed donut with my coffee. It was the qualitative data that allowed them to provide what was a great customer experience.

As businesses have grown more into national firms and then into multi-national firms and as the technology to process data has progressed, they have spent considerable amounts of money gathering huge quantities of quantitative data about their customers. All of this affected marketing campaigns, product development, customer acquisition, and more, but the customer experience began to slide. For example, have you been on an airplane lately? Airlines have large amounts of customer data about you, but has it really improved the experience. The pendulum swung from the heavily qualitative to the heavily quantitative.

Yes, there has been some qualitative data gathered through surveys, focus groups, customer comments, customer interactions, but the amounts of qualitative data has been significantly eclipsed by the overwhelming amounts of quantitative data. But things are shifting. More and more qualitative data is becoming accessible and usable. Companies are better able to take advantage of the knowledge locked up in the qualitative data. What is causing this swing?

• “New technologies” - The technologies aren’t really new, they are finally getting to a point of maturity now that they are beginning to have a disruptive impact. Technologies like text analytics and other business intelligence applications have been around since the 1940′s and 50′s. But now these technologies are being applied to new and broader sources of content, such as through social media channels. Better algorithms and methods are also being developed and deployed.
• Computing power - Coupled with the technologies is having the necessary computing power to run them. We are getting close to having the necessary computing power at an affordable price point to do just that. Whereas not to long ago a mainframe would have been overwhelmed with processing this much data, now desktop computers and servers can run most of this.
• Reaching beyond the enterprise - Social media has opened up companies to the wealth of data in the daily interactions of their customers and potential customers that until now have been out of reach. Companies now have access to a portion of the conversations taking place about their products between customers. Yes, there are still significant issues with the validity of such conversations and how representative of actual perspectives, but my guess is that this will become less of an issue as more and more consumers become more comfortable with social media.

Bottom Line: We all complain about the horrible customer experiences we have. But my guess is that we are on the cusp of change. Ability to access qualitative data is going to be a large disruptor for customer experiences. As businesses gain more and more access to more and more qualitative information that can fill in the gap between the quantitative points, customer experiences will improve.

Question: Do you think text analytics and similar technologies will improve customer experiences? If so, how?