Make the most of Pit Stops with the 3Rs

Make the most of Pit Stops with the 3Rs

The global disruption caused by COVID-19 has found a lot of businesses rethinking their business models and given them a pause. The disruption can be turned into a Pit Stop - an opportunity to relook, replan and refresh businesses akin to the motorsports racing team using their pit stops during a competition. I will look at the Pit Stop topic with some of the typical questions along with my take on it - What, Why, How, When and Who should do a pit stop?

What is a Pit Stop?

In Motorsports "a stop at a pit for servicing and refuelling, especially during a race."

A Pit Stop is time and space to relook, replan and refresh the purpose, goals, business model and priorities for your business leading to a re-invigoration of all the stakeholders.

Taking the analogy of personal finance, pit stop is akin to re-balancing your investment portfolio to keep your risk in line with your risk profile. In investment parlance, it is about building a sustainable investment portfolio. Similarly, Pit Stops are about actions or activities to build a sustainable business.

Why a Pit Stop?

Although most businesses set aside time to do a strategic planning (offsite, meetings etc) exercise every year followed/supported by planning and budgeting cycles, these are often done while running the existing business model. Hence, these planning exercises are mostly about incremental growth and extending the status quo.

The pit stop are essential because they help organisations in:

• building a sustainable business in line with your business' purpose
• Re-energizing the business with new ideas and reiterate the purpose

How do you do a Pit Stop? The 3 Rs Approach

There could be several frameworks and approaches based on organisational maturity and current state of the business or industry. A generic approach is what I term the 3 Rs (not related to the 3Rs of education introduced in the 1800s) for organisational renewal, which is a step-by-step sequential approach which builds upon each other and is a continuous cycle.

Step 1: Relook

This is the Analysis phase of the Pit Stop. Thinking back to our analogy of motor sports, relook is based on data generated during the race (with the best race teams, combining this with past race data, competitor behaviour and additional vehicle/driver/environmental insights).

In the case of organisations, it is about reviewing the financial data along with insights and progress on Customer NPS, Employee engagement scores, contribution to society, environment (UNSDGs are a good list of goals lot of good organisations are supporting) and wider stakeholders. These insights need to cascade down the organisations to get everything thinking and contributing to the next step.

Some of the best pivots in the tech industry have come from a fresh look at the business model, customer behaviours and other insights from the previous business model - example mentioned in the Business Insider article include Youtube pivoting from a dating site to its widely successful model today; Instagram from a foursquare-like app to photosharing; Twitter from podcast sharing to microblogging.

Step 2: Replan

This is the Strategy and Planning part of the Pit Stop. Although the business may already have a hypothesis/idea on how to improve and build a sustainable future, the entire workforce taking the time to relook and replan can bring about surprising insights. The replan can be undertaken either with a cascaded down approach or ideas from individual employees or teams being collated up by a central team or a combination of the two.

As mentioned by Daniel Pink in Drive, autonomy, mastery and purpose are essential to motivating individuals. The Autonomy and engagement in involving employees across the organisation can be critical to the success of any organisational renewal (more on purpose in the next step).

I love this story of HUL transformation under Nitin Paranjpe and great use of the A>>R (Ambition greater than Resources) to revitalise the business and refresh the workforce on a new ambition and purpose. The pit stop due to the 2007-2008 financial crisis was the backdrop against which this transformation was run.

Step 3: Refresh

This is the execution phase of the Pit Stop. From the motorsport analogy, this is when the vehicle heads back into the track taking the relook insights, replanned and refreshed to making an impact in the race.

Put Purpose at the Core of your Strategy - this article in the Sep-Oct 2019 issue of Harvard Business Review highlighted that the organisations making purpose the core of their strategy (as opposed to a CSR led paying lip service to it) drove sustainable profitable growth while remaining relevant and building deeper ties with their stakeholders. The article also highlights the role purpose plays in redefining the playing field and reshaping the value proposition.

In my opinion, Purpose should be the lynchpin of any organisational refresh. It is easy to forget purpose as the focus shifts to quarter end closes, regulatory/industry changes and crises but it is key to building loyalty with customers, employees, partners and the wider ecosystem.

Unlike motor sport, in the organisation context - the refresh can be executed on a small subsidiary/region/function, lessons learnt, cross corrections made and rolled out in other parts of the organisation on a phased or big bang approach.

A number of examples of successful strategy refresh is shared in this HBR article. The one which I would like to highlight is the transformation of Danish Oil & Natural Gas into Ørsted -  In ten years, it has transformed from the most fossil fuel intensive utilities in Europe to the most sustainable energy company in the world. A great story about using Purpose to drive your corporate strategy.

When should you take a Pit Stop?

Annually (along with your planning and budgeting cycles) but you may need more frequent considering the pace of change of business. Also, events like COVID which brings a stop to BAU (business as usual) provides a breathing space for forward thinking businesses to take a pit stop.

Who should run Pit Stops?

Like the planning and budgeting cycles which businesses have got used it, Pit Stops are something business can run at the Corporate level, business unit level. It is also a good opportunity for teams and individuals to do Pit Stops of their own - with relook/replan/refresh of purpose, goals and impact (along with alignment with the overall company purpose). Teams with a mission are more collaborative, more engaged and key to a sustainable profitable future.

Conclusion

Although business disruptions and uncertainties caused by pandemics and other crises are a good opportunity for organisations to take a Pit Stop to rethink the business, organisations should regularly relook their business models and insights from current business to replan and refresh (if needed). Using insights from multiple stakeholder perspectives to relook, collaborating organisation wide for ideas for replan and putting Purpose at the core of your strategy to refresh are essential to getting the most out of your Pit Stops.

Acknowledgements

A few months back, I attended a LBS webinar by Prof Andrew Scott (Do check the Pandemic webinar series by London Business School - Thanks Stuart for sharing this), where the impact of Corona Virus on the global economy was discussed. Prof Scott mentioned using the COVID enforced break for businesses as an opportunity for doing a pit stop. This got me thinking and hence this article. Also, Thanks to Imran & Akhilesh for reviewing and providing feedback on this.

This was originally published on LinkedIn

4 steps for addressing Personalisation challenges in Customer Experience

"For the lover, a beautiful woman is an object of desire;
 for the hermit, a distraction; 
 for the wolf, a good meal" -Canonical buddhist verse quoted

I love the quote above which, in the context of customer experience, highlights both the importance of getting personalisation right and dangers of generalisation.

My definition of Personalisation is 'truly' understanding your customer and adjusting/changing your service/content/interactions with the customer's context and needs in mind. This is not an easy task especially in a consumer facing situation - this is borne out by the high failure rates of the proliferation of startups in the online space (Check out this article on reasons for the failure).

Why is Personalisation Important?

There are a number of reasons for getting personalisation right related to customer loyalty which can be summed up as follows:

• Build a deeper emotional connect with customer The key ingredient for building loyalty and trust with your customer is by having an emotional connect - the feelings your every interaction with the customer (be it in an online context or in person or any other channel) will drive the customer lifetime value.
• Drive Top line Growth According to a July 2018 Mckinsey article Personalization at scale can drive between 5 and 15 percent revenue growth for companies in the retail, travel, entertainment, telecom, and financial-services sectors.
• Develop a Strategic Advantage Emotional connect with your customers → better understanding of customers → insights on the direction your product/service → Strategic Advantage. 

Types of Personalisation

So what're the different levels of personalisation any organisation can offer, irrespective of whether you're a B2B (business to business) or a B2C (business to consumer) organisation? Although there are other tiers you can define based on industry and maturity of your customer data/understanding, I like to think of it in the following terms (obviously technology, organisational maturity and data play a huge role in progressing from one level to the next):

• Basic This is the basic level where some generic aspect of a customer is used to differ the experience e.g. a country/region specific page is displayed for a user based on his/her location
• Demographic or Interaction based Here some of the basic data the customer has shared or product he/she is looking at is used to tailor the customer experience (again it is basic level - age, gender etc.) - this is also where online data based insights like 'people who bought this, also looked at' etc come into play
• Self-service Personalisation In addition to the previous two level, here the customer is given an opportunity to control his/her experience by tailoring (e.g. how the page components are displayed in a news website or nickname used in Online shopping etc.)
• Deep Personalisation Combining all the power of the previous 3 levels, deep personalisation uses all the statistics from customer's interaction with your organisation across channels to deliver a tailored and continuously evolving experience. This is a Big-Data enabled personalisation.

A word of caution here is that it may not be necessary to aim to move to deep personalisation for all industries or all organisations. The regulatory environment, product/service features, channel of interaction and company value proposition may necessitate just the basic personalisation in some cases.

4 Step Personalisation Transformation 

Getting personalisation right is not easy, takes time and is a continuous process. I believe the following four steps, from my experience of working with customers and learning from the experts in the field, will help organisations make the journey to optimal personalisation with their customers. 

Step 1: Make customers an ally in your transformation

Customer trust is a linchpin of any successful customer experience transformation. It is important to get existing customer excited and bought into any customer experience transformation you have planned - you need honest feedback and desire to make things better for both themselves and others. Open, honest relationship along with a superior product or service is key. A structured program to recruit pilot customers who are representative of your wider customer base is necessary if you're trying to experiment different personalisation approaches.

Step 2: Become a Customer Data Focused Organisation

All organisation collect a lot of data but most lack focus in their collection and usage of data. In the journey to being an organisation further along the personalisation maturity, the data strategy needs to have 

Step 3: Connect all your sales, service, marketing and other channels

Once you've nailed your data strategy with a customer experience improvement focus, the biggest impact on your overall customer experience is by being consistent across every interaction point. This should be right from the first marketing message to sale to customer onboarding to ongoing service to even an exit scenario. With the right data strategy coupled with building and providing a holistic picture of your customer at all touch points, consistency across all interactions is possible. Consistency also means that the ability to use data from previous interactions (both positive and negative) becomes extremely important - for instance, your call centre agents having access to the same customer data as someone in a retail center (This has been the promise of omni-channel software).

Step 4: Tweak your customer experiences, continuously

With Steps 1-3 accomplished, the next step is about agility in your customer interaction channels. The ability to do A/B testing on your changes to understand customer responses is critical as well.Your personalisation approaches should be able to change based on changing customer habits, better technology availability and individual customer's preferences. It is also about realising that, like any other transformation initiative, there is no 'end-state' in a personalisation transformation journey. Personalisation is a continuous improvement initiative which needs to be constantly adjusted for it to remain relevant for your customers.

 Although I have used these steps in the context of personalisation transformation, it is generic enough to be applied to other areas of customer/employee experience transformations as well.

Value Investing for your Business

Applying the techniques used by Investment professional in your business decisions and strategies

Value is a much misused term which is easy to define (one definition would be benefits in comparison to costs) but difficult to measure and quantify. Value investing, as a concept, has been around for a long time in the investment management profession with its most famous proponents being Benjamin Graham and Warren Buffet. The principles and techniques used by value investors are equally applicable in most business decisions where investments in capital and other resources are involved. 

Definition

Investopedia defines Value Investing as follows:*

“The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts … resulting in stock price movements that do not correspond with the company's long-term fundamentals..”

According to Professor Greenwald of Columbia University**, value investing is three things – a good search strategy, a good valuation strategy and discipline and patience. This fits in well with what a good business decision should be based on – a good planning, solid evaluation criteria and discipline to carry it through. Hence, any business planning exercise should diligently apply the concepts and techniques of value investing to derive the best possible value.

The following are some key learning from concepts and techniques used in value investing which can immediately applied to your business:

1: Invest based on Best Return on Investment (ROI)

Intrinsic Value concept in value investing undertakes a fundamental analysis of the company – a similar approach has to be the basis of your key investment decisions. It is extremely important to have a good methodology or strategy for how the investment returns are calculated or as Professor Greenwald calls it “a valuation strategy”.

A solid Business case should be driven by conservative and realistic estimation of benefits and the management team should be very clear on the benefits, their basis and the timelines.

Caveat – Be sure to check the basis of the benefits projected in the business case and how achievable they are.

2: Make a Fact & Analysis Based Decisions

Benjamin Graham said “the stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.” Make facts and analysis the central tenet of your business decisions and you can drive out uncertainties surrounding your choices. It is important to note that within the investment professional, any decisions which do not have a basis of fact based thorough analysis is considered a speculation rather than an investment

Caveat: Do be careful of Analysis Paralysis - spending too much time on analysis to make a perfect decision and losing the chance to capitalize on an opportunity.

3: Monitor and Update Business Case Regularly

One of the cardinal sins of value investing is not to be on top of your investments and the changes in the market conditions or internal company activities impacting its value. In the case of business decisions made, it is imperative to re-evaluate the investment on a regular basis by updating the progress made and results achieved. A change of course may be necessary if the business case doesn’t add or the ground realities and assumptions used have changed.

Caveat – The frequency of the updates/review should not to be far too many as to prevent actual progress being made on the business decision.

4: Plan an Exit Strategy

Closely related to previous point and one of the key tenets of Value Investing is not to be too attached to your investment selections and knowing when to exit. This approach is equally relevant to any business decisions as well – it is important to regularly re-evaluate the business case and the benefits and know when to exit.

While formulating a business case, considerable thought needs to be given to what are the possible triggers to exiting an investment decision – this can include ROI not being relevants because of cost or time overruns.

Caveat: Be careful about when just a course correction is needed as opposed to exiting from the choice made  

5: Take a Long Term View of All Investments

Value Investment is not about benefiting from short term market fluctuations but about gaining from the inherent value in a business and thereby the underlying stocks. In a similar sense, where possible, business decisions should be driven by the long-term business vision and strategy. Alignment with the overall goals of the company should be the bedrock of any investment decision made.

Caveat: The definition of long term changes based on business lifecycle and the industry

Using IT to deliver a Value Culture

Although business systems doesn’t explicitly figure in value investing, most fundamental analysis in the investment community give a lot of importance to the management team and stability of the company being analysed. Fact based analysis needed can be best achieved by a flexible analytical tools delivered by a Business intelligence platform enabling users to analyse and understand the information available. The full benefits are achievable if this is built on top of stable ERP and related business systems driving the operations. Also, any business decision which has implications of both capital and people investments should ensure the programme/project has the right team of people in place to ensure success. The key factors to look for in people for your key business plans is experience and the attitude to persist with the plan and see it through.

Conclusion

In conclusion, the concepts and techniques used by the practitioners of Value Investing can be effectively used to make better business decisions. Although value investing cannot be the silver bullet to the tough decisions an organization has to make, it does add an element of scientific methodology and common sense approach to decision making. Further, the techniques can help organizations be a better judge of the business value of internal and externally driven organizational initiatives.

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*http://www.investopedia.com/terms/v/valueinvesting.asp

**http://www.fool.com/investing/general/2004/08/09/value-investing-101.aspx