A Planet-Sized Problem
E.O. Wilson | Factoids | Business frameworks can't replace thinking | Forget ‘Delight’. Just Don’t Piss Them Off.
Quote of the Moment
Few will doubt that humankind has created a planet-sized problem for itself. No one wished it so, but we are the first species to become a geophysical force, altering Earth’s climate, a role previously reserved for tectonics, sun flares and glacial cycles.
| E.O. Wilson, Consilience: The Unity of Knowledge
All the ‘mad world’ weather, wildfires, hurricanes, and flooding underscores Wilson’s observation: welcome to the Anthropocene.
Canadian wildfires have this year burned a land area larger than 104 of the world’s 195 countries. The carbon dioxide released by them so far is estimated to be nearly 1.5 billion tons — more than twice as much as Canada releases through transportation, electricity generation, heavy industry, construction, and agriculture combined. In fact, it is more than the total emissions of more than 100 of the world’s countries — also combined. | David Wallace-Wells
In the past five years, EVs have gone from 2% of new-car sales in [California] to 22%. Tesla recently overtook Toyota as the top-selling car brand in California. | Tom Randall
America has more retail per capita than any other country. | Emily Badger
And the urban doom loop is bringing us down to Earth. Maybe more daycare centers and public toilets would entice people back.
Slowing consumer spending, reduced availability of credit and rising penetration of e-commerce may contribute to the closure of 50,000 retail stores in the US by 2027, a UBS analyst said in a recent report.
Business frameworks can't replace thinking
[Originally published on the Sunsama blog]
It’s the time of year when we start reflecting on all the work we did and all the work we’ll need to do in the year ahead. For many of us, that means relying on a popular framework like OKRs (Objectives and Key Results) to guide us through the new year.
It got me thinking about Roger Martin’s critical post on OKRs titled the “OKR Hype Train” and the danger of ceding our thinking to a playbook. In a nutshell, Martin posits that businesses put so much faith in the OKR playbook that they neglect to develop a thoughtful strategy unique to their circumstances. And without a principled strategy, there’s no good way to decide what work should be done to take us from an “Objective” to a “Key Result”. Martin details how we can shoehorn deep thinking about the company’s strategy between the Os and KRs and solve the “and then a miracle occurs” step made famous in the S. Harris cartoon:
The OKR framework is just one example in a long parade of models that are widely used and which become foundational concepts underlying our shared understanding of how businesses should operate. Other examples include SWOT (Strength, Weakness, Opportunity, Threat), Clayton Christensen’s Disruptive Innovation Theory, and the long list of decision-making models (like DICE, RACI, and DARE).
Over time, previously innovative ways to help people think about markets, business, and work are ritualized and applied without much — if any — reflection on the current context or the limits of the models themselves. That is, of course, the benefit of a model. It offers an abstraction of the situation at hand and minimizes the time and effort required to determine the salient factors of a situation.
In my experience, the shiny appeal of abstract models lies in making decisions through deduction. But deduction relies on starting with facts we know to be true, and in complex systems like businesses, we must work with incomplete information of unknown accuracy and reliability. If the inputs to our models aren’t very good, we must instead rely on something else. I believe we should rely on deeply internalized principles to guide us.
One approach to using internalized principles I’ve found helpful is making decisions based on explicit relative values. The approach uses “even over” statements to guide our decision-making, like these:
Employees' well-being even over customer satisfaction
Customer satisfaction even over profits
With these principles in place, a customer support rep can make the decision to give a customer who has an emergency temporary free access to a paid tier of the product, knowing customer satisfaction is more important than the profits from a single transaction.
A company, team, or individual can draw upon internalized principles like these when deciding a course of action that will take them from an Objective to Key Results without resorting to some Harvard Business Review article on strategy.
Martin offers one critical takeaway when focusing on the missing piece, saying “desire is not strategy”:
But desire (as with hope) is simply not a strategy. The desire to achieve the named key results won’t cause those key results to happen. You may desire the substantial rise in your NPS, but if you are serving customers that your key competitor serves better than you do, your NPS is unlikely to rise — even though you really want it to. Your strategy is the thing that will cause your NPS to rise or your customer churn to fall, or your customer acquisition to strengthen.
Perhaps this year, before forging ahead and hoping OKRs lead to success, it would be worthwhile to write down your principles and see if they help you navigate the chasm between Objectives and Key Results. Models will never be a substitute for the hard work of strategic thought.
Forget ‘Delight’. Just Don’t Piss Them Off.
In a classic 2010 article, Stop Trying to Delight Your Customers, Matthew Dixon, Karen Freeman, and Nick Toman debunk conventional wisdom about customer service and its relationship with customer loyalty:
The idea that companies must “delight” their customers has become so entrenched that managers rarely examine it. But ask yourself this: How often does someone patronize a company specifically because of its over-the-top service? You can probably think of a few examples, such as the traveler who makes a point of returning to a hotel that has a particularly attentive staff. But you probably can’t come up with many.
Now ask yourself: How often do consumers cut companies loose because of terrible service? All the time. They exact revenge on airlines that lose their bags, cable providers whose technicians keep them waiting, cellular companies whose reps put them on permanent hold, and dry cleaners who don’t understand what “rush order” means.
The authors compiled their evidence over a three-year period, surveying over 75,000 B2B and B2C customers in non-face-to-face channels, including live phone calls, voice prompts, web, chat, and e-mail.
Their two biggest findings:
'Consumers’ impulse to punish bad service—at least more readily than to reward delightful service—plays out dramatically in both phone-based and self-service interactions, which are most companies’ largest customer service channels. In those settings, our research shows, loyalty has a lot more to do with how well companies deliver on their basic, even plain-vanilla promises than on how dazzling the service experience might be. Yet most companies have failed to realize this and pay dearly in terms of wasted investments and lost customers.' 'Delighting customers doesn’t build loyalty; reducing their effort—the work they must do to get their problem solved—does.'
'Acting deliberately on this insight can help improve customer service, reduce customer service costs, and decrease customer churn.'
Companies fool themselves into thinking customer satisfaction numbers are a solid proxy for loyalty. They’re not. As they put it,
Although customer service can do little to increase loyalty, it can (and typically does) do a great deal to undermine it. Customers are four times more likely to leave a service interaction disloyal than loyal.
So companies must focus obsessively on making it as easy as possible for the customer to accomplish what they contacted the company to do. Remove obstacles to that. Here are some of the most common:
Most customers encounter loyalty-eroding problems when they engage with customer service.
56% report having to re-explain an issue
57% report having to switch from the web to the phone
59% report expending moderate-to-high effort to resolve an issue
59% report being transferred
62% report having to repeatedly contact the company to resolve an issue
Work on making the mainstream customer interactions as low friction as possible, and forget about delighting them. Delight won’t have anything like the impact of one terrible experience.
As I was rereading this article, I was struck by the similarities with employee experience. I’m certain that the same principles hold when a worker approaches the HR department or grapples with one of the bazillion apps the company expects the employee to use to get their job done. As I wrote about recently at Reworked (Where Leaders Should Focus Their Employee Experience Efforts Today) I cited a Qualtrics report that showed the number one factor in well-being was "work processes allow me to be productive as possible," and the top driver of burnout was "ineffective processes and systems."
So, customer disloyalty and employee disengagement are very close cousins, and are triggered by the same sorts of disregard.