Over that time, I have learned a ton! From innovative product and service concepts, to how brands are engaging customers, the pace of change has been incredibly invigorating. In my practice, I have focused on Customer Experience and Innovation with a particular emphasis on the social web. I’ve tried to delve into not only social media tools, but how attitudes have changed within companies as they look at how their business fundamentally interacts with their customers.

I began my company with the goal of “bringing companies closer to customers.” And I like to think that I’ve been able to do that by understanding our clients’ objectives and constructing solutions that help them more effectively interact with their internal and external stakeholders.

But what do you do when you are given a fantastic opportunity to work with a terrifically talented and hard-working team at a great company? As hard as it is to leave what I am doing now, I feel the time is right for me to join the Corporate Development team at LoyaltyOne (AirMiles). This move makes perfect sense for me at this time; I don’t feel that I am leaving anything behind because I am taking all the skills and resources I’ve developed and applying them to a new set of challenges.

At this stage, I won’t be taking on additional clients or projects, but I will, of course, remain engaged in this industry and involved in all the pioneering groups that continue to move it forward. And, I promise to continue to learn and contribute with everyone who has made this medium the great, ongoing experiment in communication and interaction.

Starbucks recently introduced a new line of instant coffee that they claim is as good as their regular ground coffee. To prove it, they are conducting blind taste tests in store head-to-head with their Pike’s Peak blend to show customers that it can stand up to the most discerning coffee palate.

So yesterday when I was in Starbucks for a meeting, I stepped up to the plate – would I be able to tell the difference? The pressure mounted as the server poured both samples into the small cups. As I tasted both the reality set in – I haven’t had instant coffee in over 20 years! It took Starbucks’ claim that their instant coffee was significantly better than what was on the market to at least get me to try. They claim:

“The magic is in a proprietary, all-natural process that we spent years perfecting. We microgrind the coffee in a way that preserves all of their essential oils and flavor. No other coffee company takes this step, and it makes all the difference.”

I confess that I had seen this statement before I took the test: in fact, without seeing that they were doing something different, I probably would never have even bothered to try it. But I saw numerous posts on it on Twitter so I decided to see if the claims were true.

But what got me thinking was why Starbucks would even bother? For the past 20 years they have been trying to get us into the store for an “experience” centered around premium priced drinks. Does instant give them additional credibility in the home/office or does it take away from the experience they are trying to create in the store? I’d be interested to hear your thoughts on this new direction!

By the way, I was able to pick out the instant. It tasted pretty good almost like french press coffee but will I be buying a package? Probably not, when it only takes me a minute more to make a good pot of coffee using the press.

With more and more companies starting to realize that product and service innovation is the way to sustained success, model construction and analysis is certainly part of the product innovation process. With Brandsential’s understanding of customer needs and the product development process, clear actionable steps are put in place as part this process.

All of these are very focused, while they bring lots of benefits, they’re really designed to do one thing and do that well

They put the product or service directly at the center.

They are completely customer focused, they aren’t designed to do things that the company may want e.g. build community, evangelists etc. they are designed to serve customers.

They are utilities much more than they are communications.

Simply put, they make it easier for customers to do more business with them.

I really like the last one- with these new technologies its easy to lose focus on the customer and making things easier is one of the best things about technology.

1. Need buy in from the top. There will likely not be the same level of participation from the top but with the right set of guidelines, executives can see that participation from company staff can actually help build customer engagement with the brand.
2. Need an internal culture to support it. Executives must understand that the conversation about their brand and products is taking place whether or not they participate. Lack of participation is not going to stop conversations from happening and may in fact lead to missed opportunities to shape the dialog.
3. Understand that it’s not the tools but the topics. It should be the substance of the conversation which should be the focus. Tools change, but customers have issues that need to be heard and there is a great opportunity to get previously unmet customer needs out of the dialog if you co-ordinate this data with other channels.
4. People don’t live and breath your products. Unless you are RIM or maybe APPLE you have to consider your products in the context of the customer’s lives; how they enable customers to meet (or exceed) their needs. The conversations should be real and not just marketing jargon. Customers can see beyond language that doesn’t relate to their experience.
5. Need to go beyond click-thrus and impressions to measure overall brand engagement. Executives must be prepared that it might not increase transactions in immediate short term but will allow a new dialog with customers. What does this mean? If someone engages with a brand on a social media site then recommends your product to others on their blog should you say your website failed? Of course not. It must be one component of the overall mix.
6. Measure measure measure. Based on your overall objectives and also the objectives of your other partners in the value chain you need to use metrics that have relevance to your business – metrics that executives understand.
7. Need to dedicate resources to this as an ongoing initiative. Just doing it for a short term won’t produce desired results over long term. There’s a need to understand and implement compatible compensation structure to reward success to make sure that this doesn’t go the way of other “buzz-word” tactics.
8. Consider it as part of current marketing mix. It should not be thought of as standing alone, or as a replacement to current initiatives (see excellent post by @tamera)
9. Understand current customer viewpoints on products and services. In order to start finding ways to engage customers, review existing customer needs insight and if necessary look at re-examining ways to get deep customer needs back into the organization.
10. Tweak and build feedback loop to continually improve the initiative.

And don’t fret if it doesn’t immediately take off. No matter what anyone says, nobody has this totally figured out yet…

There is a great article from Geoff Ramsey-CEO, Co-Founder of eMarketer on how it’s important to stay balanced during these difficult times. In it he mentions five key ways to keep on track and avoid seeing every article or news report as additional evidence that we are heading towards an inescapable catastrophe.

1. Understand Your Locus of Control
2. Tighten the Spigot
3. Focus on the Opportunities
4. Leverage Data to Construct Opportunistic Experiments
5. Invest in the Future

What is interesting is that these five ways pretty much mirror in sequence how people deal with other stressful situations in their lives. I believe we are still in the early part of this sequence as business owners and consumers try to make sense of all the statistics and negative news which bombards them every day.

But the critical element in this sequence is moving beyond the paralyzing fear which has gripped the markets and realizing that this will turn around and everyone out there has an opportunity to creatively reshape how we do business. I was at a great talk at the University of Toronto’s Rotman School of business last night and the speaker Geoffrey Helt reiterated that we are in a transformation right now and as painful as this is at the moment (especially with everything else going on in the economy) will result in new models and ways of conducting business.

We can help to get past this by decreasing the flow of negative news (#2) and promoting the opportunities (#3) inherent in this shift. Turning down the volume allows you to refocus that energy and hear emergent trends in the marketplace.

Finally leveraging data and investing in the future gives you a starting point for investigating how to move ahead. Just remember to balance what is coming in with a grounded sense that standing still won’t work for long; the agile competitors are already looking at opportunities and trying things to carve out a path to new revenue sources and better customer experiences.

One can see this happening at large companies in different sectors as they announce cutbacks in spending on innovation to meet customer needs. As the former CTO of Cisco notes, America is facing an “Innovation Crisis,” and needs to find “new ways of funding fundamental research.”

She cites the fact that Bell Labs announced late last year that it was discontinuing basic science research to “align the research work in the Lab closer to areas that the parent company is focusing on.”

The problem is that with these expense reductions, there is a tendency to pull back customer facing programs in order to conserve cash and “reduce” risk. As in an earlier post, I maintain that this may actually be a riskier strategy over the long term as competitors who continue their innovation program will be in better shape once the economy returns to normal growth.

Arguably, innovation can be seen as an “assembly” of tools, techniques, or assets to meet those deep customer needs. But without the foundation of basic research, it is very difficult to source assets to put into a solution. Of course there are grey areas within both fields, but I believe these days it is becoming increasingly difficult to justify investments in basic research which makes partnerships with universities an interesting way to explore getting access to more fundamental work.

In my opinion, innovation (which I define as meeting stated or unstated customer needs) is different than basic research or invention. While both are important, it is harder to make the case in today’s corporate environment for basic research, which is why I believe that many corporations are reducing their investments in these areas to (hopefully) concentrate more on innovation and getting more value from their existing assets. Keep in mind that the best way to use these assets is understanding the needs and taking a simple (but not dumb) approach to serving them.

In this economic climate, we at Brandsential work towards this goal by using “Value Extraction;” to leverage what’s inside the company to satisfy deep customer needs. And as I’ve said before, now is a perfect time to develop and innovate with these existing assets to make sure the company is well positioned to lead the market once the economic climate improves.

An article by McKinsey suggests that companies that invest during a recession actually do significantly better than their peers who choose to cut back. They studied about 1,000 mainly US  corporations from 1982-1999 and identified attributes that industry leaders (top quartile performers) or challengers (those that moved into the top quartile) possessed. Including a contrarian approach to M&A (top performers actually increased M&A during periods of uncertainty), they had quite a different strategy when it came to spending.

Successful challengers actually spent significantly more cash than their more conservative peers during a recession. But what is most striking is their approach to expense spending: with greater focus, these challengers spent more on selling, general and administrative (SG&A) than those competitors that lost market share. In addition, relative to their competitors these successful companies more than doubled their spending on R&D during the recession.

The reward for this approach showed as market conditions improved after the recession as the successful companies’ market-to-book ratios were 25% higher than their unsuccessful competitors.

As part of responsibly managing a company, leaders have to look beyond current conditions
and see that a careful scrutiny of expenses is necessary to assess if all parts of the organization are moving in the right direction. But leaders have to be sure that they are not taking on more risk by failing to invest in the right areas now, to pay benefits later.

• the cost is relatively low, given that there very talented people on the market to lead these initiatives
• it is easier to get teams to focus on one or two very important Innovation initiatives (after companies re-commit to their strategy, making sure they are well positioned for the conditions)
• customer needs analysis when the market conditions are tough will unearth needs that are more core to customer’s lives and this insight will help define more enduring products
• when the market picks up, concepts are ready to be fast-tracked to development. Those products and service are those that differentiate companies and customers will pay a premium for them.

Perhaps not all companies would benefit from a concentrated effort on Innovation, but for those companies who do not just want to compete on price, it is key to maintain focus on Innovation. Investment, not cuts are necessary to keep this focus because cutting talent fosters a bunker mentality. This turns the rest of the company inward concentrating on cutting in all areas to “follow the leader” instead of focusing on growth opportunities.

Proctor and Gamble has put Innovation at the heart of their strategy, focusing on the consumer and the CEO A.G. Lafley even going so far as to call Innovation a “team sport” because “Innovation doesn’t spring fully formed out of the head of one man or woman.” Keeping the right social climate for an innovative culture is part of how they are re-inventing the company.

Apple certainly understands this and as Steve Jobs said in an interview with Fortune:

“We’ve had one of these before, when the dot-com bubble burst. What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place — the last thing we were going to do is lay them off. And we were going to keep funding. In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.”

Not only can Innovation help with growth opportunities, because it is centered around customer needs, it can actually help retain customers through difficult times. In fact you could argue that Innovation decreases risk as a company that retains customers can maintain cash flow on the one side and develop new ideas for increasing growth without see-sawing back and forth between inward and outward focus.

Just as financial discipline is part of the way leading companies operate, Innovation should be part of a company’s strategy not only in good times but also in challenging times.