The Innovation Toolkit: Insights to help executives stay ahead of the curve

By V.A. Purcell

As the leader of your company, you must stay on top of your industry or risk obsolescence. This can be a daunting task. Get ready to solve your biggest challenges and learn how to capitalize on your biggest opportunities.

Executives depend on external advisers to fill knowledge and experience gaps; to help them make a case for change; or, to have an experienced mind audit their thinking. The Innovation Toolkit: Insights for executives to help stay ahead of the curve brings together a wide range of proven thought leaders from around the globe and makes them available to you.

Get access to insights, advice, and the tools you need to succeed.

"The secret is that there are a relatively small number of things, needs you might say, which are required for you to appeal to your customers. If you do those things really well, you build a marvelous footing on which to create a really great customer experience."  - Stephen Hewett, Founding Director at iCustomer

"There is a huge difference between capability and competence. Competence is what you get from going to a course, or a training program, or you are taught in school, or as an MBA. That gets old pretty quick. What you learned in the MBA program can kill you ten years later. The thing is to focus on how to learn, how to act, and be proactive—that is capability." - Magnus Penker, CEO Innovation360

"Who people are underneath is quite aligned with the roles that they aspire to. If we can get them in the right roles, they're much, much more likely to perform well, experience less stress, and are more likely to stay in the role and perform well" - Dr. Stewart Desson, CEO Lumina Learning

"And the paradox here is, when leaders let go of power, they gain more power back because more is achieved with less effort and they are seen as a true leader." - Professor Vlatka Hlupic, CEO, The Management Shift Consulting

"I think every business today needs to find that like-minded platform, that like-minded technology which allows them to bring more ideas together more quickly, because that identifying, filtering, and implementing is what pushes your business forward. The more you can connect, the more you can collaborate, the more open you are, the more successful I ultimately believe you can be." - Ken Tencer, CEO, Spyder Works

"It's not really about there being good ideas, because there's all sorts of good ideas. It's about what you do with them when you have them. How do you decide which ones are the most likely to have an impact on your organization? Which ones are going to have a positive return?" - Gerry Purcell, ICG Global Partner Strategy & Innovation

"The demonstration of our success is understanding the motivation of the buyer in the market. Forty percent of our success is the relationship that we generate as we go to market. I don't care how motivated you are. If they don't believe that you have their back, if they don't believe that you're going to look after their best interest, if they believe that you're just trying to sell them something, they won't buy from you."  -Mark S.A. Smith, Business Growth Strategist, Bija Company

"I think we need to start thinking about how we get ready for change and be able to make change happen regardless of what that change is. I think this is a fundamentally new way of thinking about how we manage, how we design, how we invest, and how we approach our markets." -Roger Burlton, President, Process Renewal Consulting Group Inc.

• Language: English
• Publisher: Royal Oaks Publishing
• Release date: Feb 26, 2019
• ISBN: 9781999576202

Book preview

Chapter One: Meeting Customer Needs

The secret is that there are a relatively small number of things, needs you might say, which are required for you to appeal to your customers. If you do those things really well, you build a marvelous footing on which to create a great customer experience.  

— Stephen Hewett, Founding Director at iCustomer

Meeting Customer Needs

With Stephen Hewett

This conversation was first recorded February 2018 in London, England.

Mark My guest today is Stephen Hewett, who is the Executive Director of iCustomer and the Internal Consulting Group’s Global Thought Leader specializing in customer needs and growing your business by identifying and providing those needs to your customers. He is the creator of the Net Customer Needs Score (NetCNS) that allows us to understand if customers are getting their needs met and what to do next.

He is the author of three books: The Customer Centric You, People Centricity, and Customers Are the Agenda.

He is also a pilot and a strategic thinker about how to make more money as fast as you possibly can. Welcome Stephen.

Stephen Hello Mark. It's a pleasure to speak with you.

Mark Tell me about how you chose to create this Net Customer Needs Score. We've all heard of the Net Promoter Score and you've come up with, what I think, is actually something even more powerful.

Stephen Well, as you mentioned in your kind introduction, I started life as a pilot. When I was taught to fly, I was given an option. I was told that I could be taught by rote or I could be taught by first principles. First principles are always better. You only have to learn a small number of things and then you can apply those principles to pretty well everything that happens to you when you are flying. I’ve tried to bring that piece of advice forward in my business life, which I've been doing for the last thirty years.

Mark Let’s take a break there because what you just said was a massive piece of brilliant information that every executive needs to wrap their head around. You have the choice to learn either by rote or by first principles.

The difference between those two is the difference between training and education. Training is by rote—do it in this procedure, do it in this process. The challenge when we use rote training for our teams is that they have very little latitude to make adjustments when things change. The problem is that anybody who accepts rote training is at risk of being replaced by artificial intelligence and robotics.

Stephen You are absolutely spot on. And by its very nature, rote learning can only deal with a set number of scenarios. If you fly that way, sooner or later a scenario will turn up that will kill you.

But by learning a simple set of principles, whether it's flying or running your business or interacting with your clients, then you are pretty well prepared for any scenario that turns up, as long as you're agile enough to apply it on the fly. That's something I've applied to my business career forever, and I'm pleased to say, so far it's been successful. 

Mark Well, that dials right into my belief, which is the concept of systems thinking versus goals thinking. Rote learning is really about goals. First principles are about systems. I really like that setup. That's a great foundation.

Please continue to tell us about how you're applying first principles to your business.

Stephen Sure. You can take first principles and apply them to any complex problem or system. For many years in my interactions with clients, I heard a common thing, "It's really hard to be great with your customers because they're all so varied. Some of the organizations I deal with have millions of customers. How can I possibly know what every customer wants?"

If you step back and you apply those first principles, the first thing you realize is that there are a relatively small number of things that customers need from an organization.

For example, apply that test yourself. Think about the last time you interacted with a brand or an organization, what were the top five things you needed them to deliver? Generally, one to three things will come to mind pretty quickly. People will think a little harder about number four and then they'll make up number five.

Mark I really love that piece of advice. Customers immediately come up with one, two, and three—"Well, I need good customer service and cheap prices. I need the stuff to be in stock. I like the quality and uh... the bathrooms are clean."

Stephen The only real question is, if I hear that from one customer do I have that same piece of feedback from a million customers? Or in fact, is there commonality across the customer base? In fifteen years of deploying that principle, we’ve found there's a huge amount of commonality.

The secret is, there's a relatively small number of things, needs you might say, that are required for you to appeal to your customers. If you do that well, you build a marvelous footing on which to create an exceptional customer experience.

Mark And that customer experience creates competitive advantage. It creates the ability to continue to grow your value and to continue to make profits in a world where profit seems to be difficult to come by.

What do you see as the trends in what customers need as far as the Net Customer Needs Score?

Stephen Let me just talk a little bit about what you asked me earlier. First, we define what that small number of needs might be. Even for a large global company that means there may be fifteen to twenty customer needs.

Then if you know what those needs are, the next common-sense thing to do is measure them. That's exactly what Net Customer Needs Score does. It basically allows you to work out whether you are meeting those needs or not. And as you've already said, there isn't an option about meeting these needs. They are fundamental. Basically, they are the things you must have.

You can easily express this score as the number of needs being met against the number of needs not being met. The probability that they will not do business with you in the future goes up dramatically if you're not meeting a number of these needs.

There are lots of statistics to prove this, but all we really have to do is sit back and use our common sense and say, well that must be right, mustn’t it?  That’s a good way of thinking and a good way of measuring. It is the basis of Net CNS. It is about the whole philosophy and thinking about how to understand what your customers need.

Mark  I think that's a really elegant system that you've created. It's one of those blinding flashes of the obvious and yet people just don't do that kind of surveying or understanding or adjusting and of course we see that in the turn in the marketplace.

Stephen  Lots of organizations do this intuitively, but they won’t be breaking it down, they won’t be defining it or measuring it. There are businesses out there who are successful, and they will intuitively apply this thinking. But because they don't measure it and because they don't define it, they are not able to improve on it.

And what do you do with this information? You make sure you are delivering at the lowest possible cost. That's the fundamental basis for a successful business. There is more to do, but if you're not doing that, then you're not really on the path to being a great, successful business.

Mark How do you measure the needs with your customers when you're doing this for a client? What's the process that you go through? Is it just as simple as sample polling? Asking people questions?

Stephen  Essentially, we listen to what customers are telling the organization. There are two steps. There's the confirmation and definition of what the needs are. Typically, we start by looking at the data the customers are already giving the business. Many businesses collect data, whether it's for the NPS score, or their customer feedback.

What tends to happen is the organization—and if they're big enough, the organization’s inside department—will focus on the number, but rarely look at the verbatim feedback. They do that because the perception is that the number is easier to understand and easier to focus on.

The problem is that the real value, the gold dust, is what customers are saying. I've just recently been working in an organization where they were very focused on an NPS score.

Mark Let’s just make sure that the listener knows that's the Net Promoter Score. It is a very popular way of measuring customer satisfaction, but I believe there's some serious issues with the Net Promoter Score. The problem is that it is very difficult to satisfy people to the level where they're going to be out there as raving fans.

You'll get a percentage of people who will love you no matter what you do. Then there will be a percentage who hate you no matter what you do, even though you’re doing the exact same thing. The problem is that a Net Promoter Score halfway measures the people that hate you as well. The other problem is that we're turning over our marketing to customers and that is always a bad thing because you lose complete control.

Now I’d like to hear your opinion about the Net Promoter Score.

Stephen  In itself there is nothing wrong with the Net Promoter Score. The problem is that it's been pushed and stretched and changed to a point where it's now possibly dangerous for an organization.

For example, we were working with one of the largest insurance providers in the UK where they were focused on their net score for the business. It was only when we started to talk to them about needs that they looked at what people were saying and compared it to how they were scoring their needs.

It was quite a learning for the board when they realized what you're telling me is, Here's somebody who is saying they're quite content with our service, but giving us a Net Promoter Score of six. which as you know, is actually a detractor.

Customers were completely misinterpreting what was good. The other thing is that they had a significant number of people who just got the answer to the question wrong, so they were saying, You are a brilliant organization. You do a really great job for me and your score is one.

Mark  You need to tell people which end of the spectrum is good.

Stephen Exactly. The other thing is because boards are presented with a single number, the other issue is that they don't realize that the score is still, to a great extent, subjective. It's subjective based on the customer's interpretation of the question asked. That makes a huge difference.

Mark Indeed. You started off the conversation talking about how every customer is different.

Stephen  It's very difficult to measure customer needs because there are so many of them and they have widely differing needs. They also have differing experiences by which to compare current experiences to past experiences. Coming up with a single number cannot be enough to identify how you're taking care of the stratification of your customers. The context in which it's used can be misleading.

I recently had a ‘flu jab’ here in the UK.

Mark For my American audience that would be a flu shot.

Stephen Yes, exactly. It took literally about three minutes. Within five minutes of having the flu shot my doctor’s office sent me a text asking whether I would recommend them to people wanting a flu shot. That's clearly mad. Flu shots are a utilitarian thing. It's not something I'm going to make a recommendation about.

You touched on this earlier, Mark. There’s a huge amount of golden information which is lost between a Net Promoter Score of one and Net Promoter Score of eight. Basically, you have to get a nine or ten to be a promoter. But there’s a huge amount of detailed below that, which I would argue, is vital to the way businesses understand what customers need.

Mark  The fix to this is the Net Customer Needs Score. First, we figure out what customers need and if we're doing a good job meeting those needs.

Then do we lay the Net Promoter Score on top of that to find out how customers’ behaviors post-measurement, post-event or post customer experience are being affected?

Stephen Exactly. The Net Promoter Score is the propensity of your customers to promote you and the Customer Needs Score is more about their experiences now—did you do the job well? It's as simple as that.

Mark The Needs Score is going to be an indicator of such things as: Do they come back? Do they continue to do business with you? Are they going to churn? Do we even have the platform to get people who are going to promote us?

Stephen Correct. It would be difficult to imagine a customer who would give you a low Customer Needs Score—somebody who was saying you’re not meeting my needs—then go on to give you a positive Net Promoter Score.

From a common-sense point of view, it is part of the first principles we talked about earlier. It becomes very clear how the relationship between these two numbers work and how the Customer Needs Score is very much about operation performance today rather than the propensity to recommend tomorrow.

Mark Interesting. In some of the conversations that we've had in the show, without a doubt, you've got to get that base first. You've got to figure out what it is that people are going to promote absolutely lined up, before you can expect them to promote anything.

Stephen Yes, in and of itself it is vitally important, but it's not enough. You do need to add all the things that make a difference to the customer on top of it. But you can't add those if you're not delivering