Experience Strategy Podcast: From Chaos to Clarity: Strategies for Unpredictable Times

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Today, we sat down with Joseph Michelli to explore the unprecedented challenges businesses face today, with customer satisfaction at a 17-year low despite the growing emphasis on customer experience. Listen in to learn actionable insights for experience strategists and business owners, including a clear roadmap to navigating these volatile, uncertain, complex, and ambiguous (VUCA) times. Discover how to build trust, exceed customer expectations, and create lasting loyalty by crafting exceptional customer journeys, adapting to multiple possible futures, and simplifying your channel strategy for maximum impact.

Voiceover: [00:00:00] Hey, welcome to the experience strategy podcast, where we talk to customers and experts about how to create products and services that feel like time well spent. And now here are your hosts, experience nerds, Dave Norton and Aransas Savas. 

Aransas: Welcome to the experience strategy podcast. I'm your host, Aransas Savas.

Dave: And I'm Dave Norton. Today we're joined by Joseph Michelli, who is a systems psychologist and the author of 10 Wall Street Journal and New York Times bestselling business books about companies like Ritz Carlton, Mercedes Benz, Starbucks, Zappos, Airbnb, the companies we're all talking about. Like us, he works with some of the world's leading companies to innovate their experience strategies.

And so today... We're going to share with you listeners some of the key ways that we're advising our clients to help them navigate this time of unprecedented volatility, uncertainty, complexity, and [00:01:00] ambiguity. Get your notepad. Get ready to take action on some of these ideas. Joseph, thanks for joining us today.

Joseph: Thanks for having me. It's a pleasure to be here. 

Aransas: So let's start by just laying the groundwork about why we would even describe this as an unprecedented time. What are some of the forces you see at play, Joseph? 

Joseph: Well, we are at a time when the American customer satisfaction in Index is at a 17 year low, uh, despite the fact that most organizations have customer experience as a primary differentiator in their strategic platform.

So despite all of the. Goals to make for better experiences for customers. We are not realizing the fullness of what customers expect from us as business leaders. And a lot of that comes with plenty of excuses. At least they sound like excuses to customers. Their reasons to us in the business side of things, the things like supply [00:02:00] chain, the war on talent, the burgeoning use of technologies that we can't even fully understand, let alone deploy.

Um, so all of this comes together in this wonderful storm. where customers want a lot more and they get conditioned to expect more and more and more. And we're having a harder and harder time understanding what they expect and how to not only meet those expectations, but clearly to exceed them in ways that drive loyalty and referrals.

Aransas: Yeah, I think you're right. Customers have become savvier and systems have become more complex and, and it is that It's a force from both sides that has ultimately led to this decline and not just customer satisfaction, but trust, which is something we've been talking a lot about on our show is the effect of lower customer trust on companies globally.

Joseph: Trust is such an important word. It can't be. commanded. It can't be demanded. It has to be given to be received. [00:03:00] It's truly a reciprocal phenomena. And yet people walk into relationships with businesses now with a heightened level of skepticism, with a lot of frustration carried over from others who they have lost trust with.

And so you have, you know, now these rage inventories suggesting that we have more customer rage walking into the door, let alone, uh, you know, an environment where they're even willing to trust us. 

Aransas: And Dave, what are some of the other forcing factors you've observed? 

Dave: Well, I mean, there's all kinds of, uh, External factors that are going on in people's lives right today, they have gone through a tremendous period of uncertainty when it, when it comes to COVID, they've come out of that.

And now they're dealing with inflation. Now they're, they're dealing with, global war type things going on and discussions. And then of course there's US politics, which is never [00:04:00] relaxing, right? We never get a chance to kind of step back and, and say, Oh, the government is actually working for us. So there's a lot of things that are going on in people's lives.

And I think it's affecting. Millennials and Gen Z, uh, to a greater extent than it is even affecting Gen X and, and baby boomers, because they're, they've been going through this uncertainty for a long period of their, of their time. And, uh, I think, uh, a lot of research out there shows that they don't have a lot of institutional trust, uh, because of what they've seen.

Aransas: So if we take all of this in, in total and we say, okay, externally, internally, and then structurally, we're a hot mess. Um, things feel disrupted, things feel unstable and [00:05:00] uncertain. What we're talking about is a breeding ground for failure. So of course there's going to be low trust. Of course there's going to be low satisfaction.

Of course there's going to be low confidence. And yet, I think each of us. Champions every day, ways in which companies can rebuild that and actively differentiate themselves in this highly unstable landscape by being the company that customers can rely on, that they can trust, that they can build deep, lasting, confident relationships with.

And so I want us to really dig into what we see as the

So, Joseph, what are, what are some of the examples or ideas that you give to your clients to help them prepare for a stronger future?

Joseph: Well, I think we have to recognize that we are in [00:06:00] truly the VUCA world, that Warren Bena, Venus and, and Bert, uh, NNI coined the phrase for back in the, the mid 1980s in their book Leaders, the strategy for taking charge.

And once we acknowledge that, and we appreciate that. The U. S. War College has been, you know, war gaming on the backs of this VUCA concept, volatility, uncertainty, complexity, and ambiguity. We start to say that's the 21st century leadership paradigm. And if that is the 21st century leadership paradigm, what is it that enables us to manage a world that is volatile, uncertain, complex, and ambiguous?

And I think I then rely on researchers who've spent a lot of time looking at how do organizations become more nimble? How do they become more learning agile? And so if you look at work of people like david hoff and warner burke And their their focus on learning agility. It really tells us that as leaders.

We need to think about making swift decisions We need to be able to have Uh, shifting cognitive sets that break [00:07:00] paradigms, uh, we need to be able to deploy more of a test and learn approach to everything we do. We have to really seek performance risk taking, getting outside of our comfort zone, volunteering for assignments, learning new skills at all times.

There's a certain interpersonal risk taking that we have to do where we're more vulnerable and we're more transparent. We have to learn how to collaborate more the days of, you know, the, the loan. Wolfstar performer are gone, and we have to share information and gather information differently, and we have to constantly be seeking feedback whether we want to hear it or not.

And then once we get all of that, all those things we've just done, we need to take some time to reflect so that we can quickly reposition ourselves. Out of the last volatile situation using those learnings for the next one. That's you know, right on our doorstep 

Aransas: Yeah, and I think you make a really valuable point in one of your writings on vuca about how important a level of change and constant [00:08:00] transition is to engagement that it's actually an opportunity for innovation and energizing organizations.

And you say if, if we lived in Groundhog Day, we'd all be incredibly bored and dissatisfied and lacking personal impact. So I think, I think that is, it's actually an important point here that we overlook often is that we, we feel so unsettled and destabilized that we forget that, Okay, yeah, actually this is happening for us and we can use this, all the learning and all the growth that comes from study state change to create new energy, new innovation, new power within organizations.

Joseph: Yeah, I'm an old guy, so I lived in a time when we would wait every year for the Wizard of Oz to be shown one time on television, right? I mean, um, that desire and slow burn to the next Wizard of Oz showing. Uh, what's not necessarily the greatest world either, right? So, uh, slow [00:09:00] moving, uh, worlds are not, not exciting.

We live in an incredibly exciting time, but it's managing that excitement. And if we do develop these high learning, agile individuals, we're seeing research that shows that. You know, those are our high potential employees. We know that organizations that have a lot of these learning agile individuals and executives are producing higher profit margins than peer companies.

So there is something to be said to say, stop acting like you want the old days. Let's really try to get a harness on doing the behaviors necessary to manage the speed of change that we are facing today.  

Aransas: Yep, and it's an obvious link you're making here, but I'll just be explicit about it. It's the difference between waterfall and agile development.

And that waiting for the Wizard of Oz every year is what we did in our companies for a very long time. We said, okay. How are we going to innovate in 2024 and we wait for the one big ta da and everybody spends the entire year working toward the one big [00:10:00] ta da and then if that ta da is by then irrelevant, the company is at a huge risk instead of constantly innovating and constantly iterating based on consumer feedback.

Joseph: I did a whole series of writing on just the issue of The gift of the pandemic, like I know disrespect to people who died or suffered. I just think that there was an opportunity amongst all of the suffering. And the benefits, I think, for some companies is they had a technology roadmap that spread out six years down the road, much of which got done in six weeks under necessity.

People had pivoted to mobile pay, all mobile opportunities in ways that they had envisioned doing. over a long, long run. So there's value in embracing the uncertainty and the volatility. 

Aransas: And I'll say just very briefly in terms of the employee experience on that part, that [00:11:00] as an employee who was a part of one of those rapid accelerating periods during COVID, yes, we worked too hard.

We were at risk of burnout. However, it was the most satisfying and energizing work I've ever done because we were actually getting things done. And so I think there is like, how do we find that balance between Impact and work life balance that allows our organizations and the people who power those organizations to truly be successful and find meaning.

Dave: It kind of reminds me of the concept of punctuated Equal equilibrium, right? Had that, you know, evolution kind of goes through these periods where there's stability and then all of a sudden there's rapid change and then there's stability again. But it seems to me like there's been a lot of instability for a long period of time and The other thing that's running through my head is you, you watch what's going on.[00:12:00] 

Another example of what we're talking about here would be what's going on in Ukraine in terms of war strategy. And again, a very devastating thing. We would never want to see what's going on, but the way that they are fighting. That war has changed dramatically in the last six months, changed in terms of technologies that they use.

I mean, there's so much more reliant on drones and, and, and individuals who are making small incremental, uh, changes versus tanks that are trying to blow up, um, whole, groups of, of, um, the enemy. So, you know, like that kind of change, it can be really, really dramatic and out of necessity, but it takes you down a different course to a very different course.

Joseph: And I think to that point, we as leaders [00:13:00] have to learn how to do incredible scenario planning alongside of our forecasting and for me, you were going to be aided by a I in that scenario planning. We're going to have the challenges of understanding when do we Trump the A. I. S. Recommendations on which course of action to take, given the three or four likely scenarios that we're facing in any particular condition.

Um, and I think that's gonna be an interesting dilemma. I mean, there probably will be a time when we stop going with our intuition and go with the A. I. Because the A. I. Has been trained to our intuition and then beyond. But for right now, I think that the active role of leaders is to define what are the scenarios.

What's that two by three grid? You know, if it's, if it's inflation, for example, uh, what is our scenario around decreased inflation? Uh, what is it if it maintains the same and what if it runs away with us? Those are the kind of factors I think we have to build our business around knowing that that inputs coming in on a day [00:14:00] to day basis.

May change our war strategy as, as you point out in the Ukrainian example.

Dave: I'm so glad you brought up scenario planning because that has been something that we have been talking about for several years now. Um, you know, experienced strategists. have a tendency, I think, to design for the ideal and the permanent.

They're, they're not, they, they think this is how the, the consumer, the customer is going to behave. And we have this big insight and, and we just move. In that particular direction. And I think that experienced strategists need to get much better at thinking through different scenarios and understanding that the customer will in fact, um, change dramatically depending upon external forces.

the mode that they're in, the situation that they find [00:15:00] themselves in, and they, they need to be able to project the potential. And you're suggesting on top of that, that artificial intelligence will help us with that. I guess that begs the question, are we using artificial intelligence to actually do scenario planning?

What, what have you seen? 

Joseph: I'm seeing it start to be in play, um, and it's classic sort of human condition. If you remember the days when. You know, big blue was, uh, was competing with the chess masters. Um, we knew that no way could technology beat us. Human intuition was going to win and we won, I think one game.

And then shortly thereafter, it learned all of our nuances and when we broke the rules and how to respond to that. So. I think we as humans overestimate the fact that we're capable of making these complex analytic assessments in real time with big data in ways that we're not really proving to be as as pure decision makers as we think.

We obviously are influenced by other factors, but I mean, literally, I see companies [00:16:00] putting in kind of pestle elements like political, economic, social, technological, environmental and legal factors into a I formulas. Uh, that helped guide them into when they might change their business course. So that's just starting, um, but I think we're going to see more and more of it, uh, as, as we move forward.

And to your point about this, the permanent predictions and the strategy, I think so beautifully put. I mean, look at Martek's law. Martek's law is one of my favorite, um, elements when applied to experience design. So a lot of us. are making improvements incrementally on our business based on the way customers have behaved, assuming that customer behavior will be the same.

And so we make those incremental improvements. We are getting better. Our businesses are better, no doubt about it. But the problem is there'll be some disruptive force that we haven't considered and we don't adjust our, our course based on that. And if you think about the mobile phone as a classic example of how it changed the way consumer behavior is.

So if you were Incrementally [00:17:00] improving an experience and you weren't moving in the digital first direction, you're becoming less and less relevant, irrespective of the improvements you are providing to streamline your non digitally first created experience. It is important for us to, to be willing to kill our darlings and start looking at where our customers, not where do we want them to stay.

That's such a great phrase.

Aransas: Yeah. We're both waiting for the other to our customers. 

Joseph: Exactly. I thought, boy, mic drop. I mean, they're, they're, they're, they're so bored with this conversation, they've all left me. We left Aransas.

Dave: why don't you go?

Aransas: I was just going to say, I mean, I think this is something we say to our clients a lot, that it is not about where you want the customer to be or even where you expect the customer to be, but where the customer is.

And one of the, the key. The 10 key guidance points that we gave [00:18:00] to our customers and for 2024 back in 2023 or I guess end of 2022 guidance was meet your customer where they are and I think that means really listening to them and you know we'll always come back to understanding the jobs to be done and the jobs are really shifting for customers and companies right now because The, the importance of some of those functional jobs have changed, uh, but also our expectations have increased, as you said at the very beginning.

And so now we want and need and demand that customers do more emotional, social, and aspirational jobs for us on top of that in order to differentiate. And I think about the products that I value the most. I watch the steady state innovation that happens there. It's not just that they make me comfortable, but [00:19:00] they anticipate my needs because they understand what other people like me need and want.

And then when it happens it, it feels like they've read my mind and gotten me where I want to go before I even knew I wanted to go there. 

Joseph: That's so brilliantly put. And, and, and I think it's a function of, you know, where are the customers now? So meeting them where they are. Where, what are the customer, where do they want to go?

I think that's another element. How do they see you? Not how do you see yourself, but, and where do they want you to take them? And so for me, it's, it's a lot about understanding both the customer, but also kind of both the customer now and the customer's ideal, you know, optimize future state as best we can tell it, but also how do they see us and, and not, you know, make sure that we have a fairly good sense of our brand.

Relevant to the perspective of the customer, what we need to do with our brand to be able to help get the customer where the customer wants to go. And that sometimes [00:20:00] requires some brand rework or some strategic revisioning of the way we're going to pursue the future. 

Dave: You know, another topic that I think is, um, Um, related to this has to do with channel strategy.

You know, you brought up mobile phones and, um, how important it was that people make that transition to stay relevant. We live in a world today where. Most companies have so many different, uh, channels that they're interacting with their customers around. And they're trying to develop some kind of a omni channel strategy where at least some of the experience...

It can be the same across different parts of the platform. I'm thinking about the struggles that I had getting an, a new iPhone, right. Um, and had to do [00:21:00] certain parts over a call and certain parts, um, on the website and then go in for other parts. Right. So there's what's different between 2015, 2013 and today.

is that companies have really picked up on this idea that they have to have chat. And now everybody's saying, I have to have AI chat. And, um, they, they want all of these different channels to support. They have a wide variety of social channels that they're using. And. That creates complexity for the customer on the other end.

And I wonder what your thoughts are about this, uh, I don't want to be left behind because I'm not in the right channel kind of mindset. 

Joseph: Yeah, well, you, that is definitely systematic complexity that we bring on ourselves. I remember a friend of mine was saying that there, there was [00:22:00] once upon a time, a great restaurant chain that just had great burgers and French fries.

And then they started to decide that they needed to be more complex and added all these non hamburger based products. And you know, lo and behold comes another great. Brand that does the french fries and hamburgers only, um, the discipline of executing what you can do That you can standardize and that you can reduce costs around minimize your complexity and delivery is A valuable way to approach the levels of complexity in our world.

Will that make you universally appealing to everybody? No But it will ensure that you're able to execute the thing That your customers want you to do, obviously with iterations and advances, but not losing the core of your standardization. Um, I think that's become a real challenge for businesses is that they're not able to standardize because they're trying to [00:23:00] do too many things.

They've got too many disparate. IT platforms that they're trying to integrate, um, they're not getting any kind of leverage on costs. And so I'm not saying that you can only be that, a hamburger stand with French fries and win. But look, I think there are some doing that today. So I think we just always have to ask ourselves, is this necessary complexity?

Um, are we just chasing every consumer and not the consumer that really brings us where we need to go for the future?

Aransas: I was like, I keep jumping in so fast, so I'm going to, this is, this is, we just moved to audio only and are no longer recording video. And I think we're learning that not being able to see one another, um, makes it harder to know when to, who's, who's. Like burning to say something and stepping on each other, uh, which is probably [00:24:00] a metaphor for what we're talking about here.

Exactly. So as we sort of round into the, the final section of this episode, I'd like to hear from each of you, maybe the, the top five things that you believe companies need to consider and focus on. In order to differentiate and stay relevant in what I think we're sort of identifying here is new steady state.

We are not, we're not leaving VUCA. We live in VUCA times and we will stay in VUCA times. I guess I don't see any path. By which we slow down, use less technology. I mean, unless there is like some massive catastrophic event. And as you said, it's going to be hard for any of us economically to plan for that one.

Something bigger than COVID. . And so what do you, [00:25:00] what, what are your top recommendations, Joseph? And then I'll send it over to you, Dave. 

Joseph: Well, I, I have stayed very much on the same mantra here for a while, and, and that is we have to set a clear vision of what does success look like. We have to paint a vision of where we want to take our organizations.

Irrespective of all of the twists and turns and detours, we need to know what our end state looks like. So, um, we need to articulate that. What problems are we going to try to solve? How are we going to try to create success? What does success look like for our customers? I think once you have that, then it's really a matter of getting alignment, making sure that When you have that vision, it's not just a hallucination that you see, but no one else in your organization actually can, can conceptualize or create a course of action around.

Then I think in the world today, we have to act on what I've called bad, which is best available data. What is the best available data we have at the time? It's not perfect data. We need to create minimal, viable products in a VUCA world. [00:26:00] And we need to use our best available data to iterate around that product, which is really my next point.

And that's, we have to become really good at iterative design. We have to develop competencies in design thinking. We need to be willing to take risks around design. And then I think when in doubt, Just try to do something that creates value. Um, got to trust the marketplace that if you create value for others, you will be valued.

And so for me, you know, if I don't know what to do, just keep moving my feet in the direction of stakeholder value. I like 

Dave: that. You know, you brought up a couple of things and I just want to touch on them fairly quickly. The first is this idea of iterative design. I think one of the things that we have learned coming out of COVID and dealing with the uncertainties of this generation is that you can be doing incremental Iterative design, and then all of a sudden your [00:27:00] world can change and you have to use those same skills and apply them to much bigger topic areas, more challenging issues.

And so it's not enough just to say that you're able to do design thinking or iterative design, you have to be able to meet the challenge of the day. And that requires you oftentimes to be. And I think there's a lot of companies that have become, have used iterative design as a way of mitigating risk and, and not necessarily as a way of embracing opportunities, uh, which I, I think is a, is a different thing.

Um, you know what I mean?

Joseph: That's brilliant actually. That's, that's kind of brilliant. I think we should end right now. Yes. That was really pretty over the top. 

Dave: Okay. Well, let's stop right there. I also, Thank you. I also learned from this and you reinforced something [00:28:00] that is so important to me. And that is experienced strategists really do need to be thinking about the future in terms of multiple futures, potential for a wide range of things to happen.

And so scenario planning has got to come back into the fold. And we have to start thinking, we have to develop the right kind of tools to think about if this occurs, what will we do and how will we use the resources that are available to us to give the customer the best possible experience that we can without adding a tremendous amount of complexity, which would, would, would work against it.

Right. 

Joseph: Absolutely. That is so well put. I have nothing else to add. That was like. I'm just sitting here now, silent.

Aransas: We, uh, we call these episodes that you need to listen to twice because they're so jam packed. I call them a twicer. [00:29:00] Um, I, this is definitely a twicer. And, uh, for our audience out there, we will definitely post the transcript to this episode for you. For those of you who are more visual and want to read through this, um, we'll also post links.

to a number of the books that were mentioned today as well as ideas, uh, and Joseph's side. So please head over to stonemantle. co after this episode, get all those resources, listen twice and consider what these uncertain times present to you as an opportunity to differentiate, to grow, to be bigger and bolder than ever before.

Um, the old ways of working aren't working, and I think adopting these new ways opens us up not just for greater customer impact, but for greater employee impact, which of course all leads to greater company impact. So Joseph, thank you so much for being here. Dave, thank you for [00:30:00] being my partner in, in crime, I don't know, maybe no crime, uh, and To our listeners, thank you for listening in, for letting us know what it is you want to hear more about and who you want to hear more from.

Joseph: I just want to thank both you and Dave Aransas, because you are setting up the world to be able to manage VUCA. And thank you for sharing your thought leadership, and Empowering people to make solid decisions to make the world a better place for all of us in the service environment. 

Aransas: Well, thank you. Yeah, it does feel like mission driven work.

It feels like it is for the good of everyone if companies can be better for their customers. Thank you for joining us on the experience strategy podcast, everyone. 

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