Experience Strategy Podcast: Unlocking the Customer Value Chain

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In today’s episode, we had the privilege of speaking with Thales Teixeira, a leading expert on customer-focused innovation. Thales is the co-founder of Decoupling and the author of “Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption” 

Our discussion with Thales is a succinct masterclass in unlocking customer value by focusing on what matters most - money, time, and effort. We discussed how disruptive startups gain traction by decoupling and excelling at key value-creating activities while avoiding “value eroders” that waste customers’ precious currencies. Thales brought this concept to life by breaking down companies like Netflix eliminating the hassle of going to the video store, and Alibaba layering on services like payments to make shopping smoother. Whether an innovative startup or an established organization, prioritizing your roadmap to remove friction and create more time well spent is crucial for delighting your customers and staying ahead of disruptors.

Voiceover: [00:00:00] 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 Aransas Savas

Dave Norton: and I'm Dave Norton.

And today, Dave, we are joined by Thales Teixeria. He's a co-founder at Decoupling and a former associate professor at Harvard Business School. Currently a visiting associate professor at UC San Diego. He is also the author of the book, Unlocking the Customer Value Chain. How decoupling drives consumer disruption.

So tell us, before we talk about anything else, I want to better understand the premise of this book and what you are talking about when you talk about unlocking and decoupling, something that so many of us are focused on aligning and [00:01:00] integrating. 

Thales: So thanks for having me around Aransas and Dave. It's a pleasure to be here and talk to you about my book and about, uh, my learning journey.

Um, The premise of the book is essentially really, uh, first of all, explaining what I learned through being a professor at the Harvard Business School for 10 years. I had a remarkable journey, um, up until a few years ago. And, um, I started the journey but not knowing what I wanted to know, as most of us. I would read many things, and startups were becoming really, really popular when I joined Harvard Business School in 2009.

This was about the year of the founding of Uber and Airbnb, Etsy, and others, Google, Facebook, and Amazon and Apple had already taken off and they weren't even considered startups anymore, considered tech companies. But, um, at the time there's a lot of debate about what causes the startups to succeed because some were failing, some were succeeding.

So we all wanted to know the secret recipe of success. And my former late colleague, Craig Christensen, he really coined [00:02:00] the term disruptive innovation. And he was very successful with that. And it took the world by storm. So the ongoing idea was that any startup that was succeeding had a disruptive technology or disruptive innovation that others didn't have.

Something that started off being potentially less valuable, but as it improved, it really grew really fast through this technology in terms of adoption, and it got better than what was available in the market, and it stole customers from established companies, right? So think electric cars in the beginning are pretty bad.

And then they got better and better and better and suddenly took the world by storm, right? So you can think of many technologies like that. And Clay Christensen talked about, you know, the PC and mechanical excavators and a variety of other products and industries. But I, I, I wasn't quite so sure because when I visited the startups and the first startup I set foot was Facebook.

I met Mark Zuckerberg. He was programming, [00:03:00] standing in his feet with flip flops. Before it IPO small startup lots of young people. I was so shocked when I visited that company There were people taking pictures of the facade. I've never seen that before only at Harvard They do that but no other company I've seen people just go to take pictures of the entry of the building But you know, I I was invited to give a presentation of my research then I asked them How are you planning to disrupt the social media industry?

And they explained to me what they were trying to do. They weren't kind of trying to hide secrets, but at no moment did they say they had a disruptive technology. And I just wrote it down, and then I left, went back to Boston, and then I was invited to Airbnb, and I asked them, how are you planning to disrupt the hospitality industry?

They did not at any moment say, we have a disruptive technology that is ours, proprietary, nobody has it, right? So, same thing. I went to give a talk at Netflix, They came to me and they said, you know, this is the way we're planning to disrupt the movie and entertainment, uh, industry, right? First, they did it with DVDs by [00:04:00] mail.

Does that require any disruptive technology? You had to have warehouses and DVDs and people putting DVDs and slip, uh, uh, envelopes and send it to you. And then with streaming, streaming was available. You know, there was YouTube, others were doing streaming. So, you know, I started questioning this idea that a disruptive technology is the root cause of success of disruptive startups.

And the more I learned, the more I discussed consultants and academics were talking about these disruptive technologies, but you know, I had my doubts and in academia, when you have doubts, you have to prove it out. Right. And the way to prove it out is really to visit it. These startups write Harvard business school cases on them.

Teach to my students and think about the frameworks of what was going on. And the first moment that like the idea of the book, the core framework, the book came to me was when I was reading an article, I don't even remember where it was, but it was this 16, 17 year old kid that had grown [00:05:00] a pretty sizable business selling, um, watches that look like luxury watches, but we're actually about like, you know, 75 to a hundred dollars.

They looked very cool. But there were unbranded. They were, you know, and what did he do? He found a factory in China that would produce it. He found a distributor that would send it to, to I think Miami. And he set up a website. He didn't even, he didn't know how to code. So he set up a website that was like, you know, Shopify would make the websites, and he set up a website.

And by the way, he didn't know how to take payments. So he had to, A startup take payments on his behalf. And when he got a sale on his e commerce website, he just asked this distributor to ship the product. And he was becoming very successful. And, and as I read, I thought to myself, so what is he doing actually?

What is this kid doing? He's not manufacturing, not distributing, not shipping, not getting payments. You know, he's not doing, you know, quality control. He's not doing. What is he doing? The only thing he was doing is where he was [00:06:00] like hyping Facebook to to get those watches that others took pictures for him and he put it there and get people to go to the website and then it dawned on me this idea that these disruptors, him being one of many, they look at what is an opportunity in the market by what people are generally unsatisfied with.

And they enter the market by doing that activity better than others. But instead of doing all activities required to be successful. Manufacture, distribute, ship, get payments, after service sales, all of these things. You just focus on one or a few and you kind of essentially outsource all the other ones.

Let others do the other ones and you focus on the one that you think you can do better than others. And you stitch along these activities and you essentially have a business to the consumer, its entire business, but you're only kind of, you broke up all of the activities that customers have to do in order to buy a watch.

So customers have to look at options, compare, [00:07:00] choose, evaluate, order, make a payment, receive it, use it, dispose of it. And you just do one of these activities or a few of these activities. And that. Concept is what I call decoupling, because you look at the activities of what I call the customer value chain, which are essentially the steps that customers take in order to acquire, use, and dispose of goods and services.

And you decouple them, you essentially break that chain of activities, and you say, I'm going to do one or two things much better. And I'm going to let the rest of the market do the rest. I'm not going to focus on everything. I'm not going to replicate a watch retailer. I'm not going to replicate Amazon.

I'm just going to do one thing and do one thing much better. And that was the premise of the book. That's why it's called unlocking the customer value chain. And then I going back and going back to Facebook and Netflix and Airbnb and Uber, many others. And in this entire industry is like the rise of FinTech.

I [00:08:00] realized that that's what they were doing in essence. They're all decoupling the customer value chain. 

Aransas: And is the idea that they start there? Because so many of these examples, I feel like. Ultimately expanded to deliver on an entire end to end journey. That's right. 

Thales: That's, that's exactly it. That decoupling is an entry strategy into a market.

It's right. It's a startup strategy. It's a starting the startup strategy. It's like a beachhead. So you enter. And, um, in my book, I talk about this idea of weak links. Right. If you think of the customer value chain, so I want to watch a movie. I have to figure out what am I in the mood for? And in the past before Netflix, I would have to say, well, let me go to the rental store and let me browse around options.

And I, I asked for recommendations for the, from, from the people that work there. And then I look at the options. I read a little bit. I choose, I go, I rent it, take it [00:09:00] home. And then I put it in the DVD player and I watch it, and then I have to return it. All of these activities, all of these are activities in my customer value chain, right?

And what essentially Netflix did, DVD by mail, say, okay, let's eliminate some of these activities. You don't need to go to Blockbuster, right? You don't need to return the DVD by going back to Blockbuster. You just set up a queue initially, set up a queue, get the DVD by mail and do this. Now, over time, Netflix said, well, let's improve upon this.

Because this activity of waiting for the movie, people don't like. It's what I call in the book, a value eroding activity. They don't like to go somewhere to get it, and they don't like to wait for the movie. So then they were one of the first to do streaming of these movies, right? And so they looked at what really adds value for consumers, value, creating activities, watching the movie, everything else, let's strip it out.

And let's avoid it. And then over time they said, what do people want to see as well? Not just [00:10:00] movies, but shows and kids and all these things. So as they grow, like you said, uh, they add more and more activities to their, essentially roster. They start adding more activities in the customer value chain. 

Dave: So, going back to your watch example for a second, you said that the kid that was so successful doing this, he did one thing very well.

And what was that one thing that he did very well? 

Thales: The one thing that he did very well was show on Facebook, social media, that you could pull off using a 75, 100 watch that looks really luxurious. You can pull that off. Minimal payment as long as you find the right watch. So you can get that look not spending 500, 1, 000.

You can get that look, pay much less. And that was what he could do very well. He was selling status.

Aransas: Like you [00:11:00] said, the thing he did well was hype. He was a marketer. That was the part of the value chain. Desire. 

Thales: What we need to think about, right? Like, he's a teenager. He's, he knows other teenagers don't have 500, or if they do, like, they even buy wrong watches.

And so you have to buy the right watch for the size of your pulse. And this and that and the color and matching and all these things. So yes, it's marketing, but this is the thing that he looked at it saying, you know. There's kids who have 100 bucks and they want to look that they that they bought a 500 watch and he went in the market for it and he found right watches.

So not only he didn't in the hype, but you know, if you go to China or go to, you know, Alibaba's website. There'll be hundreds of manufacturers of watches and each one has hundreds of models. Which ones are you going to choose? So the merchandising is very important that he would bring and collect, right?

Finding that combination of watches that were like, look good, but didn't break about in a few days, things like that. So I think he was very good at that. 

Aransas: Interesting. Yeah. So it was [00:12:00] the curation of the product too. It also sounds like maybe there was an educational component of it. That's right. Say, I know what's cool and I know what works and I'm going to help you figure that out too.

Thales: And he focused, the important thing about decoupling is this. Why do big companies lose to small companies? Why? Why does Chase? Lose out to a startup that was called PayPal, right? And then Venmo, right? Why, why do these big established companies, why are they losing? So they have more people, they have more talent, they have more experience, they have more money, they have more everything.

So when I teach my courses, my MBA courses, I tell my students, theoretically, there's no reason startups should exist. Initially, they don't have more money. Eventually, if they're successful, they get money from Visa. But initially, they don't have more money. Often times, they don't have the experience.

Airbnb founders were not in hospitality. Uber founder, Travis Kalanick, was not in [00:13:00] transportation. And you can go on and on. They're all outsiders and they don't have better people. They don't have experienced, like, you know, senior executives. The only thing that they have going for them, the only thing is like, they're looking at something that is not well done and they just do that thing.

Instead of saying, well, this, this kid could have said, well, I am going to kind of figure out how to get payments. I'm going to create a shipping company. I am going to start getting kind of creating, getting a warehouse to distribute, to import these products. And I'm going to learn how to import watches, or maybe I'm going to learn how to manufacture.

He could have gone all different ways, right? Uber could have said, you know, we're going to, you know, Tesla's manufacturing cars. We're going to manufacture cars as well, or at least we're going to buy cars. Let's buy cars and, and, and own these cars and own and operate. No, they focused, they kept focusing on what was bad.

And one thing, one thing only, and they did better and better and better over time. [00:14:00] Whereas the big established companies, they're essentially in the kitchen, as I like to think, they're preparing 10, 15 different plates. And as you prepare many plates at the same time, you're a bank, you have mortgages, you have retail banking, you have advisory services, you have all of these services.

Essentially, when you're doing all at the same time, you're going to burn a few plates here and there and customers get upset. And that's the opportunity to see this big company is not doing these things well. 

Dave: You know, one of the things, tell us, that Clayton Christensen believed is that as, in order to maintain your competitive advantage when it comes to getting jobs done for customers, that you needed to add more jobs.

So the reason why Microsoft was so difficult to disrupt is because they did so many different jobs for their customers. And it sounds to me like part of what you're suggesting here is that there's a point where [00:15:00] you start doing too many jobs for your customers. Is that what you're implying with this?

That's right. There's a threshold. that you hit where you're doing too many jobs. 

Thales: Exactly. That's exactly.

Dave: You talk to that a little bit more. 

Thales: Sure. So, so you know, the, the entry point being decoupling where you do one or two jobs very, very well allows you to steal customers from big established companies.

And, and as you do that, it becomes successful. Every entrepreneur says, what else can we do? It's natural. And they start doing other things. Some are successful and some are not. And in my book, I explained that the more successful ones often do this process that I call coupling activities. They look at what they're doing and they look at other activities that are very closely aligned to what they're doing.

And so just to give an example of coupling, I [00:16:00] love to give an example of Alibaba because Alibaba is essentially today a business. Big tech company, but it's growing still at the speed of a startup, which is an aberration of sorts. You're either grow fast and you're small or you're big and you grow slow.

But Alibaba seems to be doing the two things. And when I went to China and I researched Alibaba and I learned How did they enter new markets? They essentially started with B2B sales, and then they created a app that allows you to negotiate prices between sellers and buyers because in China, negotiations are very important.

And then they created Alipay, which became Ant Financial, a payment company. And then they created a search engine to allow. Searching for products across the web. And then they created a consortium of delivery. So you can see that when you map out the activities in the customer value chain, I need, I need a device.

I need to search online. I need to negotiate prices. I need to pay, I need to receive my product. So they started growing what I call [00:17:00] outwards in the customer value chain. And that's the process of coupling. So as they grow, as they grow, they start doing more and more things. And if they're successful. you know, they can keep growing and do all these things very well.

But as you say, Dave, sometimes they start doing too many things and then they're balancing, juggling a bunch of different plates, so to speak, and some of them don't pan out and some of them fall. And this past week I'm teaching a course and one of my students and I, I, I thought about this, but I like, because I use the Socratic method.

One of my students said, so professor, we could think of the history of, of, of companies as starting with one thing, growing, doing more and more things, and they become the incumbent, and then they get dethroned by another startup that says, Oh, You're, you're, you're, uh, burning one of the dishes, I could do it better, and then they grow, grow, grow.

And so you can think of it this cycle of kind of growth and expansion, and then you do too [00:18:00] much, as you say. You don't do a few things well, and that's an opportunity for others to enter. 

Dave: Interesting. Now, do you think that part of the reason why Alibaba has continued to grow exponentially is the way that they've set up their businesses.

Are they like separate entities that they start up or do they do some kind of skunk work kind of thing or what makes them so agile when they're setting something up? 

Thales: I think that's a, that's a challenging question. It's, it's, I think we should never say there's one or two or three reasons of why a company like this is successful, right?

There's, there's got to be many reasons, many, many, many. To me, what is interesting is some of these reasons are replicable and some are not. Some of these reasons, once you learn, you can try to do it yourself and wow, it works. And others are, no, Alibaba was, you know, You know, in 1990 in China where there's no e commerce and then a lot of factories selling things.

And so you can't replicate that right? That moment in time is amazing. But the [00:19:00] things that you can possibly replicate is Alibaba in doing this coupling strategy it essentially instead of going out and saying, Hey, We're going to create a social network. We're going to create an electric car. We're going to kind of, uh, create a Google competitor, Baidu.

We're going to compete with Baidu and create, you know, a search engine. Uh, uh, they could have done that. They were already growing. They had a lot of money. They could have done that, and those were big markets at the time. But Alibaba decided to do the same. What else, if we make for our customers, it will make their lives easier in what they're trying to do with us.

Not what they're not trying to do, so they're trying to get products from us. Okay, so if we facilitate communication, negotiation, is it going to be helpful for them within their environment? Yes. If we facilitate payment, yes. If we facilitate, you know, the delivery of what they're trying to buy, yes. So then they [00:20:00] start selling new services to their current customers.

And by doing that, it becomes easier, right? Because your customers are already happy with you because you've provided them. The reason they're with you is because you disrupted and you decoupled entered and you offered something better. Now you're offering, offering something afterwards, after and after, after, and, and, and this creates what I call customer side synergies, which is the more I do with Alibaba, the easier everything else gets.

That's very powerful and that other startups can emulate. 

Aransas: And we talk a lot about superpowers and essentially they are giving their customers superpowers via the technology that they've produced to make the shopping experience bigger and easier. And so that that it's, it's integrating further into people's lives, but they're also creating a greater dependence on the product because it has been so integrated into the life.

So it's less about. Integrating across sort of a shopping journey and more about [00:21:00] how it fits into their lives, which is something that's very well aligned with the work we've been doing. 

Dave: That's right. You know, Aransas, it brings up, um, you know, last week we were at our collaboratives meetings and one of the questions that came up from one of the participants, we were talking about artificial intelligence and how, what these legacy companies could do around artificial intelligence.

And one of the participants said, this might be a moment where our company needs to simply leapfrog, not. Try to just, uh, what's the word, incrementally improve, but just find partners, lots of partners who we can work with and simply bring all of these elements together and, and not try to build it in house, just leapfrog.

And I thought that was a big epiphany for them. And I think [00:22:00] tell us to some degree, you're kind of. I think if you're an incumbent at a certain point, you've got to do something similar, I would imagine, to what the teenage boy was doing. You have to find partner networks and kind of build things out from the outside rather than build things inside.

Thales: Yeah. You know, I have, I have a few, I have a few experiences because basically part of my, you know, I, I teach, uh, at UCSD. Um, and, uh, you know, I advise startups, but one of my main jobs is working with established companies to evolve their business models and to create more customer centric, uh, innovation.

So, you know, among our clients, we have Samsung, we have LG, we have Hyundai, we have Chevrolet GM, we've had American Eagle until recently that we've worked with them. [00:23:00] I've worked with Nike, I've worked with BMW, with John Deere, in so many different industries. And, you know, the, the, the headline is working with big established companies is really hard to innovate.

Going back to your point, yeah, leapfrog would be desirable because the companies can't figure out, you know, how to move forward. They're stuck and they're stuck because many different people inside the organization have some power and they're saying, well, let's go in this direction. And then somebody goes, let's go this other direction and another person.

So, so. Everybody choosing a different direction. And when you talk to them and as a group, you know, they just rehash the same thing they've been saying for the last five years. Right. And so some companies hire us for the sheer fact that they just want a referee. They're tired of like, somebody kicks the ball forward.

Another one kicks it back. One kicks to the side and the other one kicks to the other side. And they've been doing this for a few years. You just can't get, [00:24:00] you know, if we hear in the media, we hear the stories of the powerful CEOs. That's what we do. You know, Satya Nadella, he just comes in and, you know, a huge company, he does, he has an MBA, he's not a tech person and he just decides to brute force and saying, you know, cloud, cloud and mobile is going to be the future and we're going to go everywhere.

And he made it happen. Right? And then Elon Musk and a few other ones, but the vast majority of companies, the CEO is not this ultra powerful king that decides has a vision says we're going to go that way. And that's the end of that. The vast majority of companies is negotiations, discussions, tension, power disputes, politics, all these things.

So the leapfrog is not possible because you can't get everybody on board to leap with you. Towards the same direction. 

Dave: Sure. Yeah. There's another issue with leapfrogging, uh, for these large companies is they want to be very, very careful about what partners [00:25:00] they integrate into their companies because they already have very complex infrastructure requirements.

The more they add. The more difficult it is for them to manage and, and if they've got people at the front line, it's, it's a real challenge. And yet I wonder with what is going on right now with artificial intelligence and some of these other technologies, if now is not a opportune time for them to start to think about new types of partnerships.

That that could really help them leapfrog.

Thales: So something to think about in that regards. I completely agree with you. This is a pivotal moment for for many companies and many industries, and they need to make the tough decision. So they need to the vast majority of them have a culture in a decision making that prohibits [00:26:00] them from being very bold.

But you know, if, if constraints were not an option, I would say to any company, be bold, be bold, spend the money, jump into the unknown, go for it. Now's the time, the technology, find the right partners. Like that, that is the easy part, right? But then when you really see companies. Companies are a woven fabric of individuals that are kind of like, it's hard to pull the, that, that blanket towards any direction because there's an opposing force in the others.

So many times when I come in and, and they often, these companies, they often task somebody who's not the most powerful person to say, Hey, you, you go be our, you know, chief AI innovator. And this person is up and coming young, Knows the technology as is ambitious. Was, was, was naive enough to take this job because, because, you know, the big tension is, is this the innovators are not the moneymakers and big established companies.

Okay. So I [00:27:00] work with Sephora and I visited Sephora, you know, I didn't consult for them, but I visited them and talked to many of the senior people. Many of them were Harvard grads and at Sephora. The people that were in charge with the innovation, they didn't have a big budget and they were not powerful within the company.

Who's the powerful person? Sephora, the person who owns the stores, because most of the money until recently came from foot traffic of selling products. So there's this person that is trying to just create more stores. And get more people into the store and then they buy more and then he's more powerful or she, and then there's everybody else is like, no, we need to create a subscription service.

We need to create online sales. All of these other people, you know, are tasked by the CEO because you need to innovate. And now you have another AI person and these people are not powerful. They're not respected. They're young. They're they, they don't have their chops. They don't have big budgets. And then when everything that they bring in, guess what?

The powerful person [00:28:00] that owns the purse strings just squats them down. What? You want a subscription business for sampling of products that people can get in home and then they're not coming to our stores for their beauty consultants to put the cosmetic in their faces and try and buy? No way. Oh, that's not going to help me meet my goals.

Exactly. Crushed, crushed, crushed, crushed. And then they get tired and They leave. So go see the tenure of these young people. They're like, get frustrated. They leave, they leave, they leave. So You know, like what I have to do, a tough job, what I have to do is go to these people and say, you know what, I know you have this big, bold vision of AI or this new technology or blockchain or whatever it is, a virtual reality.

You need to earn money. Trust. You need to earn credibility. And to do that, we need to figure out something that you can do fast, get results, and show a quick win before you can [00:29:00] put your bold plan.

Aransas: So yeah, I was coaching one of our clients on this last week and they were thinking about it in terms of retention and they really only measure retention in a one year cycle.

And I was like, no, that can't be the answer because if it's going to take you a year to get to your quick win a year to get to any belief or support from your organization, you're already. setting yourself up for failure. And so we talked about different metrics and leading metrics that you could use that churn fast, where you can see some sort of measurable benefit.

What can you do for 10 percent of your population that you can see a real shift in three months? Post launch, like that's a story that's going to win, but I think you're right. So many of those longer term benefits are just already set up at odds with an entire organization. It's like, you know, the one little horse riding in to face a giant army, uh, it's always [00:30:00] going to get trampled.

So, uh, When you coach them through, and it sounds like this concept of quick win, which clearly I get very excited about, is, is sort of at the core of how you help legacy teams effectively, actively innovate. What else are you coaching these legacy teams on doing to help them break through the forces against them?

Thales: Yeah. So, um, Some of the people that we work directly with when I established company hires us is either the chief innovation officer, chief strategy officer, sometimes a CTO, but oftentimes it's these and it's generally not the person who owns the PNL, which means it's generally not the person who has a lot of cash and a lot of power and they have all these ideas of what to do, but we've seen so many times that it's just they didn't get the credibility, the time, the money, The patience to, to show the first sign of results, just like you're saying.

And [00:31:00] so we have to essentially kind of figure out a way to make our direct, you know, uh, uh, um, the, these people that are working with us not be antagonistic to the rest of the company, to the, the C and the ceo. E generally is like this neutral. The CEO is gonna support whoever's is showing signs of success.

whether it be the innovators or the established, uh, you know, moneymakers in the company. And so we, we have to come in and we have to kind of be the ones to propose some ideas because, um, we have to be the bad guys. Essentially all companies need somebody to Point their fingers and we come in and say, Hey, point your fingers at us.

We'll do the analysis. We'll do all these things and we'll help this year, but we don't want it to be the, the, the, the chief innovation officers project that he or she is fighting against the other eyes, the other, the rest of the company. Essentially, they need to be together. They need to be band together and they need to challenge us.

And [00:32:00] we'll come up with all of these solutions and strategies and changes. And as they. Together, they band to sometimes, you know, really discuss and argue with us and, and, and criticize all of our work. They become actually partners. And they do it together because one, and then they decide, and they say, you know, decoupling these things you guys proposed, we don't think so, but these things are good.

We're going to do those. And then kind of essentially, I think every company needs to have an enemy and we're like hired to become the bad guys. Just point your fingers at us, complain at us, you know, all these things. And by doing that, they start kind of getting together as a group. It's like little kids in the yard.

They can't be. So arguing with each other in the team. So you need to have like a third agent come out such that they start like getting together to kind of say, Oh, let's work together to do this and that. And then we're, we're this third agent that kind of throw the rocks at us instead of throwing the rocks at each other.

Dave: Yeah, it's, uh, I mean, [00:33:00] we have our own consulting practice, obviously, and sometimes you need to hire a consultant so that you have someone to fire, to take responsibility, right, for everything that's, that's going to happen. You know, as we think about like experience strategy, and that's what we're focused on is helping companies to develop strategies for making better experiences.

I wonder what What your thoughts are for where things are headed, what new opportunities there are out there or things that get you excited about the future of customer experiences. 

Thales: Customer experience. If you're a marketer. It's almost like a Bible. You have to improve the customer experience, and it's just something you have to do, you do, you see the value of it, but to be honest, if you're the CFO of the company, the question is, well, is this going to have a return?[00:34:00] 

Are we going to pay back? You know, if we put a red carpet in our lobby, So I think this is a very important debate to know. Is this going to bring in more customers or retain more customers? Show me the ROI. That's what they call it. Show me the ROI. If we improve our website, is that going to improve the financials of the business?

Show me the ROI. You know, if we put a water fountain in the lobby of our office, is that going to get us more clients for our consulting practice or for our law firm? Show me the ROI, right? So I think this is a very important debate to know. That there's a group of people inside the company that their job incorrectly.

So is to be the representative of the customer in the board meeting, right? Nobody's going to represent the customer. If not the chief marketing officer, chief strategy officer is doing something else. Supply chain officer is doing something else. CFO human resources, but chief marketing officer say, Hey, I represent the customer and you guys are just going too much on.

[00:35:00] Benefits for the company. Now let's think, let's bring in the customer, but ultimately the CFO and the CEO are in charge of dispersing resources and you can't just make everything better for the customer. Without having a strategy and sometimes not often, but sometimes with having a path to the payback of this, because resources are limited.

You can't do everything. And so the big question to me is how do you, and we do this for our clan clients all the time, and it's a very hard job out of all of these potential improvements in customer experiences, which ones should you do? Which one should you do first? Then second, then third, then fourth, based on financial goals and non financial metrics.

That's the hard thing. It's very easy to say, improve the customer experience. It's very, very easy. It's like, there's many things, right? We ask consumers, there's too many things. Like I can go into my bank branch and just point out a [00:36:00] bunch of things. I can go to the website point, but some of them take money and like prioritization.

What should you do first? That's the key question. If you think about certain industries, the telecom industry, we have telecom clients. When they show us their database of customer complaints, there's like a million things. A million complaints. And they don't know where to start. They don't have a plan, a framework, a structure to say, where should we start?

What's the first thing we should do to improve and the second and the third. So I think that's a key issue that companies should address how to keep improving customer experience such that you can get the money from the CFO, benefit the company and benefit your customers. Because if you go too much on one or the other problems will happen.

Too much improvement customer experience. After a while, the money dies out too much. Just caring about the financial customers [00:37:00] leave. They're unhappy. They'll complain. All of these things. 

Dave: Interesting. 

Aransas: And we really believe value and experience move in tandem at best. And so that's where so much of our work is focused.

And so it's interesting, of course, if you map that then against what you're talking about about value eroding decisions and value building. I think we're all saying the same thing, which is prioritize your roadmap to add the most value. And we believe that that's really going to happen by adding value to your experience in ways that ultimately improves your bottom line, but also ideally improves your employee experience at the same time.

So it's that powerful triangulation. Very, very well said. 

Thales: And one, you know, going back to Dave's points, like what trends. So up until recently, we've seen. A huge erosion in customer experience by companies trying to reduce costs and adding chatbots everywhere. You know, up until recently, all chatbots to me were a [00:38:00] nightmare.

So chatbot appears like it's this awful algorithm that just wastes my time. And I know why companies are doing that. They're trying to save money on getting, hiring people to answer customers problems. Right. So just cost reduction, pure and simple, but now with, you know, a year and a half after ChatGPT.

The quality of the responses of AI based chatbots has been just a remarkable leap in quality, right? And that is an opportunity. Suddenly the technology broke a barrier that it's good enough, helpful to customers. And it is very cost efficient compared to just hiring humans and which is just not happening anymore.

Aransas: Well, and it comes down to time, right? So it used to be a waste of time. Total waste. And now it is. It is a valuable use of time that it [00:39:00] actually gets me second and third level support faster if I need that, or it answers my question more quickly. And so like everything really, and it's the same as your Alibaba example, it comes down to the value of time.

And I think you're, you're absolutely right. It's such a good example about the threshold there. I have to giggle too. Because I just glanced at my phone and a news alert came in. I don't know if anybody else saw this, but while we were talking today, uh, about monoliths and their risks, uh, meta crashed. And so both Facebook and Instagram are down, I think globally.

So, uh, another reminder. Yeah. Of our dependents on tech. 

Dave: Absolutely. And getting too far away from your core offering probably too. 

Thales: Yep. Oh yeah. That'd be my guess about you know, um, we can, we can talk endlessly about, you know, the billions that Mark Zuckerberg invested in the virtual reality, right? [00:40:00] Sure. So, so, you know, it, it, it circle backs to this idea a few years ago, you know, virtual reality, augmented reality, you know, metaverses.

The company changed its name for that. Mark Zuckerberg said, this is the new wave. It's going to be the future. So he leapfrogged and I'm, I think, I don't know how many billion is like five to 10 billion was spent on this. Like entire businesses, big businesses were spent on, on this, the quality of the product, GDPs of small countries.

And, and, and so, you know, he leapfrogged into the unknown, took everybody with them because he had majority, uh, voting power. And it's done. There's nothing to show for it. There's absolutely nothing right. Everybody else we've realized that, you know, VR and, and, uh, metaverses just like the value to consumers are very little.

I just, this past week I saw that Oculus headsets, the survey says after six months, [00:41:00] uh, people who bought an Oculus headset. Uh, less than half of them are still using it. The other ones are just, they stopped using it. 

Aransas: Apple was reporting the same thing from their new VR headset that it was the highest returned product that they've ever launched.

I believe people are checking them out. They're interested, but within a few minutes, the novelty wears off and there's no real use case. Yeah. 

Dave: So, um, other than apparently lying on your bed, which Well, we'll see. I mean, maybe in five more years, it'll take off. I remember the Palm Pilot, you know, but then we got the Apple phone.

Aransas: I finally watched the Blackberry movie last week.

Thales: You know, the question is that my students ask about all these things is, how do you know? How do you know when a new technology comes? Will it eventually grow to be dominant or will it, you know, fizzle out? How do you know, and, and answering this question is, you know, it's, it's, it's, it's a golden ticket to future [00:42:00] success.

So, so it's extremely hard question, but the way I think about it is every time new technology comes, it's very important to understand what's the next best alternative. What is it trying to replace? What's the next best alternative and, you know, in what circumstances is it better or worse than the next best alternative.

So a VR headset right now. One could argue, say, what's the alternative? What are you doing? What are you asking your customers to do with VR sets? Well, watch movies, play games, you know, go on, go, uh, the videos show people navigating on the web, going to, doing email. Playing golf. There's a few things, virtual golf and a few things.

Okay. So, so let's assume those use cases, get real data, compare that with the next best alternative today, which might be a phone or a TV or a, or a computer screen. Is your email much experience much better? Doubtful, right? Like questionable. Like, [00:43:00] uh, I'm, I'm pretty happy. I'm not, there's like, there's nothing in my email experience right now that's like, Oh, this is like, this is awful.

There's some other things, but they're not, They're not going to be resolved by me plastering kind of screens on my face, right? Uh, uh, video games, I'm pretty sure it can be way better. All, all, all technologies, like I've looked at all these data is across very industries. IT technologies get firstly adopted by two industries, video game and porn industry.

Video game and porn, like it's, it's like everything that has come out, it first gets video game and porn industry adopted first, right? And so you could argue that VR headsets, like if I need to bet money, these two industries are going to really adopt it. It's going to be an improvement for the customers.

If you're doing, you know, if you're doing golfing, you know, maybe I'm not a golfer, but you need to know, right? You need to know compared to what, you know, these, these 3D golf systems that [00:44:00] people put in their garages seem very good to me, right? Just putting a headset, will it be better, right? Navigating the web, doing these other things.

And eventually time will come that, that, that they'll find cases in which a VR headset is much better than the phone or a, or a, or a big screen TV or a computer, right? But, but then the market will shrink. So they don't want to do that now because then right now this idea that everybody needs to use it.

And, and, and what ultimately happened is for certain use cases, it will be a better product, but not for everything. And so now you, you would need to reassess the size of the market for, for something like that. 

Aransas: This is great conversation and really exciting to think about what legacy companies can learn from startups, but also how startups prioritize their roadmaps and create a sense of focus and real value for customers.

Thank you so much for joining us today. And for those of you listening, thank you for [00:45:00] being with us on this journey. We talked, uh, sort of loosely around the power of customer research and the process of this, really listening to your customer and understanding what they want and need. Well, you.

Experience strategy podcast listeners, you're our customer. So tell us what you want to hear more about, who you want to hear more from. You can find us at stone mantle. co where you can also find out all about all the other products, services, and incredible programs that we offer to help you bring the most value to your company and your customer as an experience strategist.

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