Are you missing the beat?

In the article titled “Are you ignoring trends that could shake up your business?” published in the July-August number of Harvard Business Review, Elie Ofek and Luc Wathieu discusses how and why companies should leverage trends even if not obviously related to their core business.

The article mainly uses examples from large North American companies such as Nike, Apple and others but according to my experience their observations are pretty universal, regardless of company size or location.

The authors discuss reasons why companies fail to leverage trends and proposes strategies for using and addressing the impact of future trends. For the benefit of everyone I will limit myself to my experiences and thoughts related to the reasons for failure, since sadly it seems more companies are struggling and failing than succeeding. For the full story I recommend you to read the original article.

Three reasons why companies fail to leverage trends

• Ignoring trends that originate outside their markets
• Responding to a trend in a superficial way
• Waiting too long

Ignoring trends that originate outside your market

It seems to me that many companies have an inside-out view of themselves and the products or services they offer. There is an important lesson to be learnt from the experience of ice selling businesses at the arrival of electricity and refrigerators, and that is understanding the value you are providing and consequently which business you are in. If the ice companies had realized that they did not sell ice but refrigeration, they might have survived.

Confusing the real value that you are providing and to whom makes you a prime candidate for unwillingly ignoring important trends. Not fully understanding the problem you are helping your customer with gives you very little chance of seeing the changes and trends that will have an effect on your business, positive or negative. It is a big difference between getting ice blocks to your customers doorstep and helping them refrigerate perishable groceries.

Focusing too much on your company’s specific product, be it ice blocks, company information or a specific form of cooling technology, easily narrows your innovation focus down to improvements of those products and your sensisitivoty to trends directly related to them. The risk is obvious that you are developing a blind spot for changes and trends that are relevant to the real problem you are helping your customers solve.

Responding to a trend in a superficial way

The second trap is as common as the first and is mainly seen in relation to trends that are heavily covered in media. One trend that has resulted in a lot of superficial activities from companies everywhere is in my opinion the social web. Since it is all in the news everyone wants to “jump on the boat” and quite often without (at least it seems to me) seriously giving a thought to how this new mode of communication and interaction actually relates to the value they are providing to their customers and the relations they want to keep with their customer.

Setting up a fan page on Facebook or converting your press releases into a Twitter stream won’t necessarily make your company any better prepared to tackle the challenges posed by the social web. Personally I believe that social networks will change a lot in the way companies communicate with their customers. What is more important than quickly getting on Facebook is reconsidering the tone and way of having that conversation in the future.

Waiting too long

The article uses the case of how Nike by being eaerly movers successfully teamed up with Apple to create Nike+, effectively barring Adidas, Rebook and others from entering that space. Personally I have less experience from this type of situation but two obvious risks from waiting to long in my opinion are:

• A specific player or group of players tie up a certain asset that is crucial for leveraging the trend. In the Nike+ example the asset was Apple and their dominance of the mobile audio market through the iPod. But also less concrete assets could be important, like customer attention or trust. The first company that customers feel “get” the trend stands formidable advantages over those that ” don’t get it”.
• Nothing beats the knowledge and insight you get when actually trying to do something. If you sit on the side, waiting for the right moment you will always be behind the smart first movers. Those who start out quick and small, equipped with a vision of what they want to achieve as well as the courage to experiment and who quickly iterates and improves without tying up too much resources.

If you would like to improve the way you identify and respond to external changes I recommend you to read the article. It might just open your mind and sharpen your skills and methods for succeeding in an ever changing world.

The Peak-End Rule

When planning for moving with my family to Shanghai I decided to start a blog. I wanted to get into the habit of writing because I thought that the process of writing, doing research and organizing tidbits of knowledge and ideas would make keep me productive and creative, and make it easier to learn new stuff.

Almost a month have now passed since we arrived at Pudong International Airport and I have yet to finish my first post. Sitting in front of an empty piece of paper (or screen) and just letting my “creativity flow” was more difficult than expected. What was I to write about, how much should I write, for whom and even how should I start the first sentence?

Reading Scott Berkun’s hacks for writing (http://www.scottberkun.com/essays/54-writing-hacks-part-1-starting/) made me decide to go for something really random. I picked up the awesome Mental Notes card deck (http://www.getmentalnotes.com/) which I had just received before leaving Sweden and randomly picked a card. The title of the card I picked was Peak-End Rule. So just to get me started I made this the topic pf my first post.

The Peak-End Rule is a behavioural patterns first described by Nobel laurate Daniel Kahneman and it states that we judge our past experiences almost entirely by their peaks (pleasant or unpleasant) and how they ended. The origins to formulating this rule seems to have been a series of pretty constructed and concretely physical experiments involving both painful sounds and colonoscopy (http://www.psych.uncc.edu/pagoolka/pbr96.pdf).

Can it be transferred to other domains? Yes of course, and have been as well. Once you give it a second’s thought it feels intuivitively right. Did you have a good summer vacation? Most likely your answer will depend on how it finished and whether you had any really bad or good experiences, not so much on how the vacation was on average. Think about difficult assignments at work or struggling helping your kids adjust to a new school environment. You have the ups and downs, remembering only the worst or the best (the peaks) and finally the end determines whether you will consider it a good or bad experience overall.

We know that business in general and the perception our customers have of us are determined by psychological factors. Then how come this simple rule is not utilised more? Applied creatively we could see companies designing engaging experiences woth built-in positive peaks instead of boring, bland, impersonal experiences. Situations which I feel could be improved by paying attention to the peak-end rule include:

• Long-haul flights.
• Booking airplane tickets
• …pretty much anything related travel and transportation actually
• Customer support
• Tele marketing / sales

You could also see this as a supporting argument for focusing on your strengths (increase the peaks) rather than reinforcing your weaknesses. Don’t worry so much about the average, instead make sure you create those peaks that will make your users, customers, readers, or what have you, happy and then pay close attention to how you treat them at the end of your interaction.

While researching this post I have come across several other articles and blogposts that cover the peak-end rule. If you find this topic interesting I urge you to check them out:

Roland Smart: Integrating experiences across touchpoints
http://www.rolandsmart.com/2009/02/integrating-experience-across-touchpoints/

The New Yorker: Boom and gloom
http://www.newyorker.com/archive/2002/11/11/021111ta_talk_surowiecki

The Artful Manager: It’s all about the peak end the ending
http://www.artsjournal.com/artfulmanager/95296.php