For decades, leaders from the industrial era have been using product superiority, economies of scale and operational efficiencies as the route to market leadership. Their playbook involves building competitive advantage through new product creation, finding cheaper labour, building bigger factories and investing in operational efficiencies.
In the globalized digital world, however, these advantages can no longer ensure success. Competitors are able to decode and develop “me too” products in no time. While these “upstream” production-related advantages are still relevant, businesses across industries are experiencing a tilt towards the “downstream”, where companies interact with customers in the marketplace. Niraj Dawar, professor of marketing at the Ivey School of Business in Ontario, Canad,a and author of Tilt, asserts that companies reorienting strategies to focus on customer interactions will enjoy significant advantages in the post-industrial age.
In this emerging experience economy, companies are focusing increasingly on designing exceptional customer experience to acquire, nurture and retain customers. They do so by using human-centred design principles to understand the stated and unstated needs of the customer. Human values such as empathy are now being embraced by senior leaders to drive home the importance of customer-centric innovation. So much so that in his best-selling book Hit Refresh, Microsoft CEO Satya Nadella says empathy is not just nice to have, it is an existential priority for companies.
Developing a healthy obsession with customer experience makes complete economic sense too. According to a 2014 assessment by the Design Management Institute, US, design-led companies such as Apple, Coca-Cola and Nike have outperformed the S&P 500 over the past 10 years by an extraordinary 219%.
What’s unique about customer-centric companies is that they make an effort to be available when the desire is born in the minds of customers, much before the desire becomes a well-articulated need. The DBS Home 360 app from DBS Bank is a case in point. Buying a home is one of the most important decisions people make. It is also one of the most harrowing experiences. We visit many properties with a realtor, pick something we like and then knock on the doors of banks to get a valuation and submit a mortgage application, hoping the home loan will be approved. The whole process is laborious, stressful and often overwhelming.
Recognizing this pain point, DBS Bank announced the launch of DBS Home 360 in September. It is the first banking mortgage app in Hong Kong to leverage the power of virtual reality (VR) in a mobile format to revolutionize the way people buy homes. Users can point their phone cameras to homes that they like and find out if these are listed in the app’s “properties for me” feature. The virtual tour feature lets users tour properties from the comfort of their home. The app provides the indicative market value of the home and an estimate of how much they can expect to pay, including stamp duty, commissions and related fees. Users can find out instantly if they qualify for a mortgage and have a bank representative follow up and assist with the formal application.
What this shows us is that a horrible customer experience can become both hassle-free and fun when the company makes an effort to thoughtfully design the experience.
Innovations such as the DBS Home 360 app are often the result of a structured, human-centred, prototype-driven innovation process called design thinking. Given the tilt towards customer experience and design, it is becoming imperative for leaders in the digital age to build design thinking as a core capability.
To build a design-centred culture in the workplace, leaders must first build an inclusive culture that celebrates diversity in ideas. They must build a healthy balance between right-brain and left-brain thinking within their teams. Leaders should promote the use of empathy to discover the needs of the customer. At the same time, they should encourage teams to use feedback and data analytics to sharpen the solution development process. They must encourage rapid prototyping to quickly test the viability and feasibility of ideas. They must also develop the ethos of continuous learning to help teams learn from the impact of their designs on customers.
It is clear that leaders who are successful in the digital age will be those who care deeply about designing stellar experiences. They will embrace the idea that ultimately, great design produces great desire—and that makes all the difference.
This article is part of a series on leadership in the digital era. Rajiv Jayaraman is the founder and CEO of KNOLSKAPE, an end-to-end learning and assessments platform.