Last week, I discussed Customer Experience Transformation Theory and the reasons why it is a necessity for your business rather than a nice to have. I then used Kodak and Blockbuster as examples of how a company can become irrelevant if they do not pay attention to this Theory.
But it is sometimes difficult to discuss this topic with board members, particularly those of companies that are in distress and need guidance to remain relevant.
Executive Owner Engagement
The article that I read on Customer Experience Transformation Theory pointed out that customer experience transformation is exactly that; transformation.
With transformation comes responsibility. And the need for a deep understanding of two essential elements; the current state of your experience, and the desired future state of your business.
The article adds that a well-executed transformation retains the elements of the business’ core brand that made it successful up to the point of transformation. Then, the company is able to bring those core elements into the new version of your organization, enriching its overall experience and brand ethos. Of course, one of the more challenging pieces of the puzzle is identifying those evergreen, competitive elements of the company’s strategy and brand identity in order to safeguard it and carry the brand into the future. Knowing that the company needs this is not the same as being able to execute it. To do so, companies need an executive level strategic thinker with cross-industry experience to execute customer experience transformation.
So, when is the right time for customer experience transformation? The article points out that this question is presented with the understanding that investment in transformation is a significant financial risk, and a real disruption. Therefore, while the answer is not simple. This advice holds: the time for customer experience transformation is when the trends of how we live reveal a new environment (a new reality) that is entirely separate from your brand experience.
The article adds that the time for transformation can be even more obvious than that. When a new set of customer expectations exist for a product or service that you do or can provide, but you have not designed your business to meet those expectations, it is time to transform your experience.
The technology behind success
I was about 13 years old when the first cellular phone came into South Africa. It was a Motorola and it looked like a brick.
Cellular technology was pretty basic in 1995. However, even then, there was a movement to make phones smarter, smaller and sexier. Nokia achieved this and became a multibillion dollar company based on the popularity of their cellular phones. An article by medium.com pointed out that Nokia’s operating profit went from $1 billion in 1995 to almost $4 billion by 1999. That’s a 400% increase in four years.
There was a trend during this time to try and transform these cellular devices into smart devices that could connect to the internet. Apple were the pioneers in this field and launched the first iPhone in 2007. By the end of 2007, half of the worlds smart phones were Nokia phones while Apple only had a 5% share.
Apple invested significant capital into its operating system (iOS) which it felt would be a product differentiator. Nokia didn’t invest any money into the development of its own operating system and the quality of Nokia’s products started to decline.
The medium.com article points out that in just six years, the market value of Nokia declined by about 90%. The article adds that Nokia’s decline accelerated in 2011 and contributed to its acquisition by Microsoft in 2013.
According to Investopedia, Apple’s net worth at the end of the fiscal year 2020 was $65.34 billion. According to statista.com, Nokia experienced a net loss of over €2.4 billion in 2020.
Tim O. Vuori, an Assistant Professor in Strategic Management at Aalto University and Qui Huy, Professor of Strategy at INSEAD Singapore conducted a qualitative study to explain Nokia’s downfall. The results were published in the 2015 paper Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle. This will be discussed in a further article.
One of the findings of the study was that Nokia suffered from a lack of strong leadership: Nokia’s ultimate fall can be put down to internal politics. In short, Nokia people weakened Nokia people and thus made the company increasingly vulnerable to competitive forces. When fear permeated all levels, the lower rungs of the organisation turned inward to protect resources, themselves and their units, giving little away, fearing harm to their personal careers. Top managers failed to motivate the middle managers with their heavy-handed approaches and they were in the dark with what was really going on.
The fall of BlackBerry
If you owned a BlackBerry, you had a status symbol. After the fall of Nokia, BlackBerry quickly stepped in and gave Apple the competition that it needed when it came to the highly competitive smartphone market.
Blackberry actually invested significant capital into its operating system. I recently read another article by medium.com which pointed out that BlackBerry’s faults were in its design flaws and the stubbornness when it came to making BlackBerry Messenger (BBM) available on other platforms.
The article points out that a key reason behind BlackBerry’s failure is their ignorance in choosing to stick with the Querty keyboard whilst leaders like Apple provided a full touchscreen interface which consumers preferred. Although BlackBerrys had been popular due to their ease of use with instant messaging and firing off quick emails through the keyboard and scrolling ball. In today’s age phones are virtual- and augmented-reality tools. They’re for taking and sharing photos, video chatting, playing games, and so much more. Even within text boxes, we’re using emojis, stickers, voice-typing, GIFs and a thousand other things you can’t do with three rows of hardware QWERTY keys.
The article adds that another major issue with BlackBerry was its horrible phone design. Examples such as the BlackBerry Priv and BlackBerry KEYone showcase their resistance to change. Maintaining their keyboard within the phone carries dead weight. The hybrid design is unnecessary, one keyboard is enough and “having the option” of a typing keyboard seems somewhat redundant. Whilst the likes of Apple were innovating, tweaking and examining every aspect of the iPhone. BlackBerry’s phones were heavy, clunky and never looked nice. Whilst you look at an iPhone and it makes you want to pick it up, it’s sleek, slender and looks beautiful.
The article pointed out that BBM helped capture the younger teenage audience with its faster approach to messaging and made texting appear boring. Features such as Status updates, pinging a user and groups were really interesting features BBM users had at a time where instant messaging was limited. Yet when BlackBerry started freefalling through the market, they thought BBM would save them. Rather than let BBM be installed on other devices, they continued to make it a blackberry exclusive. They eventually changed their mind but by then it was too late. Whatsapp, Kik and iMessage were already dominating.
According to macrotrends.net, BlackBerry is currently worth $4.77 billion.
Underestimating the competition
While the above factors are the main reasons why these companies failed to maintain their relevance in a highly competitive market, as with all things business rescue, these actions were symptomatic of a bigger problem which was the actual cause of the distress.
Chief Technology Officers and Chief Development officers often have corporate roles that are widely defined. What do they actually do? Well, they fulfil a role that Nokia and BlackBerry desperately needed. They analyse trends and influence boards to make key changes that would benefit the future relevance of their business. In terms of business rescue, this is an executive that BRPs would be working closely with when it comes to designing the business rescue plan and the overall implementation of the business turnaround strategy.
