Day one of the first Cognitive Computing Forum in San Jose, hosted by Dataversity, gave a great perspective on the state of cognitive computing; promising, but early. I am here this week with my research director Leslie Owens and analyst colleague Diego LoGudice. Gathering research for a series of reports for our cognitive engagement coverage, we were able to debrief tonight on what we heard and the questions these insights raise. Here are some key take-aways:
1) Big data mind shift to explore and accept failure is a heightened principle. Chris Welty, formerly at IBM and a key developer of Watson and it's Jeoapardy winning solution, preached restraint. Analytic pursuit of perfect answers delivers no business value. Keep your eye on the prize and move the needle on what matters, even if your batting average is only .300 (30%). The objective is a holistic pursuit of optimization.
2) The algorithms aren't new, the platform capabilities and greater access to data allow us to realize cognitive for production uses. Every speaker from academic, vendor, and expert was in agreement that the algorithms created decades ago are the same. Hardware and the volume of available data have made neural networks and other machine learning algorithms both possible and more effective.
I come to Forrester after working in the Solution Marketing and Corporate Marketing groups at a large customer service software provider. That role put me in touch with contact center technology buyers and the overburdened folks responsible for actually making great customer service happen every day. I saw close up the impact of the age of the customer on the thinking, processes, behavior, and technology choices of contact center professionals around the world. They are facing a world in which consumers are much less willing to settle for mediocre and impersonal experiences when dealing with customer service organizations. As consumers we all want effortless service delivered via whatever channel is most convenient at the moment, and we want companies to know just the right amount of information about us, but not too much, at the moment of the interaction.
That is a very tough nut to crack for contact center managers, supervisors, and agents. My research coverage will primarily focus on two areas that can help contact center pros begin to address these issues:
Telcos across the world — and especially mobile operators — are now struggling with increasing network complexity and lower customer satisfaction due to exploding data traffic, decreasing ARPU, and OTTs marginalizing their opportunities to generate new revenues via content. The Japanese market, with one of the highest ARPUs, has been the battlefield for technology providers to offer local telcos to services their high-value customers in a country where people have very high expectations of telecommunications services. Two weeks ago, I participated in Nokia Networks’ analyst days in Tokyo and was interested to see how the company has increased its share in Japan in the past couple of years. To continue its success in the age of the customer, Nokia Networks must help Japanese telcos better win, serve, and retain customers.
Two days of briefings and discussions convinced me that Nokia Networks’ must address three critical items to maintain its leadership position in LTE radio in Japan:
Optimizing its networks to make its coverage and performance the best it can be in this very high-density market.
Introducing customized features from its Japan R&D lab to meet the most demanding operators in the world.
Helping telcos meet or overfulfill their customers’ expectations via a customer experience management (CEM) solution, although the revenue contribution is much smaller. Obviously, what customers experience and perceive are what really decides how effective all of the network improvements have been.
Every business must transform into a digital business. Digital businesses continuously exploit digital technologies to create new sources of value for their customers and increase their operational agility to serve those customers. In Asia Pacific, CIOs have had limited success in driving digital business transformation. Organizations taking an early lead in transforming their business include Commonwealth Bank of Australia, China’s Ping An Insurance Group, and DBS Bank in Singapore.
A true digital business needs to integrate two sides of a digital strategy: digital customer experience and digital operational excellence. My colleague Nigel Fenwick has written extensively on the topic; this infographic, for example, sums up our thinking. Becoming a truly digital business requires a radical overhaul of organizational structures, technologies, measurement frameworks, and operating models. And it’s ongoing.
The organizations coping best with digital disruption are creating:
A digital strategy as a defense mechanism against disruption. The pace of consumer change poses the biggest threat to any traditional businesses that have yet to experience the impact of digital disruption, regardless of whether they’re in the telecommunications, media and entertainment, transportation and travel, or other industry. For example, Australia Post has set up a A$2 billion kitty to aggressively pursue a digital strategy to tap into new revenue sources, including building a new center for the digital delivery of mobile and online products and services.
Professional services firms must go through their own digital transformation before they can truly help their customers. In this comment we highlight some observations we made during a recent analyst event of one of the leading global professional services firms PWC.
Digital strategies will not translate into sustainable business models for the digital age
PWC is right to state that customers do not need digital strategies. Instead, they need support to prepare themselves for the digital age. But digital transformation projects are not so much about technology as about redesigning business models and changing the style of doing business. Hence, successful CIOs recognize that:
Cultural transformation is the main challenge for digital transformation. Digital businesses map out customer journeys and ensure that products turn into plug-ins for broader digital propositions. These propositions are connected through data, communities, and collaboration. This allows the business to understand who the customers are and how they use products. It’s easier to implement technology innovations than to change habits and culture. Technology is only the catalyst for cultural and organizational transformation. The transition of Philips towards a vendor of digital propositions is a case in point.
To compete in the age of the customer, it’s essential to make the most of the data you have access to, whether it’s from internal or external sources. For most organizations, this implies a need to review and challenge existing approaches to how they capture, process, and use data to support decision-making. But it’s important first of all to move beyond a technology-centric view of big data. This is why at Forrester, we define big data as:
The practices and technologies that close the gap between the data available and the ability to turn that data into business insight.
Moving beyond a technology-centric view doesn’t mean, however, that a bottom-up, technology-led approach to big data strategy won’t work. After all, it’s often the case that business executives can’t see the potential of a technology until they’ve seen it in action. A bottom-up approach also provides the opportunity to acquire technical skills, and gain an understanding of what needs to be done to integrate new technologies with existing systems (even if it’s just at the level of getting the data out – often easier said than done). But a pilot project or proof-of-concept demonstrating the “art of the possible” in a business context is different from implementing a Hadoop cluster and expecting the business side to start asking for projects.
The recent business articles about customers screaming for change, such as Bloomberg’s recently published article about Goldman Sachs’ CIO threatening Cisco, conjures up images of Dee Snider busting through the wall and screaming, “OH, WE'RE NOT GONNA TAKE IT ANYMORE! WE'VE GOT THE RIGHT TO CHOOSE, AND THERE AIN'T NO WAY WE'LL LOSE IT! THIS IS OUR LIFE.” Connecting customers, employees, and business resources has become a life-or-death element for businesses (see The Enterprise Network Enables Business Innovation).
Am I being overly dramatic? I would like you to name a technology that the entire market openly voiced their displeasure about and forced a market leader to come up with a new strategy like Cisco’s Application Centric Infrastructure. Sure, the market has gone through transitions like the movement from fat access points to controller-based access points and the implementation of server virtualization, but the difference between those transitions and the current one is that these technologies were created before customers demanded them.
Now we have customers defining what they want before the technology exists or even creating their solutions, such as:
Vacations are over – or at least mine is – but I’ve brought home some of mine for homework. Yes, I did a little work while on vacation. While in Costa Rica this summer, I had the opportunity to meet with the country’s Director of Digital Government, Alicia Avendaño Rivera.
Governments worldwide recognize the power of “going digital.” The recently announced US Digital Service and the appointment of its dedicated Administrator illustrate a commitment on the part of the US Federal government. Yet the US is merely joining others who have made similar commitments to transforming government with a focus on efficiency, effectiveness, transparency and empowering citizens and businesses through new digital technologies. Alicia Avendaño has served as Costa Rica’s Director of Digital Government since 2009.
Costa Rica Digital Government initiatives address four main goals:
G2C: Government to Citizen – citizen oriented services
G2B Government to Business – rapid and transparent business services
G2G: Government to Government – efficient and interconnected services
Infrastructure – favorable ICT infrastructure and legal framework
Your business executives seek top line growth – 7 out of every 10 we survey state growth is their top priority. Growth requires competitive advantage, but hanging on to yesterday’s competitive advantage will doom your firm. Your technology empowered customers have more power over your brand than ever before. And today’s world of global sourcing and efficient supply chains allows your competition – old and new – to copy or undermine any move you make to compete. Technology has fundamentally changed the competitive landscape.
We believe the only source of competitive advantage is an obsession with understanding and engaging with your customers. Your business leaders across Sales, Customer Service, Marketing, and Product Development now look to technology to help them obsess about your customers. Unfortunately, the majority of those same business leaders don’t think you and your team can accelerate their success.
You can start changing the dynamics in your organization, and build new competitive advantage, by crafting a business technology agenda. That agenda must focus on what you do with technology, systems, and processes to win, serve, and retain customers. And it starts with putting your customers at the center of your decision making. Once you do, you’ll start to reshape your technology portfolio and prioritize the technologies that help your business obsess about its customers.
Forrester’s Customer Experience Index (CXi) research reveals a shocking business result: Over five years, CXi leaders outperformed the S&P with 43% stock growth, while CXi laggards had negative returns of -34%. (See this Forrester report to learn about our new customer experience index.)
As a result, firms are in an arms race to mobilize their services, deliver new digital capabilities, and delight customers on every step of their journey. eBusiness, marketing, and customer experience teams are eagerly adopting new software to deliver these digital experiences. At times, they chose a conscious uncoupling from the CIO’s team in order to move quickly and stay ahead of customers’ expectations.
Unfortunately, the mismatch of customer-facing teams scrambling to build new digital services while CIOs and their teams hunker down to cut cost and risk has caused a disconnect on the role of technology management in delivering great experiences. In a new Forrester report, Closing The Experience Gaps, my colleague Ted Schadler and I interviewed more than 35 companies and analyzed survey results from 3,502 US consumers, we uncovered this misalignment and identified the four experience gaps that result (see Figure 1).
Figure 1 Experience Delivery Requires A New Architecture And Philosophy