5 Key Actions to Help You Stay Ahead of Market Disruption As You Lead CX

With startups disrupting more industries than ever, how does your company stay ahead of customer expectations? In this podcast, join me for a fascinating discussion with Thales Teixeira, the Lumry Family Associate Professor at the Harvard Business School, whose research focuses on digital disruption and what he calls, “The Economics of Attention.” Discover a new framework that will kickstart and advance your work as a CX practitioner and leader inside of your organization.

In this discussion, Thales also shares several case studies that demonstrate how startup companies are disrupting incumbent businesses. He walks us through a new approach to customer journey mapping and diagnosing new consumer behaviors. We chat through some of the concepts in Thales’ newly released book, Unlocking the Customer Value Chain, which is a roadmap to understanding how and where digital disruption takes place. He helps us understand the importance of the customer value chain, so you can know where the blind spots in your business are, in order to prevent competitors from creeping in.

You’ll definitely want to listen to this episode; there’s so much that we couldn’t fit it all in the notes!

1. Know Where the Value Erosion Moments for Your Customers Are

Thales tells us that startups are at the helm of market disruptions but not the sole cause. As a leader engaging your organization around improving customer experience, it’s critical that you understand how disruptions affect you.

Market disruptions happen during the process of buying products and services, changing consumer behavior. For instance, he explains that subscription-based beauty startup, Birchbox, isn’t exactly going head to head with the big beauty brand, Sephora, rather, it’s helping customers decide which products they want by offering a monthly service that allows consumers to conveniently try sample size products via home delivery.

Thales clarifies that essentially, Birchbox stole customer activity from Sephora, but not the entire customer. Rather than going to the store, trying products, evaluating, then buying—customers are able to do these activities from the comfort of their own homes when they subscribe to Birchbox.

According to Thales, the rise of Birchbox was due to the need for convenience. It’s not Birchbox that’s disrupting Sephora, it’s the consumer that is disrupting Sephora. Customers are changing their needs and wants. There are offers that are becoming cheaper, faster to obtain, or more convenient. As business leaders in already established companies, you need to thoroughly understand your customer behaviors and desires, and adapt to them. Don’t think that technology is what creates the disruption because it’s not.

The nature of competition has changed. Instead of stealing customers, these disruptive companies are stealing customer activities. -@ThalesHBS #businessmodel #consumerbehavior Share on X

2. Lead Your Company to Understand the Changing Needs of Customers’ Lives

Thales also walks us through an example of a healthcare industry disruption. He shares that with Amazon’s desire to go into the healthcare industry, the company recently purchased Pillpack. Pillpack buys medication on behalf of patients and redistributes it in an easy way for people, who consume multiple pills a day, to know exactly when they need to take each pill.

Pharma companies who initially saw Pillpack as a threat now realize that it could actually be a partner because it’s helping patients comply with using their medication. Thales shares that one of the biggest problems doctors face is patients not complying with what to take and buy for their medication. Pillpack makes compliance easy for consumers, which is something that benefits the whole industry. Business leaders at Amazon saw a consumer need to improve dosage compliance, and through Pillpack, were able to ease the burden with a service that alleviates this problem.

Listen to the full episode, as Professor Thales walks us through examples from B2B, the auto industry, and electronics.

3. Zero-In on Value to Focus Your Company

I love how Thales also explains the customer value chain, laying out the specific activities that fall within it. As CX leaders, understanding your customer value chain will help you think through the various actions that your customer takes in order to purchase your product or service. It doesn’t matter who your customer is, their buying behavior can be classified into the following:

Is it a value-creating activity? As a customer, using the television is a value-creating activity, as well as comparing options, and trying the product.

Is it a value-capturing activity? In the case of the television, paying for the television is the way that Best Buy or the manufacturer makes money, so that’s value-capturing activity.

Is it a value-eroding activity? Value-eroding activities are activities that don’t benefit the customer or the company of which you’re doing business. It’s “a necessary evil” to do the business, so to speak. For example, going to the store doesn’t benefit the customer or the store; it’s just necessary to look at TVs—this is a value-eroding activity.

Ultimately, when it comes to improving your CX, your company needs to have more value-creating and value-capturing moments. To sum up this process, Thales has us look at Netflix for example. Netflix eliminated the need to go to the store by sending DVDs by mail, which gave them a lot of new customers. Then, when it moved to streaming, it eliminated the activity of ordering a DVD. Now that content can be streamed, it’s cheaper and more convenient.

Value eroding activities are activities that don't benefit the customer or the company of which you’re doing business. It's a necessary evil to do the business, so to speak. @ThalesHBS Share on X

4. Map the Customer Value Chain

How do CMOs and CCOs use the customer value chain method while working for incumbent organizations? According to Thales, business leaders need to understand their customers by mapping this out. Map out all the customer activities and evaluate for what’s value creating, value capturing, or value eroding.

Next, Thales tells us that you need to determine how to increase the value for your customers—how do you retain or keep them? You will also need to go into your business and figure out how can you reduce your cost to the customer? How can you make something monetarily cheaper, or have them spend less time, getting what they want?  When you go through this process, you identify points in the customer value chain that could potentially make something better for your customer. You need to minimize the opportunity for a startup to come and do the same task that will steal your customer.

Identify the weak link in your customer value chain. You need to figure out where your customer might leave you. Reduce time, effort, and money for your customer. Listen to Thales walks us through specific methodologies he found to work best in the podcast.

5. Don’t Forget to Go Back to the Business Basics

Lastly, Thales leaves us with some important words of advice. He says that if you are a business person, you’ve been educated or you’ve been experienced in business. Don’t let technologists tell you how to run your business. Going back to the basics of businesses is very important.

He shares that everybody talks about technology, and just because you may not know much about the technology because that’s not your forte, don’t be fooled by thinking it will solve your problems. Ultimately, your problem is a business problem that only a business person like you can solve. Thales reminds us to be calm and confident of your abilities, and make sure that whatever you do, you start with the customer first because they are making the decision that will disrupt markets or not. His book will help you go through the process of solving business problems, making sure that you don’t lose sight of the important elements in running your business.

About Thales Teixeira

Thales Teixeira is the Lumry Family Associate Professor at Harvard Business School. There he has taught MBA, doctoral and executive-level courses in Marketing Models, Digital Marketing and E-commerce. His two primary domains of research constitute Digital Disruption and The Economics of Attention.

He is the author of dozens of articles published in trade press outlets such as The Harvard Business Review, The McKinsey Quarterly, and Think with Google. And he is one of the current judges of CNBC’s Disruptor 50 most innovative startups. He has consulted, advised or educated top executives of over 15 of the Fortune 100 companies.

Thanks to Thales and the wonderful folks at Penguin Random House, who have been generous enough to share the first chapter of Unlocking the Customer Value Chain with us for you to enjoy! 

Click here to download

Reprinted from UNLOCKING THE CUSTOMER VALUE CHAIN: How Decoupling Drives Consumer Disruption Copyright © 2019 by Thales S. Teixeira. Published by Currency, an imprint of Penguin Random House LLC.


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