Complexity creates more complexity

Companies often end up creating their own nightmare. At fault is the lack of a clearly defined company ambition and idea: what the business is all about. Instead, management starts managing (costs), often to the detriment of a successful future product. Optimization creates its own complexity, which is subsequently managed by repackaging identical products to different target groups.

To make difficult things easier to understand, a whole new language is invented to make the unexciting facts seem more exciting (or difficult to understand). Because everything needs to be communicated to different sets of people differently, this creates cost. Cost is what optimization was supposed to reduce, so this must be justified by further layers of complexity and managed by scaling the service of product to ever greater markets and target groups.

Obviously working over a large territory or catering to many different target groups can be considered a means of managing risk, which should guarantee sustained profits in a volatile market. However, working over a large territory with tons of distinct customers creates complexity, which is often managed by segmenting the target group and repackaging identical products to these various, different target groups. To make them seem more different, and to be understandable at the same time, a language must be developed to make unexciting facts more enticing. All of this must be communicated...

...you get the picture.

To reduce costs, increase value to the company and to customers, a simple and clearly understandable consumer benefit is infinitely more effective. Both the company and its customers understand what the product / service is good for. To communicate it costs pennies instead of dollars and complexity is eliminated. Managing all of this is easy, because everyone knows what the goal is.

Seems logical, but research clearly shows, that while 80% of managers think that their service offering is unique, only 8% of their customers would agree.

Opening speech of the 1st Service Design Conference in Tallinn

Photo: Olev Mihkelmaa

"Welcome everyone. It is nice to see a full house at the first Service Design conference here in Tallinn.

Today we’ll hear and see many presentations and case-studies that show the effectiveness of service design as principle and process. But before we get to those speeches I’ll try to define why we’re here in the first place. After all, for anyone with even a bit of service design experience will surely agree with me, that most of it looks like adults playing with post-it’s trying to look important. Service design is a buzz word. But what does it mean?

Let’s start with the word design. For most people this means making things look nice. To put it in context: many years ago, when we still used drip coffee makers in the office we had two of them. One looked really nice. One was used. The one that looked really nice, if you tried to pour coffee into your mug, you’d also cover the whole kitchen counter with caffeine creating the world’s first wired kitchen. So we used it only during important client meetings because clients knew how much this coffee maker cost. The other one was used to pour coffee into the cup when people wanted coffee. Consequently, good design was not functional. Functional design was not beautiful and this is how a majority of the population views design. Things that look nice but don’t really work. Design, however, is not really about aesthetics. It is a problem solving discipline that makes products and services easy to understand, usable, attractive and noticeable. But when things are working, nobody thinks that they’ve been designed. Swiss Army Knife.

Turning to the word service we like to think that service is something somebody else does for us. Be it a physical service, like bringing food to the table in restaurant, or a virtual service, delivering video-on-demand at the push of one button. In fact, I would hypothesize that service design comes from software and user experience design: we have all used bad websites and wondered aloud why it takes 25 clicks to get to the right information when other sites provide it on the front page. Interface designers learned how to fix things. Now this skill is being applied to the real world.

Either way, service is what most of us now buy and sell, because making things is handled either by machines, or companies in China. Because making things has become easy, how you deliver the things you make to your customers becomes a key point of differentiation. For example IKEA has long had instructions for assembling furniture that don’t include any text whatsoever. Apple makes the iPod, but it is a challenge to find people who’ve actually read the instructions for using it. Each push of the button or swipe delivers the next step’s instructions without the need to refer to a complex manual. Contrast this with the incomprehensible operating menu of a Nokia phone. It is frustrating for people not to be able to understand and for years, it was people that thought they were dumb.

And this is the point where service design comes in – the realization that as people we’re not dumb, but we just hate standing in line, waiting on the phone, or trying to program a DVD player using the remote control to type text! The big problem with services is that the people providing the “service” usually can’t see what’s wrong with it, because they know how things work. But for anyone arriving in Tallinn by ferry the first time, it can be quite disconcerting to step out of the terminal and see a sign ‘centre’ that directs the pedestrian accross 5 hectares of undeveloped wasteland littered with garbage, without a single additional sign before they actually arrive in the city centre. For the person putting the sign at the ferry terminal, it was probably difficult to understand why you need a sign in the first place. The city is over there, what’s the problem?

Once many-many years ago I had to learn Soviet signs. It was back in 1994, Estonia was truly post-Soviet and I went to the local pizza joint to get something to eat for lunch. It was summer, the door was open and a chair was placed in the doorway. Being practical, Western and hungry I stepped over the chair just to be shouted at, ‘that don’t you understand that we are closed because of a broken water pipe?’ I wonder what they place in the doorway if there’s no electricity?

A case on TED illustrated the need for good signage as part of a good service with the example of the new Terminal 5 building in Heathrow. For anyone arriving for the first time it was a challenge to find the train. The first sign you saw stepping out the gate was ‘trains to central London’. This sign was, say, yellow. After walking for about 200 feet, which in a building is quite a distance, you were confronted with the sign, now purple, ‘Heathrow Express’. This all makes sense to people who know, but a first time visitor is very confused, and stressed and quite possibly even pissed off.

However, private sector endeavours at confusing consumers pale in comparison to what the public sector can achieve. Government services are very difficult for human beings to understand. The first problem is that the language used by public services is very strenuous to comprehend. Secondly, information is not organized by how people look for it, but rather by which department and subsection is responsible for administering it. Thirdly, information entered in one database is proprietary to that department and section and is not shared to the other department that also needs it and therefore instead of making the paper run around, it is the person getting the ‘service’ that does the running.

Now, admittedly, Estonia is in by far better shape than most countries in delivering easy to use government services to the public. However, it is still department by department and often mystifying why simple things have to be so difficult. Each ministry has a different web structure, completely un-intuitive web address and confusing navigation. Contrast the simplicity of Apple products, which are guided by the principle that if you know how to use one, you can use them all while government websites require users to relearn navigation every time.

Often the reasoning behind decisions is incomprehensible and there is no way to change people’s minds. A few years ago, a colleague and I had to run a branding seminar and workshop in the middle of the country, in a very nice but quite out of the way location. To get there we obviously looked on the map and asked questions of our hosts, who assured us that there were signs on the way. Oh, and by the way, this was tourist attraction, therefore how to get there was an important issue. So off we drove and once we were getting close we started to look for signs telling us that we were going the right way. There was one! After, what seemed to be too long a distance to be quite sure - did we miss the turn-off - we saw another giving us this comfortable warm glow that we weren’t going to be late and then, again, nothing for quite a while. So we came to a fork in the road and there were signs there, but nothing that helped us. So we inched out on the road ahead and then saw the sign we were looking for pointing us right. But to see the sign we had already to have gone right so it was in a fairly pointless location. Anyway, we drove on and surprisingly enough arrived in the right place at the right time and then took the opportunity to say immediately to our hosts that, ‘guys, you need more signs. It’s very easy to get lost’ to which they responded, ‘yes, we know. But the highway department said that they won’t allow more roadsigns, because there shouldn’t be more than 2-3 per destination in this area.’ Period. There was probably a rulebook that said, ‘signs is what people expect us to put out there...’

I would argue that the problem that service design solves is, that people hate not understanding. We hate not knowing why things are as they are and what will happen next. Lack of information when we want it is very frustrating and off-putting and, given the chance, we’ll turn our back on what we don’t like. In a first aid course that I took in Canada, there were many rules and procedures for saving people’s lives. But after making sure that the person will survive the main rule was, ‘treat the patient, not the disease’. That means that you have to talk to the patient, tell him what you are doing and why. As anybody with children will appreciate, having a doctor that talks to the child in a way that is understandable to the kid makes the treatment easy and quick. But when the pediatrician is full of himself, and talks medical to make everyone feel stupid as well as telling the parent to ‘hold that kid down, or I can’t do my job’ is no way of improving someone’s health. And being powerless in situations like this really pisses people off. We don’t understand what’s going on and why, and we can’t influence the situation.

Now when you’re at the doctor’s you’re probably not going to get up and leave, just because the doctor’s a bit of prick. But if it is something you are paying for, then this just won’t do. A restaurant will never see this customer again, and that car dealership with the snotty salesmen selling zeir exklusiv automarke won’t sell very many of them. But these are all individual services of the person-to-person variety.

What happens when you have to serve thousands or millions of customers and there is a need to standardize? Financial services try to segment customers and invariably end up putting everyone in the wrong box because they don’t have data on the motivation for economic behaviour – they just see the results of behaviour. Or telco’s treating almost everyone like computer illiterates instead of helping people to become literate. McDonald’s did service design 50 years before the term was coined, and is still one of the best companies in delivering a consistent brand experience. We know what to do, why and how. I mean, their business can be described as ‘pay up front, carry your own food, eat with your hands and clean up after yourself.’ Not exactly the classical restaurant experience everyone is looking for but we like it, because we understand how it works.

Signs. Predictable behaviour. Clear instructions. Understandable rules. Whether it is government providing critical services or the hairdresser that will be back in 15 minutes, we want to understand. Service design, in my opinion, is providing the means to customers and citizens of understanding how and why things are the way they are.

And this is the challenge for companies and organizations and governments. We are used to keeping things mystical, because explaining everything properly takes a lot of time and effort. Because that also means we have to simplify and this need often involves the whole company and we can’t really do that now, because companies are built in departments where inter-departmental projects are too complicated to bother with. And for some, helping people to help themselves is a sure fire way of eventually getting fired, so there may be some disinterest there. In the long run, however, I think the efficiency gains that companies are looking for and the financial savings that governments desperately need makes a clear case for creating services and providing the information that allows people to help themselves as much as possible. And more informed, motivated customers are better customers, because they actually want to buy what you are offering instead of ‘just looking’, because they aren’t sure of what you are selling. Service design, as a tool pays for itself by simply making things more efficient, aligning customer needs with company motivation, and providing the information background necessary to make right decisions.

Service design is the future. But it was the future already thousands of years ago when someone in China said, “Tell me and I will forget. Show me and I may remember. Involve me and will understand.”

Service. The only remaining source of competitive advantage

Over the past few years, we developed our own vision of branding. We believe that branding is about staff motivation and empowerment, how this relates to good service and how, increasingly, the delivery of a positive customer experience will be a source of competitive advantage. In fact – we stated that service delivery will be the most important differentiator in a competitive environment where everything else can be quickly copied. Copying happy staff that delivers the service, however, will always be difficult.

Our vision has just been confirmed by research sponsored by BDO in "Service 2020: Megatrends for the decade ahead," compiled by the Economist Intelligence Unit. The research clearly lays out the forces stressing the importance of service, trends that need to watched and the desired outcome that companies must strive for.

The key will always be staff and it is our experience that communicating with staff is perpetually on companies' to-do lists but rarely gets done. Building a company that delivers an outstanding customer experience through service is done through motivated and empowered employees. This, for obvious reasons, will always cost a bit more and require human-resource management to be one of the priorities company management, instead of something delegated to the third tier of responsibility. By focusing on employees, and getting them to fully understand, and deliver, what the company is about, is the best means of building a strong brand, with staff as the main spokespersons.

Undoubtedly, the best service is delivered by the owner of the business. A family run hotel will always be hard at work providing a better service, because everyone knows and understands where the money comes from. But often the shop floor employee at the supermarket is be so far distanced from responsibility and where the money comes from, that s(he) cannot recognize what is good or bad service and what is making customers upset. This disconnect between the mission of the company and the staff that are supposed to deliver it is a fundamental flaw in organizations, that is not being addressed. After all, it is easier and more manageable to install a new CRM system than it is to train and motivate staff.

Building a strong company brand means making staff fans first. Secondly, it means delivering to customers a service that allows staff to shine. All it takes is hard work with people - complicated, emotional, individual and temperamental people.

The Perils of Lifestyle Branding

Extending a brand beyond the borders of your product category has a lot of opportunities. Here's a study that brings out some substantial threats of such an extension - cross-category competition for one.

Why an e-mail can go sour in no time

Here's a brief article on the hazards of electronic communications. I've had some occasions myself when exchanging e-mails has made things much worse instead of solving them - although that was their intension.

Not being a big fan of emoticons (and still opposing over-using them), I read this piece through carefully.

Innovatsioonist ilma Apple'i näiteta

Brand Manual on pea kaks aastat aidanud ettevõtetel parandada oma konkurentsieeliseid. Üsna pea tajusime, et vastuseis meie mõtetele tuleneb sellest, et brändingu nime all on ettevõtetele müüdud logo joonistamist ning sisuline töö on jäetud tegemata.

Sestap panime kokku oma koolituse, Branding ABC, kus lahkasime sõnastatud konkurentsieelise temaatikat. Oleme koolitust edukalt läbi viinud mitmekümne ettevõttega ja soovitame seda endiselt oma tulevastele klientidele kui ka kõigile, kes tahavad lisaks teoreetilistele aruteludele ka praktilist nõu saada.

Nüüd võtsime oma fookuse alla innovatsiooni. Kuidas toimub uuendusprotsess, mis seda takistab ja millised on universaalsed tööriistad selle läbiviimiseks. Me ei räägi radikaalsest innovatsioonist, leiutamisest, me räägime astmelisest innovatsioonist. Me räägime sellest, miks ettevõtted muutuvad kasvades innovatsioonivaenulikuks ja kuidas nende juhtkond ei saa sellest enne teada kui nende naftaplatvorm juba põleb.

Eelmise aasta lõpus viisime oma klientide seas läbi küsitluse, kus mitmed kliendid heitsid meile ette jäärapäisust. Samas toodi meie põhimõttekindlust välja kui tugevust, mis võimaldab kord ette võetud tee lõpuni käia. Kui soov on kaalust alla võtta, siis aitab sihikindel treener.

Seesama oskus minna oma ideede elluviimisel lõpuni välja on see, mille oleme nüüd vorminud päevaseks koolituseks, mil nimeks Innovatsiooni ABC. Kavatseme selle ka materjalina üles riputada, kel aga suurem huvi, võib saada osa meie testkoolitusest, saates meile kirja.

Üks märkus veel. Oleme oma suhtluses läinud üle inglise keelele puhtpraktilistel kaalutlustel. Meie teenuseid vajavad Eesti miljonist elanikust 1%, samas on meil maailmas miljon potentsiaalset klienti, kellest vaid 1% räägib eesti keelt.

Innovate or die: but how?

Image courtesy of 15/30 Research

Companies that continuously come up with new and exciting stuff have one thing in common: little management and lots of leadership. The company has a goal, everyone knows what the goal is and does their part, in helping the company achieve that goal.

The cumbersome, not-fun, uninspiring company has a plan. Everyone in the company has a job to do. "Your part in the great plan is to serve customers water." Management has reduced every task to a manual. There is a clear hierarchy and everything is being measured for efficiency. Redundancies are quickly eliminated. People work to prove their importance for the plan, but no one knows what the goal is. Turf wars are more important than customers.

The former company innovates daily. The latter company optimizes daily.

The danger to the former company is to become like the latter company. The latter company is likely to become extinct. You can blame management for both scenarios.

Managers optimize. Leaders empower. Innovation requires both, but if management and optimization becomes too important then innovation will disappear. Innovation requires that people are motivated about their jobs and that they continuously think about what could be done better AND that they have the power to implement their ideas. Management doesn't like unstructured, unplanned activities because they are inefficient.

People having inspiring ideas are inefficient, because they won't have the ideas on schedule. That messes up the whole production cycle. Therefore if the manager has to approve a budget for the engineers to come up with improvements but he's not sure that the engineers will be on time or on budget, then it's easier to say no to the whole thing. After all, no manager has been fired for reducing risk. Of course, in three years time, when the company is about to go out of business because there hasn't been a new idea for 10 years, taking risks will seem awfully safe.

Innovate or die: but how?

Innovation can be learnt. Innovation depends on people who can be empowered. Innovation depends on communication and trust, which can be built up again. Innovation depends on leadership, the right of which can be earned. Innovation cannot be managed, it must be allowed to thrive. Innovation pays off in the long-term. Continuous innovation pays off continuously. Optimization pays off in the short term and over time, less and less.

We developed Innovation ABC following the success of our Branding ABC course. Whereas Branding ABC looks at how brands are built in companies, involving the whole company then Innovation ABC looks narrowly at the process of coming up with new ideas.

• How to build up a company structure that supports innovation and nurtures it.
• How to keep the business focus on the idea, not the method of execution of the business plan.
• How to motivate people and how to work with them so that innovative ideas just happen.
• And most importantly, how to handle the fuzzy front end of innovation projects, where you don't know where you're going, how you're going to get there and how it is all going to end.

For more information check out our website.

Merry Christmas Experiment

A phone call from a confused client inspired us to make public, and thus conclude, our little Christmas card experiment. We had almost completely forgotten the whole thing, since it all took place more than 6 weeks ago. It appears, however, that due to the "good" service of global postal companies there is still plenty of room for late Christmas greetings and pleasant surprises. So be sure to check your snail-mailboxes every now and then.

On December 13th we posted three different postcards (see the winter magic above) with Brand Manual's best wishes to our clients and friends from 10 different locations all over the world: Estonia, Russia, Portugal, USA, Malaysia, Australia, United Arab Emirates, Sweden and God knows where (we really don't remember the last two locations ;). So it was a random lottery for the recipients, when and from where they would receive their three cards, and apparently it is still happening, as a card from UAE finally made it to one of our Estonian clients 2 days ago. Only to be followed by another one from Kuala Lumpur that made it to Tallinn today. Who knows how many cards are still on their way or have been lost on their quest of getting together the big picture.

For those that are still waiting for their set of cards or want to pay their tribute to the ones that went "missing in action", here's copys of all three of them.

PS. How did the 4 of us manage to post cards from 10 different locations, thousands of miles apart, all at the same time? Send us a postcard when you figure it out!

The future of transactions

Service design has a lot to do with future scenarios. A few months ago we developed the initial identity for ParkNOW!, a pay-by-cell phone parking payment operator in the US. During that project we talked a lot with them about different payment methods, and NFC (near-field communication) got mentioned too. In fact, all major mobile phone manufacturers have white papers on it and are working on making the technology usable.

NFC enables devices to talk to each other when they're close enough. It can let you share contacts, pictures or whatever data you want. The killer app though, is payments. Using your mobile phone (cell phone in the US) as wallet. In short, this will revolutionize monetary transactions in near future. And as always, for existing industries (banks) it will happen faster they can say "return on investment".

A few days ago, Financial Times published an article saying that Apple would incorporate NFC technology in their iPhone 5, which is due this fall. Surfing around the web seemed to confirm the story, because this week has seen a flurry of articles about the iPhone 5 and iPad 2 incorporating NFC. The really big deal is this, however: Apple has through iTunes credit card information on over 100 million people. This makes NFC not only a cool technology, but for Apple customers also an immediately available payment system with enough people tied to it, that for retail operations this can represent critical mass. Retail outlets therefore, will be highly incentivized to install NFC payment terminals in store. (Starbucks has, in fact, aldready developed an app for the iPhone to enable their customers to pay faster using their phone.)

This is what banks are charging for. (Image: Wikipedia)

The real impact of NFC payments, digital wallets and eventually peer-to-peer transactions using NFC will be felt in the bank. Banking relies on charging incremental fees from customers who are moving their own money around. Additionally banks earn interest lending out people's money. Purely digital money, manipulated directly by customers themselves, without a third party being involved, can represent a paradigm shift in transaction infrastructure.

Money, after all, was invented to facilitate trading. It was more effective than barter, because the relative value of each item was difficult to gauge. Money provided an independently assessable equivalent that was a lot cheaper to manage than barter trades. Today, money is everywhere. However, in reality money is like fixed line telephony. Developing nations don't bother to install telephone lines – they go directly to mobile phones. Similarly, the internet is not really being accessed by computers in developing nations but is used on smart phones, which are cheaper and simpler to use and need less fancy software. What if money, like fixed line telephones, is a legacy system that can be skipped?

In Africa, a mobile operator enabled their customers to send and receive money via an SMS system. There were few banks, with even fewer branches in rural areas making it difficult for people to trade with each other except by using cash. Credit cards aren't available and even if you've got one there is no guarantee that the store will accept it. This lead Safaricom to develop MPESA, a micro-payments system and Wizzit to provide mobile banking. From being on the fringes of the banking business, they have now effectively changed consumer's understanding of what banking is, and are leading the debate for the whole industry.

For early adopters, PayPal has introduced the mobile-to-mobile payments app. The talk of "can it be done" is already yesterday's news. With Apple's client base we are also over the "are there enough people to use it" question. So banks, thanks for all the fish.

Change Hurts

There has been a lot of discussion lately about changing identities of the world-famous brands. Well, the fuss has always been up in forums, but with social media gaining more public attention some logo redesigns have become matters of global importance. Namely Gap, Starbucks, Tropicana.

John Nunziato, the author of the featured article tries to cool the (often anonymous) crowd down. Changing a logo is influenced by so many factors that the "like-unlike" scale is just not a sufficient judging criteria. Critics often (mostly) have no clue what's behind that symbol replacement. Getting even the smallest amendments through is a long and painful process, especially in big corporations.

The situation here is Estonia is often quite the opposite, paradoxically. Marketing departments of locally famous brands quite too often regard radical identity change as a remedy against business slowdown. We at Brand Manual have a few examples of projects that start with a "we need a new logo" brief - and ending with a thorough fix of their current identity. You get bored by your face long before your customers do - that's the mantra we keep repeating. Look at Budweiser, it has kept the same appearance for the past 140 years - and is still one of the greatest brands there is (you have to admit that, even if you don't like the beer). I struggle to find a good domestic analogue, though.

The bottom line - just changing your brand's identity wouldn't improve your business, period. But when your offer has really risen to the next level, then a logo refreshment can be a pretty effective way of getting attention. Especially if you have fans (and aficionados are attracted by great service, not a logo).

Brave new year

Last year was different. We saw the rise of the iPad and the smartphone reigned over the mobile phone. Making websites has changed into creating content. Media is no longer the message, being on Facebook is not a strategy. Corporate and governmental systems are in disarray, as for the first time in history people can and do question government authority. Are your procedures reasonable? Is you profit margin reasonable, is it good for the community or the environment, is there another easier way of doing things? Power is with the people, not in the system, because now people can build systems of their own.

Brand Manual has acted as guinea pig for it's whole existence. We started this company to prove that quality can be sold. We preached branding as something companies do internally and that "the business idea" can never be "to make profit", but has to offer something valuable to the customer. We find it really tempting to grow in size, using the business model of design or ad agencies. But that would not help us achieve what we are aiming for, which is to become an change agent inside companies. It is easy to give good advice and leave, but our goal is to create lasting understanding and value through well designed products and services and a clearly formulated business proposition.

Now to the topic of the day: our website. We wanted to create something intuitive, something that works the way people surf the net. Jumping from interesting bit to interesting bit with no dominating structure impeding progress. Our previous site was a linear presentation, this one has no structure. Secondly we dropped Flash because of the personal grudge Steve Jobs has against Adobe. We don't really care who's right and who's wrong. We just like it when things work on iPhones too. And there's no mouse-over, because on touch screens that function doesn't really exist.

The problem we couldn't solve is how to make people read the copy, instead of just looking at the picture. The most valuable part of our work is not the graphic design, it is the thinking behind the design that matters. But without pictures the site would be a bit dry. Enjoy!