There are just two fundamental building blocks for business success, and neither involves cost-benefit analysis, spread-sheet forecasting, budgeting, NPS or any other fashionable metric that purports to measure efficiency. The two cornerstones on which a successful business is built are simply customers and creativity.
Kahn (2015)[1] has identified different ‘epochs’ in the type of relationship established by any business with its customers. This evolutionary approach describes progressive phases in organizations’ orientation towards its customers and marketing strategies. Importantly, our behavioural psychologists at IB/CP can also demonstrate that each phase is implying simultaneous changes in the companies’ cultures.
The phases are:
- Product Orientation: companies produce goods and services and compete on quality, price and other product characteristics.
- Market Orientation: a differentiation in customer needs is recognised and demographic-psychographic segmentation allows for the development of different marketing-mix bundles.
- Customer Experience: this phase recognises that it is important for customers to have a positive experience when interacting with the business.
The evolutionary progress of Kahn’s three phases is made possible by advances in technology and the creative use of it to establish a relationship between the business and its customers. For example, database marketing only became possible in the 1980’s with the introduction of office computers. By the mid-1990’s CRM (Customer Relation Management) is born. Companies can now collect and analyse large amounts of data. Organizations are now ‘interacting’ with customers, rather than just ‘transacting’.
Businesses can analyse their customer behaviour in terms of sales, communication channels and ‘clicks’. A single platform can integrate business KPI’s with customer activity in the cloud, on the mobile and ‘in-your-face’ social media.
However, in the past five years, it has become apparent that although CRM was designed and installed as a ‘customer-oriented service’, in practice, it provides more benefits for the management and partial solutions to internal organizational problems. CRM is no more than a sophisticated piece of software, a process and piece of technology that cannot interact with customers in any meaningful way.
In an effort to personalize this process, companies have increasingly attempted to shift to a process called CEM (Customer Experience Management). “Customer experience management is not just repackaged CRM; the internal focus of CRM often left out the consumer in the cold. CEM marks the shift from internally focused solutions to solutions that focus externally to deliver superior customer experiences[2].”
In addition to this shift to and external (customer) focus, CEM in practice is about collecting as much data as possible about individual customers. Companies monitor and track all interactions with a customer during the duration of their relationship. This involves the strategy of building around the needs of individual customers[3], using integrative technology that can capture VOC experiences at key touch-points of the customer journey[4].
And yet, despite this massive effort to collect mountains of data, the employment of the latest technology and a sworn dedication to the customer, recent research exposes the nasty truth; CEM in its present configuration is not working! Although 80% of businesses included in the study offered ‘great customer experience’, (through CEM), only 8% of customers expressed satisfaction with their experiences[5].
What is wrong? What is still missing?
As our brief history of the relationship between businesses and their customers outlined, the way customers have been treated has gradually changed over the past few decades. The customer has moved from “always being right”[6] to a position where they are always being monitored and scrutinised. The latest CEM technology now focuses on the ‘customer experience’ and we accept that without even questioning what is meant by experience. Data is collected from various touch-points using the latest mobile or SaaS technology using scales of satisfaction, recommendation or behavioural intention etc.
It is only recently that the proponents of CEM have begun to consider the possible important role of emotion in the area of customer experience, touch-point analysis and journey-mapping[7].
In organizations, emotion is usually excluded from conversation and consideration. It has no place in the scientific-rational world of business:
“Interestingly, some authors (e.g. Paglia, 1990) have associated Apollonian behaviour with males e.g. rationality, reason, solidity and goal-directedness, whilst females are associated with emotionality, and unconstrained non-rational behaviour.
With the existence of this type of self-delusion and stereotyping, we can perhaps understand why the Western Business-World has a male dominated, ‘scientific’, Weltanschauung. It is rigid, tight-lipped and emotionally controlled. It is almost afraid of emotion and in this suppressed-world of ‘homocracy ’; anything challenging the traditional rules, regulations or routines is viewed with suspicion; creativity is seen as ‘abnormal’ and ‘alternative’ thinking deemed a heresy.”[8]
However, all the latest research in the psychology of decision making (e.g. Kahneman, 2012[9]), points towards a human mind that is bicameral; an information processor that is at the same time capable of rationality and non-rationality, of being reasonable and impulsive, of being ordered and chaotic, of reacting stolidly or ecstatically!
Most of us ‘know’ this; in any given circumstances, we are capable of both kinds of behaviour. However, the unpalatable news is that for almost 90% of the time we are acting under the control of our subconscious, the non-rational part of our brain, and our emotions have a correspondingly large influence on our thinking and behaviour.
The behavioural psychologists working at IB/CP have accepted this counter-intuitive characterization of human behaviour, and have developed their research and consultancy work accordingly. We still retain traditional metrics (e.g. Likert scale questionnaires etc.) for measuring the ‘rational’ behaviour of consumers and employees/managers, but we have realised that it necessary to go beyond these in order to pursue the true triggers and levers of thinking and behaviour. Increasingly, it is becoming apparent that emotion plays the central role in influencing decision making, the direction it takes and the momentum that it possesses; usually we label it “motivation”.
Applying this to customer experience, we can see that the signification of any experience is emotion. Think about a recent experience of your own – in fact to recall any incident, it must be associated with some kind of emotion, good or bad. For instance, when did you last use a pen? Was it to sign a cheque, a contract or a Will? The point is that to recall any experience requires an associated emotion, indeed, to have an experience requires an associated emotion. Emotion is the ‘currency’ by which humans give meaning to their lives. The grandfather of psychology, William James, commented “how pale and colourless” human life would be in a world consisting of purely perception and cognition, “without the warmth of human emotion”.[10]
Understanding and ‘capturing’ emotional experiences is therefore central to understanding consumer behaviour. At a very fundamental level, humans are designed to want to seek out and repeat pleasant experiences. The opposite is true for negative or unpleasant experiences; we are designed to avoid these and try not to repeat them (sometimes unsuccessfully – “Never again!”). Just how much ‘BIG DATA’ do you need to collect to discover this? The message is straightforward: make the customers’ experience of dealing with your business a pleasant one, and they will stick with you and recommend you to others.
Oh! And by the way before you sign-off would you mind completing this 15 page ‘happiness questionnaire’ and the NPS scale, and…..and……? Just to enhance your experience with us!
On the second subject in our title, we can all agree that creativity is essential for organizations. The majority of Management books tell us that in today’s ever-changing business environment, flexibility, adaptation and innovation are increasingly important. Here we examine the role that emotion plays in creativity.
Earlier, we characterised the majority of organizations as being almost ‘autistic’ in their treatment of emotion. The culture of most businesses is ‘scientific’; decision making is deliberate and rational; companies are run to maximise metrics such as NPS, KPI’s, Cost-Benefit ratios etc. It is therefore not too difficult to imagine how anything challenging these established values and routines would be dealt with. There would be a certain amount of apprehension, hesitation and reluctance; the indecision and questioning being rationalized as ‘reasonableness’, ‘sound judgement’ and ‘good sense’. There would be a ‘rallying of troops’ to protect the status quo, the ‘old guard’ would feel the need to defend both public reputation and private self-esteem. Note how in this process, ‘rationality’ is used as a cloak for purely emotional responses! And these emotional responses are delaying and denying change because for most people it is perceived as a negative experience; creativity is threatening; it is by definition abnormal, peculiar, strange, and ‘out-of-line’.
Creativity is an elusive concept. We think we know what it is, but a glance through the textbooks shows that there are numerous definitions. Here are a couple of examples:
“Creativity is any act, idea, or product that changes an existing domain or that transforms an existing domain into a new one… What counts is whether the novelty he or she produces is accepted for inclusion in the domain.” – Mihaly Csikszentmihalyi, Creativity – Flow and the Psychology of Discovery and Invention
“Creativity is the ability to find new solutions to a problem or new modes of expression; thus it brings into existence something new to the individual and to the culture.” – Dr Betty Edwards, Drawing on the Right Side of the Brain
“I define creativity as the act of turning new and imaginative ideas into reality. Creativity involves two processes: thinking, then producing. Innovation is the production or implementation of an idea. If you have ideas, but don’t act on them, you are imaginative but not creative.” – Linda Naiman, Creativity at Work
“Creativity is the process of bringing something new into being. Creativity requires passion and commitment. It brings to our awareness what was previously hidden and points to new life. The experience is one of heightened consciousness: ecstasy.” – Rollo May. The Courage to Create
The nature of creativity places it alongside many other ‘slippery’ concepts used in psychology, like intelligence, personality and culture. We ‘know’ what they are, but each is terribly difficult to pin-down with a scientific definition. That is also a fundamental problem for creativity, because it is so difficult to define accurately, it is exceedingly difficult to measure.
This difficulty becomes an almost impossibility when considering what modern organisations are like. It will surprise few readers to learn that most; if not all business environments are complex systems. Consequently, what goes on inside and between organizations and their customers is more easily modelled and understood using complexity and chaos theory[11].
Seen in this light, ‘creativity’ is an emergent property from a complex system. Emergent properties come into being from the interaction of the system’s components. The system changes in a qualitative manner as well as quantitatively. The whole is different from the sum of its parts. In other words, ‘creativity’ can emerge from and organization even when the system’s individual components show no signs of ‘creativity’ themselves!
“………. the whole becomes not merely more, but very different from the sum of its parts.”(Anderson 1972)[12]
Our next question is to consider how can ‘creativity’ emerge from an organization?
Organizations should be collaborative enterprises. Despite the all-pervading hierarchical structures of most businesses, it is important to remember that a creative culture will only develop if different people participate and are allowed to make their own creative contributions.
The manager’s role in developing and sustaining a creative culture is crucial. The manager must have a general sense of direction for the business, but be able to swallow pride, status and any sense of being the most powerful, most knowledgeable etc. He or she must be prepared to ‘let go’ completely and let others have the lead; let others have their say; let others make decisions and above all, let others make mistakes without fear of retribution.
A manager who insists on too much control will gradually squeeze-out any spontaneity from the organization. Too much control means too much predictability, much less individual freedom and the stifling of any creativity. Employees become reactive; waiting for orders and responding to instructions. The individual energy, proactivity and self-motivation are eroded.
The truly inspirational leader who can manage creativity has this unique facility of a clear vision and simultaneously the ability to allow changes in emphasis or direction without feeling threatened by change.
The best way for a manager to kill creativity is by trying to be the ‘expert’ in all situations; “my way is the way”.
Here are some other creativity-killers that you will recognise:
- Never talk to your employees on a personal level.
- Always pretend to know more than anybody else.
- Make sure that there is a lot of form filling e.g. “How many creative ideas did you have last month?”
- Run daily checks on the progress of everyone’s work.
- Police your employees by every procedural means that you can devise. Insist that they stick to the rules and fill in many forms that need to be signed by almost every senior manager in the organization.
Creativity is only likely to emerge when there is a high level of diversity and networking between work teams This prevents the development of ‘silos’, where the mentality, vocabulary and behaviour becomes very much ‘us and them’. Diversity is challenging and disruptive but is essential if different ideas are to emerge. Creativity has its best chance of emerging from a conflict situation where two different sets of values ‘face-up’.
All of these factors add-up to a mighty challenge for the managers in an organization. The issues range from those that are individual such as self-perception, self-esteem and the ‘image’ of being a manager. There are the connected issues of power and status gradients within the organization and aspects of the culture that implicitly value certain people differently to others.
Here we can identify personal issues as well as problems at an organizational/systems level.
Central to the question of how creativity can be ‘sponsored’ within an organization, is the way in which emotions are handled by individuals and also collectively at an organizational culture level.
As pointed out earlier, for the majority of businesses, emotion is a sign of weakness and unprofessionalism. Emotions are something to be left behind in private life and not allowed to contaminate the workplace. This is a ridiculous position to adopt because it is impossible to separate emotions from our psychology – organizations are full of emotion: boredom, excitement, anger, fear, satisfaction, pride, shame, feelings of inadequacy, and even sexual urges. These cannot be ‘left at home’; they exist in the workplace; and the more successful managers (and organizations) recognise this and learn to handle emotions in a more controlled manner.
This ability to recognise and control emotions has been described as Emotional Intelligence[13]. Research has shown that those who have high levels of emotional intelligence are generally happier with themselves, suffer less stress and are able to establish more effective relationships with others. Within organizations, emotional intelligence has a positive effect on leadership, team success and employee performance. It is also highly correlated with effective leadership and creativity[14].Research into Emotional Intelligence shows unequivocally that emotional management and understanding the emotions of others are positively related to innovation and creativity in the workplace. Just being in a happier environment promotes creativity and innovation[15].
Many of the dimensions of Emotional Intelligence overlap with the characterization of ‘Authentic Leadership’[16]. Authenticity relates to the way in which individuals and organizations recognise and deal with emotions. If emotions are denied and dismissed as ‘fluffy’ and not business-like, they will make themselves known in many recognisable ways e.g. Low engagement and motivation, lack of creativity, lack of loyalty, customer and employee churn, low satisfaction, poor performance etc.
As Kahn (2015)[17] points out, the ultimate objective for a business is authenticity:
“This is the top maturity stage for companies. Products and service emerge from the real soul of brand and connect naturally and on a long term sustainable basis with clients and other stakeholders.” (Kahn, 2015).
Our emphasis should focus on ‘soul of the brand’. What are the values and reasons for the business existing? Ultimately, these are the things that will attract and retain employees and customers.
[1] https://marketing.wharton.upenn.edu/profile/200/
[2] http://www.crmsearch.com/customer-experience-management.php#sthash.Z3AhMnt5.dpuf
[3] http://www.sas.com/en_us/insights/marketing/customer-experience-management.html
[4] Rae, (2006). The Importance of Great Customer Experiences. Business Week.
[5] James Allen, Frederick F. Reichheld, and Barney Hamilton (2005). The Three ‘D’s of Customer Service. Harvard Business School: http://hbswk.hbs.edu/archive/5075.html
[6] https://en.wikipedia.org/wiki/The_customer_is_always_right
[7] http://innovationbubble.eu/the-consumer-psychology-model-of-customer-experience-management-cem/
[8] Neural Network Analysis in http://www.amazon.com/non-significant-Journal-Business-Consumer-Psychology/dp/0954361636
[9] Kahneman, D. (2012). Thinking Fast and Slow. Penguin Books, London.
[10] William James: The Principles of Psychology, Vol. 2, 1890
[11] Lloyd, H. (2013). Some thoughts on Chaos and Complexity in the areas of Business Psychology. The non-significant Journal of Business & Consumer Psychology, Vol. 2.2., Autumn 2013, p.98-112
[12] Anderson, P.W. (1972), “More is Different: Broken Symmetry and the Nature of the Hierarchical Structure of Science”, Science 177 (4047): 393–396.
[13] See: Goleman, D. (1998). Working With Emotional Intelligence. New York, NY. Bantum Books.
[14] Zhou, J. and Georgia, J. M. (2003). Awakening employee creativity: The role of leader emotional intelligence. The Leadership Quarterly, Volume 14, Issues 4–5, August–October 2003, Pages 545–568
[15] Ciarrochi, J., Forgas, J. & Mayer, J. (2001). Emotional Intelligence in Everyday Life: A scientific inquiry
[16] George, W. (2003). Authentic leadership: Rediscovering the secrets to creating lasting value. San Francisco: Jossey-Bass.
[17] https://marketing.wharton.upenn.edu/profile/200/