DIGITAL MARKETING UPTRENDS





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Y&R has been awarded a total of 98 Lions at this year’s Cannes Lions Festival of Creativity. This includes the agency’s first Glass Lion and a Grand Prix in Mobile

Y&R’s wins included its first Glass Lion, 1 Grand Prix, 12 Gold, 30 Silver and 55 Bronze. The agency was also Shortlisted 195 times.

 

Key highlights for Y&R and VML this year include:

  • The global network won in 36 offices, 26 countries and across 20 categories.
  • Several firsts for the network: DY&R Tokyo was awarded the first Glass Lion for Tokyo and for Y&R, for Recruit Lifestyle Seem “The Family Way.” The campaign also won a Grand Prix, Gold and Silver. VML won the network’s first Entertainment Lion for Absolut Vodka “One Source.” Advantage Y&R in Namibia brought home the country’s first shortlist for Greenpeace “Trash Masks.”
  • Y&R Madrid was the most awarded agency in its market.
  • Y&R and VML were awarded 14 Lions in Africa, and won more Mobile Lions than any other agency on the continent.
  • Y&R New Zealand’s “McWhopper,” one of last year’s most awarded campaigns, returned to Cannes this year to earn a Gold Creative Effectiveness Lion.
  • VML won 17 Lions in North America, including Wendy’s viral “#NuggsforCarter” and “Twitter Beef.”
  • Y&R Dubai and Y&R’s New Moments in Belgrade collaborated on “One Book,” for the Interreligious Council in Bosnia and Herzogovina. Researched by Christian and Muslim theologians, the campaign brings together similar passages from the Bible and the Quran to show that our common beliefs unify us more than our differences. It won an extraordinary five Lions, including a Gold for Design.

“We are very pleased that, for the fifth year in a row, we have had a strong performance at Cannes, multiple firsts including a Glass Lion, another Grand Prix and great work created for so many major brands both global and local. This year, almost every one of our offices submitted work to Cannes — which we think is not simply a testament to the great creativity that is flourishing in all our offices around the world, but also a reflection of the great support we have from clients to courageously create work that continues to meet the standard our founder set to Resist the Usual,” said Tony Granger, Y&R Global Chief Creative Officer.

David Sable, Global CEO of Y&R said, “I am once again proud of our network and thrilled to see that 26 countries contributed to our standing among the top global networks. Y&R has long believed that a global network’s strength comes from its deep roots in its markets matched by a vision and mission that is shared globally and supported by the common tools, resources and technology around the world. It is this dual-pronged strategy that helps us deliver work that is not only recognized for its creativity but also for its effectiveness. Strong performances at Cannes and Effies in 2017 give our clients the best of both worlds.”

There’s a continuing digital disconnect in corporate marketing departments—and a widening digital divide as well.  Many companies have refocused their marketing functions on a digital or an omnichannel approach. But too many appear to be spending more on digital without building up the capabilities that produce bang for the digital buck.  Advertisers ascribe high importance to such capabilities as digital- content development and to fast-rising digital channels such as mobile advertising. 

The current situation presents both sides of the digital-marketing partnership with questions about how they should work together going forward. Advertisers, in particular, need to build up their digital capabilities in order to improve their own performance and guide their agencies’ work effectively.

Spending on digital channels continues to rise. Global spending on digital advertising is $250 billion. Digital channels now represent a third of all advertising spending worldwide; this year, they will overtake TV, driven by the strong growth of social media and video. Advertisers are buying more digital services from agencies: digital’s share of agency revenue passed 60%. And agencies are responding to the demand. US agency employment reached its highest point since the dot-com bubble of the late 1990s—almost 300,000 people.

Digital and mobile channels and advanced marketing techniques, such as digital targeting and data analytics, are reshaping consumers’ purchase pathway for companies in all industries, from travel and hospitality to consumer products and retail to financial services. Different channels increasingly require different content, and the more advanced marketers are using technology to actively shape consumers’ cross-channel experience of their brands and products.

The risk for many advertisers is that they keep falling further behind, since digital technologies and the complexity of their application are advancing at dizzying speed. While many companies are struggling to develop digital content and employ social media, digital marketing is already moving toward new capabilities. The most significant may be personalization, marketing to individual consumers at scale. 

It’s particularly surprising that advertisers and agencies continue to give themselves low scores on testing, since testing, learning, and adjusting the campaign approach or design are among the most powerful capabilities enabled by digital technologies. The ability to see what is working and what is not, and to experiment almost in real time with adjustments and improvements, is essential to using digital channels effectively. This is especially true in fast-growing channels that are also evolving at a rapid pace, such as mobile web and apps, in which both advertisers and agencies—perhaps not surprisingly—also score poorly.

While a good number of agencies and some advertisers report that they understand the role of video in the consumer journey, they are still mostly putting existing TV assets online and not investing in the digital capabilities that make online video a more effective medium than TV. Too few companies, for example, create more than one video per campaign, tailor their video creatively to fit consumers’ use of different devices and digital platforms, or make use of such tools as hotspots and sequential retargeting to keep consumers engaged with their brands. In other words, marketers are still using new and advanced tools in old-fashioned ways.

Advertisers and agencies that are behind the curve may not be aware of how much they lag or why. But whatever the reasons for a company’s failure to make progress, lack of talent, in particular, hurts its ability to plan, execute, measure, and improve digital campaigns. As a result, many companies either mount subpar campaigns or rely on the support of their agencies to plan the work, do the work, and measure the results. So far, it appears that many are following the second course—outsourcing campaign development and execution, just as they have long outsourced creative development and media buying.

Those that outsource pay a big price—in more than just agency fees and commissions. Digital campaigns are different from their offline equivalents. They are continually modified and adjusted in real time based on real-time results. Marketers that are not actively involved in the test-learn-adapt process lose touch with both their campaigns and their digital consumers. They don’t know whether their strategies are being faithfully executed or how their budgets are being spent. They are hard-pressed to explain how or why success—or failure—occurred. And perhaps most critically, they don’t learn how to access and use the plethora of digital data that campaigns generate—the data that makes more advanced techniques, such as personalized outreach, possible.

Advertisers face another skills-related challenge. Unless they improve their performance and their learning and development, the digital divide is set to widen. These companies will find it increasingly difficult to attract technical talent as they compete for skills not only with agencies but, more significantly, with digital natives, tech startups, and other organizations. Since talent attracts talent, it will become harder and harder for advertisers that lack technical skills to fill the void.

All of this spells opportunity for agencies, with the caveat that they need to raise their own game as well. That agencies gave their capabilities a higher rating than advertisers do makes sense. Agencies do have an opportunity to increase billings by compensating for their clients’ weaknesses, but to add the most value, they need to improve their own skills in several key areas, starting with mobile and video. These channels are critical now, and their importance will only increase in importance. Testing is another area of weakness. The ability to test and adjust creative content and campaign formats and methods is one of the biggest advantages that digital technologies provide marketers. Yet both advertisers and agencies give themselves poor grades in how they test content, creative materials, targeting options, and offline content (such as TV commercials on YouTube). 

The bigger opportunity for agencies lies in building long-term partnerships with their clients. These partnerships should be based on the development of joint skills enabling the design and execution of digital campaigns that can further continuing consumer relationships and engagement both online and offline. Such campaigns are the ultimate promise of digital marketing, but so far they are more the exception than the rule. 

Agencies believe they are good at developing digital-content strategies that tailor content to key moments in the consumer journey and at translating marketing objectives into a set of actionable metrics.

Agencies have the lead in digital-marketing skills and capabilities. Smart agency heads will resist the temptation to use this advantage to maximize near-term agency revenues by taking over more and more of their clients’ campaign work. Instead, they will field multiskilled teams that work with clients to design and execute orchestrated campaigns that achieve measurable results, and in this way, build long-term digital-marketing partnerships that work.

 

Digital customer care is still new territory for many companies. They can learn a lot from the natives.

Today’s customers expect digital service. More and more are getting it, too, across sectors from telecommunications to banking and from utilities to retail. For example, telco customers conduct roughly 70 percent of their purchases either partly or wholly online—and 90 percent of their service requests as well.

The rapid shift to digital customer care (or e-care) should be good for everyone. Automation and self-service cuts transaction costs for providers. When e-care is done well, customers prefer it, too. Our research among telecommunications customers shows that customers who use digital channels for service transactions are one-third more satisfied, on average, than those who rely on traditional channels. And since companies that excel in customer satisfaction also tend to create more value for their shareholders, there is even more incentive to get e-care right.

Despite e-care’s advantages, however, many companies struggle to give their customers a consistently good digital experience. The same research revealed that while more than two-fifths of service interactions with telecommunications companies begin on an e-care platform, only 15 percent are digital from start to finish. We’ve also found that use of digital service channels lags a long way behind awareness. In Europe, for example, 98 percent of mobile phone users in one survey knew their provider offered a service website, but only 37 percent made use of it. In the United States, meanwhile, only 18 percent of mobile users said they used their providers’ online service platforms.

And e-care is getting more complex to implement. Not only do customers now want access to a fully comprehensive range of online service offerings—they also want to access these offerings using a variety of platforms, including both conventional web browsers and a growing pool of mobile devices and dedicated apps. Customers expect their experience to be continuous and consistent as they migrate from one platform to another, but they also want service options that make sense in the context in which they are asking for help.

Finally, customers are getting harder to impress. The rapid rise of “digital native” companies, such as Spotify or Uber, exposes customers to simple, streamlined user experiences designed from the ground up for digital delivery. Established companies that build their e-care offerings and processes on top of, or alongside, more traditional channels often find it hard to meet the same standards.

That comparison is becoming increasingly important. When customers think about the e-care service they receive from their bank or phone company, they don’t compare it with its competitors in the same industry but with the other digital services they use every day. When the online experience doesn’t meet their expectations, customers go back to the phone. As a result, some telecoms companies have seen call-center volumes—and costs—rise as they attempt to move to a digital service model.
Making e-care work

Companies that have been able to move more customer-care services to online channels and articulate strong e-care offerings excel across seven dimensions:

Simplicity starts with a clean, clear, and intuitive design that requires few mouse clicks or screen touches to achieve the desired task. The main functionalities are easy to find and well explained. The language is concise, simple, and easy to understand. Apple offers a wide range of products aimed at very different customers, for example, but its product information and support websites use the same clean, pared-down design, with key information presented clearly and more detail available with a minimum of clicks. In financial services, companies such as PayPal have dramatically simplified online payments, in many cases requiring only the recipient’s email address or mobile-phone number as identification.

Convenience means customers are offered a wide variety of services and a choice of support channels. User interfaces are easy to navigate and critical information is not hidden within long pages or complex menu hierarchies. Even better are sites that use data intelligence to tailor page content dynamically based on who is accessing it. Similarly, biometric identification techniques using fingerprint or voiceprint technologies accelerate authentication steps and reduce the mental burden on users without comprising security. One telecom company has developed a dynamic FAQ system that suggests possible support articles as soon as a customer begins to type a query and that loads the most relevant content automatically without requiring a page refresh.

Interactivity reflects the fact that customers now expect their online experiences to be dynamic and interactive, with blogs, social-media feeds, user reviews, and customer forums all playing important roles in modern e-care. These are especially important for millennial consumers, who have grown up steeped in social media and online interactions. Accordingly, an active user community is central to UK-mobile-phone-network giffgaff’s strategy. Users receive account credit for helping others with their queries, and individual community members are regularly highlighted on giffgaff’s support website. One of the company’s core product offerings—a bundle of text messages, voice minutes, and data known as a “goodybag”—was introduced as a direct result of suggestions on user forums. Moreover, through interactive games and a cocreation system that lets users build new services for other community members, customers now help set giffgaff’s direction.

Consistency is essential: customers require that the appearance, functionality, and information available in e-care services be consistent regardless of which device or software they use. Amazon, for example, shows customers essentially the same menus, the same links, and the same tone and language across all of its mobile and website channels, giving customers the same experience as they move from one channel to the next. This commitment significantly reduces any need for relearning after each switch—and any attendant digital friction.

Value results only if e-care works for the customer. Services must be designed to reflect the user’s individual needs, rather than the company’s internal processes, and must evolve as those needs change. One insurance company, for example, uses real-time rendering technology to create a customized video presentation of the coverage included in the customer’s quotation. The video combines professionally scripted and presented content with customer-specific data drawn from multiple sources, and its content is adjusted based on the customer’s choices and responses during the presentation.

Desirability is a product not only of a consistently appealing visual design but also of the tone and presentation of the site’s content. Both usually require adaption to suit local tastes, which may require dramatically different choices depending on the specific context. For instance, Chinese websites are typically very crowded, with lots of information available, while sites in the United States and Western Europe tend toward a more streamlined aesthetic.

Brand is not just a label: it is how customers experience a company’s products and services. Given that e-care has become one of the primary ways customers interact with a business, brand reinforcement should be a primary e-care goal rather than an afterthought. The best companies therefore integrate their brand values deeply into the design of their e-care offerings.

To buttress its message of providing exactly the services its customers need, one mobile-phone company has tailored its service experience to support unique “moments of truth” in the customer journey. Once a customer logs in, the website’s navigation changes dynamically based not only on what the customer is doing but also on behavioral insights based on previous interactions with the company.

A customer who’s usually pressed for time may see just three simple plan alternatives, cutting through the clutter, while one who wants to be assured of getting the best deal will see more detail on plan options, so she can feel in control. The site then guides the customer through activation steps, offers clear instructions on how to get the most from the service, and anticipates the most common questions with detailed answers.

To understand how leading players measure up under this harsh scrutiny, we evaluated the e-care offerings of more than 20 major telecommunications companies across the world, covering both online services and dedicated apps. We tested half a dozen common service activities, including access to billing and consumption information, technical-support queries, and sales or upgrade queries.

Our approach looked at the way e-care platforms were designed and presented to the user, the functionalities on offer, and the information available within each of our target service activities. Under each of those three main concepts, we rated the offerings across the seven dimensions described above.

Overall, our analysis should be sobering reading in all sectors for incumbents that are digitizing their customer-service offerings. We found only one area—the presentation of information using simple, jargon-free language—where most of the companies surveyed are demonstrating best practices. Elsewhere, we did find examples of best practices, but they have not been adopted by every company, and they are not always consistently applied even when they have been adopted.

The best websites and apps in our survey sample, for example, offer a wide range of services using a clear, easily understandable architecture that requires few clicks to access relevant content. Several, but by no means all, companies provide a convenient search function to help customers access technical support. Only a few make “search” the core navigation method for technical-support information.

Indeed, not many of the surveyed companies are taking full advantage of digital platforms’ unique capabilities. Interactive features such as support wizards or explanatory videos were rare. Only the very best-performing companies managed to integrate their e-care offerings seamlessly with live channels (such as e-calling or traditional telephone support) to create a truly multichannel experience. And just a handful have deployed the most advanced e-care technologies, such as artificial intelligence or chatbots.

For many of the services we evaluated, customer experience was inconsistent between web and app platforms. Apps sometimes offered less functionality and frequently provided less information than their web counterparts, which companies tended to position as the full-service option. On further examination, differences in look and function between apps and web often arose because of the relatively recent introduction of app offerings, or the use of different design and development teams.

As they move further into the digital world, many incumbents clearly have work to do to give their customers the best e-care experience. But that’s no reason to set their sights too low. Leading companies not only make their digital channels highly useful and consistent at every customer touchpoint—they also make them fun and emotionally appealing. They personalize the experience and keep it relevant across the entire customer life cycle. For these top digital players, e-care doesn’t just work, it builds a brand that engages and delights customers.

That’s the standard, and it’s lifting customer expectations for everyone else. To keep up, traditional companies must measure their own performance against the best of the best of best—and embrace a culture of rapid, continuous evolution and improvement. There’s no time to lose.

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CUSTOMER ANGER




Customer Anger Triggers and Ways to Defuse Them

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Resolving conflicts with customers is not easy. But over time, you will learn the ways on how to control the situation. Know the source of the problem and what triggers your clients to be angry. It can help you understand your customers and appease their needs.

Understand the reasons why your customers are angry and know what you can do help them solve their problems.

Across the business landscape, savvy executives are increasingly asking the same question: What do my customers want? They are coming to realize that, whatever they offer, they are in the customer-experience business. Technology has handed consumers growing power to choose how and where to buy products and services, and customer-friendly leaders such as Amazon and Apple steadily raise customer expectations for superior service ever higher. How an organization delivers for customers is beginning to be as important as what it delivers. Companies that systematically put customers first create inroads against competitors, build cultures that benefit employees as well as customers, and improve the bottom line from both the revenue and cost sides.

Every leading customer-experience company has motivated employees who embody the customer and brand promise in their interactions with consumers and are empowered to do the right thing. Companies centered on customers engage them at every level of the organization; employees work directly with them in retail settings, take calls, and get out into the field. In the early years, for example, Amazon famously staged “all hands on deck” sessions during the year-end holidays, a tradition that lives on in the employee-onboarding experience.10 Some organizations create boards or panels of customers to provide a formal feedback mechanism.

From leading practitioners, we’ve distilled four simple rules for building a sense of frontline engagement. First, listen to employees and establish mechanisms to address their issues and needs. Next, hire for attitude, not aptitude; in other words, if you want to provide friendly service, hire friendly people. Interviewing prospective employees in groups, as JetBlue Airways does, is one way to observe how they interact. Then give your people a purpose, not rules, so the company sets clear expectations and lets employees know that it trusts them to do their jobs. Finally, tap into the creativity of your frontline employees by giving them the autonomy to do whatever they can to improve the citizen experience and fix problems themselves.

The key to satisfying customers is not just to measure what happens but also to use the data to drive action throughout the organization. Leading practitioners start at the top, with a metric to measure the customer experience, and then cascade downward into their key customer journeys and performance indicators. To move from knowledge to action, companies need proper governance and leadership. Best-in-class organizations have governance structures that include a sponsor—a chief customer officer—and an executive champion for each major kind of cross-functional customer journey. Full-time teams carry out their day-to-day work in the existing organization, because to succeed, the transformation must take place within normal operations. To foster understanding and conviction, leaders at all levels must serve as role models for the behavior they expect from these teams, constantly communicating the changes needed. Formal reinforcement mechanisms and skill-building activities at multiple levels of the organization support the transformation as well.

The benefits of improved customer experience can be fleeting unless changes to supporting back-end operations are made, as well. Digital is reshaping customer experience in almost every sector. Digital first attackers are entering markets with radically new offers, disrupting the ways that companies and customers interact and setting a high bar for simplicity, personalization, and interactivity.

To not only stay in the game but capture new sources of value, incumbents will need to reinvent their customer experience. That begins with bringing in data and analytics-based insights about what really matters to customers and how best to deliver it to them. Some companies fail to capture the full benefits of their improvement efforts because they concentrate on optimizing individual touchpoints rather than tackling the customer experience as customers actually experience it—a complete journey that cuts across multiple functions and channels.

The other imperative for companies is to explicitly tie the reinvented customer experience to their operations. If they focus only on the front-end experience and don’t change the back-end operations that support it, the new experience is unlikely to be sustainable. Changes will be needed in both underlying processes and the way employees work.

Enhancing the customer experience can bring rich rewards. Across industries, satisfied customers spend more and stay more loyal over time. In banking, customers are seven times more likely to increase their deposits and twice as likely to open an additional account if they rate a bank as excellent (with a customer-satisfaction score of nine or ten out of ten) rather than average (six to eight out of ten). Similarly, pay-TV customers who rate their provider as excellent tend to stay with it for up to twice as long as they would a provider they rate as average or below.

More broadly, the effect of customer satisfaction on total return to shareholders (TRS) is dramatic. If we compare the TRS of companies with above- and below-average customer satisfaction scores, the leaders achieve four times the growth in value of the laggards over a ten-year period, according to data from the American Customer Satisfaction Index and the Medallia Institute.

First, how do you find out what really matters to customers? Companies that excel at this do two things: they streamline their operations and take out cost, and they create new experiences and tap new sources of value. Many organizations simply take a problem view—treating internal processes as a cost that needs to be reduced, and looking for customer pain points that need to be eliminated. That’s a good place to start, but if it’s the only view, it misses out on the idea of creating additional customer value.

One insurance company invested time in deepening its understanding of the distress customers suffer when they have an automobile accident and make a claim. The insurer found customers were extremely dissatisfied with the lengthy process of filing a claim over the phone, especially the number of back-and-forth calls with the loss adjuster and the lack of transparency on the status of the claim. The insurer used this understanding of customer pain points to create a new mobile app that enables a claim to be filed within a couple of minutes, sends messages to update customers on the status of their claim, and provides real-time processing and cash payout. To create additional value for customers, the insurer went a step further and created a function that allows customers to make appointments with a repair shop directly via the app.

Another insurer, the start-up Lemonade, allows distressed customers who have lost property to submit a claim via a video message on their mobile phone. The company reviews the message using anti-fraud algorithms, cross-references it against the customer’s policy, and then transfers the appropriate funds to the customer’s bank account. While these are still early days for the start-up, it is declaring speeds for processing claims in matters of seconds.

By showing empathy with customers and helping to fix their problems (and even delighting them in the process), companies like these can tap into a source of tremendous value, find new business opportunities, and shift their operating model over time.

Once a company has found out what its customers value, it faces the second big question: how do you link customer experience to operational improvements? Most organizations manage operations, track performance, and measure customer satisfaction along functional lines. Yet the best way to tackle customer experience is to follow it from the customer’s point of view, along a journey that cuts across functions and channels. That’s because customers frequently use multiple channels to interact with their service provider, and need multiple interactions to complete a transaction.

Imagine you are a customer trying to resolve an issue. You may need to visit a retail outlet, phone a call center, visit a website, use an app, or any combination of these. Even if you are satisfied with each of these interactions individually, rating them at 85 to 90 percent, your satisfaction with the whole customer journey from beginning to end—calculated as the product of all four interactions—can still be low, just 60 percent in this case. To create a great customer journey, you need more than great touchpoints.

Before rethinking your customer experience, look first at your product, price, service, and brand. If a product is unreliable or its price is too high, not even the most delightful customer experience will redeem it. Once these essentials are in place, work out which journeys matter most to customer experience and assess how you perform in each one so that you can prioritize what to fix to get the most impact from your improvement effort.

Banking is one industry where customer experience offers enormous scope for differentiation. We analyzed the main customer journeys at a sample of US financial institutions to expose choke points where banks consistently underperform and explore opportunities to address them. We calculated how much each customer journey contributed to overall satisfaction and found that the most critical journeys were using a product or service and resolving problems. Onboarding new customers—signing up, setting up services, and opening new accounts—was also extremely important.

US banks as a group underperform on customer satisfaction for the two journeys that matter most: product use and problem resolution. The journeys for signing up and opening a new account also rank among the worst, often requiring customers to enter vast quantities of data and navigate numerous application forms and fields.

A successful improvement effort begins not by taking an existing portfolio and digitizing it wholesale, but by radically simplifying both the customer experience and the product or service at its heart. One telecom provider reduced its product portfolio by 80 percent before streamlining its digital experience and supporting platform. After rationalizing its offerings, eliminating some process steps, and using readily available tools to automate others, it managed to cut its sign-up time for new customers by two-thirds.

Resolving problems is an area that many customer-facing businesses struggle to get right. Given self-serve options and simple guidance, customers can often fix problems for themselves, but companies don’t always provide enough of this support, or communicate it clearly enough when they do. Another stumbling block is having customer care that mimics a company’s broader organizational set-up, complete with product silos. Customers dealing with a credit-card issue and a mortgage issue can often experience two entirely different processes at the same bank, and find themselves being transferred from one function to another because each group can help with only one aspect of their problem.

When companies rethink their customer experience, digitization allows them to work backward from what customers would like to see instead of getting bogged down in incremental improvements. This clean-sheet approach encourages greater ambition, not shaving 20 percent off the time it takes to open an account, say, but slashing it by 80 percent or more. When one major North American bank revamped its deposit-account journey, it managed to reduce the time from sign-up to working account from two weeks to less than ten minutes.

Eliminating problems or saving customers—and the business—time and effort is only the beginning, though. Much more value can be created when we understand what else we can do to satisfy an unmet need or spark delight. To do that requires working much more closely and directly with customers: observing them during interactions, asking how they are feeling, and mapping their emotional state at every touchpoint in the journey.

The insurance company mentioned earlier found that taking care of an anxious customer who had suffered an auto accident was a great opportunity to make a friend, build loyalty, and reduce claims payouts by recommending preferred repair services. In an industry where differentiation is hard to achieve through products alone, providing a turnkey service that spans the whole process from identifying the cause of damage to finding a repair provider to paying the bill proved to be a valuable new business opportunity.

Digital innovation and user feedback provide a catalyst to simplify products and customer experience, but to capture economic value, you need to take a further step: link the new experience to underlying operational processes. That requires an understanding of two things: what creates value across a given journey from the customer’s point of view (faster cycle time, personalization, cross-channel functionality, and so on) and what drives business costs and revenues (number of manual touches, extent of customer fallout, additional product sales, and so on).

When businesses are trying to see journeys as customers see them, it can be hard to shake off a frame of mind that revolves around internal processes, structures, and KPIs. It may take a deliberate effort to stop thinking “this change might be difficult to implement” or “that cost has to be reduced” and start thinking what the customer wants instead. Small changes can help to create the right mind-set, such as the insurance company’s decision to stop referring to customers by their claims numbers.

Describing journeys from the customer’s perspective—“I wait in line” or “I receive a bill”—is also helpful in exploring what can go wrong and how to put it right. When an airport realized that customers queuing for security checks often worried they might miss their flights, it introduced new signs giving a rough indication of waiting times. Another company investigating customers’ experience of repairs found they preferred knowing when a technician would arrive to having a shorter wait with more approximate timing. This insight led the company to improve its control over scheduling and start tracking the whereabouts of field staff in real time—which in turn meant investing in GPS and dynamic dispatch technology, overhauling staffing levels and costs, and rethinking the operating model.

We also investigated which parts of banking journeys had the biggest impact on satisfaction, and how well banks performed in them. In the sign-up journey, for instance, what mattered most to customers was the smooth completion of the application, followed by the availability of information to help in choosing and comparing products and services; the choice of products and services; the ease of understanding interest rates, account fees, and other features; the simplicity of signing up online; and finally knowing the customer representative and the quality of his or her service. Among these factors, customers tended to be most satisfied with the availability of information and least satisfied with the ease of signing up online.

As well as scoring poorly for customer satisfaction in general, sign-up is also the journey that exhibits the widest gap between top performers and the industry average. Leading banks make it easy and quick, like the bank mentioned earlier that enables customers to open a functioning deposit account in under ten minutes. Any bank seeking to improve its sign-up journey should diagnose how its performance compares with industry benchmarks, customer expectations, and best practices within and beyond the industry. Then it can focus its improvement efforts on the drivers that should deliver the most impact.

Delivering a great customer experience calls for disciplined execution and consistent service delivery. By analyzing customer journeys, companies can pinpoint the operational improvements that will have the biggest effect on customer experience. A North American bank examined how satisfaction among deposit-account customers was affected by the time it took to apply for an account, activate it, and receive the account card.

If applications took more than 20 minutes to complete, the net promoter score (NPS) declined; if activating the new account took more than a day, or receiving the debit card and PIN took more than five days, the NPS fell sharply.

An understanding of break points like these helps companies focus their operational improvements and target their investments pragmatically, without reaching the stage of diminishing returns. Once the desired operational improvements have been identified, organizations can implement them by activating five key capabilities and approaches from their next-generation operating model:

  1. Digitization: the process of using technology to automate and improve journeys directly.
  2. Advanced analytics: the autonomous processing of data using sophisticated tools to discover insights and make recommendations.
  3. Intelligent process automation: a suite of business-process improvements that combines process redesign with automation and machine learning to eliminate repetitive routine tasks.
  4. Business-process outsourcing: using resources outside the main business to complete specific tasks of functions.
  5. Lean: a systematic approach to streamlining processes, eliminating waste, and fostering a culture of continuous improvement.

How much companies can achieve by redesigning  customer journeys is demonstrated by a leading global bank that sought to improve its customer-satisfaction ranking from average to top three in three years. To identify priorities, the team worked out how much value could flow to customers and the bank if various journeys were reimagined and digitized. It determined that onboarding journeys for all products were of most value, followed by credit-card journeys involving disputes, issuance, and fraud handling.

The work began with the transformation of just one credit-card onboarding journey. As the organization gained experience, the next wave included onboarding journeys for two products, with four in the wave after that, and so on. The choice and sequencing of the journeys to transform were always linked to value creation. Over the course of three years, and after the transformation of multiple journeys, the bank was able to boost its customer-satisfaction score by 25 percent and generate $1 billion a year in additional customer spending from its credit-card business.

  • Start with a clear understanding of what customers value and use it to decide where to focus (and what to deemphasize).
  • Guided by these priorities, simplify and streamline your underlying product and services; if you don’t, you’re likely to digitize existing complexity.
  • Link customer value to the operational drivers that underpin it, then design a new operating model based on these linkages, working back from the customer and using digital tools to streamline or automate your processes in line with what customers care about.
  • Tackle the most important customer journeys one by one and support the effort with operational changes to improve efficiency and speed.
  • Embed agile, cross-functional ways of working and reengineer your management system to support continuous improvement.

Organizations that take these steps can turn customer experience into a source of delight for customers and a new and sustainable source of differentiation for themselves.

 

Personalization is causing a seismic shift across the landscape of consumer-facing brands, and we are only starting to feel the shocks. Already brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6% to 10%, according to our research—two to three times faster than those that don’t. As a result, personalization leaders stand to capture a disproportionate share of category profits in the new age of individualized brands while slow movers will lose customers, share, and profits. Over the next five years in three sectors alone—retail, health care, and financial services—personalization will push a revenue shift of some $800 billion to the 15% of companies that get it right.

Digital natives have a head start because they have built their business models around collecting data and responding to customer needs. These companies build strong customer loyalty using both traditional vehicles, such as loyalty programs, and new models, like “free” and short-notice delivery, automatic replenishment, and other forms of convenience. The deeper direct connection enables digital natives to more fully understand what customers need and create new ways to serve them, both independently and by working with suppliers. Personalization will take another big evolutionary step as voice recognition and cognitive-computing systems gain mainstream traction.

In many consumer categories, high-value customers drive 70% or more of the value for companies. Brand individualization unlocks the ability to enhance loyalty with these (and other) customers by tailoring the brand experience to each contextual user journey. Even before Netflix made the jump from mailing DVDs to streaming movies and TV shows online, for example, the company was collecting data and using it to engage with customers about their viewing preferences. In March 2017, Amazon asked customers to choose its next online original series for production from five video pilots. Leading e-commerce players such as Amazon and Alibaba use customer data to continually tailor interactions and create powerful feedback loops. 

Starbucks is in the coffee business, but since 2014, the company has had its customers playing games. Starbucks sends interactive games to loyalty program members through email and its mobile app. The games provide a fun way to reward loyalists and motivate them to try new products and visit stores more often. Since 2016, the games have been personalized—one customer at a time, using data gathered from past visits and digital interactions.

It’s a smart move and a profitable way to engage customers with the brand. The personalized games have helped to triple Starbucks’s marketing campaign results, double email redemptions, and generate a threefold increase in the incremental spending of customers who redeem offers. The results come with increased marketing effectiveness, enabling Starbucks to reduce its mass-marketing spending and invest more-personalized marketing dollars with the right customers, thus incentivizing the right behaviors. But Starbucks has bigger plans: it is developing one-on-one relationships at scale. It is individualizing its brand by giving each customer his or her own personalized experience that encompasses in-store visits, digital interactions, and even, potentially, products offered.

Starbucks is not alone. At Walt Disney’s Orlando resort, visitors use MagicBands to reserve rides, unlock hotel rooms, and make purchases; guests at Disney’s new Shanghai resort can do the same things with their smartphones. Disney gathers data from every interaction and uses it to serve up targeted offers to guests. Carnival is introducing “smart medallions” that use similar technology on its hundred-plus cruise ships.

Personalized marketing is a good starting point, but ultimately personalization is more than a marketing challenge. For incumbents to defend—and expand—share, they need to reimagine their business with an individualized value proposition at the core, merging physical and digital experiences to deepen their customer connections. They need to put brand individualization at the forefront of their strategy agenda to influence everything that they do, including marketing, operations, merchandising, and product development. Many incumbents have significant strategic advantages over many digital players: they can merge digital and physical channels to deliver an integrated personalized experience, as Starbucks, Disney, and others are doing. (This is one reason why digital natives such as Amazon and Bonobos are establishing outposts in the brick-and-mortar world.) Brand individualization is about the future, but it’s taking place in the present; companies that are slow to act will see customer loyalty and sales decline.

Expectations from personalization run high, and some companies are achieving eye-opening results—and establishing big leads of their own. Because personalization is about establishing individualized brand relationships, early leaders tend to lock in customers, heightening the barriers for those that try to follow.

Companies do face significant hurdles to realizing the full potential of personalization. These include the technical barriers that one might expect, such as poor data centralization (companies collect ample data, but struggle to aggregate it and form one universal view of each customer), legacy technology that doesn’t support one-to-one communication at scale, and insufficient measurement capabilities. Almost 60% of companies struggle to effectively measure and attribute the impact of campaigns, limiting their ability to learn from customer feedback and adapt accordingly—which is at the core of individualizing the brand experience.

A lack of dedicated personnel is the most-oft-cited barrier (74%), but the majority of companies also face hurdles that are organizational and cultural in nature. These include insufficient cross-functional coordination (61%), inadequate creative processes (57%), lack of talent and knowledge (54%), and cultures that are not conducive to innovation (52%). More than 60% feel that they lack a clear roadmap, and half cite the absence of a clear business case and objectives. 

Our experience working with a number of personalization leaders shows that companies can overcome the hurdles and develop the ability to personalize at scale by executing an integrated personalization approach that is built on four pillars. 

Adopt strategic design. Personalization is not a series of fancy tech tricks to prove that things can be done differently; it is a solution to improve the customer experience. Disney’s MagicBands and Carnival’s smart medallions address customer pain points, such as long lines and slow company response times. Sephora offers a lipstick app that helps a customer find the best shade before going to the store and without actually having to try dozens of colors. True brand individualization requires an approach that is data-driven, consumer-centric—and grounded in everyday customer experiences.

Personalization leaders apply design thinking, a solution-based approach that looks beyond data insights to define customer value propositions that can be executed at scale; the fact that these are enabled by artificial intelligence, the cloud, and mobile technologies is secondary (although important). These leaders think across the full customer journey to identify opportunities for personalized offers or assistance. They use design thinking to help surface latent unmet needs and combine insights with analysis of the data behind behavioral and economic drivers. They can then employ the resulting synthesis to shape a differentiating set of customer value propositions that are reflected in their product and service offerings, customer experience, marketing, and membership and loyalty models. They ask questions such as, How do we reinvent the customer experience to radically reduce friction? What needs do customers have that they may not even be aware of? How should we have conversations with customers across their journey instead of pushing static campaigns? As answers to these questions accumulate, leaders prioritize opportunities for intervention based on pain points, need, or opportunity. They make sure that they are delivering personalization with a purpose, that each intervention delights or adds value for the customer.

Build data and analytics capabilities. To personalize at scale, it is essential to have the ability to both access and process large amounts of disparate data—including customer, transaction, and third-party data—on an ongoing, reliable, repeatable basis. However, harnessing data from internal and external sources and developing the necessary machine-learning algorithms to drive the right customer-level interactions are beyond most organizations’ current capabilities. More than half of the companies we surveyed believe that they collect the data they need but, to paraphrase many of the executives we surveyed, “We have the data, but integrating and using it—that’s the hard part.”

Most companies need to bolster their ability to extract value from their data assets by building proprietary data sets, securing permission from customers to collect and use their data, and entering partnerships to acquire complementary data assets. In addition, they have to build or acquire the tool sets, talent, and processes to extract signals from this data to drive personalized interactions. The lack of timely data use is also a major shortcoming: more than half of the companies we surveyed make limited or no use of real-time data. Successful companies commit significant staff and budget to multiyear projects to develop their analytics capabilities. They build internal knowledge and talent, and they work with external resources and partners across an ecosystem.

Transform technology. Part and parcel of developing the requisite data and analytics capabilities is building or acquiring a scalable technology platform. It should include a robust layer of application-programming interfaces that provide the flexibility to support existing and emerging technologies, such as voice recognition and augmented reality, and enable personalization in any channel or on any device.

This is a tough and time-consuming task, one that requires the collaboration of marketing, IT, and others. Plenty of help is available as new vendors proliferate; in the past two years alone, tech entrepreneurs have started several hundred personalization software companies. In addition, traditional tech companies continue to acquire startups and expand the roster of features they offer. The established cloud-based providers of marketing software and services are the most commonly used vendors, but no one leading player has emerged. And integration remains an issue. One retail executive told us, “We’ve ended up with technical soup—Franken-systems that don’t play well together.”

Enable new ways of working. Personalization is an inherently collaborative venture. As one marketing vice president put it, “You need to make sure the organization doesn’t get in the way.” Yet at 60% of companies, no one team is responsible for personalized cross-channel communication to consumers, and 54% of companies say they have no or low cross-functional coordination for personalization efforts. In addition, in a field where speed is essential, 57% of companies take three to six weeks to create a campaign (another 22% take several months) and up to four weeks to measure the results. More than half take one to four weeks or more to make changes based on the lessons learned.

Leading companies share some common ways of working: they collapse silos, create dedicated cross-functional personalization teams, locate all team members together, and work fast. Leaders also develop test-and-learn cultures, aligning marketing, IT development, and other functions in an agile model. Top performers run more than 20 sets of personalized-communication experiments per month and hone processes that execute and measure rapidly so that campaigns can be created in days and assessed in real time.
Brand individualization offers companies the chance to engage consumers one-on-one and to build enduring—and self-reinforcing— relationships. The data and the technologies are already at work, and the quality of both will only improve. Leaders are showing what can be achieved and how to do it. The hurdles are significant, but the stakes are even higher. Companies that don’t want to be left behind should move quickly, before they discover that their best customers—the ones that drive the most value—have struck up a serious relationship with a rival.

Lines between products, services, and user environments are blurring. The ability to craft an integrated customer experience will open enormous opportunities to build new businesses.

Time was, a company could rely on a superior product’s features and functions to coast for a year or more before competitors could catch up. Or a well-honed service advantage could single-handedly buffer a company from start-up challengers looking to nip at its heels. No more. As digitization drives more and faster disruptions—and as customers increasingly desire the immediacy, personalization, and convenience of dealing with digital-marketing leaders—the business landscape is undergoing an upheaval.

Products, services, and environments—both physical and online—are converging to anticipate and meet rising customer expectations. That’s giving birth to a proliferation of new products, often from unexpected sources. It is also stirring up a storm of new, unanticipated competitors. In this novel mix, product companies will be pushed to create services and service providers to incorporate products into their offerings. Both will face the challenge of developing great user environments as part of customer-centric strategies.

The signs have been apparent for some time. Technologies regularly compound each other’s effects, with a dynamism and speed of innovation that has become unpredictable: for example, the combination of global positioning systems (GPS), radar, video object recognition, and infrared sensors gave birth to the development of self-driving cars. In smartphones, manufacturers once focused on features and functions as selling points. Today that emphasis has shifted completely to style, lifestyle, and simplicity of use. These permeate the customer experience and define the value proposition for such products.

This evolving convergence of products, services, and environments affects some industries more than others. Telecommunications, automotive, and consumer-product companies, for example, have already embarked on a convergence journey; other industries, such as insurance, banking, and energy, lag behind them. Understanding the way this phenomenon is taking shape can help companies prepare for the competitive opportunities and challenges. In this article, we explore some of the places where the convergence is taking shape today and some key principles for designing integrated, end-to-end customer experiences.

Traditional product companies are transforming themselves into providers of services and ecosystems. Some innovators, such as Rolls-Royce, some time ago moved beyond merely selling jet engines to selling engine hours in a lifetime service relationship with customers. Elevator operators, such as KONE, emphasize the number of floors their products will serve over time, not just their physical products. Microsoft Azure sells computing as a service, not as software; Philips is transforming the home-lighting business into a “connected business” to improve sustainability, cost of ownership, and smart control by integrating applications such as scene personalization, home automation, security services, and sleep quality into its core product.

Service companies are integrating physical products into their customer experience. Amazon’s Echo, for example, provides quick access to the company’s services. Evernote and Moleskine have collaborated to create notebooks that seamlessly integrate physical notes; capturing handwritten ones with the Evernote camera allows you to search and organize them digitally. Progressive Insurance’s connected-car devices allow the company to charge drivers according to their driving behavior.

Companies are investing to create a customer environment that builds a connection with their products. Online players such as Amazon open physical stores; car manufacturers (Tesla, for example) open fancy showrooms in shopping malls and prime locations, with a completely transformed customer experience. Electronics companies, like Apple, stage the customer experience with open-space concepts, a sprawling Genius Bar, and diverse sales staffs.

In essence, highly successful companies have realized that the boundaries between products, services, and environments have blurred. They know as well that they need an integrated view to design end-to-end experiences that are truly valuable to consumers and successful in the market. It’s not just about designing the best product or service but rather about striking the right combination and making sure the integrated customer experience is compelling. This kind of successful, convergence-designed strategy can deliver a durable competitive advantage. Done well, the strategy will also make implementation more intuitive for the company and more seamless for the customers who engage with the product or service. In this evolving environment, maintaining an integrated customer-experience perspective is necessary right from the beginning of any improvement or transformation effort.

Today’s consumers do not buy just products or services—more and more, their purchase decisions revolve around buying into an idea and an experience. This change in expectations will give product and service businesses opportunities to create new revenue streams by expanding into adjacent territories. Given these complexities, the shift also requires an innovative approach to business models and a new look at how companies provide value to customers.

To better understand how some companies are grasping the opportunity to design end-to-end experiences, it’s useful to explore some examples of cutting-edge approaches and the techniques and principles that underpin them:
Raising the temperature in thermostats

For much of this decade the smart-home-thermostat market has been under assault by new entrants using world-class design approaches. Incumbents, largely embedded in professional-installer sales channels, were left with little access to end consumers.

Ecobee, which embarked on a design-led strategy against competitors such as Nest from the standpoint of aesthetics, usability, and features, believed that its technology was superior. But it was missing a major component the company felt customers cared about—design. To Ecobee executives, it was not just a matter of the product’s color and shape. Rather, they believed that consumers would see value in the overall experience of interacting with the device itself, its mobile app, and its Internet presence. The “squaricle” shape of the device was decided in part by the need to differentiate it from competitors’ round or square thermostats and to pair up with Ecobee’s remote sensors, which have the same shape. Black was chosen as the color for its practicality, unobtrusiveness, and understated high-tech signaling.

Ecobee’s approach was to redesign the thermostat with sensors that work over Wi-Fi systems, so it can moderate the temperature where the user (as opposed to the thermostat) is located. The new design made it possible to launch the product in new channels, such as Apple stores, Best Buy, and Home Depot, gaining direct access to new customers. Ecobee won PC Magazine’s Editor’s Choice Award for smart thermostats in 2015.

In late 2015, the Swedish public-transport provider Skånetrafiken aimed to enhance the value of bus transportation. The idea was to explore extending the travel experience beyond the bus with new technologies. Designers thought about that experience from an end-to-end perspective—before, during, and after travel.

The company’s approach took the form of a design lab on wheels.2 A multidisciplinary group of technologists and designers, with support from transport companies Transdev and Volvo, prototyped and infused a bus with new technologies. The team employed an agile approach, with iterative prototyping to generate more than 40 innovative ideas (based on interviews with customers) in less than six months. Every two weeks, new ideas were conceived, prototyped, and tested with users in a number of iterations. New design concepts transformed the space, made seating more flexible, and integrated technology into the bus. One example: a specific spot for standing passengers—an integrated space divider with cup holders, phone chargers, and shelf space. Another, based on the preferences of bacteria-wary passengers, is a sensor system that lets riders send a stop signal to the driver without touching a traditional button.3

Skånetrafiken’s concept bus took a major step toward reinventing the urban-travel experience. Although it continues to be an ongoing lab and project, it is also now ready to transport riders in southern Sweden, who will provide ongoing feedback to inspire future work redesigning urban-travel options.

A leading Nordic telecommunications company needed to replace its legacy technology infrastructure. It therefore launched an extensive transformation program to develop more relevant and valuable offers for customers and ways to meet their future expectations about the end-to-end experience of service upgrades and changes. Better technology would then serve these new needs in the most efficient manner.

The central question: What will customers want in the future? Is it even possible to tell? In this case, design specialists combined their experience with prototyping and “futuring” techniques to project future scenarios and make them tangible for consumers to explore. The team understood that some aspects of the customer’s behavior, habits, and values tend not to change as much as technology or other solutions do. Encouraging consumers to play around with prototypes and to cocreate ideas with the team provided crucial insights about people’s functional and emotional needs, dreams, aspirations, and views of the future. This highly collaborative approach also made it possible to engage key internal stakeholders and to bring in a diverse assortment of capabilities throughout the development process. By listening, providing transformation tools, and engaging with stakeholders, the company persuaded them to contribute their personal experiences and ideas to the creation of end products.

Through such interactions between consumers and the company, the transformation team developed a deep understanding of what customers might expect from products and services five years down the road. That became the focal point of the company’s vision of its role in creating lifetime customer value. New investments and other decisions to advance the company’s technology-infrastructure-related transformation flowed from these insights.

A key focus of IKEA’s effort to develop its Home Smart line, which introduced technology-infused furniture, was exploring the experience of integrated wireless charging of mobile phones in homes. The ultimate goal was to design a solution that would eliminate charging entirely. IKEA’s design team had to reinvent the research process to explore how people would react to these new features in furniture. To support the vision of a simpler, more human-centered home life, it was important that the result not look like technology but still be understood as more than just furniture.

The team launched an immersive process: simple prototypes helped show where people would actually prefer to charge their devices in their homes (users could place stickers anywhere). An extensive, in-home testing process in several countries pinpointed the times and situations when charging becomes an issue. The team expected new technology to pave the way for completely new kinds of behavior, so it paid particular attention to understanding whether consumers would intuitively understand the underlying functionality of the products.

Home testing, which allowed families to try products for several weeks rather than only during workshop sessions, helped the company to see how the concept would fit into everyday life and influence current habits and routines. In parallel, the team spent time with consumers in stores to learn about the retail experience and the environment where the new products were sold. To create the right store experience, it was critical to get insights on how consumers would understand and perceive this new integrated-charging feature.

The result was the world’s first line of furniture with integrated wireless-charging capabilities—part of a successful initiative to bring smartness into homes and make it accessible to the mass consumer market.

Each company’s efforts to shape design-led experiences will unfold differently. But it is possible to draw lessons—several principles for shaping a design-led customer-experience strategy—from these examples, unique as they are. As companies increasingly turn to design strategies, it is helpful to keep the principles in mind to guide their efforts.

  1. Understand the customer’s needs and perspectives. Companies often approach innovation from a technological point of view and already, at the outset, have strong ideas about what the solution should be. To arrive at a new, integrated solution that taps into the power of convergence, it’s better to start from a people perspective. Companies can begin to study key aspects of the customer’s experience and try to understand and resolve core pain points by answering a few questions:

What do customers really need, desire, and aspire to?

What are they trying to achieve by consuming a product or service?

What kinds of behavior are connected to the experience, natural or constructed?

What do customers think about the product, the service, and the experience? And why do they think the way they do?

Often a company ought to consider shifting its mind-set: away from a technological solution (“what product or service can we provide to the market?”) to a consumer-oriented one (“what customer needs do we aim to fulfill through this integrated solution?”). An unmet need, even if for the most part unexpressed, frequently turns out to be a company’s next business opportunity.

  1. Draw inspiration from other industries. Companies increasingly look beyond existing industry boundaries and try to adopt better approaches from unrelated contexts. Some examples:

A hotel company that wanted to improve its customer experience drew inspiration from the world of senior-executive assistants. The company reasoned that the best assistants anticipate the needs of their executives, sometimes even before the executives are aware of those needs. By applying that principle to its customers, the hotel company emphasized service that anticipated their needs, as though it already knew even first-time visitors.

A software provider of e-trading platforms wanted to redesign its core product. When it decided which information to place centrally and which could be relegated to a peripheral view, it took a hard look at airplane cockpits.

The CEO guide to: Customer experience The CEO guide to customer experience
Read the article

  1. Get a glimpse of what’s on the horizon. By definition, design is a creative and exploratory process. Looking into the future allows a team to project an industry’s circumstances as far as 15 to 20 years away by framing the landscape of products and services. The primary elements to consider are typically societal shifts, such as changes in behavior, demographics, and social norms, as well as technological improvements.

The exercise can also be useful with a much shorter time frame by projecting emergent trends that can already be observed to a certain degree: for example, the new EU payment directives in banking—PSD2—will remove the banks’ monopoly and allow nonbanking players to initiate payments and access account information. How will this change the landscape of the banking industry? What if you could use Facebook or Google to pay your bills? What about the effects on other industries? What new business opportunities could be created when these developments combine with other shifts that happen simultaneously?

  1. Empower multidisciplinary teams. Designing a convergent, end-to-end customer experience requires the broad involvement of stakeholders across the organization and beyond. They will have expertise in fields such as design research, anthropology, and business, and spheres of influence, such as product development, marketing, or finance. Creating a multilayered experience requires a variety of design capabilities, such as designing products, services, user experiences, and interactivity. Such multidisciplinary teams can break through silos and foster cross-disciplinary collaboration. Decision makers from all stakeholder groups should align together and embrace uncertainty together, developing capabilities throughout the entire design process. The use of existing resources can keep the investment in time and costs low.
  2. Use agile techniques to prototype experiences and business models. The challenge of mastering many convergent opportunities is that solutions often reside in complex ecosystems that either stand alone or depend on other, related systems. Think of air travel, for instance, as a combined experience of products, services, and environments. Despite this level of complexity, companies can achieve rapid progress through prototyping, which quickly brings to life new opportunities and perspectives for effective implementation.

An experience can be prototyped through simple cardboard models, role playing, or clickable digital prototypes. This approach focuses on eliminating mistakes and highlighting possibilities for further development. Alternative business models can be visualized and prototyped to explore where value is added, costs occur, and efficiencies or new revenue streams lie in wait. We find that it’s most efficient to iterate a prototype of the customer experience and the business model—these pilot efforts can secure the best outcomes before scaling. The goal should be managing prototypes in an agile way, through sprints and frequent feedback from users, with a focus on developing business value.

The convergence of products, services, and user environments is just taking flight. In this environment, large and unexpected business opportunities will appear, along with unlikely competitors. To prosper, companies must balance agile, design-led development processes with the continual redesign of customer journeys.

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The success of sponsored posts has radicalized the way companies communicate. The sponsored post revolution signals more than a mere marketing fad. It marks an important new chapter in the history of business communications, the era of corporate enlightenment. The phenomenon of sponsored posts has unfolded rapidly because it responds to consumer preference.  Most people would rather learn about a company via a sponsored post than an ad. Sponsored posts in Venitism allow companies to react in real time, provide increased transparency, and create a strong brand identity at a fraction of the price of traditional marketing tactics, and in less time.

Sponsored posts in https://venitism.wordpress.com can be the means by which a brand shapes and impacts business and consumer landscapes. Sponsored posts can be a thoughtful investment in a company’s legacy. Armed with quality sponsored posts, corporations can become thought leaders, change agents, and experts. They can, in fact, become enlightened. Branded content is a powerful movement, and for good reason.  In an always-on digital world, netizens have places to go and destinies to meet. To get their attention, you have to offer something valuable in return with no more than a couple links. Great stories persuade by uniting an idea with an emotion. Weave a story with information that makes your audience’s heart beat faster, and you have a good chance of winning them over.

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EMAIL DELIVERABILITY: THE GOOD, THE BAD AND THE UGLY


Email Deliverability: The Good, Bad And The Ugly

Email marketing can seem like the Wild West with a variety of players and techniques in the industry. Learn how to emulate best practices and minimize negative tactics. Improve your email deliverability and sender reputation by following our tips.

Given the avalanche of email we receive each year, it’s no wonder that we have become somewhat desensitized to its impact on our professional brand. We’ll spend hours polishing our profiles and revising our résumés, but hastily hit send on an unintelligible missive simply because we’re in a rush. 

Have you ever thought about the brand you’re conveying through your emails? You should. Every email you send affects your professional reputation, or brand. Don’t make these all-too-common mistakes in your communication:

Your emails are too long for anyone to digest. Are your messages typically the length of all 12 installments of Crime and Punishment? Do you include all the backstory a reader could ever want to know? While context is critical to guiding the reader’s interpretations, remember that what they need to know is inevitably a subset of everything you could tell them. Given that the adult attention span is a mere eight seconds, it’s important to make every moment count. Get to the point.

You’re including way too many people. Do your Cc habits ensure that a cast of thousands is in the loop? If so, ask yourself who is truly the essential audience for the message. In many organizations, overuse of Cc reflects a political culture in which people cover their tracks by overinclusion. Remember that each message you send contributes to everyone’s inbox, including your own, especially when one of your recipients decides to Reply All.

You’re dashing off incomplete thoughts. While there’s a lot to be said for brevity, there’s a big difference between being concise and being terse. Do you find yourself shooting off one-liners that pick up in the middle of a thought without considering whether the reader can follow the thread? Do you end up with a high volume of clarifying questions in response to your messages? If so, that’s a clue that your emails need more composition and more context.

You’re burying the lede. It shouldn’t take a symbologist to find the important message hidden in your email. Make sure your readers know what the ask is and why they should care about responding. Despite our compulsive relationship with it, responding to email is not a sacred duty. If you want your readers to digest your message, and perhaps even take action on it, make it easy for them to do so.

We already have a negativity bias toward email messages. As has been demonstrated in the emerging field of social neuroscience, without the social cues — voice tone, facial expression, and physical gestures — that we rely on to interpret communication, we are prone to conclude the worst. Don’t skip the niceties, or your audience may assume a message that wasn’t intended, and you’ll be forced to do damage control.

The next time you start to write an email, follow a few rules:

  • Use an intuitive subject line that clearly states the purpose of the message. Bonus points if you include a header, e.g., [ACTION] or [INFORM], that helps the reader understand the expected response.
  • Provide a clearly stated request right at the beginning of your email in case your audience fails to read beyond the preview pane. At least you’ll increase the chances that people will understand the essence of your message.
  • Bold the names of anyone who’s been assigned a task or asked a question in the body of the email to increase the likelihood of it getting the needed attention.
  • Take the time to be nice. It will help your audience truly hear what you intended to say.

The next time you’re in your email account, take a closer look at your sent folder. Everything you need to know about your email brand is contained within. If you don’t like what you see, tomorrow is another day. There’s always another chance to shape your email reputation.

Mainstream advertising is expensive cluster bombing, whereas sponsored posts in excellent blogs, such as Venitism, bring quality clients at low cost.  Small is beautiful!  Most organizations are now marketing with sponsored posts, going beyond the traditional sales pitches and instead enhancing brands by publishing or passing along relevant information, ideas, and entertainment that customers will value.  Sponsored post is the most respected social medium.

The success of sponsored posts has radicalized the way companies communicate. The sponsored post revolution signals more than a mere marketing fad. It marks an important new chapter in the history of business communications, the era of corporate enlightenment. The phenomenon of sponsored posts has unfolded rapidly because it responds to consumer preference.  Most people would rather learn about a company via a sponsored post than an ad. Sponsored posts in Venitism allow companies to react in real time, provide increased transparency, and create a strong brand identity at a fraction of the price of traditional marketing tactics, and in less time.

Sponsored posts in https://venitism.wordpress.com can be the means by which a brand shapes and impacts business and consumer landscapes. Sponsored posts can be a thoughtful investment in a company’s legacy. Armed with quality sponsored posts, corporations can become thought leaders, change agents, and experts. They can, in fact, become enlightened. Branded content is a powerful movement, and for good reason.  In an always-on digital world, netizens have places to go and destinies to meet. To get their attention, you have to offer something valuable in return with no more than a couple links. Great stories persuade by uniting an idea with an emotion. Weave a story with information that makes your audience’s heart beat faster, and you have a good chance of winning them over.

https://venitism.wordpress.com offers sponsored posts for companies that want to highlight their thought leadership expertise, while gaining objectivity and credibility through content marketing initiatives. As a sponsor, your company can gain a powerful advantage, exceptional visibility, and access to a global audience for only one hundred euros! Venitists have power, influence, and potential. They are successful executives, independent thinkers who embrace new ideas, rising stars who are aiming for the top. Our readers demand accurate, original reporting, untainted by establishment spin and linkbait. Venitism is a first-in-class blog that provides warp speed, on the ground reporting from anywhere in the world. For more information, email venitis@gmail.com

PERSONALIZED DATA-DRIVEN MARKETING IS HERE TO STAY

10 Reasons Why 2017 is the Year of First-Person Marketing

 

Marketers are suffering from PTSOD (post-traumatic shiny object disorder), developed after experiencing too many PowerPoint presentations from ad-tech, mar-tech, whatever-tech companies promising the holy grail of the “right message to the right person at the right time.” Becoming distracted by the shiny objects took our eye off the ball. We forgot to focus on what matters.

Platforms often create new behaviors in the ecosystem by aggregating new markets. Airbnb, for example, created a new behavior among both hosts and guests, encouraging hosts to unlock spare capacity and guests to trust strangers enough to live with them.

Effecting change along the systems dimension is crucial. While traditional firms largely deal with internal systems and leverage supply side economies of scale, digital platforms benefit from externalities and demand side economies of scale. Platforms need to architect new systems and understand the sources of delay and feedback that lead to coordination of the ecosystem and reinforcement of behaviors across the collective.

Culture shapes cohesive action in firms. In ecosystems, culture shapes the trust and implicit contract between participants. Platforms that enable ecosystem interactions involving high risk or sensitive information need to invest in their ecosystem’s culture. While systems enable explicit contract, culture creates the environment for value exchanges to occur repeatedly. Finally, culture is emergent on a platform owing to the lower control that the firm has in shaping culture outside its boundaries. To create culture, platforms must constantly track patterns of usage in order to detect early signs of collective emergent behavior. MySpace, while a successful social network, failed to scale because it failed to create a culture of trust and security. Facebook, and more recently Snapchat, have successfully created a more secure culture.

There will be increasing complexity in consumer purchasing decisions. Consumers use all kinds of media to make shopping decisions – from YouTube to Facebook – and it’s becoming increasingly harder to put the people that buy certain products into a box than it used to be. Consumer categories like mainstream, or high and low end, are starting to disappear. Segmentation is getting more and more complex. The same customer can buy one high end product and one low end product at the same time. These days you could easily find someone who could take an EasyJet flight from London to Milan to buy a Gucci bag. People select which consumer products they want to buy with an unbalanced mix of emotions and rationale. They might not have any emotional connection to aviation and thus the cheapest product will do. But when it comes to a luxury bag they might value tradition and craftsmanship.

Personalization in product design and communications will be more prevalent. Thanks to big data, social media and flexible manufacturing, more companies are learning to offer customized products and designs. This trend is reaching a growing number of industries including the health sector. While pharma companies continue to treat all patients in more or less the same way, they will soon be moving towards personalized medication based on our differences such as age, sex, weight, and medical history. Watch out for many other industries to start following suit.

Mobile communications are becoming the center of marketing.  There have been rumblings in the press recently about WhatsApp giving Facebook its users’ phone numbers to deliver targeted ads. Although getting a text message about one of your favorite products may seem intrusive, so is telemarketing and that hasn’t gone away. Look out for companies to communicate with consumers more and more via their mobile devices.

Transparency will dictate brand-customer relationships. From Wells Fargo to Volkswagen, the list of disgraced companies keeps getting longer. Businesses are realizing that they cannot escape the transparency offered by social media. More companies are learning the lesson that if they aren’t truthful, they will pay the price: Not only hefty fines from the authorities, but also in lost loyalty and business from their customers.

Personalized data-driven marketing will become more friendly. Thanks to big data, companies are learning an awful lot about who you are and what you like. They will get keep getting better at targeting you and communicating with you in the most effective way depending on who you are and what your habits say about you. Don’t say goodbye to spam just yet, but the companies that figure out how to stop casting their one-size-fits all messages less widely, and start targeting people in a more meaningful way, will win.

More accurate metrics will continue to emerge. Until recently, justifying and measuring the impact of their decisions has often been a major challenge for marketers. Today, there are many ways to measure online activity – likes on Facebook, clicks on articles, and so on – but many of them are not fully meaningful yet. Facebook was recently caught amplifying data about how much videos were viewed on its platform. Think about the ramifications for advertisers who thought they were getting more bang for their buck! But this should change soon. Remember when people used to talk about not knowing which half of their advertising budget was wasted? Well this should be approaching somewhere closer to 20% soon. Measurement will probably never be perfect, but digital technology is improving it. Will we ever know the exact trajectory of who views an ad and then opens their wallet to buy a particular product? I’m not so sure. But that is what marketers dream of.

The marketing organization will increasingly move from digital silos to integrated teams. A few years ago you would have the digital team on one side and the marketing team on the other. It can no longer be that way. Digital has to be part of everything now so the two have to be fully integrated. As one marketer recently suggested: Companies do not necessarily need a digital strategy, what they really need to know is how to plug the digital component into the complex process of how consumers make purchasing decisions!

 

Sometimes brands weaken not with a bang but a whimper. Investors naturally want to see greater financial returns, putting constant pressure on brands to keep growing, expanding, and building profits.

So brands cut costs. They also stretch themselves to include products or markets with which they have not been previously associated. Overextension can result in short-term growth, but often weakens a brand over time. Little by little, positive customer associations fall away, until one day it becomes clear that the brand has lost its foundation altogether.

Originally known for high-quality handbags and other leather goods, over the last 20 years Coach aggressively sought new markets by introducing less expensive items and dramatically expanding its outlet-store presence. For a brief period, business boomed. Then consumers started to question the brand’s value. When everybody has a Coach bag, it isn’t so special to have a Coach bag. But because the negative effects of these choices are cumulative and incremental, brand erosion often evades early diagnosis.

There are some steps that companies can take to prevent brand erosion.

First, a company must maintain clarity about what its brand stands for. Who are the core customers? What is the brand’s value proposition? If you can lay this out, then it makes it much easier to remain true to the brand—and to avoid weakening it.

A company should also continuously monitor the health of its brand. This isn’t so much monitoring financial results. Instead, companies should ask questions such as: Is my brand healthy? What are people thinking about it? What are they saying about it? Is it relevant?

Asking consumers open-ended questions such as these, he says, can reveal valuable qualitative information about the associations a brand conjures. For a quantitative perspective, consider a tool called Net Promoter Score, which measures customers’ willingness to recommend a product or service. Other metrics like brand awareness and intent to purchase are also worth analyzing.

Finally, companies should take brand health into account when setting employee financial expectations and incentives.

In many cases, brands get in trouble because the financial expectations are simply too high. If you give somebody big financial expectations and big incentives, they will do everything they can to meet those expectations. The problem is that while meeting them, they may do things that are going to damage the brand in the long run.

Such a pressure-cooker atmosphere may have been what led Wells Fargo employees to make fraudulent customer charges. The banking and financial services behemoth is facing a $185 million regulatory fine after years of charging customers for accounts they had not opened, services they had not requested, and credit cards they had not ordered. If companies are put under too much pressure to meet their numbers, employees start thinking: I can always worry about the brand next quarter. This quarter, I’ve got to keep my job.

Say a brand has already lost its way. How can a company strengthen it again? In 2008, Starbucks found itself in crisis, its stock value having plummeted by 50 percent over the previous year. At least part of the crisis stemmed from its increased emphasis on sweet, frothy beverages, which conflicted with its original reputation as a place to get truly authentic coffee.

To turn things around, CEO Howard Schultz took many drastic steps—including closing every Starbucks location for an afternoon in order to retrain its baristas in the art of espresso. Yes, he also replaced the company’s outdated cash registers and improved its social media presence, among other measures. But at its core, this was about retrenching and rebuilding the Starbucks brand. And it worked.

That’s not to say that any company aiming to revitalize a languishing brand should simply mimic Starbucks’s steps. Rather, there is a basic process that any company with branding problems can follow. It begins, once again, with a deep exploration into what the brand actually means to customers. There’s often a big difference between what you want a brand to stand for and what it actually stands for.

Then comes the often painful process of refocusing the brand on its core business. Take Burberry, which originally gained fame for its trench coats. Over time, the company diluted its brand by overextending itself into a wide range of products. When Angela Ahrendts came on board as CEO in 2006, she refocused the brand on those iconic coats to great success. They first reestablished the base and then began to grow again. This led to an incredible turnaround.

Dedicated marketing staff and senior managers will of course be critical to a brand’s efforts to reestablish itself—but don’t forget about teams from customer service, sales, and operations, too. In many ways, the most important people are the frontline employees. Experiences are incredibly powerful when it comes to building a brand, so if these employees aren’t engaged, it will be tough to revitalize a brand.

Next, brands should highlight any branding shifts publically. In the absence of news, brand associations don’t change. A company might introduce innovative products that embody the essence of the brand; think Apple’s late-nineties launch of its iMac line. Or a company can leverage the power of other brands, often through celebrity partnerships. Take Adidas, which signed Justin Bieber, Katy Perry, and Kanye West as brand ambassadors, in addition to expanding its U.S. athlete sponsorships. You’ve got to find a way to get people’s attention, and celebrities are a great way to do that.

Finally, companies need patience. Revitalizing a brand takes attention, but it also takes time. Companies should resist the temptation to employ strategies such as discounted pricing, brand extensions, and cost cutting. In fact, they must often move in the opposite direction by narrowing their portfolios, reducing discounts, and improving quality.

In some cases, profits go down dramatically when you turn brands around. You could see falls of 30 or 40 percent in the short run. So set modest targets in order to produce positive news—and take comfort in knowing that long-term thinking now will pay off in long-term benefits for your brand later.

Distrust is often based on experience or reliable information, while mistrust is often a general sense of unease toward someone or something. This is the age of distrust. Fake news infiltrates the media daily. It inundates social media feeds and tempts with the most appealing of clickbait headlines. For marketing’s underbelly, it has been a gold mine, but it has come at the cost of trust and consumer confidence.

Never before has the general public been so skeptical of absolutely everything, let alone marketing and advertising. We see the largest-ever drop in trust across the institutions of government, business, media and NGOs. Trust in media took a nosedive and fell to all-time lows in 17 countries. Businesses, from faith in the brand to trust in executive leadership, didn’t fare much better.

For younger generations, millennials in particular, this is hardly surprising. Research and analysis has for years pointed to a lack of trust for advertising and corporate America, with some data suggesting that upwards of 85 percent of younger populations just aren’t buying it. What is surprising is the speed in which gen-xers and even boomers are forming similar sentiments. And so in an era of fake news, high skepticism and low confidence, marketers face perhaps one of their greatest challenges to date, believability.

Fortunately, consumers have, in a way, offered their own solution. As consumer trust decreases, reliance on people increases. More specifically, reliance on the opinions of peers. A person is just as credible for information as academics or experts about a company or brand. Half of all adults are now routinely checking online reviews before making a purchasing decision. 78 percent of people who read online reviews find them reliable.

For marketers, this signals a shift in how dollars should be spent. It’s time to double down on pre-existing customers, as their voices, opinions and beliefs now say much more about a brand than traditional advertising or marketing can. Social media offers the most obvious platform for this kind of marketing, but other forms of social-in-nature content are beginning to take off as well.

For those that have already started down this path, customer review platforms have been checking off all of the right boxes. Brands that utilize a quality customer review tool and proactively seek the feedback of their existing customers are showing results across a wide scope of tangible metrics.

For one, some third-party review tools (they come in many shapes and sizes) have licensing partnerships with Google, making them Google Review Partners. Reviews collected with these platforms can help brands gain Google Seller Ratings, which have been shown to increase the average clickthrough rate for ads by as much as 17 percent. There is also significant SEO and traffic value businesses can attain by collecting reviews.

On the less analytical side, brands that regularly engage with their customers directly through social media, forums, message boards and review platforms end up with a built-in marketing team made up of their own customers. The reviews and feedback consumers leave not only generate brand loyalty but also provide potential customers—those who don’t quite trust traditional marketing methods—with the push they need when a purchasing decision needs to be made.

Responding publicly to those who have had a negative experience with the brand is like winning the marketing lottery in the age of distrust. Research shows increasing customer retention by just 5 percent can lead to a 25 percent to 95 percent increase in company profits. Engaging with customers demonstrates trust and transparency to anyone else looking on.

Regardless of the platform or medium, it’s now more important than ever for marketers and advertisers to invest in trust marketing. The data is concrete and suggests that without a game plan, traditional marketing dollars will start to fall short if they haven’t already.

It’s hard to say when consumer confidence will be restored to its normal levels; sins of the past may make that nearly impossible. But like it or not, distrust is now ubiquitous. Fake news is now part of the world we live in. Each and every time it’s disseminated, brand trust takes another gut punch—and so do today’s marketers.

Mainstream advertising is expensive cluster bombing, whereas sponsored posts in excellent blogs, such as Venitism, bring quality clients at low cost.  Small is beautiful!  Most organizations are now marketing with sponsored posts, going beyond the traditional sales pitches and instead enhancing brands by publishing or passing along relevant information, ideas, and entertainment that customers will value.  Sponsored post is the most respected social medium.

The success of sponsored posts has radicalized the way companies communicate. The sponsored post revolution signals more than a mere marketing fad. It marks an important new chapter in the history of business communications, the era of corporate enlightenment. The phenomenon of sponsored posts has unfolded rapidly because it responds to consumer preference.  Most people would rather learn about a company via a sponsored post than an ad. Sponsored posts in Venitism allow companies to react in real time, provide increased transparency, and create a strong brand identity at a fraction of the price of traditional marketing tactics, and in less time.

Sponsored posts in https://venitism.wordpress.com can be the means by which a brand shapes and impacts business and consumer landscapes. Sponsored posts can be a thoughtful investment in a company’s legacy. Armed with quality sponsored posts, corporations can become thought leaders, change agents, and experts. They can, in fact, become enlightened. Branded content is a powerful movement, and for good reason.  In an always-on digital world, netizens have places to go and destinies to meet. To get their attention, you have to offer something valuable in return with no more than a couple links. Great stories persuade by uniting an idea with an emotion. Weave a story with information that makes your audience’s heart beat faster, and you have a good chance of winning them over.

https://venitism.wordpress.com offers sponsored posts for companies that want to highlight their thought leadership expertise, while gaining objectivity and credibility through content marketing initiatives. As a sponsor, your company can gain a powerful advantage, exceptional visibility, and access to a global audience for only one hundred euros! Venitists have power, influence, and potential. They are successful executives, independent thinkers who embrace new ideas, rising stars who are aiming for the top. Our readers demand accurate, original reporting, untainted by establishment spin and linkbait. Venitism is a first-in-class blog that provides warp speed, on the ground reporting from anywhere in the world. For more information, email venitis@gmail.com

INTRODUCTION TO ALGORITHMS

What are algorithms?

In the modern world, algorithms do much of the digital heavy lifting.

Algorithms control the inner-workings of everything from particle accelerators to stock markets. They determine the news you see, what search results you get, how computers learn, and what gets recommended to you on Netflix or Amazon.

In short, society couldn’t function as-is without algorithms – and as we lean on them to run more things, it becomes more important for us to learn what they are and what they do.

Algorithms 101

The above infographic digs into the origins of algorithms, and how they impact our everyday lives.

What is an Algorithm?

An algorithm is a predetermined set of steps for a computer to accomplish a task. It’s basically an instruction manual. And as in life, instruction manuals can be simple (e.g. building an Ikea side table) or extremely complex (e.g. filing a patent).

Below is “Sorting Out Sorting” (1981), a timeless primer on sorting methods. It clearly demonstrates the way computers approach sorting vast quantities of information by following a set of instructions.

A famous example of an algorithm is Google’s PageRank, which determines the order in which websites appear in Google’s search rankings. PageRank’s methodology is explained succinctly and effectively in the video below.

By building on a stochastic model called the Markov chain, PageRank revolutionized the way the world accesses information. The power of this algorithm is partially responsible for Google’s ability to control 41% of the online ad market, which is where Alphabet still generates the majority of its revenue.

How Algorithms Influence Society

Social platforms play a substantial role in delivering news and information to us. In fact, an estimated 44% of the U.S. population consumes news via Facebook. The more we rely on social networks to supply us with news, the more algorithms will influence what information we’re exposed to. Since social platforms are designed to serve us customized content, there is a growing concern that we are creating online echo chambers that crowd out opposing views.

Algorithms also have a profound influence on our economy. Roughly 50% of the market moves through high frequency trading – the process of using dedicated programs to make automated trading decisions to place orders. Large portions of our economy are now managed with very little human intervention.

In recent years, progress in the field of artificial intelligence has generated an abundance of interest and excitement. Deep learning (a technique for implementing machine learning) is making all kinds of machine-assisted tasks possible. Preventive healthcare, driverless vehicles, drug discovery, bioinformatics, and hyper-customized recommendations on shopping websites are all here today or coming down the pipeline.

Deep Learning

The remarkable thing about deep learning is that it goes beyond what any human can program a computer to do. Programmers have instead used a learning algorithm – fueled by terabytes of data – to train it to perform complex tasks. The computer essentially figures out for itself how to recognize the desired objects, text, or actions.

Breakthroughs like this are the reason AI startups are now receiving billions of dollars of funding.

AI funding

The Algorithmic Economy

The potential upside for technology providers are enormous, particularly if proprietary processes work on a global scale. An era where “things” will communicate autonomously and take actions without human intervention is sure to profoundly impact our society.

The big question is, what will we do once computers and algorithms are taking care of business?

Making accurate predictions based on historical precedent is flawed, but thinking in scenarios reduces uncertainty. Most investment reports don’t publish formal risk assessments. Analysts typically provide investment recommendations in the form of a buy, hold or sell call, often derived from a fundamental analysis of the firm’s intrinsic value and its projected cash flows. However, existing research finds that while target prices do convey information, they also seem to be optimistic, inaccurate and of little long-run investment value.

There is a better way to present a fuller picture of future possibilities by putting multiple scenarios on the table, instead of limiting predictions to a single-point outcome. When forecasters are asked to explore the possible outcomes they otherwise would not have thought about, they are able to take more factors into account to allow for upsets to their base case scenario. This not only helps to allow for uncertainties, but reduces optimistic biases, improving overall forecasting.

Big data’s potential just keeps growing. Taking full advantage means companies must incorporate analytics into their strategic vision and use it to make better, faster decisions.

There is a transformational potential of big data. This potential has not been oversold. In fact, the convergence of several technology trends is accelerating progress. The volume of data continues to double every three years as information pours in from digital platforms, wireless sensors, virtual-reality applications, and billions of mobile phones. Data-storage capacity has increased, while its cost has plummeted. Data scientists now have unprecedented computing power at their disposal, and they are devising algorithms that are ever more sophisticated.

The greatest advances have occurred in location-based services and in US retail, both areas with competitors that are digital natives. In contrast, manufacturing, the EU public sector, and healthcare have captured less potential value. And new opportunities have arisen, further widening the gap between the leaders and laggards.

Leading companies are using their capabilities not only to improve their core operations but also to launch entirely new business models. The network effects of digital platforms are creating a winner-take-most situation in some markets. The leading firms have remarkably deep analytical talent taking on various problems—and they are actively looking for ways to enter other industries. These companies can take advantage of their scale and data insights to add new business lines, and those expansions are increasingly blurring traditional sector boundaries.

Where digital natives were built for analytics, legacy companies have to do the hard work of overhauling or changing existing systems. Adapting to an era of data-driven decision making is not always a simple proposition. Some companies have invested heavily in technology but have not yet changed their organizations so they can make the most of these investments. Many are struggling to develop the talent, business processes, and organizational muscle to capture real value from analytics.

The first challenge is incorporating data and analytics into a core strategic vision. The next step is developing the right business processes and building capabilities, including both data infrastructure and talent. It is not enough simply to layer powerful technology systems on top of existing business operations. All these aspects of transformation need to come together to realize the full potential of data and analytics. The challenges incumbents face in pulling this off are precisely why much of the value we highlighted in 2011 is still unclaimed.

The urgency for incumbents is growing, since leaders are staking out large advantages, and hesitating increases the risk of being disrupted. Disruption is already happening, and it takes multiple forms. Introducing new types of data sets (orthogonal data) can confer a competitive advantage, for instance, while massive integration capabilities can break through organizational silos, enabling new insights and models. Hyperscale digital platforms can match buyers and sellers in real time, transforming inefficient markets. Granular data can be used to personalize products and services—including, most intriguingly, healthcare. New analytical techniques can fuel discovery and innovation. Above all, businesses no longer have to go on gut instinct; they can use data and analytics to make faster decisions and more accurate forecasts supported by a mountain of evidence.

The next generation of tools could unleash even bigger changes. New machine-learning and deep-learning capabilities have an enormous variety of applications that stretch into many sectors of the economy. Systems enabled by machine learning can provide customer service, manage logistics, analyze medical records, or even write news stories.

These technologies could generate productivity gains and an improved quality of life, but they carry the risk of causing job losses and dislocations. Previous MGI research found that 45 percent of work activities could be automated using current technologies; some 80 percent of that is attributable to existing machine-learning capabilities. Breakthroughs in natural-language processing could expand that impact.

Data and analytics are already shaking up multiple industries, and the effects will only become more pronounced as adoption reaches critical mass—and as machines gain unprecedented capabilities to solve problems and understand language. Organizations that can harness these capabilities effectively will be able to create significant value and differentiate themselves, while others will find themselves increasingly at a disadvantage.

 

Combining pure prediction with causal inference will get us closer to being able to address the really hard problems that involve sussing out all of the alternate outcomes that could result from implementing different policies.

Many public-policy problems have questions of causal inference at their core. That’s the really hard stuff, and you have to proceed with caution to understand the effect of something. But that’s most of the world.

The momentum of big data and machine learning in academic research and practical applications is invigorating. The gap between research and practice, which used to be insurmountable, is disappearing. It’s so cool when our research gets adopted within months.

It’s especially gratifying to witness the widespread adoption of predictive methods that not too long ago were the exclusive province of a specialized cadre of data scientists. It’s amazing, because you’re empowering people who in a previous generation wouldn’t have used a computer for anything other than word processing. Now it’s not just the geeky engineers, but people at high levels of a company are interested in the most recent research. They recognize the power of being able to use data to optimize decisions and investments. They’re building big-data models and open-source software to make great predictions with cutting-edge techniques. It’s been completely democratized, and that’s a huge success story.

MEGACITIES

Animated Map: The 20 Most Populous Cities in the World by 2100

 

If you look at a modern map of the world’s most populous cities, you’ll notice that they are quite evenly distributed around the globe.

Metropolises like Moscow, New York, Tokyo, Cairo, or Rio de Janeiro are spread apart with very different geographic and cultural settings, and practically every continent today can claim at least one of the world’s 20 most populous cities.

In the future, things will be very different. In fact, over the next 80 years or so, some cities will literally 10x or 20x in size – turning into giant megacities that have comparable populations to entire countries like modern-day Germany, France, or the United Kingdom.

The most interesting part? None of these cities will be in the Americas, Europe, China, or Australia.

The Top Four Megacities of the Future

According to predictions from the Global Cities Institute, these will be the biggest cities in the world in 2100:

Lagos

Lagos is already one of the biggest metropolises in Africa, and we previously noted that it was one of the fastest growing cities in the world.

In fact, it’s growing so fast, that no one knows how big it actually is. The U.N estimated it had 11.2 million people in 2011, and the year after The New York Times said it had at least 21 million inhabitants. In any case, this Nigerian metropolis is growing like a weed, and the Global Cities Institute estimates that the city’s population will hit the 88.3 million mark by 2100 to make it the biggest city in the world.

The city is already a center of West African trade and finance – but Lagos has ambitious plans to up the ante even further. Right now, the city is building Eko Atlantic, a massive new residential and commercial development that is being pitched as the “Manhattan of Nigeria”. It’s just off of Victoria Island, and it is being built on reclaimed land with special measures in place to prevent flooding from global warming.

Kinshasa

When people think of the DRC, sprawling metropolises generally aren’t the first things that come to mind.

But Kinshasa, once the site of humble fishing villages, has already likely passed Paris as the largest French-speaking city in the world. And it’s getting bigger – by 2100, it’s projected to be the world’s second largest city overall.

How Kinshasa develops will certainly be interesting. As it stands, approximately 60% of the 17 million people living there by 2025 will be younger than 18 years old. How the city deals with education will be paramount to the city’s future progression.

Dar Es Salaam

Have you heard of Dar Es Salaam, the Tanzanian megacity that will hold 73.7 million inhabitants in 2100?

It’s not on a lot of people’s radars, but its population will explode 1,588% to become the third largest city in Africa, and in the world.

Interestingly, East Africa will be home to many of the world’s biggest cities in the future – and many will be seemingly popping up out of nowhere. Consider Blantyre City, Lilongwe, and Lusaka, for example. Most Westerners will not likely have heard of these places, but these centers in Malawi and Zambia will each hold over 35 million people.

Mumbai

Finally, the last city to round out the top four is Mumbai, which is already one of the world’s biggest megacities with over 20 million people.

As the entertainment capital of India, it will be interesting to see how Mumbai evolves – and how it ends up comparing to other Indian megacities like Delhi and Kolkata, which each will hold over 50 million residents themselves.

The representation of the city we need is a mystery to us; now, without that vision, we mutilate urban value. The novel Frankenstein written by the English author Mary Wollstonecraft Shelley describes the creation of a poor wretch. The premise is that a sum of organs could create a human being. Shelley wanted to write the best horror story and she succeeded.

“Smart” buildings, “intelligent” transportation systems and “smart” airports are all isolated projects (managed by independent departments) which leverage the use of technology to create new urban value in a city being modernized and often called a smart city. Like Frankenstein, the sum of isolated smart urban projects creates a so-called smart city!

A city is not a sum of things. Vibrant cities are a complex system of systems (and not a set of sets) which relies on economic, social and environmental interconnected values with the goal to support urban sustainability.

In the history of ideas, Aristotle was probably the first to point out that the whole is more than the sum of its parts. Blaise Pascal wrote in Pensées 72, “since everything then is cause and effect, dependent and supporting, mediate and immediate, and all is held together by a natural though imperceptible chain, which binds together things most distant and most different, I hold it equally impossible to know the parts without knowing the whole, and to know the whole without knowing the parts in detail.”

Our traditional urban management fails (congestion, pollution, waste of energy) and urban governance struggles (siloed urban organisations and operations, economic pressures) because they rely on an incorrect model of representation of a “city”. Urban leaders ask the wrong question, “What is a city?” when no unequivocal answer exists and then design their city as a set of independent organisations. To find the next model for our future cities, we need to answer different questions.

What does the city do? Cities are characterised by activities, including the planning of new districts to face growing urbanisation, the reorganisation of the transport network to ease congestion, the distribution of public water and electricity to all inhabitants, environment management and providing law enforcement. These examples show that goal-directed collective actions in a city (or an urban area) cannot be managed by a single department or agency. It is a collaborative work between silos such as security and safety, transport, utilities, city mayor’s administration, government agencies and ministries, involving non-governmental organisations (NGOs), citizens, businesses, tourists, etc.

As such, the modelling, design and implementation of a collective effort in a city can be perceived as a complex process. Le Moigne says, “a phenomenon is said to be perceived as being complex when it has the following property: no single finite model, no matter how large, how complicated, how stochastic, etc., it may be built, seems capable of representing exhaustively that phenomenon.” Edgar Morin, in his work on complexity, explains that reducing the complexity of a situation (as we do when applying a Cartesian approach to solve urban challenges) will mutilate its understanding and make it even more complex (so that it will no longer be possible to understand the situation and solve a challenge).

How is the city organized? Experience shows that if the context in which the action takes place is not properly considered during the design process, its implementation will fail (such as satellite cities and many Greenfield cities launched since 2007 in Asia and Middle East). For example, when designing a city platform (like a few cities are currently planning) only the selection of an appropriate methodology adapted to complex system modelling will provide the conceptual tools for modelling in the context of the environment of the city. For cities, the holistic approach needs to be replaced by a systemic approach. Such new approach in the urban environment reveals that the governance of the city of the future needs to change to include co-operation and collaboration between departments and so, the design of a systemic urban management system. Cities need to innovate their governance (the Leipzig Charter on Sustainable European Cities recommended in 2007 to develop integrated urban development) or they will stagnate (cities continuing with a silo approach).

What will the city become? Each city needs to do its own analysis and modelling. All the axioms defined along this analysis will constitute the new paradigm of the systemic urban governance of the city. It will show that the current organisation is based on segmented decision centres and a more efficient one should rely on a collaborative and systemic governance to support urban sustainability. Because you cannot manage what you cannot measure, thanks to forthcoming technologies, the management of cities can be improved using ICT solutions and an urban digital transformation strategy.

China wants to finds its typical Chinese city. Each city has its own culture and heritage, and is shaped by international trends and local challenges. When defining its strategy to create future urban value, the city shall consider what it wants to become. Cities are unique and need a unique vision based on national strategies like the 2020 plans in Europe, India and China, or the 2030 plan in the Kingdom of Saudi Arabia.

Industry has business objectives and the way the industry models the city will determine its ability to design and develop urban value solutions and products. For example, the ICT industry has its proprietary models of a city (based on set of sets, puzzles of IoT trees and layers like fog, cloud, applications), so the manufacturers have designed different types of city management platform. We understand that if the manufacturers used a holistic approach or a Cartesian approach they have mutilated the representation of the city: like Frankenstein “seeing” the human body as a sum of parts and not as a person with interconnected parts. In “smart” models, the city is represented as a sum of departments and not understood as a whole. The “smart” cities as designed nowadays are like a “Frankenstein city” where networks of networks are forgotten, where happy citizens are replaced by “happy sensors”. The model of the “city of the future” is not yet defined and will not be unique like “one fits all”.

To become sustainable and human centered, the model of our future city should be analyzed from a systemic perspective and not built from as a sum of siloed projects and departments. Just ask yourself in which city you would like to live and why.

In the fictional world of the video game Watch Dogs, you can play a hacktivist who takes over the central operating system of a futuristic, hyper-connected Chicago. With control over the city’s security system, you can spy on residents using surveillance cameras, intercept phone calls, and cripple the city’s critical infrastructure, unleashing a vicious cyberattack that brings the Windy City to its knees.

Watch Dogs is just a game, but it illustrates a possible “what if” scenario that could happen in today’s increasingly smart cities. Advancements in artificial intelligence and Internet of Things (IoT) connected devices have made it possible for cities to increase efficiencies across multiple services like public safety, transportation, water management and even healthcare.

An estimated 2.3 billion connected things will be used in smart cities this year, according to Gartner, Inc., the technology research and advisory company. That would represent a 42% increase in the number of connected devices since 2016. But the rise of digital connectivity also exposes a host of vulnerabilities cybercriminals are lining up to exploit.

On April 8, hackers set off 156 emergency sirens in Dallas, Texas, disrupting residents and overwhelming 911 operators throughout the day. The number of attacks on critical infrastructure jumped from under 200 in 2012 to almost 300 attacks in 2015. As smart cities move from concept to reality, securing their foundation will become a top priority to ensure the safety of our digitally connected communities.

Simply put, smart cities rely on interconnected devices to streamline and improve city services based on rich, real-time data. These systems combine hardware, software, and geospatial analytics to enhance municipal services and improve an area’s livability. Inexpensive sensors, for example, can reduce the energy wasted in street lights or regulate the flow of water to better preserve resources. Smart cities rely on accurate data in order to properly function. Information that has been tampered with can disrupt operations — and constituents’ lives — for days.

Several cities have adopted smart technologies, applying artificial intelligence to accelerate their transition into the future. In Barcelona, smart water meter technology helped the city save $58 million annually. In South Korea, one city cut building operating costs by 30% after implementing smart sensors to regulate water and electricity usage. With the global IoT footprint expected to surpass 50 billion connected devices by 2020, urban communities will need to strengthen existing cybersecurity protocols and disaster recovery methods to counter hackers searching for opportunities to wreak havoc.

As smart city infrastructure proliferates, the stakes for protecting these digital foundations will only get higher. While investment in smart technology has gone up, many of these innovations are deployed without robust testing and cybersecurity is often neglected.

For example, cities currently using a supervisory control and data acquisition (SCADA) system, are particularly susceptible to frequent hacks due to poor security protocols. Though SCADA systems control large-scale processes and unify decentralized facilities, they lack cryptographic security and authentication factors. If a hacker targets a city’s SCADA system, they could threaten public health and safety, and shut down multiple city services from a single entry point.

Simple computer bugs can also cause significant glitches in control systems, leading to major technical problems for cities. Once hackers invade smart city control systems, they can send manipulated data to servers to exploit and crash entire data centers. This is how hackers gained access to an Illinois water utility control system in 2011, destroying a water pump that serviced 2,200 customers. Not only do these breaches disrupt daily operations for residents, they can be costly to remedy. A hypothetical hack that triggers a blackout in North America is estimated to leave 93 million people without power and could cost insurers anywhere from $21 billion to $71 billion in damages.

The inevitability of cyberattacks is a lesson the private sector has learned the hard way. As cities adopt smart initiatives, they’d be wise to make data security a priority from the outset. In addition to physically securing facilities controlling power, gas and water, city planners should also implement fail safes and manual overrides in all systems and networks. This includes forcibly shutting down potentially hacked systems until security experts have the opportunity to resolve vulnerability issues. Encrypting sensitive data and deploying network intrusion mechanisms that regularly scan for suspicious activity can also protect against hackers trying to breach control systems remotely.

Smart cities can increase productivity and efficiencies for citizens, but they have a serious problem when security is underestimated. As local governments pursue smart initiatives, realizing the full potential of these digitally connected communities starts with implementing cybersecurity best practices from the ground up.

 

LISTEN TO ALTERNATIVE FÜR DEUTSCHLAND

Beatrix von Storch: This policy is not humane. It is megalomaniac.

The following video is a brief talk by Beatrix von Storch, one of the leaders of AfD (Alternative für Deutschland, Alternative for Germany), about the insane immigration policies promoted by Angela Merkel and the leaders of the European Union.

Video transcript:

00:00   People’s decision in Germany
00:04   Video Message: 6.6 Million Migrants at the Gates of Europe
00:08   According to German security authorities
00:12   there are 6.6 millions migrants in North Africa,
00:16   Jordan and Turkey who are waiting to continue their journey to Europe, or more likely
00:20   to Germany. 6.6 million.
00:24   Since the end of January, the number of those waiting has increased by 7,400,
00:28   and that every single day. This is not my “fear-mongering”;
00:32   these are the findings of German Security Authorities.
00:36   BILD has cited them. We are standing just in front
00:40   of an onslaught of unimaginable proportions.
00:45   Mrs. Merkel capitulated in September 2015 before 15,000 migrants
00:49   and opened our borders for them, because, for a few days,
00:53   Yes, it was difficult to obtain pictures.
00:57   We’ve said it constantly: Mrs. Merkel
01:01   has powered up the magnet, and she has refused up through today
01:05   to turn it off. With her insane, unconstitutional,
01:09   completely insane border opening, she has asked the whole world
01:13   to come to us. 6.6 million
01:17   have now heard the call, and this
01:21   is only the vanguard. I simply cannot believe the way
01:25   a whole continent rides into the abyss with open eyes,
01:30   wantonly, the way a large part of society applauds, and
01:34   the way far too many remain silent. How politicians and the press accuse
01:38   all those of hatred, who speak up and warn about
01:42   this incomprehensible reality. How the churches are involved in this moral crime,
01:46   and yes, I call it a crime: against our country,
01:50   against our culture, against social peace and also against the people
01:54   who are lured over the seas by false incentives.
01:58   It is not humane to send half the world, with the promise of paradise,
02:02   on a dangerous journey. And no, we cannot
02:06   save the whole world. This policy is not humane; it is megalomaniac.
02:11   The political elites in Germany and Europe have
02:15   lost their minds. A world without borders is limitless madness.
02:19   Peace and security in Europe will collapse if we
02:23   do not turn around now.

90% of the so-called “aid organizations” on the Mediterranean are German firms. With their large seaworthy ships, they close the logistical gap in the Mediterranean between the Arab smugglers in Libya and the Arab smugglers in Italy. So it is not Libyans and other Arabs who are organizing the mass transport of invaders to West Europe — it is Germans. The Identitarian Movement put on a wonderful solo demonstration against the German smuggler groups. But where is the systematic protest? Where are the pickets in front of the headquarters of these shady companies right here in Germany? Where are the flyers being handed out in the pedestrian zones of those cities? Why is our concentrated anger not directed at those Germans among us whose hands are dirtiest from this repulsive, duplicitous business?

Day after day, the Lying Press presents us with the same Fake News: “Refugees saved from danger at sea!” Every word is a miserable lie! There are no refugees. They were not “in danger at sea.” They were not “saved!”

This is the truth: These are paying passengers, all from Africa or other places where there is no war. These passengers only pay Libyan smugglers such amounts for a seat in a zodiac, because the smugglers can guarantee them that their journey will continue beyond the 12-mile limit on a modern German sea-going vessel. The zodiac waits patiently outside the 12-mile limit for the smuggler ship — informed beforehand by their smuggling colleagues — to take the African passengers on board. These passengers from the inflatable weren’t rescued. They were passed from one smuggler to the next, in a perfectly orchestrated arrangement.

Because they are nothing but smugglers, the so-called German “aid organizations” do not transport their allegedly saved-from-danger-at-sea African passengers to the closest port, as is required and customary in the case of real danger of death at sea. No, because they are smugglers, they smuggle their passengers 500 kilometers to Italy. Then they put out to sea and the whole charade — refugees-danger at sea-saving — starts all over again.

Without the big German ships, the Libyan smugglers would not have a chance to sell their expensive tickets. Why should a Bangladeshi or a Congolese put his hard-won money into the grubby paws of a dodgy Libyan, if he promises a trip to Europe, but can’t guarantee it? That is why the participation of the Germans is crucial. Without the guarantee of a secure, dependable continuation of the journey, “made in Germany,” there would be no business for the Libyans. So the notorious German “aid organizations” are the crux and the fulcrum of all the organized human trafficking in the Mediterranean.

So Germans are once again the ones who are dragging the rest of Europe in the wrong direction. It is not only an icy, passive-aggressive woman at the head of their state, whose selfies advertise a folk migration to Western Europe. It is also those people, predominantly Germans, who are organizing, coordinating and carrying out this folk migration.

In this context, it is puzzling that the latest, exemplary Identitarian demonstration is thus far a noble but isolated act. Systematic, regular protests against the German smuggler mafia — the so-called aid organizations — are long overdue! There is no admonitory presence in front of the company headquarters of these dubious enterprises. No flyers or informative movements in pedestrian zones. No protests against the backers: particularly the churches that provide sums in the millions for these smuggling groups — because the church-backed asylum industry needs constant replenishment of people, to increase its profits.

Germans must not allow themselves to play the bogeyman of Europe again. They must not allow themselves to be singled out again, and be compelled once more to be ashamed of their wretched contribution to the history of our continent. It is the obligation of Germans to pillory the German smugglers of the Mediterranean, the worthless, criminal pseudo-Germans who are sinning against all of Europe. The perpetrators are in our midst. Let us put a stop to their filthy works!

Alice Weidel, the new leader of the Alternative for Germany, is a firebrand who doesn’t hide her disdain for stupid Merkel. Weidel lives with her female partner and their two children on Lake Constance. AfD is the only real opposition party which stands up for the rule of law, in Germany and in Europe.

“On the European level, the bailouts of Greece have breached the Maastricht agreement, and it’s no bailout clause. The ban on bond buying by the European Central Bank has been breached. We are the only party talking about this – this is, by the way, the reason that we were founded.”

The AfD is the youngest party on the German political scene, having been set up by a group of economists as a protest party against Eurozone in 2013. “The AfD is also the only party which calls for referendums, meaning direct democracy… and then there is the migration crisis,” Weidel adds.

If there is one topic which connects the worldly Weidel with the rank and file of the AfD more than any other, it is likely her burning anger at stupid Merkel’s decision to open Germany’s land borders to refugees in August 2015.

August 2015 was also a turning point in the short history of AfD. While the party was languishing under the five percent mark necessary to make it into the parliament over the summer, the sudden arrival of tens of thousands of asylum seekers every day in the autumn sent worried voters flocking to them, as they declared war on Merkel’s open-door policy.

“It just can’t happen that the state gives up control of its own borders,” Weidel says. “That is a contravention of German asylum law.”

She explains that allowing people to arrive in Germany via neighboring countries such as Austria breaches Paragraph 16a of the German asylum law, whereby refugees cannot apply for protection in the Bundesrepublik if they arrive from another country that adheres to the Geneva Convention on refugees.

“Since September 2015, we have had a policy of open borders without legal basis. It is an exceptional circumstance which didn’t even receive the approval of the parliament. It was just done. In an emergency you can do that – for a few days to absorb the shock – but not for one and a half years,” Weidel says.

It’s worth noting that in August 2015, Germany suspended the so-called Dublin rules for Syrian refugees, which state that refugees must apply for asylum in the EU country where they first arrive. A few months later in November that year, Germany announced it would reinstate the rules, except for those who arrived in overwhelmed Greece, which has been one of the main ports of entry into the EU.

Then in March of 2017, the government again started returning asylum seekers to Greece.

Germany’s asylum policies are heightening the risk of terrorist attacks taking place in Germany. But it also encouraged countries on the periphery of the EU, such as Greece and Italy, to stop securing their external borders and to simply send migrants and refugees on to Germany.

By adding up asylum seekers, illegal immigrants, and families of asylum seekers who are allowed to join their loved ones at a later date, Weidel arrives at a figure of 8 million new inhabitants of Germany based on arrivals in 2015 alone. According to official figures 890,000 asylum seekers arrived in Germany in 2015.

“That is completely crazy. That is 10 percent of the German population in one year.” And her predictions for what that means for Germany are apocalyptic. “The country will be destroyed through this immigration policy. Donald Trump said that Merkel is insane and I absolutely agree with that. It is a completely nonsensical form of politics that is being followed here. Germany needs qualified migrants. The people who have come here as refugees are illiterate, they don’t have any training. Eventually they’ll have to go back, this just can’t go on.”

For Weidel the refugee influx is the result of Germany still not having a law determining who can emigrate to the Bundesrepublik. “We are the only party calling for an immigration law based on the example set by Canada. We need qualified migration. We are an industrialized nation. We don’t need illiterate people.”

“I’m sorry but this entire policy is driving me up the wall. It is outrageous what is going on here. We have a completely headless government that has no idea what it is doing. It is acting based on stupidity, ignorance and irresponsibility. You really need to ask, are Germans paying their taxes for this?”

Migrants unsuited to the German economy aren’t the only threat Weidel sees in the mass migration of 2015. The fact that most of the asylum seekers were Muslim also troubles her. “Of course” Islam poses a danger to Germany, she says.

“There are 1,200 people who pose a threat to the country here, who aren’t being deported. I have to be very honest, from my point of view this country has completely lost control over civil society.”

Arab countries such as Saudi Arabia have free hand to send their imams to Germany with their stone-age sharia populism to tap into the Muslim population here. Meanwhile the fact that the state has given control of Islam classes in schools to Ditib, a religious association tied to the Turkish government, irks her. “Lessons in Islam should be taught by a department of the German government, not the Turkish one,” she says.

As German intelligence has reported a steady rise in Islamist radicalism in Germany over recent years, far-right violence has also risen alarmingly. Police figures for 2016 show a 14.3 percent increase in violent crime by right-wing radicals.

“There are no racists in the AfD,” she claims. “But at the same time one must see that dangerous people have come into the country through the government’s open-border policy, even the government admits that one can’t rule out that terrorists have come into the country.”

One of the most interesting things about Weidel and the AfD is that a party which is often characterized as regressive has chosen an openly gay women to lead it. Weidel recognizes that she doesn’t have the easiest job in the world, leading the most controversial party in Germany into the national election.

She says she has set a personal target for the elections to win 15 percent of the vote, “but I think realistically we will get at most 10 percent.” Whether she will still seek to lead the party after the elections is something she is keeping to herself.

“I am really careful about looking ahead. A new party like the AfD is very volatile. Two to four weeks inside the AfD is an incredibly long time – you really can’t see what is going to happen.”

A government task force created to promote the integration of migrants into German society has published a list of the core features of German culture.

The list studiously omits politically incorrect terms such as “patriotism” and “leading culture” (Leitkultur), and effectively reduces German traditions and values to the lowest common denominator. The task force, in fact, implicitly establishes multiculturalism as the most complete expression of German culture.

The so-called Cultural Integration Initiative (Initiative kulturelle Integration) was created by the German government in December 2016 to promote “social cohesion” after Chancellor Angela Merkel opened German borders to more than a million migrants from Africa, Asia and the Middle East.

The task force — led by the German Cultural Council (Deutscher Kulturrat) in close cooperation with the German Interior Ministry and two dozen media, religious and other interest groups — was charged with reaching a consensus on what constitutes German culture. The original aim was to facilitate “cultural integration” by encouraging migrants to assimilate to a shared set of cultural values.

After five months of deliberation, the task force on May 16 presented a list of what it considers to be the top 15 guiding principles of German culture. Encapsulated in the catchphrase “Cohesion in Diversity,” the list consists of mostly generic ideas about German culture — gender equality, freedom of expression, freedom of religion, pluralism and democracy — that are not at all unique to Germany.

Moreover, the list makes no mention of German culture as being the guiding or core culture (Leitkultur), nor does the task force explicitly demand that migrants assimilate to the German way of life. Rather, the guiding principles appear to be aimed at encouraging Germans to embrace the foreign cultural norms that migrants bring to Germany. The task force’s focus seems to have shifted from integration and assimilation to coexistence, tolerance and to the Germans adopting the migrant’s core culture.

Only about 1.1% of the world population is German. However, 48% of the mid-sized world market leaders come from Germany. These Hidden Champions, are part of what makes German economic growth more inclusive: they have created 1.5 million new jobs; have grown by 10% per year on average; and register five times as many patents per employee as large corporations. And they are resilient: my estimate is that in the last 25 years no more than 10% of them disappeared or were taken over, a distinctly lower percentage than for large corporations. Nearly all of them survived the great recession of 2008-2009.

Moreover, Hidden Champions have also contributed to the sustainment of the German manufacturing base, and it is in large part thanks to them that nearly a quarter of the German gross domestic product continues to come from manufacturing. The percentage in most other highly industrialized countries such as the U.S., the UK, or France is only about half of this. The effect on employment is enormous. Manufacturing creates jobs at home and at the time same allows companies, through exports, to participate in the growth of emerging countries.

Given this success, it’s not surprising that many non-German policymakers and economists have looked to the Hidden Champions, or more broadly, the Mittelstand, to try and chart a path to more inclusive growth in their own countries. But how replicable is their success? While other countries could try to emulate aspects of what makes the Hidden Champions so successful, the reasons for their success are the result of a complex network of factors, many of them historical.

A Hidden Champion is defined by three criteria: 1) a company has to be among the top three in the world in its industry, and first on its continent; 2) its revenue must be below €5 billion; and 3) it should be little known to the general public. Germany seems exceptionally good at creating these companies; I have identified 2,734 Hidden Champions worldwide and no less than 1,307 of them are based in Germany. You might argue that my research is deeper in Germany than in other countries, and most likely I wouldn’t be able to prove you wrong. But researchers in other countries have also examined this phenomenon and found far fewer Hidden Champions in their countries. A colleague who looked for Hidden Champions in Japan for years identified only 220 companies, a researcher in France has come up with only 100. With the exception of Switzerland and Austria, the per capita number of Hidden Champions is nowhere near as high as it is in Germany.

Of course, success of individual Hidden Champions is based on their leadership and strategy. The most important difference is the continuity of the leadership. The leaders of the Hidden Champions stay at the helm for an average of 20 years; according to Strategy&, which collects data on the world’s largest 2,500 companies, in large firms the average CEO tenure from 2012 – 2016 was only seven years, and the median was even shorter, at five and a half years. The leaders of Hidden Champions are also more likely to come into power at a young age and are more often women than in larger companies.

But the reasons they are a predominantly German phenomenon are many. This includes the German history of many small independent states (until 1918 Germany consisted of 23 monarchies and three republics), which forced entrepreneurs to internationalize early on in a company’s development if they wanted to keep growing. In addition, there are traditional regional crafts, such as the clock-making industry in the Black Forest with its highly developed fine mechanical competencies, which developed into 450 medical technology companies, most of them makers of surgical instruments.

Scientific competencies also play an important role. The cluster of 39 measurement technology companies in the area of the old university of town of Göttingen are the result of the leading role Göttingen university’s mathematics faculty had for centuries. The Fraunhofer Institute continues to function as a transmission belt between science and practical applications. The Munich-based Hidden Champion Arri, world market leader in professional film cameras, used the expertise of Fraunhofer to navigate the transition from analog to digital technology, and was thus able to defend its leading market position.

A further pillar of the Hidden Champions’ competitive strength is the unique German dual system of apprenticeship, which combines practical and theoretical training in non-academic trades. The Hidden Champions invest 50% more in vocational training than the average German company.

Tax advantages are another reason. The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector.

Finally, the international openness of a society is an essential factor in the globalized world of the future. Germany is far ahead of other large countries with regard to mental internationalization. This includes language competencies, international experience from student exchanges, and university studies. Countries such as France, Italy, Japan, and Korea lag far behind in these respects.

Why is this mental internationalization so important? Because while Hidden Champions may be small, they compete on a global scale. They achieve world-class quality by keeping their focus narrow; focus is the most important element of a Hidden Champion’s strategy. Flexi, for example, makes only one product — retractable dog leashes — but has the claim to make them better than anyone else. This has allowed them to reach 70% of market share in this category. But focus makes a market small. How can you make it bigger? By globalizing. Today, the Hidden Champions are present in their target markets with 30 subsidiaries on average. Despite their medium or small size, they are true global players. About one quarter of German exports comes from the Hidden Champions.

Hidden Champions provide a model of inclusive growth that are worth emulating. But any foreign policymaker or economist seeking to foster a community of such companies in their own country should tailor their approach to that country’s own unique conditions.