The customer meets the organisation at the service interface. The customer has needs, tasks to do (jobs to be done), which are served by the offerings of the organisation. That’s where the customer and organisation perspectives meet. And that is valuable for both the customer and the organisation.
The customer meets the organization at the service interface.
Concepts
The quality of customer interactions (with offerings of the enterprise) determines whether services meet customer needs. Service quality manifests in the service outcome, which describes the benefit and value that the customer receives from the service. Substantial concepts are introduced below.
Task or demand is the need or job to be done that the customer wants to accomplish. This can be achieved through collaboration with the customer to better understand what motivates them. The customer’s perspective should always be respected, even though it sometimes looks like the customer doesn’t always know what they need.
Offerings, products and/or services, is what the organization does and provides for the benefit of its customers. The customer utilizes the organization’s products and/or services to fulfill a certain need.
Organisation represents the structural part of the enterprise, or some part of it, that consists of people (employees).
The brand communicates the identity of the enterprise: what is its purpose, offerings etc. The brand also represents the impression, and the feeling that customers have about the organization’s products and/or services.
Offering refers to what the organisation provides to its customers, typically services and/or products.
A driver is a cause, reason, trigger or initiator that sets events in motion, prompting the customer’s actions. It’s the actual factor that leads the customer to need to do something. The trigger can be any event or phenomenon in a person’s life. For example, a change in life circumstances, illness, toothache, hunger, etc. This leads to a need for some service, such as assistance, support, problem-solving, or providing alternative solutions to accomplish a specific task and achieve the desired outcome.
Customer experience (CX) describes the perceptions and feelings arising from interacting with an organisation’s products and/or services. A positive impression of the service results in a good customer experience. Customer experience also involves the organisation’s brand, through which the organization communicates its offerings.
Customer insight provides information about the customer’s underlying motives, expectations, behavior, experiences, and the reasons behind their choices. For the design & development of the organization’s offering, it is important to understand how customers act and why they behave the way they do. Customer insight helps the organization understand the customer, and distinguish between what the customer wants and what they really need. Customer insight can be obtained in various ways, such as surveys, interviews, and observations, typically with the Service Design methods (with soft, human-centered approaches).
Customer value can represent, for example, the customer achieving what they need faster, more affordably, or more comfortably. Alternatively, customer value can be evident when the customer receives more or better than expected. A service meets expectations when it fulfills a customer’s need. High-quality and excellent service meets or exceeds expectations. Value, broadly speaking, can be monetary (such as benefit, profit, savings), qualitative (e.g., feeling, advantage, potential, usability, time-saving, comfort, ease), or functional (aid, support, guidance, expertise, solution, etc.).
Holistic approach
It is meaningful to examine the customer perspective and the organisational perspective together, holistically, taking into account all relevant factors. This covers the basic idea of business: business is based on offering products and/or services to customers that provide them with benefits/customer value. As a result, the organisation gains business benefits in line with its purpose and objectives, business value. According to this ‘wireframe model’ (image beside), it is evident that it makes sense to start from the customer’s needs and tailor one’s offering to this demand – not the other way around.
Customer needs help identify what customers require. The organisation aims to address these needs with products and services for which the organisation requires specific capabilities. Operational capabilities answer the question of what the organisation requires for producing its products and services to meet customers’ needs.
The organisation’s business is based on its purpose and the related goals. Purpose answers the question of why the organisation operates as it does and why it does what it does. It explains why the organisation has precisely these capabilities to produce these services for these customer needs. The business purpose is related to the organisation’s mission or value creation in business. The brand represents how the organisation communicates its offerings to the customer.
The Enterprise Design approach supports a holistic and human-centered examination, considering all relevant aspects, as ‘everything affects everything.’ With Enterprise Design, perspectives can be shifted, the whole can be examined from different angles, through different lenses, ensuring that all influencing factors are considered. In a holistic examination, the customer perspective and the organisational perspective are combined, utilizing both outside-in and inside-out approaches. For more information on Enterprise Design, please refer to the link.
Customer-centric model
Customer-centric business model, or briefly customer engagement model, expands the traditional business model. Customer-centricity is an organizational strategic choice, an approach that places the customer at the center of all business decision-making and operational activities. [S. Hänti, linkki]
The progression of development according to a customer-centric model:
- Acquiring customer insight and identifying customer needs
- Aligning offerings, operations, and organisation with customer needs
- Adapting resources to support operations.
In a customer-centric business model, the entire business design and development is based on customer orientation, where customer needs are the starting point for all improvements and changes. The fundamental principle of the customer operating model is ‘customer first.’ Following this, the focus shifts to the organisation’s operational processes, how services are delivered, and how the staff operates – in other words, operational business. It is crucial here to identify a) the business capabilities required for service delivery and b) the resources (assets) through which these capabilities are actually realized, including information systems, data, facilities, and equipment. At the same time, it is important to recognize that the role of IT solutions is ‘merely’ to support services and organisational processes – IT should not be the driving force. The tail shouldn’t wag the dog. IT is not an end in itself, and technology is not the goal but an enabler.
Offering services and/or products to benefit customers is the foundation of successful business operations. The primary focus should be on understanding customer needs so that suitable services and/or products can be provided. The organisation’s offering should serve customers and provide a good customer experience and value, that is, customer value. In this sense, the starting point for developing the organisation’s offering should be understanding customer needs, where customer insight is the key.
A customer-centric business model affects the entire structuring and organization of operations. In this case, operations are structured and organised based on customer needs. In practical terms, a customer-centric and customer need-based operating model and organisation can be achieved with capability-based organisation.
Capabilities are the business components that structure the entire business into modular units. Capabilities bring together related elements: people, processes, data, and systems. Capabilities are required to deliver the organisation’s offering. Therefore, all design and development ultimately focuses on capabilities. Similarly, all costs, risks, and objectives can be attributed to capabilities. Most importantly, when the entire business is viewed from a customer-centric and need-based perspective, capabilities are precisely those functional entities within the organisation that enable the delivery of services and/or products to meet customer needs. The highest maturity level of a customer-centric business model is customer journey management, where operations are organized according to customer needs.
The business idea is to offer customers services and/or products that the organization produces with its capabilities. In other words, the organisation requires certain capabilities to deliver its offerings. Note! Not all capabilities are customer-facing; some capabilities are support capabilities that enable what’s known as core business capabilities.
Implementing digitalization change initiatives (digital transformation) is most appropriate to start with acquiring customer insight. Following this, operations are fine-tuned, such as service processes. Then, the focus shifts to how information systems (IT applications) support these operations.
A customer-centric business model places the customer at the center of decision-making and operational activities.
Digital Transformation
Business changes and innovations are constantly happening in all organisations of any size, both big and small. There are pressures to digitalize services, pull from new customer needs, and push from the possibilities of new technologies, driving organisations into comprehensive change programs. This is what we call digital transformation. It involves not only digitalizing services but also impacts on business operations, processes and people. Therefore, it also entails a cultural shift in the attitudes of employees. Ultimately, digital transformation aims to provide better services to meet customers’ new and evolving needs – a better customer experience. This goal is achieved when changes are implemented with a customer-centric approach.
A customer-centric operating model ensures that large change programs, such as digital transformations, achieve their goals and deliver good results. By focusing on understanding and responding to customer needs as the starting point for all design and development, these changes ensure that efforts and change actions are directed towards the right areas. In implementing changes, the emphasis is on doing things right. The end result is timely delivery of services: right services delivered at the right time.
Risks to failure
Because digital transformation programs are often extensive, there are risks of failure. Research indicates that up to 70% of digital transformation projects fail (McKinsey, 2016), and there hasn’t been significant improvement in recent years (Boston Consulting Group, BCG, 2020, etc.). The reasons for these failures are often related to implementation rather than a lack of a coherent vision.
Common pitfalls of digital transformations:
- Ambiguous goals and lack of planning
- Without clearly defined goals, measurable outcomes, and action plans, large changes are doomed to fail. If goals and their measurable outcomes cannot be clearly tied to operational elements, they remain vague slogans without concreteness.
- Scale mismatch: too much at once
- The most significant reason for failure is often the scale. Trying to make too many changes at once may lead to confusion, sprawl, lack of control, and overall chaos, potentially resulting in demoralizing failures and a downward spiral in the organizational atmosphere.
- Lack of collaboration and shared vision
- Change requires subject matter experts, deep expertise, and collaboration across departmental boundaries. Change will not succeed if it is based solely on the views of a small group. The vision should be based on shared understanding of the organization’s situation, common situational analysis, and drivers of change.
- Engaging employees through communication
- Effective change requires communication that engages employees in a common mission, creating an inspiring, encouraging, and psychologically safe atmosphere, fostering identification with a shared purpose. All of this can be undermined by ineffective communication.
Digital transformations often fail due to: vague goals, scope, lack of a common purpose and collaboration.
Success Factors
The successful implementation of organisational business changes is best achieved through small, targeted changes focusing on distinct subcomponents – such as service offerings with their customer journeys or business capabilities. One root cause of failures in organisational changes is too big changes. Instead, small, incremental changes can succeed when the goals are clear.
Aspects of successful digital transformation:
- Clarifying goals and outcomes
- Analyzing current problems and their root causes, conducting a diagnosis of organisational capabilities, identifying change drivers.
- Establishing clear goals and deriving concrete outcomes desired from them.
- Incremental progress
- Changes should be small enough to ensure success.
- Incremental changes are easier to implement, increasing the chances of success.
- Small steps lead to significant changes, without exceeding the organisation’s capacity.
- Breaking down the overall transformation into smaller parts (such as capabilities and capability increments) and implementing changes accordingly.
- Clarifying a common purpose
- Motivating everyone towards a common purpose, with employees identifying with the shared purpose and story (narrative).
- Starting with the customer: a customer-centric operating model forms the foundation.
- Prioritizing customer needs and journeys, followed by examining operations, and only then considering changes to IT systems or technologies – technology is an enabler, not the goal or end in itself!
Factors contributing to the success of digital transformation: 1) clear goals, 2) breaking down into parts, and 3) clarifying a common purpose.
Customer-centricity as the primary principle of digital transformation yields the best results. When customer needs are the foundation of all development efforts, it ensures that the right things are being developed. The task of organizational development activities is then to execute things correctly and in the right manner. This way, the organization can offer the right services to customers at the right time (just in time).
Digital services, like all other services, should be designed and implemented with a customer-centric approach, based on customer needs. This ensures the best customer experience and prevents unnecessary failure demand. Designing services with a customer-centric approach is best achieved through service design methods and by leveraging Enterprise Design’s holistic approach, which considers all perspectives from the outset: customer experience, business objectives, and operational activities.
The key to successful digital transformation is a customer-centric model.
Customer Journey Management
Customer journey management is becoming increasingly central approach in designing and developing an organisation’s business to be more customer-centric. This approach focuses on customer experience and customer needs, making it easier for the organisation to offer appropriate services and/or products in right time. In this sense, customer journey management supports a customer-centric business model. As such, customer journey management is the path, means, and method toward a customer-centric business model.
Customer journey management focuses on service experiences. A customer journey encompasses the actions (steps) a customer takes at various stages (a.k.a. phases) while seeking to accomplish a specific task. Within the stages of the customer journey, sub-tasks, needs, are identified, through which the customer interacts with the services offered by the organisation across different channels.
Customer journey management involves not only understanding customer actions in the context of a specific end-to-end service experience but also refers to the organisation’s service offerings and internal operations (service processes). Through customer journey management, businesses can design (or reframe) their services to be more customer-centric, allowing the organisation’s service offerings and internal operations to be better aligned with customer needs. In this sense, customer journey management is a holistic and human-centered approach.
See more information of the customer journey and service blueprint from here: link.
The Service Blueprint helps to depict both the customer journey and the organization’s operations (background processes and systems) within a specific service offering (context). The layers of the Service Blueprint are illustrated in the image below.
The Service Blueprint illustrates both customer actions and organisational processes.
Enterprise Design as a Tool for Customer Journey Management
The practical Enterprise Design approach and its EDGY description language are suitable supports for customer journey management. With these tools, the design of customer journeys can be initiated in a way that considers both customer actions and organisational operations. Enterprise Design combines service design methods with methods for operational business architecture.
Experience
The experience is associated with the customer’s tasks, the needs, that the enterprise tries to fulfill.
Customer experience is intricately connected to the organization’s offering (services and/or products). A customer-oriented organization can enhance its offering by improving its operational activities. This is best achieved when the organisation understands its capabilities and the components within them: people, processes, and resources. When capabilities function effectively, the organisation’s operational activities perform well, and the offering meets customer needs.
Operations
When an organisation structures its operations into distinct functional units using capabilities, it becomes easier to design and develop business processes with a customer-centric approach. This is because the existence and necessity of these capabilities in business are directly or indirectly linked to customer needs, which are the reasons why the organisation offers specific services and/or products. With these capabilities, the enterprise can deliver the value on its promises.
Identity
The identity represents the purpose of the enterprise. The purpose consists e.g. of the following: mission, vision, strategy, goals and content that communicates what the organisation does and why it does what it does. This purpose is communicated (via brand) to people who are involved or in touch with the enterprise: customers, employees, partners, owners, investors and other stakeholders.
All these aspects, experience, operations and identity, are covered with the holistic Enterprise Design approach.
Enterprise Design
Enterprise Design is a holistic and human-centered approach that combines both the customer perspective and the organizational perspective. The Enterprise Design approach is based on the facet model, which helps in asking the right questions when designing services. The facet model of Enterprise Design supports switching perspectives, allowing the examination of the target area from different angles and considering all factors that influence the whole.
Enterprise Design:
- Helps the organization understand the customer and shape its services to meet customer needs.
- Combines the customer perspective and the organizational perspective.
- Supports co-design, collaboration, and co-learning, where different experts and stakeholders collectively examine the target area of development and form a shared understanding of it
EDGY tools
The Enterprise Design language, EDGY, from the Intersection Group, enables people to design well-designed outcomes for better enterprises!
EDGY diagrams can be created with several tools, such as:
- Draw.io (available as Confluence plugin, which enables lots of features for combining diagrams, text and tables)
- Miro
- QualiWare
- BlueDolphin
- PowerPoint
More to come.
EDGY stencils (+ lots of information) can be found on the Intersection Group’s Enterprise Design with EDGY pages:
References
[1] Intersection Group pages, https://intersection.group
[2] Enterprise Design with EDGY pages, https://enterprise.design/
[3] EDGY language foundations, book, 2023, (available as pdf), link
[4] EDGY 23 Language Foundations, Online course (4 weeks), Milan Guenther & Wolfgang Goebl, link
[5] Enterprise Design Patterns, Intersection Group book, 2020, (available as pdf), link
[6] EDGY 23 product release, launch on 29th March 2023, webinar recording, Milan Guenther & Wolfgang Goebl, link
-Eero Hosiaisluoma
