Diego kolsky

Relationship over experience

Some businesses are winning by syncing their culture, operations and offerings with their customer and communities’ goals.

What’s going on?

Iconic, global brands are getting record setting shares for the worst reasons. Pepsi produced and aired a commercial that managed to offend the sensibilities of its most prized target audience, the youth segment. United Airlines managed to get embroiled in an outrage of human rights proportions after turning a passenger over to the authorities and allowing the use of force in one of their aircraft. Uber’s misguided culture is vented publicly, revealing the dark personality of the company that many credited for leading with a focus on service.

What these crises have in common, beyond the short term loss of value, is that they highlighted how out of touch brands are with their customers’ values. And their fail is deeply ironic, considering the scale on these companies’ investments in customer experience.

Pepsi’s infamous TV spot caps a major effort by the f&b giant in repositioning its major brands and innovating its products and distribution. How did PepsiCo manage to misunderstand its customers’ by so much? Misplaced focus.

It’s bad enough that United chooses to inconvenience a paying passenger to make room for solving an internal problem (the airline has since pledged not to do that again). But turning a passenger to the authorities, and standing by as he is abused by the authorities goes against the airlines pledge to carry people safely to their destination. It underscores the entire industry’s misinformed focus on profit at the expense (and now safety) of its customers.

It’s been a tough quarter for Uber. Its CEO was captured on film berating a driver a few days prior to revelations that the company chose to ignore a sexual harassment claim due to the perpetrator’s good business performance. The public venting followed Uber’s misguided decision to take advantage of a taxi drivers’ strike in NYC (in protest of the new administration’s immigration ban) and revelations that it used of a secret tool to keep authorities from assessing its practices. #DeleteUber didn’t impact rides much, but criticism of its leadership continues and the company’s reputation will never be the same.

In all these cases explanations were given and apologies ensued. But they beg the question–how could they get it so wrong? After all, the three are credited for leading the transformation of their respective categories.

I would argue that ultimately it’s a matter of focus. Over the past decade or so, brands have focused resources on enhancing the customer experience through technology and product innovations. But what good are intuitive apps, sleeper seats and custom flavored sodas if your customers feel offended and unsafe?

Businesses must shift their focus to the customer relationship (a more rewarding and reliable goal, in the face of accelerated technology and innovation cycles). This proposal is not as esoteric as it sounds, but it does call for collaboration across disciplines to create business models that can realize higher proximity with the customer.

The case for ‘relationship’

In contrast to these massive ‘fails’, some companies are winning by syncing their culture, operations and offerings with their customer and communities’ goals. The result is a relationship that contributes to several of those businesses’ bottom line and sustainability, and makes them more relevant in the marketplace.

On this post, I include some examples, along with inferred principles. These are not meant to be a comprehensive set, and are selected to help illustrate my point.

What becomes apparent on all these examples is that, by fusing  disciplines in non-traditional ways, from management to technology, product design and communications, these companies managed to keep closely in touch with the external world–stakeholders, customers and wider communities alike.

The implications to executives, marketers, designers and communicators are vast and call for refocusing our work on the relationship rather than the experience, a perspective centered on what the company understands customers need, and can deliver.

The team at Velo is already investigating the concept of relationship design, and during the Summer, I’ll be also exploring it with a group of students towards defining a methodology. I look forward to sharing the results with you in an upcoming post.

Gustin/Doing business together

Gustin is a crowdfunder for blue jeans and other men’s clothing and accessories.

In Gustin’s words, “We design boutique-quality handmade menswear which is made to order right here in the United States. With a unique crowdfunded business model and continuous production, we are able to provide American-made goods at an amazing value. Our small batch approach allows us to offer you top quality and unique fabrics at the fraction of the cost of what a larger company would be able to offer. “

What’s particularly interesting about Gustin is that the company implemented the concept in a way that the customer can contribute to the design process beyond its backing.

To start, the company itself was crowdfunded through a Kickstarter campaign. The pledge reads: “Imagine going to an amazingly curated online storefront. You can browse from an entire collection of premium GUSTIN menswear. Instead of a simple buy button, each style will have a funding level. When our audience collectively pushes an item to its funding goal we're in production! Everything delivered to your door at wholesale prices. We can't wait to see where GUSTIN goes with your support!”

To try the concept, about a year ago I backed a pair of jeans. While the wait took getting used to, the level of detail in the product design and the service stands apart from traditional online retail. What’s more, Gustin invites customers to bring back popular campaigns.

Gustin’s results are mind-staggering. From a Forbes article published in 2013, when the company entered its crowdfunding phase: “"We pass along the savings to consumers. Before our crowdsourcing business model, I would charge $205 for a pair of blue jeans at a high end retailer. Now I charge $100 and we still get the same 50% gross margin as we did before.” According to the article, that year revenues grew 40-fold.

LEGO/Co-creating products and services

LEGO’s intimate relationship with its customers is well known. The company is credited with recruiting lead users to take the product into new places.

As reviewed in Marketing Professionals: “When LEGO Group was designing Mindstorms NXT, the second-generation programmable brick intended for use in building robots, it hosted a two-day workshop at MIT with a group of end-users whose opinions they valued. The workshop produced numerous ideas and considerable feedback on initial design ideas. LEGO Group then developed a list of 20 top end-users, then hand-selected the top 5. This effort resulted in a panel of four lead users who helped design the Mindstorms NXT.”

Perhaps the success informed another initiative, this time opening the call to entries for everyone. On their site IDEAS, customers share ideas for new LEGO sets. “Fans can vote on submissions and give feedback. If a project gets 10,000 votes, LEGO reviews the idea and picks a winner for an official LEGO Ideas set to be created and sold worldwide. The creator gives final product approval, earns a percentage of the sales and is recognized as the creator on all packaging and marketing.”

Initially a collaboration with CUUSOO System in Japan, the concept was beta-tested worldwide and after being proven a success it was brought in-house in 2014.

T BrandStudio/Starting conversations

Self-defined as “the brand marketing unit” of the New York Times, T BrandStudio “T Brand creates “content and experiences that spark imagination and influence the most influential audiences around the world.”

T BrandStudio launched in 2016 as an independent business unit inside the New York Times. Initially dedicated to reviving ad revenue, the group realized the inherent advantage in its parent’s strengths in the editorial side.

Organically and through acquisitions, the team managed to embrace a new direction that saw it working closer to the Time’s editorial work, while respecting the boundaries separating partner-created content from editorial content.

As covered by Digiday: “Increasingly, the Times has produced work for marketers including Philips, Charles Schwab, Nike and Deloitte that’s run outside the Times site (the way T Brand is set up is that the client owns the content). For Philips, it has a five-person team that acts like a mini-newsroom, producing long-form articles for the electronics company on an ongoing basis. One-third of T Brand’s business is now coming from agency-type work, the rest from native advertising. All in all, the studio is on track to produce more than 100 campaigns and contribute 20-30 percent of the Times’ digital ad revenue this year.

Perhaps Tessa Wegert asks the right question in her article published in Contently: “Can a native ad be as engaging as editorial content on The New York Times?” The author rightly contends that ‘consumers’ have learnt that good quality content can come from any source today.

I would expand that notion because engagement is only a partial success-metric. True success depends on the ability to start and lead conversations, something T BrandStudio has mastered through a culture of artful reporting and state of the art technology applications.

Patagonia/Leading the cause

Corporate activism has risen as of late, together with the proliferation of hate, fake news and  unpopular public policies. Not to be confused with ‘cause marketing’, a lighter flavor of corporate involvement which is more akin to a campaign than stewardship, corporate activism is led by the company’s mission rather than a popular belief.

Patagonia demonstrates this concept like no other business. The company is legendary for taking its mission seriously (its mission statement’s last line reads “…use business to inspire and implement solutions to the environmental crisis.”) The company’s impact is seen on countless environmental efforts, and as of late, actions dedicated to impact public policy through actions, rather than lobbying.

It’s quite possible that the rising lack of faith in government and institutions (including corporations) and the unavoidable impact of ‘transparency’ has finally pushed some companies to take tangible positions on global concerns.

The Patagonia Environmental & Social Initiatives 2016 report includes an impressive list of initiatives and achievements. “To change the idea that doing business and protecting the planet are diametrically opposed, we use the whole company as a tool for environmental activism.”

Patagonia’s activism will only be credible if their words and actions align, and the company knows it. They publicly discuss the conflicts of being a successful business in pursuit of environmental protection, and incorporate management principles to evaluate and curb the impact of their own growth. By engaging stakeholders and customers in this internal quest, the company hopes to influence customers’ behaviors and recruit them as part of the effort to reduce environmental impact.

Massive, urgent, troubling issues are quickly piling up, and people seem frustrated by the slow reaction and inaction of government and large organizations, and companies like Patagonia are stepping in to help their customers understand and act on those shared concerns, together.

Blue Apron/Solving problems together

Companies have been perfecting food retailing online ever since the internet became a household item. What sets Blue Apron apart is not its meal-kits model (others do it too) or its adventuresome recipes and ingredients.

Blue Apron’s vision is much larger and includes the customer in what they define as a ‘better food system’ with four objectives at the core: creating better standards; regenerating the land; eliminating the middle man; and reducing food waste.

The company’s vision may read altruistic, but the reality is that Blue Apron managed to answer to key forces at the heart of the meal-kit business, especially as relates to who the most valuable customers are and changing food habits.

Millennials, at the higher end of the customer spectrum, spend more on food out of their home, have grown more adventurous in their food choices and share concerns around environmental sustainability and waste. Blue Apron’s four vision goals address their concerns and make meal-kits cost competitive, but also empower customers to make decisions that directly impact the food supply chain. In other words, they are active participants in improving the food system.

Blue Apron has filed for an IPO, which is expected to trigger changes across the food distribution business. Whatever happens, Blue Apron managed to serve its customers a unique way to eat and have a positive impact, which is unlikely to go away.


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(Initially posted on Velo's blog in 2017)