This article is the second in our Value of Strategic UX series, and follows on from our first article which looked at combating commoditisation.
As our lives become more digitised, Unicorn businesses like Uber, Spotify, and Airbnb are seizing the chance to offer us yet more innovative products.
You can read more about Unicorns in our white paper – they are businesses that have all achieved extraordinary exponential growth through totally new ‘value innovations.’ So, what is a ‘value innovation’?
‘Value innovation happens when a business stops focussing on fighting off the competition in the existing market space by creating a leap in value. By introducing innovative technologies or upgrades often at a low cost, they can pass off this saving to customers.’ Blue Ocean Strategy Tools
But the odds of becoming a successful start-up are low at best, and becoming a unicorn even lower. Having a ground-breaking idea, a strong stream of venture capital or an exemplary team may not be enough.
To achieve unicorn status you need to successfully manage a combination of these factors rolled up into the delivery of an excellent user experience. This is real value innovation. And that requires a strategic approach.
This is a big problem for many start-ups. Too often they fall into one of two traps when it comes to strategy: either they underplay the importance of strategy (they don’t have one, or think they don’t need one), or they have a strategy that does not change.
Ideally, strategy should be considered as part of the overall ‘design’ vision. And so any change in the design needs to be considered in terms of impact on the strategy. But what does a successful strategy for value innovation look like? Let’s look at collaboration tool Slack as a great example of a business that completed an amazing commercial pivot. Now with more than six million users, an estimated $3.8b valuation and over $200m in annual recurring revenue as of September 2017, they are darlings of the digital design world.
“There’s no better word than ‘heartbreaking’ to describe what it feels like to have to do this.”
It was late 2012 and gaming company Tiny Speck could not see a sustainable future for their Flash-based game Glitch. The above quote was from the sad announcement of the game’s imminent closure. Business Insider estimated the layoffs at about 30 employees.
If you were to look at the details of the game’s shutdown, you would spot this seemingly innocuous statement:
“Tiny Speck, the company behind Glitch, will continue. We have developed some unique messaging technology with applications outside of the gaming world and a smaller core team will be working to develop new products.”
Slack thrived. It thrived because it met the needs of its users, that they didn’t even know they had, creating a new market. They had made a ‘value innovation’. But how did they give us something we didn’t know we wanted?
Slack CEO Stewart Butterfield recounted his estimate of the understandable customer ignorance about their own behaviour:
“When we asked users what they were using for internal communication, [70 – 80% said] ‘Nothing.’ But obviously they were using something. They just weren’t thinking of this as a category of software.”
It was in fact such a compelling tool that their users were willing to set aside part of their busy work lives to trial it. The User Experience was brilliant. And it was relentlessly tested over a cycle of continual learning and improvement. They delivered — and continue to deliver — a quality of care and action on user feedback that any company aspiring to greatness would envy.
Slack knows that to really thrive in our hyper-competitive, fast-changing and globalised market, UX is an essential strategic tool and a springboard for exponential growth and success. And when they got to this lofty point, they were free in this new market place, “untainted by competition” and “vast, deep and powerful—in terms of opportunity and profitable growth”. Now let’s take a close look at some of their best UX habits.
Marketing from both ends: highly iterative feedback loops
Butterfield’s now-famous memo to employees before the August 2013 soft-launch of Slack, “We Don’t Sell Saddles Here”, referred to the fact that they didn’t sell just saddles, they sold the whole horseback riding experience, and they would always approach ‘marketing from both ends’:
“We should be working carefully from both the product end and the market end:
• Doing a better and better job of providing what people want (whether they know it or not)
• Communicating the above more and more effectively (so that they know they want it)”
This is a form of feedback loop — specifically a customer feedback loop — where customer feedback informs feature changes, which tweak how the offering is communicated, which leads to new feedback, as seen below:
Figure 1: Improving the customer experience through continuous feedback integration
Or as Butterfield puts it in the aforementioned memo:
“The product itself and the way people use it should suggest new ways of articulating the value — and refinements to how we communicate the value should lead to principles which clarify decision-making around product features and design.”
Many companies are passive and haphazard in handling of user feedback. Negative Facebook comments are treated as typical grumpy outliers undeservedly handed a social megaphone. Concerns raised to installation engineers never get recorded. So qualitative feedback is typically ignored, and even quantitative measures—such as from call centres—often get morphed into abstract monthly reports, devoid of any actionable insights.
Conversely, Slack is fanatical about feedback. In a Fast Company interview, Butterfield notes:
“Of course hard numbers tell an important story – user stats and sales numbers will always be key metrics. But every day, your users are sharing a huge amount of qualitative data, too — and a lot of companies either don’t know how or forget to act on it. We’re pretty fastidious about tagging all of these incoming messages, collating and entering and retaining the data that people are sending us.”
He understood the old adage: If one customer takes the time to say it to you, ten others had the same problem but said nothing.
Don’t take our word for it. Try tweeting a question, issue or praise to @SlackHQ, even now – with their millions of users, and see how they reply.
Being “extremely, surprisingly good”
But what does this all mean to your business? First you’ll need to know for sure what makes your company tangibly different. As we said in the first article in this Strategic UX series, the ‘experience’ you create for your customers is what differentiates you in a culture where others can copy feature-led services and roll out worldwide technology infrastructure in a blink. Because ‘experiences’ are much harder to copy.
Raising the bar across the board
Customers who enjoy using your service will find it will eventually change their habits and behaviour because they believe it will save them time and effort. That’s why every effort must be made to reassure users that they have made a good decision – by giving them an unrivalled experience.
That said, customer experience remains paramount. There can be no misalignment of UX-related goals within your company; no division that is exempt from “getting it”; no wavering from a singular, aligned, and unrelenting focus on experience excellence.
The temptations away from this mantra are ever present, as Butterfield notes:
“[There is a] constant battle to not focus on short-term results but rather always build for the long run and do what is right for the customer.”
Strategic UX will always outlive a myopic focus on short-term gains and measures. Ignore this, and you are on a sure-fire path to a commoditised or marginalised product or service that eventually ends up on the digital scrapheap. Embrace the bigger strategic picture, however, and you can craft a compelling digital experience that leads, even on a global stage.
It has never been easier to create a digital service commercially, and yet it has never been harder to make it succeed. UX excellence is integral to success—especially when trailblazing into a new market that neither company nor customer can fully define at the outset.