I recently had the opportunity to sit down with R Ray Wang, Principal of Constellation Research and author of “Disrupting Digital Business: Create an Authentic Experience in the Peer-to-Peer Economy.” As an expert who’s spoken with thousands of businesses on the topic of digital disruption and what it takes to transform and thrive I jumped at the chance to dig deeper into his thoughts on the relevancy of customer experience (CX) and application performance management (APM).

Q: What is digital disruption and what does it mean to be a digital disruptor?

A: Digital disruption is more than just a set of technologies.  What’s required is a shift in thinking around disruptive business models and the technologies that enable them. Disruptors are enabling a post-sale, on-demand, attention economy.  This business model values the activities after a sale, realizes that individuals expect immediate access to smaller and smaller slices of products and services, and focuses on saving customers time or captivating their attention.  With 52% of the Fortune 500 merge, acquired, gone bankrupt, or fallen off the list since 2000, the digital disruptors such as AirBnB, Amazon, Apple, Docusign, Tesla, Uber are disrupting business models.

Q: In your book, you mentioned the importance of customer experience/analytics in business success and the importance of mass personalization at scale. What steps should IT groups take to help achieve this? And what steps from the business?

A: Have you noticed that products companies no longer just sell products?  In many cases they are willing to trade off product margins for services revenue.  Take the mobile industry, we often see phones given away for free for a commitment to 2 to 3 year annual contracts. Well, that’s just the beginning.  Services companies are giving way services for experiences.   Access to free services often trigger additional offers.  The freemium to premium conversion is an example of how this works.  If you want to access more advance features or use a service more often you then pay for a premium offering.

So where does this all go? Experience based companies are now giving away experiences for business outcomes and  business model companies are giving away their business models and focusing on brand promise.  To succeed, the customer journey must be delivered with mass personalization at scale.

Delivering on these customer segments of one will require a few foundational concepts:

  1. Choose your own adventure type of journeys.  With no real beginning nor end, expect these systems to work like a Choose Your Own Adventure Funnels fall aside as customers, partners, employees, and vendors jump in across processes, make their own decisions, and craft their own experiences on their terms.  Journey maps must account for infinite journeys and support the customer centric points of view.
  2. Continuity of experience. A customer may start an experience on a mobile device, carry it with them to a car, jump into the office, and then come back to the home.  Regardless of channel, device, platform, or situation, context is carried.  Experiences are delivered with massive context and personalization.  While customers do not expect a disruption in the experience, they do expect relevancy regardless of the context.
  3. Intention driven design.  Currently the fashionable approach is predictive.  Predictive does a great job of using past history to predict future patterns.  Intention driven tests for shifts in patterns by setting up hypotheses and awaiting the results.  If we know a person always gets a specific type of coffee at the same time every day that’s predictive.  An intention driven system will test to see what type of coffee is purchased based on time of day, weather, relationships, location, and even sentiment gathered from heart rate or actions. The test comes from an offer or studying shifts in patterns and behaviors.  This self learning and adjusting capability is powered by cognitive computing approaches.

Q: Describe the common cultural traits seen across business and IT groups who lead their industry as digital disruptors?

A:  Market leaders and fast followers share common traits.  These individuals don’t settle for incremental innovation. They seek to push the envelope and transform markets.  This requires building teams with the right digital DNA.  Beyond collaboration, these individuals focus in on right –brain and left –brain teams.  If they have too many science, technology, engineering, and math folks, they balance it out with design thinkers, anthropologists, ethnographers, and story tellers.  The goal is to bridge the gap between both business and IT.  The outcome results in organizations that put the customer first at design time not as an after thought.

Q: You discussed Force Multipliers in your book, specifically Situational Awareness and Predictive Hotspotting appear to be the most aspirational business accelerators. What are disruptive leaders doing to achieve this?

A: Situational awareness and predictive hotspottng represent foundational shifts in how we use data. The key requirement is rich, relevant, and contextual data delivered before it’s required.  Context attributes such as time, location, geo-spatial position, temperature, heart rate, weather, roles, relationships, and even sentiment play a role in lessening the data deluge.  Success often results in conversion rate optimization, higher click thru rates, and better levels of customer satisfaction.

Q: What are the key trends seen in businesses that put customer experience first?

A: Customer experience is evolving. Some key trends include:

  1. Omni-channel is not good enough for digital. The focus is on channel ubiquity across devices and IOT settings.  The only channel is the channel that customers expect to experience.
  2. Campaign to commerce drives continuity of experience. The days of forced fit functional silos of sales, service, and marketing no longer matter.  Islands of functionality can not solve a customer problem.  Islands of functionality serve no one.
  3. Customer journeys are more choose your own adventure than prescribed. Journey mapping helps deliver more tailored experiences but the future is more than the standard, prescribed or guided journeys.  Expect systems to provide more self-learning and intention driven approaches.
  4. Battle for identity drives the future of CX. Identity provides the glue across channels and settings. Identity enables context.  In order to succeed in CX, sellers must convince buyers that the value exchange for trading identity for convenience or a service must be worth their time.
  5. Scalable customer experience testing is required for success. Given the massive complexity in delivering on CX, customers seek scalable testing solutions. Beyond interactive models, template design, data sets, and analytics are required in order to make sure experiences meet brand promises.

Q: Where do market leaders rank Application Performance Management practices in their effort to deliver top customer experiences?

A: Today’s customer experience initiatives often start with a design thinking approach and a great deal of journey mapping in the solution design.  Organizations meticulously map out the journeys to a set of personas.  Teams of experts design the most relevant experiences they can imagine for each persona.  Experts study the challenges customers face and seek to identify solutions to emerging problems.  In many cases, the efforts improve the overall customer experience and help brands and organizations achieve greater customer satisfaction, higher levels of engagement, and greater lifetime value.

Yet, these initiatives often fail 12 to 18 months after the initial launch.  In some cases, even in less than 6 months. Why? Customers are fickle.  They get bored.   Customers feel trapped with a limited set of options.  The result – a lot of investment with some initial positive results, but then a big void and gap occurs as customers change their preferences.  The key lesson? Build APM into the process in order to improve rapid prototyping and improve quality of delivery.

APM is absolutely essential to delivering on customer experiences.  Given the complexity of design, content, and strategy, more and more clients run APM in parallel to their design efforts.  Often they incorporate APM in the ideation and prototyping phases to improve time to market.

Conclusion

Thanks very much to Ray for his time. If you haven’t checked out his book yet, I highly recommend it. The correlation of disruptive and successful business models and organized CX & APM efforts is pretty evident here. In fact, it’s a major reason Dynatrace has positioned its APM platform as Digital Performance Management. Not exempt from the rules of disruption, the APM category definition is blurring more and more with CX. I’m excited to see where it takes us.

If you’d like to see Ray speak on these topics further, join me at Perform in Orlando, FL October 14-16.