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No strategy is worthwhile and no project is worth doing if you cannot communicate it effectively. Once the communication is about how your customers and partners feel about your company, intuition and emotion enter into play. Let’s start with two suggestions. The first is on how to use color-coding of numbers to achieve what you want, and second is about use of ‘identifiable victims’. Both are intended to help you to align the rational and emotional messages you want to get across.

Communicating performance

Consider the three sets of data in the table below. Let’s suppose they represent your customer experience performance in different countries. The data is identical in all three columns; only the colors are different. The messages are radically different between the first and second table. If you are showing the first table to your CEO who has been in place for the last few years, the subliminal message is, “You have totally failed in over half the countries. You are a disaster for our customers.” No CEO is going to accept that and your work will be dismissed as worthless.

The message to the CEO in the second table is, “You are doing a really nice job for our customers generally. There are some things to improve in France and Italy.” That message is far more likely to be accepted. Remember the actual numbers are identical. The choice of red status is arbitrary, no matter what you think. Use red carefully, understanding its impact. The third table is a bit more subtle, showing a continuous set of shades from green through amber and red. It can be appropriate if your messaging is subtle too.

Timing can change how you want to communicate

Let’s suppose a new CEO has just arrived. The old one has been kicked out by the board for poor performance. Then there is almost no possible downside to presenting the first table, as the new person will blame his or her predecessor, even if you do not. Timing is everything.

Decide whether you want to emphasize or de-emphasize something

The leaders in the emerging field of behavioral economics have taught us a lot about how people perceive and react to different types of numbers. Our intuition and emotions kick in quickly, and prevent further rational thought. Rather than pretending it does not happen, why not exploit it? OK, yes, I am talking about manipulating your audience, but your audience is always manipulated; you just want some control over how and to what end.

Use emotion – Identifiable victims are essential

In his book The Upside of Irrationality, Dan Ariely describes an experiment run by Small, Lowenstein and Slovic. Two groups were given radically different explanations about humanitarian crises in Africa. The first group was given this text:

Food shortages in Malawi are affecting more than 3 million children. In Zambia, severe rainfall deficits have resulted in a 42% drop in the maize production from 2000. As a result, an estimated 3 million Zambians face hunger. 4 million Angolans — one third of the population — have been forced to flee their homes. More than 11 million people in Ethiopia need immediate food assistance.

The second group was presented with a photograph and information about Rokia, a seven-year-old girl from Mali.

Her life would be changed for the better as a result of your financial gift. With your support, and with the support of other caring sponsors, Save the Children will work with Rokia’s family and other members of the community to help feed her, provide her with an education, as well as basic medical care and hygiene education.

Both groups were then asked how much of $5 each person had been given they would be willing to donate. Guess what? The Rokia group gave twice as much.

Customer experience victims

Applying this to customer experience, try not to talk about percentages and big numbers if you want to change something. Communicate it by video clips of individual customers, direct quotes from decision-makers, and talking through the journey or experience a specific person has had with your company. Make it personal. On the other hand, if you don’t want to attract any type of emotion and don’t want people to pay attention, use big numbers and percentages. As Dan Ariely puts it, “Rational thought blocks empathy.” Humans do not behave like economists would like us to believe. Use that to your advantage.

Thanks to those who have taken the survey on analysis of open-ended questions. I would like to summarize what I have seen, provide a link to the results, and invite anyone who wishes to do so to analyze the answers to the open-ended questions.

Summary of answers received so far:

In round terms, a quarter of you use some sort of automated solution to analyze text responses. Half of you simply read the responses. Here is a chart that shows what all 131 people who answered said they do with the responses:

So, does this change for larger companies? Not much. Here is a breakdown of the responses from the 86 companies with 500 or more employees:

Download the survey file

The full survey file is available in Excel format on my OneDrive here. It is mainly just the SurveyMonkey output file. However, I have removed the first few columns (which include IP addresses) and the column that contains the email addresses of those who asked me to email them the survey file.

You can of course move the graph to see what is under it. To make it easier for you to analyze the verbatim answers, I have copied the answers to the ‘Other’ question to row 146 and the answers to the ‘Ideal solution’ question to row 178.

Invitation to analyze

I would now like to invite anyone who has a text analysis solution to us it on the two sets of verbatim answers. I have only done this manually, and don’t want to bias anyone by saying what I have found. If you use an automated solution, please indicate whether any manual intervention (such as tagging) was required.

Conclusion

While some companies use automated solutions, they do not currently seem compelling enough for everyone to adopt. I believe that is changing rapidly. Let’s see if any companies can provide useful automated analysis of the responses to this short survey.

The best strategy development method I have come across is one I learned from Willie Pietersen at his Columbia Executive Education course and is also described in his excellent book, Strategic Learning. I have blogged about the critical first step, “Situation Analysis’ here. While the method is reasonably easy to understand and implement, some people still want to find shortcuts. Their questions go something like this: “We are paranoid about missing out on a potential business strategy. Surely everything conceivable must already have been tried by someone. Can you suggest a list of all possible strategies, so we can choose the three to five that will make a difference for us?”

I used to think that this was like a company saying it wanted to design a new logo, and needed help with the choosing the color. “Could you please give us a full list of all possible colors?” I no longer believe this. For example, for consumer businesses, I now believe there is a finite number of possible customer-centric business strategies, and that the number is 30.

It is all about resource allocation

Business strategy is all about how you allocate your scarce resources in a way that allows you to win. As Pietersen put it in his class, you need to be able to count your strategic initiatives on your fingers, with one hand in your pocket. There should be no more than three to five. Once you have selected them, you take resources away from other areas so you can afford to execute your chosen initiatives and crush your competitors.

Bain Partner Eric Almquist has done extensive research on this subject over the years. He spoke about it on last week’s Net Promoter System podcast, and I found it quite compelling. He has just completed his work on B2B, but it is easier to find his B2C work on the web. There is a Harvard Business Review article, but I find the interactive presentation on the Bain site more interesting. After a few introductory slides, you are taken to the interactive graphic shown in the screen capture at the top of this article. Almquist found that leaders in various industries were outstanding in just a few areas. You can click on the industries listed in the bottom-left corner of the graphic to see which ‘elements of value’ brought the best returns for each of the ten.

So, what does this mean for customer-centric business strategy development? Choosing any five of the 30 as your strategic initiatives gives over 140,000 different possibilities. I suggest you use Almquist’s guidance for your industry as a starting point, if it is covered. No matter what you choose, the key to success will be finding the necessary resources by cutting spend in other areas that you have just decided are less strategic. Move to these new areas and win!

Quite a lot has been written about the recent $2.7 billion fine levied on Google, much of it simply wrong. Here is how to think about this type of competition law case, and yes, I am an expert:

1. The European Commission launches competition law investigations based on complaints.
2. This specific complaint first came from a UK shopping comparison site called Foundem and took seven years to reach the announcement of the fine.
3. European and US competition laws are quite similar. When there is a major case that seems to violate competition law on both sides of the Atlantic, the US Department of Justice and the European Commission can agree which of them will pursue the case. This avoids companies having to duplicate legal and other resources, so is a good thing. I do not know factually whether the DOJ made such an agreement for this case, but they did so for the very similar case I was involved in.
4. The general legal principle that matters here is that a company that is dominant in one market is not allowed to use that dominance to decrease competition in a different market.
5. For European Commission cases, the rule of thumb for ‘dominance’ is a 40% market share. I believe the US DOJ does not have a well-established rule of thumb, though they operate on the same general principle.
6. The way the Commission decides that a market exists is simply by observing the existence (or not) of competitors who are active in that space alone.
7. It is of course perfectly legal to be ‘dominant’. However, the rules change for you if you are ‘dominant’. Apple, for example, does not have dominance in the PC market. It therefore does not have to observe the same rules as Microsoft, which is dominant in the PC operating system market. (Going back in time, the Commission ruled that web browsers were a separate market, since Netscape competed there, and that Microsoft could not therefore use its OS dominance to squash Netscape by favoring Internet Explorer over Netscape or any other available browser when customers installed a new Windows operating system or PC.)
8. It was easy for the Commission to observe that www.foundem.co.uk and other similar sites competed to earn money in the UK comparison shopping site market. So the separate market exists. The market was fragmented and nobody was ‘dominant’.
9. Since Google had over 40% share of the search market, they were therefore forbidden from using their search dominance to squash competitors in the comparison shopping site market.
10. The easiest way of avoiding the competition law issue would have been for Google to publish ‘independently objective criteria’ for how shopping price comparison search results would display, and ensure that the same criteria applied to both themselves and to the large number of small competitors in this new market. Google did not do this.
11. Trying to claim that you are not dominant in search when you have over 40% market share is pointless.
12. Claiming that the result of your business tactics do not harm consumers is also pointless, as the consumers were not the ones who complained.
13. Since the Commission cases always take a long time, the correct way for companies to address competition law issues is to modify their business practices during that period. It then becomes relevant to take the following position: “While we do not agree with your interpretation of competition law, we have now changed our business practices, so there is no need to continue the case.” Of course that all needs to be true.

The tactic described in point number 13 is what we used when I was the business leader assigned to the European Commission’s case against Digital Equipment Corporation. The case was about hardware maintenance. The Commission contended that the price discounts we gave when customers bought hardware and software maintenance together made it impossible for third party hardware maintenance companies to compete with us. The Commission defined the maintenance of DEC hardware as a market, based on the fact that there were companies who did only that.

We changed our business practices, made them transparent to customers and competitors, and were able to negotiate a settlement with the commission and the plaintiff that meant we had no fine to pay. We simply had to commit to continue the new business practices. Google could have adopted the same tactic, but did not. I don’t know why. They have no chance at all of winning the legal case if they lodge an appeal. I suppose the fine could be changed, up or down.

OK, one final anecdote. Just after the DEC case, the Commission started the browser case against Microsoft, with Netscape as the main plaintiff. I was headhunted and interviewed by Microsoft to run licensing operations in Europe and work on the case. During the interview with the corporate head of licensing, he asked me what the probability was that Microsoft could win the case. I told him it was 0%, and why. He told me that while both he and the legal team were tended to agree, Bill Gates did not, so he could not hire me. Of course Microsoft lost. The principles of the loss were the same as in the current Google case.

I was the first non-lawyer to be published in a particular legal journal on this sort of case, I believe my explanations are accurate. That’s all I want to say on the subject for now. If you believe my explanations are out of date or wrong in some way, feel free to comment below and I will correct or remove this article if necessary.