II. Innovation by Example, Let’s Start From the Top.
In the context of the above growing and evolving climate for innovation, there has been a recent innovation rolled out by the CEO, and senior management, in the way the company provides service. The company will soon market a package of service designed to offer customers more flexibility and choice in their usage of service. The service package will include certain usage into one offering regardless of the media used. Therefore, whether the user is online, using a cell phone or a land wire line phone, the same package and billing rules will apply. For example, most cellular phone companies offer minutes of use packages based on volume with some long distance calls included free. For the company, the same offer will be extended to wire line usage. If a user subscribes to a choice package, then long distance calling on a wire line will be free on weekends or nights. Rather, the same offer independent of phone call type.
This integration of wire line and wireless calling rules is one of the first, if not the first, in the market to offer usage independent of the type of medium used for the call. This approach is innovative in the sense that it places more emphasis on customer freedom of choice. As the company plays by the market norms of free long distance, competition is lessened between traditional phone service and wireless telephones. Customers have more decision making freedom to use any phone they have to place calls. Customers do not have to resort to a wireless phone in order to get free long distance calls. Empowerment of the customer is the key element in this innovation. In addition, the flattening and simplification of the rules makes the essence of the service more transparent between provider and customer.
It is important to recognize how this empowerment idea came to fruition. Four groups of employees in customer service, operations, network, IT, sales, and marketing were established to troubleshoot the problems in customer service and the growing reality of lost access lines, or wire lines. From these groups, overseen by the Executive Vice President, came four initiatives to be implemented as soon as possible, including the integration package. While the innovations may have been brainstormed at lower levels of employees, the ideas are supported and are being rolled out from the senior leadership down. The senior executives will direct the implementation and make the innovations a strategic reality.
The management of the initiatives will be overseen by the executives who will task through the management layers to begin implementation. However, it will take the time and skill resources of front line employees to bear the initiative to fruition. There is a sense of strategic planning and direction from the top down. When innovation is supported and rolled out from the highest level of authority, all employees of the company begin to feel the strategic urgency and become motivated to seek their own innovation for the benefit of the holistic business model.
This particular package innovation aligns with the overall strategy of the enterprise – “First for our Customers.” Yet, the strategy and the innovation go beyond classic notions of service. The underlying philosophy is more customer empowerment. The overarching value is customer centric. Make the customer more of a partner in the relationship between service provider and user. When an innovation such as the package deal bear out in the marketplace, the customer is pulled into the end of the value chain and feedback becomes visible in the innovative ways users use service.
It is well recognized in business that retention of existing customers is more valuable than seeking to win new customers from competitors. Existing customer retention pays off with more profitable customers, cross selling and up selling of customers, customer loyalty, and word of mouth customer advertising. In the case of telco, access line losses should be mitigated and sales should increase with respect to bundled services for existing customers while some new customers are added. By integrating customer needs with an innovative approach to service offering, the package innovation is a tight fit with overall customer centric strategy.
Competitive advantage via the package innovation should play out in the market. Customers should find it extremely convenient to use a classic phone in the way they have used their cell phones in order to take advantage of free long distance calling. The message should be clear to customers that the “old line” phone company is using innovation as a key tool in customer relationship processes. Dell computer has been extremely successful in their customer centric customized product business model. But it is not just a message to customers, it is also an interesting message to competitors. The business is going to be proactive and innovative in the market. The company will not sit back and react to competitors. The incremental status quo is no longer a way of doing business.
While this example of innovation may not be quite the full blown empowerment model as defined by Peters, it clearly is indicative of a change in direction and a holistic strategic outlook based on customer value. Moreover, Drucker’s definition of innovation as “change that creates a new dimension of performance” is coming true in the context of the company’s new performance through innovation.