Applying the Point of View to the Business Model
Chapter Three: Principle 2—To Be Compelling Requires a Strategic Point of View
Dear Friends,
In the post, I go deeper into how to use a strategic point of view statement to guide business model design. One thing that I didn’t write in the post but should seem obvious at this point is that experience strategy is about a holistic look at the business. Too often, the people who create the customer experience are involved solely in designing protocols for a particular channel or tool. The UX people focus on the user interface. The CX people focus on experience delivery. And on and on.
Experience strategy comes before the design. It comes before the brand strategy. It helps the company to shape the whole business model. And this post shows how having a point of view statement supports the the experience strategy.
If you are trying to catch up, go to the bottom of the post for an outline of the chapter and links to past posts.
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Applying the Point of View to the Business Model
Here’s a simple canvas / metaphor framework: the business model map. Lots of companies use business model maps to help them think about the design of their business models.
I created this business model map because I felt that the templates most companies use are missing some foundational elements. In this framework you can see that the building blocks are connected in tiers. The foundational tier defines the customer need or job to be done, the customer journey, and the value proposition. Once the company has these three interdependent building blocks in place, the next tier is the strategies for channels/tool, revenue, and customer relationships. The third tier focuses on the key requirements to execute the strategies, namely the key activities that the company will perform, the resources that are at the company’s disposal—or need to be, and the partnerships that need to be in place. The final tier is the cost structure, or what the impact of changes to the business model means for the company’s finances.
Now, let’s imagine that a travel company that specializes in cruises for older adults has decided to adopt the strategic point of view statement that I shared earlier. To refresh your memory, here’s part of the point of view statement:
Our customers want to improve their personal performance and will reward us with their loyalty if we can develop a culture of innovation, direct resources toward solutions that improve customization, and learn to anticipate future needs. By focusing our resources on personal performance our company can simplify our channel strategy, deliver a consistent and compelling message to our customers, and create growth. We will be able to innovate faster.
The cruise company has done their research. They realize that their customers, even though they are older, are no longer satisfied with sedentary cruise experiences. They want to improve their own wellbeing will being on vacation and constant food and entertainment isn’t enough. They recognize that older cruisers tend to book longer cruises, which means they have more time to do everything they want to do. And the cruise company realizes that brand loyalty has eroded. Their customers no longer identify as brand advocates. Instead, they seem to choose their next cruise based on what they want to accomplish. If they want to connect with grandkids, they choose a family brand. If they want to see a new locale, they choose a local brand. The cruise company wants to keep their customers and grow their market. They plan to apply their insights about the customer to all aspects of their business model.
You can see in the language that there are a number of changes that need to occur to the business model. The point of view statement helps to set priorities for the company. But there’s more work to be done. So, the experience strategist creates the following From/To framework to help the company understand the shifts that need to occur.
Notice what changes occur to the company. New data must be collected; new ways of creating revenue must be developed. The focus of the entire company moves toward customization of the experience, but not just any type of customization. It’s a focus on tailoring experiences to the personal goals of the customer, which could change from cruise to cruise.
An exercise like this demonstrates the fundamental difference between experience strategy and CX. Experience strategy is about maximizing the value created from experiences by improving the business model. CX has historically been about improving customer loyalty through incremental change. There is nothing wrong with improving the customer’s incremental experience. It’s just not enough to help companies truly grow.
This exercise also demonstrates the difference between a point of view and a brand strategy. In today’s world, a brand strategy needs a point of view that permeates the entire business model in order to be compelling. The point of view comes first.
Let’s do this exercise again, but this time let’s use a more current example: Apple. For the past ten years, Tim Cook, Apple’s CEO, has articulated a powerful point of view regarding the near future needs of Apple’s customers. People should be able to trust technology companies to preserve their privacy. That’s the strategic point of view. He’s doubled down on privacy. He became a major critic of technology companies who played fast and loose with customer data. Privacy is his mantra, and it matters. Let’s use that point of view and apply it to the world of generative AI, where data sharing is crucial to the company’s ability to create what Apple calls ‘personal context.’
An Example of How Apple’s Point of View on Privacy Drives the Business Model
Here’s an example that I wrote to illustrate what the company needs to do:
In the near future customers will have to make difficult choices between using generative AI tools and giving up private information that could be used elsewhere. Our customers want their privacy to be preserved. Apple has built is business model and its reputation around privacy. To ensure that our customers can control access to their personal data, Apple will only work with outside AI solution providers, like OpenAI, when data that identifies the customer has been removed. Apple will build its own generative AI tools that give the user full control over what data is shared with the platform. Our guiding principles are
Data Minimization: Apple collects only the minimum amount of data necessary to provide its services.
On-device Processing: Whenever possible, Apple processes data on the device rather than sending it to the cloud.
User Control: Apple gives users significant control over their data. Users can decide what data to share and with whom through detailed privacy settings.
Transparency: Apple is transparent about its data collection practices.
Encryption: Apple uses strong encryption to protect user data both in transit and at rest.
Differential Privacy: Apple employs differential privacy techniques to collect useful data for improving services while preserving individual user privacy.
As Apple thinks about our business model going forward, we need to ensure that:
Business Model
Our Focus
1. Customer JTBD
People hire us to create technologies that preserve their privacy while empowering them.
2. Journey
An intelligent journey map that gives people control over sharing contextual data with Apple’s ecosystem and partners and lives up to our principles.
3. Value Prop
We combine the very best in generative AI with personal privacy. At no time should your information be used without your explicit choice to share it.
4. Channel, Tool, Environment
We need to create intelligent tools that deploy generative AI to help the individual create their own, private, personal data ecosphere.
5. Customer Relationship
We will provide total transparency regarding data usage.
6. Revenue Stream
We will ensure there are no revenue streams built that exploit shared customer data with/from other companies or ad agencies.
7. Key Resources
Our key resource is the Apple ecosystem, which will make it possible for Apple users to create their own personal data ecosphere.
8. Key Activities
We will become the very best at anticipating what impact generative AI will have on user privacy and ensuring that our tools get the job done for users.
9. Partnerships
We will create partnerships with solution providers like OpenAI, but we will maintain control over customer data and never share customer data with these tools.
10. Cost Structure
Apple can accomplish these goals within the current software and hardware development cost structure.
Now the company can make decisions faster, easier, and in a way that is compelling to all customers. After all, who doesn’t want their privacy protected. And it’s after the company understands how the principles will drive business decisions and innovation that the brand story kicks in.
The point of view drives the business model and then the brand strategy.
To be continued …