Category Archives: creativity

Use Virtual Reality and Pokemons to Increase Customer Loyalty

Digital transformation doesn’t touch only companies in the U.S. or Western Europe. Many Russian firms made efforts to incorporate digital into their business models. Take Sberbank, for example. This is the largest universal bank in the country with approximately 330 000 employees, $39.2 Billion market cap and close to 17000 branch offices. It now has over 30 million active users of online banking system Sberbank Online, 18 million active users of Sberbank Online App for smartphones and over 90000 ATMs and self-service kiosks.
Being a universal bank in Russia means that you have to serve very diverse customer groups—from senior citizens– who want interaction with a human customer service representatives and are not comfortable with the technology — to digital natives who want mobile banking without much human interaction.
Elderly customers (i.e. 60 year old +) represent a large proportion of the bank’s clients. These customers don’t use Internet banking and even have trouble using self-service terminals in the branch offices to pay utility bills. How to make sure that the bank’s staff is always willing to help the elderly to navigate the terminals? One can run customer satisfaction surveys or develop KPIs for serving elderly clients and reprimand employees who are not helpful. Alternatively, one can work on improving the staff’s empathy with the elderly so that the associates are willing to assist without specific KPIs or a fear of reprimand from the top management.
To address this issue, Sberbank has developed a powerful virtual reality tool called Empathy for its staff. With a use of headphones and Samsung VR headset, a young branch associate can actually “become” an elderly client of her own bank. The bank worked with a team of psychologists and doctors to understand how a seventy-year-old person may perceive the world, given his (or her) poor health condition and declining motoric skills. When inside the program, you have the visual and sensory experience of an elderly person. You have to orient yourself inside the bank’s branch office, seek advice from a not-very-friendly Sberbank associate, figure out how to punch the numbers on the self-service payment kiosk. At the same time, you battle blurry vision (due to eye disease), noise in the years (due to high blood pressure), hands that lost their dexterity (due to arthritis) and occasional bumps into younger customers who don’t understand why you stand in the middle of the branch looking for help. The experience is extremely powerful and helps branch office employees to develop empathy towards seniors’ frequent inability to understand the technology and they become more willing to help. As a positive side effect, this experience helps young bank associates to feel more empathy for their own elderly relatives as well.
What about younger customers who tend to think of Sberbank as a boring place where their grandparents go to open savings accounts and pay their bills? Russia now has a few brunch-less banks targeting digital natives and Sberbank needs to change its perception of being a traditional bank in the eyes of this customer group. 2016 was a year of Pokemon Go and a small team of Sberbank’s executives decided to use the game to attract millennials to its branch offices. In 3 days, the team created a new insurance product called “Sberbank Go”. Every Russian citizen who hunted for Pokemons could sign up for insurance that covers medical costs in case of an accident. That is, if you walk into a street lamp pole while looking for Pikachu and hurt your leg, Sberbank insurance will help you pay your medical bill. In addition, Sberbank put Pokestops inside some of its branch offices to attract virtual eggs and Poke Balls. This helped game’s fans to capture more Pokemon if they visited Sberbank.
While this initiative sounds a bit silly, the objectives were very serious: increase awareness among the younger customers about the bank’s insurance products, its loyalty program and mobile payment solutions. The project was run in 27 branch offices across Russia. The results were very good. There was huge buzz in the Russian social networks about the campaign and the TV channels run stories about it. This was free publicity. At the end, 130 million individuals have heard about the initiative, journalists and bloggers wrote about 10 000 articles, the dedicated website (SberbankGo.ru) received 70 000 visits and the bank issued 6500 insurance policies to customers with the average age of 24 years old. In addition, 12 out of 27 branch offices with Pokestops experienced visible increase in physical traffic during the month of July, i.e. the period when traffic normally decreases due to the vacation lull.

How to make your company more open to digital transformation? Sberbank’s answer lies in raising awareness of opportunities among senior executives and empowering lower level employees. The bank’s CEO German Gref and his top management team became aware of the Virtual Reality’s potential to teach empathy while visiting the Virtual Human Interaction Lab in Stanford University. The CEO and his team realized the importance of agile approach in developing new products, and they created the organizational culture inside Sberbank that allows for small scale experimentation. This helped the emergence of SberbankGo and many similar digital initiatives. Ultimately, the embrace of digital technologies helps the bank to better service the elderly while appearing hip to the young. 
Shorter version of this article was published in French by Les Echos 

When to Partner and When to Acquire: Louis Vuitton Style

A few weeks ago, I was fortunate to sit down with Yves Carcelle, a former CEO of Louis Vuitton. He is a humble man with penetrating brown eyes. An INSEAD MBA, he is credited with transforming Louis Vuitton (LV) from an old trunk maker into a luxury powerhouse throughout his 23- year long tenure as CEO. Now he is a self-declared “fixer” for the top management team and Vice President of the LVMH Foundation. His own modest handyman-like image is in stark contrast to the venerable leader he is considered both inside and outside of LVMH.

When he became CEO in the early nineties, he knew that LV had grown very quickly across the world without having all the management resources it needed to maintain global leadership positions. This meant that LV had to form alliances with distributors in most of the countries it operated in. These distributors played an active role in the company’s business operations.

Yet, 100% reliance on global business partners was not Carcelle’s philosophy. One of his earliest initiatives at LV was to take control of 100 percent of the distribution of LV’s products in almost all geographies. “With 100 percent distribution, you can have a good database…every morning you see the sales product-by-product, store-by-store, clientele-by-clientele all over the world,” he told me in a recent interview.

Partnerships and alliances are valuable drivers of competitive advantage, but if everyone in your industry relies on partnerships, there might be opportunities for achieving competitive advantage in a different way, i.e. when you integrate everything under one roof.  Carcelle was willing to go against the grain, and now he remains surprised that no other luxury brand considered such a move. Even now most of LV’s competitors have a lot of distribution partnerships worldwide.

But why did LV decide to go against the industry’s majority opinion? During the 1990s, business revolved around the concept of outsourcing and many luxury goods companies moved many of their operations overseas. Carcelle argues that LV’s key source of competitive advantage was its know-how of product making. Success doesn’t always come from “manufacturing everything yourself, but from understanding and controlling the know-how and having your experts in-house,” he explains.

Does vertical integration always make sense?

Over time, LV bought out all of its partners, but there was one exception. “The only partners I decided to keep were our partners in the Middle East.  This was not only because their values were the same as ours. Friendship and value-sharing is not enough. [A big reason for keeping them was that] the Middle East is complicated, legally and culturally,” he said.

As I explain in the new book Network Advantage: How to Unlock Value From Your Alliances and Partnerships, LV decided to stick with a Middle Eastern partner – Chalhoub Group. As Yves Carcelle commented, “Decision-makers [in the Middle East] speak Arabic and I decided it was important for us to continue to work with partners that opened doors, be our advisers and we were the first one to organise a joint venture for the whole Middle East market”. However, to still ensure as much consistency across regions as possible, LV decided to work with Chalhoub Group across several Middle Eastern markets, and not to try and find a separate partner for each country.

The lesson from Yves Carcelle’s experience is clear. The more unique your assets are and the greater the control you need to exercise over the value chain to extract competitive advantage from these assets, the more vertical integration makes sense. However, the higher the uncertainty and complexity in your markets, the more you should think about partnerships. LV’s key assets were a unique brand and long term experience in luxury goods. By vertically integrating, LV has ensured a highly consistent image all around the world. If you face a situation when you have unique assets, control over the value chain helps you extract value from them. Yet when you are dealing with complex and uncertain markets, then you need to find a single partner with expertise in most of these markets.

You can watch this clip for more insights on networks, innovation and creativity from Yves Carcelle–  one of the most experienced executives in the world of luxury goods.

http://www.youtube.com/watch?v=72OrkXqYxQo



How to make your company more creative? Hire a senior executive who worked abroad.

Creativity is an important driver of competitive advantage for companies. One way your company can be more creative is to hire executives who worked abroad. These people are likely to offer non traditional solutions to your problems.

I recently did a study with Frederic Godart, Will Maddux and Adam Galinsky. We looked at how foreign working experience of fashion designers affected creativity of their collections. We found that fashion critics and buyers were more likely to view a designer’s fashion collection as creative, if this designer worked (or is currently working) abroad.

Apparently, working outside of your home country changes the way you think: by looking at how different people in different cultures solve problems differently, your brain learns to think about how to approach any business problem differently. If a problem is solved in France in one way, perhaps the Italians solve it in a different way. And you can perhaps think of the third way to solve the same problem–by combining the French and the Italian approach. Karl Lagerfeld is even reputed to work in Italy and France during the same day!

Working abroad also shapes your personal network. If you work in one country and then go work to another country, you become a bridge between professional communities in both countries. For example, a fashion designer who works in France gets to know other French designers and when she moves to work to Japan, she can get to know Japanese designers. If she still stays in touch with her French friends, she will know what is going on in French fashion world while she is working in Japan. And this knowledge will help her combine French and Japanese fashion influences in the future collections. Our study shows that such collections are seen as being very creative.

So, next time you are looking for a senior executive to fill a job that requires creativity and ability to innovate, look up their Linked-In profile. Does it indicate that the person worked in several different countries? If so, she or he is worth looking at, as this person is likely to be indeed creative.