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Thank you and bye.

Prospector

Thank you Beth.  Goodbye.

Prospector

Thanks Peter & Ritu. Fascinating subject!

Blogger

Would just want to emphasize again the optimization-emotion balance.  That's a difficult but important concept to keep in mind.

Prospector

Take a look at the diagram in the SMR article an assess your firm on the capabilities listed below each of the three capabilities on the diagram. This will give you a case for action and a place to start

Prospector

Peter, Ritu -- any last comments before we wrap up?

Blogger

It sounds so basic, and logical. Yet people so often are overlooked!

Blogger

I think it starts by acknowledging that customers, employees, and business partners are the most critical pieces of the puzzle -- they buy your products, and help you make your products.  Once everyone in the company gets that, you can start asking the question about how to infuse passion in these relationships and build the emotional connections.

Prospector

So perhaps as companies begin working with "big-data" that affords them the opportunity to think in new ways -- ie, about how to "softscale?"

 

Blogger

Sorry, meant layer not later (:-

Prospector

I wanted to ask just one last question and wrap up -- unless anybody lurking out there has any questions to toss in (now's the time!). The question is, where does a company even get started in thinking about data more empathetically? Any suggestions?

Blogger

Beth, I wouldn't say big data makes it easier -- just that it provides the nessary but not sufficient condition for growth.  Big data will reveal patterns and help you make predictions -- then you apply a later of empathy on top of that to interpret and contextualize results.  Softscaling includes a set of value and beliefs in the company about how to use big data.

Prospector

Peter -- that's curious. Perhaps we can pick up that discussion at another point!

Blogger

Beth, I agree about the cuture of data but I am much more optimistic about the impacts of A/B testing than big data analytics

Prospector

Peter, that is a stunning difference.

And, Ritu, I was just going to ask about the relevance of big-data here! Does big-data make it easier to "softscale?"

Blogger

Ask any USAA customer and they say USAA cares about us. And their NPS is 87% when the financial serivces industry average is about 25%. Stunning difference!

Prospector

Isilay, Yes, employee loyalty is a big part of the emotional connection.  Given weak labor markets US companies may not care right now -- but as things pick up, the war for talent will heat up.

Beth, yes, financial organizations have a great opportunity because they already have "big data!"  the challenge is to figure out how to use it well -- instead of simply identifying more products that their customers might want to buy.

 

Prospector

Ah Peter. You mention a "culture of debate, informed by data." I was thinking, too, that these companies must have what we hear call the analytics culture -- one in which everybody understands the importance of  data and making informed decisions based on it. Would you agree?

Blogger

But Ritu, financial institutions are at least well aware that they must become more customer friendly. They've got great opportunity, I would think, given the amount of data they amass about their customers

Blogger

Nordstrom's comes to mind.  I think the Telco's rank at the bottom.  Harrah's casino is another company that does a good job.  Financial institutions don't do so well.

Prospector

Softscaling requires requires certain capabilities. Companies like Tata Motors, HDFC Bharti Airtel and USAA have strong visions, identities and missions. When there are difficult tradeoffs to make these firms rely on their mission – to empathize with and serve the customer. They also have – despite organizational hierarchies – nurtured a culture of debate – informed with data. USAA is proablably the best SoftScaling company in the US 

Prospector

Also how about employee loyalty... Given the Tata example, empathy also helps on the employee side, it sounds like...

Prospector

And how do you think they will differ and why?

Prospector

Any examples of companies in the US that have a version of softscaling? 

Blogger

We believe US companies have to develop their own version of softscaling.  Isilay, you are absolutely right.  Customer loyalty is a function of the human touch -- and while data provides us with lot's of insights into how customers behave, it will not reveal the explanations for that behavior.  That's where the interpretation with empathy comes in.

Prospector

What are your thoughts on the applicability of softscaling in the Western countries? Isn't human touch suppsedly the core of all service offerings?

 

Prospector

So what can US companies learn from the research? How can they go about shifting their focus and becoming more empathetic -- or is that even possible with the high levels of automation we see at many US companies today?

 

Blogger

Interesting. That's fast growth!

Blogger

When going in for the research we simply wanted to understand what was driving the success of a handful of Indian companies that had become global contendors across a variety of sectors: automobiles, telecommunications, healthcare, etc.  So we hand-picked the companies we wanted to study.  We did not know then that we would discover "softscaling" -- we were looking for best practice but did not know what we would find

Prospector

To identify companies we looked for firms that were both growing 30 to 40% annually over the last 5 to 10 years and were either going international or had aspirations to do so

Prospector

How did you identify companies you wanted to study in India? Are there certain characteristics that mark companies that have the potential for using data empathetically?

Blogger

Ah, I see. Pretty cool. 

Blogger

Beth, Tata has outstanding personnel management systems that keep track of all employees and their families.  In addition, their HR functions are tasked with using these data to build relationships with employees.  So that's the data+empathy connection

Prospector

By value I mean impacting a basket of financial performance measures like ROA, net margin and revenue growth relative to competitors.

Prospector

Empathy,  I should say, not empathetic!

Blogger

Ritu, so that definitely shows Tata has empathetic. Remind me, though, of how the data came into play.

Blogger

That's an interesting stat, Peter. Any others to share? Like, along the lines of Noreen's last comment, did your research turn up any hard numbers on the bottom line?

Blogger

My favorite one is about the young man that Tata looked after when his father passed away.  I have met him -- he is brilliant, and could go work for anyone in the world.  But his loyatly to the Tata company is unwavering.

Prospector

Absolutely, but scale without a emotional connection creates automated voice response systems and worse. Interestingly we found that Softscaling companies in India spend about 25% less on technology but get 10% more value than the average firms elsewhere.

Prospector

All of these principles to me seem to be very drectly connected to the bottom line

So you guys gave some great examples in the MIT SMR article. What are your favorites, though?

Blogger

I would say evolutionary.  I believe that losing empathy completely in analyzing and responding to what the data tell you is a losing strategy for the long run.  Volatility is bound to occur sooner or later -- as we have seen even in purpotedly stable economies in the Western world.

Prospector

Peter -- so I see that responsiveness is best when through an emotional connection to the customer. But isn't scale, at least on a big scale, best obtained through automation? 

Blogger

I think it will be a while before markets stabilize in India. Instead other markets are getting more volatile.

Prospector

So what happens then as markets stabilize in places like India? Will companies start optimizing and automating and, therefore, lose that empathy? And, if so, is that necessarily a bad thing? Or more of an evolutionary thing?

Blogger

My hunch is that they will try to develop their own version of softscaling.  We are witnessing soem level of consumer frustration with the intense automation and the lack of human interaction.  It is somewhat inevitable.

Prospector

In volatile environments you need both scale and massive responsivness. Relying predominately on scale doesn't link you to the all the changing trends. Responsiveness does and we found the best way to achieve resposiveness was through an emotional connection to the customer.

Prospector

If you are in a stable setting, you can afford to swing more towards the optimization side because you face fewer threats.  And of course stuff is more predictable -- so, for example, you may have a pretty good sense for what custimers want

Prospector

I remember a few years back talking to a company -- a big US publisher I think it was -- that was transitioning from a product-centric view to a customer-centric view. The realization it went through sounds sort of similar to the softscaling idea.  As US companies become more customer-centric, do you see them embrace softscaling -- whether by that name or other?

Blogger

In volatile environments customer needs and preferences change very quickly.  New segments emerge.  The regulatory environment is also in a state of flux.  Competition is intense.  You need to grow and grow fast -- but at the same time you need to be responsive to market needs.  You do that by finding the softscaling balance of optimization and emotion.

Prospector

Why is this approach found more in volatile environments? Are good in volatile environments?

Blogger

Ah, yes, NPS. OK, I get it.

Blogger

India is a country that has experienced phenomenal growth and an opening up of the economy.  In some sense that provided the right opportunity for a handful of firms to capitalize on the growth by making the right strategic moves.  We had an intution that these companies would teach us something new about managing.....

Prospector

Why India?

As the business world becomes increasingly volatile what a perfect place to learn from talented executives who grew up thriving in volatile environments - - perhaps chaos!!

 

Prospector

Sorry. NPS = net promoter score. NPS and similar metrics are incrasingly used by firms to see how their customers feel about their company - are they net promotors or net detractors when they talk about the company. And NPS correlated with future financial performannce

Prospector

Noreen, yes, you're absolutely right.  And all the customer service research reminds us that loyalty is engendered if you can respond with speed to a customer complaint

Prospector

Why India? I know Ritu you said you were from there and wanted to highlight what's happening there, but were there other compelling reasons to do the research there?

Blogger

Ah! That sense that someone really cares

Peter and I thought very hard about an evocative phrase that would describe what these successful Indian companies were doing.  Softscaling exemplifies rapid and profitable growth and extensive use of data that is "contextualized" with empathy

Prospector

Siftscaling. What we saw in these top performing companies was an extraordinary ability to combine optimized process (particularly back end processes) with emotional connection to the customer. And data was the link that gave the left brain analytics and right brain emotives common ground. We called it sofscaling because it combines scale and the softness of the emotional connection.

 

Prospector

Peter -- NPS? I'm not catching that acronym...

Blogger

With digital - e.g.social and NPS - we see an increasing strenght of the customer voice. We need to listed, coonect and act on it.

Prospector

In the article, you use the term "softscaling." How'd you come up with that term. And what does it  mean, really?

Blogger

Data analytics must start by identifying what is important to the company -- and I would argue that for a majority of firms that would be the customer

Prospector

One of the most compelling statements I heard from a CEO in one of the companies we studied "We love the smell of the customer."  This company has outsourced virtually everything except their relationship with the customer.  That summarizes it!

Prospector

I wouldn't mind the systems as much if they actually recignized what I said. The first time

Ritu & Peter, a starting point for a data analytics project is "understand the business need." I would imagine more times than not that's "grow profits" or "win business" or somethign along those lines, and not necessarily "think about our customers." No?

Blogger

Yes, they are.  So we need to figure out how to balance the human element with the efficiency and optimization that systems provide.

Prospector

Peter, reminds me of a call I get daily from an IVR asking me to "press 1" if I'm so and so, who I'm not, or hang up otherwise. I hang up, but they still call the next day. It's so aggravating.

Blogger

Noreen, the answer is no.  But the ones who are successful I believe are....data drives profits, but equally data creates better relationships with customers (the warm fuzzies and social value).  And it also builds relationships with other partners that is such a critical aspect of social value

Prospector

Voilce recognition systems are so frustrating!

 

The lack of an emotional connection between companies and their customers is very common. Consider how many firms require callers to navigate voice recognition telephone systems. While these automated processes are intended to increase efficiency, they often leave callers frustrated when their voices aren't understood or it takes too many steps to speak with a real person.   We feel this focus on optimized systems at the expense of emotional connections can be a dangerous strategy, especially in today's volatile business environment when customers' needs and preferences are changing faster than ever.

 

Prospector

I often refer to what I call the tyranny of data.  Just as it is with Math -- we sometimes get so seduced by the numbers that we forget they represent real-world objects

Prospector

Ecionomic value and social value, that is

Are nost companies effectively blending both?

 

So Ritu & Peter, the idea of applying data compassionately is one we don't hear often, if ever. What made you think about empathy in an analytics context?

Blogger

True -- there is often a disconnect but it's a false dichotomy.  Economic value drives social value in many respects -- and of course social value improves lives.

Prospector

Great backgrounds, the two of you!

Blogger

I grew up in India and spent the last 25 years in the US -- working with lots of large and small corporations.  And of course teaching!  I truly believe that India has soem unique insights to offer -- and I wanted the world to hear the story!

Prospector

Ritu, I would imagine that there's often a disconnect between economic value and social value?

Blogger

I am an Aussie and love MIT. My work centers on the role, value, and governance of digitization in enterprises. Peter joined the Sloan faculty in 2000 to become director of MIT Sloan's Center for Information Systems Research (CISR). MIT CISR is funded by 80 corporate sponsors and patrons, and undertakes practical research on how firms generate business value from IT. Peter is now Chairman of MIT CISR and focuses on globalizing MIT CISR research and delivery.

Prospector

I am a professor who is keenly interested in understanding how data and information technologies can be used to create economic and social value. Economic value for governments and businesses and social value for individuals and societies!

Prospector

Peter & Ritu, while we wait for others to join, why don't you share a bit of backgrounds on yourself and your research?

Blogger

Hi Beth, I am online Peter.

Prospector

I am online.  Looking forward to the conversation

Prospector

I'm looking forward to today's e-chat. Set to begin in about 10 minutes. As you join in, please announce yourselves!

 

Blogger

I'll be here, Thanks

Prospector

Hi clslks. We'll be chatting at 3 ET.

 

Blogger

Hi Daniel. We'll be chatting at 3 ET.

Blogger

In a recent MIT Sloan Management Review article, authors Ritu Agarwal and Peter Weill discuss the benefits of combining data with empathy to optimize business results. "The empathic use of data enables companies to be, in effect, left-brained and right-brained simultaneously," they wrote. 

It's a fascinating topic that we'll explore with Agarwal and Weill during an e-chat here on Wed., Nov. 14, at 3:00 p.m. ET. 

Please join us in the conversation with Agarwal, who is a professor and the Robert H. Smith Dean's Chair of Information Systems at the University of Maryland's Robert H. Smith School of Business, as well as the founder of its Center for Health Information and Decision Systems; and Weill, who is a senior research scientist and chair of the MIT Sloan School of Management's Center for Information Systems Research. 

Blogger


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