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The service sector is a large and growing part of our economy. But a lot of service businesses are managed according to old ideas imported from more traditional industries, says Ryan Buell, UPS Foundation Associate Professor of Service Management at Harvard Business School (HBS).

In today’s rapidly changing service sector, a new set of frameworks is required to build a robust and competitive service business, says Buell.

“Service jobs have a reputation for not being great jobs—and in many cases, I think it’s a well-earned reputation. But it shouldn’t be that way,” says Buell. “Service is the business of people helping people, and when employees lack the capability, motivation, and license to perform, there’s no hope they’ll deliver excellent service to customers.”

Transforming Customer Experiences


Transforming Customer Experiences draws upon the latest research and insights to equip senior managers with a new toolkit for leading and managing a professional services firm or a customer service or sales team. As a participant in this program, you will work alongside some of HBS’s most renowned service management thought leaders. You will learn innovative methods for designing exceptional service offerings, creating a distinct and sustainable service model, and effectively managing employees and customers.

Buell is faculty chair of the HBS Executive Education course Transforming Customer Experiences, which explores how service leaders can create distinctive and sustainable service organizations that “turn customers into raving fans and employees into dedicated stewards of the mission.”

The program is distinctive in developing a holistic curriculum that speaks to the challenges faced by modern service organizations, Buell says. Participants in the program learn the fundamentals of transforming customer experiences through cases from and interactive lectures by HBS faculty members.

For instance, one case, developed by Buell, focuses on the way IDEO uses human-centered design thinking as a systematic methodology to help create new products and services. The case explores this process through the example of Cineplanet, a leading movie cinema chain in Peru. The company hired IDEO to help them determine how to better align their operating model with the needs of their customers. “This case study may change the way you think about thinking,” says Buell.

The HBS program also includes workshops and one-on-one coaching sessions with faculty who are experts in their fields to help participants discover gaps in the design and execution of the service businesses they lead so they leave with road maps for how to transform and revitalize those businesses.

“Our goal each day is for participants to walk away with practical ideas that can be put to work in their own organizations to make an immediate impact on performance—for employees, customers, and owners alike,” says Buell.

Peer-to-peer learning is also a key part of the program, which assembles a learning community of exceptional service leaders from all around the world.

“My colleagues and I will certainly bring ideas to the table, but just as importantly, we’ll work to set the conditions for participants to leverage and benefit from each other’s experiences,” says Buell.

“At any given point, there will be someone in the room who has faced a challenge similar to another person’s. Getting those people to have a conversation about how they solved the challenge is incredibly valuable, and it doesn’t necessarily happen by itself. We’re very intentional about fostering those interactions.”

The program features workshops on service design and service execution, and those workshops are particularly valuable for companies that send cross-functional teams to the program—that is, when they send multiple people who understand the organization from different angles, says Buell. In this context and setting, teams have an opportunity to deeply understand and diagnose challenges that their organization faces, but they also leverage their cross-functional expertise to identify opportunities to improve their business. Also, having a shared experience allows teams to go back to their organization with a common language and a common set of tools and frameworks for addressing business challenges.

To learn more about Transforming Customer Experiences at Harvard Business School Executive Education, taught by Ryan Buell and other renowned faculty, visit the program website.

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The global digital economy crossed an important milestone recently: the number of internet users in two countries — China, with just over 800 million users, and India, with 500 million users  – surpassed the aggregate number of internet users across 37 OECD countries combined. In both countries, users spend more time on the internet than the worldwide average of 5.9 hours per day. They also have room to grow; China has just under 60% of its population online, while India, with one of the lowest rates of internet penetration in the world, has under 25% of its population online.

While it’s tempting to group China and India together as a block of emerging digital markets, they offer several important distinctions, especially for international entities and countries looking to invest. In our Digital Evolution Index (DEI), we place them in the “digital south” which means the full deployment and adoption of online systems is still in development. Our DEI research classifies both China and India as “Break Out” countries, which means they are experiencing strong digital growth. China has 783 million smartphone users and, as reported by the Cyberspace Administration of China, had 469 million registered on a mobile payment platform in January 2017. It is also the world’s largest market for e-commerce. And India is on track to become the youngest country in the world by 2020 and its digital economy is expected to balloon from $413 billion today to $1 trillion dollars by 2025.

Both China and India present barriers to entry for foreign players. The most obvious distinction between the two markets is that China is mostly closed to international players because of state restrictions, while India is, technically, open for business. Top U.S. companies are investing heavily in India —  as are Chinese companies, such as Alibaba and Tencent.  However, India presents barriers that are less visible. Consider two examples:

Languages: Language poses a high barrier to entry or growth for any company. Less than 100 million out of India’s 700 million literate population can read or write English. There are 32 different languages with a million-plus speakers each across India, whereas in China, Mandarin is understood by the majority. In India, 90% of the country’s registered publications do not have a website because of language barriers and 95% of video consumption is in local languages. It is essential to crack at least five Indian languages to truly break into this market. Protectionist policies: While China’s protectionist policies are transparent, India’s protectionist agenda is in the form of regulations and red tape. For example, a recently proposed Indian government policy on e-commerce and a similar order from the country’s central bank seeks to prohibit data on Indian e-commerce consumers from being stored outside India. Many international players view this as favoring homegrown digital companies and a case of India borrowing from China’s playbook, that mandates local storage of Chinese user data considered “sensitive”.

The few international players active in China have scaled the entry barriers through adaptive (and sometimes risky, complex, or controversial) strategies, while others that have been blocked – e.g. Google and Facebook – keep experimenting with ways to comply with the state restrictions and invite fresh controversies. In parallel, companies will need to tailor their approaches to fully crack India, but in different ways. Building on our example above, in response to the language barrier, Google has invested in its Translate app and in its AI-enabled multi-local language publishing platform while Amazon plans to launch in multiple local languages in India. Even for these giants, there is a long way to go.

Both China and India have governments deeply engaged in orchestrating the digital economy and in citizens’ data. It is well-known that China’s government has ambitious objectives for the country’s digital future. According to China scholar Adam Segal’s analysis, the Chinese President Xi Jinping “aims to build an ‘impregnable’ cyber-defense system, give itself a greater voice in Internet governance, foster more world-class companies, and lead the globe in advanced technologies.” Among its other ambitions, a July 2017 State Council document aims to position China as the world’s AI leader by 2025.

In the context of this agenda, the Chinese government is assembling a comprehensive database on its own citizens with help from Chinese technology companies that routinely synchronize with the government.  The data will establish a social credit system  expected to be both mandatory by 2020. Every Chinese citizen’s “social credit score”, drawing upon public and private data sources can determine what services – from no-deposit apartment rentals to booking airline tickets to dating to government services — are accessible to the citizen. The private sector, companies such as Alibaba – e.g. Sesame Credit, run by the Ant Financial, an Alibaba affiliate. — and Tencent, through its popular messaging platform, WeChat, have become enormous repositories of user data, with which they can better design and target new services, discern key user attributes, such as credit-worthiness, and train algorithms. They also help the government with necessary data and algorithms. This public-private collaboration not only helps serve the state objectives of citizen surveillance and preserve social order, but also produces user data that improves China’s AI capabilities.

Meanwhile, India’s government also has ambitious objectives for the country’s digital economy. Relative to its Chinese counterparts, India’s authorities have been focused on the fundamentals — on low-cost access to digital tools and on creating an open and inter-operable infrastructure.  The country has embarked on a broad Digital India initiative that encompasses everything from broadband “highways” to e-governance to digital literacy. There are also plans to establish 100 “smart cities” across India in collaboration with public agencies and private companies.

Like China, India, too, has a citizens’ database.  The aspirations for such a database were to establish a universally accepted form of identification to promote inclusive access to a variety of services in a country where many are excluded because of a lack of key documentation. As the core visionary behind this initiative, technology pioneer and Infosys co-founder, Nandan Nilekani, writes, the essential idea was to “empower users with the technical and legal tools required to take back control of their data.”

Nilekani led the initiative that produced such a system, Aadhaar, which has enrolled 1.2 billion citizens. Aadhaar has become the foundation for an “India stack”, the world’s largest API that allows any enterprise, private or public, to build services and linking them to each individual’s unique identity.

While each country has chosen a different path, both markets are being shaped by governments defining a framework and working with the private sector to populate it. Of course, state-organized citizen databases raise plenty of concerns.  China’s social credit system raises worries about “Orwellian” mass surveillance. In addition, the growing use of facial recognition technologies across China adds to worries about privacy and government over-reach.

In India, Aadhaar had increasingly become mandatory for privately offered services, such as mobile communications, banking and airline bookings as well as government programs, triggering concerns from consumer privacy and advocacy groups. The Aadhaar database itself has not proven to be secure and there were worries about both commercial abuse of data and government surveillance of citizens. As in China, India has also entertained proposals to add facial recognition to the database. The mandatory aspect of Aadhaar was re-visited after being legally challenged and the country’s Supreme Court has ruled that while the ID system is constitutionally valid and is required as proof-of-identity for government programs, it cannot be mandated for private services, making it harder for companies to authenticate their customers.

Companies looking to enter either of these markets will need to be prepared to navigate a digital landscape being actively shaped by the government. They will also have to contend with some difficult privacy issues; in China the rules of play on these issues are clearer, while in India the rules can change with political turnover, as well as the outcomes of legal challenges and citizen advocacy.

Both China and India are key contributors to the world’s growing middle class. Currently, China is ahead on the major economic metrics: to add as much to its GDP as China will in 2018, India would need to grow by  40%.  But there are other measures that suggest that India might have a chance to narrow the gap. India’s middle class (defined as $11 – $110 a day in 2011 purchasing power parity terms) is expected to exceed that of China’s by 2030, according to the OECD and Brookings.  Simultaneously, India’s high growth rate of 7.7% in the first quarter of 2018, continues to maintain its position as the world’s fastest-growing large economy.  Some India-enthusiasts argue that its demographic advantage and democratic political system will prove beneficial over the long-term in catching-up with state-controlled China.

China is ranked 36th and India 53rd out of the 60 countries ranked by our DEI. In light of the potential narrowing of the broader economic gaps, it makes sense to ask if the gap between the digital economies of the two countries might narrow. How long will it take for India to get to China’s current level of digital evolution?  What key drivers might help accelerate the journey? Could India plausibly narrow the gap? These questions are important for companies that would rather pursue opportunities in India, rather than contend with the high barriers in China, but are concerned about how far behind India is relative to China.

Using our DEI model, there are three possible catch-up scenarios:

First, if India were to pick up China’s momentum, it would reach China’s current level of digital evolution by 2029.

Second, if India could achieve 3% growth annually across several drivers, it could achieve China’s current level of digital momentum by 2022; these drivers are: physical infrastructure, government facilitation of the ICT sector, digital access, use of digital money and payments, national investment in R&D, gender digital inclusion, digital footprint of business, mobile internet gap.

Third, if India could accomplish the following combination of growth rates, it could reach China’s current state of digital evolution by 2024.

18% annual growth in Gender Digital Inclusion 3% annual growth in Physical Infrastructure 3% annual growth in national investment in R&D 1% growth in Digital Access Availability

This analysis suggests that narrowing the digital gap is within India’s reach. If international technology players and investors were to consider where they might intervene in India’s digital economy and provide leverage to the country’s policy objectives, they can participate in India’s digital economy while helping it accelerate and narrow the gap with China, a perennial economic rival. If this happens, India’s economy could even catch up to China’s. It is important for businesses, innovators, and policymakers to be aware of this potential for convergence between the two great powers of the digital south just as much as they see the differences in order to make wise strategic choices for approaching the two most essential digital markets in the world.

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Most people at one time or another have struggled to navigate the complexities of the U.S. health care system. Many have received unpleasant surprises, such as a medical bill they expected to be covered by their health insurance or an unexpectedly expensive bill for a simple service. This type of confusion results in a lot of administrative work, including avoidable calls to customer service centers or time spent helping people find lower-cost options for services. It is costing employers and health plans billions of dollars each year.

Recognizing this exorbitant cost, Accenture developed a literacy index to evaluate how well consumers can obtain, understand, and navigate information and services. We used this index to assess how health care literacy affected the performance of nine consumer experience touchpoints. We then calculated the correlating impact to administrative costs. From this, we identified strategies in which health plans could save themselves billions of dollars — by simplifying the “user experience” of a system that was not designed with the preferences of the consumer in mind.

Our analysis found the health care system is so complex that more than half (52%) of consumers are unable to navigate it on their own, triggering avoidable customer service calls and more costly care. Consumers with low health system literacy are three times more likely to contact customer service. Our estimates found health insurers and employers spend $26 more on administration fees for every consumer with low health system literacy. This translates into a total cost of $4.82 billion, which would be even higher if accounting for medical cost.

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We found that consumers with low literacy struggle to make informed decisions about everything from the health plan types they choose and the premiums they pay to the doctors they see and the procedures they have done. It is worth noting this issue has nothing to do with education level: Roughly half (48%) of low-literacy consumers are college educated and nearly all (97%) have at least a high school diploma.

Difficulty in making informed decisions impacts consumers’ ability to get the medical care they need. This is especially detrimental for the one in four (26%) consumers who have both low understanding and the highest need for health care interventions, such as individuals who are facing chronic or serious conditions. While our study assessed the impact of low literacy on administrative expenses, two decades of research has documented the impact of literacy on the overall health economy — some estimate the cost to add up to as much as $238 billion, or 17%, of all U.S. health expenditures.

Education has a role to play in reducing costs for health insurers, but it alone will not eliminate the problem. To ease their cost burden, health plans should instead aim to simplify the user experience. Our research points to a few strategies that health plans can implement a new model of consumer service and engagement. This can be achieved by harnessing digital channels to make the user experience easier, incentivizing progress driven by other stakeholders in the system, and shifting the complexity burden off consumers.

Harness digital channels to improve user experience. While systemic complexity won’t be eliminated in the short term, health plans can approach service differently to make navigating the health care system feel simpler and easier. Amazon and other digital retailers have done just that. Consumers can select one-click options to get their delivery within a specific timeframe, but are oblivious to the operational complexity that goes on behind the scenes to make it happen. In today’s increasingly technological world, consumers expect this type of simplicity and digital access across all industries that they interact with.

One example of a company in the health industry that is seeking to simplify the process is Oscar Health, a New York City-based insurance company serving six states and 250,000 members. While widely known for using digital, telemedicine, and concierge service to augment care, Oscar Health has also tackled operational complexity across core insurance functions, like claims processing, providing its 240,000 members with cost estimates for select medical services.

Incorporating intelligent technologies such as artificial intelligence to customer service initiatives can also help with delivering easy-to-follow programs and relevant products.

Incentivize progress. Another solution to cut through complexity is incentivizing health providers and consumers to work together in navigating health insurance options.

We know that providers influence where consumers go for health services. A recent NBER study found that, when choosing between low- and high-cost care settings, referring physicians had far more influence over where consumers sought care than cost did. Employer plans — such as those offered by startup Centivo — are bucking this trend by incentivizing physicians and patients to work together to lower the cost of care.

Other programs focus on educating consumers on how to choose affordable care settings on their own. Programs provided by Vitals, for example, offer consumers cash-back rewards when they select a lower-cost service or procedure such as an MRI or mammogram. Incentives such as these are more likely to drive consumers to change their behaviors, and in the process will educate them about how to make better and cost-efficient care choices.

Shift the complexity burden off consumers. Health plans also need to deploy new product concepts that take us closer to the goal of simplification and orchestrate service options to reach low literacy consumers on their terms.

For example, organizations can offer simple, per-visit copayments instead of complex deductible and coinsurance plans. That is what Minneapolis-based startup Bind Benefits is doing by offering employers on-demand plan options with no deductibles. The idea is to offer simple, straightforward pricing rather than complex plan structures so consumers can easily engage and know the price of their services at the time of consumption.

Ultimately, the only way to eliminate systemic complexity in health care is by actually making health care simpler. Rather than forcing consumers to battle the complexities, the health care system must design user experiences to align seamlessly with the needs, behaviors, and preferences of the people it serves.

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On his first day as CEO of the Carlsberg Group, a global brewery and beverage company, Cees ‘t Hart was given a key card by his assistant. The card locked out all the other floors for the elevator so that he could go directly to his corner office on the 20th floor. And with its picture windows, his office offered a stunning view of Copenhagen. These were the perks of his new position, ones that spoke to his power and importance within the company.

Cees spent the next two months acclimating to his new responsibilities. But during those two months, he noticed that he saw very few people throughout the day. Since the elevator didn’t stop at other floors and only a select group of executives worked on the 20th floor, he rarely interacted with other Carlsberg employees. Cees decided to switch from his corner office on the 20th floor to an empty desk in an open-floor plan on a lower floor.

When asked about the changes, Cees explained, “If I don’t meet people, I won’t get to know what they think. And if I don’t have a finger on the pulse of the organization, I can’t lead effectively.”

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This story is a good example of how one leader actively worked to avoid the risk of insularity that comes with holding senior positions. And this risk is a real problem for senior leaders. In short, the higher leaders rise in the ranks, the more they are at risk of getting an inflated ego. And the bigger their ego grows, the more they are at risk of ending up in an insulated bubble, losing touch with their colleagues, the culture, and ultimately their clients. Let’s analyze this dynamic step by step.

As we rise in the ranks, we acquire more power. And with that, people are more likely to want to please us by listening more attentively, agreeing more, and laughing at our jokes. All of these tickle the ego. And when the ego is tickled, it grows. David Owen, the former British Foreign Secretary and a neurologist, and Jonathan Davidson, a professor of psychiatry and behavioral sciences at Duke University, call this the “hubris syndrome,” which they define as a “disorder of the possession of power, particularly power which has been associated with overwhelming success, held for a period of years.”

An unchecked ego can warp our perspective or twist our values. In the words of Jennifer Woo, CEO and chair of The Lane Crawford Joyce Group, Asia’s largest luxury retailer, “Managing our ego’s craving for fortune, fame, and influence is the prime responsibility of any leader.” When we’re caught in the grip of the ego’s craving for more power, we lose control. Ego makes us susceptible to manipulation; it narrows our field of vision; and it corrupts our behavior, often causing us to act against our values.

Our ego is like a target we carry with us. And like any target, the bigger it is, the more vulnerable it is to being hit. In this way, an inflated ego makes it easier for others to take advantage of us. Because our ego craves positive attention, it can make us susceptible to manipulation. It makes us predictable. When people know this, they can play to our ego. When we’re a victim of our own need to be seen as great, we end up being led into making decisions that may be detrimental to ourselves, our people, and our organization.

An inflated ego also corrupts our behavior. When we believe we’re the sole architects of our success, we tend to be ruder, more selfish, and more likely to interrupt others. This is especially true in the face of setbacks and criticism. In this way, an inflated ego prevents us from learning from our mistakes and creates a defensive wall that makes it difficult to appreciate the rich lessons we glean from failure.

Finally, an inflated ego narrows our vision. The ego always looks for information that confirms what it wants to believe. Basically, a big ego makes us have a strong confirmation bias. Because of this, we lose perspective and end up in a leadership bubble where we only see and hear what we want to. As a result, we lose touch with the people we lead, the culture we are a part of, and ultimately our clients and stakeholders.

Breaking free of an overly protective or inflated ego and avoiding the leadership bubble is an important and challenging job. It requires selflessness, reflection, and courage. Here are a few tips that will help you:

Consider the perks and privileges you are being offered in your role. Some of them enable you to do your job effectively. That’s great. But some of them are simply perks to promote your status and power and ultimately ego. Consider which of your privileges you can let go of. It could be the reserved parking spot or, like in Cees ‘t Hart’s case, a special pass for the elevator. Support, develop, and work with people who won’t feed your ego. Hire smart people with the confidence to speak up. Humility and gratitude are cornerstones of selflessness. Make a habit of taking a moment at the end of each day to reflect on all the people that were part of making you successful on that day. This helps you develop a natural sense of humility, by seeing how you are not the only cause of your success. And end the reflection by actively sending a message of gratitude to those people.

The inflated ego that comes with success — the bigger salary, the nicer office, the easy laughs — often makes us feel as if we’ve found the eternal answer to being a leader. But the reality is, we haven’t. Leadership is about people, and people change every day. If we believe we’ve found the universal key to leading people, we’ve just lost it. If we let our ego determine what we see, what we hear, and what we believe, we’ve let our past success damage our future success.

Nick Morgan, a communications expert and speaking coach, says that while email, texting, and Slack might seem like they make communication easier, they actually make things less efficient. When we are bombarded with too many messages a day, he argues, humans are likely to fill in the gaps with negative information or assume the worst about the intent of a coworker’s email. He offers up a few tips and tricks for how we can bring the benefits of face-to-face communication back into the digital workplace. Morgan is the author of the book, Can You Hear Me?: How to Connect with People in a Virtual World.

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How to Keep Warm Leads From Turning Cold

Cold leads, hot leads, warm leads … what do these terms mean? A cold lead is someone you think is a potential buyer, but you don't know them, and they don't know you.  A hot lead is someone who is ready to buy and is interested in buying from you.  A warm lead is anywhere in between. 

Warm leads have, at the very least, raised their hand and expressed interest in your offering. While warm leads vary in degrees of temperature, from lukewarm to borderline hot, they all have two things in common. One, they hold great potential for future sales. Two, they require nurturing and cultivation to keep them from turning cold again. Ideally, those warm leads will one day turn hot, and your company will be front and center when they do. 

A helpful way to understand how to best approach warm leads is to compare it to dating, or in more outdated terminology, courting. The same rules apply. When a man, for instance, courts a woman with the intention of marrying her, his behavior will follow some very important guidelines, because he knows he'll lose her otherwise. These guidelines are almost identical to my seven tips for nurturing warm leads.

In a courtship, a man's number one goal will be to further the relationship so that one day she'll say yes to marrying him. All actions will adhere to this overarching goal (Tip No. 1). He will date her and see her as often as possible, toeing the line between being too overbearing or seeming too uninterested (Tip No. 2). He will make her feel special in other ways, such as sending her flowers, writing her love notes and giving her gifts (Tip No. 3). He will listen to her so that she feels heard and valued and so that he understands how best to support her (Tip No. 4). He will always be honest, knowing that if he breaks trust, she will end the relationship (Tip No. 5). He will be patient with her, allowing her to come to him in her own time (Tip No. 6). And, in our present modern age, he will move in with her first before committing to marriage if she so desires (Tip No. 7). 

With these dating guidelines in mind, here are my seven tips for nurturing warm leads:

1. Focus on building rapport. The most important aspect of nurturing warm leads is the relationship. In every interaction, the primary goal should be to further cultivate the relationship. This overarching intention needs to inform everything that you do and every decision you make. 

2. Regularly follow up. This is the area where it can get tricky. You don't want to be a pest, but you don't want to be forgotten. It's the delicate balance between coming on too strong and being too distant. If you come on too strong, it will scare leads away and make you seem too salesy – the kiss of death in sales. However, if you play it too cool, you will be perceived as not caring about gaining their business – again, the kiss of death in sales. Plus, you'll be easily forgotten. Out of sight, out of mind as they say.

Unfortunately, our instincts can't be totally relied upon when it comes to this area. I advise clients to follow up a little bit more than they might naturally be inclined to because most people err on the being too distant side of the equation. It helps to have a purpose with each follow-up, i.e., news about your company, new offerings or services, updated information, targeted marketing collateral, handwritten notes, white papers, etc. You can also congratulate the prospect on their news, offer up a valuable referral or note a mutual connection. Every once in a blue moon, you can just check-in, but most of the time have a purpose or add value in some way, shape or form. 

3. Connect in any way possible. In today's world, businesses can connect with prospects in a number of different ways. Before the advent of computers, we were limited to in-person meetings, the phone and snail mail. Now, there is LinkedIn, Twitter, Facebook, Instagram, YouTube, etc. Make it a habit of following your prospects on all these platforms so you can connect with them and support them in a variety of ways. This will go a long way toward building rapport. 

4. Listen more than you talk. The focus should be on them, not you. People like to talk. They want to be heard. They want to know they are important to you and that their concerns are important. Plus, the intel you can learn by simply listening is priceless and can be of enormous help when it comes time to close the sale. 

5. Be integrous. As in any relationship, trust is of paramount importance. A stain on integrity is not easily forgotten or forgiven. Maintain integrity throughout all of your interactions, big and small. It all matters.

6. Be patient. The truth is, there is no way of knowing when a warm lead will turn hot. Could take weeks, could take months, could take years. Be patient and just trust the process. No matter how long it takes, you want to be there when they decide they're ready.

7. Let them take you out for a test spin. Every company should have a soft offering – a way to test the product or service. Just like most couples these days will move in together before walking down the aisle, most prospects are going to want to try you out in some capacity before fully committing. If you don't have that option available, you'll likely lose a lot of business to companies that do offer that option.

As a final thought, it helps to remember that, as in dating, there are no guarantees. You could do everything right and a warm lead could still turn cold for reasons that have nothing to do with you. Alternatively, they could turn hot and, at the last minute, decide to go with a competitor. However, if you master the practice of cultivating and nurturing your warm leads, you'll always be in the game. And as long as you're in the game, odds are you'll win sometimes too. 

AI Won't Run the Business World: Why We Still Need Human Intelligence

Is there a time on the horizon when humans can turn over their businesses to advanced deep-learning neural networks and relax while artificial intelligence does all the work? The early 2000s saw a boom in machine learning, AI and automation — and despite the advances that have given us chatbots and personalized suggestions for everything from shoes to potential spouses, we humans are still necessary for effective business processes in virtually every type of industry. That's because while artificial intelligence is efficient, it relies on humans to build its intelligence and take on tasks it can't yet handle.

Neural networks have to get the information they use to recognize patterns from humans. We have to decide which data to “feed” the neural networks to train them to handle specific tasks, such as facial recognition or similar products. This is called supervised learning and it's as far as the technology reliably goes for now. Deep-learning technology can do a lot of things it couldn't do a decade ago, according to Roger Parloff at Fortune, but it hasn't evolved enough to let networks sift through raw data on their own to consistently find relevant patterns.

AI is great at using massive amounts of human-selected data, but the knowledge and experience that allow us to select the data is still our domain. And sometimes, our human customers just want to interact with another person. What does this mean for business? For the foreseeable future, machine learning will continue to deliver efficiency that humans can't match, while humans provide the discernment and interpersonal skills that AI cannot. In other words, it's a partnership, not a competition, as demonstrated in a variety of industries.

What chatbots can (and can't) do for customer service operations

Like other AI tools, chatbots have to be trained by human interactions, and in most cases training allows chatbots to offer initial responses to basic customer questions. This frees up human customer service representatives to focus on more complicated customer inquiries. However, it's worth noting that customers may not use chatbots the way retailers and B2B merchants expect them to.

Terena Bell at CMS Wire reported that although many merchants train their chatbots to answer questions about products, US-based customers prefer to deal with humans before they make a purchasing decision. They're more likely to use chatbots after they buy to handle shipping inquiries and updates. This means chatbots need human instruction and need to be used to meet human customers' actual preferences.

Why content curation still needs the human touch

Spotify and other streaming content services generate recommendations for users with their own AI tools, but people want more. Spotify's editors manage several thousand playlists, but even that's not enough. The desire for music recommendations made by humans is so strong that there's now a niche industry of Spotify playlist curators — independent users not paid by the company — who build their followings on other platforms and make money from artists who pay for the possibility of inclusion on their lists. Why would listeners care whether a computer or a person picks their playlists? It's a social phenomenon, motivated by some of the same sense of familiarity, trust, and group belonging that draws social media users to follow influencers.

Why fraud prevention needs AI and human analysts

AI has been an asset to the fraud-prevention industry by making it easy to evaluate large amounts of customer and transaction data very quickly to look for possible fraud. However, because human behavior doesn't always conform to fraud-detection patterns, analysts still play a key role in fraud prevention. For example, wealthy shoppers' orders sometimes raise flags for potential fraud because they, like many attempted fraudulent orders, come from far-flung locations, are for expensive items and may include rush shipping. Effectively reaching out to these customers to verify their orders requires skill and finesse in the moment. Analysts must be able to spot fraud and they must treat each customer with courtesy, keeping in mind that well-heeled customers—the ones merchants most want to win and keep—are likely to stop shopping with the store if their order is rejected by mistake or if the call from the analyst feels like an interrogation.

Part of what keeps fraud prevention reliant on humans' expertise and observational powers is that fraudsters' tactics are always evolving to beat whatever new system merchants put in place to stop them, and the behavior of legitimate customers can be highly variable. These behaviors aren't limited to fraud. People adapt their interactions with businesses to meet their own needs, whether that's avoiding retail chatbot help until after a purchase, seeking out music recommendations from people online, or buying jewelry online while traveling from one country to another.

Human behavior means that learning and pattern recognition within a particular business context may be efficient to a point, but never truly finished. Businesses of all kinds, even those with cutting-edge AI and deep learning tools, still need the reasoning and real-time discernment that only humans can offer. 

MIT Sloan Management Review

Editor’s Note: This is the first post in a new MIT SMR series about communication strategies for digital transformation.

Leaders trying to get their organizations to adopt new technologies or new ways of thinking tend to kick things off with big, inspirational speeches. “When we’re finished,” they like to say, “we’re going to be the Apple of [insert niche industry here]!” This gets everyone fired up about the change.

And then ... silence.

My colleagues and I have seen this happen many times in our consulting work. Communication grinds to a halt until the company’s leaders define the next level of detail in the strategy or reach a massive milestone. Meanwhile, employees wait, wonder, and want to know how they can help. The absence of information leads to doubt, cynicism, and anxiety — which quickly become obstacles to change.

What if, rather than going quiet after kickoff, leaders model the behaviors they want to see by using digital tools to deliver a steady stream of messages to their employees and continually gather and respond to their feedback? It sounds quite basic — and really, it is.

If you’re planning a digital transformation, try the following techniques to embrace the spirit of change and guide your team through the process.

Push Information Out Quickly

A social media company we work with decided to launch a new internal performance-management platform in preparation for a major shift in the business’s compensation model. But HR leaders knew adopting the system could be challenging and emotionally fraught for employees. They also knew it wouldn’t be ready until close to the date when people would need to start using it.

To reduce resistance, the company’s internal communications team crafted a series of emails explaining the new system to everyone: why the organization was switching to it, what skills people would need to learn to use it, and what the change process would be like. The first emails targeted senior managers to prepare them for the rollout and provide guidance on responding to employee questions or concerns that were likely to come up.

The next emails were sent to employees. These messages unpacked the core skills people would need and emphasized how developing those skills (with the organization’s support) would benefit employees not just in their current roles but throughout their careers. The series also featured a frank, one-on-one interview between the head of HR and a trusted leader employees looked up to. In the interview, that leader voiced common objections and got HR to answer those concerns head-on.

Information has a way of quieting the nerves. A series of regular messages will keep your people in the loop about the change they’re expected to implement. It can also allow for a faster, more efficient adoption process, especially when time is of the essence. Your communication tools don’t need to be fancy. Email is about as simple as it gets, and that worked for the social media company. But if the change you’re espousing involves using unfamiliar technology, it may make sense to make that the vehicle for your information sharing. That way, people can gradually get comfortable with it, through passive exposure — and the senior team can lead by doing, which builds trust.

Incorporate Listening Mechanisms

It’s easy to forget that communicating change isn’t a one-way street. You may feel pressure to get your new program rolling and broadcast your message, but then fail to check in to see how the information landed. Throughout the transformation process, make sure your team is on board and morale is high by keeping a virtual “open door.”

The same social media company that moved to a new performance-management platform also uses a simple, app-based pulse survey to gather “emotional” feedback during periods of organizational change. Employees respond to a few quick questions about how they’re feeling about work, and the app collects responses in the aggregate to protect anonymity. This helps uncover potential job satisfaction issues and other obstacles to change. You can ask employees how they feel about your company overall, the job they’re doing, and the people they work with. The responses will help you gauge employee sentiment while also giving team members an outlet for expression.

Yet, listening isn’t enough; to reassure people that you’ve actually heard them, you need to respond, both by reporting out and reporting back. Report a summary of the feedback so it’s clear that you processed what employees had to say — and then, to show that the feedback made a difference, report back on progress as you implement changes and address issues that matter to them.

Provide an Online Learning Space

Change programs tend to focus more on processes than on people, but if you want your organization to meet the challenge of change, your team members need to undergo a personal transformation as well.

You can dampen doubt, combat cynicism, and reinforce commitment to the process by educating people throughout the transformation. Online training, in particular, can equip everyone involved in your process with insights and tools that will help them practice the change.

We once worked with a global industrial company that was attempting to digitize every aspect of its operations across the business. It started by using the lean startup methodology to develop new products but soon sought to transform everyday processes in each business unit. To smooth the bumps during the change, the company created an online training platform filled with resources about the change plans and new behaviors required of each person. All employees could access it, no matter their position, and it included presentations, videos, exercises, and tools that could be downloaded so that people could learn and practice the new systems in their daily work.

Using an online training program to educate people makes sense: If you’re going to be adopting new digital techniques, you should offer a digital space for learning them.

Help Managers Reinforce Desired Behaviors

Developing new mindsets and behaviors in an organization requires practice, so it’s important to provide on-the-job experiences that make the change realistic for everyone. In the midst of a transformation, every interaction has the potential to become a useful teaching moment — especially when you give your managers tools to overcome resistance and reinforce desired behaviors.

For instance, a small flash-storage startup we worked with was preparing for an upcoming initial public offering. The newly appointed CEO believed that everyone in the company needed to adopt a new set of core values to navigate the transition and position the organization for long-term growth. In collaboration with the CEO and the executive team, we crafted new values statements and prepared a campaign to teach employees how to live them. Online training helped people learn the nuts and bolts, but the company’s leaders realized the process would be smoother if they incorporated personalized learning opportunities, too. It wouldn’t be easy, though, because long-term employees were strongly attached to the old values, while newer employees who had joined through a recent acquisition were championing their original company’s ways. Their managers would have to help bridge the divide with individual coaching that considered both perspectives — newbie and old guard alike.

The startup planned one-on-one employee learning sessions and check-ins with managers as part of the change. It created a series of scripts that managers could rely on to coach team members as they used new programs and to help them navigate any difficulties they encountered when adopting new processes. The scripts enabled managers to reinforce learning in the moment, which helped people move past their initial opposition. Because the sessions were conducted one-on-one, they provided a degree of psychological safety and multiple opportunities for frustrated or hesitant employees to feel heard and validated.

Use Collaboration Tools to Align Teams

If people stop feeling connected to your mission during your change effort, they’re more likely to start resisting. Online collaboration can keep teams aligned while also modeling new ways of working.

We recently worked with an airline that was trying to make a wholesale shift to digital processes across the business. It was a huge endeavor to automate labor-intensive operations and create entirely new kinds of services for customers, including online travel planning, inflight entertainment, and pre- and post-travel experiences. The first obstacle, though, was to begin using technology in the most basic ways internally, like getting knowledge workers to post files online rather than sharing them over email or circulating old-school printouts. To make the transition easier, the company started using Microsoft SharePoint and Microsoft Teams to collaborate on projects in real time. The tools also allowed employees to chat with one another or with an AI assistant who was trained to answer specific kinds of questions.

Using collaboration tools like these to harness peer-to-peer communication allows you to tap into the “hive mind” so that your employees can support one another as they learn and adapt. This can build momentum — perhaps better than any other technique. In a transformation that’s focused on technology, leaders must foster connections between humans and their digital tools, of course, but it’s equally critical to bring humans closer to the people they work with. That’s how change becomes the new normal.

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