As a Service, Customer Success

Customer experience, the subscription economy and 10 ways success teams will make you win

The Subscription Economy

Advances in technology, economic pressures and shifting cultural norms mean new models of ownership are gaining attention in many industries. People are increasingly interested in consuming and paying for temporary or limited access to goods and services, rather than purchasing them outright.

Subscription-based models in which companies offer ongoing access to a product or service for a periodic fee; rental models that give consumers temporary use of a product or service; and sharing models that allow groups of people to jointly share ownership of a product or service are among the preferred options.

It helps that there are major success stories where companies have proven the economic model. Netflix where consumers don’t feel the need to own movies and Spotify where they don’t need to own the songs, to name just a few.

It has been more prevalent with consumer software. Enterprise software has lagged somewhat as it always does, but it has caught up fast.

Behemoths like Microsoft, Adobe and Oracle are transforming their businesses and turning them around to pivot on these new business models. Some would say Salesforce, who was born in the cloud, popularised the movement.

These enterprise software companies have given rise to a category of business called SaaS, or Software as a Service. For a good explainer of a SaaS business see this article from Salesforce. A fundamental premise of a SaaS business is that the software is not owned by customers and paid for on a subscription basis.

Businesses not traditionally in technology are eying the models too and trying them on (highly recommended while software eats the world). The best example is probably Amazon Prime. Amazon Prime is an undisputed success and not just because its latest Prime day has broken all records. From this article, “what sets Amazon apart is its undivided focus on improving the customer experience, something Bezos has talked about at length”. Amazon Prime plays a leading role in driving that customer experience.

Subscription business are far from new but how technology is utilised to improve customer experience is (especially in utilising data about customers needs and preferences) and it is making all the difference.

At least one of the reasons for Unilever’s acquisition of razor subscription service Dollar Shave Club for $1B was that it was a subscription business with recurring revenues. Another was that it used technology to build incredible relationships with customers based on its understanding of how they used the product

Another interesting business expanding into subscriptions is Nespresso.

NOTE: I am using the term subscription economy as a pretty broad, catch-all term to cover many types of business. As mentioned subscription businesses are not new and so I don’t want to cover only the new types of SaaS business I’ve already mentioned. And it does not just have to be about a subscription. Wherever there is recurring revenue, some kind of consumption based payment model, even pay as you go, I’m bundling them all under the term.

Customer Experience

Trusty Wikipedia has one of the better and most succinct definitions of customer experience I thought I’d share:

In commerce, customer experience (CX) is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction is made up of three parts: the customer journey, the brand touchpoints the customer interacts with, and the environments the customer experiences (including digital environment) during their experience.

On the three part distinction made in the definition above, this Harvard Business Review article has a good explainer: Understanding Customer Experience.

It should probably be a given but I will emphasise it that when you run a subscription business, you have unparalleled access to customer interactions and the data it creates because of the ongoing and recurring nature of the relationship.

Insofar as the subscription economy is concerned there is one major reason why customer experience is so very important. In a subscription business where the economic value a customer provides is not based on a one off payment but recurring payments over time, the imperative is for the provider to keep those payments coming in for as long as possible.

As long as the customers experience is positive, the fundamental presumption is customers will continue with the subscription. If not, the subscription can be stopped (notwithstanding the longer term contracts that enterprise customers frequently sign up to but at some point they are still able to).

The three fundamental elements of customer experience management are:

  1. Being able to map the journey your customer takes
  2. Track their progress on the journey through data collected while on it
  3. Take remediating action where necessary or constantly improve the journey and experience

The data should help decide how well the journey is going at any one point. The first is done through a mapping exercise and there are many approaches to this – one of my favourite is Adaptive Path’s approach which has its own site: http://mappingexperiences.com/

All is not well in customer experience land:

A positive customer experience is deemed important but only 3 out of 10 organisations match customer expectations and yet 8 in 10 are willing to pay more for a better experience. 75% of organisations believe themselves to be customer-centric but only 30% of consumers agree to this.

The source of those statistics is a report from Cap Gemini – The Disconnected Customer: What digital customer experience leaders teach us about reconnecting with customers. But you don’t have to look much further to find similar statistics and as alarming as they may sound (similar to to the “80% of change efforts fail” that some discredit), you have to admit where there is smoke there is often fire. So much work is still needed.

The role of customer success

I’m not suggesting a customer success team should be the single custodians of the customer experience and drivers of the subscription economy. The whole journey has many touchpoint that go beyond the success teams remit and the business drivers too broad for that. In the past I’ve mapped where I think a success team can and should play a prominent role and where it supports efforts.

Customer Success Focused Experience Map
Click to enlarge

Here at left is how I tried to position the role of the CSM in an organisation based on my experience at Microsoft helping to run first Yammer then O365 Customer Success practices.

SaaS companies in particular, where subscription models drive recurring revenue, know that a good experience is critical. You’ll most often find a team of dedicated customer success managers, supported by automated and data-driven processes and scalable methodologies in a SaaS startup. It is a relatively new practice after all. As the world moves to subscriptions where experience is key, learning from the best in customer success is what a lot of this report will cover. I will also make the case that it should be expanded to other relevant organisations that have an interest in driving recurring revenue and great customer experiences as a means of doing that.

When I attended the Pulse 2017 customer success event I found out a lot about the latest best practices. I wrote about them here: State of Customer Success – Learnings from Pulse 2017. That includes links to customer success explainers but this one I wrote is probably the most succinct if you want to know what a CSM does: Role of the customer success manager.

In particular at Pulse 2017, McKinsey spoke and made the connection between customer success and customer experience in research they are currently undertaking. Take a look at the deck of slides they presented (thats a pdf and the audio is here) that covers the latest status and findings of the research. They make a clear link between customer success and customer experience and this is the essence of my hypothesis. Which is, that customer success activities can and should be studied to understand the potential they have to be key drivers of customer experience in the new subscription economy.

customer success within experience

More will be touched on in the eBook but for now an outline of the 10 areas I will explore further are below.

10 ways customer success will make you win

These are just high level titles and descriptions – for the detail you will have to wait for and read the eBook :) They cover elements of a good customer success practice that you can apply in order to drive a good customer experience in a subscription economy business and achieve the success you envision.

INTRO

1. Mindset and Culture

As mentioned in the Cap Gemini report, many companies think they are customer centric. The main problem is that customers don’t agree. The difference between saying you are and being it is often based on mindset that translates into action and ultimately experience. When you think a certain way, you act accordingly and this permeates the experience people have of you. Its no different with organisations and the employees that create experiences with customers. So you need to live and breathe customer centricity at the very core of your company culture – that is easier said than done.

Success is also a mindset game. Successful people often start out by defining some parameters of success and then set out to achieve them. They are goal and outcomes oriented. This is generally true of all businesses but has to be even more so for a success oriented part of the organisation.

Customer success teams have it not just in title but also in their marrow to focus on the customer and the success they achieve using the organisations products and/or services.

BUILD

You have to start somewhere and these are the foundational building blocks of a good customer success practice – outside of building the right culture and mindset referred to in the intro. These building blocks provide the foundation to expand and scale your practice and need to be in place for overall success.

2. Methodology

This means a robust approach to planning for and executing on the right strategy for success. It most often focuses on usage being made of and value being derived from the product or service, by the customer. It should also include a robust view of the customers experience journey and how to influence it at every point.

3. Data, Metrics and Tech

This will tie in with the methodology because you cannot manage what you don’t measure. One of the most important metrics is Net Retention. What Net Retention means is, if you never sold to another customer, is your customer-base a growing entity (quote from Dan Steinman, Chief Customer Evangelist, EMEA at Gainsight)? How you measure (meaning the data source and the reporting tools you use) are equally important. Then there is the platform or tech stack you use to manage activities, workflows and processes for you success team.

4. Practice and Leadership

Leadership is not so much about looking to a single leader but leading customer success practitioners doing excellent work with customers. After all nothing succeeds like success and seeing colleagues succeed and how they share that is often a core part of a customer success practice. But building a practice does mean having the right intent for customer success and experience activities and senior executives driving that and appointing someone on the board ideally to drive it is critical. The Chief Customer Officer is a new kind of CxO that seems to be and indeed should become more prevalent.

GROW

The subscription and experience business is such an iterative one by its very nature. Experiences vary so much by customer and continue to evolve and subscription models can be constantly tweaked as the data provides feedback and evidence of what works and doesn’t. Responding to this is key.

5. Segmenting Customers

Not all customers are equal, at least insofar as they contribute to net revenue retention. Some are deserving of different treatment. Those that account for greater returns are naturally the ones you will tend to focus on more but that shouldn’t be the only approach. There are many ways to segment customers and target different activities for each of them and I’ll cover that all in the eBook.

6. Scaling the Team

When you are a startup and have fewer customers you can afford to do things with them at a deeper level and piecemeal. At some point though, as your organisation and customer base grows, you have to start getting organised. Putting in place processes to make repeatable work easier to manage and execute is one area of effort. Understanding scale models like revenue per employee mapped to customer book size is another.

7. Scaling the Customer

As mentioned, nothing succeeds like success, especially when your customers play a hand. If customers are successful in the use of your product and/or service (i.e. they gain value from it) there is nothing better than enabling them to share that onwards with other customers. I’m talking about creating and nurturing influencers or champions of your customers. Not only will this bring other customers on board (think testimonials or references) but it provides evidence of great customer experience that spurs on further great experiences.

INNOVATE

By definition there will be less evidence of organisations doing things in this space, especially where success teams are set up (at least when they are called that). The fact is you cannot be standing still and although we are at an early stage in many of the practices covered, you can and should constantly be looking at ways to innovate how you deliver value to customers through use of data, technology and new business models.

8. Automation and AI

To some degree this is about scale too. Automation refers to the automation of interactions the organisation or product has with customers. It can cover marketing, service/support interactions and/or educational interactions. It takes interactions away from humans which is where scale comes into it. Things are at an early stage but many companies are experimenting already and doing some very interesting things which I will document. AI is playing an increasing role in this too.

9. As a Service

As subscription models expand in use and favour as a viable business model for more than just technology companies, traditional companies are experimenting and innovating how they incorporate this into their offering. I’ve already mentioned a few that are doing things in this space but I will do a thorough review and share examples of what companies are doing in this space to adopt the practices and innovate themselves.

10. SaaS 2.0

These are the companies and success teams you would expect to be taking the practices to the next level. Teams here are combining and innovating various factors to drive truly exceptional customer experiences. These kinds of teams operate in organisations that understand the role of customer success in driving great experiences and leading to increased revenue and profitability for their subscription business. It’s a two way street as teams innovate and achieve great results and organisations give them a greater role to do so.

Customer Success

State of Customer Success – Learnings from Pulse 2017

I attended Pulse 2017 in San Francisco a few weeks back, a three day event run by Gainsight, a vendor selling customer success software. A massive event for this nascent industry with over 4000 attendees. Gainsight is gaining traction and on the first day of the event they announced a new round of investment at $52M. The article explains how you could see Gainsight as a bellwether for the industry and also the practice to some degree.

percolate cs teamMy first day I joined the entire customer success team from my company Percolate in a training session that lasted a day. The entire trip was spent with the team and that was such an amazing part of the experience and highly recommended. On the 4th day we spent half a day in a team offsite and part of it was dedicated to bringing the learnings from Pulse into our organisation. Several projects have been spun off as a result so very worthwhile on so many levels, not least a great bonding opportunity – cue team selfie :)

The training was run by Success Hacker, a customer success training, recruiting and service consultancy. The theme for the training was Predictable Success = Predictable Revenue which I thought was pretty representative of the conference as a whole actually.

The training was intended to be a level-set for our team as well as all the attendees, to get us all on the same page. It was basic in nature, introductory level stuff. I understand why they took this approach but having been practicing customer success for at least 5 years this was rather too basic for me and many of my colleagues.

Shameless plug: I’ve been writing about customer success for a while and have a collection of my most recent blog posts sharing learnings I’ve picked up over the years.

There were several trends or themes covered at the conference which I synthesise below but first let me recap on some of the best and new learning from the training (I skipped the non interesting/useful stuff). This may take a while so go grab something hot and steamy :)

Training Day

Success planning

A road trip analogy was used to intro this – the customer is the driver the CSM is the navigator – I liked that. Success planning was deemed mostly relevant for larger accounts – it’s not scalable for smaller accounts. There was talk of automating this but no real insights how. I had an idea that survey type forms could be useful for getting customer input – a good way to scale.

Challenges to success planning are typically that there is not enough time, info or value (seen in the planning) for it. Benefits and best practice are that it makes you proactive and it is best when plans are shared with customers (I would say co-created) and are kept updated.

They went through a very simplistic overview of what it contains starting with an exec summary. That was probably the most useful piece of advice. Instead though I would offer up the use of a Success Canvas – check mine out (pdf).

I also have an approach to planning you can find here: Lean startup methodology applied to successful enterprise technology adoption. The Success Canvas is normally the early stage work before the full blown success plan is created. But back to the simplistic format they suggested. It included: company highlights; agreed objectives; actions, owners, dates.

Metrics

We went through the meanings of some standard SaaS metric acronyms. They touched on business metrics that often went beyond customer success. This was inane. Any number of the excellent posts on a standard Google search would have done better. This was a total waste of time.

Just a few metrics or measures of performance very specific to customer success worth pointing out were:

  • Active usage – how frequently is the platform being used
  • Feature adoption – depth and width of feature usage
  • CSAT – Customer Satisfaction Score (mostly made up from survey responses)
  • NPS – Net Promoter Score – flavour of the conference and most often a single question rating scale in app
  • CES – Customer Effort Score. A measure of the amount of effort expended by a customer to achieve a task. This was interesting but difficult to measure I thought.

In this article unrelated to the event (Predicting the next Slack: Finding sticky cloud apps with cult-like followings) they define some key growth factors using a handy, five-point framework I really liked.

Building a customer centric view in your org

That should probably have read “building a customer success centric view” because that’s where most of the work is required. Customer centricity is old hat (though still far from well served), customer success and its unique role in SaaS companies isn’t. Building a good undestanding of the role and its contribution to overall company success is key and something I have struggled with before. This actually stood out as a common theme and challenge at the conference. But on to what we covered – some useful nuggets there (with some creative interepretation by me):

  • Avoid inside out thinking. Think first and always from the customer’s perspectives not your internal processes and approaches.
  • Avoid “you need to email …” emails, take responsibility for solving customer pain.
  • Avoid solving for the average customer. Try and think in segments at least. Scale can be a challenge here.
  • Prospect preference. Avoid developing features for new customers ahead of existing.
  • Shiny thing syndrome. Think impact, not feature / function.
  • The solution isn’t a process its a mindset and needs to become habit.
  • Invite customers into “virtual” decision making – “What would the customer think” about an internal decision. “How would this impact the customer?”

How to change things:

  • Invite teams to customer visits
  • Invite customers to your office for lunch and learn sessions. I would go much further and suggest customer meetups which I have written about and worked on setting up at Percolate and they are now taking off.
  • Invite customers to internal all hands sessions to talk to all employees
  • Collect and share customer success stories. We have an awesome database built and maintained by our customer marketing team at Percolate.
  • Provide an internal collaboration tool or channel to share customer success stories

Applying a consultative approach with customers

There’s consultative selling so why not consultative customer success. I like the thinking. Here’s the upshot.

  • Two types of approaches:
    • Boiler man – fixed, package solutions. Less time consuming and open ended and more scalable.
    • Wing man – help guide customers to the right solutions. A more custom and suitable fit to customer need but more intensive.
  • Try solve biggest the problems not the easiest.
  • Focus on selling a solution, not just a feature.
  • Key skills
    • Storytelling – effective way to convey by example.
    • Active listening – improves mutual understanding.

Strategies to manage accounts

  • Help your customers support their customers better – think of the end customer. Cannot stress this often overlooked approach enough.
  • Make your customer contacts look good in front of their superiors. Another sure fire way to ingrain yourself in the business through key stakeholders.
  • The converse of this last point and this is my view not covered in training, is that you shouldn’t get single threaded in case that person leaves. So always broaden your stakeholder base beyond one.
  • Create internal subject matter experts and champions on your solution. Take a train the trainer approach – make them super users. I wrote about this here: Building user success managers.
  • Always try and set beatable expectations – like Amazon deliveries. Great idea and benchmark.
  • Keep up with whats happening in their industry and organisation – Google alerts.
  • Become a trusted advisor and act like a partner and not a vendor. What’s needed:
    • Domain knowledge (their domain)
    • Customer knowledge (organisational) – annual report a good source
    • Product expertise
    • Business acumen

Change management

This wasn’t separated out, I have here and felt it should have been in the training. It was glossed over. Although I emphasise innovation strategy over change (Innovation is the why, change is the how), at the very least successful technology adoption needs some change management element. Main take outs were:

The best presentations that shone a light on the state of the industry

I saw some excellent, top quality presentations. Some I missed and since there were parallel tracks that was inevitable. Thankfully they have made every presentation and the audio from it available here. I need to go back over some of them but below are the take outs from me from the best I attended.

cs trends 15-17
Top trends from past Pulse Conferences: 2015-2017

Before I go into my views though I should point out the trends the CEO of Gainsight (Nick Mehta) shared based on running the last 3 years of Pulse conferences (2015 – 2017). I’ve combined them conveniently side by side above but slides are here and audio here for more. Trends from 2017 are pasted below with a small comment from me.

  1. Involve Your Whole Company. Reinforced by McKinseys study – see below.
  2. Include Your Customers. Can’t emphasise this enough and I’ve been trying to bring this aspect into my organisation with some degree of success: Connecting customer advocates to drive product strategy and customer success
  3. Partner With IT. I tend to agree with this whereas once I would have said, whatever it takes to embed yourself in the business do it, including ignoring IT. But I’ve learned you can get much further partnering with them.
  4. Extend To The Real World. This has a lot to do with the Internet of Things and customer success moving out of its traditional home in SaaS companies where they become custodians of the entire customer experience. This HBR article co-authored by Michael Porter, one of the world’s foremost experts on strategy and competition, covers it well How Smart, Connected Products Are Transforming Companies (see section covering customer success).
  5. Scale Through Your Partners. I observed first hand how Microsoft, who already has a formidable partner network, tried to embed customer success and technology adoption through its partner network. Its a massive challenge for such a large organisation and network but they have serious intent and I’ve seen it work well with some early stage successes. Cisco was also held up as an example of this approach.
  6. Invest In Your Community. A point was made by Nick Mehta that part of the funding they had just recived was going to be about building the community. He mentioned expanding on their PulseLocal efforts which they started on way back in 2014. I’m looking forward to joining their London chapter. I also see this as a focus area for specific company CS efforts – building a community of customers, partners and employees starting with customer meetups as I covered under point 2.

McKinsey’s Customer Success Benchmark study – main findings

customer success within experienceThis was a lunch and learn session where two of the study’s main authors went through their main findings. Definitely one of the highlights for me. The fact that McKinsey is putting so much effort into this says a lot in itself. Slides here and audio here. My take aways as follows:

  • Value of Customer Success is realised far better with an integrated approach, not in isolation (slide 3 – see above). That is, part of a broader customer experience journey and aligned with full business strategy, not just as a “go to market” strategy.
  • When setting KPI’s pick the right metric (churn, NPS, etc.) then the parts of the journey that are key to drive impact. Churn is the most prevalent KPI.
  • Most organizations do not allow enough time for real results. I’ve seen this time and again – many are too eager for results, too early on. True success takes time.
  • CS needs to have a seat at the product table and play a quarterback role. The CS and product teams presentation I cover further down expands on this.
  • Onboarding and product experience are by far the most important journeys, yet product teams are rarely involved in driving customer experience / customer success.
  • Centralised governance from the top down is key. Centralized accountability and governance drives a big lift in value according to respondents.  A single “integrating leader” to track and manage end-to-end is required.
  • Guided journeys automated throughout the journey lead to insights for success plans
  • People are still key for success despite digital automation. Automation is definitely an important element going forward (see Hubspot presentation) but customer success is still predominantly about people and relationships.
  • Use design thinking & in-product triggers to guide users to desired outcome. My success planning approach which I linked to earlier is based on lean startup principles which in itself is based on design thinking. I also cover the importance of in product triggers in my customer success primer slides and my post on Scaling your customer success efforts online – a guide.

Adobe – fostering a culture of innovation through customer success

This was one of the first presentations from organisations adopting customer success practices successfully (slides here and audio here). These are always best in my view. Just as with customer success, examples of success are the best way of learning from and perpetuating further success. Adobe was the first I saw but I’ve included the best from the others. Their key points:

  • Lots of experimentation – try something see if it works. You should make space for this and invest in it. Love this and my success planning approach is all about experimentation.
  • Best CS teams focus on specific and different aspects of customer lifecycle (team broken up into specialisms). Also don’t ask a non technical CSM to emphasise product, for example. Or no sales skill but needs to renew.
  • Ok to lose customers if you understand why – not if you don’t.

Fastrack at Microsoft Office 365

I worked at Microsoft on this approach with Mike Grafham who presented and has his own take of main learnings from Pulse 2017. So I had to attend this session to see how things had progressed since leaving Microsoft (slides here and audio here). I wasn’t dissapointed :) The main thing is that the focus on scale with such a large customer base continues to be the driver of activities.

What stood out for me was the approach to qualifying customers before they come into the CS pipeline. It’s the first lesson he shared – slide 3. I love this approach and funnel which again borrows from another discipline – the best sales practices.

Bessemer Ventures – state of the cloud (customer success edition)

This was a solid session on the overall state of the cloud (slides here and audio here). The relevant part started with the startling statistic linking improvement in churn with an increase in company valuation.

churn improvement increases valuation

They also pointed out that of the multiple ways to be successful, upselling existing customers is the major driver.

Scaling Success Through Layered Communication – HubSpot

Essentially this presentation was about automation, a major theme of several presentations. This one by Derek Roberts, Director, Services Strategy and Operations at HubSpot was one of my favourite of all. Slides here and audio here. Highlights as follows:

  • One of the main thrusts of their view is that they see the customer application as an active participant in Customer Success. I couldn’t agree more – customer success should happen as much in app as it does outside, by and through people. So much can be automated and scaled this way as the user interacts with the product and in this context, is where CS activities are most powerful.
  • He showed such good examples of some of the simple ways in which they are automating activities. For example, they send data on usage via email – triggers to the right people for low or high usage. This can encourage further use.
  • Scaling happens at the process level. It’s so important to map your processes, dare I say customer journey map, and understand where you have an opportunity to automate and make life easier for yout CSM’s and customers alike. At the same time you can boost key outcomes. Below is a chart showing how Hubspot break it down.

cs automation hubspot

Working with Your Product Team to Drive User Success

Becky Banasik of TrendKite, Katie Leighton and Nicole Salzman of Box were part of a panel discussion moderated by Todd Olson of Pendo. No slides but audio here and my notes below. In essence, cooperation between product and CS teams was seen as critical to customer success. Since I believe CS teams are the window to product for customers and vice versa, this was heartening.

  • I love that Box have built a tool to get customer success feedback to product teams. Before a feature is built, CS and sales are asked if they think customers would value it.
  • At TrendKite features are evaluated on the basis of potential impact on usage, revenue and retention. CS own NPS scores but account managers are responsible for outreach.
  • At Box product and CS teams both co-own NPS scores. No compensation is tied to NPS at Box but it is at TrendKite.
  • Based on product usage trends, both spoke about how triggers are sent to CS teams, e.g. when usage drops off or spikes in a specific area. This links to play books for CS to respond to customers. This tied in with what HubSpot does.
  • At Box, CS and product teams work on new feature releases to come up with a common strategy and comms to set up the release for success.
  • The panel chair asked whether either involved product teams in onboarding sessions to learn from the user experience. Neither Box or TrendKite do but great idea I thought.

How high trajectory startups manage CS

A panel session chaired by Jason Lemkin of SaaStr involved the founders of several startups: Sarah Nahm of Lever; Michelle Zatlyn of Cloudflare and Jennifer Tejada of PagerDuty. No slides but audio here.

  • NPS and retention rates are key measures they all used and NPS covered product, brand and company measures.
  • Use of industry benchmarks was made to judge success, not just improvements over time.
  • The whole company owns NPS but CS is seen as the cheerleader.
  • CSAT (customer satisfaction) was also used at Lever. And they try and give various team members (not just CS) specific targets that are actionable.
  • Role of marketing in CS was discussed. CSM’s feedback customer messaging to marketing to use in campaigns instead of generic and bland marketing messages. Head of customer marketing should sit within the CS org and a budget should go to it from marketing.

Phew, finally done. If you managed to get this far down I’d love to hear your thoughts in a comment.

Sense Making

Creativity jumps in top ten skills 2020

At least according to this World Economic Forum report: The 10 skills you need to thrive in the Fourth Industrial Revolution.

top-10-skills-2020

Something to add to my new trend report – intro to that here: The post robotic AI age and the role of creativity and innovation

#creativity #trends

Sense Making

The post robotic AI age and the role of creativity and innovation

You’ve all heard the news. Jobs will come under fire if not already so. Machines, robots and Artificial Intelligence (AI), are going to take over. The Matrix, Terminator, could all those movie scenarios have had it right?

What happens if it’s all true but the ending is not a tragic one. Can we find a happy coexistence with machines? In an alternative scenario, machines would be our servants and tackle the hard tasks they are brilliant at. Retaining, processing and repeating rule-based information. Complex calculations in milliseconds. Massive infrastructure and mechanical jobs that require strength, are dangerous and may even need to happen on other planets and atmospheres.

And whither humans? With land, capital, and labour safely being managed on our behalf, might humans be able to realise their full potential? Creative powerhouses constantly renewing and improving, stimulated by human interaction and fired by endless imagination. With time to put that strength to work.

All questions I have pondered leading to this post.

It’s important to start somewhere. A diagram is one of my favourite ways to synthesise thinking. So I drew some lines.

post-robots-ai-creativity-innovation

An explanation of the diagram

I hope it’s straightforward enough. I struggled with this for a while and am still not sure I have the right angles. I’m not referring to the arrows :)

I grappled with how to characterise the trajectories of the three arrows. I mean what did they constitute. I concluded that they were learning priorities. Whether by humans or machines, they were directions of learning intent.

By machines I mean AI for the most part. In the case of super AI even more so. By definition it is self learning and its intent is to become super intelligent.

Robots are something that are going to take over physical work. They have mechanical capability more than intelligence. Their intelligence will come from computers that drive AI.

Together you could see them as a whole – machines.

If all projections on AI are correct, then its trajectory is due for a massive jump soon. Capacity to learn as well as intelligence will rise exponentially.

Human learning is different. Learning directions and priorities are often imposed. By schools that teach who are often lead by organisations that hire based on skills taught.

I have distinguished between STEM based learning directions and creativity based.

STEM stands for science, technology, engineering, and mathematics (as an educational category). This has dominated learning priorities for at least the last fifty years. As mentioned, institutions of all kinds impose it.

Creativity, if seen beyond the narrow confines of education in the arts, has lagged. That in my view, should change and I’m not the only one. I’m suggesting we will need to see a massive increase in learning emphasis, both at school and at work.

Creativity is as important as literacy. Sir Ken Robinson

I assume there is going to be a need for humans to take care of the machines. Even if humans will not remain on a par, they will have to maintain their STEM focus. They will need it to maintain the machines – at least in the near term. So the STEM based learning trajectory continues roughly on par with past trends.

As for my vertical axis, here too I grappled. I was thinking what is the point of all this activity. For the moment I have couched it in the familiar. Innovation and productivity are after all the holy grail that many organisations aspire to achieve.

So that will do for now on my current standpoint. My hypothesis in essence is as follows:

Machines are self learning and will become super intelligent. There will soon be an exponential rise in their capability. They will outstrip our current STEM based capabilities. We will no longer need the capabilities as much since we can rely on machines. Mastering our creative capabilities is the next frontier. We will use them to put ourselves and machines to work and solve the biggest challenges humanity face. We need to start preparing now.

Below I describe some of the main influences on my thinking so far.

Main influences on my thinking so far

Tim Urban: The Road to Superintelligence

I attended a Tim Urban talk at Transition, an event my company hosted last year. We didn’t record and share the full presentation. Luckily this Google talk he gave was and he spoke about the same topic.

He makes compelling arguments simple, as he is know for doing. A couple of things stood out for me. That we are at the cusp of exponential growth in AI’s capability for self learning. And the distinctions between standard and super intelligence blew me away.

The latter especially lead me to believe we are not thinking big enough about AI. In essence he showed me the limits of my imagination.

He didn’t project futuristic outcomes, he only shed a light on the possibilities. Extrapolate from only recent progress and a super intelligent future is hard to deny.

Don’t want a robot to steal your job? Be creative

The title is not mine – here is the article: Don’t want a robot to steal your job? Be creative. The title alone is what nailed it for me. Then on reading it several points jumped out. The first was this one:

Cheap computing power and rapidly advancing AI mean that machines already outperform us on tasks that involve retaining, processing, and repeating rule-based information.

Then their point about STEM learning which I incorporated into my diagram and thesis.

creativity-vs-robots-nestaThere was also the link to the NESTA report (pdf). This provided rich, research based evidence. The results confirm that “creative occupations are more future proof to computerisation”.

They also define a far broader concept of creativity than common perception holds. That it’s more than the arts. It encompasses “the use of imagination or original ideas to create something”.

The part in italics is what stood out for me .

That lead me to Richard Florida’s paper: The Creative Class and Economic Development (pdf).

Modern Organisations Hierarchy of Needs

Independent of all this, I wrote a post some time ago that seemed to resonate with many from all the likes and shares it received (in the thousands).

Based on Maslow’s model I positioned the Modern Organisation’s Hierarchy of Needs. Creativity and innovation were at the pinnacle of organisational actualisation.

What I left out was the AI and robots element. I’m convinced I should include it. I propose to remodel the hierarchy and include these considerations. I’ll make this a core part of my trend report. I’ll use it to advocate how organisations should change to refocus their efforts.

modern organisation hierarchy of needs

Any feedback at all on my initial thinking would be great. Please add a comment.