(upbeat music) - All right so, oh that's working, good.
So, first, never propose doing a talk on Twitter as a joke, somebody might take you up on it.
I had one of those epiphanies that you have when you're working on something every now and again and I came up with an interesting title, a name for that epiphany and that's become this, I'll try and live up to it.
You may have heard of observer effects in quantum physics, right, so this is the idea that say there's an electron, and you want to see where the electron is, you're gonna have to shoot a photon at the electron to see it and that's gonna move the electron, so it's the act of observing that electron has changed it. And in quantum physics this is really complicated, and I don't really understand it, but one of the interesting things about it is that theoretically until you observe it, it's in any of the places where it could be simultaneously, it's not really, it isn't just in one place and then you observe it and move it, it's actually a probability wave form of all the possible places where it could be until you observe it, and when you observe it, that wave form collapses into one possible state, this is the beginning of the many-worlds theory of how the universe works which is heaps of fun and the basis of a lot of my favourite Sci-Fi. So, as an example, I'm in a quantum superposition of jobs right now. So I am currently still for a few more weeks, I'm Head of New Things at CHOICE, at the same time I've just kicked off a, and the Head of New Things is basically the product innovation team, so we work inside CHOICE, which I'll explain to you in a second what that is, to come up with new approaches and new business models, and I'm also kicking off a product innovation consultancy and incubator called Little Owl, and by announcing it here, it kind of makes it real, so the probability wave form is collapsing as we speak. Okay, putting aside the quantum interpretation, my background is in social research, and in social research it's also well understood that by interacting with research participants, you change them.
So this is another way of using this term, observer effect, and my contention in this talk is that product innovation is social research, and we have a huge amount to learn from that field particularly, and the kind of social research it is, is called action research, a term coined by Kurt Lewin in 1944, so yes. It's okay, it doesn't get very academic, that's about the only reference.
But I should explain what CHOICE is for anyone in the room under 30 or for people from other countries. If you're from outside of, so there's one of these organisations in every country pretty much in the world.
If you're from the US, you've heard of Consumer Reports, in the UK, there's Which?, Norway has Consumentenbond, there is one of these pretty much everywhere. They're nonprofit entities that came about during the early flowering of mass consumer capitalism, CHOICE was founded in 1959 by an amazing woman called Ruby Hutchison, who you should look up, also the first female MLC in the WA parliament, and a lot of other things, she started a bunch of incredible entities, one of which is CHOICE, so this is also known as the Australian Consumers Association, founded in 1959, launched their magazine in 1960, and that became the business model.
It's a social enterprise that supports the entity, right, so they advocate for better consumer rights. It was CHOICE who you can give credit for the Trade Practises Act, the Australian Consumer Law, we've been working on the consumer data right recently, I'm on committees for that, so all of those types of things, but the operations are supported by this, testing products, right.
So in 1960, if your washing machine blew up, it might burn down your house, and you had no recourse, right, and they fairly often did.
there was no refunds, no compensation, we needed protections, testing those things was very crucial, but, you know, testing products is still the core of the organisation in 2019, and this is a bit of a problem in a world where goods are, you know, less than 40 percent of expenditure, services is where everything has moved to.
So one of the things that my team was doing was trying to help the organisation pivot from goods to services and to become as well known in services as it is in goods, in products.
So we went about it, you know, in a very research-based way. CHOICE is a extremely geeky organisation, does a tonne of research.
One of the things, we looked through all of the services consumer concerns and the number one is energy pricing.
It's not just a media hype, people really worry about this, it's their number one cost of living concern every quarter since 2014.
Health insurance has recently starting to, you know, pip it off the post, but it's still right up there. So that's interesting because we did some more analysis and we found that, yeah, just like the energy services market is very tortured in interesting ways that I won't bore you with today, but the upshot is that you should switch and if you live in Australia in a deregulated market, you should switch energy providers every year, which no one does.
If you did, if everyone did, they'd collectively save two billion dollars a year, not once but every year recurringly, right. So that's what's on the table right, that's the the cost of the imbalance of information between energy retailers and consumers.
And what is, so people are very worried about this, there is a thing they can do about it, how many people do it? CHOICE did a nationally representative survey of everybody in the country, we do this, you know, proper serious nationally representative surveys to get the figures.
Almost nobody does this, so these figures are the number of people who switched in the last three years, like everyone is supposed to switch every year according to rational economic theories, right. Almost, you know, only a minority of people ever, like a huge number of people never have ever switched, and this if we boil it down, it's complexity. It's too hard to figure out what deal to switch to, and it's too much of a hassle to call these horrible companies and talk to them, you know. Nobody wants to do this, the ACCC's nailed it down. There are, so there are 3,000 energy bills on the market at any time and they change every day, and the one you're on changes every six weeks, but without you being directly proactively notified. It's kind of a mess, all right.
So okay, fantastic, this is straightforward kind of design thinking, right, we've identified a problem, there's a job to be done, maybe we can put together an MVP.
This was our MVP and it was a Wizard of Oz service, so we served about a hundred customers that wasn't really even MVP, it's pre MVP, it's very, very experimental, right.
It was constantly, we kept shifting it, and changing it. We were trying to experiment to figure out what service design would work for people.
We very lightly branded it with CHOICE, 'cause we didn't wanna ruin the organization's reputation. We didn't advertise it at all, but we designed a service, you know, using build 'em as you learn, and we did what you do, which is we tried to understand who our customer was, right, and we did lots of research and thinking and put together personas and scenarios and we kind of came up with this idea based on some really solid research about the idea of actively disengaged people. There are people who are so annoyed with all of the options available that they are now willing to just pay someone to deal with it for them, right.
The complacent consumer, so CHOICE traditionally serves this kind of very active people, who are very interested, willing to pay a subscription for good information, right. To understand what CHOICE is, it's like bizarro universe Finder.
So Finder survives entirely on kickbacks, CHOICE wouldn't take a kickback under any circumstances. It's the opposite thing, charges people subscriptions instead.
Okay, so you need these very active like engaged consumers if you're gonna charge them a subscription. We decided to target this service at the huge population of people who clearly were very annoyed about this topic, but were not doing anything, right, the actively disengaged consumer, and we discovered there was a huge population of these people and they just wanted a service that they could pay, you know, take my money and solve this problem, and I do not wanna talk to you again.
So we built it and modelled it all around this idea, and of course we built a business model canvas, here is the user quadrant of that canvas, one of the versions of it.
So you can see we thought it could be a very low-touch, high convenience, automated, we built lots of automated systems to make it work. We spent five months of dev time automating everything, after we'd spent about a year in iterating the Wizard of Oz service design in the background. You know, we figured out who these people were and what they were like, we thought, and we built a service design around that persona. So you send us your bill, we send you back an email immediately, having done all the analysis with the figure that you can save and then you push a button, and we save you money, and to that point, it worked.
And you know, at this point, okay here's what the stakeholders and the C-Suite want, let's put it on the brand and make it pretty. That was very important to internal stakeholders, but we also at the same time, iterated the user interaction design, the user experience to clarify the value proposition and walk people through it and we developed a very slick onboarding experience, partly as a branding separation from energy companies, who have perhaps famously the worst onboarding experience you can imagine.
If you've ever called an energy company and be asked to spell your alphabet, in the NATO phonetic alphabet twice.
Your name, sorry, that has happened to me.
Yes, when they already have it, right, they have your name, but they want you to spell it to them in NATO twice, okay.
So it went quite well.
We built a, and we iterated it as well, so initially our kind of innovator, early adopter consumers were very, they got it straight away, we'd just say forward us your energy bill, and like, from your email and we deal with it from there. We then ran into a cohort of users who were puzzled by what does that mean, so we built this how to send us your energy bill three-step process, which actually like I hated this, but it worked really well and we put it in the process, so not everybody had to read it, but it did increase the number of submissions, about 10,000 people sent us energy bills over a few months, and the savings that we could deliver people were very huge so the conversion rates were ridiculously high as well, right, 'cause we developed this service design that there's this one step that required a huge amount of trust and only CHOICE could do, really get away with asking that much of people, that much trust, but then that loop, you know, the very rapid loop of here's the value worked extremely well.
Okay and one thing that is useful about delivering something in a market where there is massive consumer need is that everybody wants to talk about it.
There is nothing that the media likes so much as a stay tuned at the end of our news bulletin for the final story about what you need to do to save a lot of money on your electricity bill. I think I'll play a little bit of this one. - [Reporter] In the last 12 months, Harry Korpetutuncu has flicked the switch on not one, but two energy providers.
First, EnergyAustralia, then GloBird, and now he's with Alinta.
- I'm currently saving about 653 dollars per year. - [Reporter] Harry was one of the first to trial CHOICE's new energy switching service.
- We become your energy bill concierge.
For 12 months, we will continue to switch you if we find a better deal.
- [Reporter] Choice Transformer compares 33 electricity retailers, around three times more than other comparison sites. It promises to find you the- - Anyway, so you can see though that by being CHOICE, and having to go public, it means that we had to front-load a lot of the design, right, so we been through a lot of iterative process but when we launched, it was like, okay this is what we're launching with, and we had to describe exactly the product, you know, the 12-month subscription, what you get for it, and we were kind of locked into that, but we've done a lot of modelling into how much it was gonna cost us to deliver the service per user, customer support costs in particular, right, but we, you know, we were pretty sure that it wouldn't be massive customer support costs, because of the user segment, the population, that we've chosen, which is these people who just, deal with it, leave me alone, right, low-touch. (audience laughing) Yeah, you guys should have been on my team. All right, so we got, you know, this is customer number one coming through the door, that was very exciting, and this is our first two hours of support emails. It's a kind of a representative sample.
One person saying thank you, a couple of people are talking about missing features in our profile system that we're having to manually deal with, like you know, you can't, some things people couldn't update themselves, they couldn't do DIY so we had to do it for them, can you help me deal with my retailer, right, we'd promised them a year of service, okay, and our responses, we tracked all of this, and we discovered of course that it's a power-law distribution of how much time you wanna spend on each customer inquiry, and here, this is not a real customer email, for privacy reasons, I've synthesised it from five different customer emails, but it's the length, it's the average length of those five, and it's the average number of concerns, These are the people that took 80% of our customer support time.
So let's start at the top, "Save 1890 dollars a year off your electricity bill", so this is somebody who has definitely not switched in over five years, or they wouldn't be being so incredibly badly ripped off, right, they've been on the same default deal, and it's ratcheted up to a standing offer, which is the worst offer you can be on.
Sounds fine, standing offer, bad, bad news. If you're on a standing offer, you're in trouble. Never done anything about it, but having been through our service, and being told you can save this amount of money, suddenly has a lot of questions.
"Just a quick question, "I'm getting 30 kilowatts of solar panels "on the roof installed, don't have solar at present", also we've done, in our surveys before, we discovered that the vast majority of Australians who put solar have never done the numbers.
They've never checked what the payback time is, whether it's gonna save them, you know they're just kind of are annoyed generally, they're irritated at government, they're irritated at the energy companies, they just wanna stick it to 'em by doing something and this is the thing they can do and they do it, right.
This is not just a minority, this is most people who get solar, they have never done the numbers.
Suddenly, he wants to do the numbers, right. "Got the north-facing space, "also I'm 82, so maybe the payback period "isn't gonna work out for me" (audience laughing) "Yeah, thinking about a switch to smart metre "and time of use." Yeah, so okay, this happened a huge amount, and we tracked these people, and we interviewed them, and we surveyed them and yes, they had no idea, they were not interested at all, but we solved a problem for them, and a lot of them, we got back to the people, and said, "Yeah, we'll help you but do you wanna "push the button first", and they signed up in huge numbers, but they did get, they changed from these actively disengaged consumers to engaged, highly engaged, and in a way like that's something we'd kind of hoped would happen, but we really didn't think it would happen like that, you know.
We thought maybe we'd shift the market over years, but what happened is we shifted our customers instantly, and they changed drastically, and we hadn't accounted for it.
You know you write your user persona, and you assume that's kind, you know, I mean we know that people change, but we don't think they change radically, but of course they do, right.
And if we succeed in our product designs, they really do. Like our designs themselves ought to change people, right. I once had a wonderful lecturer who when I was asking what's the difference between the introduction and the conclusion, and in the paper I'm told it's got to have the same material in it and he explained to me, it's the reader, the reader's changed, right, in the introduction, they haven't read your essay yet, and in the conclusion, they have, so what they know has changed, so how you explain, you're just recapping, but to a different person.
So what are we gonna do about this, right? I mean sure probably some of you are smarter than me, and have already figured this out, but this is where I am.
So the question is what if it works but too much? And our default answer and a good answer which I'm gonna try is you can map it. So you can add a customer transformation dimension to your customer journey map, right.
Imagine what if they change? What if who they are and what they want radically changes at some point? You could even try and invent a customer transformation map, that sounds like a thing a consultancy could do, so I'm gonna upload one to our website after this, we're working on it, we have a small team, and we will try to come up with a customer transformation map, but obviously as well, it's a lot of the problem, a lot of the problem we had is that we relied too much on maps so we had all of these artefacts, right, and we had our customer terms, we had big information architectures mapped out with giant plan printers and arrows and diagrams and you know, our personas were locked, right. You know, these things can be traps, you know. Anybody who makes a checklist and who's any good will tell you, for God's sake, don't use my checklist, you know, for design anyway. And the last thing is just to be adaptable, right. So this is gonna happen, things will like, this is one of the many things that you're gonna encounter as you try to, particularly in product innovation more than iteration, things are gonna be weird and unexpected and locking things in too much, don't do annual subscriptions, you know monthly's better. Do whatever you can to increase optionality and adaptability, yeah.
And we should go back maybe to some of this really interesting social research. So Action Research and Minority Problems, this is where Lewin coined or first published the phrase. It was about a deliberate attempt in the field of education to change people, but when we build products, we act in the world, and whether, even if like, even if we're not really trying to change people, we will. So that's gonna happen, so even if it's not your aim, right, so sometimes you'll have a product with a purpose and you're trying to change people, and it feels like it's hard and it's an uphill battle, but yeah, maybe that's just 'cause you're trying to change 'em in a specific way, right.
It's important to map this out, figure that out. So yeah, that's where I'm up to.
Oh something really cute about this pape, which I reread in preparation for this talk.
Lewin describes action research as a spiral of steps, each of which is comprised of a circle of planning, action, and fact-finding. 1946. Build, measure, learn.
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