There is an interesting article in the April 2008 Harvard Business Review about how to be a successful services company, and one of the examples they talk about is Progressive Insurance. They talk about the two features of Progressive which are most distinctive and visible - their white vans, and how they list competitor’s rates alongside their own. As the article describes:

When someone insured by Progressive is involved in an auto accident, the company immediately sends out a van to assist that person and to assess the damage on the spot… Customers love this level of responsiveness and give the company high marks for service.

But customers are very price sensitive about auto insurance and so would not pay more for this service in their monthly premiums. So why does Progressive do it? Because it cuts down on fraud. Turns out most insurance fraud happens when people make claims on accidents that never happened or which were staged. This results in expensive legal costs. By dispatching a representative to the scene immediately, Progressive helps prevent this type of fraud, and even discourages it pre-emptively because people will expect a representative to show up and therefore not even attempt fraud.

 

It’s not that Progressive is determined to go one better than rivals to win the business. In fact, Progressive’s is the lowest quote only about half the time. What Progressive does believe is that is quote is the right one given the probability of that person’s getting into an accident - a probability that the insurer is best in class at determining. If indeed its quote is spot-on, then allowing a competitor to insure the customer at a lower rate is doubly effective: It frees Progressive from a money-losing propoition while burdening its competitor with the unprofitable account. Thus a level of service that looks downright altruistic to the customer actually benefits the company.

In other words, potential customers self-select not to use Progressive, but still come away feeling impressed by Progressive’s service and trustworthyness. If at some point in the future when their driving record has improved they may return to Progressive’s site and see that their price has improved, and potentially switch. So it’s a win-win for Progressive and buyers, only Progressive’s competitors lose. The perfect scenario!

I believe we are about to see the birth of a new business organization - one that is optimized for complex systems of problems and solutions, rather than based on silos focused on specific functions, and which treats user experience as a core organizational axis rather than a meddlesome add-on. Call it Org Chart 2.0.

Today’s companies are largely structured with Org Chart 1.0: silos of knowledge and product offerings (segmented by customer type, price point, technology, etc.). We have had this structure for decades, even centuries, and there are good reasons for it: it helps drive efficiency of development and decision-making, focus on customer segments and competitors, it makes the chain of command and (in theory) accountability clear, and so on.

Unfortunately this type of organizational structure is quite poor at dealing with complex systems and systemic-level problems. And this is becoming increasingly untenable for several reasons:

1. User experience design challenges the ability of organizations to cross silos: user experiences run rough-shod over org charts. Why? Because many elements go into making a user experience that from the user’s point of view should all be seamless and to an extent indistinguishable. Users don’t really care if the e-commerce portion of your website is created by a different group than the informational areas of the site, and from a brand point of view you should be ensuring that both areas of your site speak with the same brand voice. Now multiply that across your products (hardware, software), collateral, packaging and out-of-box experience, call-center, point-of-sale displays and materials, sales staff, and so on. That’s how user experience gets created.
2. Companies now need to deliver whole “solutions” rather than old-fashioned products. User experience design is just one example of this. More and more companies must pull together complex networks of partners, acquisitions and vendors in order to create and sell these solutions. No-one today is as vertically integrated as Henry Ford’s River Rouge manufacturing plant, where iron ore came in at one end and finished cars went out the other. Being nimble, global and adaptive in hyper-competitive and dynamic markets has forced dis-aggregation of capabilities and resources.
3. Customers are more complex than they used to be (or more likely it’s simply that our old models of market segments and personas did not allow for human nature and its self-contradictions). This makes understanding them and addressing them with offerings more nuanced and multi-faceted. A one-size-fits-all shrink-wrapped product on the shelf at Best Buy or Walmart is not going to cut it any more.

The strain is showing on the traditional silo’d organizational structure. I believe we will soon see the emergence of new companies formed in this environment and they will look quite different than what we have seen for the last decades. For these companies, thinking systemically and about user experience will be as natural as breathing. They will treat complex systems as inherent to their structure and creators of value, rather than as headaches to be avoided and territories to be fought over by silo’d clans.

What could a Business Organization 2.0 look like?

Instead of business units these companies will have “experience units”, which manage the end to end experience. Instead of focusing on products and technologies, they will be focused on the “invisible” system that connects the various products and customer touchpoints together. They will welcome outside vendors and partners as enablers rather than disdaining them as “not invented here”, and see themselves as being modular entities that can fluidly adapt to chaning market dynamics and customer needs. Customer input will be voraciously sought after and taken in, and customer participation in shaping the company and its offerings will be routine rather than the exception.

I’m sure there are many time-honored and well-established reasons why these things don’t make sense, and why Org Chart 1.0 is better. But the fact is that the world is changing and we need to think about new business organizational structures to adapt.

So what do you think? Are there any companies you see emerging that have these traits?

MacWorld has been running a series of reviews comparing Microsoft Office 2008 to Apple’s iWork suite and they have been pretty bizarre in their perspectives. As someone who is a longtime Office user (both on Mac and PC) and who has been using iWork for the last few months for Keynote and Numbers, it’s been frustrating to read them as they seem to have missed the boat on some pretty fundamental things (and strangely for a Mac publication, in a non Mac friendly way).

Let’s just get this out of the way: I’m a fan of Apple products, but I’m not a “fan boy”, and I use XP with Parallels every day, as Outlook is clearly superior to Entourage and Powerpoint on PC is clearly superior for production on a PC than on the Mac (Mac version is better for presenting however).

I haven’t really used Pages so I’m not going to comment on that, but Numbers and, in particular Keynote, I’m now quite familiar with. Using my complaints about the MacWorld article as an excuse, here are some thoughts I’ve been meaning to write up for a while on these two applications.

Numbers/Excel

 

I have to say that I’m not a big fan of Excel, but I know plenty of people are, and I work with many who are Excel power users and appreciate its capabilities for dealing with very complex analysis. My typical needs are much simpler, and I also often use a spreadsheet for personal use to collect and compare information about purchases, for example at the moment I have one going about different camera lenses (picture above). Excel also has some interface annoyances that I don’t like, for example:

• When you “cut” a cell, it doesn’t actually get cut until you paste it, thus violating the rule that other apps go by
• When you copy and paste a cell, it takes the style formatting of the cell, when 99% of the time all I want is the content. This usually then requires and additional step to fix the formatting for the pasted cell. (If cutting, I also have to go back and re-do the formatting for the one I cut from).
  

Numbers fixes these and goes on to address some other things:

• Including pictures into Numbers is nice and simple, with the alignment guides present in all iWork apps, which makes using it more fluid. Pictures can live outside the grid so you can easily place them wherever you want in relation to data just by dragging the picture or the sheet itself around.
  
• MacWorld complains about how Numbers doesn’t warn you if you try to drag a cell onto on already populated cell, as Excel does. Fair enough, but Numbers if far better about being able to drag stuff around on the sheet, whereas Excel again ignores typical drag/drop conventions. (And what other app warns you about replacing something with something else? How annoying would it be if Word did that? That’s what the undo key is for, it’s not a big deal.)
  
• MacWorld complains that Numbers doesn’t have a keyboard shortcut for adding a line above a range of cells. True, but it does have a one-button click for achieving that. And how often do you have to do that anyway?
• They complain about the automatic summing capability in Numbers, but I can’t see any difference in how they function
• Last, and most significant, they miss the point entirely about what Numbers is trying to do, or rather not trying to do. It is not trying to beat Excel at the power-user game. It is explicitly intended for “average” users doing relatively straightforward things, and who have common tasks like home or small business budgeting, making purchase decision comparisons, etc. The templates it provides for this are infinitely better than Excels (and not just on aesthetics). The multi-table in a sheet concept that it uses is brilliant, and makes working with multiple types of data in a single view much more fluid. True, it does make freezing panes impossible (conceptually it’s hard to see how this will work), but it offers so many other things in comparison. The Excel reviewer leaves a comment to the review about how a “moderately sized” spreadsheet of 3000 cells by 40 cells bogged down Numbers. Dear God, how many people work with that size of spreadsheet other than power users? Completely misses the point of what Numbers is aiming for.
  

Keynote/Powerpoint

For all the valid bitching about Powerpoint presentations, I appreciate the things that this workhorse application does well. However, Keynote’s visual style and production capabilities have won me over and it is now my default tool unless I’m worried about some exotic compatibility issues with Powerpoint users down the road. Of the three iWork apps it’s the one that goes most toe-to-toe in terms of conceptually attacking the same goal.

The things I appreciate about Keynote are:

• Despite MacWorld’s protestations to the opposite, I feel Keynote’s handling of themes and layouts is far superior to Powerpoint, and makes managing a lot of masters far simpler. It’s very easy to tell which pages have which masters (and to change them), and its method for grouping masters makes them conceptually simpler. I also like how I can apply master rules to just a single item on a page, not just the whole page.
  
• The automatic alignment lines are a god-send and make putting together multiple elements on a page a snap and is a huge timesaver over Powerpoints finicky grid and snap capabilities. This was not even mentioned in the MacWorld article, but is one of those things that makes a big difference to someone who puts together decks almost every day like I do.
• MacWorld did not talk about how Keynote allows subgroupings of slides in the “flimstrip” mode which makes crafting a narrative arc of a presentation much easier, essentially creating chapters. Powerpoint still has rather primitive story-telling tools. Again a seemingly small feature but one that is a big help if you use the app frequently.
• Keynote’s thumbnails are much clearer, and making scanning the flow of a document actually possible in the light-table view, another workflow improvement
  
• Per-paragraph line spacing and tabs (Powerpoint treats all text in a text box the same). Avoids having to create multiple text boxes in many cases.
• Auto-flow columns of text
  
• The article does mention Keynote’s  path animation tools, and I’ve used these to create quick and dirty UI mock-up animations.
• The instant alpha tool is brilliant, and since I use a lot of images in presentations it is a big time saver by avoiding a roundtrip through Photoshop (though Leapard’s Preview tool can do many of the things I would have used Photoshop for in the past).
  
• I’ve found PPT imports to be almost flawless, and almost equally flawless on export (assuming you’re not doing transitions that are not cross-compatible)
• The flexibility of the presenter display is very nice, and the dual clock (actual time) and timer (elapsed time) are great, though I wish they didn’t have seconds, mostly I’m concerned just with hours and minutes. It’s also nice that the timer doesn’t start until the first mouse click (so that the title slide can be up for a while, which often happens before a talk). It would be great to pause the timer while in rehearsal mode, or to reset it. Skipping to other slides in the presentation is not as intuitive at Powerpoint, however it definitely can be done and is easy once learned.
  

Having said that there are some downsides to Keynote that bug me:

• The page is always stuck to the top-left corner of the artboard, which is both visually distracting and means that objects getting animated in from the left or top can’t be accessed.
• There are not enough zoom steps (MacWorld mentions this too)
•  Items have to be ungrouped before properties (text size, fill etc.) can be adjusted, even if all the objects in the group have those properties in common. Also, I do miss Powerpoint’s “regroup” function.
• Its image mask tool (cropping) drives me batty, and requires several steps for cropping a single side, which Powerpoint sensibly only needs one step to do.
• I’d prefer it if drawing lines took place in the usual point-to-point drawing method, rather than dropping a default line on the page that is sure to be wrong, and always requiring multiple steps to get it how I want.
• Music can be on one slide, or carry through a whole show, but it can’t be started on one slide and stopped on another. This is a pretty glaring omission given how well Keynote handles other multimedia functions.
  

Overall, however, the workflow and visual capabilities of both Numbers and Keynote outweigh their relatively minor (for me) problems. They have bumped Powerpoint and Excel off my dock, only Word still soldiers on (and I use Nisus Writer Pro for personal writing anyway…)

Isn’t it interesting that in the latest airline quality rankings the top three spots were taken by low-cost carriers? JetBlue, Southwest and AirTran ranked the best while overall the industry had its worst ratings in twenty years.

Just goes to show that providing a leading user experience does not have to mean premium price. All three are relative start-ups compared to the likes of United and American, and they have been able to structure themselves (and therefore their) costs based on lessons learned from the older airlines.

Nevertheless, with issues like number of passengers bumped per flight, amount of baggage lost, and late flights that the survey measured, it’s hard to see how these three airlines would have intrinsic benefits over their older competitors.

There is also a more intangible difference between JetBlue and Southwest compared to most other carriers: the atmosphere on the ground and the plane that emanates from the staff. It is more relaxed, more can-do, more enjoyable. One can always find one-off examples at other airlines, of course, but the widespread nature of it at these two airlines (I have not flown AirTran recently so cannot comment) makes it clear there is systemic approach to managing and encouraging this atmosphere.

(And neither Southwest or JetBlue are perfect: JetBlue had its famed debaucle with passengers stranded for hours on runways in snow conditions, and Southwest is currently not looking so good with questionable maintenance practices. If you raise the user experience bar high, the punishment is extra hard if you fail to meet it consistently.)

People often think of good user experiences as uncontrollable black magic. Nothing could be further from the truth, as JetBlue, Southwest and AirTran show: even in a highly cost-sensitive industry there is room to make it a competitive differentiator. And not just for premium brands.

Given its rather grotty patina I’m not sure if I’d actually want to plug into this, but it’s an interesting concept. This poster of a stereo receiver has a headphone jack sticking out of it that plays a continuous loop of John Legend music, courtesy of Target. Nice way to take advantage of the fact that people have headphones with them anways these days, and are more open to interactive advertising experiments. Still, standing in a subway corridor plugged into the wall with lots of other people brushing by is a little off-putting.

(Spotted in NY subway)