PTV© in Action - Tapping those untapped growth opportunities using an Experience Pool Portfolio (EPP) Framework

Our last week’s article definitely has created some buzz within the blogosphere– as we received quite a few follow-up questions (both by formal and informal means) from our readers – especially asking us to propose additional measures (on top of the CET index), to effectively gauge this customer centric vs. vision centric innovation dilemma. While we agree that the optimal number of additional measures would definitely help us in solving this dilemma effectively, it is important to highlight the fact, that too many measures, at times, could also lead us to faulty, out-of-context conclusions. With that said- if at all, we need to add any more measures, it would be in the area of measuring the nebulous emotional/ emerging experience expectations of the consumers - as this is one area, the traditional quantitative analytics fall short – partly because of the fact this space is filled with too many opposites.

Having said that, we quickly realized the fact that this dilemma, in a way, is also interconnected to another macro level dilemma within our Portfolio-Thread View (PTV©) called “Pull vs. Push value chain” as well. As it turns out, customer centric innovations, by and large are driven by the push (supply) value chain models, whereas, the vision centric innovations (or the glorified customer centric innovations) are driven by the pull (demand) value chain models – which made us to step back and solve these two macro level dilemmas together (i.e., CE vs. VE & Pull vs. Push) in a holistic manner within the larger PTV© context (with its six macro level dilemmas that were identified within our earlier PTV© blog). This holistic mindset, along with our “causal chain based opposing forces analysis” not only helped us to create few more additional measures (as identified in the picture at the top of the page), but also, resulted in the following value-add INSIGHT –

• While the push (or supply) side of the value chain has been continuously optimized by corporations for over 10+ years, the pull (or demand) side has been often overlooked– and so, bulk of the untapped (or hidden) growth opportunities are being buried deep within the pull side of the value chain only.

What do we mean by that? To better understand and comprehend this insight, let us step back and understand the foundational underpinnings of our “value conservation principle based PTV© view” using an inspirational analogy (if you allow me, let me, take a digression for a minute - and I promise you, that I will come back quickly to the key point of our article…)

• Imagine for a moment … A Poet was about to step out of his home for his inspirational walk in to the nature’s trail -like most poets of yester years like Wordsworth's of the world, did! As the Poet started opening the door, the whistling/whispering sound of the wind started welcoming him with its wonderful rhythm – which made him compelled to start a friendly conversation with the wind - “What’s your name?” The Poet asked. The Wind apparently started talking back “My name is love, peace, joy, patience, kindness, etc (all the emotional fruits/energy types!).” – the Poet was so captivated by the answer, and so, started asking his next question– “Where were you then yesterday this time?”. The intelligent wind quipped – “I was in your nostrils my friend, didn’t you notice me?”- Hearing this punch line back, the Poet’s interest level started going up again -and asked another follow-up question- “Where were you then, the day before?” The wind started imagining one step ahead of the Poet, and gently whispered back – “I was in between the zigzag lines of those Pampoo trees in your backyard producing those wonderful lullabies, my dear Poet”. Now the poet’s interest level started reaching newer heights and asked –“how about the day before that?” The wind apparently started answering back with a musical twist –“Guess what, my friend… I can run over 100 miles an hour, and so, with me being everywhere, anytime, believe it or not, I was flowing through those wonderful Krishna style flutes – that were being played within London’s symphonic orchestra!” Now the Poet started recognizing the fact that the wind was trying to act smart, and so, thought of asking a non-answerable question, thinking that it would end the conversation – “how about zillion years ago?. The wind quietly said – “don’t you know my friend – I was the one who was breathed by your creator in to your fore father’s (Adam’s) nostril to give him (and you) the life you are all treasuring now”. After hearing this insightful answer, the Poet got so humbled and started thanking God for His wonderful creation of nature and the wonderful inspirations that come along with it!”

Granted, it is an imaginative story – but the added inspiration within our context here is – like the wind energy, business value also revolves around our PTV© conservation cycle (within the four walls of the BSC perspectives along with its six dilemmas) as I had alluded in the picture of one of our earlier blogs (http://strategywithapurpose.blogspot.com/2011/01/portfolio-thread-view-ptv-in-action.html), and to be little more precise,

• As we can visually see in the PTV© cyclical picture, the intangible human intellectual capital energy (like the wind energy, in the form of capabilities) within the “Growth/Learning” perspective, first transforms itself in to a tangible asset value (in the form of P&S’s) within the “Value Chain” perspective – and then, those tangible assets gets interchanged with the “need state based experience pools” within the “Customer” perspective (creating the incremental value or cash-flow from outside growth opportunity sources) – which finally transforms itself in to the shareholder value in the “Financial” perspective – which again gets re-invested in the form of human intellectual capital energy (or capital/capabilities) – and the PTV© value conservation cycle keeps moving.

The key message here is that VALUE gets either increased (using value accelerators in the form of positive cash flow generating growth opportunities from an external source) or decreased (using value deaccelerators in the form of negative cash flows or bad business decisions) within the PTV© conservation cycle – very much like how PHYSICAL ENERGY gets accelerated/deaccelerated (from external energy sources) as part of the energy (or wind energy) transformation process. In other words, if we had to summarize - the single most important challenge facing corporations today, in our opinion is -

• IDENTIFYING, GUARDING and RESURRECTING (The IGR Challenge) those hidden value accelerators that are being buried deep within the pull side of the value chain in the form of a positive cash flow (i.e. value) generating growth opportunities.

This IGR challenge not only made us to start our gold rush journey of searching for those hidden treasures (sounds like the gold rush of the 19th century?) – but also, resulted in the following hypothesis -

• These “right to win” type hidden growth opportunities, happen to exist more on the pull side of the value chain – because, bulk of the unmet emotional/emerging consumer experiences are buried within the hearts and minds of the high-spend creative customers/consumers.

This does not mean that we need to ignore the push side altogether (which is more of functional or baseline experience focused) - rather, we need to balance both (i.e. pull and push value chains) to bring this “right to win” hypothesis to life. With that said, the key question that needs to be solved within this hypothesis is -

• What are those untapped, unmet, need state, based experience moments of your most profitable customers/consumers -and how fast you can, not only tap them, but also can fill those experience gaps with your P&S’s (or business models)much before your competitors could?

As we started answering this question– we quickly realized that we need to first re frame this untapped growth opportunity space using a “pull value chain” based market segmentation approach – given the fact traditional “push value chain” based demographic and/or behavior based market segmentation approaches, that worked well to quantify the traditional consumer segments, do not seem to work very well, to quantify the “pull value chain” based emotional/emerging experience moments. Part of the reason being is that –the traditional demographic/behavior based segmentation approaches are based on the rear-view mirror type historical data and so, it does not work very well in quantifying these futuristic emotional/emerging experience moments. Granted, the historical data, definitely is useful in identifying the unmet functional (or already fulfilled) experiences – however, in our opinion, it does not work well for quantifying the emotional/emerging experiences - and so it is time to try a different approach – called the “Pull-Push balanced Experience Pool Portfolio (hence forth called as EPP Framework)”.

Under this EPP framework, the traditional products and services (P&S’s) are redefined as Experience Enhancers - to better identify these untapped emotional/ emerging expectations in the form of experience pools (EP) and the corresponding unmet need-states (NS). Experience Pools are the groups of consumers that are grouped based on the futuristic emerging/emotional experience expectations of their needs (i.e. what part), including the rationale behind the decisions they make to meet those needs (i.e. why part), and the potential growth opportunities ( i.e. how part of discerning the growth rate variations within those groups). For those of us who have come from the data intensive analytics background – I perhaps could provide an OOS analogy to explain the differences between the traditional Market Segments and Experience Pools – it is the same difference between “Entities/ Tables” within Relational Schema vs. “Objects” within Object Oriented Schema(OOS). Along the similar lines, Need-States are the distinct set of “usage occasions” depicting how the choices made by the Experience Pools change depending upon the situation or usage occasions.

Once the experience pools and need-states are mapped as a matrix (5x5 matrix as identified in the picture at the top of the page), it helps us to perform the experience gap analysis to accurately size these “experience gap opportunities” in terms of dollars and volumes. Granted that these experience pools and the unmet need states vary from category to category – however, our analysis has shown that most of these macro experience pools and need states identified in our 5x5 matrix are common across most consumer focused P&S categories (whether it be consumer electronics experiences, content/video experiences, F&B experiences or non-durable experiences), as there is a need to solve/gauge these emerging unmet experience needs of the creative/high-spend consumers within all of these sectors, regardless of a specific category. However, please note that these experience pools and need states may have to be refined, should we get an opportunity work on an engagement for a client firm to identify the experience pools for a specific category. For the purposes of this blog, we strongly believe that our EPP framework (along with its 10 component level analysis sub-frameworks) - definitely help us to answer our hypothesis question with clarity, certainty and speed as identified in the picture at the top of the page

1. Experience pool (EP) analysis - arriving at the Experience Pools addressing the nebulous emotional/merging experience expectations as identified in the 5x5 matrix at the top of the page.

2. Need state (NS) analysis - arriving at the occasion based need states driving those experience pools as identified in the 5x5 matrix at the top of the page.

3. EPNS Gap Analysis – econometric analysis to identify the experience gaps between current experiences offered by the current P&S’s within a category vs. the ideals expected up those creative high-spend consumers for each EPNS Pool. EPNS pool is the intersection bucket of EP and NS within the 5x5 matrix.

• Context sensitive EG metrics in % at Experience-Pool-Need-State (EPNS) pool level e.g. SURVEYED EXPERIENCE GAPS (SEG %)and DERIVED EXPERIENCE GAPS (DEG%) in the EG areas of – enjoyment, mood-fill, award-status, access, relevance, convenience, personalization, uniqueness, deal, good enough mindset, recreation, nutrition, flavor, texture, energy, trendiness, style etc or some combination of above as outlined in the picture at the top of the page.
• Context sensitive EG relative priority rankings at Experience-Pool-Need-State (EPNS) pool level e.g. SURVEYED EXPERIENCE GAPS (SEG #) and DERIVED EXPERIENCE GAPS (DEG #) of the above EG’s.
• Context sensitive weight factor for each EG metrics (%) and rankings (#) at Experience-Pool-Need-State (EPNS) pool level e.g. SURVEYED EXPERIENCE GAPS (SEG #) and DERIVED EXPERIENCE GAPS (DEG #) of the above EG’s.

4. EPC Gap Analysis – econometric analysis to identify the experience gaps between current experiences offered by the current P&S’s within a category vs. the ideals expected up those creative high-spend consumers for each EPC Pool level. EPC pool is the intersection bucket of EP and Channels within the 5x5 matrix, very similar to the above matrix, with the only difference of need-state being replaced by channels(Groceries, Drugs, Mass, online, mobile etc.)

• Context sensitive EG metrics in % at Experience Pool-Channel (EPC) levels e.g. SURVEYED EXPERIENCE GAPS (SEG %)and DERIVED EXPERIENCE GAPS (DEG%) in the areas of - physical/virtual feeling, ease of experience from home vs. making a trip , on my side, better deals, service on a touch of a dial/screen, same day vs. next day delivery, flavor, texture, energy, trendiness etc.
• Context sensitive EG relative priority rankings at Experience Pool-Channel (EPC) levels e.g. SURVEYED EXPERIENCE GAPS (SEG #) and DERIVED EXPERIENCE GAPS (DEG #) of the above EG’s.
• Context sensitive weight factor for EG metrics(%) and rankings(#) at Experience-Pool Channel (EPC) levels e.g. SURVEYED EXPERIENCE GAPS (SEG #) and DERIVED EXPERIENCE GAPS (DEG #) of the above EG’s.

5. EPNS and EPC pool based new opportunity analysis - mapping the ENS and EPC gap experiences to future P&S’s (in the form of line extensions and/or new product/business model innovations) in few more variations (i.e. permutations and combinations).

• EPNS/EPC with Decision Makers (Moms, Dads, Grand Parents)
• EPNS/EPC with Life stage (Family, Single, Senior Citizen Boomers etc)
• EPNS/EPC with Family Type (Small, Medium, Large)

6. EPNS & EPC pools mapping to tiered brand strategy (dual or triple brand positioning) based on these emerging/emotional gap opportunities.

7. EPNS & EPC pools mapping to tiered pricing strategy/framework based on the gap opportunities.

8. EPNS & EPC pools mapping to differentiation tier strategy based on these emerging/emotional gap opportunities.

9. EPNS and EPC based Profit Pool Analysis - Experience Fulfillment (EF) map wherein ENS and EC pools are mapped to current and gap opportunities in the form of revenue, volume and profits.

10. Final recommendation with an action plan/execution focused roadmap.

As it turns out, solving these macro dilemmas within the larger context of our PTV© view, in our opinion, has definitely paid off, in the form of two synthesis based “doing both” solution frameworks called Experience Pool Portfolio (EPP) and Purpose innovation Portfolio (PIP) – respectively addressing the challenges posed by these macro level dilemmas. At the same, we would like to highlight the fact that, in the real world within large corporations, there exists always a tension between the opposite ends of these dilemmas – and so– as leaders, we have a greater responsibility of resolving these tensions, on a proactive, timely manner using emerging collaboration techniques like Power Through Collaboration (PtC©) framework promoted by experts like Dr. Steve Willis. At the end of the day, executing these collaboration driven strategic actions on a timely manner, much before the competitors, is what going to create the incremental value for shareholders.

In a way, we can also call our PTV© as a Reset Enabling View (REV©) as it revisits/resets some of the foundational assumptions of the other dominant strategic views of recent years (and derives its best features from them as well) and help organizations to go back to their drawing board with a reset/refresh mindset – and so, in our opinion, PTV© is one of the best views to develop both near and longer term reset/refresh strategies (e.g. Annual Plan and 2020 strategic plan), especially for corporations within those industries (Consumer Goods, Consumer Electronics/Media/Telecom and Retail industries to be specific) that are trying to reset their businesses to better align with the challenges and opportunities of the next decade, as identified in one of the recent McKinsey’s surveys.