Consulting Industry Faces Threat From Artificial Intelligence

Consulting Industry Faces Threat From Artificial Intelligence

Previously I explored the value of eminence and thought leadership to consulting firms, and how unfortunately the power of inbound content marketing has a dark side that forms part of a three-pronged attack on the consulting industry.

Meanwhile, the tireless invention and innovation efforts of research teams in companies around the world have helped to keep the pace of technological advancement in computer processing power at or above Moore’s Law for several decades. This has given technology companies the ability to put more computing power than the entire Apollo space program into the pockets of more than a billion people around the world.

It seems like everything has become digital, including music, books, and even movies. Increasingly intelligent digital technologies and mercurial customer expectations threaten both people and enterprise at every turn. With all of this technological change, the last few decades have been an amazing time for consultancies, full of revenue and opportunities. Clients desperate for solutions to help them cope with these challenging times helped management consulting firms grow in size and scale, expanding to cover multiple technology, and even marketing, specialties.

But the same technologies that have led to the growth of consulting companies over the last couple of decades, will begin to lead to a shrinking of those same consulting firms. The increasing diversification of the large global consultancies into other specialties is the first step to what is an inevitable shrinkage forced upon the industry by the three factors I detailed in my last article titled Consulting Industry Caught in the Crossfire.

The same forces that are causing a feeling of disequilibrium for the firms that consultancies serve are also causing the same unease, trepidation and challenge for the consulting firms themselves as they find themselves attacked on three sides from:

1. Increasingly Available Intellectual Property
2. Internal Consultants
3. Artificial Intelligence

In my previous article on the Consulting Industry Attacked on Three Sides I looked at each attack in turn, but in this article I would like to dig a bit deeper into the final threat.

Artificial Intelligence

Roboadvisors, chatbots, and other implementations of artificial intelligence have captured people’s imaginations and led to both an increase in the number of articles written about artificial intelligence, but also in the practical implementations of artificial intelligence. People are becoming increasing comfortable with artificial intelligence thanks to the recommendation engines on Amazon and Netflix and IBM Watson’s appearance on the game show Jeopardy and battles against chess grandmasters.

But what does consulting have to fear from artificial intelligence?

Perhaps viewing this short video might give you a glimpse:

In the short run, maybe consultants don’t have as much to fear from artificial intelligence as workers in transportation, retail, or manufacturing. But, in the grander scheme of things, over time enterprising technology vendors will inevitably build upon publicly available artificial intelligence frameworks made publicly available by companies like Microsoft and Google (who are seeking to increase the sale of cloud services) to automate some of the tasks that recently minted undergraduate analysts or Indians perform now for the large consulting firms.

What we are starting to see is exactly what Roger Martin described in his landmark book The Design of Business, from which I would like to highlight one of the key concepts called The Knowledge Funnel highlighted in the image from the book below.

Knowledge Funnel v2
Source: The Design of Business by Roger Martin

The key point here is that as we understand our business and our interactions with our customers well enough, what was once a mystery we start to identify patterns inside of (heuristics), which then eventually allows us to create algorithms that can be captured in Standard Operating Procedures (SOP’s) and then eventually in code. The power of artificial intelligence is the ability to move the role of the machine to the left in The Knowledge Funnel, away from pure manual coding by a human, to computer programs that write themselves and eventually to heuristic identification and algorithm creation at some point in the near future. This is what crowd computing, machine learning and deep learning ultimately make possible, and which I explored in a previous article titled Welcome to the Crowd Computing Revolution in more detail. The fact remains that as computer programmers and the artificial minds they create become more adept at watching the work that consultants do and recognizing the patterns in their recommendations, the pressure on consultancies will build.

Conclusion

These are challenging times for large consultancies and small independent consultants as consultancies are forced respond to these attacks from three sides. Part of that three-pronged attack will come from a growing legion of automation engineers taking to cubicles around the world to design people out of jobs. In the same way that mechanical engineers build robots to replace our human muscles with machine muscles, automation engineers are computer programmers tasked with creating inexpensive machine minds with sufficient artificial intelligence to replace our more expensive human minds. Professions like that of the automation engineer will attract increasing numbers from workforces around the world, but not nearly enough to offset the losses in job opportunities that these individuals are tasked with eliminating. Only time will tell how quickly and how broadly artificial intelligence (AI) threatens the core business of consultancies.

If you are in the consulting industry, what is your strategy for responding to this threat?

Because, make no mistake, the threat is real. The only question is how quickly it will materially impact your bottom line.

BONUS:

You might enjoy this interview with David Cope, the creator of Emi (Emily Howell) the algorithmic composer, whom he later killed:

Charting-Change-Article-Banner

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Consulting Industry Being Attacked on Three Sides

Consulting Industry Being Attacked on Three Sides

The worlds of employment and business are becoming increasingly turbulent as the stability of the enterprise grows ever shorter, the loyalty of the enterprise to its people faces extinction, and the wealthy countries of the world stand at a precipice of overhanging debt. Increasingly intelligent digital technologies and mercurial customer expectations threaten both people and enterprise at every turn.

One would suppose that this would be an amazing time for consultancies, full of promise and opportunities. One would imagine that clients desperate for solutions that help them cope with these challenging times would be banging down the doors of consulting firms outbidding each other to the firm’s next client.

But that is not the reality…

Because, the same forces that are causing a feeling of disequilibrium for the firms that consultancies serve are also causing the same unease, trepidation and challenge for the consulting firms themselves.

The fact is that the consulting industry is being attacked on three sides:

  1. Increasingly Available Intellectual Property
  2. Internal Consultants
  3. Artificial Intelligence

Let’s look at each threat in turn:

1. Increasingly Available Intellectual Property

In my last article, “How Much is a Thought Leader Worth?”, I wrote about the importance of thought leadership in today’s digital age and its role in helping to drive inbound sales leads.

Hiring a consultancy, even for a small project, is a big expenditure for most companies, something that requires several levels of approval before the project can begin. Given that, company employees take to the Internet to build their consideration set and to do their research into how each company thinks and who seems to be the leader in the space where they need help. For help with building an innovation or digital transformation strategy or process, often they find me.

The way that company employees find the companies they will include in their consideration set, and the individual (or firm) they will ultimately hire, is by finding and evaluating thought leadership created by consultants like myself who are good at creating frameworks and other tools aimed at simplifying complex concepts (referred to as eminence by some firms).

Because the discovery and evaluation of thought leadership by potential customers is a key way that independent consultants and advisory firms attract new business, and because it is easier than ever to create and share thought leadership while simultaneously becoming an increasingly important factor in the buying process, independent consultants and advisory firms are creating more pieces of thought leadership and eminence than ever before.

On the plus side, thought leadership and eminence help independent consultants and advisory firms to win business. The down side however is that in much the same way that kids in Hawaii have learned how to become professional surfers by watching YouTube videos, as advisory firms create more thought leadership and make it publicly available to win new business, they also stand to lose an accelerating amount of new business as well. The reason is that the proliferation of eminence and thought leadership will inevitably lead to:

  1. Increasing numbers of line managers feeling that they know enough to tackle the challenge themselves that they might have otherwise outsourced to a consulting firm
  2. Increasing numbers of senior leaders deciding that someone inside their company could spin up and lead an internal consulting group

2. Internal Consultants

Let’s face it, whether we like it or not, an increasing number of senior leaders are becoming fed up with spending $500/hr on newly minted MBA’s from McKinsey, Bain, BCG, etc. when they could hire them on full-time for $75-100/hr by taking one of their promising senior leaders and having them spin up an internal consulting group.

Many companies have already created internal consulting groups to handle the bulk of their strategic project work in order to either:

  1. Save money
  2. Increase responsiveness
  3. Increase speed to market
  4. Keep the knowledge gained from such projects readily accessible
  5. Create and retain a competitive advantage

For me, reason number five is potentially the most compelling reason because it is impossible to expect any large consulting firm to unlearn the insights they acquire on one consulting project and not leverage them on a subsequent project with a competitor somewhere down the line. Doing projects with your competitors is how a great deal of industry expertise is gained by large consultancies, and this expertise is one of the primary reasons that managers hire a consulting firm.

3. Artificial Intelligence

Roboadvisors, chatbots, and other implementations of artificial intelligence have captured people’s imaginations and led to both an increase in the number of articles written about artificial intelligence, but also in the practical implementations of artificial intelligence. People are becoming increasing comfortable with artificial intelligence thanks to the recommendation engines on Amazon and Netflix and IBM Watson’s appearance on the game show Jeopardy and battles against chess grandmasters.

But what does consulting have to fear from artificial intelligence?

In the short run, maybe not a lot. But, in the grander scheme of things, over time enterprising technology vendors will inevitably build upon publicly available artificial intelligence frameworks made publicly available by companies like Microsoft and Google (who are seeking to increase the sale of cloud services) to automate some of the tasks that recently minted undergraduate analysts or Indians perform now for the large consulting firms.

Conclusion

These are challenging times for independent consultants as they respond to these attacks from three sides. Only time will tell how quickly and how broadly artificial intelligence (AI) threatens the core business of consultancies. The internal consultancy threat is real and growing in scope and threat. What may have started in Project and Portfolio Management (PPM), Six Sigma, Lean and Agile practices in some organizations, is quickly expanding into other Operational Excellence areas and even into Innovation, Digital Transformation, and traditional Strategy. Increasingly available intellectual property poses a Catch-22 for consultancies as a refusal to participate in the creation of eminence and thought leadership will lead to less business in the short-term, but doing so will certainly over time lead to an overall reduction in the size of the market for consulting services. Some consultancies are responding by diversifying their service offerings, attempting to create consulting superstores. What will be your response to this attack from three sides?

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Amazon Changes Everything in a New Way

Tide Dash Button

The arrival of the Internet began major disruption to decades old methods of consumer packaged goods (CPG) distribution. The tried and true method of manufactures selling to a collection of wholesalers, who then sold the product on a range of retailers began to be reexamined. We saw the arrival of online retailers like Amazon who sought to compete with brick and mortar retailers, trying to offer a wider selection while also offering potentially a more convenient (and possibly cheaper) shopping experience for a few (or possibly for many). We saw retailers experiment with selling on Amazon (adding an extra layer of intermediation) and grocery stores experiment with online ordering and local delivery.

But at the same, in 2010 we saw manufacturers like P&G start to experiment with selling direct to consumer over the Internet via sites like pgshop.com and then in 2013 P&G started selling their wares on Amazon. Below is a screenshot of a Pampers product listing on Amazon:

Pampers Amazon Screenshot

As you can imagine, when companies like P&G start selling direct to consumers and via Amazon, this makes traditional retailers nervous. And while maybe some day their nervousness will translate into major volume declines, we’re probably not quite there, yet. But for manufacturers, the possibility of selling direct to consumers or via Amazon changes everything. It changes everything because it requires companies selling consumer goods to build new marketing capabilities, and possibly even new manufacturing and distribution capabilities as well.

Frito Lay Amazon Box

Here we have an example of a Sweet and Salty Box being sold to consumers via Amazon by Frito Lay. Compare this with a P&G Pampers page on Amazon and you’ll see that Frito Lay is still learning how to market via the Amazon channel and hasn’t completely figured out how to optimize the experience they create for consumers or likely how to maximize their conversion. But, you may also notice that the Amazon channel offers Frito Lay the opportunity to sell something they probably couldn’t sell in a Krogers, or Whole Foods, or Tesco, or 7-11.

In both of these examples, Amazon is taking and selling the inventory much as a grocery store would, but the customer wants, needs and expectations in the Amazon channel are different, and the skills to effectively market in this channel are different too. These are the reasons that Amazon changes everything for CPG companies. As Amazon continues to grow in importance as a channel for nearly everything, and as other sites like Facebook make a stronger push into eCommerce, and as consumer preferences for where and how they want to buy things changes, it presents a great opportunity for the forward thinking among us to take existing products and create new offerings that resonate with consumers showing a preference for existing and emerging digital channels and to create entirely new solutions that may involve a new product or possibly move beyond a product. Companies in CPG must continue to ask themselves:

  1. What is possible online that isn’t possible in-store?
  2. What do online shoppers want that is different than in-store shoppers?
  3. If we were to move beyond the confines of the product (and how it is packaged and presented), what would resonate with this type of consumer?

You can see on the Pampers page on Amazon above they’ve done a number of different things without changing the product:

  • Offering a range of product quantities
  • Coupons
  • Amazon Dash buttons (push the button and it automatically orders for you)
  • Etc.

And Frito Lay took their existing products and re-packaged them in a different way to suit the capabilities and needs of the channel because selling one individual bag of Doritos doesn’t make economic sense (and so Amazon won’t let you do it unless it is part of a larger Prime Pantry box).

If you were in charge, and had the product range that P&G or Frito Lay have, what would you do to optimize your results in the Amazon channel, or even more broadly in a direct to consumer context?

Please add your comments below.

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Charting Change – eBook Now Available

Charting Change is Number OneI’m super excited to announce that my new book Charting Change is now available in English as both a hardcover and as a Kindle eBook at various Amazon sites around the world (USA, UK, CA, AU, DE, FR, JP) and now the traditional eBook is also now available!

Charting Change has been the number one new release on Amazon for at least “Business Management” and “Production & Operations” so far. It also was the #2 new release for “Organizational Change” and probably #1 too (but I think I missed getting a screenshot).

For those of you prefer to read digital books instead of hardcovers, you can get the Kindle version or get an eBook at the following places:

  1. My publishers web site
  2. Google Play store

For those of you who already have the book, I hope you are enjoying it and leave an Amazon review when you finish! 🙂

Please feel free to ask questions about the book below.

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FedEx Not Keeping Pace

FedEx Not Keeping PaceFedEx took the shipping world by storm about forty years ago, growing to become the defacto shipping leader, unseating UPS and DHL. But, then after thirty years of strong growth they began to lose their mojo. In 2003, in a reaction to UPS’ acquisition of Mail Boxes Etc., FedEx announced they were buying Kinko’s, a large United States based copy center chain. For me this showed that FedEx was beginning to lose its way, and it appears their connection to customer expectations and the current capabilities of technology is failing. For a company based on the promise of speed, FedEx is becoming increasingly slow.

Increasingly frustrated with the performance of FedEx, Amazon has increasingly turned to the United States Postal Service to deliver its packages, striking a special deals with USPS to even deliver packages on Sunday. And now, Amazon is beginning to buy trailers so they can potentially contract directly with truck drivers to help them move inventory from one distribution node to another.

And for me, my latest FedEx misadventure is a perfect example of why FedEx is now in trouble and at risk of falling from its perch. Here’s what’s happened so far.

  1. I ordered a new laptop from HP that was supposed to arrive in three (3) days on Saturday, July 9th
  2. On Saturday, July 9th I received no contact from FedEx or estimate for when my package might be delivered
  3. On Saturday, July 9th FedEx attempted to deliver the package when we weren’t home
  4. For some reason FedEx then determined they were going to wait THREE DAYS before attempting re-deliver the package
  5. On Tuesday, July 12th I received no contact from FedEx or estimate for when my package might be delivered
  6. On Tuesday, July 12th FedEx despite someone being home nearly all day, FedEx attempted to deliver the package when we weren’t home
  7. On Wednesday, July 13th I received no contact from FedEx or estimate for when my package might be delivered
  8. On Wednesday, July 13th FedEx despite someone being home nearly all day, FedEx attempted to deliver the package when we weren’t home
  9. On Thursday, July 14th I received a missed call and voicemail from FedEx
  10. On Thursday, July 14th I attempted to call the FedEx number given and nobody answered the phone, got voicemail and left message
  11. On Friday, July 15th the Web site indicated that package would be delivered again that day, but no delivery came
  12. On Friday, July 15th I called FedEx and got voicemail
  13. On Friday, July 15th I called FedEx again and got a person, hooray! But, the person said my only option was to drive a fair distance to come pick it up or have it delivered to a FedEx location near me.
  14. On Friday, July 15th I chose to have the package delivered to my local FedEx location (a Kinko’s about 5-10 miles away) under the impression it would be available Saturday, July 16th at this location for my pickup and that they would probably call me after it arrived
  15. On Saturday, July 16th I went to the Kinko’s around 7pm figuring that it must be there by that time (How long could it take to ship a package 15-20 miles from one FedEx location to another?)
  16. On Saturday, July 16th at the Kinko’s the employee was unable to find the package
  17. On Saturday, July 16th at the Kinko’s the employee was unable to get any information from their systems because they were down for maintenance
  18. On Saturday, July 16th at the Kinko’s the employee was able to call and using a voice response system get a Tuesday, July 19th delivery estimate to their location
  19. On Monday, July 18th I received a postcard from FedEx saying they had tried to deliver my package three times and to contact them (NOTE: this was a very confusing postcard, not obvious what to do)
  20. On Tuesday, July 19th I received a phone call from the FedEx Kinko’s store saying they had my package, and I picked it up a few hours later after they used my name (no technology) to search a pile of packages in the back

VERY BAD EXPERIENCE – I got my package TEN DAYS AFTER I was supposed to get it, and nearly two weeks after I ordered the laptop.

Inaccurate information on the web site, poor customer service, bad technology, slow resolution…

These are all signs that this logistics company has gone off track and has not kept pace with the capabilities of technology today.

There is no reason why FedEx shouldn’t have been able to:

  • Show me online exactly where my package is
  • When FedEx is estimating it to be delivered based on the packages loaded on the truck and the planned route
  • Offer me the opportunity to select an alternate delivery time or date or location if the likely delivery time doesn’t work for me

This would be customer service.

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Charting Change – Kindle Price Reduction

Charting Change is Number OneI’m super excited how well my new book Charting Change is doing on various Amazon sites around the world (USA, UK, CA, AU, DE, FR, JP)!

Charting Change has been the number one new release on Amazon for at least “Business Management” and “Production & Operations” so far. It also was the #2 new release for “Organizational Change” and probably #1 too (but I think I missed getting a screenshot).

The book is currently available on Kindle and as a hardcover, and I’m excited to announce that the publisher has reduced the price on the Kindle version to make it more accessible to people worldwide. More news on other ebook versions coming soon!

For those of you who already have the book, I hope you are enjoying it and leave an Amazon review when you finish! 🙂

Please feel free to ask questions about the book below.

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Microsoft’s Seeing AI Glasses

The Seeing AI Glasses of Microsoft

Saqib Shaikh lives is blind, lives in London, and is a core Microsoft developer. He lost the use of his eyes at age 7. Saqib found inspiration in software development and is helping build Seeing AI, a research project helping blind or visually impaired people to better understand who and what is around them. The app is built using intelligence APIs from Microsoft Cognitive Services.

Pretty amazing that an app can use a camera to capture an image or a video feed, and using artificial intelligence, to analyze the scene and vocalize to the user what it sees. In this example this is being done for the benefit of a human user, but imagine what could be possible if one computer program is used to serve instead, another computer program as the user of the analysis. What might that make possible?

How might you or your organization make use of technology like this?

What direction do you think technology like this will take?

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What April Fool’s Day Teaches Us About Innovation

What April Fool's Day Teaches Us About Innovation

April Fool’s Day was this week. Did anyone have a good prank played on them or come across a good corporate April Fool’s?

My favorite this year was from my alma mater, the University of Oregon. Go Ducks!

We try to think a little differently at the University of Oregon and specialize in helping the world run a little faster (and more comfortably), and with some of Nike’s founder behind the football team, why shouldn’t they have the world’s most advanced field, say, an LED field?

Watch the video:

The best corporate April Fool’s Day pranks are the ones that are believable and almost seem feasible.

What does this tell us as innovation professionals?

The insight is that the best corporate April Fool’s Day pranks find a resonance point, a place where the outlandish intersects with what people are ready for, what they may actually desire, and what they believe should be possible soon.

Consider asking your innovation teams to design their own April Fool’s Day prank and see where it takes you.

Ask yourself questions like these about their designs:

  • What must be true for this to be possible?
  • What stands in the way of this being possible?
  • What would it take to remove the barriers that are preventing this from being possible?
  • Are our customers truly ready for this?
  • What would it take to prepare them for it?
  • What capabilities do we need to build to prepare for this eventuality?
  • Is this idea more feasible in a different context? (i.e. basketball courts instead of football fields)
  • Etc.

One final thought…

Is there any reason why the field shown in the University of Oregon LED field video couldn’t become a reality?

Why couldn’t it be built out of some of kind of fiber optic material that maintained both the sports performance characteristics and the multi-color transmission capabilities?

Would it be easy to design such a thing? No. But it seems possible, and that’s where innovation begins…

Keep innovating!

This article originally appeared on Innovation Excellence

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Charting Change – Now Available on Kindle

Charting Change is Number OneI’m super excited to announce that my new book Charting Change is now available in English at various Amazon sites around the world (USA, UK, CA, AU, DE, FR, JP) with a traditional eBook coming soon!

Charting Change has been the number one new release on Amazon for at least “Business Management” and “Production & Operations” so far. It also was the #2 new release for “Organizational Change” and probably #1 too (but I think I missed getting a screenshot).

The book is currently available on Kindle and as a hardcover. Unfortunately the eBook is still delayed. I’m trying to stay on top of the publisher to get it out as quickly as possible, so stay tuned!

I will announce on my blog here when the eBook and Nook versions are available for those who don’t have a Kindle.

For those of you who already have the book, I hope you are enjoying it and leave an Amazon review when you finish! 🙂

Please feel free to ask questions about the book below.

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Service Redesign – Lost T-Mobile Smartphone

Service Redesign - Lost T-Mobile Smartphone

Given the health risks of carrying a smartphone (or any kind of mobile device) too close to the body for extended periods, I try to always remove electronic devices from my pockets whenever I can. For ten years this has never caused a problem until Saturday. This marked the first time in more than a decade that I walked off and forgot my smartphone.

Now I’ve had the joy of reporting my lost phone to T-Mobile and getting a less than helpful response. Not because the agent I spoke with didn’t try to be helpful, but because the customer service representative was trapped inside of a service experience that wasn’t designed to meet the goals of the customer.

First I must mention that I don’t have a find my phone type app installed on my phone because I don’t like the idea of someone tracking me all the time. Second, yes, I know that even with location awareness or GPS turned off that my phone is being tracked anyways, but I still like to maintain the illusion that my every move isn’t being tracked. So, please humor me.

The fact is that T-Mobile could tell me exactly where my phone is even without such an app, but then they would have to breach the illusion and admit that they’re always tracking where every phone is at all times. Not such a good customer experience.

Redesigning the Lost Smartphone Experience

I’m only one person so this list won’t be as good as if I was working on this with a small team and prototyping with customers, but let’s ignore that for now and try to come up with a list of customer goals (and thus opportunities to delight) in the lost smartphone scenario:

  1. I don’t want someone to use my phone after I lose it to make calls that I’ll have to pay for (international calls, premium calls, etc.)
  2. I don’t want someone to buy anything (apps, music or other content that I’ll have to pay for)
  3. I don’t want someone to call my contacts
  4. I don’t want someone to use my apps and make in app purchases
  5. I don’t want someone to use my texting function (SMS) – read, send, etc.
  6. I don’t want someone to use my email – read, send, etc.
  7. I don’t want someone accessing my photos
  8. I don’t want someone to steal information about my contacts
  9. I want to be able to call my phone to try and speak with the person who found it so I can try and get it back
  10. I want the person to be able to call me or T-Mobile to let me know that they’ve found my phone

In short, I don’t want someone who finds my phone to be able to do anything other than contact me to let me know when and where I can come pick it up.

But, when I called to T-Mobile to report my phone lost the only option was to have the phone disabled. Prior to doing so, calling my phone was going straight to voicemail, and maybe I should have left a voicemail, but I didn’t, I thought I would try again later. After they disabled my phone, instead of getting voicemail I got a message saying the phone has been reported lost and that I wouldn’t be able to leave a voicemail. This is partially helpful, but not completely. Now I can’t call the phone and if someone has found the phone, they can’t try to contact anyone to arrange a pickup.

T-Mobile has met goal #1 (and possibly #2-4), but likely they could access #5-8 (able to read but probably not to send).

But, there are many other goals that have not been met. Most importantly, T-Mobile has actually made it less likely that I will get my phone back because I have no way of communicating with the person who may have my phone.

What could T-Mobile do to make this experience better?

Simple.

When a phone is reported lost, T-Mobile should make it so that the phone can only call T-Mobile. If the person calls, then T-Mobile knows which number is calling, can get information from the caller to connect the two parties to arrange a pickup, and pass on the contact details to the subscriber via pre-arranged methods.

Second, T-Mobile should allow designated numbers to call the phone, so that the subscriber can try to get in touch with whoever found the phone.

Third, T-Mobile could call the phone every 15-30min with a robot until someone answers and connect them with a T-Mobile representative.

These three small changes to their lost phone service design would make an immediate positive impact in the customer experience for thousands of customers.

How else could T-Mobile make the experience better?

Image credit: easyhacker.com

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