Back to our five characteristics of Intelligent Software Agents, there is no doubt that the software is Rational. Based on simple queries from the user, the software goes through a logical process of understanding what the user is asking for.  For example, when you say ‘I want to see Angels and Demons’ it figures out it is a new movie and shows you the theatres where the movie is being screened. Ideally, the next plausible action might be that I want to read the book ‘Angels and Demons’. We can go on to less plausible actions, such as wanting to see a picture of Angels and a picture of Demons and so on. Not sure if the software is ’smart’ enough to infer alternative goals and intentions of the user.  In that sense, the software is probably Purposeful in a limited way.

The other characteristics of being Social, Autonomous, and Emotional are not exhibited (at least in the demo). This might be a deliberate design choice.  When the user is goal-oriented, you probably don’t want a software agent to start a conversation e.g., start talking about the movie plot and the author of the book and so on. Nor would you want the software agent to be autonomous in pro-actively booking  tickets to the movie or airline tickets based on their calendar without confirming first with the users.

Irrespective of how successful Siri is, I am sure we will be seeing more of these kind of applications appear for iPhone and other mobile devices.

Siri – Virtual Software Assistant is a post from: Connections

A good customer experience has to embody three key components

• A for Aesthetics – Aesthetics in its broad sense is the branch of philosophy that deals with the nature and expression of beauty. According to the great philosopher Immanuel Kant it is a branch of philosophy that is concerned with the laws of perception. An aesthetically pleasing experience needs to appeal to one or more of the five senses. For example, walking into a Starbucks Coffee shop you smell the aroma of the coffee, listen to soothing music in the background, and meet with the friendly staff – all together constitute a pleasurable or aesthetic experience.
• C for Contextual – Any customer experience has to fit within the overall context of what the customer is seeking to accomplish. For example, while I am happy to chat with a Resort receptionist about the attractions around the resort when I go on a vacation, I expect a professional and fast service when I am checking into a downtown hotel in Manhattan when I am on business.
• E for Emotion- Depending on the context, the experience should touch the customer ‘emotionally’. While mass media advertising has focused a lot on the emotional aspects, online media have generally not paid enough attention to the ‘emotional’ aspects. However, that is changing rapidly as we will see in some of my subsequent blogs.

While Aesthetics and Emotion deal with experience as an ‘art’ form, the Contextual component of the experience appeals more to the engineering discipline. I’ll explore the Aesthetics of an experience in this post and leave the other two components for subsequent posts.

I want to consider two types of aesthetics – Visual Aesthetics and auditory aesthetics.

Visual Aesthetics: When is the last time that you found your banking or credit card website visually pleasing? Although, most of them are designed for easy navigation they tend to ignore the visual aesthetics behind the online experience. Take a look at Mint – the financial services aggregator site and compare it with your banking site. The ease-of-use, the interactive Web 2.0 interface, and just the pleasing and uncluttered layout brings into harmony the 3C’s of Visual Design – Concept, Components, and Composition.

Visual aesthetics need not always mean, pleasing to the eyes. In some cases, you want to invoke a feeling of ‘disgust’ and make the visual imagery ‘repulsive’ to enable people to act. One of my favorite sites that does this well is the site on ‘Longevity Game’ developed by Northwestern Mutual – an insurance company. It uses visual imagery in an interesting way to capture the attention of the users and urge them to act. The site is a very simple Life expectancy Calculator. Based on the answers provided by the user the system develops a caricature that could be pleasing or repulsive. The purpose of the game is to show the impact of lifestyle and behavioral habits (e.g., eating and exercising habits) on one’s health and life expectancy. The site first engages the user, educates them, and then leads them to action – the 3 E’s of customer experience.

Auditory Aesthetics: While visual aesthetics is easy to comprehend, auditory aesthetics is more of a challenge. What would you like to hear that is pleasing? How can a customer experience change based on auditory aesthetics? The best example of auditory aesthetics I came across was in the airline industry. How many of you really listen to the safety instructions of the flight attendant? After a tiring day or week working away from home and looking forward to the interminable delays en-route home, everyone is ’switched off’ to the pleas of the Flight Attendant. Listen to the following video – one of the most popular YouTube videos on what an auditorily pleasing experience could be?

Agreed, not many of you might be into ‘Rap’, but this Southwest Airlines flight attendant definitely got everyone listening and I am sure most would not have objected to a little diversion from the dull and boring announcement.

The negative side of auditory aesthetics is extremely important in a Call Center environment. Abusive customer service representatives can significantly damage the reputation of a company. A couple of years back AOL had a very famous case of a customer who was attempting to cancel his subscription and was faced with a really hostile AOL customer service representative.

As it happened the recording of this call went ‘viral’ and within 12 hrs there were more than 700,000 hits to a blog that carried the recording. Within a couple of days the incident was being reported in all major newspapers and TV media, forcing AOL to do damage control (See my article on Slideshare for more details). While this might be an extreme example of auditory aesthetics on the negative side, we often experience terrible customer service interactions with contact centers. Auditory aesthetics is particularly important for contact center agents or service representatives.

Do you have any other visual or auditory aesthetics that has really changed your customer experience? If so, leave a comment behind. I’ll tackle the other two aspects of ACE in my future postings.

ACE of Customer Experience – Part I is a post from: Connections

MIT’s Technology Review, in its 10 Emerging Technologies 2009 rated Intelligent Software Assistant as one of the emerging technologies of 2009.

Search is the gateway to the Internet for most people; for many of us, it has become second nature to distill a task into a set of keywords that will lead to the required tools and information. But Adam Cheyer, cofounder of Silicon Valley startup Siri, envisions a new way for people to interact with the services available on the Internet: a “do engine” rather than a search engine. Siri is working on virtual personal-assistant software, which would help users complete tasks rather than just collect information

These ‘do engines’ are not new. In fact, Artificial Intelligence (AI) researchers have talked about and built such limited, task-specific, intelligent software entities for decades now. In fact, the first such Sevak or Intelligent Software Assistant was built to engage in a conversation with its user – like a therapist. Eliza, the first Sevak, was built in 1966 by Joseph Weizenbaum with just 200 lines of computer code. Things have moved a long way from these humble beginnings, but the task of building ‘useful’ Sevaks or ‘doers’ as opposed to just agents that ’search’ has kept the attention of many researchers and has captured the attention of a few VCs as well.

More recently, such Intelligent Software Assistants are being commercially deployed is Contact Centers. Botego, Virtuoz, MyCyberTwin, NextIT, SitePal, Soliloquy, and Intellichat are some of the firms that specialize in developing voice or chat-based contact center ‘virtual customer service agents’. They are being used by a number of companies, including PayPal, eBay, Buy.com, Continental Airlines, AMP, and National Australia Bank – just to name a few. While comparing these Agents and their applications is a worthwhile (and sometime amusing) exercise, I will reserve that for a future post. Here I would like to expand on five key characteristics that such Sevaks should exhibit.

• Social – Being able to engage in a conversation with a user that is beyond the immediate task is a critical characteristic of Sevaks. Customers are used to engaging in a conversation beyond their immediate reason for contacting the company. Failing to design an agent that can engage in such conversations can easily expose the agent to abuse and mistrust. For example, one of the sites allows the user to have a conversation with the cyber twin of Paris Hilton. Even a simple question, such as ‘I thought you were a Hotel in Paris?’ results in a incongruent answer, ‘Paris looks like a beautiful city. I’d love to visit the tower’.
• Purposeful - Sevaks or agents need to be pro-active or purposeful. They should explicitly ask for the user’s goal or infer it, before providing an appropriate response. Failing to have this characteristic, will result in ‘entertaining’ but useless applications from a commercial perspective.
• Autonomous – These agents must be autonomous or require no human assistance behind the scenes to resolve customer issues. While it might be acceptable to handle Level 1 questions and pass the customer to a ‘Live Agent’ for Level 2 questions, requiring human monitoring of all agent conversations will increase overhead and costs.
• Rational – The answers provided by agents must follow a logical sequence and be acceptable as adequate explanation for why they answered the way they did. While humans might be irrational when they make decisions, having a Sevak that provides irrational answers will not be conducive to building ‘trust’ that is an essential attribute for success in this domain.
• Emotional – Finally, having a Sevak emotionally connect with the user or empathize with the users’ concerns and issues will be critical. While a virtual customer service agent might be able to take all the abuse from human customers, being emotionless in its response will be counter-productive as well.

SPARE - is a minimal set of five characteristics that Sevaks in contact centers must exhibit. How does one build such intelligent software agents and how do some of the agents mentioned in this blog stack up against there characteristics will be explored in future blogs.  If you are interested in exploring more (and having some fun) why don’t you visit my CyberTwin here or even go to the original Eliza and see how far the technology has evolved (or not!!) since 1966.

Top 5 Characteristics to Look for in Intelligent Software Assistants – The Next Generation of ‘Sevaks’ is a post from: Connections

For another, peer-to-peer lending is cheaper than consumer credit. Lending Club’s rate for the best credit risks is 7.88%, whereas the bank rate for personal loans, on average, is over 13%. A credit-worthy borrower gets the money faster and for 5% less.

Why now? First, the internet and social networks enable peer-to-peer interaction on an unprecedented scale. Second, electronic mechanisms for assessing potential customers are emerging. Lending Club starts with traditional credit scoring and adds a proprietary assessment of customers’ reputations within their social networks. You may think of Facebook as fun and games, but important underwriting information is hidden in there for those who know how to look.

What we have here is a classic case of two alternative ‘business designs’ satisfying the same function (see my earlier post on the 3F’s of Business Design) - the function here being collecting money from people who have an ‘excess’ of cash and giving them to people who need them. In the bargain, the person willing to leave the money in the bank for safe-keeping gets an interest (i.e., savings rate) and the person borrowing money from the bank has to pay an interest (i.e., lending rate) to the bank that lends it. For the privilege of mediating this transaction the bank gets a good slice of the difference between these two rates (i.e., the spread). In a peer-to-peer lending, institutions such as Lending Club and Zopa play a similar function.

However, there are two fundamental differences between these two models: (a) How they make profits or Profit Patterns? and (b) How they use information or information patterns to generate these profits?

Profit Patterns: The form (one of the 3F’s from my earlier post) of the traditional lending and peer-to-peer lending are entirely different. In the case of traditional lending there is a big ‘distance’ between the organizational area that sources these funds (e.g., customer deposits or savings accounts) and the destination for these funds (e.g., consumer loans). In fact, given that money is a ‘fungible’ resource, matching the source and destination is not needed and does not occur in traditional lending. However, in peer-to-peer lending the ‘distance’ between the source of funds and destination of funds is very small – in fact, the lender can hand-pick the borrower to whom he or she is lending. This leads to a fundamentally different way of making money or ‘profit pattern’ as Adrian Slywotzky would call it (see Profit Zone by Adrian Slywotzky et. al.).

In the case of traditional lending, profits are made through ’scale’. The lender wants to increase the ’spread’ between the savings rate offered to savers and the lending rate charged to borrowes. Scale provides an advantage in at least two ways. Scale allows the lending institution to reduce its ‘cost of borrowing’ from the capital markets and it also lowers the cost of processing each deposit-taking and lending transaction. In other words, traditional lending is based on the Transaction Scale Profit Pattern.

In the case of peer-to-peer lending, profits are made through ‘matching’. The P2P lender has to create and mediate a social network where it can match borrowers with lenders and give them the confidence that they can transact in a safe and secure manner. Of course, to facilitate this matching the P2P lender needs to have a certain scale – but scale is a secondary factor. Adrian Slywotzky refers to this as the Switchboard Profit Pattern.

Information Patterns: In any business design, in addition to how profits are made, how information is processed is also a critical component. In any good business design there is a good ‘fit’ (the third of the 3F’s of Business Design) between the profit pattern and the information pattern.

What is an information pattern? An information pattern is the process by which an organizational entity turns Information into Insight and Insight into Action (or the I-I-A cycle). In the case of traditional lending the I-I-A cycle is basd on Collect-Organize-Analyze-Decide-Act or COADA pattern. Data is collected from different parts of the organization, organized into different information domains, analyzed to generate insights, disseminated to roles that can make decisions, and decisions conveyed to individuals to act. The COADA pattern is the default pattern that most traditional organizations adopt to manage information complexity. Traditional lending follows the COADA pattern and hence it is no surprise that such organizations invest in IT to make this process as efficient as possible.

In contrast, peer-to-peer lending adopts the Connect-Share-Decide-Act or CSDA pattern. Individuals connect to each other, choose to share information or not, and based on what they see make a decision and act. Notice that there is very little collection, organization, analysis of the information. The success of this ’switchboard’ profit pattern comes from being able to entice the right groups of people to the social network so that ‘connections’ can be formed to share the information. The peer-to-peer lender needs to faciliate the making of these connections and also have the necessary guarantees in place to provide lenders and borrowers to have the ‘confidence’ to lend and borrow.

In his post, John Sviokla shows that the peer-to-peer lending is beneficial to both the borrower (who gets a lower rate than from a traditional lender) and the lender (who gets a higher rate than from a traditional deposit taker). One of the primary reasons for this is, I believe, the information advantage of the peer-to-peer lender compared to the traditional lender. By matching borrowers and lenders and facilitating their transactions, the P2P lenders have eliminated the need for collecting, organizing, and analyzing lending information that traditional lenders do a lot of. In addition, decision making has been delegated to the edge (one could even argue ‘outside’) of the organization.

Finally, note the ‘fit’ of the profit pattern with the information pattern. Traditional lending, based on hierarchical organizational structures, uses the COADA information pattern that requires transaction scale economics to make profits. In contrast peer-to-peer lending is based on a social network structure and uses the CSDA pattern that requires matching or having a switchboard to connect buyers and sellers to make profit.

Business Design and Information Patterns is a post from: Connections

Business is defined as ‘purposeful activity – usually commercial or mercantile in nature’. Design on the other hand is defined as ‘to create, fashion, execute, or construct according to plan’; ‘to conceive and plan out in the mind’; and ‘to devise for a specific function or end’.

Putting these two concepts together we arrive at Business Design (follow this link for more information). Business Design is viewed by some as a creative and artistic endeavour. Roger Martin of Rotman School of Management defines business design as follows:

“Great design is characterized by a deep understanding of the user, creative resolution of tensions, collaborative prototyping and continuous modification and enhancement of ideas and solutions. Great design is characterized by Integrative ThinkingTM. The application of these principles to business practices is what we call Business DesignTM”

The businessweek article (see here) quotes Procter & Gamble’s CEO A.G. Lafley from his book The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation.

“Business schools tend to focus on inductive thinking (based on directly observable facts) and deductive thinking (logic and analysis, typically based on past evidence),” he writes. “Design schools emphasize abductive thinking—imagining what could be possible. This new thinking approach helps us challenge assumed constraints and add to ideas, versus discouraging them.”

The Three C’s of Business Design

The site OlayForYou clearly illustrates the 3C’s of Business Design. First and foremost is the notion of the Consumer. The entire experience is centered around the consumer – their concerns, issues and solutions. It is based on a deep understanding of the consumer – their life-stage, the nature of their skin, their gender, and their aspirations. It empathizes with the consumer and ‘creates what could be possible’.

The second C of Business Design is Collaboration. The consumer is intimately involved in developing the solution for himself or herself. By asking a series of questions the system narrows in on the key parameters of the design space (e.g., aging induced wrinkles for someone in their 40’s with dry skin condition). Once the design space has been identified it then uses abduction or the best possible explantion for the consumers concern to develop a solution (e.g., best possible product and treatment for the given situation).

Context - the third component of good Business Design comes through in the OlayForYou with the creative design of the site, the guided tour of a friendly human voice, and the conversational tone that makes the consumer feel at ease and will to share information.

Business Design as design thinking or integrative thinking is gaining in importance and is being actively promoted by a number of academic institutions (e.g.,Rotmans School of Management, Instiute of Design at Stanford, and Institute of Design at Illinois Institute of Technology). While it is laudable to bring aspects of creative design into designing businesses or developing innovative business models and creating the future, I think it should not just stop there. The emerging inter-disciplinary area of Business Design should also draw its inspiration from Engineering Design.

The Three F’s of Business Design

Viewed as an engineering discipline, the 3 F’s of Form, Function, and Fit play a major role in Businesss Design. Form in the engineering sense refers to shape, size, dimension and other physical characteristing of an object. In the context of business design ‘form‘ refers to the organizational structure of the business – how hierarchical or how flat the organization is and where the decision rights in the organization reside.

Function within the context of business design refers to the business processes or functions that a business performs – producing a widget or delivering a service or creating an experience. Going back to the definition of a business as ‘purposeful activity’ it is the business function that characterizes the purpose of the business.

The most important aspect of business design is ‘fit’ - how well do the different components of the business fit together – from the customer needs, to the product, to the strategy of the firm, to the ecosystem that the business is embedded in, to the business processes, the information architecture, the organization structure, and the IT systems.

No company better exemplifies the ethos of Business Design than Apple – both in its creative design and in its engineering discipline. The creative element in all things Apple needs no elaboration – the sleek design of the iPhone, the beauty of the ultra-slim MacBook, and even their elegant and distinctive stores are the envy of any Design house.

However, it is not just the creative part of Business Design that is at work at Apple. Apple also exemplifies the engineering discipline of business design. The ‘form’ or how Apple is organized plays a great role in its innovative designs. As quoted by Daniel Turner in MIT Technology Review:

“The businessman wants to create something for everyone, which leads to products that are middle of the road,” says Brunner. “It becomes about consensus, and that’s why you rarely see the spark of genius.”

“Critical to Apple’s success in design is the way Jobs brought focus and discipline to the product teams,” Norman says. “[Jobs] had a single, cohesive image of the final product and would not allow any deviation, no matter how promising a new proposed feature appeared to be, no matter how much the team complained. Other companies are more democratic, listening to everyone’s opinions, and the result is bloat and a lack of cohesion.

Brunner says that part of what makes minimalist design possible at Apple is the way Jobs structured the design group–and the way he privileged it. “The design leader has to walk a fine line,” he says. “He has to be integrated with the company but keep his team members protected from being lobbied by marketing, engineers, manufacturers. They all have viewpoints on design.” In recognition of these pressures, Apple has always kept its design team small–somewhere between 12 and 20 people, Brunner estimates.

The importance given to the Design group and the uncompromising attitude of Steve Jobs defined the ‘form’ of the company. This to a great extent allows Apple to fulfill its primary business function of delivering the ‘Best Designed’ gadgets in an aesthetically pleaseing way. The fit between the product and consumer tastes is what catapulted iPod and iPhone to their pre-eminent positions in the market. The product design itself was aided by the fit between the design and how the company was organized to create superior design with no compromises.

As business design gains in popularity both in academic circles and in practice, I hope that the tension between the elements of creative art and the elements of engineering discipline both enrich the field of business design.

I’ll continue to explore the concept of business design and show connections between business design and system dynamics, as well as business design and artificial intelligence in my future blogs.

Business Design – Creative Art or Engineering Discipline? is a post from: Connections

Our challenges may be new.  The instruments with which we meet them may be new.  But those values upon which our success depends – hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism – these things are old.  These things are true.  They have been the quiet force of progress throughout our history.  What is demanded then is a return to these truths.  What is required of us now is a new era of responsibility – a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.

This is the price and the promise of citizenship.

This is the source of our confidence – the knowledge that God calls on us to shape an uncertain destiny

Not only did The President launch a new era of responsibility – on January 20th, high noon, Barack Obama also tansformed his campaign website into the first C2P (Citizen to President) and P2C (President to Citizen) site – launching a new era of direct communication with the people. True that past presidents have reached out to the ‘common man’ to get their views. But the reach, annonymity, and richness of the online channel will transform this Presidency and the way in which the Executive Branch deals with the Legislative Branch of our country. 

So what can the President use this site for. Let’s explore a few possibilities:

• Let’s say The President wants to have a certain legislation passed (the way he wants it rather than the compromises made by the Congress or Senate) all he has to do is to reach out to his MyBO users in that constituency to organize a grassroots movement to lobby their Congressmen and Senators. 
• Talk about participatory democracy – he can pre-release his policies in the language of the ‘common man’ rather than the incomprehensible legal language and gauge the public reaction to his policies. 
• Will this be also an era of Open Source Legislation? An era where legislators, academics, and even the common man can participate in the legislative process, craft the legislation, look for loopholes, ensure that legislations are fair to the majority and not influenced by the ‘money power’ of the minority.
• Moving on from the American stage to the International stage The President will have a powerful channel to directly reach out to the ‘People’ of other nations – not just their rulers.  

I am sure there are many more ways by which The President can and will forge a ‘conversation’ with the Citizens of America and of the World ushering in the Era of C2P and P2C. 

Being a consultant, I cannot end this post without talking about the significant operational challenges in implementing the vision of such a C2P and P2C site.

• If successful, just imagine the traffic to this site – especially during a crisis. Millions of Americans – not to mention ‘billions’ around the world will be accessing the website. 
• The sheer number of messages the site receives and sifting through the messages to even categorize the ideas is a task that may not be humanly possible and will require the use of sophisticated filters, semantic web, and intelligent software agents (look forward to more postings on these subjects in the near future. But for now you can click here). 
• How can you be sure that The President sees some of the ‘critical’ messages and they are not intercepted and sanitized by his Staff? May be an automated solution where the President receives a selection of the messages by pre-defined categories directly to his Blackberry?
• Not to mention the dark side of technology – hackers and cyber-terrrorists gaining entry and spreading false propaganda messages on the website.

In this ‘era of responsibility’ and the age of social networking, I think every individual CAN make a difference. This blog is an attempt to take on that responsibility as a Citizen of the World and a resident of this Great Nation to make a difference. 

What is required of us now is a new era of responsibility – a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.

Hope you visit my site again to read and see about how we can address some of the issues (financial crisis, healthcare, retirement)  from my personal viewpoint.

Era of Responsibility – From Citizen 2 President and President 2 Citizen is a post from: Connections