The use of artificial intelligence (AI) and machine learning are leading the way in innovating on customer experience and consequently building competitive businesses, according to Telstra CEO Andrew Penn.
Speaking to the American Chamber of Commerce (AMCHAM) in Melbourne on Thursday afternoon, Penn outlined what he believes are the three drivers of innovation: The move to mobile and consequently the Internet of Things (IoT); the widespread usage of cloud computing; and the rise of machine learning and AI.
Focusing on AI and machine learning, Penn labelled it "perhaps [the] most significant driver of technology innovation".
"The implications of artificial intelligence are profound. The world ahead will be full of products and services that are intelligent and able to learn our preferences, interact with each other, the cloud, and other devices that we have," Penn said.
Using the example of Netflix, Penn argued that it is not the company's "relatively limited library" of content that has contributed the most towards its success; rather, it is the use of technology-led customer experience through its smart recommendation software.
"What has made Netflix extraordinarily successful has been their focus on the customer experience through the use of technology ... what they have developed is an intuitive and compelling customer experience enhanced by their recommendation engine," he explained.
"The recommendation engine is the algorithm software smarts that determines how to serve up content and offer it to customers in a way that they find compelling and personalised to their taste.
"This is where [Netflix CEO] Reed's AI background comes in. Netflix spends 20 times as much on their recommendation engine compared to traditional companies."
Penn did, however, say that Netflix is now facing some potential disruptors itself, including YouTube's $5 a month subscription video-on-demand service Fullscreen and Disney's new app-based service Disney Life, which are both putting customer experience first in their offerings.
"Disney, one of the most powerful brands in the world, have recently launched an app-based service, Disney Life. This provides on-demand access to content including movies, songs, games, soundtracks, and TV episodes, all within a single user experience," Penn said.
"Disney realise the power behind their brand will not protect them if their customers can find a better experience elsewhere."
Penn added that Telstra and its partner Foxtel also have plenty of content to disrupt Netflix within Australia, including the NRL, AFL, and the new national netball league, for which Telstra announced a five-year live-streaming deal earlier on Thursday.
Summarising the similarities between the content competitors, Penn said the largest shared link is their "absolute focus on the customer experience" -- something that Telstra is continuously looking towards through technology solutions such as its customer service app.
"Our highest priority at Telstra is to improve customer advocacy. Nothing matters more to us. 40 percent of all variable remuneration of the company is linked to this single outcome. It carries more weight than any other measure in the company," Penn said.
"The Telstra 24/7 app now has 2.6 million active users. More customers now interact with us online than in person, and we have progressively enhanced functionality to help customers get the most out of their services with us."
Despite improving its customer service, the chief executive conceded that a great customer experience means users should not have to call in the first place.
"That is the whole premise of many of the most successful disruptors today. Who has tried Uber's or Facebook's call centre? They do not really have one.
"They are offering an experience in such a way that it is intuitive, it makes sense, so you do not actually need to connect with them or follow up."
Technology-driven customer experience involving machine learning and AI is therefore the future, although he added that there is no "silver bullet".
Penn also used the speech as an opportunity to address Telstra's three outages -- which will see it spend an additional AU$50 million to improve its monitoring and recovery times -- saying the network has come out on top in terms of resilience, which the telco can add to with a high-value customer experience.
"It is because of this commitment to network leadership that we were so disappointed with the network service interruptions earlier this year. We responded by conducting a full review with global experts in the field of telecommunications networks. This review, which looked at every aspect of our network, has been completed and the good news is it has confirmed the incredible strength and resilience of our network," Penn said.
"The future success of every organisation will depend on how quickly they can digitise their core and how quickly they can move to positively touch the lives of their customers with goods and services, but also with the customer experience they offer."