Let’s assume that for the purposes of this conversation that when I use the term customer-centricity I am pointing towards a specific behaviours which show an organisation as being attuned and responsive to the needs of their customers – their core customer base.
How should you go about effecting change in the behaviour of your people, your teams, your functions, your business units, your entire organisation so that your organisation shows up as customer-centric? The authors of Six Simple Rules point out that managers go about effecting change by typically taking a hard approach (strategy, structure, process). And when this fails or to make it more appealing they introduce elements of the soft approach (training, team building, affiliation events). How well do these approaches – hard, soft, hard+soft – work?
In the last post I illustrated what tends to happen when managers take the hard approach: set direction, communicate direction, set metrics to hit, change the bonus system. What about taking the soft approach? How does that tend to work out? Lets return to David K. Hurst’s experience at Hugh Russel:
The top management team emerged from Hugh Russel as a “band of brothers” ….. we found we could “read ” situations better … “contextual intelligence” seemed to be an important feature of our newfound skills. So, after our near death experience, we set out to create an educational experience that would nurture the spirit of commitment, excitement, and engagement we had seen at the senior level of the organisation….
What did this senior leadership do? They organised a series of 3 day retreats ["core samples"] where 50 people drawn from all levels of the company (truck drivers, salespeople, branch managers, vice presidents) were invited to a “lovely old cottage”. What happened on the retreat? The participants hung out together doing team exercises, case studies, got feedback on their behavioural styles, and discussed the issues that the Hugh Russel was facing. How did it go? The senior leadership were delighted with the results:
Discussion at the meetings was open and honest, the behaviours observed were cooperative, and the feedback from the participants was excellent..…… our local branch managers, who nominated most of the attendees, told us that they saw changes in the behaviour of those who had come to the session, even staunch union members. We were very pleased.
The soft approach works! If you take folks from all levels of your organisation to a three day retreat, at a nice place, educate them, teach them, develop them, give them feedback, and allow them to hang out with another then you are well on your way to being customer-centric. Or are you?
Then, over time, the feedback from the managers became less positive….. after awhile back at work, the participants began to revert to their old dysfunctional habits. Many of them who had been cooperative and open during the core samples became surly and aggressive again after a few weeks back at work.
Slowly it dawned on us that we had completely misunderstood cause and effect….. We thought we were teaching them new behaviours, which they could practice back in the workplace. But they knew these behaviours already since they were the ones the workers used in friendly environments, like their homes or bowling alleys or golf clubs. The open environment of the development sessions evoked those social behaviours.
Please make note of the line that I have put in bold. The behaviour that was being taught was behaviour that the folks already had in their very being: cooperation is intrinsic to us. In infant never makes it past infanthood unless it arrives and is nurtured in a cooperative context. So if cooperation is not showing up in the work context then it is because non-cooperation is the functional behaviour in the work context. And cooperative behaviour is dysfunctional in that work context. What can we learn from David K. Hurst?
We had misunderstood the power of context over our people’s desire and even their ability to practice these behaviours back at work. The closed work setting was completely different from that of the country estate …..
Martin Heidegger was on to this phenomenon back in the 1920’s almost a hundred years ago. Most managers are yet to get it: when you ‘deworld the world of its worldhood’ you are in the land of theory. And what is theory? Theory is derived from the Greek word: theoros. What does theoros signify? Spectator. And if you follow that which I speak here on this Blog, you may have gotten the profound difference between “being in the stands and being in the arena”.
Let’s continue listening to David K. Hurst:
…. we weren’t teaching them soft skills that they didn’t already know; we weren’t conveying any hard skills that might have been helpful to them; we weren’t using live company cases or confronting real issues…… our management development program had some of the ingredients of a behavioural trap – short term rewards and a long terms waste of resources.
How does David K. Hurst conclude this story? With a profound lesson for anyone seeking to effect behavioural change that lasts:
This is a perennial problem with development programs, especially those that depend upon a radical change in context to produce their effects. Climbing a challenging mountain peak or whitewater rafting can certainly build temporary espirit de corps in a team. However, the challenge is not to take the skills learned in those challenging contexts back to the workplace but to create challenging workplace contexts that evoke those desirable behaviours. The development sessions should deal with the constraints that prevent an organisation from creating challenging work environments where learning and teamwork are a natural response….
– David K. Hurst, The New Ecology of Leadership
1 – That the challenge of showing up as a customer-centric organisation is one that involves a radical change in context to produce the kind of behavioural change that is needed from just about every person in your organisation;
2 – The central task of any leadership team is to get to grip with the existing work context – to understand what it is about the context that generates the behaviour that is generated today; and
3 – Using this insight to nudge-influence-shape the work context (made of up many micro work contexts) such that the only functional way for your people to show up is as being attuned to and responsive to customers.
Let’s assume that you are a member of the leadership team for your organisation. Circumstances are such that you decide that your organisation needs to focus on customers and generate “total customer satisfaction” on the assumption that satisfied customers buy more of your stuff at higher prices thus generating higher profits. How would you go about it? What approach would you take?
The Default Organisational Change Approach: “Analyse-Think-Change”
The default, dominant – almost exclusive, approach has been labelled as “analyse-think-change” by John Kotter. What kind of results does this generate? Let’s explore this through the experience of David K. Hurst as recounted in his book The New Ecology of Leadership:
For the pilot program we decided to measure “on time delivery” as a proxy for customer satisfaction; that is, did the customer get the steel on the day we promised it? ….
We didn’t know whether to laugh or cry when the first measurement showed that ….. 53% of the step was delivered on time. Shocked, we decided to feature on-time delivery as a significant part of a new bonus system, allowing branch managers and their people to earn up to 25% of their bonus for on-time delivery.
What kind of results showed up? Did treating human beings as purely economic beings yield a step change in one-time delivery?
To our delight the results started to improve immediately, climbing quickly to 75% across the system, and some branches even headed into the 80-90% range.
It works, it is as simple as that! Sit in the executive suite, decide to become customer oriented, find a lever that represents customer orientation, measure it, bonus people on improving that measure, and soon you find that your organisation is customer oriented. If that is what you are finding in your organisational change / customer-centricity efforts then take a break from celebrating and listen some more:
We had hardly finished congratulating ourselves … when one of the senior team had a disturbing experience. While walking through a branch, he overheard a salesman on the phone to a customer. “We can’t get it to you on Tuesday,” said the salesman. “How about Friday?”……. The executive saw the salesman go back to the on-time delivery screen and record the new promised date as Friday ….….
Was this salesman just an isolated ‘rotten apple’? I say that where there is a so called ‘rotten apple’ there is a structure that generates rotten apples. Think back to the last post where I shared Robert Fritz’s insight: structure determines behaviour. Let’s listen to David K. Hurst again:
Further investigations revealed that the improvement in on-time delivery that had earned bonus for all was largely an illusion created by our people, who gamed the quirks in the measurement system. The actual delivery processes in the organisation remained unchanged, and the customers were seeing no difference in our performance. Our analyse-think-change approach had rendered the organisation mindless by focusing exclusively on outcomes and ignoring processes….
“See-Feel-Change”: A More Effective Approach to Organisational Change and “Total Customer Satisfaction”?
So what did David and his colleagues do? How did they go about orchestrating “total customer satisfaction” through “on-time delivery”? Let’s listen once more:
We realised that we had to dig deeper to get into the “habit systems,” the processes our people were using, by repeatedly asking why. The top seven reason for the late deliveries were instructive:
1. Salespeople promised the steel early so that they could get the order.
2. The credit department could not approve the credit in time.
3. The processing department couldn’t make the schedule.
4. The quality of the product was not up to standard.
5. We were unable to locate the product in our inventory.
6. The trucks were unable to deliver on schedule.
7. A third party (usually a steel mill) let us down.
Take a look, a deep look, at these reasons. What do you see? I see issues in the product, in the manufacturing of the product, in the management of the inventory, in sales, in finance, in logistics….. In short, just about every function in the organisation is involved in the work that has to come together in order to generate “total customer satisfaction”.
David and colleagues tackled the challenge because they had to – the survival of their employer was at stake:
We formed teams to look at each of these reasons and to search for the systemic causes behind them, drilling down into the bowels of the system. Reason 1 was no surprise ….. the disconnection between sales incentive schemes and factory production systems is a major obstacle to effective performance.
Reason 2 (credit delay) did surprise us -surely credit approval was a mechanical, by the numbers job,. How could it be a major source of delay? ….. investigation revealed that the problem lay with the large number of smaller orders. Now small orders were part of our overall strategy, and for years we had encouraged the taking of smaller orders… Margins on small orders were high, so, as far as we were concerned, the more we had the better.
…. another team working in the warehouse on reason 3 (production delay) found that the primary cause of production delay was the time spent waiting for cranes. After another investigation a team of warehouse people found that the main reason was …. small orders…….. Management was stunned – our small order strategy had been an article of faith throughout the corporation. Yet here it was creating a fundamentally unprofitable operation for systemic reasons that we had never understood.
There is a profound insight and truth here. And it is one that is neglected. It is this: organisational policies and leadership-management practices are the real source of most organisational dysfunction including a lack of attunement-responsiveness to customer needs. I say this as a statement of fact, not as blame. What does David K. Hurst say on the matter:
Now, the reader may feel that management must have been asleep at the switch to miss something as obvious as this. However, the logic of complex systems is neither obvious nor intuitive, and it becomes clear to us only in hindsight. Even then it was the people who worked in operations every day who had to point to us that the real cost drivers on the warehouse floor are finding and handling the product. It’s a common problem in large organisations. The people on the front lines have all the answers, but senior managers seldom ask them the questions, at least in a form … that they can understand.
How does David K.Hurst end his story? What does he conclude?
We had experienced the benefits of drilling deep down into operations, into the processes that produced the outcomes that we were trying to change. John Kotter calls this kind of change “see-feel-change”. That phrase neatly captures a sensual aspect of change – you see a truth and it changes how you feel – it is timely, specific, visceral feedback. Also, it’s compelling for other operators to see it because they can study the action required at the fine grained levels at which they are going to have to implant the changes in their own operations……. First, you go deep on a narrow front, and only after that do you go horizontally, rolling out a program in depth from unit to unit….. This perspective also suggest that huge benefit of pilot programs that develop working prototypes of how a proposed change will actually function….
What is my take? David is sharing and advocating the road less traveled. It is less travelled because it is not quick. It is not cheap. And it is not painless. Yet, it occurs to me that this is the road that has to be travelled to generate the insight-motivation-action that is needed to effect deep change in the behaviour of the organisation. And shift it towards generating-delivering “total customer satisfaction”.
What Is The Weak Point Of Many Organisations?
In a few days I had grasped the main principles on which the hotel was run …….
What keeps a hotel going is the fact that the employees take a genuine pride in their work, beastly and silly though it is. If a man idles, the others soon find him out, and conspire against him to get him sacked…… everyone in the hotel had his sense of honour, and when the press of work came we were all ready for a grand concerted effort to get through it….
This is the good side of hotel work. In a hotel a huge and complicated machine is kept running by an inadequate staff, because every man has a well defined job and does it scrupulously. But there is a weak point, and it is this – that the job the staff are doing is not necessarily what the customer pays for. The customer pays, as he sees it, for good service; the employee is paid, as he sees it, for the boulot – meaning, as a rule, an imitation of good service. The result is that, though hotels are miracles of punctuality, they are worse than the worst private houses in the things that matter.
Take cleanliness for example. The dirt in the Hotel X, as soon as it penetrated into the service quarters, was revolting ….. the bread-bin was infested with cockroaches….. The others laughed when I wanted to wash my hands before touching the butter. Yet we were clean where we recognised cleanliness as part of the boulot. We scrubbed the tables and polished the brass work regularly, because we had orders to do that; but we had no orders to be genuinely clean, and in any case had no time for it. We were simply carrying out our duties; and our first duty was punctuality, we saved time by being dirty.
In the kitchen the dirt was worse….. he [French cook] is an artist, but his art is not cleanliness..… When a steak is brought up for the head cook’s inspection, he does not handle it with a fork. He picks it up in his fingers and slaps it down, runs his thumbs round the dish and licks it to taste the gravy, runs it round and licks it again, then steps back and contemplates the piece of meat like an artist …. then presses it lovingly into place with is fat, pink fingers, every one of which he has licked a hundred times that morning…..
Dirtiness is inherent in hotels and restaurants, because sound food is sacrificed to punctuality and smartness. The hotel employee is too busy getting food ready to remember that it is meant to be eaten. A meal is simply ‘une commande’ to him, just as a man dying of cancer is simply ‘a case’ to the doctor. A customer orders ….. a piece of toast. Somebody pressed with work in a cellar deep underground, has to prepare it. How can he stop and say to himself, ‘This toast is to be eaten – I must make it eatable’? All he knows is that it must look right and must be ready in three minutes. Some large drops of sweat fall from his forehead onto the toast. Why should he worry? Presently the toast falls among the filthy sawdust on the floor. Why trouble to make a new piece? It is much quicker to wipe the sawdust off… And so it was with everything…..
Apart from the dirt, the patron swindled the customers wholeheartedly. For the most part the materials of the food were very bad, through the cooks knew how to serve it up in style. The meat was at best ordinary, and as to the vegetables, no good housekeeper would have looked at them in the market …… The tea and coffee were of inferior sorts, and the jam was synthetic stuff out of vast unlabelled tins ……. There was a rule that employees must pay for anything they spoiled, and in consequence damaged things were seldom thrown away. Once the waiter on the third floor dropped a roast chicken down the shaft of our service lift, where it fell into a litter of broken bread, torn paper and so forth to the bottom. We simply wiped it with a cloth and sent it up again. Upstairs there were dirty tales of once-used sheets not being washed, but simply damped, ironed and put back on the beds. The patron was as mean to us as to the customers ….. And the staff lavatory was worthy of Central Asia, and there was no place to wash one’s hands, except sinks used for washing crockery.
In spite of all this the Hotel X was one of the dozen most expensive hotels in Paris, and the customer paid startling prices. The ordinary charge for a night’s lodging, not including breakfast, was two hundred francs …. If a customer had a title, or was reputed to be a millionaire, all his charges went up automatically…..
George Orwell, Down and Out in Paris and London
What is that the astute change agent can learn here?
I don’t know. Here is my take on the matter of leadership and organisational change – including shifting organisations to be more responsive and aligned to customer needs:
The context is decisive
- Werner Erhard
The underlying structure of anything determines its behaviour
- Robert Fritz
I urge those of you who strive to be effective in effecting change need to master and obey these insights. Most of us don’t – even if we get these distinctions we don’t have the time, the energy, the resources, or the passion to do that which is necessary. Which explains why it is that most organisational change efforts yield disappointing harvests. And why most ‘customer-centric’ change efforts fail to yield an organisation that shows up as customer-centric. Perhaps genuine customer-centricity is unnecessary – maybe it is a matter of faking it like the patron and employees of the Hotel X were faking it. Perhaps not – today just about everyone has digital media and access to social media. You decide.
I dedicate this post to James Lawther who reached out to me when reaching out occurred as a most welcome kindness. James called me back to the conversation that occurs in this blog.
I find myself interested and caring for the human. So the following slogan caught my attention: “There is no more b2b or b2c: It’s human to human”. This got me wondering: What does it take for us to show up and operate as ‘human to human’?
If we are to do business in a ‘human to human’ way then it helps to have a good grasp of what the defining characteristic of human is. In Being and Time, Heidegger asserts that ‘Care (Sorge) is the being of dasein’. For the purposes of this conversation dasein = human being. What does Heidegger mean by this? I take it to mean that I do not find myself indifferent: to myself and my experience of living, to the world in which I find myself in, to my fellow human beings. It matters (to me) how I live and how my life turns out. It matters (to me) how my fellow human beings live and how their lives turn out. And it matters (to me) how this world is and is not. I care as I am aware that I am being-in-the-world-with-others-towards death.
If we are going to show up and operate from a ‘human to human’ way of doing business then we must genuinely care for ourselves, the people we work with, the people we sell to, the people we buy from, the people whose lives are touched by us and our way of showing up and operating in the world. How best to illustrate this? Allow me to share a story the following story with you (bolding is my work):
Harry, an emergency physician …. One evening on his shift in a busy emergency room, a woman was brought in about to give birth…….. Harry was going to deliver this baby himself. He likes delivering babies, and he was pleased…… The baby was born almost immediately.
Whilst the little girl was still attached to her mother, Harry laid her along his left arm. Holding the back of her head in his left hand, he took a suction bulb in his right and began to clear her mouth and nose of mucus. Suddenly, the baby opened her eyes and looked directly at him. In that moment, Harry stepped past his technical role and realised a very simple thing: that he was the very first human being this baby girl had ever seen. He felt his heart to go out to her in welcome ….
Harry has delivered hundred of babies. He has always enjoyed the challenges of delivery, the excitement of making rapid decisions and feeling his own competency, but he says that he had never let himself experience the meaning of what he was doing before. He feels that in a certain sense this was the first baby he ever delivered. He’s says that in the past he would have been so preoccupied with the technical aspects of delivery, assessing and responding to needs and dangers, the he doubts he would have noticed the baby open her eyes or have registered what her look meant. He would have been there as a physician but not as a human being. It was possible, now to be both…
-Rachel Naomi Remen, Kitchen Table Wisdom
This is what I notice about the whole Customer thing: the focus is almost exclusively on the technical stuff (metrics, data, analytics, technology, processes) and almost no recognition of the human. Does this matter? Yes. Why? I leave you with these words of wisdom:
Quality matters when quantity is an inadequate substitute. If a building contractors finds that her two-ton truck is on another job, she may easily substitute two on-ton trucks to carry the landfill. On the other hand if a three star chef is ill, no number of short-order cooks is an adequate replacement. One hundred mediocre singers are not the equal of one top-notch singer…
- Richard Rumelt, Good Strategy Bad Strategy
We may not be able to define-measure-calculate quality. Yet we are present to it when we experience it. The quality that you/i/we experience from the people we interact with, work with, sell to, buy from, makes a huge difference to our experience of living. This quality of caring cannot be faked, though many folks make the attempt to fake it.
Interestingly, in our age, it is easier to build this caring into the ‘product’ itself (Apple) or the digital interface (Amazon) than it is in human to human conversation-encounters. Why? Because we have become so wrapped up in the technical that we have lost touch with the human – including our own humanity. Yet, it is possible to get in touch with this humanity and give it expression: to show up as a CEO and as a human being; to show up as a CMO and as a human being; to show up as CFO and as a human being; a sales person and as a human being; to show up as call-centre agent and as a human being……
Please note: I am about to go on vacation and will be out of touch for several weeks. I wish you well and look forward to being in communication after the holiday.