Customer & Leadership: Is There A Formula / Recipe For Success?

I wish to acknowledge members of the ‘methodology police’, whom I met recently, for being the source of this conversation. Please note that for the purposes of this conversation I will use the terms formula, recipe, method, script, template interchangeably.

Is Success Reducible To A Formula/Recipe?

Is communicating with another reducible to a formula?  Is relating and cultivating relationships with colleagues, clients, family and friends, reducible to a recipe?  Does the co-creation of a ‘good’ customer experience yield to a predefined template?  Does the successful implementation of a new CRM systems and the associated way of showing up and operating in the organisation yield to a specific method? Is great customer service reducible to a recipe? What about leadership: is the exercise of leading and leadership reducible to a formula?

YES. If I look at how it is that we show up and travel then it occurs to me that we operate on the basis that the answer is an unequivocal YES.  Everything is reducible to a recipe: EVERYTHING.  Which means that if the outcomes that we wish for are not showing up then the cause of the problem must be in one of the following domains:

  • we are making it up as we go along as opposed to following a ‘proven’ formula;
  • we are not following the formula/method and as such we need to be manipulated (training, rewards, punishment) into following the one ‘proven’ formula; and

  • there is something wrong with the recipe, it is not ‘tight’ enough, or it is out of date.

Hence, our obsession in organisational worlds with the likes of processes and procedures, methodologies and methods, scripts, judgment-evaluation of people, criticism, praise, reward and punishment.  With this deep rooted obsession we create a wide open clearing for all kind of charlatans to show up and sell their unique ‘secret recipes’ for success – in just any and every domain including the domains of Customer and Leadership.

What Constitutes The Deepest Lack Of Intelligence?

Is there a deeper lack of intelligence (stupidity) than seeking formulas/recipes for the major challenges of business, of education, of living and life?  I say yes.  What is the deeper stupidity?  I say it is keeping our faith in the god like being of formula/recipe intact even when we have followed the formula/recipe and  it has not generated the promised-desired outcome/s.  Why do we do this?  We do this because we grant, individually and collectively, divine status to formulas/recipes.  Therefore, it makes sense to conclude that our understanding and/or application of the formula was at fault.

Words Of Wisdom 

I invite you to listen to the speaking of one that shows up for me as speaking wisdom:

Once, several years ago, some friends and I enrolled in a cooking class taught by an Armenian matriarch and her aged servant. Since they spoke no English and we no Armenian, communication was not easy. She taught by demonstration; we watched (and diligently tried to quantify her recipes) as she prepared an array of marvellous eggplant and lamb dishes. But our recipes were imperfect; and try as hard as we could, we could not duplicate her dishes.

“What was it,” I wondered, “that gave her cooking that special touch?” The answer eluded me until one day, when I was keeping a particularly keen watch on the kitchen proceeding, I saw our teacher, with great dignity and deliberation, prepare a dish. She handed it to her servant who wordlessly carried it into the kitchen, to the oven and, without breaking a stride, threw in handful after handful of assorted spices and condiments. I am convinced that those surreptitious “throw-ins” made all the difference….

But what are these “throw-ins”, these elusive, “off the record” extras?  They exist outside of formal theory, they are not written about, they are not explicitly taught. Therapist are often unaware of them ……. The critical ingredients are hard to describe, even harder to define. Indeed, is it possible to define and teach such qualities as compassion, “presence”, caring, extending oneself, touching the patient at a profound level, or – that most elusive one of all – wisdom?

– Irvin D. Yalom, Existential Pyschotherapy

Concluding Thoughts For Your Consideration

I invite you to consider:

That the guru does not even have to be a charlatan for charlatanry to show up. How so? In this example, the matriarch, was not aware of the “throw-ins” that were being added to her recipe by her assistant.

Where human beings are intrinsic to the game being played, the access to effectiveness (generating the desired outcomes) lies in a sensitivity-attunement to the context in which the game is being played.

Sensitivity-attunement to the context allows you to figure out and put into the game the “throw-ins” that make the difference between the ordinary and the extraordinary.

It is our addiction to slavishly following formulas/recipes that is the biggest obstacle to being attuned and responsive to the context and throwing in the most appropriate “throw-ins” for that particular context in that moment;

Insisting on and slavishly following formulas/recipes (including processes, procedures, scripts, methods etc) is the most significant barrier to effectiveness in the human realm. And that includes the dimensions of Customer (customer service, CRM, customer experience) and of Leadership.

You may disagree. If that is the case then I look forward to hearing what you say.

 

Leadership: What Is The Access To Generating Breakthroughs In Effectiveness-Performance?

Some work environments are characterised by that which is called psychological safety:  a shared belief, by the people who work in the environment, that it is safe to experiment, to give voice to one’s voice, to take risks.

A Thought Experiment On Psychological Safety and Performance

A researcher is researching the link between psychological safety and the number of medication errors made in hospitals.  She studies eight hospital units and finds that the hospital units characterised by psychological safety have the highest medication error rates.  She reports these ‘findings’ to you.

Imagine that you are the manager responsible for reducing the number of medication errors in these hospital units.  How will you determine what course of action you will take given what the researcher has ‘found’?  Will your action not be determined by how you make sense of the phenomena at hand: the higher the reported psychological safety the higher the reported medication errors?

Given your management training, you say something like this to yourself: “No surprise here. Where you create an environment for people to make mistakes without fear of punishment, people make more mistakes!”

Given this ‘explanation’ what will be your course of action?  Isn’t the course of action shaped, even dictated, by your explanation?  Will you not reduce the psychological safety?  Of course you will.  You will put fear into the hospital units characterised by psychological safety. Imagine you take that course. You track medication errors by person and hospital unit. You name-shame by putting together and making visible a ‘leaderboard’ of those making the most errors. And apply sanctions to those who exceed a certain error rate.

What turns out to be the impact?  You find that after a little while there is significant drop in the number of medication errors that end up on your weekly management report.  You congratulate yourself: you figured out what was going on, you acted, and you generated your desired outcome.

Let’s Reconsider The Phenomena AND The Explanation

Whilst you, the manager, have been ripping out psychological safety and replacing it by fear, the researcher has been doing some more digging.  She had a brain wave and decided to look at independent data.

By looking at this data, she ‘found’:

  • The psychologically safe hospital units did not make more medication errors. In fact, the data showed that the higher the psychological safety within a hospital unit, the fewer the medication errors made by the people in that unit.
  • The folks working within units lacking psychological safety  hid their medication errors, out of fear of punishment.  And as  a result no learning took place regarding the causes of medication errors and thus no reduction in medication errors.

With this phenomena-explanation (the explanation and the phenomena have been merged into one here) what course of action do you the manager take?  Isn’t the sound course of action dictated by the phenomena-explanation?  Isn’t the sound course of action to increase psychological safety in those hospital units (under your management) where fear of retribution-punishment pervades?

Your Actions Are Shaped By The ‘Story You Construct’ To Explain The Phenomena

I draw your attention to the fact that action is the access to influencing the world and generating change-outcomes: only actions cause-shape outcomes.  If you think otherwise then don’t breathe and see what shows up!

Notice that your actions are NEVER given by the phenomena itself. That which is, simply is. And is discarded by most of us if we cannot make sense of it.  Why? If we cannot make sense of it then we cannot orient ourselves in relation to that which is: the phenomena.

Further, notice that your actions are ALWAYS given by the ‘story you make’, the explanation you construct, about the phenomena.

What does this mean?  It means that all the power-possibility lies in the ‘story you make’, the explanation you construct.  Why? Your actions are influenced-shaped, even dictated, by the explanation you construct.

What Is The Access To Generating Breakthroughs In Effectiveness-Performance? 

The access to generating breakthroughs in effectiveness-performance lies in the domain of explanation: the ‘story that we construct’ around the phenomena at hand.

If we are to construct more insightful stories/explanations (on the phenomena that concern us) then we have to escape the pull of the existing ‘net of understanding’ – the paradigm that gives us being and from which we operate. Listen to Ralph Waldo Emerson:

Every nation and every man instantly surround themselves with a material apparatus which exactly corresponds to … their state of thought. Observe how every truth and every error, each a thought of some man’s mind, clothes itself with societies, houses, cities, language, ceremonies, newspapers. Observe the ideas of the present day ….. see how timber, brick, lime and stone have flown into convenient shape, obedient to the master idea reigning in the minds of many persons ….. It follows, of course, that the least enlargement of ideas …. would cause the most striking changes of external things.

I say that the job of leaders is to generate that ‘least enlargement of ideas’ that Ralph Waldo Emerson is talking about. That is to say make a shift in the dominant paradigm that shapes organisational sense making of phenomena. And thus shapes-dictates their courses of action.

If you are lamenting the state of the Customer Experience like Colin Shaw is then it is worth listening to the following words by Donella H. Meadows:

There are no cheap tickets to mastery. You have to work hard at it, whether that means rigorously analysing a system or rigorously casting off your own paradigms and throwing yourself into the humility of not knowing….

The reason that organisations have not made a success of Customer Experience. And are in the process of killing it, is that the Tops in these organisations have not made the requisite ‘least enlargement of ideas The have not put aside their existing ‘net of understanding’ and so are go about the new in the same old way. Thus, I say that many, if not almost all, Customer Experience initiatives start stillborn.

To conclude: the challenge of leadership is to cast off the already existing ‘net of understanding’ and thus creating a space from which to construct more insightful stories-explanations of phenomena. And thus opening up new courses of action. Course of action that carry risk and also the promise of breakthroughs in effectiveness-performance.  

If you found this ‘conversation’ one that resonates with you then I invite you to watch the following video:

 

 

How do you transform customer service? 7 lessons from Undercover Boss: npower

npower is supplies gas and/or electricity to some 6.5 million residential and business customers based in the UK.  It is a well know brand.  It is also a brand that is known for over charging customers and is facing fines of up to £2m if it does not comply with Ofcom’s order to stop silent and abandoned calls.  And according to the Undercover Boss that I watched this evening it has (or had) the worst customer satisfaction score according to Which?

In this post I simply want to share with you the stuff that struck me as being noteworthy as a result of yesterdays Undercover Boss programme that was shown on UK tv.

“Perfect for getting that insight that I just would not have seen in any other way”

Kevin McCullough, the COO of npower, who went undercover to work in and experience some of the key customer touchpoints (call centre, replacing meters, boiler services) and work in one of the coal-fired power stations made the following statement at the end of undercover stint: “This has been perfect for getting that insight that I just would not have seen in any other way”.

This is key insight and one that is not acted upon by most executives for most of the time.  Data and reports can be useful if they are used correctly yet too often they are used incorrectly.  Take the instance where Kevin accidentally deleted the customer record.  How would that experience be captured in a report?  That experience had the impact that it did have because Kevin experienced it – he lived it: he did not simply read about. What is likely to have happened if he had read about it?  It would probably have gone through one ear and immediately out of the other ear.  It might even have been coated with a particular attitude: people in the call centre whining again / they just don’t know how to use the system.

Lesson 1:  there is no substitute for walking in the shoes of your employees and customers.  Data and reports can be used to complement that experience yet they can never replace it.  Looking at the world of the customer and the employee simply through the data lens is like trying to capture a 360 panoramic view with a 35mm lens.  If you are a photographer you know exactly what I mean.

“Human element to it all”

When Kevin, the COO, was talking about decision making in Head Office and specifically about when the management team will close the coal fired power stations he because made the statement that the senior management tend to forget that there is “a human element to it all”.  Business is game between people: a game between flesh and blood human beings who have hopes, ambitions, fears, hardships, frustrations…..  And if organisations are going to be customer-centred or simply customer-friendly then these senior executives and all the managers who report into them need to get (at an experiential level) that customers are human beings.  And their staff – front office and back office – are human beings too.  Why?

If you fail to take into account this simple fact then you tend to do all kinds of dumb stuff like treating human beings as objects.  And this has consequences.  It means that most employees do the minimum they need to do.  It also means that customers do not feel any connection with the company because connection is an emotional bond.  And that is the very thing that executives are not present to because they live in a world of  ‘management by Excel’ where emotions are forbidden.

Lesson 2: the ‘age of the customer’ is the age of ‘human centred business’ – they are one and the same.  If you don’t  get that or that fills you with dread then you are better of playing a different game perhaps cost reduction or the next killer product.

“Impressed by the people”

In summing up his undercover experience the npower COO said that he was “Impressed by the people”.  He was impressed by the lady in the Complaints dept that was getting one call after another, day after day, from upset and emotionally charged customers.  Let me blunt – many of the customers are frustrated and angry and the dump that on the call centre staff.  You and I struggle if one person dumps on us.  Yet the Complaints folks experience endless dumping. Yet they are not responsible and in fact can only do so much to fix the problem.

Lesson 3: most employees want to do a good job even a great job – they want to matter, to make a difference.  If your employees are not doing that then take a good hard look at the management style and environment you have created.  Behaviour is a function of the context in which people are embedded.  And the strongest influence on that context is management style. Deming made this point brilliantly when he separated the performance of the worker from the structure of the system in which the worker worked.

Lesson 4: most failures in performance are the failures of senior management not employees.  As the npower COO said “I have seen it, I have lived it. It is my job to put anything wrong right.”  So stop looking toward customer facing staff as convenient scapegoats and take a good hard look at management practices and their impact on employees and customers.

“Most customers need a hero”

The npower chap who was replacing old meters with new meters made a great statement “Most customers need a hero”.  Most of us most of the time take our world for granted: it is a black box and that is fine because it works.  However when it does breakdown then we not only experience the breakdown as a disruption we also experience being powerless.  That puts us in a vulnerable position and we look for help: we look for a hero.

Lesson 5: most executive suites, despite the customer rhetoric, do not get (or do not care) that when customers are ringing customer service or waiting for the field service guys to arrive are looking for a hero – a competent and compassionate human being that will help them out with their problem so that the ‘glitch in the matrix’ can be fixed and everyday life restored.  Oddly enough, many employees on the front line do get that – at least before they reach the stage of ‘learned helplessness’.

Call centres are a key touchpoint and ‘failure’ is built into these call centres

The lady in Complaints (call centre) made three interesting comments.  Firstly, that one experienced (knowledgeable) person is worth hundreds of novices.  Second, that one of the most frustrating things for her was knowing what needed to be done to fix customer problems but not having the authority to do so.  Third, the customer care IT system had a glitch – badly designed.

This fits in with my experience.  Most call centres are staffed with people who have the absolute bare minimum knowledge/expertise.  Companies pay the bare minimum and there is a high turnover of staff.  Because there is a high turnover of staff call centre management do not invest in training.  After all why invest if the agents will be leaving you.  Furthermore classroom based training is not enough – most of the knowledge and skills you need come from on the job experience and you can only get that if you stay there long enough and many don’t.       The systems that call centre agents have to use are inadequate at best and woeful at worst.  In any case they are often a hindrance rather than help to the time pressed call centre agent who is being monitored on AHT.  Finally, you would be amazed at how much the call centre agents actually have on what matters to customers and what stuff is broken in the enterprise – from a customer perspective.  Yet, this knowledge is rarely tapped by the senior management suite.

Lesson 6: if you really want to improve the customer experience then take a radical look at one of your critical touchpoints – the call centre.  Don’t change what you are doing instead completely rethink and transform this focal touchpoint. 

Unrealistic performance targets

One of the points that became clear was that the boiler service guys were given some 45 minutes to do the job.  Yet even a simple job took over an hour.  Furthermore, travelling a distance of some two miles could take well over an hour due to the London traffic.  Yet, this reality clearly had not been factored in by the managers who had set up the 45 minute performance target.

Over 20+ years have experience have taught me that the vast majority of performance targets are ‘pie in the sky’ or ‘aspirational’ – choose whichever term you like.  The reality is the same: people who have to live with these targets either ignore them like the field engineer was doing as he was putting quality and safety first or people game the system.  When customer facing staff game the system then the person that suffers is the customer and if he is like me then he terminates the contract and looks for another supplier: The curse of the functional-activity-efficiency mindset: my British Gas experience

Lesson 7: the functional-efficiency orientated metrics are one of the key drivers of poor customer experience.  There is world of difference between efficiency and effectiveness: too many performance metrics drive efficiency (doing things right) and in the process drive out effectiveness (doing things right).  The impact is felt by the customer and incentivizes him to find another supplier – one that cares (more) about the customer.

What you are failing to do is much more important than what you are doing?

There are two kinds of errors that you can make: errors of commission and errors of omission.  An error of commission involves doing something that you should not have done.  A good example of this is the money that large companies invested in implementing complex CRM systems on the assumption that these would engender customer loyalty and drive revenues and profitability.  Closing down Napster and thus allowing the likes of BitTorrent to rise was an error of commission made by the music labels.  If you take a look at mergers & acquisitions you find that the research shows that these almost always destroy value and are not a good idea: the AOL and Time Warner merger is the one that sticks out for me.  If you look at this at a global level then the deregulation of the financial services industry was the big mistake that has brought the western economies to their knees.  Errors of commission are easy to spot in hindsight.

Errors of omission are the more important ones.  These errors occur when you fail to do something that you should have done.  Did Nokia indulge in an error of omission in sitting on smartphone technology (insiders tell me Nokia had this technology) and not introducing it and thus letting Apple steal the show?  Did the music industry make an error of omission in not setting up online music stores allowing customers to download individual songs? Did the offline book stores make an error of omission in not embracing the internet aggressively and thus allowing Amazon the premier seat at the table?

So where is this leading?  In the Customer field there is a whole bunch of stuff that companies should be doing right now and yet they are not doing it.  As such these companies are making errors of omission.  Allow me to give you some examples.

The words have changed yet the mindset is the same.  The mindset continues to be about finding clever ways of getting customers to do what we want and reducing costs.  The mindset has not shifted to a relentless focus on creating superior value for customers and figuring out how we get a fair reward for doing; time after time I hear something to the effect “How do we make more money out of our customer base or reduce the cost of servicing our customers?”  I rarely hear “How do we create more value for your customers?”.  Yes, it really does matter which comes first because what comes first determines the whole context for what happens.  It requires one kind of mind, one kind of organisation, to ‘extract’ value and grow this years financials.  It requires a fundamentally different mind and organisation to create value for customers, cultivate relationships and secure a lifetime income stream.

Effectiveness is doing the right things.  Efficiency is doing things right.  To cultivate long term relationships organisations have to focus on effectiveness: doing the right things as viewed from the customer perspective.  Yet the organisational focus continues to be on efficiency.  The relentless focus on efficiency means that I had to spend ten minutes or so hunting around for a telephone number to contact Sky.  It is also the reason that after four phone calls to BMI I was not able to pay my bill because my call was important to them yet they could not answer it even after five minutes.  It also means that human-human encounters are being replaced by human-technology interactions and so the opportunity to build emotional bonds is being sacrificed.  As a famous systems practitioner pointed out “The righter you do the wrong things the wronger you become!”

The organisational design is the same.  The functional organisational design and the associated management system was and is designed for a manufacturing centred organisation operating within a command and control operating system.  To be a customer centred organisation requires a fundamental change to the way that the organisation is designed.  It requires recognising that the front line people (those interacting with customers) are the most important actors in the organisation and the role of managers is to support these ‘actors’ in putting on the best performance they possibly can.  If you take segmentation seriously then it requires operational changes and not just sending some communications via email, others through SMS and the rest via direct mail.

I could go on and on and I am sure that if you put your thinking hats on then you can complete the list yourself.

Is your organisational focus on errors of commission?  Then who is looking out for errors of omission?  Please remember that the errors of commission rarely kill you.  Yet, errors of omission do exactly that even if it takes a little while for the results to show up.

If you want to drive up efficiency and reduce your costs then focus on effectiveness

John Kay one of the UK’s leading economist and wrote the following in his FT column yesterday: ” …profit-seeking paradox – the most profitable companies are not the most aggressive in pursuit of profit.”  A similar paradox applies to efficiency and cost reduction.  If you want to drive up efficiency and cut costs then you should focus all your efforts on effectiveness – from the customer’s perspective.

Generally customers are busy people so why are we getting so many calls from them? That is how I started my investigation into IDV’s sales order processing and customer services team back in 1996?  By asking this question I identified that high value customers were calling in the most: they had placed high value (high volume) orders for a range of our products on one order.  I discovered that on average one sales order resulted in 2.6 deliveries because of stock shortages.  So customers were ringing in to ask the status of their order, why it has been only partially delivered and when they were going to get the rest of their order….

So customers were up in arms because they were not getting the products they ordered when they expected them.  IDV had large warehouses (a fixed cost) that were almost half empty.  Costs in the logistics function were going through the roof because most customer orders required multiple deliveries because one or more products were out of stock.  All because management had handed the stock manager aggressive stock level targets – she met them by cutting stock levels to the bone!

Looking at it from a customer experience perspective I decided to focus on two, customer friendly, operational effectiveness metrics: customer contacts per order placed and deliveries per order.  My intention and commitment was to take out this ‘non value added demand’: demand that created waste (time lost, peace of mind lost) for the customer and waste (higher costs) for IDV.

Then I set about working with the folks to redesign the ‘order to fulfilment process’ that cut across a number of functional groups.  At no time did I look for lower cost ways of handling incoming calls from customers.  Nor did I look at lower cost ways of making deliveries.  Why?  Because that is simply finding better ways to deal with the waste created by inappropriate internal policies and practices.  Instead, I focussed on taking out the root causes of the ‘non-value added demand’ falling on the customer services function so that the IDV got it right the first time and thus saved customers worry and time.  The end result was a big increase in customer satisfaction accompanied by a large drop in costs across the functions (sales order processing, customers services, logistics, warehousing and stock management, finance) that handled the customer order.

Now contrast my approach (which I attribute to excellent mentors) with the way many organisations deal with the customer services operation today. The taken for granted practice is to hide the customer services number, to replace humans with technology, to focus relentlessly on getting the most out of the contact centre agents, to drive labour costs down by moving offshore etc.  They do reduce costs mainly by degrading the customer experience.  The trouble is that they also drive down customer satisfaction, customer loyalty and customer retention; the costs associated with getting new customers to replace the customers that have left due to the efficiency drive are hidden in the marketing and sales budgets.

So here are my tips for improving efficiency and reducing costs:

The smart way to cut costs in customer services is to focus on improving effectiveness – improving the customer experience. How do you improve effectiveness?  By doing it right first time by the customer. Why does this matter to the customer services function?  It matters because somewhere between 25 to 80% of the demand that is falling on the customer services centre is ‘failure demand’. This is the term that I have stolen from John Seddon to replace ‘non-value added demand’.

Failure demand is the demand that the customer has to place on the contact centre because some product, communication, policy, process or touchpoint has failed the customer. This is demand that the company does not want to deal with.  And it is demand that the customer would much rather not place on the company.  An example of this kind of demand is where the customer rings the company because she was promised  a delivery time of six weeks and it is now week 7 and she has not heard anything from the company.  Or the customer calls in to complain when he finds the warranty or the insurance is not worth the paper that is written on.  This means having the ear of the CEO, COO and CFO as the people who will have to make the necessary changes will sit in Marketing, Sales, Product Management, Logistics, Finance and so forth.

Once you have a cultural practice in place to find and deal with the root causes of failure demand you can turn and look at the value demand: the demand that customers place on customer services and which creates value for these customers.  The key thing here is to separate this demand into the simple and the complex.

Simple demand – where is the nearest store, what are the opening times, topping up a mobile phone etc – is a great candidate for self-service through a smart use of information technologies such as websites and IVR.   A great example is the airlines allowing customers to check-in and print their boarding passes: it saves customers valuable time and allows the airlines to save costs.  Another example is electronic banking.  The beauty of this approach is that if it is approached in a customer centric way then customers will thank you because you have improved convenience; you have saved them time – which is often in short supply; and put them in control.

When it comes to automating simple demand and requiring customers to serve themselves you must remember that is not always appropriate.  So you must allow customers to speak with the customer service agents – easily.  For example, the customer is in his car and wishes to move money between his accounts.  This is something he can do himself when he is sat at his desk and connected to the internet; yet it is not advisable when you are driving a car.  It is also possible that your self-service solution breaks: Self Service is not an easy fix or why I love Kylie.

By taking out the root causes of failure demand and introducing self-service channels for simple value demand you will increase customer satisfaction (usually dramatically) and save  your organisation a considerable amount of money.   In one case that I know of,  the savings run into tens of millions of pounds per year.

The final step is to deliver great service on the complex value demand.  For example the customer is browsing your website and needs your help in making the right product choices. One company that uses customer service agents to contact and help customers who have abandoned their shopping carts is putting a £1m+ on the bottom line.  Another example is from the insurance industry: taking care of the customer when a traumatic event occurs e.g. car crash; guiding the customer through the process; doing as much of the work as possible for the customer so as to ease the customer’s burden.  Or the customer is in a foreign land, has a change of circumstances, has no access to self-service and needs help (from a capable sympathetic human being)  in changing her flights and getting to her destination with the least hassle.  Do this right and you win customers for life.

The approach that I advise and have practiced is still the road less travelled.  Why?  Because it is counter-intuitive.  And because it requires the whole organisation to play ball.

How the relentless focus on efficiency drives poor customer experience

Back in early 2008 I met up with Bob Greenberg – the founder and CEO of R/GA the digital agency renowned for their work on Nike+.  Prior to meeting Bob I had studied his background and had come to the firm view that Bob is a genius.  So I was surprised when Bob shared with enthusiasm how he was going drive up efficiency by introducing video conferencing  and thus cutting out all the cost and time wasted by people travelling between offices.  This is identical to the argument used by many in the CRM field and now in the Customer Experience field!

I cautioned Bob that as you drive up efficiency you drive down effectiveness. I mentioned that should focus on effectiveness and accept a certain level of inefficiency: that they go together like two ends of a stick.  He looked puzzled and I could not get my point of view across convincingly even though I just knew that I was sharing a valuable insight with him.

I have struggled to convey this insight to executives working in the realm of customer experience improvement.

Then a couple of days ago I received the latest newsletter from Vanguard.  In this letter they shared a story that a reader of theirs had shared with them – a story that beautifully explains how you drive down effectiveness (the customer experience) as you drive up efficiency:

“I’m a reader of the systems thinking review, and a trade union rep in the public sector with responsibility for a helpline. I find myself arguing with managers who are keen to manage performance using metrics for advisor availability, utilisation, call length, and adherence to roster.  I recently had one of those moments where the penny drops; it was in relation to the management of efficiency.

I was staying in a Hotel, a 20 storey building with two lifts. The restaurant was on the 1st floor, and each morning I would travel down from my room on the 14th floor to the restaurant for breakfast, afterwards I would return to my room to brush my teeth and pick up my papers, and then travel down to ground level and go to my training course. For most of the week one of the lifts was out of order, and the service from the single lift was pretty rotten, you had to wait and wait, usually with other hotel guests stood around tut-tutting and sighing.

Towards the end of the week the second lift came back into service and I noticed something surprising (to me at least.) With two lifts I’d expect the service to be twice as good, waiting times to be halved. But the improvement seemed much better than that. Basically you pushed a button and the lift came. The improvement was huge – though I can’t say I stood around with a stopwatch gathering detailed stats on how two lifts performed compared to one.

As I thought about this, something else occurred to me. The single lift system was much more efficient than the two lift system, from the point of view of the lift and the use of “lift resources”.  With one lift out of order the remaining lift was in nearly constant motion. It started at the bottom picking up passengers waiting in the underground car park, then at street/reception level and then at the restaurant on level 1. It then travelled upwards, dropping the passengers off at their floors. Once it reached the top it changed direction straight away to start picking up the passengers who were by now already waiting to go down, stopping several times to pick up a number of passengers, and of course dropping them off at various lower levels. The lift was highly “available” it was working all the time, and it was highly “utilized” maximizing the number of passengers riding on each journey. But as I said before the service was pretty rotten for the passenger.

Improving the efficiency of the lift would not improve the service to the passenger at all – in fact it could only make it worse.

For me it was one of those – “Oh now I get it” moments.” One lift represents economies of scale, two lifts economies of flow. Concentration on individual unit efficiency can lead to a worse service, and if you try to improve things by going further down the route of more and more efficient use of resources, service will get worse and worse.

As a result of this story I am more able to share my insight with the next executive that I meet.  Thank you, to whoever shared that story with Vanguard.