Honda & Jaguar: customer experience, management and organisational effectiveness

There is a pervasive assumption that management (managers and the control oriented practices that they put in place) – is useful and necessary.  And that the issues to do with the customer experience and organisational effectiveness centre in the people who work in the organisation – the employees. The specific issue being that these ‘lowly employees’ have to ‘whipped into shape’ and once they are then all will be fine.  That is the assumption that I  challenge in this post.  I say management is the true root cause of poor customer experience and organisational ineffectiveness.  If that interests you then read on, if it doesn’t then go and do something that does – life is too short to do that which does not inspire you.

Why am I delighted to be in possession of my Honda Accord?

Trusted Honda AccordThis week I drove up to Preston (in a Jaguar) to take possession of this beauty.  It is a Honda Accord, it is 12 years old, it has done over 172,000 miles.  And it works marvellously; my latest annual service/MOT/repair bill came to £250.  OK, my brother is rather generous to me, so I’ll double it to £500.

Why is it that I love this car?  Because it works consistently.  Because it is easy to fix – just about any mechanic can fix it without specialist tools or diagnostic computers.  Because, my annual service/repair bill is around £250.

Put differently, in building this car Honda has put in technology that works.  And this is not the only car for which this applies.  I also drive a 1995 Honda Accord Estate which works perfectly, consistently!  And is easy/cheap to service.

Why is it that these ‘old’ Honda Accords work so well?  The simple answer is that Honda designed/built these Accords such that they work and as such are reliable.  Dive into it deeper and you will find that Honda put their time and effort in the technology and functioning of the car and not the look & feel.  Put differently, Honda put workability and performance before looks.  I find it interesting that Honda prides itself on its technology and that is what it emphasizes.  I also find it interesting that Honda cars are consistently at the top of reliability tables.

To sum up, I love this Honda Accord because it shows up as a trusted friend.  It does the job that I hire it to do: get me from A to B, reliably and with no fuss.  And, like a good friend it is low maintenance – it is easy/cheap to keep in good shape.  Which is why I have stuck with it for such a long time.  It also happens that this Honda Accord has a bigger-older-more powerful brother that shows up in exactly the same way.  And that is why I like the Honda brand: in my world Honda shows up as a company that makes cars that work, reliably and relatively cheaply.  True, driving a Honda does not confer status.  And that suits me just fine as I am not that into status.

Why was I happy to hand the Jaguar back?

For a little while I was driving a Jaguar.  At the start I loved driving it: it was more spacious, the driver’s seat showed up more comfortable, I could adjust the steering while such as to get a more comfortable driving position, my kids loved the look/feel of the car and truth be told it did grow on me…  Then this great customer experience fell off a cliff: from great to poor.  How/why?

I had just parked the Jaguar and switched off the engine whilst I waited for my son to return from the shops.  When he did, the Jaguar would not start.  Listening to the noise I was clear that there was nothing wrong with the battery.  And I knew that there could not be anything wrong with the spark plugs etc – because my brother had serviced it a week or so before.  I tried again, then again, then again.  The engine management light was on and the car just would not start!  So I called the AA out.  Half an hour later, I tried again and the Jaguar started perfectly.  And I cancelled the AA patrol.

Next day, it is the morning and I have somewhere to get to.  What happened?  The Jaguar didn’t start.   I waited a little while and tried again – no luck.  Forty minutes Vince from the AA turned up.  What happened?  He sat in the driver’s seat, turned the key and viola – the Jaguar started perfectly.  So Vince plugged in the diagnostics (as the engine management light was on) and there were some 7 faults.  He cleared 5 of them easily – something to do with some “software” in the engine management system being out of date.  That left two faults, which turned out to be the same fault – an O2 sensor playing up.  And Vince advised me to take the car in and get it sorted out.  Which is exactly what I did.

A day or so later I took possession of the ‘sorted out’ Jaguar – one without the engine management light on.  And the car started straight away and continue to work fine for several days.  It was the evening, I had to take my son to his Karate, and once again the Jaguar didn’t start.  The issue?  the engine management light!

The customer experience lesson is straight forward and I fear not sufficiently understood/grasped.  ‘Design’, as in the look and feel is great as long as it compliments the proper functioning of the ‘product’.  Why?  Because customers hire ‘products’ to do jobs.  Put differently, you don’t look cool nor have high status in a Jaguar if the damn thing does not start.  You show up as a fool – for yourself and for others!  Which is my way of saying that designing the customer experience starts with being clear about the core job/s that customers hire your product to do.  And ensuring that your product does those jobs.  That is the core of the customer experience.  That is the customer experience that drives advocacy and loyalty.  Everything else is a making it easy/fun for your customers to get to, learn about, experience and buy your ‘product’.  That matters but only as long as you have put forth a product that is worth getting to, learning about, experiencing and buying!

Lets, turn our attention to management, control and effectiveness

What can we learn about management from my experience with the Honda’s and the Jaguar?

Getting present to my experience it occurred to me that the Honda Accords I drive do not have sophisticated engine management systems (and the associated sensors) to monitor and control the functioning of the car.  What there is, is the ‘car itself’.  And Honda designed the ‘car itself’ to work by paying attention to the ‘technology’ that gives being to that car.  This attention is in the form of: using the right technology – that is robust/reliable over the longer term; and taking pains to ensure that the various technologies work together in harmony.  Given that, Honda did not need to put in place a sophisticated engine management system.  Put differently, and this is the key point: the Honda cars have less management.  They have (and need) less management because the ‘car itself’ was designed right – to work, to be reliable – to not need management!

Now compare that with Jaguar.  What is stopping the car from starting consistently?  Management in the form of the engine management system.  Look, there is not an issue in the ‘car itself’: when the engine management system lets the Jaguar start, the Jaguar starts and works perfectly – short and long distances.  My brother has confirmed that the ‘car itself’ is fine, it is the O2 sensor that is playing up and needs to be replaced.  Put differently, it is management itself (the engine management system) that is degrading workability and performance of the Jaguar.  I say that if Jaguar had focussed on the ‘car itself – designing it to be robust and reliable – then Jaguar would not have needed to put in such a sophisticated engine management system.  Which is my way of saying that Jaguar have taken the traditional short cut: too much reliance on control because of lack of ‘quality’ built into the design of the ‘car itself’.

Which brings me to the central point: stop focussing exclusively on the employees (‘the car itself’) and focus also on managers and management.  Put bluntly, the root cause of poor customer experience and poor organisational functioning is often the managers and the management practices that they enact.  Managers whose ‘map of the territory’ is mismatched with the territory that they put in place and enact practices that degrade the workability and performance of the organisation.  In the same way that the O2 sensor in the Jaguar provided a distorted ‘map of the territory’ to the engine management system which enacted a fault practice ‘stop the engine starting’.  I believe my thinking here is in alignment with Gary Hamel – the management ‘guru’ who says the biggest issues in organisations is management.

My next big point is this – and this goes with the former point as they complement/work together –  design your organisation so that it works without management control and oversight!   That is right.  Put in place a context that draws the right people to show up in your organisation and behave in the right way by themselves, of their own accord.  That is to say that the purpose and values are the music that call forth the right type of dance.  And signal to all when one or more people are dancing the wrong dance – a dance that does not fit the music.  If you have doubts I ask you this: does the CEO, the management team, have a more intimate understanding of the customer or the people who interact daily with customers – speaking to them, listening to them, selling to the, serving them?  And who has the best grasp of what really does and does not work within the organisation: management who are divorced from actual work or the people who do the work?  Finally, who has the best insight into what they could accomplish if they put their hearts into it: the people who do the work or the managers?

Summing up

Create a context and design an organisation that does not require managers and management.  Instead create a context and design an organsiation that works by itself – because that is simply what goes with the design.  And from time to time ‘service/repair’ the organisational context and design to ensure that all is in alignment with the mission and values. Robert Greenleaf coined the term ‘servant leadership’- itt is not quite what I am pointing at and yet it is pointing towards the right direction.

What do you say?

What is the ‘secret sauce’ of success?

What is the ‘secret sauce’ of this company’s success?

I was at a gathering where the topic of ‘secret sauce’ came up in the context of the ‘secret sauce’ of the company’s success.  After the main forum I ended up in a conversation with two colleagues  – one of whom (D) had posed the ‘secret sauce’ question and other of whom (J) has been working with me on a recent consulting engagement.  Talking about ‘secret sauce’ J pointed out what he sees as my secret sauce: analytical skills, financial skills, workshop facilitation skills, consulting skills, being straight with clients, articulating my point of view, getting along with people……

What is my ‘secret sauce’? Is it what it seems to be?

Does my secret sauce come down to a bunch of skills, behaviour, frameworks and tools?  Is it possible that what J is pointing at are simply the visible aspects of the iceberg and the ‘secret sauce’ is hidden from view especially from those with a scientific orientation which neglects the inner dimensions of the human being? If I have a ‘secret sauce’ then it lies in my inner dimension – my being, my stance, the context from which I operate, how I see myself.

What if I told you that my ‘secret sauce’ is CARING?  I care deeply about this client – the people who have placed their trust in me. I care deeply about the what we (the client and I) are up to – the project we have taken on, the outcome which we wish to manifest in this world. I care deeply about the impact this will have on the lives of prospects and customers who touch this business.  I care deeply about how it will impact/improve the lives of the people who work within this business;.  And I care deeply about excellence – doing great work impeccably.

What if I told you that my ‘secret sauce’ is the conscious choice to operate from a context of service and of contribution – of making a difference to the quality of our lives and the ‘workability’ of the world that we share?  Yes, I am straight with people and that includes sharing/disclosing what they do not necessarily want to hear.  What J does not see is that I can only be straight because this being straight arises out of this context of service.  What J does not see is that when it does not matter, when it does not contribute to the game I am playing, I strive to keep my mouth shut.  Furthermore, what J does not see is that in my consulting work I operate from the  educational/coaching paradigm:  I help clients see, explore and get to grips with the options that are available to them and once this is done I make it clear that the responsibility for choosing the path lies with them as it is ‘their baby’ and I am simply the ‘midwife’ – they have to live with the consequences of their choices whereas I can walk away.

Lessons

Am I sharing this with you because I am on an ego trip today?  Possibly and I hope not.  I am sharing this with you to point out the following:

  • We live in a culture where the default is to look for success recipes that take away the inherent uncertainty, unpredictability, messiness of life and replace it with certainty, security, guarantees;
  • The number of explanations for anything that shows up is limited only by the number of worldviews / ideologies / perception filters that are available and used to make sense of the ‘situation/data at hand’;
  • We live in a culture where our search for these recipes is often only on the outside – that which is visible to the naked eye;
  • Often the recipes don’ work out because we only looked at the surface and did not dig deeper to get at the true ‘secret sauce’.

This probably occurs as ‘abstract and intellectual’ to you so let me share some example with you to make it more concrete.  Lets start with Honda to show how smart people can come up with multiple interpretations based on their worldview or the secret-sauce they want to promote (because they have a vested interest in promoting it).

Honda: what was the secret sauce behind Honda’s successful entry into the US motorbike market?

What accounts for Honda’s successful entry into the US motorbike industry back in the 60s/70s?  The answer depends on the worldview that you hold, the lens that you use to pose that question and dig around for answers.  Here are three different answers due to three different lenses:

“The first is the BCG Report [1975] story of Honda’s cost advantage, developed (the story goes) by the successful exploitation of scale and learning, and of the “segment retreat” response of British and American competitors. Anyone who received an MBA between 1979 and 1985 was almost certainly exposed to this version of history.

The second, explicated by Pascale [1984], offers a revisionist account of Honda’s motorcycle success.’ According to Pascale’s interview with six Honda executives, the company’s early scale in Japan came from its having a better product, flowing from design skills. Furthermore, Honda did not “target” specific market segments in the U.S., but rather showed an ability to experiment, to learn quickly from mistakes, to rapidly revise design problems, and thereby to discover opportunities.

The third, described by Prahalad & Hamel [1989, 1990], couples Honda’s success in motorcycles with its successful entry into the U.S. automobile market. Here the center of the story is Honda’s remarkable ability to go from “nowhere” to prominence despite the earlier entry of very efficient competitors like Toyota and Nissan. Prahalad and Hamel have given the names “intent” and “stretch” to the processes which underlay this success and the name “core competence” to the central skills and abilities that Honda built upon.”

If you want to read more then check out / download the following:  HONDA Enters Into US

Zappos: what is the secret sauce?

If you read about Zappos the taken for granted answers are: culture and wow service.  One or more astute observers have also noted logistics – Zappos wow service is enabled in part because Zappos has a finely tuned logistics operation that can get goods quickly to customers.   So is that the secret sauce?

I say that these are simply the visible manifestations of the secret sauce.  I say that if you read “Delivering Happiness” by Tony Hsieh you will find that the secret sauce is Tony Hsieh.  Tony has a particular philosophy: living a meaningful life, an affinity for people, an affinity for fun, strongly family ethos, a desire to get into and be a part of the nuts and bolts of business, getting that when you create happiness you are the first one to be lifted by this happiness.  And everything that is visible at Zappos is a manifestation of Tony Hsieh.

Starbucks: what is the secret sauce?

Is it the quality of the coffee?  Is it the location of the stores?  Is it the layout / feel of the stores?  Perhaps it is the baristas that serve customers?  Maybe it is the machinery and the processes?

From where I stand I am clear that the secret sauce is Howard Schultz.  Go read “Pour Your Heart Into It: How Starbucks Built a Company One Cup At a Time” and “Onward: How Starbucks Fought For Its Life Without Losing Its Soul”.  Read deeply enough and you are likely to find that Starbucks is simply the manifestation of Shultz’s love of coffee, the coffee experience and his stance/relationship towards ordinary people.

Schultz knows first hand what happens to people and families when people are not treated well, recognised, acknowledged, not given an opportunity to develop, to progress, to shine.  So is it a surprise that he fought so hard to give the barista’s – part time employees – pay and rights (including medical coverage) that were unheard of in the retail industry?

What happened when he handed over the reins?  Starbucks did lose its soul – the person who replaced Shultz was not Schultz and did not live Shultz’s philosophy  when it came to the quality of the coffee, the coffee experience, how people should be treated…..  Incidentally, I do know that Howard Behar and is philosophy about people and relationships complemented and made a big impact on Schultz and how he ran Starbucks.

Final thought

Be skeptical of any and all ‘secret sauces’ that are put forward.  Why?  For any phenomenon a multiplicity of stories can be constructed to explain and give meaning to that phenomenon.  The number of stories is limited only by the imagination and the number of voices that get to speak and be heard.  Furthermore, perhaps the challenge is to come up with, create, construct ‘secret sauces’ rather than find existing ones.  Where would Apple be if it had looked for the ‘secret sauce’ rather than invented it?  Where would Starbucks be?  Where would Facebook be?  Where would Google be (remember that Yahoo was the master of the online universe then)?

If you don’t answer this question correctly then your customer efforts are simply putting lipstick on the pig

Yesterday British Banks Gave Up The Fight Against Compensating Their Customers
Yesterday the British Banks (HSBC, Barclays, Lloyds, RBOS…) that ‘own’ the retail banking market gave up, reluctantly, their legal fight against compensating the millions of customers who were ‘mis-sold’ payment protection insurance (PPI): ‘Millions in line for PPI redress’.

The British banks are notorious for delays especially when it comes to handling complaints and refunds.   Today the FSA has instructed these banks to accelerate compensation payments: ‘Financial Services Authority wants banks to speed up PPI payouts’.

Was it ‘mis-selling ‘ or deliberately ‘ripping-off’ customers?
Whilst the newspapers use the term ‘mis-selling’ consumer groups and others describe PPI as a ‘rip-off’ or ‘racket’.  ‘How the PPI scandal unfolded‘  makes it clear that “Britain’s banks have been aggressively selling ‘ineffective and inefficient’ – but highly profitable – payment protection insurance for more than a decade.”

This is what the Citizens Advice Bureau said about PPI:  “Payment protection insurance (PPI) is sold to borrowers with the promise of peace of mind and reassurance that credit or mortgage payments will be covered if their personal and financial circumstances change for the worse.  However, many CAB clients find that they cannot make a successful claim on their policy because of exclusion clauses and administrative barriers to making a claim.  Premiums for PPI policies can add 20 per cent or more to the total amount to be repaid on a loan agreement, thus increasing people’s indebtedness rather than preventing it.”

The one key question that lies at the heart of the customer-centric orientation
If you read widely you will see there are all kinds of views on what it means to be customer-centric and no shared agreement.  As such all kinds of people and companies are claiming to be customer-centric.  If you believe you are customer-centric then I put this question to you:

  • Is it ok for you to make money by taking advantage of your customers trust, ignorance, biases and other cognitive weaknesses?

If it is ok for your and your organisation to take advantage of your customer then you are not and will never be customer-centric.  Why? There are two ways to answer this question.

The blunt answer is that you are self-centred and selfish. Given that, it is simply not possible for you to be other-centred including customer-centred.

The polite answer is that long term relationships are central to a customer-centric orientation and these relationships rest on trust.   Trust, in turn, rests on the three key pillars: honesty, fairness and competence.   As Peppers & Rogers say in Rules to Break & Laws to Follow:

Customers may forgive honest mistakes but will never forgive dishonesty.

This point is articulated rather well by Nils Pratley in the following piece: ‘The moral of this PPI tale: don’t rip off your customers’.

Incidentally, dishonesty literally sucks the heart out of many of your employees: how many people genuinely want to exert the best of themselves in dishonest activities?

If you wish you can stop reading right here.  However, if you have the interest then follow me and lots explore/probe the customer-centric paradigm a little further using the Be-Do-Have framework.

Have: what you want to get out of your ‘relationship’ with the customer
What does top management (‘Tops’) really care about? They care about what they are measured and rewarded on. And what is that? Ultimately it comes down to exceeding analyst expectations on revenue, margins and profits. This and the behaviour that it generates are discussed in this HBR interview with Roger Martin.

Do: the actions that you take to get what you want
Things get a little trickier when we get to the Do part. What do you have to do to get the results that you want? You can make the numbers through a whole array of actions. For example:

  • locking customers into longer contracts for example by moving from 12 to 18 month contracts for mobile phones (e.g. telecoms);
  • take advantage of your customers ignorance and sell them products (e.g. PPI) that are not fit for purpose (e.g. banks);
  • deliberately making it difficult for your customers to work out which product is the best fit for their needs so that they buy the more expensive product (e.g. telecoms);
  • making it difficult for them to stop doing business with you and switch to another supplier (utilities, broadband, financial services, hi-tech..);
  • cutting the investment in customer service by making it more difficult for customers to contact you and if they do then having the call handled by someone in a distant country;
  • ensuring that your products do what they are supposed to do, that they are easy to use and have high resale value (e.g. Honda);
  • making it easy for your customers to do business with you (e.g. Amazon, eBay); and
  • standing for a set of values, practices and products that connect with a specific segment of the population (e.g. Virgin, Apple); and
  • viewing yourself as being in the business of ‘delivering happiness’ (Zappos).

Given the breadth of choice that you have,  limited only by your imagination, how do you decide what is the right course of action?   You may be thinking that brand values might help here. They can if they are lived in values. They are useless if they have been dreamt up for marketing (influence / propaganda) purposes.

The BE domain is the source of all guidance on what courses of action are ruled in and ruled out.  So let’s take a look at that.

BE: existence, stance, character and values
The BE domain is NOT concerned with the personality you put on for show – to seduce the people that you wish to seduce.  Nor is it concerned with what you say or your intentions.

The BE domain IS concerned with your authentic self.  Specifically it deals with the issues of purpose, stance, character and values as an integrated whole.  A different way of looking at this is to examine how you behave when you are under pressure: what are you willing to do or not to do no matter what the personal cost?

At the organisation level you face a fundamental choice.  To BE the kind of organisation that prospers through honest dealing and creating superior value for customers.  Or to BE the kind of organisation that does whatever it takes to make the numbers – treating people (customers, employees, suppliers..) as objects to be manipulated for one’s own benefit.

The default setting, as illustrated by the British banks in relation to PPI,  is that customers are seen as objects to be manipulated for the benefit of the organisation. Where concessions are made to customers it is because of regulatory pressure or because competitors force that move.  In Martin Buber’s view this is the ‘I- It’ orientation.

Are your customer efforts simply an exercise in putting lipstick on a pig?
You and your organization become customer-centric when you refuse to make money by taking advantage of your customers.   That means practicing and living honesty and fairness.  Until you do that all of your Customer experience, customer engagement and loyalty initiatives are simply an exercise on putting lipstick on the pig.  You might reap the rewards now yet sooner or later the pig will show through and you will pay the price.  Let me end by quoting from Peppers & Rogers once more:

If being fair to customers conflicts with your company’s financial goals, then fix your business model or get a new one.