Culture Change: what does it take to change culture in a business? in the banking industry?

The ‘banking scandal’ and Ed Milliband got me thinking about culture and culture change

The latest ‘banking scandal’ and a statement from Ed Milliband (Leader of the Opposition) caught my attention and has inspired me to write about culture and the role/contribution of the CEO.  Let’s start with the statement and take it from there:

“It was clear Bob Diamond was not the man to lead the change that Barclays needed. But this is about more than one man.  This is about the culture and practices of the entire banking system which is why we need an independent, open, judge-led, public inquiry.”

I am going to start with tackling culture, then what it takes to change culture in a business organisation and I will end up with my take on what it will take to change the culture of the financial services industry.

What is culture?  And are culture and practices distinct?

A lot has been written on culture and most of it is not particularly useful – as in actionable. Some of it is even been written by people who have pretty much always swam in the one culture and/or spent their lives in the ivory tower of academia.  And I say people in academic ivory towers make stuff more complicated than is necessary or useful.  Isn’t that the job of professors, gurus and other ‘witch doctors’?

Let’s attack this question of culture differently.  How do you know that you are in presence of culture?  Put differently, how does culture manifest itself?   Look into this and you are likely to find that you and I do not have access to the ‘beliefs’, ‘shared assumptions’, ‘mental models’ of others.   No, you and I are up to our necks in language and practices.  What we notice, what impacts us, what we participate in is language and practices – we cannot escape language and practices.

Languages and practices are not neutral – they both indicate cultures and they shape/influence/change cultures.  Allow me to give you an example – the dramatic changes in the UK’s public sector.  Have you ever wondered why the ‘humanity’ / the ethos of ‘public service’ has been driven out of our public institutions in the UK?  I have traced this  to the introduction,and subsequent growth, of the ‘language of business’ into the public sector which drove out the language of ‘public service’.  And the introduction of ‘private sector management practices’ that drove out the ‘public sector administration practices’.  If you have not noticed this then let me make it clear – language and practices go together like two sides of the coin.

Culture and practices are not distinct.  Practices are culture.  Change practices – let go of existing practices, adopt/model new practices – and you change culture.  Language is a special case – an incredibly important practice.  A practice that shapes/changes other practices.  And also a practice that is in turn moulded/shaped by practices.  Just think of how the English language of today is so different to the English of Shakespeare.  Or think about ‘human rights’ – the term did not exist once upon a time.  It was invented and its invention led to practices associated with human rights.  Think about the practice of science and the conquest of nature.  When did it take off in a big way?  After Descartes changed language so that language glorified reason and science.

Who/what does it take to change the culture of a company, a business?

Lets say that you want to change the culture of your business from product-centred to customer-centred.  Or from command and control management to collaboration (social business).  Or simply from command and control to  Upside Down Management where the focus is on empowering/inspiring the front line to do what is right for the customer and delivering great customer service.  Who is the person in the business that you should entrust with this mission?  And how should this person go about it and what can this person expect?  I say it is worth listening to what John Timpson (Chairman of the high street chain Timpson) has to say in his book Upside Down Management:

“It is now 10 years since we decided to introduce Upside Down Management and it is making a massive difference.  Nevertheless, it is not easy to change culture.  Anyone who is thinking of following in our footsteps should take note of the vital ingredient that is needed to make it work: the Chief Executive must be the champion of Upside Down Management.  He or she is the only person who can make it work.  If you’re in personnel, sales or marketing, don’t dream of trying to introduce Upside Down Management until you have your CEO’s 100% commitment.  Upside Down Management is all or nothing, only the CEO can do this, and in doing so he or she must understand how it will change everyone’s job. The CEO must have the determination to replace orders, memos, KPIs and nitpicking with praise, lots of listening, and clear obstacles out of the way to give people true freedom to operate.  The Chief Executive must be on a mission to change everyone’s perception of management Doing things upside down is nothing like what they teach at management school.  In doing so, they must understand the importance of personality and identify the drongos who would obstruct progress.

Don’t expect Upside Down Management to take root overnight.  Give it plenty of time – you have got to promote it, sell it and nurture it.  Everything has to be introduced by persuasion because that is the way you run an Upside Down business.  Upside Down Management may take years to establish, but eventually it will start to work….”

In a nutshell: the CEO must be 100% committed; pick the right people to help you make it happen; no compromises – none at all; and patience – can take five years.

What will it take to change the culture of the financial services industry?

Let’s answer this question of culture change in the financial service industry through the lens of game theory and the Prisoners Dilemma. At its simplest level we can say that there is a game going on between the financial services industry and customers/society at large.   The financial services industry can choose one of two options: co-operation or defection.   The same choice falls to customers/society.   Put this way it sounds like there is a balance of power between the financial services industry and customers/society.  That is not the case and that is the heart of the issue.

The setup is such that it ALWAYS pays for the financial services industry to adopt the practice of  ‘defection’ – to pay back the co-operative behaviour of customers/society by taking advantage of it to benefit the financial services industry.   So the challenge is to shift the industry and the key players (the shareholders and the Tops) to the practice of ‘co-operation’.  How to do that?  The simple answer is to change the structure of the game between financial services and customers/industry such that the practice of ‘defection’ hurts (a lot) and the practice of ‘co-operation’ pays.  That means putting place strong penalties for the Tops (going to jail) and the shareholders (massive fines) for practices that constitute ‘defection‘.   Which in turn means getting rid of ‘light regulation’ and replacing it with ‘smart regulation’.  And it means putting teeth into the regulators – so that they have the will, the skills/expertise, the resources, the permission needed to detect and punish ‘defection’ practices.   This means more than adequate funding, it means getting rid of the conflicts of interest at the heart of regulators.  Too often the regulators are cheerleaders for the industry players.

How likely is that to happen?  Not likely.  Why?  First, there is the practice of those at the heart of government going into the financial services industry, when they are no longer in government, and making vast sums of money.  Second, there is the practice of the revolving door between those that are in/represent the financial services industry. Who was brought into advise and help deal with the mess of the credit crunch?  The people who had played a substantial role in the mess and whose careers/livelihoods were invested in the financial service industry. To effect culture change in the financial services industry would require a change in these practices.  For example, making it illegal for any person in government to work with/advise anyone in the financial service industry during their time in government plus 5 years.

Now we come to the who question: who is willing to take on that task?  Which prime minister is willing to forgo the many millions to be made through consulting/advising/sitting on the Boards of the financial giants?  Yet, I am open to surprises and being surprised.  Who would have thought that Bob Diamond would be pushed out of his role as CEO?

Summing up

Culture is constituted and shows up through language and practices.  If you change the language and the practices – and make this change stick – then you have changed the culture.  Culture is always changing because practices and language are changing.  One of the biggest drivers of change in practices and culture, today, is technology.  The reason that the financial services industry does what it does is because there are no practices in place to punish players in the financial services industry for the behaviour that costs customers, cost society at large.

Are you using the right lens to design the customer experience?

How do you view your business, your industry?

One of the most useful posts I have come across recently is one by Mark Hurst at Good Experience.  It gets to the heart of the matter quickly and I encourage you to read it: “Your industry has the wrong name”

Mark’s key point is worth memorising: “To create a good customer experience, you need to see your job as dealing with people as they deal with your field of work.”

Now if your job is dealing with people then it really helps if you understand a little about people.

There is a big difference between Expectations and Needs

Let’s start by distinguishing between Expectations and Needs.  Too many people lump them together and that is a mistake: they are not equally important and violating Needs has very different consequences to violating Expectations. 

When you are dealing with people then you have to cater for both Expectations and Needs.  Why? Taken as a whole they determine how people (your customers) approach events and situations. And how they are likely to behave in response to events and situations.

Yet, there are also big differences.  Expectations are wrapped around daily events, specific and much more readily available to the conscious mind.  For example, you will have an expectation as to how long you should wait to get your meal at McDonalds.  And this is likely to be very different to your expectations as to how long it will take your main course to arrive at a fine restaurant.  Furthermore, when you make comparisons you will compare McDonalds with other fast food restaurants.  And you will compare the fine restaurant with other fine restaurants.

Needs on the other hand are much more global and they tend to be hidden from view: submerged in the subconscious mind.  Needs arise from our existence as human beings: they concern issues of life and death and how we see ourselves (our identity). If your job is dealing with people as they deal with you field of work then you need to pay attention to three needs in particular:

  • security – the need to feel secure and as such not threatened by harm (physical, economic, psychological);
  • esteem – the need to maintain and enhance one’s self-esteem and social standing; and
  • justice – the need to be treated fairly as a human being of worth.

Why am I making such a big fuss between Expectations and Needs? Two reasons:

First, if you dissatisfy customers by not meeting their expectations, you can still recover.  Whereas, if you dissatisfy customers by violating their basic needs, you are likely to lose them.  Would you do business with a dishonest supplier?  Would you do business with a supplier that made you feel stupid or lose face in public? Would you take the family car in for a service to the garage who failed to tighten the bolts properly last time and as a result your front wheel dropped off whilst you were driving (with your young children in the back)?

Second, I believe that too many customer experience efforts are overly focussed on Expectations and are neglecting the Needs. Even worse, some customer experience designers are improving performance against Expectations at the expense of Needs.

B2C: what matters most to your customers?

So what matters most to customers when it comes to the B2C space?  All kinds of research has been done and you can choose your favourite one.  Personally, I find the following table useful:

At the very top of the wish list is caring helpful staff.  Why is that?  Because caring helpful staff tend to deliver on the three key needs simultaneously: security, esteem and justice.  Put differently, caring helpful staff get that their job is to deal with customers as people whilst these customers deal with your field of work.

The flip side is that if you want your customers to look for another supplier and to speak badly of you then employ uncaring, unhelpful staff.  Or, employ caring helpful staff and then put them in a culture that prevents them from being caring and helpful by tying them up with unfriendly business policies and practices.

For the record, I am of the view, that the real culprits are unfriendly business policies and the associated culture (rather than the employees who serve customers).  You don’t have to take my word for it, read this post from the highly ranked 1to1 Blog: “Do Your Policies Work Against Your Company?”


Do you care about your customers? Suzanne from Sky does and that I why I love her!

Background

BSkyB is the dominant pay TV company in the UK and is more commonly known simply as Sky.  Over the recent years Sky has expanded into broadband and fixed line telephony; to use the broadband service you have to get your router from Sky.

Back in December 2009 I signed-up for the triple play (TV, broadband, telephony) with Sky on the basis that this would make my life easier.  After a promising start things went downhill fast and I wrote about that in this post: “How to convert an advocate into a detractor – a personal experience”

By December 2010 I had a much kinder, more understanding, perspective on my Sky experience and I wrote about it in the following post:  “The value of transparency or why I am no longer mad at BSkyB” As a result of this change in attitude, pressure from my children and an attractive retention offer from Sky I decided to continue to be a customer.  And everything was going well until Tuesday 6th April when my broadband router stopped working.

I contact Sky Customer Services and find my competence being questioned

On Tuesday morning I found that I did not have access to the Internet so I went to check the router.  I found that the on/off switch had developed a fault: it only worked if I kept it pushed in with my finger.  So I decided to phone Sky Customer Services to get a replacement router.

Once I found the Customer Service number (no easy task as none of the statements have a contact number on them) and navigated through the IVR, I was greeted by a friendly female voice.  I explained the problem with the existing router and asked for a replacement.

To my surprise the CSA asked if I was sure that the on/off switch was not working.  I found myself feeling offended and replied that I was 40+ years old, knew what I was doing and if I said that the on/off switch was faulty she could take my word for it.  Why did I become offended?  Because it occurred to me that the CSA was questioning my competence.   

Company policy takes precedence over doing right by the customer and cultivating loyalty

Once we agreed that a new router was needed, the CSA told me that it would cost me £28. I questioned why I had to pay this cost given that I could cancel my broadband contract (as the twelve month period had already expired), sign-up as a new customer, pay the same monthly charge, and get the router free of charge.

The CSA’s response was that it was simply Sky policy to make existing customers pay for replacement routers.  And that if I did cancel my contract and signed up as a new customer I would not get the router free of charge.  No matter what I said the CSA did not budge: she simply insisted that it was company policy.  When I asked about the rationale behind the policy, she did not explain.  When I asked her to put me through to the Retentions team she told me that she did not know if one existed. In the end, I agreed to pay the £28 as I felt I had no choice.

Amazon can guarantee next day delivery, Sky can only state that it is likely to take 3 – 5 days

Once I had provided my credit card details, the CSA told me that it would take 3-5 days to get the router to me.  I was astonished:  Amazon can and have got books to me the next day (guaranteed delivery) and Sky can only promise 3 – 5 days! I think I simply said “3-5 days!”.  The CSA responded by telling me that I could track the status of the router via the website.  My response was that I had no interest in tracking the router, I simply needed it delivered asap; allowing me to track the router deflects calls into customer services but it does not help me to get my router on time!

Sky does not keep its first promise which makes me wonder about the second one

I then asked the CSA if it was possible to speak to her manager – not about her but about the Sky policy including the delivery time.  The CSA was helpful. She went to look for her manager, found her to be in a meeting, took down a contact number for me and told me that her manager would ring back between 9:45 and 10:15.  No-one rang back.

How am I feeling at this point?  Truth be told, I am cursing my family for wanting SkyTV and persuading me to continue with Sky; I am cursing myself for my stupidity in continuing to do business with Sky.  And I start thinking about how to bring my dependence on Sky to an end because it is clear to me that Sky does not care about its customers and cannot be counted on to deliver on its promises.  Will Sky deliver the router in the promised 3 – 5 days?

Wednesday 7th April, around 7pm Suzanne from Sky ‘calls into my life’

At around 7pm on Wednesday 7th April I got a call from Sky and found myself speaking with Suzanne.  She asks me how I am and I ask her how she is.  I am pleasantly surprised by her refreshing honesty: she tells me that she is well and will be even better when it is 9pm and she can go home.  Wow, I am speaking to a real human being!  I like her already.

Suzanne then runs through the SkyTV package.  She compliments my choices and asks me what I watch.  I tell her that the SkyTV is mainly for my children and list their favourite shows.  After listening, Suzanne brings the conversation back to me and asks if I watch anything at all.  I tell her and she replies that she likes one of the shows that I like.  I feel comfortable talking with Suzanne – she occurs as genuine and actually interested in me.

Next, Suzanne runs through the services I have and tells me that she can save me £2.50 a month on the broadband if I sign up to another 12 month contract.  I reply that no amount of money would entice me to commit to another 12 months with Sky. I say that whilst SkyTV is great, the rest of Sky particularly the broadband bit is absolutely terrible.  Furthermore, I say that I simply have no confidence in Sky as a brand: I just do not trust Sky to treat me fairly, to look after me as a customer. Then I relay my previous days broadband router replacement experience.

How I fell in love with Suzanne and she changed my mind about Sky

All the while I was talking and sharing my frustration and disappointment, Suzanne listened – she stopped selling and simply listened.  She did not argue with me, try to refute my experience or to change my mind.  She simply said that she understood how I was feeling and could understood why I would not want to do business with Sky.  Then she asked me to hold on for a moment. 

She came back and told me that she was going to refund the £28 I had paid for the router – no strings attached – as a gesture of goodwill. At this point I found myself reluctant to take up her offer as I did not want to ‘owe Sky anything’ – that is how much I loathed Sky!  Yet, I found a moral pressure to grant her request: she had treated me with respect and it was now my turn to reciprocate – so I gave her my credit card details.  Then she surprised me again.

Suzanne asked for my patience explaining that she had asked her manager to do the refund. Why?  Because Suzanne does not do refunds – it is not part of her role and she does not have the authority.  I totally get that Suzanne has gone out of her way to help me!  She did not have to do it, she could simply have wished me well and left it at that when I refused her broadband pitch.  And I am grateful to Suzanne and I tell her that.  I even tell her that she single-handedly (with the help of her understanding manager) has changed my perception and feelings towards Sky.

The lessons

When it comes to delivering a memorable customer experience and cultivating loyalty there is absolutely no substitution for caring for your customers. And caring for customers comes down to employing people like Suzanne (and her manager) and allowing them the leeway to be great – to take the right actions, actions that build gratitude.  Why?  Because gratitude leads to loyalty.

A friendly CSA following the script (as set out in the Quality manual) and adhering company policies is not always enough.  It is necessary to take the customer’s individual circumstances into account. In human affairs fairness and helpfulness are critical needs.  Violate these  rules and you almost guarantee losing the customer.  For example, The first CSA I dealt with did everything by the book and was friendly throughout.  Nonetheless, she left me feeling that she was a prisoner of Sky’s unfriendly customer policies and practices and so she was unable to help me with my problem.

Company policies and practices are some of the biggest obstacles towards delivering memorable customer experiences and cultivating loyalty. Take a good hard look at your policies and practices.  Are they fair?  Do they meet customer needs?  Do they get the balance right between trusting customers and being taken for a ride?  Do they balance the long-term against the short-term focus?  Do they help or hinder your staff from delivering great service and establishing an emotional connection with your customers?

Make sure that your people who interact with customers are in a position to explain each and every single policy that impacts the customer in a way that occurs as reasonable in the customer’s world. For example: why does it take 3 – 5 days to get a broadband router when many companies can do next day delivery?  Or why do Sky customers have to use routers supplied by Sky?  Why can’t I use one of the three routers I have sitting at home?

PS: I have only been able to write and upload this post because I figured out a way of making the existing router work: glue, dice and tape to keep the on/off button pressed in – take a look at the photo below.  Lets hope the replacement router arrives before this solutions gives way!

2011: what is likely to stay the same?

Right now there are lots of people putting forward there views on what will be hot /new / different in 2011.  As I do not have a crystal ball and because I believe in the fundamentals, I am going to focus on the key themes that are not going to change in 2011.

Customer will continue using trusted resources to find information and make decisions

Customers live in a world that is full of suppliers, brands, products and services.  Choosing between them is difficult and there is always the concern around making the right choice.  So for low consideration products (the basics of food, drink, utilities, retail banking..) customers will simply continue using the brands that they use today. Some customers will continue to be tempted by ‘specials’ – to try other products, other brands, other suppliers.

For high consideration purchases, customers will turn to trusted sources: the internet, Google search, social network, other customers and independent sources.  Customers will particularly value trusted resources that take out or cut the hassle associated with doing all the research and coming to a decision.

Companies will continue to shoot themselves in the foot as the content and tools are often created by marketing.  And too many marketers are disconnected from the real lives of customers and their real needs.  Too often the need for spin outweighs the need to provide useful, informative, honest content.

Customers will continue to have the same needs around products

Most customers will continue to look for products that are easy to understand, easy to set-up, easy to use and which work as they expect them to work.  Some customers will pay a premium for products that are novel, beautiful and/or well designed.

Many products will fail to live up to customer expectations either because the marketing communications are misleading, or the product has not been well designed or because the customer has unrealistic expectations.  And this will result in calls into the contact centre and negative comments offline and online.

Customers will continue to look for, be attracted to, special offers

Direct marketers are the masters of special offers – they know that the right offers will drive purchases.  Human beings are drawn to all kinds of  special offers.  The offer can be around membership of an exclusive club, or a special edition product or simply one of a price discount.

Businesses will continue to offer attractive ‘specials’ to get new customers.  In the process they will continue to cut loyalty from existing customers and thus encourage them to move to competitors to get their special offers.

Customers will continue to look for and value good service

Customers live in a complex world where they have a lot more to juggle and less time to do it; a world where choosing the right products and solutions can be a tricky and time consuming task; a world where they need help in setting up and using products effectively.  For example, one time you could just go and buy a tv, try doing that now with the latest HD tvs.

As a result customers will continue to cry out for good service in the form of correct and informative marketing material, customer centred sales advice, convenient product delivery, ease of product set-up and use, accurate billing, easy access to the right people in the company to deal with problems and issue and responsive caring customer service.

Many companies will continue to give less than good service because of the internal, silo centred, efficiency oriented metrics, processes and culture.

Companies will continue to focus on the shiny new stuff and neglect the basics

Time and again companies are attracted to the shiny new stuff, the silver bullets, the miracle cures etc.  Social media, mobile, location-based services, group buying (Groupon), customer experience – are examples of the latest shiny objects

In the process, companies will neglect the basics such as making good easy to use products, easy to use websites, improving the delivery process so you don’t have to take a full day off work, sorting out issues that prevent sales and customer service staff delivering the kind of service that customers expect etc. Here is an example of neglecting the basics: Toyota Just Doesn’t Get It

Companies will continue to focus on the sell side of the business at the expense of the service side

The majority of companies will continue to focus their best people and the bulk of their money on the areas of the business that generate or promise to generate revenue. Revenue and market share growth are the top priorities of the C-suite in most companies.

These companies will also continue to spend money on products and services that promise to cut operating costs – thus boosting profits.  That means more investments in technology and less in people – especially those that actually interact with and serve customers.

It also means that companies will continue to focus on getting new customers than on keep existing customers through good service and fair treatment. This is partly because the it is easy to show the return on getting customer and difficult to show the return on retaining customers.

Companies will continue not to embrace and make effective use of social technologies

The philosophy – transparency, openness, interaction, connectivity, sharing, participation, co-creation etc – of social is fundamentally at odds with the command and control philosophy that is at the heart of almost all businesses.  The powerful love to exercise power – this applies to all kinds of institutions including corporations.  And it applies to the C-suite executives.

This clash of idealogies and operating practices will stop the majority of companies from harvesting the true promise of social technologies:  transforming the way that work is done – collaboratively between employees, customers, suppliers, partner etc – within the enterprise.

Instead companies  will continue to dabble in social media treating this as simply another marketing and customer research channel.  Does this remind you how digital marketing and ecommerce operations were treated?  And how some are still treated today?

Companies will continue to talk about innovation and customer experience tranformation and yet fail to deliver

Whilst every company wants to the fruits of innovation very few are willing to go through the birthing process and experience the pains of giving birth to these innovations.

It is no easy matter to make the silo’s work together.  It is no easy matter to change the technology infrastructure – most companies still do not have a single customer view despite the mountains of ink on that subject over the last ten years.  It is no easy matter to change the culture of the company.  It is no easy matter to give up the practices that are resulting in ‘bad profits’ and recapture these profits by creating products and services that customers value.  And there is absolutely no incentive when you are the category leader or the market is dominated by up to four big companies.

The task of category level innovation will continue to fall on companies that specialise in this (e.g. Apple, Virgin) or newcomers that have no investment in the existing way of doing things (e.g. Metro Bank, Groupon).