12.04.09
Posted in Customer Experience, Net Promoter / Customer Satisfaction, Service Innovation, Service Science at 5:33 am by Doug Morse
I have to be honest right up front and say that this blog was triggered by a terrible customer experience with Overstock.com. While I have every right to rant and rave and be one of “those” customers, I thought that I might channel the rage into something more positive. At least more positive for us and not for Overstock, because they lost a good customer, fore-v-e-r.
I will explain the story of how I went from loyal customer and advocate to their worst critic later. What I want to share here was the thought that came to me while dealing with this company. While there are thousands examples of customer experience nightmares in retail or consumer businesses, what came to me spans all industries. You might relate to this same thought. Most reasonable companies have some organization, person or functional area called “Customer Care”. This usually is meant to be something greater than just a customer support or call center but sometimes it is just lipstick on the pig. In the case where they have truly invested in a customer care organization though, it does not mean that the company is customer centric and certainly does not mean that they have a customer centric culture. In fact, most companies I have studied who have good customer focused cultures do not have or need a department called “Customer Care”. With a great customer culture, customer care is everyone’s job. A great example of this is Zappos.com.
Here is the example that shown the light on this issue for me, today. I ordered about $100 worth of merchandise from Overstock.com. Over the years, I have generally been pleased with how they run their site and the shopping experience and I have shared my wallet with them. In fact, they have done rather well in building an online selling environment with good technology and innovation. It seems that they worked very hard on all of the back office functions to become efficient and profitable. They have done well in the online marketing area with leading edge work on communities, reputations (reviews) and targeted advertising. Based on this I made my recent mistake, by ordering from them. There were 3 items (sku’s) ordered and none of the items ordered have arrived without significant errors in process, communications, order quality etc. Being the customer experience professional that I am, this REALLY annoyed me. In this same vain however; I am the first to give the customer care group a chance to win me back. Mistakes happen, even for Zappos; and the potential customer recovery action is often more important. Needless to say, Overstock just compounded the errors.
I contacted Overstock.com Customer Care several times via phone, chat and email. In fact, they even called me proactively after I had returned a bad customer survey. Given my 30 years of experience in Customer service, I am pretty quick to understand what is going on behind the scenes. In this case, all customer interactions are with their customer care “department”. In my interactions here is what I observed. They run state of the art contact center technology and handle multi-channel contacts pretty well. They have a good CRM system and knowledge base that allows the agents to see a customer’s history and can provide good self help. The agents seem to be well trained. They use empathy; they apologize appropriately and have some discretion to provide a minor store credit as a way to affirm the apology. In all they act very professionally but clearly have a limited role within the company to make corrective actions.
In one part of my order they clearly shipped the wrong thing. Upon contacting customer care and explaining the issue they did all the right things to reorder and expedite a replacement. I was very clear that it was a picking problem in their warehouse. It was very clear to all that it was a quality process problem for them. A supervisor called me later to again apologize and took notes on the issue. The replacement order arrived and the exact same mistake occurred but now no replacement was possible as they were out of stock. The customer care person was again professional and well trained but did not offer me anything other than a refund. No recommendation for a substitute product, no further compensation for my problem etc. Basically no service recovery action was taken. In reading the incident report as written by the agent, no record of my dissatisfaction was noted.
Then I went to do some deeper research on this company and it came clear that having a good customer care department is not good enough if the customer culture does not exist in the rest of the company. In our work on the “Service Oriented Enterprise” we found that organizational alignment around customer experience worked as well or better than even a great culture. While changing a culture is hard, changing behavior is a matter of changing incentives. Someone once told me that herding cats is easy, you just need to move their food. As I looked at the management structure of Overstock.com, I got a real hint as to the issue. They are focused on being a state of the art retailer and customers were not at the forefront. If they have a good product niche, good technology then the customers would come. (at least once ). They have a SVP of Marketing who also has responsibility for customer care. This says everything about the vision and culture of the company. Here is the quote from the CEO about the person in charge of customers :
CEO Patrick Byrne said of Stormy, “I have learned a lesson I wish to share with corporate America: if you want to make your company customer-centric, just take the most stubborn, unbending, hard-headed, customer-loving employee you have, and put her over customer service. The company gets customer-centric quicker than you ever thought possible.
I have news for Patrick Byrne, I do not know how bad it was before this person came to be, but this is not best lesson for corporate America. Perhaps he should take a few classes from Arizona State University’s Center for Services Leadership or at least read the books on customer experience written for the last 20 years. The short cut might be to hire good consultants, but be prepared to make some real changes. They should not believe their own press and assume that they are customer centric. They are online retail centric, they are operationally focused but they are not customer centric.
The good news for Overstock might be that they are not alone. In both consumer and B to B environments we see this same mistake. Companies create customer facing organizations that are given the responsibility to garner customer loyalty no matter how bad the products may be or how many times the warehouse screws up an order. Good companies use these front line organizations to listen to the customer and then use the feedback to improve the rest of the organization. In good companies these folks sit with the c-suite and partner across the business silos. In good companies the incentives are aligned to balance customer value and shareholder value. It is not a mission statement, it is a process and it is a team sport. Bad companies create the organizations, survey customers, justify the results but make the customer a responsibility of just the front office.
James Teboul, a professor at INSEAD in France wrote a book called “Service is Front Stage”. In it he discusses how more and more of the back office operation and systems affect the customer facing experience. Problems in Supply Chain or Operations are now more visible and more directly affect the customer. In our research on how companies survived over 75+ years, we found that the key to survival was how companies listen and responded to their customers. They focused on customer success and customer needs. The evolution of business organizations and processes stem from the old industrial economy where internal efficiency was a key measure. Today it is not good enough to measure and reward internal metrics, you have to focus on how those metrics drive customer experience and increase the both the value of the customer and how they create value for the customer.
Back to the main question, does having a Customer Care group mean the same thing as being Customer centric or having a Customer culture? Clearly it does not. The evolution of industry leads companies to put someone or group to be in front and in charge of customers. While this type of function provided for some form of customer advocacy, the groups charged with this were for the most part an island. The goals of the customer advocate are often at cross purposes with the goals of a manufacturing engineer, as an example. Technology like CRM with so called 360 degree view of the customer is also not the answer. It is about aligning people (organization), process and technology for focus on the customer value streams that changes the game.
There is a term used today and new area of study which gives me hope. It is “Service Value Networks”. This term has many definitions and many different views of the same problem. In essence we are talking about the power of shared information and process for the benefit of others in the network. Smart Energy Grids or Healthcare systems might be two examples of a Service Value Network. In these cases they connect the customer to all parts of the delivery and provider systems with mutual goals around the intended outcomes. I see the research and development in this area helping to automate and improve customer care without having to depend on just human to human interactions. Service Value Networks tend to be end to end managed systems and processes that drive a desired value outcome. This is an exciting area for Service Science that will involve many core disciplines. Perhaps with Service Value Network designs we can eliminate the need for one group called “Customer Care” in companies who actually do not really care about their customers.
Those are my opinions, what are yours.
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11.07.09
Posted in Academia, Service Innovation, Service Science, Service conference, Service education at 9:51 pm by Doug Morse
Dateline: Compete Through Service Symposium Day 3
This was the worst day of the Symposium… but only because it was the LAST day and I was left wanting more. Isn’t that a good sign? If we leave wanting more it is like having a great meal, you really want to continue eating because it was so good, but you are now full. I leave the Symposium feeling like I have a lot to digest but wishing I could continue to interact and learn with the great folks that attended and world class team from ASU.
“Why do you hate my bags?” was the call that Dave Ridley ,from Southwest Airlines, wanted us to ask his competitors when we all flew home. You may have seen the Southwest Airlines ads about how bags fly free on Southwest, bucking the trend of most airlines. I thought about the whole charging for baggage issue on airlines and in my opinion Southwest is very clever in not charging. I am not sure that any other brand could copy this and get the same results. Think about it, SWA is known for ‘low cost’, for great customer service and great value. Not charging for bags is perfectly aligned with their excellent service culture and their brand. They believe strongly that employees come first as they will make happy customers. Happy customers seem to make SWA the only airline to make a profit. Charging for bags would actually be a bigger problem for their employees than for the customers because it would force their employees to do unnatural acts. ( and deal with angry customers )
This last point was brought home to me as I checked in for my flight home, not on Southwest. (with carry-on only, I LIKE my bags ) In the check in lobby was a young couple, with young children frantically repacking suit cases, baby carriers etc, in order to consolidate the luggage and reduce their penalty tax. The customer was not happy and the employee looked uncomfortable and embarrassed. The employee, in fairness, was trying to be helpful with in the boundaries of the stupid rules she had to follow. Putting your employees into that situation should be cause for CEO to go to leadership jail in my opinion.
Now, think about this whole idea of charging for bags in the service industry context. The service industry (in general ) went through the process of converting services from free to fee about 15 years ago. Product services got unbundled to allow customer s to pay for value. A whole lot or marketing genius went in to convincing customers that the new FEE based services were actual a better deal than the old bundled offerings. Customers could choose the level of value that services offered and choose to buy or not. Ask any company about this process of FREE to FEE services and they would likely say they would rather have un-medicated root canals than go through that period again. So, airlines decide it is a good idea to charge more for the same (or less) service with no added value or benefit to the customer. Most customers would give a higher customer satisfaction score to an armed robbery than to dealing with an airline trying to convince you that they have the lowest fare, as long as you want to travel with nothing more than your empty wallet. So who would you rather fly with, Southwest Airlines or Pickpocket Airways?
Dave Ridley said that their ability to succeed in their “not for profit” industry was attributable to them hiring the right employees. They believe the right employees have a ‘Warrior Spirit’, a ‘Service Heart’ and a ‘Fun loving Spirit’ . The Warrior spirit is about people who will willing to go the extra mile to get things done to meet the mission. A service heart is what I describe as people that have the ‘defective customer gene’. I believe that there are certain types of people who love dealing with customers even when they are being yelled at. They thrive on converting angry customers to loyal friends. They are special. Fun living spirit is perhaps the most obvious. People need to know how to enjoy themselves and have fun even when the times are tough. If you find this type of employee, hire them immediately! Even if you do not have an opening, hire them now. Once they find a job somewhere else, you will never get another chance!
If you are reading this blog and attended the symposium, then you might have noticed that my lead for the blogs and the headlines came from the last speaker of each day. Coincidence? It is not that they had the best quotes but that I just have a shorter memory….
All seriousness aside, it would be hard to rank the best speakers or best quotes, I will leave that up to you. (fill out those feedback forms or Tweet your opinions or add comments below ) I do know that I enjoyed our first speaker of day 3 very much. Joe Doyle is the head of Customer Service and Consumer Affairs in the Governor’s office of Georgia. I was particularly excited to hear Joe because this is the second time that I have had the pleasure to hear the State of Georgia story. I first heard Joe at the 2008 Frontiers in Service conference in Maryland. Since that first presentation it is clear that they have continued to make great progress. Here is the story, for those that missed it. The State of Georgia has a goal to be number one in customer service in the US. Perhaps that might be too low of a goal as the bar is not that high but it is unique in government. Georgia has over 130,000 employees, over 2000 public service functions, takes over 50 million phone calls or contacts each year with declining budgets. In spite of these monumental challenges, they have reduced the service times of critical public services by orders of magnitude. One example is helping to collect child support from delinquent parents. The old process took 14 weeks (could YOU wait 14 weeks for critical funds?? ) the new process is same day. The improvement was done by employees with current resources and no new technology. In the process they freed up numerous other wasted resources. Service time went from 3.5 MONTHS to same day, it costs LESS to provide the services, customers are HAPPIER than ever and you get it all done with no additional resources, consultants or new technology and the process is repeatable! Who would not want that in their business and this was done by a state government who typically are not known to employ rocket scientists. We can all learn a lot from the model demonstrated by the State of Georgia.
Joe’s opening act was followed by a remarkable person by the name of Courtney Klien. Courtney is CEO of New Global Citizens. What was remarkable was not that she likely still gets carded at any bar but that she created a business with such a marvelous mission. While she mostly spoke about how to hire, manage and work with the Millennial Generation what struck me most was presence and perspective that she had about what will matter in the future workforce. Service can have many meanings. In the context of Courtney’s presentation I came away encouraged that the next generation of workers will have a focus on providing service to the world. This may mean globally, this may mean social causes, this may mean environmental but what ever the cause it should be a good thing. For those that missed her I would search for her on the internet and then see www.newglobalcitizens.org .
After Courtney’s presentation we got to hear about how another organization overcame tremendous obstacles to drive service innovation. Kim Gravell, VP of Innovation for Cardinal Health, told us that her company delivers “… a million boxes of hope, everyday”. How cool is that? While Kim spoke about their process innovation to deliver new services I really thought about the underlying challenges that she did not dwell on. Remember that Larry Winget told us the day before to stop the whining. There was no whining about the degree of difficulty, just pride in what they could change. As a good friend of mine has said many times “service ain’t for wimps” (only the strong survive… for those that do not read ’southern’ )
I don’t want to speak for Kim however I have had some experience doing what she is doing so here is what I imagine are the underlying issues that Kim has had to overcome. The complexity of innovation is made more difficult in Healthcare product manufacturers because some of what they do is in a regulated business. When it comes to critical medical products, the government makes change more difficult. Second, Kim is working with a large $90+ Billion dollar enterprise, which typically are not known for being nimble or embracing innovation without finding all those lost souls who believe that their workplace is a democracy. Lastly, when you know that what you do might impact on patient’s lives your vision over the horizon may need closer inspection as you move forward. Congratulations to Kim and her team for embracing the ASU resources, finding expert help and moving toward their vision.
I would echo the request that Steve Brown and Mary Jo Bittner gave at the end, tell your friends to come next year. Given the economy and the impact to most conferences this year the turn out this year was outstanding. Sponsors help to make these events better and reduce your costs for attending so we need to thank those that supported our experience at this symposium. Industry supporting academia is also important and one way to help ASU or other Universities is to actively participate in research and the whole education process. Overall I know that I had a great experience and will continue to recommend this symposium to my friends and clients.
That is my opinion, what’s yours?
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11.06.09
Posted in Customer Experience, Service Innovation, Service Science, Service conference, Service education at 8:43 am by Doug Morse
Dateline: Compete Through Service Symposium , DAY 2
“Nobody cares how good you were” This was one of many good quotes from Larry Winget who entertained,energized and educated as the final speaker of the day at ASU’s Compete Through Service Symposium Day 2. Larry, who wrote the book “People are Idiots and I can Prove It”, takes no prisoners when he speaks. While he had everyone laughing in an entertaining way, people got the message about the need for people to take responsibility and be accountable. This is a message that is doubly important in the services business. He tells the simple truth that everyone needs to hear, to be successful takes hard work and excellence. No one is responsible for your successes or failure, other than yourself. Simple message,hard truths.
If you missed the symposium, you missed a great day with great speakers. We started with Rob Hibbard from Enterprise Rent a car. For those involved in Customer Experience communities you are well aware of the success that Enterprise has had in delivering a culture of great customer service backed by great execution. They were written up in Fred Riecheld’s book on Net Promoter Score called “The Ultimate Question” The founder of Enterprise, Jack Taylor, is quoted as saying “Take care of customers and employees and the business will follow.” Simple but powerful message. One example of walking the talk is that Enterprise promotes from within and to be eligible for promotion you have to deliver customer satisfaction at or above the company average. Rob said something else that I thought summarized the focus on customers. He said
“Each moment of truth brings an opportunity to earn or burn customer satisfaction / loyalty.”
It must work because their business results show the benefit of the passionate customer service.
Next up was Bob Gilligan from GE Energy. He talked about the tremendous challenge that the Electric Utilities will be facing in the near future. You may not have thought much about the power utility business as a consumer but big changes are coming. Growing markets for digital products are increasing demand on the electrical grids. 10% of electricity is consumed by digital products today and growing to 20% very quickly. Electrical Utilities are becoming large complex service networks and GE and others will need to be collaborative partners with the utilities and the consumers. The value proposition surrounding electrical grid will change from just reliable transmission of power to one that is a partnership with consumers to save money, improve the environment and manage the efficiency of the technology. This presentation fit in well with the presentation that was delivered later by Dr Jim Spohrer from IBM when he spoke about IBM’s “Smarter Planet” Initiative.
As I mentioned yesterday; the brilliance of this symposium is the mix of subjects and industries that we are exposed too. Kate Johnson from Oracle talked about a leading software company in B to B environment and their perspective of services. The lessons here are that Oracle is really using services to not only support their technology but to partner with customers to increase the utility of the software purchases while lowering their overall IT costs. Innovation is key to help move from a reactive delivery of service to a proactive delivery of value. She also talked about their investment into collaborative support models.
The last presentation of the morning was by Dr. Jim Spohrer from IBM research. Jim talked about the need for greater investment into the science of service and how SSME ( Service Science Management and Engineering ) research has yielded over an 8 x return on investment for IBM. Service innovation pays. Dr Spohrer also talked about the deficits in education and skills needed for service innovation. To solve some of the challenges of the future, especially in complex service systems, we need more University graduates who are cross disciplinary. He refereed to “T” shape people. People need deep domain expertise in something but also need broader skills and understanding of how their specialized domain interacts with adjacent domains.
The afternoon sessions were breakouts with too many good choices. One of the sessions that I could attend featured a panel with IDEO, Boeing Services, Mayo Clinics, Marriot Hotels and Petsmart that discussed Service Design. Here were vastly different businesses with many similarities in their approach to service design. The key was they they all seemed to have a well defined process for design, test and roll out of new services. One line that I liked came from Petsmart who said that you have to design and develop services that customers will pay for. Quite often customers may ask for a type of service but are not willing to a pay the price (or cost ) for that service. Service offerings need to be tested or piloted before wide scale deployment. We heard this message in other presentation as well.
Long but enjoyable day. It was great to meet new people and see old friends during the networking sessions.
It was another good day in the symposium. That is my opinion, what is yours?
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11.05.09
Posted in Academia, Service Innovation, Service Science, Service conference, Service education at 8:21 am by Doug Morse
Dateline: Compete Through Service Symposium , DAY 1.
For those that regularly follow this blog you know that I am a huge advocate for what the Center for Services Leadership at Arizona State University’s (ASU ) WP Carey School of Business brings to the service industry. For 20 years they have put on a unique conference that brings together some of the best and brightest in the services industry, globally recognized academics in the services field and speakers who both inform and inspire. It is my pleasure to bring you some of the highlights from this conference. For those that are attending, I hope that you will add your thoughts and comments. For those who could not attend because of the current business pressures, I hope that this will give you some insight. Perhaps if your boss reads this blog he/she will make sure that you can attend NEXT year. (call me an optimist…. )
Emily Yellin, author of the book “Your call is just not that important to us” ended the day and her presentation with the thought that the service industry should think about their “Karma Footprint” as a measure of our success. Perhaps Emily can become the Al Gore of the Call Center Environment….
Emily is a journalist who was frustrated with her personal experience with a call center and decided to investigate the call centers of the world. Her book relates the stories of what she found in her interviews and how the little things can really be BIG things if they are not addressed. Her observations led her to talk to us about 3 key areas of focus for successful service organizations. They were :
– Design
– Follow though
– Values
Design was about knowing and understanding the full servicescape and actively designing more complete services that add value to the customer experience. Follow through was about understanding the language that we use and how we communicate with our customer and how to understand what the customers are looking for to solve their issue. She advised to look for ways to say “yes” to customers rather than finding ways to blindly comply with internally focused business rules. For values she observed that service groups are often marginalized in organizations (this resonated in the crowd !) and as a result employees were not inspired to deliver excellent service. Companies who have core values focused on the customer create better cultures. Zappos is certainly a great example of how values in an organization make a difference.
What was particularly good about Emily and her presentation was that while she is not a service professional her findings from her research seem to sum up the two previous speakers in a very authentic way and in which we can all relate.
The first speaker of the day was Jim Champy, who is the well known author of “Re-engineering the Corporation” along with his new book, “Inspire”. His first book was a bible for me when it came out so I am anxious to read his new books. The subtitle of “Inspire” is “Why customers come back” “Inspire” is about doing those things that inspire a customer to come back or for them to become loyal customers. There are many examples of companies that he cited but the key points for me were things that all companies should understand today.
- Be a part of a compelling cause. Customers will want to do business with companies for whom they feel support a common cause. (environment, healthcare reform, etc. )
- You can leverage both high tech and high touch to deliver customer value
- Understand the needs of the customer. Seems simple but so many companies try to sell what the customers THINK that they want and not really understand what they need. Henry Ford once said”If I had asked my customers what they wanted, they would have said a faster horse” In my opinion, understanding needs with a unique perspective is a way to drive innovation.
- Business models need to align to customer values (we often call this selling to the customer value chain )
- Customers are inspired when you simplify complexity for them
- Companies need to be Authentic. To be truly authentic requires that the culture across the ecosystem is authentic. It can’t be a slogan or just one department.
- Companies must be honest and transparent. In today’s connected world customers will figure out when there is inconsistency
After Jim Champy we heard from Michael Critelli CEO (ret. ) of Pitney Bowes. One of the best aspects of this symposium for me is that we get to hear from many different industries and the symposium covers consumer based services, business to business service and even government services. It is a great mix that ASU puts together.
Michael Critelli talked about the difficult nature of B to B service and how it is more complex than consumer based service delivery. ( a man after my own heart ) He spoke about the trade offs that Pitney Bowes had to make to transform their business He suggested that B to B companies offering services have to make choices along a continuum and across several axises. These included:
- Profit center vs product integrated offerings
- How do you staff, build and hope they come or try to deliver just in time resources appropriate for the customer need.
- Range of offerings. Do you offer Kiosk (self service type offerings )or high touch and high cost (concierge type ) offering or a mix?
One point that was highlighted for me was when Michael talked about High Tech / Low Touch services that he called Kiosk services. We know from our research that the number one attribute of service favored by customers is relationship. They want to know that your interests and theirs are aligned. If you move customers to lower touch services models you lose the old methods of maintaining the relationship and need to put in new measures and triggers that will help you keep in alignment with your customers needs.
One last item that I wanted to highlight was the presentation around what the CSL does and what makes it unique. For those that know me know that I am a supporter of Service Science and Service Education. ASU is one of the leading Universities in both of these areas. Mary Jo Bittner showed us a real life example of how businesses and universities can partner to bring about service innovation and trans formative change.
Not bad for day one. That is my opinion, what is yours?
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09.22.09
Posted in Academia, Service Innovation, Service Science at 7:43 pm by Doug Morse
For those that regularly follow my Blog you know that I am a huge advocate of education for service professionals. In fact, my involvement and ongoing interest in service science ( SSME ) has been to increase research and education around the services industry. Let’s face it; people are not typically prepared for a service economy career coming out of universities.
For those in the services profession, continuing education is also a challenge. As service leaders we can get so involved in our day to day world that we forget that we need to recharge the batteries to get us energized. It is even more difficult to find service specific career education opportunities. There are trade associations who may teach and share best practices but where does a service leader go to get inspiration or hear about true innovation specific to the uniqueness of the services world? Industry associations tend to focus on their industry specific segments but there are many lessons in services to be learned from all of the different service sectors. Business services, consumer services and even government service organizations can share and learn from the experiences and innovation that each create.
So, where can all of this happen? I have an answer, Arizona State University- Center for Services Leadership. Specifically their annual “Competes Through Service Symposium” Nov-4-6 in Phoenix. This is the 20th year for this event and each year it grows and delivers more value. This is the one event that I recommend to all service leaders and to all of my clients. At this event you will hear stories from many types of service organizations. Business, consumer, government and public sector service thought leaders and innovators share their stories. From a leadership perspective you can count on gaining new perspectives on the world, on social issues and how you personally can make a difference. This is truly a unique opportunity and experience that should not be missed.
As someone who chose to start a new consulting business in the middle of the worst recession in history, I understand that times are tough and budgets are tight. You have to consider this an investment and remember the big picture. This is an investment in your career and it is an investment into your business. This is also an opportunity to open your mind to new possibilities, learn new things on a diverse range of subjects and network with some of the smartest people in the industry. Speaking of being smart, if you want to save a few dollars register before Oct 12th for the best price by going to: www.wpcarey.asu.edu/symposium .
I do not mean for this to sound like an advertisement but this is an event about which I can get personally excited. Last year I wrote a blog each day of the event to share with those who could not attend on some of what they missed. Again this year I will be blogging to bring you a few of the highlights from the speakers each day. You can read my blog entries from last year’s event by going to: http://serviceinnovation.spaces.live.com/blog/cns!3F0B8EF511D76F1D!139.entry
This year, you can view my daily blog at : http://blog.servtrans.com/ or www.thesrii.org under the blog tab.
If you do not know what ASU’s Center for Services Leadership can do for you or your business you are missing out on a major resource, in my opinion. This unique center has been known for its leadership in service education and research for over 25 years. Uniquely, they have been able to form ongoing partnerships with industry that have greatly advanced research and service innovation. These Industry / University relationships are critical success factors in many other disciplines and industries with proven success and innovation as the result. While technology and science schools more readily collaborate with the private sector to create new products and intellectual property, this is not the norm for business schools and ASU is truly unique. We need many more examples like ASU in the services industry and we need to see the service industry leverage more of these university resources to drive innovation across the academic disciplines.
So, in the theme of the symposium here is your chance to shape your world, to shape your career and to help shape the future of services.
That is my opinion, what is yours?
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08.11.09
Posted in SRII, Service Innovation, Service Science at 6:26 pm by Doug Morse
I am pleased to announce that in collaboration with IBM’s Almaden Research Center, San Jose State University, University of San Francisco and other leading service science experts, a new monthly lecture series for Service Science will be starting Sept 10th 2009 in the San Francisco Bay Area. This no-charge lecture series will bring together the leading academics, researchers and practicing service professionals to discuss topics related to Service Science, Management and Engineering (a.k.a. SSME ).
The lecture series will be held on the second Thursday of each month starting September 10th from 4 to 6 pm. Information and registration details can be found at www.bayarea-ssme.org or by emailing info@bayarea-ssme.org. The first lecture will feature a panel that will discuss the “Progress and Challenges of SSME.” The panel will feature Dr. Jim Spohrer of IBM, considered to be the “father of Service Science”, JB Wood, CEO of SSPA /TPSA, the largest service trade association in the world and Douglas Morse, Managing Principal and Founder of the Services Transformation and Innovation Group LLC., a consulting firm focused on service innovation in B to B environments.
The series will feature guest lecturers whose thought leadership and work are helping to change the world of service science and help us all compete in the new global service economy. The San Francisco Bay Area, including Silicon Valley has a rich resource base for service thought leadership. We hope that similar lecture series or seminars can be started in other parts of the world so that everyone can participate. As resources permit, we hope to have the lectures recorded for sharing on the web.
If you live in the greater San Francisco Bay Area, we hope that you can join us for the lecture and networking opportunity. If you are traveling in the area we hope that you can take the time to visit. Seating is limited so we do simply ask that you reserve a seat by going to the website or sending an email.
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07.27.09
Posted in Customer Experience, Net Promoter / Customer Satisfaction, Service Innovation at 10:34 pm by Doug Morse
Ok, I admit that I am torn. I do not know whether to be happy that two inventive and customer oriented companies might make each other better or sad that a great culture like Zappos might get corrupted. In truth, I can certainly understand the benefits to both organizations of joining forces and it could make sense if it works as described by Zappos CEO, Tony Hsieh in his letter to employees (see: http://blogs.zappos.com/ceoletter ) .
I have had the pleasure of meeting and listening to Tony Hsieh and hearing about how he and his partners built Zappos WITH his employees FOR customers. If you are interested in subjects like customer satisfaction, customer experience or even Net Promoter you should know the story of Zappos. The fact that they sell great products with great prices and service that can WOW customers is not the best part of the Zappos story. The best part of the story is that the culture and success of the company is built around a complete and fanatical devotion to a core set of values. These core values are what allow the company to build a great brand. The key is that this is not just a set of words used in the annual reports to describe the company vision. This is how they live. This is how they build hiring practices, business policies and operating processes. It is a holistic devotion to build a brand that will always strive to delight customers. I really think that Tony and his partners have brought us a great example of what a customer centric enterprise can be.
Amazon is another company that I admire especially if you think of them as a service provider rather than just an online retailer. Their strategy around customer centricity and innovation is to be admired, in my opinion. In particular, their move to elastic cloud computing as a service was a brilliant services strategy.
Can 1 + 1 eventually equal 3? Hopefully bringing these two companies together will take the best of both to create something even better. The trick in these marriages is in the integration and in respecting the different cultures and best practices. I wish these both Zappos and Amazon a great future and hope that they can create a WOW factor for all concerned.
For those service researchers and professionals who are reading this, I strong recommend that you look at these two organizations as great examples of what service can be in this new service economy. As we have always said in my organization: “ It is not about the PRICE, it is about the VALUE” and clearly they have figure out how to bring the value to customers.
That is my opinion, what’s yours?
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07.16.09
Posted in Service Innovation at 6:38 pm by Doug Morse
What if GM, a.k.a. “General Motors” was now called “Global Mobility” or even “General Mobility”, would that change what they do? A name change alone would not change things perhaps; but if the name was changed because of a new way of thinking about the value that they could bring to the world, it might. In our consulting business, which is focused on innovation and transformation of businesses, we have a key saying.
“If you ask a different question, you will get a different answer”.
What we mean by this is that evolution happens as we continue to improve the status quo but revolution happens when we start to think about improving the outcomes of what we do in new ways. The simple example would be to consider a quote associated with Henry Ford that said “If I had asked my customers what they ‘wanted’ they would have simply said, faster horses”. His customers knew they needed something that would be faster than a horse that could transport more over longer distance and could help them be more efficient. Henry looked at the larger issues around the attributes of transportation that people desired. Further, he knew that cars could not just be toys for the wealthy but needed to impact society at all levels. He thought about the problem differently and he had different answers. It was not about the automobile, it was about building something that was cheap, reliable and usable for the common man that would improve society as a whole. It was about raising the living wage so that people could afford the technology that would make their lives better. It was about social revolution and not about transportation evolution.
Back to the original question. I am picking on GM because of their recent history and spot in the current news. They want to reinvent themselves as they emerge from their bankruptcy. They want to be more “green” and produce products that meet a current paradigm that automobiles must be the symbol for saving the world as much as they have been vilified for polluting it in the past. At the end of the day GM goes from being a manufacturer of automobiles to a manufacturer of automobiles with a conscience. Of course this is more of a marketing ploy than a real change of culture. In essence cars, individually, are not the evil polluters or consumer of global resources they are made out to be by the eco-frauds. Building hybrids vehicles, ethanol powered cars, electric battery packs all consume resources greater than any that they may save. Ethanol, as an example, consumes thousands of gallons of water to make a few gallons of ethanol and uses lots of energy from coal fired power plants to produce less energy (BTU) equivalents. Therefore running ethanol in your vehicles only really helps the corn farmers but it sounds “green”. Thus far electric and hybrids follow much the same pattern. They consume more resources than they save. Nuclear powered power plants would not only make more of these car technologies work better( think Hydrogen Fuel cells etc ), it would be a 1000 times more impactful and green than forcing car companies to meet artificial environmental standards.
What does this have to do with services? Well, what if GM did not think of themselves as an ‘Automotive Manufacturer’ but rather as a provider of ‘ Mobility Services’? Let’s look at the challenges that an automobile manufacturer faces under today’s paradigm.
• They build hard goods whose profits come from selling to dealers and not consumers. Their profit is on the sale of the manufactured goods. They have little participation in the lifetime of services after the sales. The margins are thin at best and this drives them to create products not totally in line with the best interests of the consumers and the rest of the world.
• As citizens of the world, and the ranking villains in terms of environmental impacts, they want to be a part of the solution and not the problem. They will be forced to reduced their so called “carbon footprint” (thanks AL …. )
• In the history of the automobile, there have been over 5500 brands and companies, what differentiates an auto company in a mature commodity market that will allow a GM to thrive another 100 years?
In essence if GM asked “the different question” and looked at what the world really needs against their current challenges the answer would not be the not-so “New GM”. Let’s assume for the moment that most people buy cars to get them from place to place and not as status symbols or extensions of their egos. What if the car could be provided as a service and paid for only as it is used to provide the value associated with transportation? As a consumer the costs of automobile ownership go well beyond the purchase price and cost of gasoline. If you want to lower your personal “carbon footprint” giving up direct ownership would certainly be attractive, assuming that you could still get where you needed to go when needed.
Cutting to the chase, GM could easily dominate the “cars as a service” (CAAS ) market and while they were at it, payback the government loans, make the shareholder rich and provide huge and real positive environmental impact. ( Note to GM CEO: Fritz, call me, I’ll tell you how .. ) To keep this simple, let’s think about companies like Zipcar or City Car that already allow users to share and pay for cars based on incidental use. Need a car? Just go online, find the nearest car, get an access code, drive the car as needed and park it someplace when you are done for the next person to use. You simple pay a fee for the use. You simply pay for the value that the car creates. GM, like many makers, makes cars that are controlled by computers with tons of sensors that can transmits a ton of data. GM also happens to own the ON Star satellite systems and infrastructure that can provide two way communications to their vehicles, seamlessly. GM already has the resources to make this market work better.
GM could provide a fleet of vehicles ranging from urban econo-box to interstate luxury cruisers for shared usage. From someplace in the world GM could easily locate a fleet vehicle, know its fuel state, its overall condition, its consumption rate. They can start or stop the vehicle remotely and control its actions including enforcing safe operation of the vehicle. It is possible for them to provide an ideal platform for the ZIP car market. Taking a theme from IBM’s smarter planet initiative for example, let’s apply the concept to this ‘GM cars as a service’ idea. By having two-way information exchange already built into the vehicle, GM could participate in the life time value of the asset that they now build and sell. Margins could be several hundred percent better than their current business model. A consumer could simply sign up for a service. When they need a car or truck etc, they would go online and find what they need, where they need it. They could ask for and pre-download navigation or other location aware services including concierge services. It would be possible to even coordinate ride shares. Their transportation experience could be enhanced, their costs would be less than car ownership and the planet would benefit from having a few less environmental impacts. GM would be making money like crazy. Little of this scenario requires any new technology. Tie this into the “smart grids” being built for highways, public infrastructure etc and GM could be one of the largest “green” companies of the world reducing their own carbon foot print as well as those of the consumer.
I confess to being an incurable “car guy” and I would still want to see and own some cars for reasons other than basic transportation. Even given the desire to use cars as something other than transportation, I do not have a strong desire to have to own the physical asset. There will remain a market for unique products etc. but if solving for mobility services was the question, how that would be done would be different from what “automobile manufacturers” do today.
That is my opinion, what is yours?
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07.09.09
Posted in Customer Experience, Service Innovation, Service Science at 10:43 pm by Doug Morse
Those that are reading this blog are likely amongst the already converted that clearly understands the importance of service in the world economy. Service now accounts for the majority of the GDP and jobs. Service today is being somewhat redefined in eyes of businesses that used to think of themselves as a just producer of goods rather than a creator of customer value. More than ever companies now realize that service is becoming a larger part of their overall business success. Today, most of the top public technology companies now see more than 50% of their revenues and profits come from services and not just product sales
We, at the Services Transformation and Innovation Group LLC, have been talking about how businesses need to innovate to become more of what we call a “Service Oriented Enterprise”™. People and businesses buy things for the value that they create not just to own an asset. However, most businesses of today learned to operate under business models designed by the manufacturing sector and espoused by Adam Smith in the 1700’s. These outdated business models built highly specialized and independently operating silos within most companies. These silos tend to not have the customer in mind and do not collaborate well to create value for the customers. We think that these models need to change in this new services based economy in which we live today. Examples of what we think of as Service Oriented Enterprise models exist today where major manufacturers of hard goods like tractors and jet engines are selling these goods not as products WITH services but are selling products AS services. For example, an airline can buy “power by hour” and not have own the jet engines used on their airliners. They pay for a service that provides them needed propulsion as they consume it and only as it creates value for their business.
While we have written in a lot more detail about the Services Oriented Enterprise™, (for examples see www.servtrans.com ) the key success factor in making these business transformations work has been an integrated enterprise that effectively leverages technology, process and people to co-create value for, and with, their customers. We were partially inspired by ideas in a book by James Teboul of INSEAD who wrote “Service is Front Stage, Positioning services for value advantage”. In that book, Professor Teboul talks about how front end systems like CRM and back end systems like ERP need to become more interconnected and how much of the service experience comes from the whole enterprise and not just the front line people and systems.
The other day, I was invited to attend a “Enterprise Service Transformation Summit” ( http://www.opnevents.com/programs/transformation/ ) hosted by Oracle, IBM and Motorola in Chicago on July 15th. I was delighted to see the agenda and subject matter that fit so well into what I think represents the future of business. IBM has certainly been at the forefront of the service transformation movements and leading the world in creating thought leadership and research for Service Science. While Oracle and IBM have collaborated before on Service Science initiatives as founders of the Services Research and Innovation Initiatives (www.thesrii.org ), this summit is an entirely new and welcomed commercial collaboration. More importantly, I am seeing the message that service transformation from an Oracle perspective is not just about effective use of CRM systems but in fact the effective use of the entire enterprise technology and business process elements to deliver customer value. This holistic approach is something that we preach to our clients all the time. Oracle has been quietly ( and NOT so quietly ) filling in their portfolio to position themselves as perhaps the unique technology vendor that can best integrate the end to end enterprise that will facilitate the new approaches to the service economy. The subject matter of this summit and the case studies that will be presented were not possible even just a few years ago. I would recommend to any of my clients who want to see what is possible in transforming to a more service oriented business model that they should try to attend this event and encourage the organizers to do more. Yes, it will certainly be a commercial for sponsoring companies but it is also a good learning opportunity.
I have been in the services industry for over 30 years and service is just now getting some of the recognition from businesses, Wall Street and governments that it deserves. In the spirit of full disclosure here, I do have to tell you that I have worked for both IBM and Oracle in the past. I still participate with IBM research in promoting SSME (Service Science Management and Engineering) efforts in order to drive research and education in the service profession. Neither I nor my company is directly affiliated with this event. I am writing about it because I am delighted to see and hear about more companies that are getting the new services religion. Business today is not about producing better, faster and cheaper widgets. It is about producing value for both the shareholders and the customers for whom they serve. For me service is not the new religion. The new religion is being fanatical about driving and participating in customer success. The term “service” is just a good proxy for now.
That’s what I think, what is your opinion?
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06.16.09
Posted in Customer Experience, Service Innovation, Service Science at 6:23 pm by Doug Morse
Service is all about delivering value to our customers. We all say that we deliver value, but how do we know?
Service has been described in the service science literature as a process of value co-creation between the provider and the customers. Assuming that this is true, how do we gather the input from the customers? While we may be able to observe customer behavior in a consumer situation, how is this done in B to B transactions? Aside from possibly repeat business how do we measure success in value co-creation?
These are all questions that we need to be able to answer as we advance service business models. In the model that I call the Service Oriented Enterprise™, we can measure the success because the enterprise shares in their customer’s success, financially. However this model is not practical for everyone today and we must therefore develop other models for acquiring customer intelligence and measuring the value that we might create.
On the customer intelligence side, the standard methodology today is to survey the customers. (or potential customers ) We see these surveys today in terms of Customer Satisfaction Surveys, Net Promoter Surveys, direct and indirect market research questionnaires and the like. In other situations companies might create user groups, in person or connected via the web, to try to understand customer wants and needs. In essence, most companies today still gather input by the same methods that we have used for decades. At times the input from customers might actually inhibit innovation if it is taken too literally. Henry Ford once said: “ If I had asked my customers what they wanted, they would have said, faster horses”
To a greater extent the problems that we have with the common practices today around gathering input from customers is that we are asking the wrong people. First, we create surveys with natural biases then we ask people who are likely to respond. If you send out a customer satisfaction survey after a transaction then you will also see bias in the response. Getting response rates to surveys above ten per cent is considered good but look who typically answers surveys. Those that respond to customer satisfaction surveys are doing so because they care. They either like you or hate you and the middle ground remains silent. What you don’t know will hurt you so getting silent customers to talk to you is the key.
We live in a connected world and the truth is that you customers talk to you, and about you, everyday and you are not capturing the intelligence that they are giving you. Front line personnel in particular can hear about product improvement areas, complaints (that might lead to future legal action! ) and opportunities to sell. Even if they are equipped with the tools and training to capture the information, it too will be biased. Important and valuable customer intelligence is being lost every day. Let’s stop the leaks now!
Conceptually we can solve these problems and might effectively end “surveying” as we know it. What if we could analyze every customer communication that happened within the normal flow of business? What if we could understand what people were saying about our companies in the social media, blogs, forums and web communities? And, what if that data could be presented in a way that could show us the impact to our brand value? The truth is, this is all possible today.
The tools used to analyze electronic traffic by government intelligence agencies that protect our countries can also be used to protect and grow our businesses. The technology is here today but has not been put together with the business process and business analytics needed to turn the raw data into actionable business plans. We already use voice analytics in call centers for quality monitoring or threat analysis, we have so called ‘net-bots’ that roam the web looking for targeted marketing opportunities and we have text analytics for email, chats etc. None of these are well focused to discern unmet customer needs, attributes of satisfaction or other metrics that will increase our levels of customer intimacy. In spite of claims to the contrary by CRM vendors, ‘360 degree’ views of the customer are still missing quite a few points around that compass
This opens several new possibilities for companies. The barriers to create this have nothing to do with technology or even the science. The key barrier is a company’s willingness to become truly customer focused and remember that to understand, one must first know how to listen. The Services Transformation and Innovation Group has partnered with leaders in the technology and business process space surrounding strategic gathering and use of customer intelligence. If you are interested in learning more, contact us for pilot opportunites that will help you get ahead of the competition, reduce legal exposures and maximize your future opportunities. Email info@servtrans.com for more information.
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