Just the other day I was standing in the lobby of a hotel waiting for the elavator to arrive. I had plenty of thinking time while I waited, and I was reminded of a great recent example of customer-focused innovation. I don’t know whether your experience is the same as mine, but I find myself spending a lot of time waiting for elavators to arrive. This is a common problem in large buildings with a large number of people – busy elavators have to stop at all floors, slowing their progress and increasing the frustration of those waiting for one to arrive. The answer has often been to put in more elavators, but this causes problems elsewhere notably in the reduction of valuable office space. Some manufacturers and developers have looked to smaller, quicker elevators to alleviate the problem but have come up against capacity issues.
Otis Elevators took a different view and looked at the way the Japanese railway system works. In Japan, as in many countries, there are both local and express rail services. The difference is that they run on separate tracks meaning that the slow trains do not hold up the express services. When you arrive at the station the train you need is determined by your destination, the time you want to take, and how much you want to pay. Otis took that idea and came up with a control panel in the lift lobby – you put in your security card (the mechanism doubles as an ID system), key in the floor that you want to go to and it tells you which lift will get you there the quickest. They have been able to reduce the number of lifts, increase capacity, improve the experience and they now lead the elevator market.
What Otis Elevators have done is a great example of innovation based on Successful Customer Outcomes (SCOs). To achieve this leap forward in the market they have done three things:
* Understood who their real customers are;
* Worked out what was needed to satisfy these customers;
* Made sure that they can deliver effectively against these SCOs.
It is this combination of getting the SCOs right and making sure that they can be delivered that is the basis of the final article in this mini-series.
To recap briefly the two earlier articles looked at the criticality of having the customer as the focus of the whole organization’s activities. This emphasis isn’t just in the words that the organization uses but in everything that the company does, from the way that it structures itself, through performance rewards to innovation. Being a business driven by SCOs also means moving away from the constraints of industrial age thinking – big hierarchies, functional stovepipes and limiting improvement to the best practice seen in competitors. Now I will look at three steps that all organizations can take to make the transition to what I call the Age of the Customer.
1. Work out the customers whose needs you are trying to meet, and understand those needs well
A fundamental requirement for defining good SCOs is to make sure you are concentrating on the right “C”. You will have heard the phrase “the customer is always right”. Well that’s not true, at least not in the way that is often used: “every customer is always right”! Some companies are so knotted up with pleasing everybody that they are unable to fully service the needs of the customers that are most important to them. There are always customers who don’t fit well with what a company is trying to do, so be prepared to lose them, so that you can better focus on the customers that you do want. If that sounds like heresy then think in terms of custom rather than customer – there are certain needs that you can’t or don’t want to meet. It’s not the individual that you are dismissing.
It’s also important to differentiate between core customers and enabling customers. Otis Elevators have been successful by focusing on the true customer (the lift user) but without losing sight of the people that buy the equipment they build, the developers and employers. The spark of differentiation comes from delivering to the real end-user; the rest is about getting the delivery right.
So, knowing your customers needs is a vital part of the process of delivering distinctive offerings. Too many organizations suffer from what I call Customer Attention Deficit Disorder – the inability to focus consistently on customers and their needs. Getting this right needs more than an occasional visit to the frontline or the shop floor. Henry Ford knew what he was talking about when he said “if I had asked what they wanted, they would have said faster horses.” It requires a deep-seated understanding of what is needed throughout the business, not just the results of last week’s telephone survey.
Once you are clear on the customers that you want to serve and what their needs are, the next step involves converting that knowledge into clear objectives.
2. Keep everything clear and simple and focussed on the customer
Consider these two quotations:
Everything should be made as simple as possible, but not simpler.
Simplicity is the ultimate sophistication.
These are not the words of slackers. They come from two of the greatest brains in human history, Einstein and Leonardo da Vinci respectively. These two guys could deal with whatever level of complexity confronted them, so this desire for the right level of simplicity had nothing to do with their intellectual ability. If only that were true of many organizations. How often do we see complexity within organizations, in structure, product range or literature, that is worn almost as a badge of distinction? Every company needs a clear, concise statement of what it exists to do in terms of Successful Customer Outcomes. SCOs are about bringing the total reality in line with the vision so they must be simple. The more involved they are the more difficult they are to understand and deliver.
As a way of differentiating between good and not so good SCOs, let’s look at a recent innovation in car hire. Hertz have developed Neverlost, an in-car GPS navigation service that, as the ad goes, does what it says on the tin. AVIS have introduced an interesting version of this: a mobile ‘phone in the car that can be used to contact a call centre for directions! I know which feels like the better solution.
A crisis is a good test of how customer-focused an organization is. Some of you may have seen the recent British Airways debacle played out on the news. Amid all the strife I was particularly struck by an interview with the BA chief who, indirectly, laid out the priorities that were driving quick resolution of the dispute:
1. Profit
2. Pilots
3. Cabin crew
4. PR
5. Agents
6. Staff
7. Customers
It seemed pretty clear that customer considerations weren’t leading the decision-making as the crisis unfolded. Although BA wasn’t itself the cause of the dispute they had responsibilities because the customers affected were theirs. It is a lesson for all companies outsourcing some of their activities. Feeding passengers should have featured in BA’s SCOs and so they should have been in control of the processes that delivered that SCO. Whatever the chain of events that led to the disruption, BA were culpable because they let go of the customer relationship when they outsourced this activity.
3. Align the organization to the SCOs
Processes are the delivery mechanisms for SCOs, so getting the processes right is a vital part of the alignment activity. Many companies are looking at their processes and developing process dictionaries and the like, but if this isn’t done within the context of SCOs then there is the great risk of just doing the wrong thing more efficiently. There are many techniques available to review and refine processes (BPMG’s 8? framework is a good place to start) – what should emerge though isn’t a set of projects but an ongoing mechanism for ensuring that the company “machinery” is delivering the SCOs.
Although it may seem obvious to put the reorganization bit last it is surprising how often this doesn’t happen. Changing a structure without understanding customer needs and how they are to be delivered simply produces a new way of getting things wrong. In an earlier article I looked at how functional divisions are a barrier to effective cross-business working. These stovepipes have been accompanied by a proliferation of specialist teams (look at the emergence of organization design teams in HR). The inertia created should not be underestimated. Layers of hierarchy also serve to place leaders a long way from where the customer interaction is. Companies built around SCOs don’t look like this. They can be, and are, flatter.
The challenge is clear, and these articles have only touched on some of the questions that organizations that are intent on transforming themselves need answering. There is one question that I hear more than any other, although it’s not often asked directly: how long has my organization got to change? Of course there are many answers to this question, answers dictated by market, competition and many other factors. I will give my answer to this question by briefly highlighting a great example of wholesale transformation to SCOs. BT have moved from a cumbersome, inwardly focused hierarchical model to a much more agile output-based structure in less than three years. They are now a market leader in this level of service orientation. If the largest organizations have already turned themselves outside-in then the companies yet to start will need more than an express lift if they are going to survive in the “Age of the Customer”.
About the Author
Steve Towers, Co-founder and Chair of BP Group (www.bpgroup.org), is an expert on process and performance transformation. Steve founded the first community focused on business process management in 1992.
Steve has bases in Europe (UK), New York and Colorado.
