Are Customers "Pulling" Value from Your Services?

In service organizations, customers demand good service, but what does that mean?  In a call center (or any place a customer interacts with your service company), customers want that one call (stop) resolution.  If a customer can get what they want in one phone call or one phone call plus one hand-off than they will be able to derive or “pull” value.  So, how easy is it to pull value from your organization?

We have found that the highest amount of closure in one stop to be around 65%.  My bank management consulting background has seen one stop resolution as low as 15% in US banks.  Often service organizations will claim one stop resolution until we perform “check” and discover that this is not true when we evaluate their workflow.  When one call resolution becomes a target we often see massaging of the data to achieve these targets.

The amount of complexity to a phone call varies by industry where retail typically has lower complexity than a IT help desk.  Regardless, call centers designed based on what matters to customers allow these customers to “pull” value from them.  The reality is this does not happen as customers are put in queues and dealt with by busy service folks (with talk time targets) and can’t “pull” this value. 

Most call centers (after evaluation) we have worked with have not been able to provide even the most basic of services in a customer satisfactory way.  When they can’t “pull” this value, you wind up with failure demand (chase calls, problem calls, escalations etc.) that wind up costing more than if the service organization would have dealt with them correctly in the first place.  This failure demand is not accounted for by the command and control thinker or on any balance sheet/income statement for those that see calls as productivity costs to be managed.
 
Call center managers are concerned about “push” because of this productivity mind set.  Prescribing how service agents should act at the point of contact.  The assumption is that customers will value the same things and management can come up with the right script to satisfy it.  We hear talk of service organizations wanting meet or exceed customer expectations but little change of method to achieve it and organizations failure to recognize “push” methods won’t achieve it.  The result of these prescribed “push” methods is higher costs (rework) and worse service.

A systems thinking organization understand the difference between “push” and “pull” and that an understanding of customer demand is the first step to redesigning the work to absorb customer variety.  They also understand the management paradox that costs go down when service improves.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control thinking and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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3 Things to Consider Before Outsourcing

I spoke to a reporter from India (Reed Business Information) this morning regarding outsourcing and more specifically the impact on Infosys.  He informed me my view was “different” than everyone else and I could only reply that I was used to that comment.  Most Americans want “in-sourcing” because they want to bring jobs back to North America, I want service organizations to realize it is a poor financial decision to take this call center or IT outsourcing strategy. 

Decisions are made in command and control fashion from the financials without knowledge of the work and/or based on scientific management theory that has long proven . . . outdated.  So here are 3 things to consider before you outsource:

  1. The Work.  For a call center what is the type and frequency of demand.  More importantly is the demand value or failure?  Most call centers have between 25 – 75% failure demand in their call centers and after outsourced lock in the costs of this failure demand.  For software development it is the realization that software is not developed in a production line, software is developed from knowledge about the work.  When developers are separated from the work it almost guarantees a poor outcome in what is coded leading to multiple rounds of rework that quickly lose their “cost advantage.”
  2. Economies of Flow.  Economies of scale drives American business.  Few understand “economies of flow” is the real driver of costs.  Trapped in this wrong paradigm service organizations separate functions of work outsourcing pieces leading to sub-optimization (improving the cost of one area at the expense of all others increasing total costs).
  3. Ancillary Costs.  There are technology costs, contracting costs, turnover costs, training costs, meeting costs, customer impact costs, etc.  Look hard at what really is involved and you will probably find other hidden costs.

Evaluating these 3 areas before outsourcing can lead you to better decision-making about what your service organization should do when considering an outsourcing strategy or even an in-sourcing strategy. 

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our evaluation of in-sourcing or outsourcing strategies at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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The Waste of Targets in No Child Left Behind

In Indiana, if the 180-day mandatory school year wasn’t bad enough, now we have these “standards” (targets) for the federal No Child Left Behind Program.  Last year 65.7% had to pass the test and the new target for this year is 72.6%.  This increase in the target has made in the best schools in Indiana “fail” in the eyes of this federal program.  All this foolishness achieves nothing.

The school systems are performing the best their systems are capable of achieving.  Let me give you an example.  I shoot around 80 when I play golf.  My system allows me to shoot in a range between 75 and 85 with an average of 80.  This is what I am capable of achieving without changes to the system.  To have someone tell me to shoot 72 (on average) requires a change to my system (swing, short game, etc.).  Just setting the target does not change method.  Our school systems need to change method to achieve new heights . . . a new target without method achieves nothing. 

Worse these targets become the defacto purpose of the school systems when the real purpose should be to find new methods to educate our children.  Instead, this defacto purpose urges schools to meet the target.  The targets will (and have) promote cheating and manipulation in the school system that distracts them from changing method and blurring the schools purpose.  These are old methods born from scientific management theory from the late 1800s.

Let’s look at the waste already being created.  My son goes to Hamilton Southeastern and we have already received a letter from the principal explaining why they didn’t pass the new standard target.  I don’t care the reason and what a waste of time and resources for the principal to have to take to to explain.  He needs to be finding better methods.  Targets are creating waste in letters of explanations (time to write), and mailings (money).

Our school systems are badly in need of better methods, not targets.  Our country and state need to focus developing these new methods and gaining knowledge.  I urge Dr. Bennett to find new thinking as targets and standards are ancient ways and cause intolerable waste.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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The Paradox of Susan Boyle

How do you not blog about this woman.  Everyone should have seen this by now http://www.youtube.com/watch?v=9lp0IWv8QZY.  We need more stories like this to remove the cynicism of the world.  The paradox of Susan Boyle is somewhat of an enigma.  She is a new chapter to be written.  I can not help but believe that these types of jolts to our individual systems can only have a positive impact on the broader systems.

It makes me wonder if the management paradox we face in scientific management theory and command and control thinking vs. systems thinking could have the same impact for business.  For me, I believe it can.  This will require people to not be cynical and open their minds to systems thinking.  It is not what we were taught or our belief systems to believe.  The counter-intuitive nature of the thinking of W. Edwards Deming, and Taiichi Ohno require a shock to our belief system, but as Susan Boyle has shown us the sound can be beautiful.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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The Standard Email: Acknowledgement, Order Status and Thank You

We all get them the standard email when doing business with an organization.  “We acknowledge receipt of your order” and “Thank you for your business.”  It’s appropriate to thank someone and acknowledge their order.  It is just so  . . . automated.  I like the thank you, but it doesn’t sound real or heartfelt.  I will soon forget this company and may buy from someone else just because the experience wasn’t memorable.  Some services may get away with this, but if I am spending money that is significant . . . I want more . . . your customers want more.

Technology change management has brought us email and it saves money which for the command and control thinker is a bottom-line proposition.  Order status emails makes me wonder how much money they are wasting in technology and other non-value-added tasks to tell me the status, they are locking in waste.  As a customer I am left wanting more service and am more likely to refer business with a feeling of belonging than a “cost-saving” email.  If my experience is bad or didn’t meet my expectations the “standard” survey does not account for the variety of demand that I want from a service.  Standard emails, scripts and technology can not absorb this variety and usually lead to increased costs.

The customer management process must be appropriate for this variety of demand.  We are in desperate need of methods that lead to absorbing this variety.  Studying customer demand is a good starting point.  The type and frequency of demand will tell us how to redesign our services for customers to “pull” value.  This method will allow a service organization to achieve business improvement, business cost reductions and new business with a more customer friendly and “systems thinking” work design.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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A Systems View

The first signs of systems thinking came in the middle of the last century in Japan.  This is where W. Edwards Deming influenced the Japanese to start to understand their organizations as systems.  They learned that the functional separation of work and budgetary controls led to sub-optimization and reduced performance. 

When economies of scale first enlightened Frederick Winslow Taylor in the late 1800s it was a breakthrough for its time.  The Japanese breakthrough was about taking a systems view to manage economies of flow an advancement so large it had US manufacturers pleading for protection.

Taiichi Ohno and Shigeo Shingo further developed these ideas at Toyota and Matsushita.  As a whole this the work of these two and Deming largely made up the Japanese Industrial Miracle.

US service companies still follow the economies of scale approach in command and control fashion.  Functional separation of work and budgetary controls that lead to sub-optimization.  The problem with command and control is the design and management of the work.  This thinking features separation of the decision-making from the work.  The worker works and management makes the decisions.  Work is broken into functions and decision-making (control) is achieved through financial goals and performance targets.  Management focuses on output for business improvement and cost reduction.   This focus assures sub-optimization by causing waste and preventing learning about the “what and why” of organizational performance.  Another drawback is the damage it does to culture when those that understand the work can’t make decisions about it or when they are forced to targets they know damage the customer and create internal competition.

This command and control thinking will be abandoned eventually.  John Chambers of Cisco says it will happen in 5 – 10 years.  Will your organization be ready?  What can be done.

Taking a systems view we can overcome this sub-optimal thinking.  To improve performance we must change the system to change the system we must change thinking to systems thinking.  Management thinking must change to improve the system . . . they are the owners of the system.  The good news is with the right approach this thinking can change in a short period of time in service industry. Months rather than years to achieve business improvement, culture change, and business cost reductions.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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Customer Purgatory: The IVR

 

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As a customer I hate them . . . and as a consultant I hate them.  The IVR (Interactive Voice Response) system that you have to call and usually guess what to say or which button to push to speak to a person.  The questions are usually asked about your account number, number of visits (Disney), phone number, etc., and after answering these questions you are asked to repeat them again when you talk to an agent.  If you hit the wrong button, back into the queue you go and typically with another 8 – 12 minute wait.  The IVR “choices” are not always the way I would communicate my order or problem and I find myself guessing whether what I said or pushed was “correct” and I am occasionally chastised for being so  . . . ignorant.  Or sometimes the agent will tell me no one ever really “figures it out.”  I am not sure that makes me feel better.

Organizations that try to break calls down into pieces mostly find themselves with a significant number of lost or mis-routed calls.  Working to standards (method, procedures, scripts or work volumes) usually increases costs. That business improvement and business cost reduction exercise winds up increasing costs and creating a poor customer experience . . . a management paradox.  This problem becomes worse when people are removed from the call center in anticipation of “efficiencies.”

The current design of most call centers does not allow for value to be pulled by the customer.  Straight talk:  The poor service and inefficiencies (waste) are caused by the way call centers are designed and managed.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and terminating bad service through application of new thinking . . . systems thinking.  Download Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  You can Twitter him at “TriBabbitt.”

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John Chambers (Cisco) Declares "Command and Control is Dead"

Some relief in the 60 blogs I have written exposing command and control thinking as the root cause of bad service and increased costs.  John Chambers (CEO of Cisco) has declared that command and control thinking is dead and if you are an organization using this methodology you will be out of business in 5 – 10 years.  I would say he is about right on the time period and that it is about time a CEO of a major corporation recognized this fact.

The

The table above describes the differences between command and control and systems thinking.  In a word, they are . . . immense.  To move from command and control to systems thinking it requires a change in thinking that can only be learned by doing.  Organizational change management doesn’t require tools, it requires new thinking to replace old thinking (scientific management theory). 

The seeds of change are upon us.  If you haven’t already, start with the free download of “Understanding Your Organization as a System”.  Last one out (of command and control thinking) IS the dinosaur . . . and we know how that ends.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

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The Zero-Sum Game: A Loser's Mentality

Most of us have connected with the service sector (public or private) and felt like we have been “worked.”  That burning feeling that what matters to you does not matter to the service company you are interacting with. 

The source of this feeling might be the IVR system you have to go through with its multiple layers of questions and feeling like you won the lottery that day by saying the right words or pushing the right buttons to get to a person that can actually help you.  The multiple follow-up calls you have to make to get an answer can be both frustrating and time consuming.  All along you think in the back of your mind either “how can I quit using this company” or “how do these companies stay in business with such poor service?”  A lot of us tolerate the poor service because we figure the next service organization will be just as bad as this one and the switching cost is too high.

The sad part is that service organizations could provide really good service at a lower cost, but command and control management doesn’t think that way.  The command and control mentality prevents good service and promotes higher cost.  They just don’t see it.  They manage their businesses in a zero-sum game believing there is a trade-off between costs and good service.  One can only be achieved at the expense of the other.  And guess which loses most of the time . . . good service at the expense of some financial or performance target typically for some financial reward that customers would cringe at if they knew about.  The leadership strategy of command and control organizations is to do as little for the customer as possible and maybe they won’t recognize or complain about the bad service.

The problem is customers aren’t stupid and the tolerance for poor service is at boiling point.  Social and business networks are now offering mediums to communicate poor service in an on-line instantaneous fashion that is viral in nature.  People will know about a company’s poor service much faster than before and avoid using those organizations that are guilty.  Recovery will be too late and the costs that don’t show up on the financials will already be incurred.

The management paradox here is that all this is unnecessary.  The zero-sum game is a loser’s mentality.  More costs are incurred through bad or poor service than are incurred when the service is good.  Command and control thinkers do not account for failure demand, multiple calls from the same person to get a problem corrected, or chase the status of a previous call.  All failure demand is waste.  Imagine how much costs would fall if customers got what they want and the corresponding system was re-designed to give the customer what they want and eliminate this failure demand.  Costs would fall and service would improve.

The systems thinking organization understands that value drives profit and not vice versa.  The command and control organization only knows the zero-sum game that is a guaranteed loser.  A change in leadership strategy is imminent, where will your service organization wind up?

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and terminating bad service through application of new thinking . . . systems thinking.  Download (free) Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.

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The New SPC for Service: System Performance Capability

One of the things that is integral to a systems thinking approach is the use of data, but not in the command and control way of thinking.  I have already heard from many of you moving away from traditional (and destructive) call center management measures like talk time and other productivity related measures.

We also need to understand the data on a service organization’s ability to perform against customer demand.  These are better measures regarding the performance of the system as a whole and not the performance of a unit or department.  A systems thinker understands that if the customer expects to get something within a time frame (say a week) and the service isn’t performed during this time frame it will create failure demand (chase calls).

The data from the customer expectation is typically “end-to-end” and crosses (potentially) multiple units or departments.  In a command and control organization the measures are by individual, unit , or department and not “end-to-end.”  These end-to-end times have a nominal value (what matters to the customer) and in command and control organizations are often ignored.

The new SPC for service needs to be Service Performance Capability using statistical process control.  What is the customer expectation around a service and how well does the service organization perform around it.  This “outside-in” approach is key to the systems thinking organization.  The command and control organization will pass down financial and performance metrics from the top-down and never consider the customer perspective.

The measures needed to achieve business improvement are concerned with the demand and flow:
Demand – The type and frequency of demand that customers put on the system.  The predictability of failure and value demand.
Flow - The capability of the system to handle demand in one-stop. If customer demand has to go through multiple hand-offs what is the capability of that demand as defined by the customer.

In future blogs I will walk through the statistical definition of capability for our new SPC system.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control thinking and terminating bad service through application of new thinking . . . systems thinking.  Download Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.

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The 95 Method