MONT TREMBLANT – Harvard Business School professor Frances Frei is one of the world’s leading experts on building and running great, service-based organizations and in her research she says she has yet to come across a single customer who didn’t want an excellent service experience, nor has she found an employee who didn’t want to provide an excellent experience.
“And yet, the act remains rare,” she noted at the top of what was superbly entertaining, and ultimately educational 90 minutes in front of delegates to the Canadian Cable Systems Alliance annual Connect conference in Mont Tremblant.
Frei told the audience they had to fight against what could be for many, their natural instincts, and find within themselves four types of courage.
- The courage to be bad
- The courage to create sustainable value
- The courage to champion employees
- The courage to manage and train customers
1. The courage to be bad, said Frei, is essentially knowing you can’t be good at everything, then deciding what it is you’re going to be excellent at – and making a conscious decision to be bad at what matters less to your customers. “Being bad is as important as being great,” she said. “To provide excellence, there are trade-offs.”
She mentioned Apple founder Steve Jobs and about when the company decided a number of years ago to make the Macbook Air the lightest laptop. To be the best at that they had to be the worst at physical features (i.e. no DVD player, for example) and own the decision. Frei noted it’s not being bad for the sake of it, but “being bad in the service of great.” Macbook Air owners do not miss the DVD player. Millions have been sold.
She also held up Southwest Airlines and Wal-Mart as examples because those two companies have made conscious decisions to be bad at certain things (Southwest has almost no on board amenities, Wal-Mart has very few sales staff on the floor, for example) in order to be great in other areas which are of utmost importance to customers (low fares and on-time flights, or low prices and huge selection). Both companies have millions of customers and are enormously profitable.
“In order to be great, we have to be bad – and we have to be equally unapologetic about both.” – Frances Frei, Harvard Business School
If Southwest, for example, added catering to its flights to provide passengers with warm meals, “it would add 30 minutes to the turnaround time of every flight… (which) would require 100 additional planes in the fleet, and the carrying costs of 100 more planes in the fleet is about $350 million a year – and Southwest Airlines’ annual profit is about $350 million a year,” she said. It’s worth noting the airline has never had an unprofitable year.
“In order to be great, we have to be bad – and we have to be equally unapologetic about both.”
2. The courage to create sustainable value is, in essence, making sure you raise your prices, or capture value, when your company creates value. Price increases must go in lock step (or as closely as possible) to when value is created for the customer. It might feel good to give something away for free, but companies have to have the courage to charge for it.
Capturing value without first creating it, however (i.e. raising prices with no corresponding value-add), is the surest way to anger people. “The cable industry, at least in the States, constantly gets this wrong,” she added.
As an example of a company doing it right, Frei outlined Zappos, the U.S. online shoe retailer. Its footwear prices can be 40% more than in a store, or on Amazon, but it promises next day delivery and to take returns back on new merchandise for up to a year. You can order in the evening and have shoes by morning – and the site encourages the ordering of multiple pairs so that customers can return the ones which don’t fit, for free.
“They spend almost nothing on advertising because women are the ambassadors for them.” – Frei
Then, since it beats everyone on service by delivering in a day, it has to do little advertising because its customers (a majority of whom are women) happily sing the praises of Zappos to their friends and on social media. That, in turn, frees up more capital to spend on service. “They spend almost nothing on advertising because women are the ambassadors for them.”
3. The courage to champion employees is not just about training them and rewarding them – but looking at the entire organization and wringing out unnecessary complexity that gets in the way of them doing what are already complex, sophisticated, tasks. “You need to identify and remove the non-value-added complexity,” said Frei.
Ask front line employees: “Is there anything you do that appears to be overly complicated and doesn’t seem to be adding much value… and please get a good night’s sleep before you ask that question,” she added. “You are going to get tons and tons of good ideas.”
Also – ask brand new hires about the company’s processes while they are still new enough to wonder why your company does certain things they way it always has. “Get to them while they’re saying ‘We do things like that’?” in order to find and eliminate unneeded complexity.
“Someone once said ‘the customer is always right’… Very few statements have wreaked more havoc on organizations than that one.” – Frei
4. The courage to manage and train your customers is finding the strength to realize that no, the customer can be wrong. “Someone once said ‘the customer is always right’,” she said. “I would like to dig that person up, bring them back and make them apologize. Very few statements have wreaked more havoc on organizations than that one.”
Customers often ask for all sorts of things companies have no business doing, or can’t afford, nor can customers see what has to be done operationally to satisfy some requests. Wal-Mart executives often get calls from people complaining about the lack of customer service in their stores, but do they relay that to the managers? No, because the company has made its decision already what it will be good at (low prices, selection) because that’s what most of its customers expect.
That doesn’t mean companies can’t train their customers to do what you want and improve operations. She cited Starbucks, who have trained their regulars to talk like a barista, which moves lines faster and improves the accuracy in coffee ordering. Thanks to increasing complexity in all Starbucks now offers, it has offloaded the ordering process to its customers who can walk up and say “Grande-triple-shot-no-foam-vanilla-latte” or whatever their order might be – in the exact way Starbucks wants them to.
Her final “train your customer” story was of the men’s bathrooms in the Amsterdam Airport, which were always so filthy until a researcher figured out a way to help men, um, aim better. They etched a fly in the urinals, making men pay more attention – and the bathroom mess all but disappeared. “Apparently men like a target,” added Frei.
