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|In: Industry Commentary|Last Updated:

Six Stupid, the preferred Customer Elimination Management (CEM) process design tool, is alive and well.

The circumstances: Our electric dryer’s heating coil burnt out.

The offender: In accordance with KJR policy you’ll have to infer which failing retailer that sells and services appliances is the culprit.

The plan: The service tech who diagnosed the problem ordered a replacement heating coil, to be delivered directly to my home, scheduling its installation a full week later to allow plenty of time for delivery.

What happened instead: The day before the scheduled repair I went on-line with the tracking number, and learned the part had been delivered to an address in North Carolina. My wife, the dryer, and I all reside in Minnesota.

Three days, ten phone calls (at least four dropped while I was on hold), and various queries, expostulations, and expressions of incredulity and annoyance, led to my being “informed” (in quotes for reasons that will be apparent) that:

  • The part was delivered to the store. The service tech would, I was told, pick it up. Which store? No answer no matter how many times and ways I asked. Had the information been U.S. troop deployments in Afghanistan, it would have been safe too.
  • The part was damaged in transit, but a replacement had been ordered and would be delivered the next day.
  • (Next day): No replacement order had been placed. But don’t worry, an emergency replacement order has now been placed, and should arrive in time for the rescheduled repair. Tracking number? None has been assigned yet. But it is an emergency order. May I speak directly to the dispatcher to confirm? No. Did the service tech speak directly to the dispatcher? No. But don’t worry. It’s an emergency order.
  • (Next day): No, there’s still no tracking number. But don’t worry. It’s an emergency order. What’s that mean? It’s an emergency order. Does that mean it will be overnighted? Don’t worry — it’s an emergency order.
  • It’s not our fault. “You can’t blame us. UPS damaged the original shipment. How were we supposed to know?”

One ray of sunshine: The company has already charged us in full for the repair.

It’s the six-stupid methodology because this little morality play sits at the confluence of at least six different pieces of stupidity:

1. Blamestorming: The customer service guy blamed UPS. Yes, UPS damaged the part. But who decided to not stock the repair part, and to ship directly to my address (presumably to save money by having no handling at a distribution center)?

Any time your company puts its reputation in the hands of another company, make sure your systems communicate so you know there’s a problem before your customer knows there’s a problem.

And don’t blame-shift. Your customers don’t care why you failed. Your customers care that you failed, and that you’re going to fix the problem.

2. Dropped phone calls? That’s so last century. Correction — I managed telecom in the 1990s for a couple of years. Dropped calls are so 1950s.

3. Failure to log: At least half of the folks I spoke with started our conversation by entering the original tracking number into the UPS site and explained to me that the part had already been delivered, as if my previous calls had never happened.

4. Keeping the customer in the dark. Don’t transfer calls. Conference them and perform a verbal hand-off. And don’t use the hold button when consulting someone else internally. Conference those, too.

Among the advantages: Irritated customers like me get to express our irritation at the person who’s in a position to do something useful … or who isn’t but should be. That gives them an incentive to do something useful without prompting next time.

5. Failure to anticipate process failure. Process designers take note: Your beautiful process will work most of the time. Your exception processes will often work too.

But not always. When they fail too, don’t hobble customer service reps with handcuffs, leg irons, and blindfolds. When the defined process has failed, Free Customer Service! The rules of hub-and-spoke practice management should take over.

6. Ignoring what IT knows. IT has mostly figured this stuff out, starting with a simple principle: If there’s an outage of any kind, the help desk should know before the first user calls to complain. If not, there’s something terribly wrong beyond the outage itself.

And a second principle: The job isn’t done when the call is over. The job is done when the user’s problem has been taken care of.

If that’s important enough for employees, shouldn’t it guide interactions with real paying customers — like the ones who will buy the appliances for their new abode from just about anyone else?

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|In: Industry Commentary|Last Updated:

Just because something looks stupid, that doesn’t mean it is stupid.

Take, for example, the process you go through when buying or selling a house. There’s sheet after sheet of paper you have to sign, every one of which has exactly the same information: Yes, all parties want to go through with the transaction.

This being the 21st century and all, shouldn’t there be an easier way?

Yes, and in fact it’s quite easy to envision a much, much easier way:

1. Review all of the documents, or, rather, review the content that’s contained in all of the documents.

2. Sign once using an electronic signature pad.

3. Store all of the results in a central database.

Nothing to it.

Nothing to it, that is, other than persuading an entire industry to adopt the system in question.

Did I say “entire industry”? Were it only that simple. The task is to persuade all of the companies in several different industries — realtors, mortgage underwriters, mortgage servicers, title insurers, every registrar of deeds, and HUD, to name a few.

And it isn’t just a system. They’ll all have to adopt standard information formats, and to modify their processing systems to accept them.

All of which starts with an industry standards committee.

If you think this is easy, you’ve never been involved in an industry standards committee.

Just because something looks stupid, that doesn’t mean the people trapped in the system are stupid. More often than not, the stupid system is the best system possible given the constraints everyone is operating under.

Which leads to one of Lewis’s Laws of Business: Stupidity is more stable than effectiveness.

Look at most stupid systems and you’ll see similarities to the closing process:

  • Blinders: Nobody who works in the system or manages part of it has much influence beyond their narrow purview.
  • Self-interest: Mastering the stupidity provides job security to those who have mastered it.
  • Lack of incentive: No matter how stupid the system is, there’s little obvious business benefit to be had from improving it.

The usual view of these things — in particular among practitioners of Lean and Six Sigma — centers on the importance of dealing with the end-to-end process, along with making sure someone has responsibility for it. Both are lovely sentiments, and there are business situations where it’s possible to achieve both of these preconditions.

In particular, there are business executives who recognize how poisonous persistent organizational siloes are to their competitive success. It’s these executives who are most likely to assign the label “core” to one or a handful or business processes, and to assign an owner to each one, usually on the theory that this gives them “one throat to choke.”

To be fair to all parties, they usually do manage to improve the functioning of their core processes. That’s because improving processes that are truly at the core of the business has a strong and clear connection to increased revenue, decreased operating costs, or better management of important risks to the business. The financial incentive is clear.

It’s also because more often than not the business is already organized around its core processes. Each one constitutes a functional area of responsibility — think sales, manufacturing, and distribution and you’ll understand the point. So the blinders issue isn’t in play, either.

But processes that are real-estate-closing stupid are rarely at the core of the business. They’re processes that have been cobbled together by less-influential managers and staff, with no tools beyond Excel to help with automation and with silo owners doing their best to maintain the blinders that might, if removed, allow the sort of collaboration that would result in a cleaner way of doing things.

The three root causes of real-estate-closing-level stupidity are why the still-popular practice of organizing a business as a marketplace … with shared services providers charging delivery functions and each other for their products and services … is a near-guaranteed cause of long-term competitive decline.

The practice is popular because of a deep-seated misunderstanding of the nature of marketplaces of all kinds. They’re widely thought of as a way to create “efficiency.”

And they are excellent ways to create efficiency, except that the efficiency in question is the balancing of supply, demand, and price.

There’s nothing at all in economic theory to suggest markets self-organize into efficient cross-business processes. Businesses maximize their own profitability. They won’t sacrifice it should that be required to make overall delivery more efficient.

And even if there was such a theory, all theories are subordinate to the “ugly little fact.”

In this case, the ugly little fact is ugly indeed. It’s called “buying a house.”

* * *

Want to buy a townhouse in scenic Eden Prairie, Minnesota?

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