All Posts in Process Management and Improvement

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Entirely Irrelevant but I Just Can’t Stand It department: “High-paying jobs are available for people who learn how to run a key software program used by retail companies, several executives told Gov. Mark Dayton on Friday. And they’d like to see the state establish a training program.” (“IT execs tout Oracle software, ask state to help train workers,” Adam Belz, StarTribune, 10/26/2012).

Want to bet that next week the same characters will be complaining about too-high tax rates and the need to shrink government? And here’s a surprise: One of the companies making the pitch provides exactly this sort of training.

Speaking of retailers …

Not Entirely Irrelevant, but Close and I Can’t Stand It Either department: Just last summer Best Buy’s board of directors paid four of its top executives millions of dollars in “retention bonuses” (“Do retention bribes make sense?” Keep the Joint Running, 7/2/2012).

Here we are, less than four months later, and Hubert Joly, Best Buy’s new CEO, has provided an exit-door instruction manual (“Don’t let it hit you in the glutes on your way out of it”) to three of the four executives bribed by the board to stay.

I don’t know whether Joly made the decision for the right reasons, the wrong reasons, or no reasons at all. It does seem likely the executives whose names are all over Best Buy’s current mess aren’t likely to be the right ones to guide it out of its current mess.

I’m skeptical, though, that Joly is the right person to guide it, either. He comes out of the hospitality industry, and is emphasizing improved hospitality (read “customer service”) at Best Buy as its path to success. And like it or not, (I don’t), customer service seems to have fallen by the wayside as a business strategy.

Consider air travel. Do you choose the carrier that provides the best flying experience? Pay for the first-class upgrade? Or buy the cheapest ticket? Since industry deregulation began, ticket prices have fallen more than 40% according to the Air Transport Association, while the air travel experience has become 247% more unpleasant, according to everyone I know who travels a lot.

Want something more provably quantitative? Economy-class seats are 17″ to 18″ wide. The average male human is 21.7″ wide. Do the math.

More math: Women are 15″ wide on average, so the airlines are causing men to victimize women by overlapping into their seat space, whether we want to or not.

Next consider Pricegrabber.com. It’s quite successful; all it does is let you comparison shop so you can buy from the lowest-price provider that isn’t likely to swindle you.

But this is all business-to-consumer … B2C for we acronym-besotted denizens of the 21st century. How about B2B? My one-word answer: China.

Before the advent of the world wide web, business supply chain theory focused on forming stable, long-term, trust-based relationships with suppliers. Now it focuses on shopping for the low-cost provider.

Some high-service exceptions remain. The Apple Store, for example, is legendary for its superb customer support. Bose has a similar reputation; I experienced its reality personally some years back. Apple and Bose can afford great support through a simple expedient: They don’t have to discount, or at least, they don’t have to discount so much that their margins are squeezed.

Quite the opposite: Apple and Bose products are perceived to be unique. For plenty of consumers they have no direct competitors.

Where is this taking most companies? Into a world where price and convenience are what matter most. The customer experience, no matter how phenomenal, will be the tie-breaker, nothing more. It won’t support much in the way of higher prices or better margins.

Which loops us back to Best Buy and Hubert Joly. If price and convenience are what companies win on, shouldn’t Joly be focusing on making Best Buy the best buy again, like it used to be?

Here’s why this all matters to you as an IT leader: Like it or not, our primary job in most companies is going to continue to be what it  has been for decades — helping to keep incremental costs as low as possible in every part of the business.

All that other stuff — business intelligence, improved decision-making, participation in strategy and so on? That still matters. It still matters a lot.

But it’s the surround, not the core, or at least, that’s how it is and will be everywhere IT supports businesses that win on price and convenience.

Sadly, that appears to be a growing fraction of the total.

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|In: Industry Commentary|Last Updated:

Dear Car Companies,

I won’t be filling out your satisfaction surveys today.

It isn’t that I don’t want you to know whether or not I’m satisfied, and why. Car Company #1, I’d love to explain that your service department did a fine job taking care of my car, and even washed and waxed it while I waited, and that I didn’t mind all that much having had to wait an extra few minutes because the guy who was supposed to tell me my car was ready got stuck on a phone call.

Car Company #2, I’d be happy to explain that your salesman did his best, but needed more training on your new models … and that the training you did give him about making sure we knew how to handle the car’s nifty electronics resulted in his taking more of our time than we really would have liked.

But I can’t. Your sales representative (CC2) and service representative (CC1) explained the rules to me clearly: Either I give them a perfect score, or you give them a failing grade.

Why would I participate in a sham like this?

Look, there are four “metrics fallacies” — four ways using metrics can make a business worse. You must employ an army of analysts. Haven’t any of them explained these to you?

I usually charge good money for this, but just this once I’ll explain them to you for nothing, if you promise to pay attention. The fallacies:

  • Measuring things wrong.
  • Measuring the wrong things, whether you measure them right or wrong.
  • Failing to measure something important.
  • Extending your metrics to individual employees.

You botched #4. But then, a lot of companies botch #4 because a lot of business executives seem to assume that if something goes wrong, it must be someone’s fault.

I guess it’s good they’re measuring all cases, not just the problem ones, because that implies they’re also assuming that if something goes well, someone must deserve the credit.

But they botch it because (I guess) they think their employees are so dim they can’t figure out how to game the metrics to their advantage … like, for example, letting customers know that anything less than a perfect score will land them in a world of hurt.

Here’s a hint: If they are that dim, you’re hiring dim employees, which is a seriously bad idea, especially for the employees you’re putting in front of your customers.

Don’t get me wrong. It isn’t that I think you shouldn’t pay attention to how your employees are doing. Quite the opposite.

The employees you decide to hire — how you choose them, how you train them, how you do your best to keep them, motivate them, and promote the best of them — they’re the single most important determinant of your success. I’m confident of this because I’ve watched outstanding employees succeed in spite of bad processes, substandard tools, and execrable managers, just as I’ve watched disgruntled employees get mediocre results in spite of having the best process designs and tools at their disposal (I didn’t add “great managers” because if they had great managers they wouldn’t have been disgruntled).

What you have to understand is that metrics don’t report root causes. They report symptoms. Unless, that is, you have a predefined list of potential root causes and monitor them all.

But that isn’t what your customer satisfaction survey is doing. The poor schmuck in the service department you’ve asked me to evaluate didn’t do anything wrong. He was stuck, having to choose which of two customers he had to dissatisfy — the one on the phone or me. Why would I give you any ammunition to shoot him with, when the problem, assuming this counts as a problem, was that you had the same person answering the phone and dealing with in-person customers?

And why would I give you ammunition to shoot the salesman with, when the problem was with your sales training program?

Tell you what. Why don’t you send me a new survey? This one would assess my satisfaction with your customer satisfaction assessment process. I’d be happy to fill it out. You could use the results as the ammunition you need to shoot yourself.

Okay, that was mean. It’s just that I’ve written books about this, I’ve given speeches about this, and (now pay attention — this is important) I consult about this, which means that if you had been paying attention, you wouldn’t have made this mistake and my bank balance would be higher.

It’s an outcome that’s known in some circles as a “win/win.”

Sincerely,

 

Robert Lewis

President, IT Catalysts, Inc.

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