customer centricity – Deep-Insight

Quality is Free (so Invest in Service Excellence)

Posted on May 17, 2021 at 4:39 pm.

Customer centricity is all about doing the right thing for the customer. Doing the right thing also means doing things right. That means service needs to be excellent. All of the time.

Sounds expensive?

Actually, it’s not. The main message in my last blog about the Service Recovery Paradox was that quality is free so make sure to build quality in from the start so you do things right first time.

The Service Recovery Paradox

By the way, the Service Recovery Paradox is a well-known management concept. It states that a service failure followed by a good service recovery can lead to more loyal customers.

The only problem is that there is no compelling evidence to show that the paradox is true. In fact, the opposite is the case.

Loyalty and Repurchase Intentions do not return to a higher level after recovering well from a service failure. There is evidence to show that Satisfaction levels can end up higher than ever before if the service recovery is managed well, but customers are less likely to repurchase.

Our own experience is that this is particularly true where there are repeated service failures. Quite often, repeated failures are symptomatic of underlying issues that have never been adequately addressed. That’s why the service fails, and fails again and again.

The implications are profound. If you want to retain clients and increase revenues and profitability, you simply cannot afford repeated service failures. The good news is that service excellence is achievable for all companies. The even better news is it doesn’t cost anything but it does mean that you need to have a good quality system in place to identify, eliminate and prevent further service failures.

Quality is Really Free?

‘Quality is Free’ and ‘Right First Time’ are references to a 1979 book by Philip Crosby. Crosby was one of the founding fathers of the Total Quality Management (TQM) movement in the 1960s and 1970s. He had previously been a senior executive and Quality Director with the US manufacturing company ITT. In the early chapters of Quality Is Free he outlines the impact of the quality programme at ITT which at the time employed 350,000 people across the globe.

Crosby’s philosophy was a simple one. Rework is very expensive. It is less expensive to do it right the first time than it is to pay for rework and repairs. So focus on doing it right first time.

Much of Crosby’s work was for manufacturing companies but the principles are exactly the same for services firms. And probably more relevant. Crosby believed that manufacturing companies wasted about 20% of revenues fixing things that had been done wrong in the first place. According to Crosby, this figure could be as high as 35% in services firms.

Crosby’s Fourteen Steps

Crosby summarised his approach to quality in 14 steps. Even though they are over 40 years old, the steps are worth repeating here. They are as critical today to retaining customers as they were in 1979 when Crosby wrote ‘Quality is Free’:

#	STEP	COMMENTS
1	Management Commitment	Get senior management buy-in from the beginning. Leaders – particularly the CEO – must be personally committed to the quality programme. Without this, nothing will happen.
2	Quality Improvement Team	It’s senior management’s job to assemble a team and equip them with the right tools to make the programme work.
3	Quality Measurement	What gets measured gets managed. The corollary is also true. If you don’t have a measurement system, little is achieved.
4	Cost of Quality Evaluation	Calculate the cost of poor quality. That provides the business case for investing in quality. Remember that quality is free if the investment is lower that the cost of rework.
5	Quality Awareness	It’s all very well for senior management to know the cost of quality. Everybody in the company must understand it as well. Make sure they do.
6	Corrective Action	This is where we start identifying and fixing problems – with products, processes, service levels.
7	Zero Defects Programme	Set ambitious targets for 100% quality. They may not always be achievable, but the ambition must be visible.
8	Supervisor Training	The concept of supervisors may be old but investment in training for management is not. And it’s critical.
9	Zero Defects Day	This is related to Point 7 and makes a statement that one day each year must be dedicated to ensuring that a Zero Defects ethos pervades the company.
10	Goal Setting	Crosby recommends 30-day, 60-day and 90-day goals. The emphasis is on teamwork to achieve those goals.
11	Error Cause Removal	Ask individuals to describe any problem that prevents them from performing error-free work. Fix those problems.
12	Recognition	Recognise and reward excellent performance. Crosby recommends that rewards for outstanding work should NOT be financial.
13	Quality Councils	The purpose of these councils is to bring professionals together on a regular basis so that can share stories and best practices.
14	Do it Over Again	Most programmes last about 18 months before they need to be refreshed. Senior management must sustain the focus on quality so that it becomes part of the company’s DNA.

Customer Centricity = Service Excellence

At Deep-Insight, we help B2B companies become more customer-centric. By doing so, they will improve retention rates, revenues and profitability. Customer centricity is all about doing the right thing for the customer. A lot of Deep-Insight’s clients think that a core part of being customer-centric is being able to bring Innovation to the table for their customers. Service excellence is far more important.

Don’t get me wrong, I’m not saying that innovation should be ignored. It’s a hot topic in boardrooms these days. Even so, all of our experience suggests that if companies are failing to deliver the basics well, their customers have little interest in discussions about innovation.

You need to earn the right to talk about innovation. That’s why Service Excellence is critical. Consistently good service eliminates the day-to-day ‘noise’ that gets in the way of working with clients on exciting new and innovative ideas. Service excellence also helps improve customer retention rates. That’s the core message from the Service Delivery Paradox blog.

Invest in Service Excellence

Remember: service excellence first, innovation second. So do the right things, do them right and get them right first time.

Remember also that quality is free so there is no reason NOT to invest in a Service Excellence programme for your organisation. You know it makes sense.

Do contact us today if this blog sparks any ideas and you want to have a chat about improving retention rates, revenues, and profitability.

The Importance of Iteration in B2B Customer Centricity

Posted on July 15, 2020 at 3:02 pm.

Written by Peter Whitelaw

GUEST BLOG FROM PETER WHITELAW, AUSTRALIAN BUSINESS CONSULTANT AND CO-AUTHOR OF CUSTOMER AT THE HEART

Wash. Rinse. Repeat.

If you conduct a customer survey only once, you capture a single ‘snapshot’ in time. That snapshot will usually give you valuable information including customer concerns that deserve remedial actions.

BUT you:

1. Will never know if those remedial actions actually resolved the customer’s concerns
2. Won’t know what’s trending. Are customers more loyal or less loyal? Are more of them actively considering defecting to your competitors?
3. Might never improve your customer relationships

Customer centricity requires continual contact with the customer. Hence the importance of iteration.

Wash. Rinse. Repeat.

Customer Centricity and Agile

There are many similarities between an iterative approach in customer centricity surveys and the Agile project management methodology.

“Agile is an iterative approach to project management and software development that helps teams deliver value to their customers faster and with fewer headaches. Instead of betting everything on a ‘big bang’ launch, an agile team delivers work in small, but consumable, increments.” (Atlassian 2020)

The Agile Manifesto, developed in 2001, includes these key principles:

• Focus on people over process
• Embed customers and their feedback in order to continuously improve
• Deconstruct work into small segments and organize effort into short chunks (typically called sprints) in order to get quick feedback and make nimble (agile!) course corrections
• Dedicate people to teams and focus on one project at a time
• Experiment and learn continuously
• Ensure transparency of the work and continuity of the team

(Derived from a Forbes article of 6 October 2019.)

The Importance of Iteration in Customer Centricity

Iteration means adopting a cyclical approach to seeking customer feedback. You need to repeat regularly. At least once every year. And remember that first principle I mentioned. Focus on people over process. Get buy-in from the account teams as they have to own the customer programme. If they don’t, it will be seen as ‘just another Head Office initiative’ and will fail.

Benefits of Iteration in Customer Centricity

• Identifies trends and locates intransigent problems (that the customer perceives)
• Enables account managers to interact with customers in a non-selling mode, building trust
• Is seen to be consistently seeking customer feedback with the objective of continuous improvement

Consequences of Not Iterating in Customer Centricity

• Customers perceive that you no longer care about their opinions and that their past participation was a waste of time
• Your organisation drifts away from its strategy of achieving customer centricity
• Staff may feel they are no longer accountable for the quality of customer relationships

Peter Whitelaw is an Australian consultant providing customer relationship assessments, customer centricity guidance and change management services. He has a background in engineering, sales and general management with Hewlett Packard, Tektronix and Optus Communications. For 11 years he was CEO of project and change management training and consulting company Rational Management, training thousands of managers across the world. In recent years he has been lead consultant on several change management and customer centricity projects for both commercial and government organisations.

Who is Kim and Where is She Based?

Posted on February 19, 2020 at 6:36 pm.

Written by John O'Connor

U P D A T E : I originally wrote “Who is Kim and where is she based?” in February 2020 just after Atos restructured itself into market-facing units. In June 2022, Atos announced that it was looking into an even more fundamental restructuring of the business. If the plan gets approval, a brand new company called Evidian will be spun out of Atos.

* * * * * * * * * * * * * * * * * * * *

Becoming more Customer-Centric

Don’t be confused by the title. This is actually a personal blog post about global organisational structures and why companies sometimes change them to serve the customer better. It’s about becoming more customer-centric. Honestly!

What triggered me to write this blog was today’s announcement of a new global organisation structure for Atos, a client of ours and a true leader in the IT and digital world. Atos is also a great case study in how leaders change their organisation to become more customer-centric.

Atos Announcement

Today, the new CEO of Atos Elie Girard announced a major global restructuring of its operations. You need to read between the lines to figure out how dramatic this change actually is. No longer will counties the UK, France, Germany and other countries be responsible for their own P&Ls. These will now be run by six global industry heads. The axis of power will shift and the shift is seismic.

Paris, 19 February 2020
Moving the Group to an Industry approach

As of 2020, the Group initiates a transformation, called “SPRING”, aiming at reshaping its portfolio of offerings, reinforcing its go-to-market approach, and setting-up an Industry led organisation. In this context, six Industries are created:

– Manufacturing
– Financial Services & Insurance
– Public Sector & Defense
– Telecom, Media & Technology
– Resources & Services
– Healthcare & Life Sciences

At the same time, the Company gathers Global Business Units into 5 Regional Business Units (RBU), each of them under a single leadership:

– North America
– Central Europe: former Germany, and Central & Eastern Europe excluding Italy
– Northern Europe: former United Kingdom & Ireland, and Benelux & The Nordics
– Southern Europe: former France, Iberia, and Italy
– Growing Markets: former Asia-Pacific, South America, and Middle East & Africa

Why?

It all sounds a bit complicated: GBUs, RBUs, Industries and so on. And yet Atos is moving to this new organisation structure in order to become more customer-centric. Here’s why.

Atos’ customers are typically large international organisations. To serve them better, Atos needs to move to a more global organisation structure, with deeper industry skills that can be deployed across international boundaries for the benefit of those clients. If your clients are global, you need to be global. This change is absolutely the right thing for Atos to do. That said, there will be challenges along the way. I’m only saying this because of personal experiences in a previous life.

Execution

Becoming more customer-centric requires four elements to be in place: Leadership, Strategy, Execution and Culture.

Atos has shown leadership and determination in making such a significant restructuring of its business. That leadership has driven a new strategy for delivering more effectively to global clients. Profit & Loss will no longer reside in each country. It will reside in an Industry or Global Business Unit (GBU). Now Atos is in the Execution phase. This is where the new organisational structure must work for both clients and employees. If Atos gets this right – and I’m sure it will – the culture of the new company will be changed utterly. And that’s good for Atos’ clients. The trick in the Execution phase is to involve both customers and employees in transformation. In other words, don’t just think of Execution in terms of ‘hard’ activities such as processes, technology, targets and KPIs. The human side of the equation is arguably more important. We call this Investing in the “Soft Side”.

A Personal Experience

More than 20 years ago I used to work in Andersen Consulting (since rebranded as Accenture) at a point when it was moving from a country-based organisation structure to a global GBU structure just like Atos is now doing. It was a painful experience for a number of reasons but – no different to Atos – it was absolutely the right thing to do. Accenture’s clients were large global organisations and that required Accenture to become a truly global organisation as well.

More than 100,000 Atos staff are now going through the very same restructuring process as I did all those years ago. For most, the impact will be small; for many it will have a significant impact on their lives and careers. As for Atos itself, the impact will be transformational.

So here’s a small personal perspective on what it’s like to be a small cog in a large wheel going through a global organisation restructure. In the late 1990s I was working with Accenture in Dublin, having transferred from its London office a few years earlier. My boss in Dublin was a guy called Mark Ryan. We both worked in the Irish Financial Services practice – our clients were the local banks and insurance companies. When the new organisational structure was announced, Mark called me in to his office. He said: “John, you’re no longer working for me. We’re now part of a European group within Financial Services. Your new boss is Kim Zimmer.”

Who the Hell is Kim and Where is She Based?

I don’t remember my exact response but it was probably something like “Who the hell is Kim and where is she based?” Mark laughed. At the time, I didn’t really see what was so funny.

After a while, Mark stopped laughing and said “Kim’s actually a guy. And he’s based in Oslo.”

As it turned out that Kim Zimmer was a wonderful man. Kim and his fellow partners had built a great business for Accenture in Norway based on long-standing relationships with senior leaders in the local banking and insurance community. For me, it was a great opportunity to work in a more European role (and spend more time on a plane). The European aspect of the work was great but the time spent in airports and hotels eventually got to me. A few years later I resigned from Accenture after a wonderful 13 years in what was always a very international company. I ended up in Deep-Insight where I’m still travelling but on a more manageable basis.

Footnote

I was going to name this blog “Who Do I Need to Buy Drinks For?” One of the most important aspects for anybody in a large multinational company is knowing who to talk to in order to help you develop your own career. Mentoring is important in any large organisation and organisational changes disrupt the linkages that people build up over time. It’s something that senior managers need to bear in mind when they suddenly find themselves with a brand new team of people reporting into them. Being customer-centric also means being employee-centric.

Similarly, for staff, it’s important to get facetime with new bosses. You don’t need to ply them with alcohol but it is important to engineer the opportunity to spend time with them to understand what their motivations are and how you fit into their plans.