01 Dec 2011
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At Your Service

To achieve excellence, make thoughtful tradeoffs
by Deborah Blagg

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In their new book, Uncommon Service: How to Win by Putting Customers at the Core of Your Business (Harvard Business Review Press), coauthors Frances Frei and Anne Morriss (MBA ’04) maintain that it is possible for organizations to reduce costs while dramatically enhancing customer service. That win-win approach involves “looking at your biggest buckets of cost and rethinking those strategically in ways that give your customers something they value,” notes Frei, the UPS Foundation Professor of Service Management.

Morriss, the cofounder and managing director of the Concire Leadership Institute, which advises managers in the public, private, and nonprofit sectors, says that as organizations increasingly ask customers to play a more active role in transactions, saving money shouldn’t be the sole guiding force. “Whether it’s pumping your own gas or troubleshooting your own computer problems on a website, companies that design those interactions purely to cut costs don’t succeed. But when they actively partner with their customers to deliver a better service experience,” she relates, “that’s the path to all-around excellence.”

A central premise of Uncommon Service is that to achieve service excellence, you may need to make some tradeoffs. Is that a hard sell for some managers who are motivated to excel in all areas?

Frei: Even superstar managers would probably admit to being better at some aspects of their jobs than others, but to be clear, our research is aimed at the organizational level. And in that context, the idea of tradeoffs is nothing new. Peter Drucker and others have said it, and people accept the concept when you are talking about companies that make physical products. When the MacBook Air came out, for example, Apple knew that to make it lightweight, there would be a tradeoff when it came to battery life and memory. Apple didn’t have any angst or shame about that, and what we are saying is that the same thing should be true in service organizations.

Morriss: But so often, it isn’t. We argue that the failure to make necessary tradeoffs is the number one obstacle to excellence in service organizations.

Why is that such a difficult concept for service organizations to embrace?

Morriss: Part of it is that the advantages of making tradeoffs aren’t as obvious in service businesses, and part of it is that there are a lot of heroic people in service organizations who feel compelled to be the best at everything. That’s particularly evident in mission-driven and health care organizations, where managers feel a moral obligation to at least try to be the best at everything, even if the overall result of that can, in fact, be counterproductive.

Could you give an example of that?

Frei: Well, we’re all pretty familiar with the litany of problems in health care, but let me give you an example of a renowned health care organization that has embraced the concept of tradeoffs with positive results. Some time ago, the Mayo Clinic decided to focus on the priority of reducing the amount of time patients wait to be seen. As a result, today you can get a Mayo Clinic diagnosis within 24 hours. For anxious patients who want to know what’s wrong with them, that’s a huge benefit.

The tradeoff—and again, no one apologizes for this—is that patients can’t choose their caregivers. They will get a Mayo Clinic diagnosis, and they will get it quickly, but it may not be a diagnosis from a specific, renowned doctor X. The system has been designed to favor speed of diagnosis over choice of physician. You will still get high-quality health care, but within a system designed around the concept that tradeoffs exist. When health care organizations act this way, they begin to thrive in unprecedented ways.

Morriss: Obviously, when your organization is in the business of saving lives, you can’t intentionally be “bad” at anything. But you can decide to not perform as well in areas that patients care less about, with the understanding that it will give you the resources to excel in those areas that patients value more highly. Getting organizations to accept that concept presents an emotional stumbling block that often is more difficult to overcome than the challenge of deciding which tradeoffs to make.

How do you help them over that stumbling block?

Frei: One way is to make the advantages of tradeoffs clear. My favorite example is organizations that use color-coded monthly management reports: green for things that are going well, yellow for areas that are OK, and red for places that are falling behind. The obvious reaction is to say, “Get better at the reds.” That’s fine, unless the presence of the reds is what’s fueling the greens. Southwest Airlines would be red on food service. But Southwest doesn’t pay much attention to that, because getting better at food service would slow its turnaround time, which is a big green for the airline when it comes to pleasing its customers. So we work on helping organizations identify the net positives of tradeoffs and on making them thoughtfully and deliberately, without remorse.

Could you talk a little about the four service “truths”?

Frei: Companies that excel at service typically do a great job in four areas: identifying the attributes of service they’re competing on; determining how to fund excellence in these areas; designing management systems that help employees to succeed at their jobs; and training their customers.

To be a great service company, do you have to be equally good at all of those?

Frei: We usually start by having organizations take a close look at their capabilities, their customers’ needs, and their competitors’ performance. If I had to identify one place most organizations could really start to make a difference, it would be service offering, number one, and probably employee management systems, number two. But all of these aspects are mutually reinforcing.

You write a lot about corporate culture in companies such as Zappos. Why is culture so important?

Morriss: A culture exists to influence how people think, so their discretionary behavior will be consistent with the values of the organization. In services, almost all behavior is discretionary. You have the moving parts of human beings delivering services interacting with human beings as customers. Culture is the guiding force; it’s the difference between the positive experience you have when you interact with someone at Zappos’s call center and the experience you have at XYZ call center that makes you decide to take your business elsewhere.

Early on in Uncommon Service you assert that humans are born with an innate desire to serve. Could you elaborate?

Morriss: Some of the research we looked at documents this impulse in babies as young as 18 months. In work situations, people are motivated at least as much by behavioral norms, such as pride in their work, as by money. We think there’s a significant, unrealized opportunity—whether you’re looking at managers, teams, or customers—to tap into the human need to be of service.

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