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Could your business suffer from “organizational indifference”?

Posted by Neha De

June 17, 2022    |     6-minute read (1137 words)

Most business owners assume that what they are experiencing in their business operations is the customer service metric they need to track. However, according to research by Jonathan Byrnes, senior lecturer at MIT and founder and chairman of Profit Isle, and John Wass, CEO of Profit Isle, “The customer service measures that really count are those that reflect what the customer is actually experiencing… Not only that, but what really counts is the customer’s perception of service, which managers often simply — but falsely — assume reflects actual service. In fact, customers’ perceptions of service are strongly determined by their worst experiences, not the average. Even if a customer’s really bad experiences are rare, those will be the most memorable.”  

To arrive at this conclusion, they conducted a workshop on customer service for executives. They began the session by asking: “What is customer service?” 

They received a variety of “expected” responses, such as case fill, line fill, no telephone tag, answering the phone in 30 seconds, fast order cycles and so on. The common thread linking these responses was that they were all tactical operating measures; more specifically, they were all internal metrics. 

After developing a long list of tactical customer service measures, they then asked the group: “What could your competitor do that would be your worst nightmare?” 

This question moved the discussion in a different direction. The responses came in varied form and content, but with the same underlying message: “If my competitor could coordinate internally to really improve my customers’ profitability, business processes, and strategic positioning, I would be in deep trouble. My customers would abandon our relationship and run to the competition without looking back.”

Hence, improving a customer’s profitability, business processes and strategic positioning was the strategic customer service breakthrough that was most important of all. 

The duo then asked: “If this is the ultimate win strategy, and we now know the secret to competitive success, why don’t we do it first? It seems we have a golden opportunity to secure our best customers and take away our competitors’ prime business.”

Most people in the group believed that that was simply not possible, mostly because “getting their functional departments to coordinate around innovative strategic customer service initiatives” was a challenge. 

While tactical customer service measures are typically managed by a single department, strategic customer service innovations require the coordinated efforts of multiple departments. This is what can be called “organizational indifference.” 

Organizational indifference does not come from a lack of cooperation; instead, it happens when counterpart managers in other departments focus on the measures their leaders have told them are most crucial, and for which they are being held responsible. 

To break through this organizational wall and create truly effective strategic customer service innovations, business leaders need to roll out testbed projects, by offering limited opportunities to experiment and discovering potential breakthrough innovations.

Driving change by rolling out testbed projects



All organizations suffer from two issues: conceptualizing strategic customer service innovations and overcoming organizational indifference. Most are unable to act decisively, and end up putting themselves in danger of being overtaken by more capable, better-coordinated competitors.

This is how health care company Baxter overcame organizational indifference. About 30 years ago, Baxter’s Canadian subsidiary collaborated with a small hospital customer to explore how to come up with innovations that would benefit both parties. Baxter chose a situation wherein the conditions for innovation were ideal. It chose a relatively small community hospital that was newly built. It had a new staff and the need to develop new processes, and the young CEO was eager to create innovations that would change the industry.

The two parties set up a joint team to explore fresh ways to work together. They came up with several crucial supply-chain innovations, including the first working model of vendor-managed inventory, which is now a standard in the field.

This process had two critical outcomes:



1. Since the hospital was a relatively small customer, it gave Baxter a low-risk way to conceive a new mode of doing business. And since it was a new company, it allowed them to perfect the actual processes in a live situation.

2. This successfully implemented testbed allowed Baxter’s managers to actually see it in practice as well as participate in developing it. The managers could talk to the doctors, nurses and the administration staff to get a feel for how things were going. In the process, Baxter managers also ended up offering the joint team suggestions on how to improve the process. This allowed the team to develop widespread buy-in while making the process better.

Developing breakthrough strategic customer service



Byrnes and Wass recommend a three-point plan that “innovative management teams can use to develop strategic customer service testbed projects that will enable them to learn by doing and overcome organizational indifference.”

Select your opportunity meticulously

– Testbed projects do not usually cost a lot, and the results can be transformative. However, it’s important to be careful when choosing testbed customers. 

Baxter chose a situation in which the conditions for an exploratory testbed project were ideal. The sales team avoided approaching the company's premier clients, which would have raised a red flag for them.

Make changes on-the-go

– Often, the most important findings surface only after a testbed project develops over time — could be a year or more. According to Byrnes and Wass, “the second and third-order changes are the most powerful because they’re reflective of customers’ real-time experiences and feedback.” 

The Baxter testbed project went through several iterations as the team worked with the hospital staff members and incorporated their newly discovered needs and concerns. The key to success is to learn from experience and evolve rapidly. 

Involve your counterparts early

– Strategic customer service innovation is a company-wide issue. Therefore, getting all functional counterparts from other departments involved right from the start is important. Allowing them to help shape the project and discovering how it will directly benefit them can go a long way. 

Baxter’s supply chain vice president wanted to try out a new, automated picking system. He was able to incorporate it into the testbed project to show the system’s viability and favorable economics. In fact, when the sales team realized that revenues rose by over 35% in this highly penetrated customer, they became avid champions. 

Following the successful implementation of the resulting innovation, top management can commit to it and change the functional departments' planning, resource allocation and compensation systems to enable the department to thrive and grow.

Conclusion



Strategic customer service breakthroughs allow businesses to powerfully impact their customers’ profitability, business process effectiveness and strategic positioning — the ultimate winning customer service strategy. The most successful managers come up with a comprehensive customer service program that drives innovations built on effective, day-to-day, tactical customer service excellence.

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