Book Review - CUSTOMER CULTURE

CUSTOMER CULTURE

How FedEx and Other Great Companies Put the Customer First Every Day

                                                                                                                                

About the Author

MICHAEL D. BASCH was a founding officer of FedEx, where he spent 10 Years as a Senior Vice President. He was part of the teams that invented bar code tracing system at FedEx, Built its SuperHub, and founded the FedEx Business Logistics Division.

Before Joining FedEx, Basch spent eight years with UPS in Sales, Personnel, Operations, and Industrial Engineering.

About of the Book

• The Book explains the importance of the Customer Culture in an organization.
• Culture is everything. “Get the right Culture, and your people will do what is necessary to serve their customers and make owners piles of money” as said by one CEO
• How to develop cultural structures or systems to get your employees into the process.
• Look for better, more cost effective and more valuable ways to serve your customers.
• Books explain about the various techniques and their application with real examples related to Customer Culture.

The Book is divided into three parts:

•                    The Theory
•                    The Application
•                    The Result.

THE THEORY 

System drive people:

• Vision: A clear picture of the desired customer experience.
• Mission: To get more package
• Values: The code of conduct or rules of the game that will not be compromised.
• Goals: The specific time – critical results that the organization desires to achieve.
• Relevance: The desire or determination level among the people to achieve the goals.
• Feedback: The result of scoreboard that tells people their relative success.
• Action: The specific action taken by the people to achieve the goals and problem
• sort out or not.
• Back Ground: Good service was defined as flawless service (service on time) and low cost (at a price the customer was willing to pay).

Problems

• The cultural structure, so successful in other areas, was not working in this district.
• The members were being compiled every day, and the information was there, but the managers were not using the information to provide feedback and to build relevance.
• Company wants to change the culture to focus people on reducing cost while maintaining on time delivery, we set a cost reducing goal at moving delivery cost than 28 cents to 23 cents per package.
• More than 10% at the packages were placed on the wrong conveyor and leading to poor service and increased cost.

Solutions

• To arrange the right transport vehicle.
• To teach the sorters the relationship between cities and three digit short codes.
• To motivation the team.
• As industrial manager set up a new system at the district headquarters where two part time clerks to gather information from 28 operating centers each night.
• Clerks would report to division manager and division manager would report to own respective manager.
• If delivery would be in systematic way cost would be decrease.

Result

• The net result of this performance- improving system was a cost per package reduction from 28 cents per package to 23 cents per package in six months, which was a 20% reduction in costs.
• Company used feedback to make goals relevant to people. They took the actions necessary to build performance and to achieve the goals.
• Fixed cost went down as predicted and within six months, the hub operators had worked out a way to bring the average pay level down to 3.5 hours, so the cost per package was back in line. 

Vision

In order to build a vision of ever-increasing value to customers some understanding of human nature and what the customer’s needs are must be addressed.

The first need of people is to have their physical needs-

On the physical side of customer need and advantages like value added curve, Federal Express maintained leadership.

Stage two is meeting informational need-

At Federal Express, that meant meeting the tracing needs of customers.

Get the package there on time was number one.

Company developed the bar code tracing system to meet the informational need.

Stage three is meeting emotional needs-

Meeting informational needs often naturally evolves to meeting emotional needs.

For example, knowing my package is going to be delivered on time gives me peace of mind, which is emotional need.

Stage four is spiritual needs-

By spiritual needs here, we don’t necessarily mean religion although it may mean that to some readers. By spiritual, we mean greater purpose where people (customer and employees) see that they are part of something greater than themselves.

VALUES AS WORDS VERSUS VALUES AS ACTIONS

Means whatever is preached should be implemented-

• Values, when practiced by all employees, define a consistent customer experience in action. Values lay out the rules of the game that are being played by employees and observed by customers.
• Values are the uncompromisable that define the organization. They attempt to define what is acceptable and what is not. They are the in-bounds or fair play area of your business world.
• Development and inculcating of values is the second step in building the success structure.
• Values simply communicate the sense of principles and rules that the corporate leader would instill if he or she was present in every operation.
• Values cannot be delegated.

Example1:

UPS (United Parcel Service) washes every truck every day whether it needs it or not. A core value of UPS is cleanliness.

• This policy is written in its policy book, but, like all solid values, it is lived in action.
• You could literally drop a burger on the truck floor, pick it up, and eat it without thinking twice.
• Once the district manager of UPS asked the center manager to mop the truck flor by hand. This means UPS enforces its value.

Example2:

Federal Express-

• The People value, a Guarantee of Fair Treatment (GFT) policy. The employee had the right to be heard if they felt they were treated unfairly in any way.
• A no-layoff policy was developed and has been followed even in the very hard times the company.
• In the beginning when the volume wasn’t there, pilots would work in the hub, sell, and even manage stations rather than be on leave from work.

GOALS

GOALS provide focus and direction for people, but, without relevance and feedback, become just numbers on paper.

• The goals must relate to the overall goal of sustained, profitable growth. Sustained means long-term, employee-oriented goals. Growth means mid-term, customer-oriented goals.
• There should only be 3 to 5 goals. This applies to the company as a whole. Each workspaces goal may be different, but the goals support the organisation’s goals.
• Goals need to be limited, measurable, and communicated constantly so that all employees relate what they do to achieving the corporate goals.

Example:

Federal Express- is a good example of integrated goal (Customer, employees, and owners). Goals are set for people (employees), Service (Customers), and Profit ( Owners) parts of the business.

• People: Employee Survey and leadership Index conducted and posted annually.
• Customers: Package count and SQI (Service Quality Index) posted daily.
• Owners: cost per package and profitability calculated and posted weekly.

RELEVANCE

GOALS are accomplished to the extent people are committed to accomplishing them. To the extent that people find the goals relevant to the personal to them personally, they will do whatever is required and within their power to meet them.

• Relevance is to motivate people (employee goals) in synch with the customer and owner goals.
• To attain a good customer culture in an organization, company and individual goals should be made relevant to the employees.
• Relevance gives Clear vision and values that give people and overall sense of direction that are important within the culture.

FEEDBACK: You Can’t Manage or Innovate.

Three ingredients for building a customer culture – Goals, Relevance & Feedback.

• Goals, Relevance & Feedback are equally important. If there is no goals feedback is irrelevant & ignored.
• In a company there was a white board for previous day activities. Benefit of this white board was that employees see how they are doing as a team to achieve the company’s primary goals. Feedbacks system making every employee aware of the company’s goals.
• Every weekend there was a meeting where all feedbacks were discussed. End of every quarterly employee put their view and made plans for next quarter. All managers saw whether goals are being met or not, if not, start working to being met the goals. He took instant actions to get fast results.
• In the beginning there were three primary indicators of success: Package Count, Service Level & [Weeks-to-Break-even (WTB)] Performance. WTB technique used by executives to check whether the company was on right track. If the weeks-to-break-even (Performance) is less than the previous week management needs to evaluate where we are lacking.

Example:

A Good Examples where Feedback has been lost is the U.S Health-Care System.

They did not take a systematic or cultural structure approach to the problem, and therefore little was accomplished. They tried to understand the problem, find its solution, and pass a government mandate to implement the solution. This is typical of most business when confronted with a need to move to a new vision or to make a major change in direction.

Extraordinary Service is Delivered by its Creators.

• Whoever invents a service concepts and process better be the people who deliver it because they are likely to be the only ones who are passionate about it.
• Creating a team and work in a team will reduce time and work load.

APPLICATION

Big company like big ships:

• Companies today are living in a world that is fast moving and fast changing.
• How does a well-thought-out Customer Culture make big and bureaucratic more nimble in a fast-moving and changing world?
• Some ships are highly effective. Take aircraft carries, for example. They combine the power of the ship with nimbleness of the airplanes on the deck.
• The ship provides the support system for the airplanes. The airplanes provide the nimbleness and ability to engage the enemies where they are.
• This is an easy to understand in channel- dependent companies (those companies that distribute their products through third party retailers or small companies.
• The big companies could be the aircraft carrier seeing its role as providing support for its channel partners, who are close to the customer and who are very nimble at changing with every change in the marketplace. Channel partners, as small business, are so nimble that constantly alter their business as necessary for survival and hrive no matter what the economy throws them.
• The same support /action system can be developed with employee groups, but, for purpose of simplicity, we will concentrate on an Example of a major manufacturer that cannot be named and how it is in the process of building the aircraft carrier and the Jet airplanes.
• This is company that sells home product and home diagnostic equipment to and through local contractors (channel partners).
• Most of the companies simply try to fill the pipeline by pushing inventory to the reselling channel partners and leave it up to them to move the products to their customers.

Systemize The Routine; Humanize The Exception

• The best time to capture customers is when they have a problem that you can solve. This is true whether it is a new or existing customer, but especially true with existing customer.
• You Can Turn Angry Customers Into Raving Fans Simply By Solving Their Problems.

Example: 

To determine the validity of this principle-

I am at airport waiting for a flight. It is delayed, and I can see that, but cannot get Information.

• Because I don’t have information, I have no options other than to sit around and hope someone will tell me something. Usually, This is another passenger who has heard something. People are frustrated and upset all around me, and some are even screaming at gate to no avail.
• Airlines probably have several delays every day for 365 days a year and yet still find it difficult to build the system to keep their customers informed.

Informed customer can make the decisions to call or do whatever to take control over their own destiny.

That’s all people want: Control over their own destiny. Take that away, and you really have an upset customer.

Current technology would make it very easy to send an email or computer-generated call to a customer whose flight is late and save a rushed trip to the airport. Technology could also have the people picking them up automatically notified if a flight is late, saving time on both ends. This is building systems to focus on customer issues that demonstrate that you care enough as an organization to solve their problem.

I could go on and on about how companies deal with angry customers, but I don’t need to. I do about your experience of zero power in a difficult situation and the employees that either had no power or no passion to resolve your issue.

Here’s is the points-

• You systematized what you can, but always leave the customer an out o be able to talk to human being.
• You systematized the routine and humanize the exception.
• Airlines could challenge their employees to come up with a process to handle delayed flights.
• May be it’s only communications, but its something that understands the exception to their overall passenger-handling systems.
• Software Company could challenge their service people to come up with a way to deal with frustrated customers.
• And so more examples of BPO sectors. IVR ,they can help u immediately (humanize the exception).

The Single Egg Organization-

• Organizational structures focus people on cooperate objectives and provide relationship structures.
• The single Egg organizational structure that focus employees on their customers-whether internal or external customers.\was invented by employees from a healthcare insurance company. The single Egg analogy provides a central focal point-the customer as the yoke of the egg.
• So far 28 different companies including federal Express using this organization structure.
• One major paradigm to be challenged is the way that most companies are organised so that the focus is on everything but the customer.
• The most companies use a hierarchical organization with CEO

But according to single egg organization Customer comes first and all response according to that-

Typical Organization Structure-

CEO

Sales

Service

Manufacturing

Finance

Typical Organization with Customer on top-

Customer

Sales

CEO

Service

Manufacturing

Finance

RESULT

Paddi Lund story:

Story says about the business transformation from average to extraordinary over a period of time by using correct customer culture.

The story is about Paddi Lund dentist who runs an office in Brisbane, Australia. He was very unhappy, working 60 hours a week and making average dental pay. He was stressed out and wanted to commit suicide. Then he started thinking of his life and profession and he said that “If goal of life is happiness, however one defines it, why would I spend the prime years of my life and the prime hours of those years at a job that makes me unhappy?”

By stating these quotes, he started thinking why he is unhappy and asking his employees. Then he decided not to commit the suicide. And thought of creating a happiness centered business where customer’s employees and owners enjoy customer culture process.

• They were able to understand why they were unhappy, because they were around the people who don’t want to be around us. According to this statement we can say that the people around us are not willing to be with us which we also get depressed.
• In order to reach his vision they should create an environment where people wanted to be there. They started working on the dentist negative experience

Pain

Smell

Waiting

Value

Time Spent

• He and his team worked all the dentist negative experience and created and positive experience to the customers, Paddi was happy now working 23 hours a week. His team was aware of the fact the growth means towards happiness, not growing in size.
• Michael D. Basch attended the paddi Lund seminar in Brisbane. He was quite impressed by his seminar.
• Then he comes to know about the Paddi’s commitment to his vision

VISION

Dental happiness-

• Then he came to know about all the things which Paddi did to overcome the unhappiness like “stress o meter” implementation.
• As Paddi Lund’s Progress in his business from depression to happiness we can say that if the organization is large or small will not matter to build some culture which drives customers, employees and owners.
• Paddi created a courtesy system and value system in his organization.

Value System-

Value System is the guidelines or rules that staff members should follow in the organization when they are working together.

Courtesy System-

This consists of eight values followed by paddi organization to improve the customer relation ships

• Greet and Farewell: Greet them in a specific way
• Speak very politely: Using the words “Please”, “Thank U” ,“You’re welcome “ whenever required
• Apologize and make restitution: When someone feels wronged by your action , you apologize and take an action to backup the words.
• Use positive conversation: When conversing we use positive conversation
• Talking about problems: Talk about problems openly and honestly and as challenges to be overcome by the team.
• Talking about people: Most work-groups have cliques and people often talk behind people back’s. This should not be encouraged
• Blame a system: Often work groups tend to blame people , not systems, for lack of performance.
• Tell the truth: Asks the people to express the truth openly, responsibly and honestly.

Relevance system-

Paddi also developed the system, which monitors the people weekly goals whether they reached or not and monitoring them.

They discuss the revenue, happiness and client referrals they were reported daily and focused on those things to meet or exceed revenue goals.

Goals-

Goals are set and are achieved, and made according to weekly relevant marketing.




*This book review is done by Rishabh Saxena, Soumen Mahato, Rakesh Mishra and Neethu Gummadi. This book review is only for class purpose.