Towards the end of the 1990s I noticed that things were changing: information and Communications Technology was developing enormously and being applied to business in amazing ways; integrated telephony was emerging (although foreign-based call centres were still in the future) and internet commerce was just starting to find its feet. No one really knew what the implications of it all were, and it was very exciting.
Today, of course, we see the full outworking of what was only just starting in those days. This was the beginning the full expression of the Technological Revolution that started in the period following the Second World War and progressively gained momentum towards the end of the 20th Century. By the turn of the Millennium, we were at the beginning of a completely new era in society, and in business.
One of the key changes I noticed, even then, was a subtle shift in the attitude of organizations. Things were becoming very transactional. Service staff didn’t relate to people in the same way as they used to. They were losing their humanity and warmth. They were becoming arrogant and acting as though they had power over their customers. Customer-facing staff were at best disengaged, at worst downright hostile. Many, it seemed, regarded customers as an unwarranted intrusion into their daily lives and were ignoring the time-honoured business axiom that, ‘People do business with people’. This is humorously but perfectly illustrated in the Little Britain television sketch, ‘Computer says No!’
It was obvious that organizations were becoming dehumanised. There was an increasing distance emerging. You couldn’t speak to the right person: someone who could make decisions. Indeed, a machine would answer the ‘phone. Eventually you would get through to someone in a call centre who could only relate to you according to what was on the screen in front of them. To all intents and purposes, they were machines sitting in front of machines. The real thing, personal, meaningful interaction with the customer was being removed and customers were being subtly shifted to being serviced rather than served. Customer service was becoming commoditised: something done by ‘customer services’, not by everyone in the organization, at every point of contact.
The skill of serving customers was undoubtedly disappearing. In supermarkets, check-out staff were repeating ‘service mantras’ – robot like – the same words, every time, to every customer, all day, every day, disempowered from using their own personalities. You couldn’t just have a pleasant exchange anymore – about the weather, the price of things, the state of the economy – just sterile, script-driven (and now mystery shopped!) interactions that were being forced on human beings on both sides of the counter.
To me all this seemed both contradictory and verging on commercial insanity, for companies to act this way towards their very means of financial gain – customers with money to spend on their goods and services. I just couldn’t reconcile this with my own experience, having run my own group of companies for almost 25 years, wooing customers, trying to please them and keep them, building the business by building trust and relationship.
At the time, I had just sold out my business interests and was working as an associate at my former business school at Durham University, U.K. I was engaged in some research into small business network relationships and lecturing on business start-up and entrepreneurship on the MBA programme.
I was in academic mode and started to think deeply about the implications of this changing business environment, particularly the effect technology was having on customer interactions; and I realised that what was happening was, once again, people in organizations were becoming conformed to serve the technology, just as had happened in the Industrial Revolution. The old 19th century, industrial mindset of command-and-control was re-establishing itself, but this time through modern technology. The parallels were astonishing, and so were the implications.
Today, 4/5ths of the U.K. economy is services of one kind or another. Manufacturing – actually making things – is now less than 12% of our GDP and the trend is the same in most economies of the developed world, yet our service organizations are really bad at giving service. In service delivery, the people are not just the means of production, they are also the product. Getting the service process right means getting the way it is delivered right too: that is what really adds the value in a service economy.
Service companies are experiencing up to 30% annual customer churn because of bad service and that is matched by up to twenty percent employee turnover, with the obvious consequent loss of business sustainability. The public sector, whose principal aim is to provide a service, is under pressure to downsize and get better value for money. The third sector is similarly under financial pressure and is having to become more commercially minded and compete for funds, yet everywhere we see people, the means by which efficiency and goodwill can be developed, not only being downsized, but depersonalised and demoralised. Nowhere are service organizations getting the best out of their people.
Customers today are crying out for meaningful interactions, and organizations need to deliver this again otherwise their shareholders (or stakeholders) will lose out. Focussing only on leveraging the cost-saving benefits of technology without regard for the overall quality of the service product, removing the value-added of service, is not the way. Removing people from the transaction and inserting technology in their place is knowing the cost of everything and the value of nothing.
Technology is important and wonderful, but we need to get more sophisticated in its use. This is not a Luddite message. It is not the technology per se, but its indiscriminate use without realising the implications on corporate culture and organizational behaviour that is the problem. Technology should be the enabler, not the mediator of the customer transaction – and the systems thinking it introduces must be challenged and replaced with more creative approaches to management. Reducing customer-facing staff to automata, restricting their freedom to relate is nonsense in a service environment.
The real efficiency and savings, those that continue to pay back, come from reducing customer and staff churn and eliminating the continual profit-sapping cost of dealing with service failures. This will only be achieved through the people, who are the organization after all. An organization is nothing else but a group of people working towards a common goal. The people need to be put at the centre of senior management concern again and procedures, processes, financial ratios, customer surveys, data mining – and the systems thinking it represents need to be subordinated to this vital goal.
I sincerely believe that a major opportunity for sustainable competitive advantage is opening up, provided we wake up to this issue. Organizations of all types (because the problem has spread to all sectors now) that challenge the current paradigm and refocus on the need to treat customers in a way that creates a meaningful experience for both customer and staff alike, will have competitive advantage in what is now a wilderness of poor or indifferent customer service.Those organizations that embrace the idea of Service-Ability will have better staff retention, better customer retention, lower costs of replacing both – and they will build their brand value through better reputations.
Our service sector’s lead will come from the manufacturing sector that learned thirty years ago that product quality ‘right first time’ was the source of competitive advantage and lowest cost, and that this could only be achieved by focusing on the people who made the product, releasing their human potential to build quality in at the point of manufacture. Total Quality Management as it came to be known was more a change of managerial mindset than it was of the production worker, and it transformed our manufacturing sector. We need the same revolution in our service sector.
The leaders of our service organizations must wake up to the implications of their current strategies, aimed solely at more efficiency; they are not the answer anymore. Indeed they are commercially dangerous, as witness the incident of United Airlines, famously cut down to size in 2009 by Dave Carroll, a musician whose guitar its baggage handlers had wilfully mistreated. This became a cause célèbre around the world when Carroll passively hit back by publishing a video ‘United Breaks Guitars‘ that instantly went viral and has now received more than 12M hits on YouTube – 12 million iterations worldwide of that damning message that caused United’s share price to plunge by 10%, wiping $180M off its market value.
The time has come for service organizations to be less concerned with process and more with personality. Our business leaders must bring about the release of their people to deliver total service quality and they must harness their entire organization in this pursuit. They need to turn towards their customers – through their people – equipping them and culturing them to be able to relate to the customer in a way that satisfies both. Service-Ability is a way to achieve that.
Service-Ability finds its expression in the individual, but it is about the skill of the organization as a whole to deliver customer-satisfying service. It is a strategic capability that produces a depth of relationship, extending from the very core of the organization to the loyal, satisfied customer through the loyal, satisfied employee who operates with initiative, professionalism, involvement and engagement; and that can only come from an organization that is in its very essence, ‘service-able’.
Service-Ability will leverage the most economic benefit from our overwhelmingly service-orientated economy. It will separate the best from the rest in the early part of the 21st century.