CX Leaders Are More Customer- And Mission-Centric

In the recent report, The State of CX Management, 2015, we examined how survey respondents from firms with $500 million or more in revenues classified their corporate culture. As you can see below, almost half selected either profit- or sales-centric.

  • Profit-centric (Generating profits come first): 28%
  • Sales-centric (Generating sales comes first): 20%
  • Customer-centric (Our customers come first): 16%
  • Product-centric (Product features and capabilities come first): 14%
  • Mission-centric (Fulfilling our mission comes first): 9%  
  • Process-centric (Process efficiency comes first): 7%
  • None of the above are even close to describing our culture: 5%

We also examined the difference in responses based on the companies’ results in Temkin Group’s CX Maturity and Competency Assessment. The chart below shows a significant difference between companies with above average CX maturity and those with below average CX maturity. Companies with higher CX maturity levels are much, much more likely to be customer- or mission-centric.

1506_CultureVsCXMaturityThe bottom line: CX maturity often requires culture change

What is Culture? How People Think, Believe, and Act

I often say that the customer experience your organization delivers is a reflection of your culture and operating processes. In other words, what customers experience outside is based on what’s going on inside. To consistently differentiate your customer experience, you need to transform your culture.

“Culture eats strategy for lunch”
– Peter Drucker

The reason that culture is so important is that it frames what people (employees) do when no one is looking. You have two choices for driving employee behaviors: 1) Prescribe all of their actions and put in place mechanisms to monitor and control them, or 2) Create a culture that encourages them to act consistently with your organization’s objectives. The first approach requires an ever-growing level of resources, and is very difficult to sustain.

Herb Kelleher, founder of Southwest Airlines, has said that:

“If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need.”

Our research has shown that customer-centric organizations demonstrate four CX core competencies:

  • Purposeful Leadership:Leaders operate with a clear, well-articulated set of values.
  • Compelling Brand Values: Brand attributes drive decisions about the company treats customers.
  • Employee Engagement: Employees are fully committed to the goals of the organization.
  • Customer Connectedness: Customer feedback and insight is integrated throughout the organization.

To help companies drive culture change, which we believe is a campaign to engage all employees, we created a concept called Employee-Engaging Transformation. This approach requires a different view towards driving organizational change:

1503_EETchangeWhat Exactly is Organizational Culture?

All of our work in this area comes down to a key reality; culture is how employees think, believe, and act. So if you want to drive culture change, you need to deal with all three of those areas. Here’s how:

  • Think: Employees need to be intellectually bought-in and understand why there needs to be a change.
  • Believe: Employees need to see that leaders are truly committed to the change.
  • Act. Employees need to adjust some of their behaviors to align with the change.

Companies often focus on the think level, hoping that a barrage of communications can drive culture change. Well it can’t. You need to develop plans that deal with all three levels: Think, Believe, and Act.

Leaders Can Make or Break Culture Change

Leaders play a critical role in driving cultural change. As you can see above, employees won’t “believe” in any change unless they see their leaders behaving differently. We’ve identified three characteristics of transformational leaders: communicating “why,” modeling the desired behaviors, and reinforcing change.

Three Required Characteristics For Transformational Leaders

If leaders continue to operate in the same way, making the same decisions and trade-offs, then the organization will believe that nothing is changing — no matter how many emails the CEO sends, or compelling speeches she gives at town hall meetings.

The bottom line: Culture is a key ingredient to long-term CX success.

Nadella Pushes Microsoft to Rediscover Its Soul

In a letter to all Microsoft employees called Starting FY15 – Bold Ambition & Our Core, CEO Satya Nadella established a mandate and vision for significant change across the technology behemoth.

Microsoft has great assets, but it has not kept up with changes in how people use technology. The Redmond giant was becoming increasingly less relevant in a world where digital technology is becoming more relevant.

Microsoft has needed to change for a while. There’s a saying that the best time to plant a tree is ten years ago and the second best time is right now. Nadella has made it clear that Microsoft’s time for change is right now.

My take: First of all, it’s hard to talk about any large-scale culture change without recommending that people review our model called Employee-Engaging Transformation, which is built on five practices: Vision Translation, Persistent LeadershipActivated Middle ManagementGrassroots Mobilization and Captivating Communications.

EET2

We work with many of the world’s leading technology companies, so I could go on and on about what changes are necessary at Microsoft. But I’d rather examine broader lessons from Nadella’s letter. Here are some excerpts that I thought were particularly valuable to discuss:

“...in order to accelerate our innovation, we must rediscover our soul – our unique core

Successful companies almost always start with a strong raison d’être, but it can get lost as the company grows and the world changes (see my post on Starbucks). Without a “soul,” companies drift along as employees across the organization start operating in a disconnected way. This is where the brand comes in. Companies need to constantly refresh their brands and make sure that the brand drives decisions across the organization (see my post on Walmart).

More recently, we have described ourselves as a “devices and services” company. .. At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

Our research shows that employees are more productive and engaged when they are inspired by their organization’s mission. Which one of these statements do you think is more inspiring: “We are the devices and service company” or “We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

“We will create more natural human-computing interfaces that empower all individuals.”

This is a comment about technology, but its also points to a broader commentary about making things easy to use. We have entered into a world where people have more options, more distraction, and less patience. Every organization needs to relentlessly focus on making their products, services, and processes easier for customers to use.

Obsessing over our customers is everybody’s job. I’m looking to the engineering teams to build the experiences our customers love.

What’s not to love about this excerpt. My customer experience manifesto (and Temkin Group, for that matter) is built on a fundamental belief that sustaining great customer experience is not about applying a veneer, but about building competencies across the entire organization that create great experiences for customers (see our four CX core competencies). Also, it’s interesting that Nadella used the word “love.” Experiences are made up of three component (functional, accessible, and emotional) and our Temkin Experience Ratings show that companies are weakest at driving the emotional component. To get people to “love” your company, I suggest applying what we call People-Centric Experience Design.

“I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work.”

One of the Six Laws of Customer Experience is that unengaged employees can’t create engaged customers. Any company looking to improve how it interacts with customers almost certainly needs to focus on its employees.

“We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market.”

How companies use customer insights is changing rapidly. Technologies such as text analytics and predictive analytics are helping companies tap into more comprehensive and ongoing insights, rather than relying on periodic customer surveys. Ultimately, companies will need to reinvent their operating frameworks so that they can adjust more frequently to take advantage of these rapidly-flowing insights.

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy.”

This type of statement only works if it’s backed up by clear actions that employees can observe. These “symbols” of change need to be clear departures from how the company operated in the past, and can include reorganizations, firings/hirings/promotions/demotions, killing projects, accelerating projects, etc.). Don’t just say change is coming, demonstrate it (see the 3 characteristics of transformational leaders).

“We must each have the courage to transform as individuals. We must ask ourselves, what idea can I bring to life? What insight can I illuminate? What individual life could I change? What customer can I delight? What new skill could I learn? What team could I help build? What orthodoxy should I question?”

The notion of a personal challenge is a great way to help employees think about how they can be (and must be) a part of the change. But the questions won’t be too powerful if they are just statements in a letter from the CEO. Use these questions as part of discussions across the organization and embed them into leadership training and competency models.

 The bottom line: Change isn’t easy, but Microsoft seems ready to give it a try.

Don’t F*ck Up The Culture, Says Airbnb CEO

Brian Chesky, co-founder and CEO of Airbnb recently wrote a post, Don’t Fuck Up the Culture. It’s a note that he sent to all of the Airbnb employees. It’s a good, short read. Here’s an excerpt:

Culture is a thousand things, a thousand times. It’s living the core values when you hire; when you write an email; when you are working on a project; when you are walking in the hall. We have the power, by living the values, to build the culture. We also have the power, by breaking the values, to fuck up the culture.

My take: Chesky is absolutely correct. Culture is a manifestation of an organization’s true values and it shows up in a myriad of ways. It can be an invaluable asset when it’s good and an insurmountable obstacle when it’s bad. It aligns the thinking and actions of employees in ways that are even more powerful than controls and measurement.

I’ve been writing about this topic for a while, so I went back into the Customer Experience Matters way-back machine and found three very relevant blog posts from 2008:

In Inspiration Trumps Coercion And Motivation, I included what I believe is a seminal quote on the topic from Herb Kelleher, founder of Southwest Airlines:

If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need.

In Discussing Zappos’ Culture With Tony Hsieh, I write about my interview with Zappos’ CEO. Here are a few of the takeaways from that discussion:

  • Tony doesn’t want to prescribe actions for employees that show how much Zappos cares about customers; he wants employees to do things because they genuinely care about customers.
  • Zappos uses its culture as a reason to hire and fire people. All new hire candidates have a separate interview with the HR department that focuses just on cultural fit.
  • Tony offers this advice to Zappos employees: It’s completely up to you guys. I can’t force the culture to happen; so part of your job description is to display and inspire the culture.

In Management Imperative #1: Invest In Culture As A Corporate Asset, I offered four ideas about how execs can manage their corporate culture assets. Here’s the first one on the list:

Track employee goodwill. When companies buy other companies, they often account for part of the price as “goodwill;” acknowledging that items like brand name and competitive positioning can be long-term assets. Following this approach, companies should track “employee goodwill.” How? By surveying employees and reporting the results like you report the balance sheet; analyzing quarterly snapshots and changes over time. Think about creating a metric from  questions like “How committed are you to helping the company achieve it’s mission and objectives?” “How likely are you to recommend this company as a place to work to your family and friends?

I also feel the need to point to a blog post from 2009, Fundamental Flaws In Management Education. This post discusses a fantastic article written by Sumantra Ghoshal, a leading business thinker. Here’s an excerpt:

Unlike theories in physical science, theories in social science tend to be self-fulfilling. A management theory that catches hold, therefore, can change the behavior of managers who act in accordance with that theory. As Ghoshal states, “the “scientific” approach of trying to discover patterns and laws have replaced all notion of human intentionality with a firm belief in causal determinism for explaining all aspects of corporate performance.” In other words, the belief that management is a social science has removed any humanistic traits (like corporate culture) from the equation about what drives corporate performance.

The bottom line: Don’t f*ck up your culture

Leadership Principles for Changing Corporate Culture

I just read a couple of articles about an important topic, corporate culture. The first one, The Rise of the Chief Culture Officer, describes how companies are appointing “Chief Culture Officers.” Here’s an interesting quote from one of those new execs, Maria Gendelman, from North Jersey Community Bank:

I’m there to make sure that every single piece of paper that we give to the customer all looks the same, that our processes are efficient and streamlined — all of those things touch culture.

The other article is an interview with John Taft, CEO of RBC Wealth Management. Here’s what Taft says about culture:

Culture is everything when it comes to responsible, long-term business success… A leader’s job is to discover, communicate and reinforce culture. If you don’t get culture right, nothing else matters.

My take: Company culture is an integral component of long-term success with customer experience. In our recent research The State of CX Management, 2012, we found that one of the most significant things that distinguishes companies that are CX leaders from their peers is a heightened focus on culture.

Executives may be able to mandate a few activities within a company, but corporate culture determines just about everything else in one way or another. Leadership guru Arthur Carmazzi does a great job of describing the value of corporate culture in this quote that I used in the post Management Imperative #1: Invest In Culture As A Corporate Asset:

“The ability to do more than expected does not come from influencing others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all.”

I talk about the intersection of culture and CX as Customer-Centric DNA, defined as:

“A strong, shared set of beliefs that guides how customers are treated.”

Here are some principles that execs should keep in mind about changing their corporate culture and building customer-centric DNA:

  • People generally conform to their environment (see 6 Laws of Customer Experience: Employees do what is measured, incented, and celebrated). So pay very close attention to the environment that you are creating.
  • Culture is very slow to move, because it often outlasts the senior executive team. Make sure you only attack the portions of the culture that you are truly committed to changing.
  • The first step of changing corporate culture is to fully understand the existing culture. It is important to frame the change in terms of explicit contrasts between the current behaviors and the desired future behaviors.
  • It’s likely that many of your existing leaders are reinforcing the current culture, in ways that they probably don’t even recognize. So changing your corporate culture will likely require some management turnover. As Pablo Picasso once said: “Every act of creation is first of all an act of destruction.”
  • Any leader who wants to transform her organization needs to adopt the three characteristics of transformational leaders: Communicate “why,” model desired behaviors, and reinforce change.
  • Use the 6 C’s of customer-centric culture as levers for change: Clear beliefs, constant communications, collective celebrations, compelling stories, commitment to employees, and consistent tradeoffs.
  • Finally, I’m not a big fan of the Chief Culture Officer position. I’d like to see Chief People Officers (heads of HR) step up to the plate and integrate culture as a core component of their organization’s work. Without culture in mind, how effective can an HR organization be at recruiting, hiring, on-boarding, reviewing, compensating, training, promoting, and outplacing employees?!?

The bottom line: Are you focusing enough on your corporate culture?

Building A Culture Of Service At Cowboys Stadium

I recently spoke with Paul Turner, director of event operations at the Dallas Cowboys stadium. He was recruited to this position from the Philadelphia Eagles 2.5 years ago.

According to Turner, his department is the watchdog for the overall guest experience and the quality of the show and his job is to make sure that there is an infrastructure to consistently deliver on all of the promises that the sales team makes. Here’s how he framed his responsibilities: “We are in the experience business; we can’t guarantee a win.”

Creating a consistently good event experience is not an easy task. There are only a handful of events every year, so most of the game-day staff is made up of part-time employees — and it’s a very diverse workforce. Making the situation even more difficult, there are many organizations working at the Stadium, including other companies like the food service provider, Legends Hospitality.

Paul’s approach has been to create a “culture of service” that is built around the organization’s service mission statement:

We are service professionals at the world’s finest venue creating an exceptional experience for our guests in a safe, clean and friendly environment

The mission statement was created by doing research with the senior executives, so it is widely supported by the Cowboy’s executive team. Turner is empowered by the feeling that even Jerry Jones, the Cowboys owner, is supportive of this mission statement.

Part of the indoctrination for all new employees is to break down the service mission statement into its component parts, beginning with the first word. Employees are taught that  ““We” we are all in this together. We collectively succeed or fail.” And with “service professionals,” employees are made to recognize that the organization plans to treat them like professionals; which, in return, means that they will be held to a high standard of performance.

The staff is also trained on the service mission statement at the beginning of every season and it is reinforced in just about every communication. It’s at the top of all of their game-day materials and training collateral.

Because of the periodic nature of the events, they can’t burden employees with a lot of procedural knowledge. Employees are given a handbook and told that they’ll be doing the right thing if they use the mission statement as their guide.

What does Turner consider his biggest accomplishment? He’s seen a lot of buy-in and the organization hasn’t gotten distracted with a lot of messages; it’s stayed focus on the service mission statement. Turner explained that with a casual workforce, you need consistency.

And, yes, I did admit to Paul that I am a Patriots fan. But only at the very end of our discussion. :-)

The bottom line: There’s a lot of power in simple, consistent messages

8 Customer Experience Trends For 2011

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It’s the time of year when prognosticators drag out their crystal balls and divine about next year. Well, I’m not too different. But instead of a crystal ball, I’ll tap into the 8 customer experience megatrends that I outlined earlier this year. They remain the key trends that I think we’ll see in 2011.

Here are the 8 megatrends along with my thoughts about how they’ll play out in 2011:

1. Customer Insight Propagation. Most decisions in companies are made without any real customer insight. Companies will increasingly recognize that they need to integrate a deeper understanding of their customers throughout their company. That’s why Voice of the Customer (VoC) programs represent one of the most popular customer experience efforts. A new cadre of vendors are making it easier to collect, analyze, and share customer information broadly across just about any organization.

2011: I’ve written a lot about VoC programs this year. Companies are beginning to figure out how to better use the insights and an emerging set of vendors have deployed customer insight and action (CIA) Platforms that can help considerably. But there’s still a long way to go. In the research report The State Of Voice Of The Customer Programs, we found that only 1% of large companies are “Transformers,” which is the highest level of maturity. In 2011,  I expect to see many companies move up on the VoC maturity scale as this continues to be an increasing area of focus next year. Don’t be surprised to see CRM players like Oracle and SAP acquire some of the CIA vendors.

2. Unstructured Data Appreciation. Deep feelings that customers have about a company often get truncated into a 5-point, 7-point, or even 11-point multiple choice scales; making it difficult to understand “why” things are happening. New text analytics applications can quickly process thousands of pieces of unstructured data and discern what’s making customers happy or what’s making them upset; pushing a dramatic rise in companies analyzing rich unstructured data like comments on surveys, call center verbatims, or social media discussions.

2011: As I said in a blog post earlier this year, it’s time for text analytics. I’m working with many companies on strategies for getting deeper customer insights and just about all of them involve a component of text analytics. In 2011, I expect there to be twice as many text analytics pilots as in 2010 and a lot of companies touting success stories at conferences. I expect IBM to make a big push in this area next year with SPSS and I would not be surprised to see Big Blue acquire either Clarabridge or Attensity.

3. Customer Service Rejuvenation As companies do touchpoint analyses and customer journey maps, they often find that customer service is a key “moment of truth” for customers. Unfortunately, the cost-cutting in this area over the last several years has created many poor experiences. Companies are recognizing that poor customer service is creating a very negative perception of their brand and will increasingly make investments to improve these experiences.

2011: During customer service week in October, I discussed how companies sometimes seem to care more about saving $1.50 in transaction costs than they care about $60 worth of business. But, I am seeing some changes. I’ve actually been working with a number of contact centers that are transforming the service they deliver. In 2011, I expect to see more contact centers drop average handle time (AHT) as a core metric and revamp quality measures based on customer feedback.

4. Loyalty Intensification. Over the last several years, many executives have realized that shareholder value is not an objective; it’s actually the outcome of building stronger customer loyalty. As companies starts using measures like Net Promoter Scores (NPS) to track loyalty, more firms will elevate these metrics to their executive dashboard; pushing companies to think and act more strategically about loyalty.

2011: Many companies are developing loyalty metrics and infusing them into their management dashboards. We found that 45% of companies tie compensation to some customer feedback metrics, but don’t push too hard, too early with compensation.  We also found that only 25% of respondents think their senior executives are willing to trade-off short-term financial results for longer-term loyalty. In 2011, it will become much more common for companies to balance loyalty metrics with financial ones. And many companies will evolve beyond fixing problems that cause dissatisfaction and start designing experiences that inspire advocates.

5. Interaction iPod-ization. QWERTY keyboards help make PCs so universal. But a keyboard-based QWERTY device is not the ideal interface for the next generation of digital devices. Fortunately, Apple’s iPod (and iPhones, iPads) are doing the same thing that QWERTY did over 100 years ago, teaching myriads of people how to interact with a touch-screen. As a result, a new wave of touch-pad based applications will emerge.

2011: Add Nooks, Android, and Windows Phone to the list of devices that will be teaching people how to touch, drag, shake, pinch, and tap to get what they need. In 2011, Mainstream PCs with a keyboard and mouse will seem even more like relics’ as people increasingly transition to iPad (and iPad-like) devices.  I also expect to see more voice interfaces emerge.

6. Social Media Assimilation. Social media is a hot topic. But Social Media is not really a new thing for companies; it represents just another interaction channel with customers. Companies will increasingly fold Social Media activities into the core activities of the company; especially within customer service.

2011: I created a term called “Social Schizophrenia” which describes companies that provide levels of service in social media that differ significantly from service levels in other channels. That still describes a lot of companies. In 2011, focus on social media will continue to grow but I expect much more mature approaches as the tools and processes are evolving.

7. Digital/Physical Integration. Consumers increasingly go online with their cell phones while they are doing activities like walking through a mall or eating at a restaurant. At the same time, iPhones have introduced consumers to the notion of task-specific application downloads. In this environment, companies can no longer think about online as a separate and distinct channel. They will start designing more experiences that blend together online and offline interactions.

2011: Mobile applications will increasingly take advantage of location-awareness to provide services and capabilities that are specific to the store, restaurant, hotel, ball park, intersection, or wherever you are. In 2011, we’ll also see more adoption of recognition-based services like Shop Savvy that can scan barcodes and Google Goggles that recognizes landmarks, text — pretty much anything you can take a picture of with your phone. Given the capabilities, I think we’ll see a bunch of integrated digital/physical offerings in the second half of the year.

8. Cultural Renovation. Companies are increasingly recognizing that “unengaged employees can’t create engaged customers” which is one of my “6 Laws Of Customer Experience.” That’s why many firms are starting to focus on the culture of their firms; trying to align employees with the vision, mission, and brand of the company. Cultural change takes several years to take hold; so significant changes won’t show up in companies immediately. But when change happens, it will very difficult for competitors to replicate.

2011: It’s great to see many executives ask for help building a customer-centric culture. I often compare customer experience to quality, which is captured in my manifesto: Great Customer Experience Is Free. I also like usurping this quote from the quality movement: “Great customer experience is the result of a carefully constructed cultural environment. It has to be the fabric of the organization, not part of the fabric.” We gauge customer-centric culture with Temkin Group’s Four Customer Experience Core Competencies. Our assessment of 144 large firms showed that only 3% are customer-centric. In 2011, I expect many companies to put in place the foundations for improving their customer-centricity while a few will revert back to their old ways; this stuff is not easy.

The bottom line: Hopefully you’re ready for 2011!

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