“Trouble With Service”Transcript of a talk on customer service given by Kevin

Robson to MBA Alumni at University of Manchester Business School, United Kingdom

12th April 2013

Service-AbilityCreate a Customer Centric Culture & Achieve Competitive Advantage

SERVICE-ABILITY EXPLAINED SERIES

“The ability to serve will be the next big thing. Businesses that get their culture and their people right will get their customer relationships right too. In what is now a wilderness of bad or indifferent

customer service, Service-Ability will make organisations different.” - KEVIN ROBSON

TRANSCRIPT OF A TALK BY KEVIN ROBSON AT MANCHESTER UNIVERSITY BUSINESS SCHOOL ON 12 APRIL 2013

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“Trouble With Service”

TRANSCRIPT OF A TALK GIVEN BY KEVIN ROBSON AT MANCHESTER UNIVERSITY BUSINESS SCHOOL ON 12TH APRIL 2013

IntroductionTowards the end of the 1990s I noticed that things were changing. Information and Commu-nications Technology was developing enor-mously and being applied to business in amaz-ing 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.

By the turn of the Millennium, we were at the be-ginning of a completely new era in society, and in business. Now, of course, we see the full out-

ABOUT KEVIN ROBSON

Following a successful business career Kevin spent a short period as CEO of an international charity and later was a business consultant, working with many different types of organisations and in a variety of sectors.

He gained his MBA with overall distinction plus academic prize for best dissertation at Durham University Business School and also holds the internationally recognised Graduate Diploma in Marketing of the UK Chartered Institute of Marketing, of which he is a Fellow. A qualified adult teacher, he is also extensively vocationally qualified in Human Resource Development and Learning Development.

At various times, Kevin has been an associate lecturer for the Open University Business School, University of Durham Business School, University of Newcastle Centre for Lifelong Learning, and Newcastle Business School, University of Northumbria.

Kevin now spends most of his time writing and lecturing on Service-Ability.

“We must restore the humanity of our business transactions, and embrace again that old business axiom that, ‘People do business with people’, because that is the key to success in a service economy.” - KEVIN ROBSON

Changing Times

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working of what was only just starting in those days. This was the beginning the full expression of the Technological Revolution that had started in the period following the Second World War and had progressively gained momentum towards the end of the 20th Century. 

“Machines Sitting in Front of Machines”One of the key changes I noticed, even then, was a subtle shift in the attitude of organisations towards their customers. Personal, meaningful interaction was being removed. 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, and the skill of serving customers was undoubtedly disappearing. Some, it seemed, regarded customers as an unwarranted intrusion into their daily lives!

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. 

There was an increasing distance emerging. You couldn't just ring the person you needed to speak to anymore: someone who could make decisions. Instead, a machine would answer the 'phone. The time-honoured business axiom that, ‘People do business with peo-ple’ was being flagrantly ignored.

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 sit-

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Things were changing ...

Machines sitting in front of machines

ting in front of machines: at best disengaged, at worst sometimes downright hostile if your responses weren't what their script ex-pected. Customer service was becoming dehumanised, commoditised and departmentalised: something done by 'customer services', not by everyone in the organisation, at every point of contact. 

It seemed to me that customers were being subtly shifted to being serviced rather than served. And all this is humorously but per-fectly illustrated in the Little Britain television sketch, “Computer says No!”

Commercial InsanityTo me all this seemed both contradictory and verging on commer-cial 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 custom-ers, 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 work-ing as an associate at my former business school at Durham Univer-sity. I was engaged in some research into small business network relationships and lecturing on business start-up and entrepreneur-ship on the MBA programme.

I was in academic mode and started to think deeply about the im-plications of this changing business environment, particularly the effect technology was having on customer interactions; and I real-ised that what was happening was, once again, people in organisa-tions were becoming conformed to serve the technology and being replaced by machines, just as had happened in the Industrial Revo-lution.

The old 19th century, industrial mindset was re-establishing itself, but this time through modern technology. The parallels were aston-ishing, and so were the implications.

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“COMPUTER SAYS, NO”

Carol Beer is a perpetually bored and extremely unhelpful woman who when approached by a customer with a very reasonable request, will type into her computer and, upon discovering the request cannot be met, she will respond with a bored "computer says no." She is unwilling to use any human initiative or common sense to help her customers.

SECTION 2

As we saw in the Olympic opening ceremony in London in 2012, the Industrial Revolution was a proudly British phenomenon. The era it triggered started towards the end of the 18th century, following the Enlightenment, and coincided with the so-called Modern Era, or Scientific Age, in an historical window defined roughly by the fall of the Bastille in 1789 and the fall of the Ber-lin Wall in 1989. This was the age of Industrialisation.

However, having been given added impetus by two World Wars, the industrial era steadily declined in the latter half of the 20th Century and probably took its last dying gasp one dark day in 1979 , during the Winter of Discontent, when a Labour govern-ment was brought down by industrial disobedience amongst the very people it represented. From that time there emerged a new economic reality in Britain. 

The age of Industrialisation: An historical window defined roughly by the fall of the Bastille in 1789 and the fall of the Berlin Wall in 1989

Our Service Economy

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Today, in common with many developed economies, only about one tenth of our GDP is actually making things, and almost eight tenths is services of one kind or another (including the so-called 'in-tangible products'). We now live in an essentially post-industrial economy dominated by services, and that is a major shift from what we have known and understood for a long time. 

Although manufacturing is only around 12% of our GDP, it isn't dead. In fact the traditional engine of our economy remains vi-brantly alive, especially in automotive and aerospace where Britain remains a world leader. Those sectors, at least, are estimated to be some 30% more efficient than in the 1980s, due largely to technol-ogy simplification, which has led to a massive reduction in shop floor workers. I mention this because it has considerable implica-

tions for our approach to our services sector and I shall be develop-ing that idea a little later in this presentation.

The Value of ServicesThe fact that we are no longer predominantly a manufacturing na-tion, doesn't mean that what we do is any less valuable.  Although a service doesn't add to your assets like a tangible product does, it nevertheless adds value, as witness the plethora of services of all kinds that are everywhere to be found.

Take financial services for example. After 'Big Bang' in October 1986, this sector increased enormously in its economic value to our economy. Today, on its own, it contributes around £53 billion annu-ally to the national exchequer - around 6% of all corporation tax re-ceipts. Compare this to the 4% corporation tax contribution from our entire manufacturing base and you will see the massive impor-tance that this one sector has in our economic wellbeing.

So, services are in demand. They are a valid basis of our economy and they have enormous economic value, but I believe we are not maximising that value to the extent that we could because we con-tinue to apply outdated 19th century industrial thinking to modern service provision, and this is causing us to misunderstand the true nature of the value-added of Service.

What our service sector seems to fail to understand is that custom-ers utilise products but they experience a service. The way a service is delivered is as much as part of how the customer perceives its value as the intrinsic benefit the service confers, so getting the whole 'service product' right means getting the way it is delivered right too, and if we consistently fail to deliver the added value of

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We now live in an essentially post-industrial economy dominated by serv-ices.

SERVICE, we will fail to maximise the potential from the whole service offering.

Mass Produced ServiceThe problem is that we continue to think of services as products to be mass produced. Indeed, companies talk about 'service products'

don’t they? However, Service is a VERB as well as a noun and we need to tease out this error of understanding in order to get to the nub of the issue.

Karl Marx observed that in Capitalism, humans tend to become commoditised and turned into mere instruments of monetary ex-change, and that is precisely what I see happening today. Rather than investing in their human capital, enabling their people to de-liver service, our corporations are reducing them to automata; tak-ing away from them the ability to relate to customers in a way that is satisfying to both; and seeing service as a commoditised produc-tion process rather than the vital business function that it really is. 

False EfficiencyManufacturers have always sought to reduce their cost-of-goods-sold by simplification through technology and reducing man-power. Quite often this maintains or even improves the quality of the product. But services are essentially about people and this ap-proach is inappropriate. 

In service delivery, people are not just the means of production they are also very much the product itself. People are inevitably a high component of the cost of service delivery and neither their numbers nor their capabilities can be reduced without reducing the value to the customer of the overall service-product. We really must stop merely servicing customers and understand how to serve them as they want to be served, not the way we want to do it. Taking people out of the process is not the way to better services because it removes the element of SERVICE.

Technology is important, don't get me wrong. I'm no Luddite. It is an amazing thing that the information available to employees to-day on a screen would, only 25 years ago, have taken a small army of clerks to produce; and what would we do without bank ATMs?

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Mass Produced Service

But the reality of the 'savings' being made by replacing customer-facing employees with machines and controlling their activity with systems is that companies are now experiencing up to 30% annual customer churn because of bad service, and this is matched by up to 20% employee turnover. That is expensive and profit sapping. Where is the sense in it? 

We must face it, what is currently going on is not working. Neither will it work, however much we tinker with it. Technology simplifi-cation cannot be applied to the service sector in the same way as in a factory. We must learn to use the technology more intelligently.

We must put it behind our people as an enabler, not use it crudely as a mediator of the customer transaction. We must restore the hu-

manity of our business transactions, and embrace again that old business axiom that, “People do business with people”, because that is the key to success in a service economy. 

Wrong MetaphorJohn Maynard Keynes said, "When the facts change, I change my mind. What do you do?" and I would like to lay this down as a gen-tle challenge to those of you who are in a position to influence the approach to customer service in your organisations, and in your clients' organisations.

Service organisations need to be organisms, not machines. The ma-chine metaphor causes an organisation to turn in on itself and fo-cus on systems and procedures: it becomes inherently self-serving and creates disengagement in its employees -  from the customer, from the organisation and from the values that inform ethical be-haviour. We have seen this only too clearly in our banking sector in the last few years.

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“People do business with people.”

The organisation as an organism, rather than a machine, allows bet-ter interaction with its environment

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SECTION 3

What is now desperately needed is an organisation-wide ability to serve. Training staff in customer service skills, or devising ever more clever service-products, for example, is not the way to ultimate success. Service initiatives like this can be part of the answer, but they are not the total answer. On their own they are insufficient because you cannot bolt-on customer service to an organisation that is inherently unable to support and nurture it. 

At best tactical service initiatives will have only a temporary ef-fect, at worst they never take root at all. The reason why countless service initiatives do not stick is because they start from the wrong place. They are not planted in fertile ground and they are not nur-tured by attentive gardeners - the senior managers: those who are the directing mind of the organisation. 

We must retain our people not just re-train them: developing them in broader ways than just training them in specific skills, as impor-

True customer satisfaction, that essential ingredient of the service-profit chain, starts with the satisfied, personable and loyal employee.

Service-Ability

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tant as these skills are. We must become less concerned with proce-dure and process, and more with personality and people. As Peter Drucker appropriately points out, profit is the by-product of a suc-cessful enterprise, not its raison d'être. 

Unless our entire organisational cultures change, and the people are freed up and empowered to serve customers meaningfully, the sort of service that delights and retains both the customer and the employee, will not happen. True customer satisfaction, that essen-tial ingredient of the service-profit chain, starts with the satisfied, personable and loyal employee who can relate to customers and colleagues alike in a human, meaningful, and above all consistent way. 

This is not just wishful thinking. Service-Ability is a structured idea, underpinned by an understanding of morale (team spirit or esprit de corps), that vital ingredient of endeavour. Morale is based on four key elements: trust in leadership; trust in colleagues; pride

in the job; and belief in the cause; and it is a matter of strategic intervention. 

In the model of Service-Ability, these attributes are inferred back into the organisation right to the very top, the corporate policy level, and classified into four strategic areas: “Effective Leader-ship”, "Getting the People Right”, “Appropriate Organisation” and “Clarity of Purpose”. I argue that if we get it right in these four ar-eas, the result will be initiative, involvement, professionalism and engagement in the individual employee at the customer interface.

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The model of Service-Ability

Effective LeadershipTom Peters said, "Organisations exist to serve. Period. Leaders live to serve. Pe-riod!"

The leaders of our organisations must wake up to this. We must learn to lead our people as servant-leaders, not as masters: instilling a desire to serve throughout the organisation by leading from within the body of the people not

from above.

Servant Leadership needs to cascade down through the organisation. Leaders must engage with their people, using their power to enable the people to get on with the job of serving cus-tomers, and sharing values and aims. How are we going to expect our people to serve our customers if we don't serve them? From whom will they get their example? 

Servant leaders empower, they trust and, themselves, are trustwor-thy because they walk their talk. They trust their people to make decisions because decisions taken close to the point of need, by someone in touch with the customer will stand a far better chance of being the right decisions.

In a culture of servant leadership, employees are able to act on ini-tiative in the best interests of the customer, knowing they will re-ceive backing, even if the decision was not necessarily the best one, because customer satisfaction is the leader's culture too.

Getting the People RightAnd then there's getting the people right. The Americans have a saying: "Hire for attitude - train for skill." How many of our would-be customer-orientated corporations are starting with their selection criteria? Are they re-cruiting people with servant hearts?

Once the right people are selected, are they nourishing them and developing them, or just treating them like work-production units? Service peo-ple need to become professionals - with a sense of professionalism that will inform their conduct because, as I said earlier, they are not just the means of production, but also the product itself. 

Appropriate OrganisationWe need to structure to enable a service culture too. An organisation is not a brand, or a building, or systems, or processes, or a compliance machine, it IS the people. It is nothing more, nor less, than a group of people working towards a common goal. That means form must follow function.

It is no good having a rigid, hierarchi-cal, bureaucratic organisational structure in which people say, "It's not on my pay scale." Neither is it any use structuring in functional silos, classic Handy Role Cultures, that prevent people relating to

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one another across the organisation. (Think of the detached 'cus-tomer service' functions in call centres here?)

We need to harness and release the power of the organisational net-work. Everyone needs to be working together; always seeking how to serve customers better. That means a team culture - not just groups of people working in the same department, or wearing the same uniform. A team culture creates employee involvement. 

Clarity of PurposeFinally, rather than the usual exhorta-tions or lofty aims of mission/ vision statements, a sense of purpose - of purposefulness - needs to be created throughout the organisation.

We must instil in our people a clarity of purpose based on the expression of right values that drives the organi-sation forward, turning its whole purpose towards the customer with

intent to deliver a quality experience as well as value for money. 

Research is now showing that understanding and identifying with good organisational values is a vital part of employee engagement - that long sought-after ‘holy grail’ of management, and this is about articulating and then communicating those values, as much as it is about being clear about strategy and mission/vision.

That starts at the very top. As Sir John Tusa, former head of the BBC World Service said, "… an organisation can run and succeed on its values; that fuel tank never runs dry." I'm afraid too many of

our organisations have lost any sense of values and right behav-iour, so lost have they become in the relentless quest for efficiency.

Our organisations need to be capable of delivering too. Far too of-ten service delivery is ill-thought-through, lacking in clarity and coherence - and failing repeatedly in some of the most simple qual-ity precepts such as ‘Right First Time’ - quality built-in right at the point of production by capable, motivated production workers.

Industry learned how to do this decades ago, we have yet to see it manifest in our service sector.

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Service-Ability as a consultancy and intervention framework

SECTION 4

As I draw this talk to its conclusion, the ability to serve, not just efficiency, is now what is desperately needed if we are to be able to leverage the maximum future benefit from our overwhelm-ingly service-based economy. We must abandon the ingrained industrial mindset that conceives of services as products, devoid of that vital ingredient of SERVICE. Instilling this idea is vital.

Procedures, processes, financial ratios, data mining, customer satis-faction surveys and the relentless pursuit of false efficiency by re-

placing people with technology, need to be subordinated to this vital goal. 

The real efficiency and savings, those that continue to pay back, will come from reducing customer and staff churn and eliminating the continual profit-sapping cost of dealing with service failures.

That is where the true value lies in the service sector.

The ability to serve will be the next big thing. Businesses that get their culture and their people right will get their customer relationships right too.

Real Efficiency

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We had Total Quality in the 1980s that believed product quality was the responsibility of everyone in the organisation if customer expectations were to be not only met but exceeded, and it trans-formed British industry: products were right first time.

Business Process Re-Engineering in the 1990s encouraged a re-think about how organisations functioned, so as to break down functional silos and re-align the entire organisation towards the customer. The Balanced Scorecard at the turn of the Millennium in-tegrated non-financial measures such as customer value, internal processes and people’s learning and growth into measures of success. 

The ability to serve will be the next big thing. Businesses that get their culture and their people right will get their customer relation-ships right too. In what is now a wilderness of bad or indifferent customer service, Service-Ability will make organisations different. Those that have it will be like oases in a desert. They will com-mand premia for their service-products, they will be better places to work and they will attract the right people. They will reduce cus-tomer and staff churn, and they will enhance brand value as a re-sult.

Today, the social media are awash with examples of bad customer service. Many firms are facing the terrifying prospect of having their customer service mediated in cyberspace, where they have no control over what happens. TripAdvisor.com is sending paroxysms of fear through the hotel trade and it is now well known that a frus-trated Tweet will elicit assiduous response from companies whose intractable customer service has hitherto blocked a sensible resolu-tion. They know they have problems and they are monitoring so-

cial media in a desperate attempt to gain control. The consumer now has the ability to fight back using the very technology whose inappropriate use caused the problem in the first place - a sweet irony indeed! 

Let me end this presentation, where my book begins: the salutary tale 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'. I leave you with his message.

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The YouTube video “United Breaks Guitars” 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 song's instant success meant a public relations humiliation for United Airlines.

“UNITED BREAKS GUITARS”

© Copyright 2013 H K RobsonThe right of the author to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher.

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Kevin Robson