RESEARCH & IDEAS

Break Your Addiction to Service Heroes

Q&A with: Frances X. Frei Published: January 23, 2012 Author: Deborah Blagg In their new book, Uncommon Service, coauthors Frances Frei and Anne Morriss show it is possible for organizations to reduce costs while dramatically enhancing customer service. The key? Don't try to be good at everything. Interview and book excerpt from HBS Alumni Bulletin. Key concepts include: Partnering with customers to deliver a better service experience puts companies on a path to all-around excellence. At the organizational level, conducting tradeoffs that support strategic priorities should not cause angstin fact, the failure to make them is the number one obstacle to excellence in service organizations. Companies that excel at service typically do a great job in four areas: identifying the attributes of service they're competing on; determining how to fund excellence in these areas; designing management systems that help employees to succeed at their jobs; and training their customers. all-around excellence." Deborah Blagg A central premise of Uncommon Service is that to achieve service excellence, you may need to make some tradeoffs. Is that a hard sell for some managers who are motivated to excel in all areas? A: Frei: Even superstar managers would probably admit to being better at some aspects of their jobs than others, but to be clear, our research is aimed at the organizational level. And in that context, the idea of tradeoffs is nothing new. Peter Drucker and others have said it, and people accept the concept when you are talking about companies that make physical products. When the MacBook Air came out, for example, Apple knew that to make it lightweight, there would be a tradeoff when it came to battery life and memory. Apple didn't have any angst or shame about that, and what we are saying is that the same thing should be true in service organizations. A: Morriss: But so often, it isn't. We argue that the failure to make necessary tradeoffs is the number one obstacle to excellence in service organizations. Q: Why is that such a difficult concept for service organizations to embrace? A: Morriss: Part of it is that the advantages of making tradeoffs aren't as obvious in service businesses, and part of it is that there are a lot of heroic people in service organizations who feel compelled to be the best at everything. That's particularly evident in mission-driven and health care organizations, where managers feel a moral obligation to at least try to be the best at everything, even if the overall result of that can, in fact, be counterproductive. Q: Could you give an example of that? A: Frei: Well, we're all pretty familiar with the litany of problems in health care, but let me give you an example of a renowned health care organization that has embraced the concept of tradeoffs with positive results. Some time ago, the Mayo Clinic decided to focus on the priority of reducing the amount of time patients wait to be seen. As a result, today you can get a Mayo Clinic diagnosis within 24 hours. For anxious patients who want to know what's wrong with them, that's a huge benefit. The tradeoff-and again, no one apologizes for this-is that patients can't choose their caregivers. They will get a Mayo Clinic diagnosis, and they will get it quickly, but it may not be a diagnosis from a specific, renowned doctor X. The system has been designed to favor speed of diagnosis over choice of physician. You will still get high-quality health care, but within a system designed around the concept that tradeoffs exist. When health care organizations act this way, they begin to thrive in unprecedented ways. A: Morriss: Obviously, when your organization is in the business of saving lives, you can't intentionally be "bad" at anything. But you can decide to not perform as well in areas that patients care less about, with the understanding that it will give you the resources to excel in those areas that patients value more highly. Getting organizations to accept that concept presents an emotional stumbling block that often is more difficult to overcome than the challenge of deciding which tradeoffs to make. Q: How do you help them over that stumbling block? A: Frei: One way is to make the advantages of tradeoffs clear. My favorite example is organizations that use color-coded monthly management reports: green for things that are going well, yellow for areas that are OK, and red for places that are falling behind. The obvious reaction is to say, "Get better at the reds." That's fine, unless the presence of the reds is what's fueling the greens. Southwest Airlines would be red on food service. But Southwest doesn't pay much attention to that, because getting better at food service would slow its turnaround time, which is a big green for the airline when it comes to pleasing its customers. So we work on helping organizations identify the net positives of tradeoffs and on making them thoughtfully and deliberately, without remorse. Q: Could you talk a little about the four service "truths"? A: Frei: Companies that excel at service

In their new book, Uncommon Service: How to Win by Putting Customers at the Core of Your Business, coauthors Frances Frei and Anne Morriss maintain that it is possible for organizations to reduce costs while dramatically enhancing customer service. That win-win approach involves "looking at your biggest buckets of cost and rethinking those strategically in ways that give your customers something they value," notes Frei, the UPS Foundation Professor of Service Management at Harvard Business School. Morriss (HBS MBA '04), the cofounder and managing director of the Concire Leadership Institute, which advises managers in the public, private, and nonprofit sectors, says that as organizations increasingly ask customers to play a more active role in transactions, saving money shouldn't be the sole guiding force. "Whether it's pumping your own gas or troubleshooting your own computer problems on a website, companies that design those interactions purely to cut costs don't succeed. But when they actively partner with their customers to deliver a better service experience," she relates, "that's the path to

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typically do a great job in four areas: identifying the attributes of service they're competing on; determining how to fund excellence in these areas; designing management systems that help employees to succeed at their jobs; and training their customers. Q: To be a great service company, do you have to be equally good at all of those? A: Frei: We usually start by having organizations take a close look at their capabilities, their customers' needs, and their competitors' performance. If I had to identify one place most organizations could really start to make a difference, it would be service offering, number one, and probably employee management systems, number two. But all of these aspects are mutually reinforcing. Q: You write a lot about corporate culture in companies such as Zappos. Why is culture so important? A: Morriss: A culture exists to influence how people think, so their discretionary behavior will be consistent with the values of the organization. In services, almost all behavior is discretionary. You have the moving parts of human beings delivering services interacting with human beings as customers. Culture is the guiding force; it's the difference between the positive experience you have when you interact with someone at Zappos's call center and the experience you have at XYZ call center that makes you decide to take your business elsewhere. Q: Early on in Uncommon Service you assert that humans are born with an innate desire to serve. Could you elaborate? A: Morriss: Some of the research we looked at documents this impulse in babies as young as 18 months. In work situations, people are motivated at least as much by behavioral norms, such as pride in their work, as by money. We think there's a significant, unrealized opportunity-whether you're looking at managers, teams, or customers-to tap into the human need to be of service.

Book excerpt from Uncommon Service: How to Win by Putting Customers at the Core of Your Business

Be the Anti-Hero Our message begins simply enough: you can't be good at everything. In services, trying to do it all brilliantly will lead almost inevitably to mediocrity. Excellence requires sacrifice. To deliver great service on the dimensions that your customers value most, you must underperform on dimensions they value less. This means you must have the stomach to do some things badly. The concept can seem immoral at first blush. We recently did some work with a major health-care provider. The CEO wasn't able to join us until the last couple of days. When he arrived, we reviewed what we'd covered, including the link between underperformance and excellence. The CEO immediately pushed back, saying, "I don't see anything we could afford to be bad at." He continued, revealing that he saw the idea of lowering the bar on any dimension as dishonorable, particularly in a field like health care. Hands immediately shot up around the room. His team disagreed, and after listening to their ideas for where trade-offs could be made-where resources could be shifted from areas low on the customers' priority list to areas customers cared more about-the CEO finally backed down. "I get it," he said. "That's how we can afford to be great." Charismatic leaders sometimes assume that they can avoid this trade-off by sheer force of personality. If they just get everybody fired up, the kinks will work themselves out. But you can't design a system that is based on the faith that all of your employees will perform heroically, all day, every day, for an indefinite period. For a system to work, excellence must be normalized. And you don't get to that point by demanding extraordinary sacrifice. You get there by designing a model where the full spectrum of your employees-not just the outstanding ones-will have no choice but to deliver excellence as an everyday routine. You get there by building a system that just doesn't produce anything else. Heroism, in fact, can be a red flag. We know a service recovery expert who comes in early and stays late every day, picking up the slack and overcoming the obstacles in her company's service design. Whenever a client has had enough and is about to walk, she gets on the case and, through her superhuman effort, "fixes" everything. But as long as she's around, the company will never confront the serious problems they've created for themselves, the money they're leaving on the table, and the growth opportunities they're missing-to say nothing of the risk of assuming that this very

special employee will stick around. Cynicism can build quickly among talented, client-facing people when service problems are systematically tolerated. The cape starts to feel heavy when it's overused. Great service, it turns out, is not made possible by running the business harder and faster on the backs of a few extraordinary people. It's made possible-profitable, sustainable, scalable-by designing a system that sets up everyone to excel.

The Four Service Truths

Once you accept the idea of trade-offsand break the addiction to service heroesthe inputs into service excellence are much easier to consume. We lay out these inputs in a framework we call the four service truths, which are the assumptions behind the basic elements of a successful, high-service model: a service offering, a service funding mechanism, an employee management system, and a customer management system. These four truths act as the mental cornerstones of a sustainable model for delivering uncommon service: You can't be good at everything. You must be bad in the service of good. Excellence requires underperforming on the dimensions your customers value least so that you can overperform on the dimensions your customers value most. Once you choose this path, the decision on where to be good and bad should by driven by deep insight into who your customers are and what they need operationally. Someone has to pay for it. Service excellence must be funded in some way. You can find a palatable way to charge your customers more for it, reduce costs while improving your service experience, or get customers to do some of the work for you. Choosing among these strategies-finding the right funding mechanism for your business-will depend on both industry dynamics (e.g., price sensitivity) and the specific relationship you have with your customers. It's not your employees' fault. Your people matter, but not because they're the make-or-break input on delivering uncommon service. What matters more is the way you've designed your service model, in particular, the way the model sets up average people to excel as a matter of routine. Rather than creating an environment where employees have the time and space to focus on satisfying customers, many service organizations today are actually undermining their people's ability to serve. You must manage your customers. You must be deliberate about involving your customers in creating-not just consuming-your service experience. In other words, you also need a management plan for your customers. To

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return to our manufacturing metaphor, the special challenge of service delivery is that your customers routinely wander onto the shop floor-unannounced-and tinker with the assembly line. And yet success isn't just a matter of keeping them out of trouble. Your customers need to play a productive role on the line itself, and to do so, they need

training, guidance, safety goggles-and more.

About the author

Deborah Blagg is a writer for the HBS Alumni Bulletin, where this article first appeared. Reprinted by permission of Harvard

Business Review Press. Excerpt from Uncommon Service: How to Win by Putting Customers at the Core of Your Business. Copyright 2012 Frances Frei and Anne Morriss. All rights reserved.

COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE