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Do You Know About Your Moment of Truth?

The Moment of Truth is the short timeframe when a customer experiences the product or service that many people have often prepared over months. It is the moment when a small, often unintentional mishap has the huge potential to spoil the result of hard work by others in the organisation behind the scenes.

"Kano

Make Use of Your Survey Data – Kano It

Nearly all medium-size and large companies spend hundreds of thousands or even millions on customer surveys every year. Customer survey results serve to amend strategies, design new products and services and focus improvement activities. Gathering customer survey data is only the first step. The second step involves making best use of the expensive data, analysing them, drawing business relevant conclusions and making important decisions. How are we doing in this step?

Everyday Innovation

“iPhone, Google, Samsung Mobile Phones and other products” are usually mentioned when it comes to innovation. It seems that innovation is strongly connected to new products everyone can see and even experience. The talk about Process Innovation is rather limited or left to the “process specialists”.

Doblin[1] has shown that the Return On Investment (ROI) of product innovations is by far lower than what you get when you rethink the way you make, sell and deliver your product or service. The HOW is much more important than the WHAT.

Some years ago when we established our business in Singapore, the registration of our company was easy.  We just needed to register our company with the government agency through a very simple and hassle-free online application. However, setting up a bank account for the company was not that simple. Doing it online was not possible. We made some calls to the major foreign banks like HSBC and Standard Chartered and we realised then that they were not ready to support SMEs. Then, we heard about OCBC and their new offerings for SMEs. We gave OCBC a try.

On the phone, Yu Jin, one of their bankers, explained the advantages of their new SME business account model. Everything looked very promising until he asked: “When can you come to our office to open the bank account?”

Everyday Innovation starts with you.

Everyday Innovation starts with you

“Today is not possible since we are with clients all day.”

“What about tomorrow?”

“No way. We are with a ministry from eight to six. After that I fly out to clients in China to spend a week with them”, I answered somewhat frustrated. I could not see an obvious way to solve our problem of opening our company bank account. And – much more important – to get our business finally up and running.

Still on the phone, Yu Jin thought for a while and asked

“What do you do tonight?” And, before I could get irritated he completed his thought: “Can I come to your place to finalise this application with you?”

At eight in the evening, he arrived at my house, explained all the formalities to me and my partner, we signed the papers and … voila. Problem solved.

On the one hand, I am very sure that at that time OCBC’s Standard Operating Procedures (SOP) did not explicitly tell their bankers to go the extra mile, to do something outstanding to help their clients with a creative solution. On the other hand, their culture must have been built in a way that people felt encouraged and empowered to do so.

The “WHAT”, which is the bank account, may be offered by other banks in a similar way for a similar price. The “HOW” makes the difference. Until today, we really appreciate the open mind-set Yu Jun was showing. He did not express the typical “Can Not” attitude. Instead, he delivered the service in a very  unexpected way, an innovative way.  He did something many people would not be keen to explore since it was beyond what the company said he could or should do.

This is what I call “Everyday Innovation”.

Conclusion

Waiting for the next “great innovative product idea” may never get you one step closer to a  higher level of customer satisfaction, more revenue and consistent business growth. Instilling an innovative mind-set facilitated by some simple creativity tools that are supported by empowerment does. Process Innovation creates much more value to the business than one realises. It can be done by nearly everyone in your organisation at any time because processes run every day. Everyday Innovation will change your organisation.

 


[1] Larry Keeley, Ryan Pikkel, Brian Quinn, Helen Walters: Ten Types of Innovation: The Discipline of Building Breakthroughs. Wiley, 2013

Complaints – The Tip of the Iceberg

“Voice of the Customer” – VOC in short – is a key topic in all kind of customer service, TQM or Lean Six Sigma training and related project work. There are two main categories for VOC data, reactive and proactive. Firstly, proactive data is collected with methods like focus groups, interviews, observations, surveys or test customers. Secondly, reactive data is mainly based on customer complaints, feedback, hotline data or warranty claims. The nature of the human being restricts itself almost always to negative comments through reactive data channels.

Value Complaints - They Carry Valuable Information About Your Processes

Value Complaints – They Carry Valuable Information About Your Processes

Proactive versus Reactive Feedback

Asking staff working in customer service departments about the nature of the feedback they receive from customers will result in answers like “No-one calls to tell us how good we are in delivering our service. Most of the calls – that are not questions – are more or less strong complaints.” On the one hand, this sounds frustrating, “not fair”. On the other hand, “negative feedback” is very powerful due to the fact that someone takes the time and tells us what goes wrong in our processes, hence shows us opportunities for getting better, for getting more competitive, for growing. The quality of this kind of information is usually much better than the feedback received via proactive channels like surveys due to the fact that respondents of surveys do usually not have a stake in the issue.

How do YOU feed back?
Reactive
The other day in Singapore, I had a small complaint about an SBS bus driver who did not really respect me cycling my way on the road. After getting home I took some time to recap what happened and wrote a very detailed letter to SBS to explain the situation.
Proactive
After I spent some days in a hotel in Batam, I received a survey form I needed to fill in before leaving the hotel. Did I fill it in? Make a guess…

The Value of Complaints

Customer research studies in the German financial industry some years ago have shown, that complaints normally reveal only the “tip of the iceberg”. Receiving 50 complaint letters means we get only the feedback from those people who take the time and the courage to complain. Hence, there might be about 1250 customers out there who experience a similar situation but do not complain. May be they go immediately to our competitor if they have a chance. We may never find out. Furthermore, the research has shown that there might be as much as 10 times more negative contact points with our company – like “Your call is important to us. Please stay on the line.” These negative incidents are not “big enough” for a complaint but always impactful enough to drive customers’ decision sooner or later.

Conclusion

Welcome complaints! As long as you get complaints someone is interested in your service and wants to help you improving. Behind each complaint you can expect as much as 25 times the situation that has led to the complaint and as much as 250 negative “Moments of Truth” with your company. Use this valuable and powerful information for taking actions. And, give positive feedback, too!

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Seven Habits … – Habit 2: Moment of Truth

The Moment of Truth is the short time frame when a customer experiences the product or service that many people have prepared often over many months. It is the moment when a small, often unintentional mishap has the huge potential to spoil the result of hard work by others in the organisation behind the scenes. Good process managers know this and put their focus on the Moment of Truth.

The Moment of Truth

The Moment of Truth

When Jack Welch explained his view on management he used to draw a company structure against the common understanding upside down. His explanation went somehow like that:

Who is the most important person for our company? It is our customer. Consequentially, the people who make or break every day’s business are the people who interact most with our customer, our front line staff. The crucial job of the lower management is to make sure their team members at the customer interface have everything they need in order to serve, to impress and to delight the customer. Every level of management has to support their team members with this purpose. My job is to ensure everyone in my company is able and willing to do his best for this objective.

For many of us this is not really new. However, the number of managers – call them process managers – who really go to Gemba for experiencing the Moment of Truth is marginal.

Is it not enough to ask your staff what is going on at the ground level, what happens at the moment of truth? Well, it would if they knew. And, it is a very normal human tendency that information gets “filtered” when it is passed from hand to hand, from level to level. Often there is a factor of guesswork added to the information.

What We Know About the Moment of Truth

Only an hour after running a very simple role-playing process simulation, the 20 managers involved in the process are asked to state the time spent on their own process steps. They merely have to guesstimate the duration for their direct involvement – a non-challenging task, one would assume. To everyone’s surprise the actual time measures more than 300% of the time estimated by the group of managers. Hence, it is not enough to estimate or guess. You need to measure in order to know.

Does this only apply to processes that are new to managers? Not at all. A Lean Six Sigma team’s project focusses on reducing the lead time for treating the customer at a routine service process. During an interim project presentation, the manager who has been directly responsible for that process for many years raised his voice after the team revealed data about the time needed to attend to the customer. He doubted the data; he could not believe that the process took as long as presented. Of cause, the team members were able to show facts… Hence, if you run a process for years, it does not automatically mean you know what happens on the ground. Customers and employees change. And so do processes.

Best Practices

Gemba is the place where your product or service is received and applied. You cannot learn about the Moment of Truth, the usage of your offerings and how well you are able to meet customers’ expectations by conducting an annual survey or by issuing some evaluation forms.

CEOs like American Express’ Kenneth Chenault know about this. He is said to spend time in American Express call centres to pick up calls from customers and listen to their requests. He surely cannot change the customer service level by answering some calls every now and then. However, he walks the talk. As a leader, he knows how important it is to observe and focus on what is critical to customers during the Moment of Truth. And, he expects his employees to “have it in their DNA”.

The former CEO of Singapore’s Alexandra Hospital, Liak Teng Lit, used to host a monthly lunch for a focus group of patients who had just gone through Alexandra’s service. He wanted to hear them out about their experience at the Moment of Truth. This way he learned about hospital processes and how his customers perceive them. Whenever possible, he would look into improving things. .

Conclusion

For managing a process successfully it is essential to know the details about the process. This can only be achieved by a set of carefully crafted instruments put in place:

  1. Make sure your process management is based on meaningful process indicators and real data collected in the right way by people who are taught to do so. Start with the Moment of Truth.
  2. Ensure that this information reaches you without being filtered or otherwise manipulated.
  3. Derive actions based on systematic and comprehensive data analysis following known and accepted rules.
  4. Publish this information in an appropriate manner so that the organisation can learn from it.

And, don’t forget going to Gemba from time to time to observe what happens at the Moment of Truth. The purpose of this is two-fold: Firstly, it helps you getting real information from the ground regularly. Secondly, it sends the right signal to your team members, your colleagues and, last but not least, to your customers.

Moreover, it is very likely that you learn something new about your processes.

What You Measure is What You Get

Developing a compelling vision and mission statement as well as a sound strategy is vital for any organisation. Equally important is the translation of the strategy into the day-to-day business. This step becomes even more critical for multi-national companies with their need for regional adaptation and alignment with corporate at the same time. So, how do we make sure our mid- and long-term plans – developed in the head quarter – make sense to business leaders and employees in other regions?

Seven Habits … – Habit 1: VOC

Ting is a sophisticated traditional Chinese character (Figure 1) that exemplifies the most important activity related to customer service in an impressive way: Listening. The old Chinese already knew that when listening with your ears, you better treat the speaker as a king, focus wholeheartedly with 100% attention.

Only by doing so you learn about your customers’ requirements, the mentioned ones and – often more important – the unsaid.

Listening Without Ting

Customer Surveys

It was early evening when I received one of these customer survey calls everyone experiences once in a while. The timing was not perfect however I decided to help this poor chap on the phone. He was just trying to do his job for his bank. Patiently did I listen to his questions trying to give him my honest rating on a scale from 1 to 10. Before we started, I had already decided that my average rating would be around 7. This does not make someone loosing face and still shows some room for improvement. Since the questions did not really touch anything that had to do with my banking experience but did rather circle around the brand value of his bank, I lost some interest. Nevertheless I installed some variation by going down to 5 and up to even 9 for some questions.

Figure 1: Traditional Chinese Character Ting. English: Listen

Figure 1: Traditional Chinese Character Ting.

When Survey Data Becomes Interesting

Only when he finally touched an area that had to do with my recent banking experience, I woke up, gave him a rather low rating and wanted to explain why. His answer was: ‘Sorry, I am not really from this bank. I am calling from a call centre and I am not able and needed to gather your verbatim feedback.’

Customer surveys are means of listening to the customer. Unfortunately, when you survey a customer he is often not in the mood to give his feedback. Most likely, he is disturbed in the middle of something more important – which is nearly everything. When you then engage a call agent – who gets paid by number of calls completed in a certain time frame – you have two people who are not interested in talking to each other. That call would be used to derive strategy, improvement actions or OD interventions. What do you think is the result of that? Where is the Ting in that?

Customer Feedback – Complaints and Commendations

Another time, I had a rather unpleasant experience with one of our banks and their incorrect statements. I sat down, took time to write a pretty detailed explanation of what happened. The bank contacted me and promised to look into the matter. Some days later they apologised and said that this was an IT issue. This would be fixed with the next release. Good.

Customer complaints related to real events are much better in quality and usually indeed useful for both, fixing the problem and improving the system. Research in the German financial sector has shown that these complaints commonly reveal only the tip of the iceberg. Behind each complaint you should expect 25 similar unpleasant events with customers who do not complain. They may just walk.

And, think about how much you pay for the surveys. Complaints come for free!

Best Practices – Ting in Action

Learning from the Great

When I joined GE Capital many years ago, one message got hard-wired in my genes from the beginning: the customer comes first. Before Jack Welch started his famous Six Sigma initiative, GE installed a thorough system for collecting and analysing the voice of the customer that was usually scattered all over the place. Every Six Sigma project presentation we did not start with the voice of the customer was prompted by our SVP with the question:

And, how does this relate to our customers?

Another best-selling question by our SVP was

Do you THINK this is what the customers want or did you actually ASK them?

Both questions needed to be answered with specifics, with facts. Commonplaces would not be accepted. Never before or after have I seen this kind of rigour in another company.

TING in Action at an SME in Jakarta

David, the MD of a medium-sized supplier company for the petrochemical industry in Jakarta, meets his direct reports every morning at 0800 for a very short update. He used to ask questions like ‘Everything ok? Anything new?’ until he found that something is missing in his company: the focus on the customer. Therefore, he decided to change this daily routine. He now starts the day with one question: ‘How is the voice of the customer?’ His team needs to mention not only issues raised by clients or observed by his staff. They also need to come with short-term and long-term solution ideas. Every day! Since they started this habit, they learned a lot more about their clients. In this company, the meaning of voice of the customer is in the bloodstream. They listen with 100% attention – and act. They know the meaning of “Ting”.

TING in Action at the Government

In the Singapore blood bank, nursing staff together with Red Cross continuously work on improving the level of customer service. They know that every donor who does not return means a lost blood bag that could be vital for a patient in one of the hospitals. Therefore, nurses and their colleagues do not rely on written customer surveys. They contact their donors in order to listen wholeheartedly to donors’ needs, to understand their concerns and to be able to serve them better. Although being a government agency, they display an exceptional level of dedication and customer focus that would do good to any private organisation.

Conclusion

Talking about the importance of the customer once in a while and running some surveys from time to time is not good enough to really serve them better. In order to achieve this you need to change the behaviour of your team members. It is necessary to install some habits.

Make it a habit, like David, to ask in your meetings with your team members ‘What is our customers’ voice? What have you done to serve our customers better?’ And, make it a habit to start the talk with your own story to highlight how you have improved the level of customer service.

If you cannot answer these questions positively every week, check whether you have spent your time wisely.

And, it would do us good to remember what the old Chinese taught us some thousand years ago: Listen with your ears wide open (and your mouth shut), by treating the speaker as a king, whilst focusing wholeheartedly and paying full attention. Listen with Ting.

See You in Gemba

A team spends months on improving customer-facing branch processes of a bank. After benchmarking with sister companies across the world and after carefully mapping out process steps they come up with an improved flow that drastically reduces the processing time for branch customers. It surely looks like a nice success story. However, they get devastating feedback from the customers whilst piloting the solution in five branches. Why?  

Season’s Greetings

Every year around December, he gets very busy. He plans for the big event and he wants to make sure everything works out to the expectations of his customers. He prepares gifts; most of them are not expensive in value. However, they are precious because of the warm thoughts and lovely considerations put in. Everyone knows him by his good deeds, only a few have seen him. He is hardly recognised and never awarded for his contributions although he adds value in multiple ways and touches countless lives. Knowing that he helps many and supports those who need his aid is enough award for his selfless work.

Sushi and more… The Importance of the Moment of Truth

A typical Friday evening starts with a family dinner in a nice atmosphere. This time we decide to visit one of our favourite restaurants for a light dinner with Sushi. Upon arrival we are amazed.

Usually, this place is packed on a Friday evening. Today, more than half of the seats are empty. Therefore, going in and taking a seat at the conveyor belt is very easy. Before the waitress has a chance to approach us we have taken some plates with Sushi already. 

Red Tape? – Not Here

Everyone, undoubtedly, has had the unenviable honour of experiencing ‘bureaucratic government processes.’ Be it applying for your first ID or passport, to initially obtaining a driving license and the inevitable dealings with the tax man. Judging by the time it takes and the “milestones” or number of departments one has to go through when dealing with German government bodies, the processes behind ID, passport or driving license must be highly complex and are usually being done by constantly overworked people. The Red Tape is often unbelievable.

Read Tape - Not HereSome time ago, I had to go to the Singapore Immigration and Customs Authority to receive my PR stamp in my German passport. The process was quite fast and the service very nice. I was about to leave the building when I saw a signboard which ‘advertised’ – “Get your Access Card now”. Since it seems to be a fashion to have a card for almost everything I stopped at the signboard and read the fine print. My conclusion was: “If you travel a lot you can make your life easier with an Access Card”. I turned around to ask a friendly officer for the Access Card counter.

Arriving at the second floor, I approached the counter. “Good afternoon, Sir. How can I help you?” After I had explained my interest in the card the lady behind the counter asked me with a smile: “Do you have your passport?” “Yes” “A passport photograph?” “Sure” “Some money?” “No problem” “Your thumb?” “Yes” “Then we can proceed.”

Being accustomed to typical government processes I imagined receiving my application form and being asked to fill it in, then submitting it and coming back a few weeks later to pick up my Access Card. I was under no illusion that this process would take less than a month.

The first surprise: this nice lady at the counter did not ask me to fill in an application form. She did it for me! I cannot recall any encounter with a German government clerk who would have done this. After signing my application form she asked me to take a seat.

About 15 minutes later, she called me back to the counter – presenting my plastic Access Card with chip and my photograph on top: “Sir, this is your Access Card. Please try at the simulator over there whether it works.” I tried. It worked – of course.

I could not believe what I had just experienced. Between not knowing that an Access Card exists until holding my personal card in my hands – with programmed chip embedded and photograph printed in plastic – pass less than 30 minutes in Singapore. No Red Tape. Impossible! Unbelievable!

This is what I call Process Excellence for Customer Satisfaction, or better: Customer Delight. I would not even expect this kind of performance from a private company, let alone a government agency. Thank you, ICA!

Conclusion

Only outstanding products or services are able to get customers noticing your company, talking about it and recommending it to their business partners and friends. Delivering what customers request is not enough. Customers would not ask for an Access Card delivered within 30 minutes because – for most of them – this is beyond their wildest dreams as it was for me. This kind of solution needs a creative mindset and an innovative organisation.
Keep in mind: Impossible is nothing.

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Procure to Pay – Spend Policies

Spending, apart from capital investments, tends to grow a little faster then organisations in most cases. Left unchecked firms face a ‘mid-life’ crisis where working capital is stretched to levels requiring borrowings incurring heavier and heavier finance costs. This is often bringing down the Procure to Pay cycle.

A lack of policies guarding the growth of spend is often an underlying cause. Naturally, many other factors come into play as well – an extreme focus on growth, inorganic growth (M&As), lack of standardization for spend reviews, infrequent and irregular supplier reviews, poor supplier maintenance, spend policy over-riding behaviour or a ‘just get it done now’ (covered as maverick spend in an earlier article) culture among others

Procure to Pay – Spend Policies

Working Capital Area: Procure To Pay

Working Capital Area: Procure To Pay

A strong spend policy put in place for both core and non-core spend that governs both buying behaviour as well as spending limits encourages stable growth of spend as an organisation grows. The requirement to ‘just get things done by hook or by crook’ often played out in the earlier growth phases of any commercial undertaking should be steadily replaced by regulatory equivalents covering especially:

  • Spend limits & authorization levels
  • Constant ongoing periodic reviews to bring in non-core and ad-hoc spend onto contractual terms
  • Annual supplier / vendor councils for both core and non-core spend
  • Supplier / vendor innovation councils (as opposed to simple ‘cost down’ demands)
  • Pre-M&A spend policy reviews where possible or immediately upon acquisition to bring in potentially detrimental terms and conditions that may cause ‘grandfathering’ or legacy terms and spend behaviours
  • Strict policies negating, as far as is plausible: ‘emergency’ payments, supplier ‘loans,’ ad-hoc payments and on terms other then contractual unless business needs so dictate
Procure to Pay - Spending Trends

Procure to Pay – Spending Trends

Policies together with a rigorous procedure to ensure adherence forms the major key to achieving a state of ‘ideal spend’ where as the business grows, again barring capital expenditures, the margins from running the business increases. While applicable primarily to larger firms with multiple cost centres the same principles apply to small and medium sized enterprises in efforts to gain this critical core competency every firm should possess.

Benefits of this program will show up in an organisational capability to effectively manage spend. For a large retailer with $5 bn of spend some $200 m were recovered from terms corrections, extensions, standardization and process improvement within 8 months of program implementation. A further $150m was liberated by contract negotiation spanning a 15 month period.

Customer to Cash – Dispute Management (Receivables)

A portion of collection activities often relegated to ‘customer service’ is that of actual dispute management. Customers who need ‘correction’ on invoicing information, goods returned, quality claims, delivery issues among others get directed to a generic ‘customer service’ department. This department attempts to secure resolutions from throughout the organisation. As opposed to ‘customer service’ per se we see these activities specifically as ‘dispute management’ as it relates to receivables management. They turn customer to cash.

Working Capital Area - Customer to Cash

Working Capital Area – Customer to Cash

Customers utilise a myriad of reasons for slow or delayed payment. Often these reasons are ‘valid’ to some extent.

“Sorry, we are unable to process your invoice as the address is different or wrong.”

“Your invoice information is incorrect …”

Crossing t’s and dotting i’s hardly figures in most finance functions but we have seen these very reasons result in late payments. This happens often after a costly (both time and money) rectification exercise that can span the entire firm in terms of inputs from different departments. Production, logistics, marketing, sales and even management sometimes gets involved in the resolution of these ‘disputes.’

Other common reasons we have come across for delayed payment are:

  • Incorrectly addressed billing entity (billing entity name)
  • 3rd party billing that has not been verified
  • Lack of ‘documentation’ such as Delivery / Purchase / Variation / Confirmation Orders
  • Quality / Quantity / Time issues
  • Incorrect credit or other terms reflected on the invoice – relative to the contract

Dispute Management to Turn Customer to Cash

A dispute management system helps address these issues by collating information on ‘reasons’ provided by customers – to turn customer to cash. Properly, though sometimes arbitrarily, categorised, these are then worked upon systematically for eradication. Inter-functional or inter-departmental work is required but this is considered a ‘one off’ exercise rather then for random late invoices that come up every so often.

Customer to Cash Disputes (AR)

Customer to Cash Disputes (AR)

While true that a smaller firm will gain in terms of organisational learning and that such a formal system may not be an absolute requirement but for sizable firms which face regular resource turnover it is much more difficult to retain ‘institutional’ memory that will quickly resolve ‘disputes’ resulting in delayed payments. These memories, in such an informal system, are also stored across departments in bits and pieces making a whole picture difficult to obtain at critical times.

As a medium and long term measure to address late receivables a dispute management system can yield results that go beyond lowering DSO (as a KPI of late receivables) to improving organisational understanding and work flow. Inter-departmental disputes are also reduced over time.

While this system is not a panacea for ‘cheques signed but locked in drawers’ customers we have worked with to design and implement such a system reap benefits of lowering their chronic overdues by some 40% to 80% permanently. As best practice for the establishment of a Financial Shared Services Centre (FSSC) or greenfield projects a dispute management system ensures that the set up of operations do not quickly degenerate into constant fire fighting exercises. Customers typically respond positively to such activities when they realise that there can be no reasonable excuses for late payments.

 

Six Sigma – Show Me The Money

Globalisation and instant access to information, products and services continue to change the way our customers conduct business.
Today’s competitive environment leaves no room for error. We must delight our customers and relentlessly look for new ways to exceed their expectations. This is why Six Sigma Quality has become a part of our culture. Jack Welch, GE

What is Six Sigma?

First, what it is not. It is not a secret society, a slogan or a cliche. Six Sigma is a highly disciplined process that helps all kinds of companies focus on developing and delivering near-perfect products and services.

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