THE LRN CONVERSATION: CAN SERVICE DESIGN ADVANCE ETHICAL CULTURE?

“Employees should not need to be superheroes, bend the rules, or take shortcuts to give customers a great experience,” write Thomas A. Stewart and Patricia O’Connell in their new book, Woo, Wow, and Win. The authors suggest that to truly meet the needs of customers, companies must be designed for service from the ground up.  We were curious about whether foundational service design can lead to companies that more regularly do the right thing—what we call principled performance. Mike Eichenwald who leads the Advisory Services practice at LRN spoke with Tom and Patricia about how organizations can be designed for elevated behavior.

Mike Eichenwald
You write at length about value proposition, identity and strategy. At LRN, we’ve conceptualized great customer service as an outcome of self-governance—companies that put purpose and values at their core, and are led with moral authority. The idea emerges from our proprietary research, articulated in our Global HOW Report, where we’ve found self-governing organizations outperform other types across multiple key business indicators. How do purpose, values and moral leadership connect into service design and delivery?

Tom Stewart
Every company has a value statement, with integrity at the heart right? But how do you translate that statement into the desired behavior of, say, a consultant working on a project or the cashier giving change at 7-Eleven? You start by helping them think about the customer’s experience and desires. One way to understand unethical behavior is to think of it as a failure to see things through the customer’s eyes—a failure of empathy—and a failure to translate empathy into the kind of behavior, or transaction, that you want.

Mike Eichenwald
In a time when our broader society seems to be increasingly divided and moral outrage so prevalent, how can businesses foster empathy and what are the opportunities for those that get it right?

Tom Stewart
In the design world, empathy generally means to literally and figuratively walk in the customer’s shoes in order to see her or his journey. Toyota and Honda offer a classic example—they sent anthropologists to the United States to uncover what Americans do in cars. This resulted in cup holders and the little makeup mirror behind visors. But when businesses go even deeper to truly think about the customer’s wants, needs, and experience, questions are raised that have big values implications. It’s as simple as this: I cannot imagine a single customer who wants to be cheated, given the back of a hand, or forced into a mold that is constraining and uncomfortable.

Mike Eichenwald
There seems to be a tremendous opportunity for the ethics and compliance community to put greater emphasis on cultivating an empathetic perspective, to look more deeply at the situation an individual employee might find her or himself in. Do companies have a responsibility to, in your language, design experiences where the employee doesn’t have to be heroic to do the right thing??

Patricia O’Connell
Yes, and a classic negative example of that is the call center employee who is measured on the number of calls handled rather than how fully they’ve been resolved. You run up the wrong score.

Tom Stewart
But here’s a powerful positive example. When Paul O’Neill was CEO of Alcoa, a heavy manufacturing business, he was big on safety and wanted to go down to zero injury days. This proved valuable for three reasons. First, it was the right thing to do. Second, it gave the unions and management a reason to find common ground. And third, it identified weak links in the process because injuries and near misses often happen when people take shortcuts. And people take shortcuts because it seems like too much of a pain to do it right. So the focus on safety actually improved efficiency as well—as you identify and fix the dangerous places, you fix the process.

An analogous thing can happen with ethics if you identify the problem spots where there are temptations to take shortcuts or cut corners.

Patricia O’Connell
Of course, sometimes people take shortcuts for the right reasons, because it is better for the customer. That’s why examining touch points with customers helps determine which steps are necessary and which require heroics on the point of employees or customers.

Mike Eichenwald
Which comes first, behavior or design? Is there an example of the former, where a company that did something because it was the right thing to do and that led to a design change?

Patricia O’Connell
“Which comes first?” is the wrong question. Behavior and design should go hand in hand. After Hurricane Katrina, Progressive Insurance decided to scrap all its customers’ cars rather than try to clean and resell them, or even resell parts. The CEO made an expensive decision to do the right thing and it sent a very powerful message.

Mike Eichenwald
A lot of organizations talk and write about putting customers first, but don’t really do so. At LRN, our clients tend to be the constructive agitators—the individual trying to help the company articulate its values and create change to live up to those principals. That’s a tough position because of both economic realities and established paradigms. How can companies best manage efforts to put customers first when there are revenue, profitability targets and perhaps even ego at stake?

Patricia O’Connell
Partly it comes down to our first principle of service design, which is that the customer is always right—provided it’s the right customer for you. It doesn’t make sense for you to twist yourself in knots and bend over backward for customers that you’re just not designed to serve.  You must align your value proposition and strategy so that you are serving the right customer base. If you are serving the customer you were designed to serve, then it shouldn’t be hard to put their needs first. But it involves making hard decisions about what you’re going to do and what you’re not going to do. And having honest conversations.

Mike Eichenwald
And the ability to make those hard decisions returns us to the importance of creating a company culture that encourages principled choices.

Tom Stewart
Say you’ve just come back from lunch and there’s an urgent email from both your most important customer and your boss, each saying call me right away. Whom do you call first? We all know it should be the customer, but it will probably be the boss. It’s challenging to create a company culture where people will answer the customer’s call first. An unhappy boss can inflict more immediate pain, but in the long run an unhappy customer can inflict greater damage. Service is both an onstage and offstage activity and service design can arrange the entire company in a manner that enables everyone to give that right customer the promised experience every time.

Mike Eichenwald
What else enables a company to effectively execute change?

Patricia O’Connell
A structured feedback system that provides genuinely useful, actionable information.

Tom Stewart
So many customer satisfaction surveys are designed to see if management or workers are following the rules. They should be about whether you delivered the experience you promised.  Real feedback goes back to the empathy question: Are you listening and creating opportunities for conversations?

In our book, we describe four stages for customer capital formation, starting with feedback and ending with co-creation. You can’t go jump into co-creation without having feedback and other of mechanisms. You’re also are not going to co-create with all customers. I was talking with an executive who runs a fast-growing online marketing and advertising company. He identifies customers he trusts—and who trust him—so they can experiment together. In these relationships, he doesn’t have to be all knowing and wise because they are on the cutting edge together. These customers get to benefit from change first. But the process starts with an honest two-way conversation, which creates a level of trust and moves up to the point where you can actually say, let’s do this together.