Designing customer value

Last week I wrote about Pumpkin Cafe's decision making around whether or not to warm my scone. A trivial decision in the greater scheme of things, but on the basis that small things count I'll tell you a story of superb customer service from a cafe in Baltimore that I visited last Monday. (I'm traveling a lot right now).

This time I wanted a wholewheat bagel toasted with peanut butter. I went into a coffee shop that said it had bagels and asked for what I wanted. They had the wholewheat bagel but didn't do peanut butter. I bought the bagel anyway. Walking on, I passed another coffee shop David and Dad's that said it had bagels. I went in and ordered a wholewheat bagel toasted with peanut butter. Their response? They didn't have any wholewheat bagels left. I said I had a wholewheat bagel with me and would they be willing to toast it and put their peanut butter on it. "Of course. No problem," came the response. Good stuff – I handed over the bagel I'd just bought in the previous shop. So then the pricing decision had to be made. Two servers conferred and decided they would charge me half the full price I would have paid for my order. No manager involved to this point.

At that moment the manager wandered along and one server told him what was going on. "Excellent," he said, and disappeared again. I couldn't fault the experience. And it was so different from the Pumpkin one on all fronts. (Is that the stereotype of UK v US customer service I spot in action?)

Both stories went down well in the client workshop I ran later in the week. It happened to be about customer centricity i.e. putting the customer at the heart of everything the organization does on the basis that pleasing the customer is where the organizational value lay.

The participants' recognition of a value structure seemed to dovetail with the way Niels Pflaeging, and Silke Hermann of Beta Codex define three organization structures:

'Informal Structure. Informal power and influence structures, group norms and interaction, patterns arise wherever human beings come together. They evolve in any social structure, and in any human interaction.
Value Creation Structure. Like Informal Structure, any organization has it: Because organizations of any kind have to create value for its outside market, and any organization that didn't have one would cease to exist. It is through the Value Creation Structure that value flows from the inside to the outside, towards the external market.
Formal Structure. Formal Structure can produce compliance, but it can never produce value. It is most frequently mapped as a pyramid of departmental boxes, interconnected by power or "reporting" relationships (the "organization chart").'

Having defined the structures, the authors invite us to imagine an organization that

'Doesn't believe in formal structure. One that considers all management and centralization of power toxic and harmful, and refuses to put energy into Formal Structure, except when needed for external compliance. One that believes so strongly in its people that it won't let come anything between them, and the external market.'

With this in mind they suggest that 10% of energy go into designing and maintaining the formal structure, 20% or total organizational energy go into designing and working with the Informal Structure and the remaining 70% being applied to designing and sustaining value creation.

This sounds great but the challenge lies in the reality of a) aligning the three structures b) weaning a traditional organization away from the notions, systems, processes and vested interests of hierarchy and bureaucracy, c) keeping the value creation piece constantly refreshing in the operating context.

However, workshop participants I was working with seem to be on the right lines in first identifying that value for them lies in the customer experience and that they need to take a series of actions that will design an appropriate customer centric value structure and align the informal and formal organization with it. Unlike Valve (mentioned last week) the reality of any, even partial, abandonment of the formal structure is a bridge too far at this point but they are looking at reducing its reach and bureaucracy.

The way they are planning to tackle is to ensure that all employees have a clear view of the customer and market forces that are 'pulling' the organization. So, for example, in general customers want to be able to:

  1. Begin a purchase in one channel and complete it in another (retail outlet to on-line perhaps)
  2. Have one point of contact for the duration of their purchase life-cycle, not be passed from one person to the next. (I had a particularly bad BT experience on this front during the week)
  3. Will get a swift response from their point of contact in the event of a query
  4. Know that a decision will be made quickly and accurately in relation to their purchase
  5. Feel confident that they fully understand the small print before committing to the purchase
  6. Feel trusted and valued by the organization. (My mother lost her debit card during the week and had to go to the local bank branch to get some over the counter cash. She remarked 'It's my money. I don't see why I have to beg to get it, and go through such a palaver.')

None of this is a quick organizational turnaround if, as is the case, the focus has been on the formal internally focused structure. But the actions emerging do cover the three structures (formal, informal, value) albeit in a different percentage scale. I estimate actions are 40% pointed towards the formal structure, 30% towards the informal structure and 30% towards the value creation structure – though the distinction is a little false because actions in the formal and informal structures serve to benefit the value structure. Actions being considered (by structure) include:

Value structure

  1. Development of a customer lifecycle management process
  2. Investment in technology that supports collaborative working/dialogue across the business
  3. Provision of all employees with tools, facilities, skills to provide fast, efficient, effective and high quality customer-centric service.

Formal structure

  1. Redesign of the organization structure to emphasise the 'customer experience',
  2. Clarification of specific customer accountabilities of the different members of the leadership team
  3. Development of a focused recruitment process for selecting and hiring the right people against customer centric values

Informal structure

  1. Creation of a climate of probes, comments, questions, and feedback from every business area on the customer experience information
  2. Encouragement of collaboration across vertical units in the interests of customer centricity
  3. Reframe of the concept of managers to be about inspiring people to deliver a superior customer experience not about controlling and monitoring

For a quick summary of the customer journey experience take a look at the handout from Eric Fraterman consulting.

Meanwhile your comments on the customer journey or experience would be most welcome.

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