Apple has an amazing self-sufficiency model, where they have only 6 desktop support analysts for 34,000 worldwide employees, 36 helpline agents for 52,000 computers, only 38% of their IT budget is for baseline operations and 62% for innovation, and their IT spend is just .6 of 1%. These are numbers that most CIOs dream of. And of course, that’s only the beginning of the Apple story…
There is no doubt about it Apple is firing on all cylinders. Apple has become a $50 billion a year company building and selling technology products that consumers are salivating for—whether it’s a MacBook, iPhone, or the new iPad—everyone wants one, and I mean one of each!
Apple’s slogan of “Think Different” is certainly true to form. It’s reflected in their incredibly designed products, innovation in everything they do, and the keen ability to view the world from their user’s perspective.
Here are some amazing stats on Apple (heard at the Apple Federal CIO Summit, 8 April 2010):
- Apple as the highest gross revenue per square foot in retail at $6250.
- Apple’s online store is the most visited PC store and is a top 10 retail website
- iTunes has over 125 million user accounts and does 20,000 downloads a minute
- The iPhone 3GS is ranked the #1 smartphone in customer satisfaction by JD Power Associates and has over 150,000 apps
- Apple processes over 1.9 million credit card transactions per day
- Apple’s MobileMe has over a million subscribers
- Apple is ranked #1 in customer satisfaction by Consumer Reports, 10 years in a row.
- Apple is ranked the most innovative company by both Fortune Magazine and Business Week.
Here are some of Apple’s self-proclaimed keys to success:
- Steve Jobs—A leader who makes it all happen
- Innovation—Rethink things; “If nothing existed, what would it make sense to do?”
- Consumerism—Focus on the entire customer experience and make it excellent
- Avoiding complexity—Simplify everything so that it completely intuitive to the users and be good at deciding what you are not going to do.
- Attention to detail—This involves creating an immersive experience for the consumer that permeates the design process.
- “The concept of 1”—Build consistency across products; standardize, simplify, and architect around commonalities.
- Learnability—Users should be able to quickly learn their technology by watching others or by exploring
- People—Smart, motivated employees and a special emphasis on their intern program
While the key factors to Apple’s success are not a recipe that can simply copied, they do offer great insight into their incredible accomplishments.
Next stop for Apple seems to be taking their success in the consumer market and making it work in the enterprise. This will go a long way to addressing users concerns about their technology at home being better than what they use at work.
It’s intuitive that organizations should manage oriented to serve their customers, because it’s the customers who keep them in business. Yet, in the name of “shareholder value,” many organizations continue to put short-term results at the forefront of their decision-making and this ends up damaging the long-term success of the organization to the detriment of its owners.
Harvard Business Review, January-February 2010, in an article called “The Age of Customer Capitalism” by Roger Martin states that “for three decades, executives have made maximizing shareholder value their top priority. But evidence suggest that shareholders actually do better when firms put the customer first.”
The author continues: “Peter Drucker had it right when he said the primary purpose of a business is to acquire and keep customers.”
Clearly, we serve our customers in the service of our mission. Our mission is why we exist as an organization. Our mission is to provide our customers with products and/or services that satisfy some intrinsic need.
The equation is simple:
Shareholder Returns = f (Customer Satisfaction)
Shareholder returns is a function of and positively correlated with customer satisfaction, as HBR notes. If we serve our customers well, the organization will thrive–and so will the owners—and if we do this poorly, the organization will die—and the owners will “lose their shirts”.
The problem with concentrating exclusively on stock price is that we then tend to focus on short-term returns versus long-term results, and the shareholder ends up worse off in the end.
“The harder a CEO is pushed to increase shareholder value, the more the CEO will be tempted to make moves that actually hurt the shareholders…short-term rewards encourage CEOs to manage short-term expectation rather than push for real progress.”
The article cites companies like Johnson & Johnson and P&G that “get it.” They put the customer first and their shareholders have been rewarded handsomely—“at least as high as, if not higher than, those of leading shareholder-focused companies.”
One good example of how J&J put customers first is when in the 1982 Tylenol poisonings, in which seven Chicago-area residents died, J&J recalled every capsule in the nation, “even though the government had not demanded it.”
Another good example in the article is Research in Motion, the maker of the BlackBerry. They recognized the importance of the customer versus the focus on the shareholder and already “in 1997, just after the firms IPO, the founders made a rule that any manager who talked about the share price at work had to buy a doughnut for every person in the company.” The last infraction by the COO had him delivering more than 800 doughnuts—the message was heard loud and clear.
These examples are in seemingly stark contrast to the recent handling by Toyota of its brake problems, in which there has been delayed recalls and the government is now investigating. As The New York Times (8 February 2010) reported: “The fact that Toyota knew about accelerator deficiencies as far back as December 2008 “raises serious questions about whether car manufacturers should be more forthcoming when they identify a problem, even before a recall,” said Robert Gifford, the executive director of the Parliamentary Advisory Council for Transport Safety, a nonprofit group that seeks to advise British legislators on air, rail and road safety issues.” Note: this is out of character for Toyota, which historically has been a car company known for its quality and safety.
As a long advocate for User-centric Enterprise Architecture, I applaud the organizations and the people that put the customer first—and by this, I mean not by words alone, but in deeds. It is easy to put the customer into our mission and vision statements, but it is another to manage our organization with a true service creed.
While the HBR article emphasizes short-term shareholder value as main culprit diverting us from a positive customer-focus, there are really numerous distractions to realizing the vision of a customer service organization. Some examples include: organizational politics that hinder our ability to accomplish our mission; functional silos that are self-serving instead of seeking the best for the enterprise; certain egocentric employees (a minority) that put personal gain or a lack of strain above a service ethos; and of course, greedy and corrupt individuals that seek to profit at the expense of the customer, perhaps even skimping on product quality and customer service, thereby even endangering health and safety.
While most people are essentially good and seek to do the right thing, the organization must put in place controls to ensure that our focus is never distracted or diminished from our customers. These controls include everything from establishing values, policies, processes, requirements management, product development, training, testing, measurement and reporting, and best practices implementation in order to ensure our finest delivery to the customers, always.
IT Leaders are often worried (almost exclusively) about the technology—Is it reliable? Is it robust? Is secure? Is it state-of-the-art? Is it cost-effective? And more.
This is what typically keeps IT management up at night—a server outage, the network being down, an application not available, a project off track, or a security issue such as a virus or worm.
While much lip service has been paid to the statement that “people are our most important asset;” in reality, too little emphasis is generally placed here—i.e. people are not kept high on the IT leadership agenda (for long, if at all), technology is.
Hence, we have seen the negative effects of outsourcing, layoffs, cut training budgets, pay and incentive stagnation, and other morale busting actions on our workforce, along with customers who have been disappointed by magnificent IT project failure rates—with projects over cost, behind schedule, and not meeting customer spec.
Our people—employees and customers—are not being properly cared for and the result is IT projects failure all around us (the stats speak for themselves!).
In essence, we have lost the connection between the technology outcomes we desire and the people who make it happen. Because what drives successful technology solutions are people—knowledgeable, skilled, well trained, and passionate people—working collaboratively together on behalf the mission of the organization.
A book review in ComputerWorld (21 December 2009) on World Class IT by Peter A. High identifies the 5 elements of IT leadership, as follows:
1. Recruit, train, and retain world-class IT people.
2. Build and maintain a robust IT infrastructure.
3. Mange projects and portfolios effectively.
4. Ensure partnerships within the IT department and with the business.
5. Develop a collaborative relationship with external partners.
Interestingly enough, while IT leaders generally are focused on the technology, information technology is not #1 of the 5 elements of IT leadership, but rather employees are—they are identified at the top of the list—and the author states that CIO’s should tackle these issues in the order presented.
Further, of the 5 key IT leadership elements, fully 3—or 60% are all about people and relationships, not technology. #1 are employees, #4 is business-IT partnership (customers), and #5 is external collaboration or outreach.
So unfortunately for our organizations, people are the all too forgotten (or neglected) 60%.
I do want to note that I do not fully agree on the order presented by Mr. High; in particular I do not think the customer should be 4th on the list, but rather as the customer represents the mission and the requirements to carry it out, the customer should be unquestionably to me at the very top of the list of IT leadership focus—always. We are here to serve them, period.
Overall though, the key point is that IT leaders need to reorient themselves to people and not overemphasize the technology itself, because if they generally respect and take care of the people and the relationships, the technology will follow and be more successful then ever.
Two of the finest customer service companies these days are Amazon and Apple. Amazon with free shipping and generous return policy for just about any reason is amazing in their no nonsense customer-service orientation—they inspire virtually complete customer trust. And Apple with their try it, you’ll like it stores full of computers, iPhones, and iPods, as well as their extended product warranties, training classes on products and awesome service desks is just another great customer shopping experience.
We need more of these positive customer experiences:
· Products—products should be true quality through and through (not the shoddy stuff made on the cheap to maximize profit and minimize customer satisfaction).
· Commitment—companies stand by their products with hassle-free money back guarantees (forget the 15% restocking fee, the mandatory return authorization number, and the 4-6 weeks to get your money back).
· Service—customer service has got to be easy to access and quick to resolve problems (banish the cold and calculating automated calling systems with the loop-de-loop dialing—“dial 1 if you want to jump out of a window!”—and where routine service problems are resolved without having to escalate numerous levels to get a supervisor only to then get accidentally disconnected and have to start all over again; oh, and did I forget having to give your basic information over 3 times to each service rep you speak with).
Aside from these basics, we need new ways to improve customer experiences to give the customer an absolutely satisfying experience.
In this regard, I loved the recent commentary by Steve Kelman in Federal Computer Week entitled Customer service Tips From Developing Countries, where some simple yet novel customer service innovations were identified, as follows:
· Chinese Passport Control and Customs provides a kiosk for passengers to “report on their travel experience by pressing a smiley face or a frowning face.” Whoola instant feedback!
· Saudi Arabia ATM Machines, while withdrawing money “offered an option of paying parking fines and some government license fees.” That couldn’t be simpler and quicker.
· Singapore Passport Control “placed a bowl of candy at the counter.” A tiny gesture that goes a long way.
From a simple smiley/frowny face feedback mechanism to a candy bowl as a way to say thank you; it is not rocket-science to be kind, gentle, and caring for customers—most of the time, it’s the basic manners your mother taught you.
In technology, these customer services lessons are especially apropos, since it is easy to get enmeshed in the technology and forget the people and processes that we are supporting. (Or to put it in another way, “it’s the customer, not the technology, stupid!”)
Being in a technical field like IT, we often see disconnects between the “techies” and the business people—almost like they are speaking foreign languages at each other. The result is that the techies don’t really understand the business requirements and the business people don’t understand the technical solutions. It’s sort of comical to watch, if not for being so sad in terms of the huge number of failed IT projects that result.
One thing we’ve realized is that we need to be able to communicate and communicate well between the business and IT or else we are not going to be very effective at IT service provision and enabling the business to perform at its best.
One solution has been to have IT staff whose job it is to translate between the business and IT units—these people are in roles at times called “business liaisons” or IT-business relationship managers. It is helpful to assign these liaisons to each business unit and give them authority and accountability for managing and nurturing a healthy relationship and unambiguous communication between business units and IT providers. The liaisons “own the customer” and ensure that requirements are captured correctly and understood by IT, that the proposed IT solutions are clearly explained to the business, and that the customer is satisfied with the systems and services they are receiving.
A second solution is hire IT communications specialists who more broadly “market” and communicate IT plans, policies, processes, goals, objectives, initiatives, milestones, and performance. I have found these professionals to be indispensable to “getting the message out there” and enhancing awareness and understanding for IT in the organization. Of course, IT leaders play a critical role in developing and honing the actual message, and in delivering ongoing two-way communications throughout the organization. In essence, they are the ambassadors and communicators par excellence inside and outside the organization with all IT stakeholders.
In short, IT needs to communicate early and often and communicate, communicate, communicate.
ComputerWorld, August 31-September 7, 2009 has a wonderful article affirming the criticality of IT communications in an article entitled: “Marketing IT: An Inside Job” by Mary Brandel.
As Brandel states: “It’s not about hype. It’s about conveying IT’s value.” I would add that it’s not only about conveying IT’s value, but also about creating IT value, by improving the two-way communication between the business and IT and thereby generating more effective solutions.
The article provides a number of useful suggestions for marketing and communicating IT that I’ve adapted, such as customer satisfaction surveys; IT annual reports that communicates accomplishments, alignment to strategic plan, “resources saved, awards won, and conferences at which staff members have spoken;” e-Brochures with “video coverage explaining goals,” services, policies, and plans; and Twitter alerts on service outages.
The key though which Bandel points out is that IT leaders need to “embed a 24/7 marketing mindset throughout the [IT] organization.” While business liaisons and IT communications specialists are focused on and specialize in this, it is still imperative for everyone in the IT organization to understand and be able to market and communicate IT services and processes to customers. All IT personnel are representatives to the business and should present and represent that customer service is our #1 goal.
From my perspective, this means transitioning our IT organizations to be wholly user-centric. This means a clear and ever present awareness that the business is IT’s raison d’être.
True IT leadership means that those who are in charge of information technology really care about and drive the success of the mission, the satisfaction of the customers, and the well-being of their employees.
To me, these three critical leadership focus areas are tied to the areas of people, process, and technology.
People: The people are your people—your employees. This is the area of human capital that unfortunately many leaders say is important, but all too often remains mere lip service. We need to focus on providing an environment where our employees can thrive professionally and personally. Where there is challenge and growth. Where we match the right people to the right jobs. Where we provide ongoing training and the right tools for people to do their jobs effectively and efficiently. Where we treat people as human beings and not as inanimate economic objects that produces goods and services.
Process: The process is the mission and the business of our organization. As IT leaders, we need to ensure that our technology is aligned to the organization. Business drives technology, rather than doing technology for technology’s sake. Everything IT that we plan for, invest in, execute, support, secure, and measure needs to be linked to enabling mission success. IT should be providing solutions to mission requirements. The solutions should provide better information quality and information sharing; consolidation, interoperability, and component re-use of our systems, and standardization, simplification, and cost-efficiency of our technology—ALL to enable mission process effectiveness and efficiency.
Technology: The technology is the satisfaction we create for our customers in both the technology products and services that we provide to them. Our job is ensuring technology WOW for our customers in terms of them having the systems and services to do their jobs. We need to provide the right information to the right people at the right time, anywhere they need it. We must to service and support our IT customer with a white glove approach rather than with obstructionist IT bureaucracy. We shall find a way—whenever possible—to say yes or to provide an alternate solution. We will live by the adage of “the customer is always right”.
Recently, in reading the book. “The Scalpel and the Soul” by Dr Allan J. Hamilton, I was reminded that true IT leaders are driven by sincere devotion to mission, customer, and employee.
In the book, Dr. Hamilton recalls the convocation speech to his graduating class at Harvard Medical School by Professor Judah Folkman whose speech to a class of 114 news doctors was “Is There a Doctor in the House?”
Of course there was a doctor in the house, there was 114 doctors, but Professor Folkman was pointing out that “these days, patients were plagued by far too many physicians and too few doctors.” In other words, there are plenty of physicians, but there are few doctors “in whom you put your trust and your life”—those driven by sincere devotion and care for their patients, the success of their medical treatment, and their fellow practitioners.
While an IT leader is not a doctor, the genuine IT leader—like the real doctor—is someone who sincerely cares and acts in the best interests of the organization’s mission, their customers, and their people.
Just like when there is a doctor in the house, the patient is well cared for, so too when there is a genuine IT leader in the C-suite, the organization is enabled for success.
>In a free society like America, we are generally all strong believers in our rights and freedoms—like those often cited from the Bill of Rights– speech, press, religion, assembly, bearing arms, due process and so forth. More broadly, we cherish our right and freedom to choose.
According to an recent article in Harvard Business Review, December 2008, one way that enterprises can better architect their products and services is by “choice architecture.”
Choice Architecture is “design of environments to order to influence decisions.” By “covertly or overly guiding your choices,” enterprises “benefit both company and consumer by simplifying decision making, enhancing customer satisfaction, reducing risk, and driving profitable purchases.”
For example, companies set “defaults” for products and services that are “the basic form customers receive unless they take action to change it.”
“At a basic level, defaults can serve as manufacturer recommendations, and more often than not we’re happy with what we get by accepting them. [For example,] when we race through those software installation screens and click ‘next’ to accept the defaults, we’re acknowledging that the manufacturer knows what’s best for us.”
“Of course, defaults can be nefarious as well. They have caused many of us to purchase unwanted extended warranties or to inadvertently subscribe to mailing lists.”
“Given the power of defaults to influence decisions and behaviors both positively and negatively, organizations must consider ethics and strategy in equal measure in designing them.”
Here are some interesting defaults and how they affect decision making:
Mass defaults—“apply to all customers…without taking customers; individual preferences into account.” This architecture can result in suboptimal offerings and therefore some unhappy customers.
Some mass defaults have hidden options—“the default is presented as a customer’s only choice, although hard-to-find alternatives exist.” For example, computer industry vendors, such as Microsoft, often use hidden options to keep the base product simple, while at the same time having robust functionality available for power users.
Personalized defaults—“reflect individual differences and can be tailored to better meet customers’ needs.” For example, information about an individual’s demography or geography may be taken into account for product/service offerings.
One type of personalized default is adaptive defaults—which “are dynamic: they update themselves based on current (often real-time) decisions that a customer has made.” This is often used in online retailing, where customers make a series of choices.
There are other defaults types such as benign, forced, random, persistent, and smart: each limiting or granting greater amounts of choice to decision makers.
When we get defaults right (whether we are designing software, business processes, other end-user products, or supplying services), we can help companies and customers to make better, faster, and cheaper decisions, because there is “intelligent” design to guide the decision process. In essence, we are simplifying the decision making process for people, so they can generally get what they want in a logical, sequenced, well-presented way.
Of course, the flip side is that when choice architecture is done poorly, we unnecessarily limit options, drive people to poor decisions, and people are dissatisfied and will seek alternative suppliers and options in the future.
Certainly, we all love to choose what we want, how we want, when we want and so on. But like all of us have probably experienced at one time or another: when you have too many choices, unconstrained, not guided, not intelligently presented, then consumers/decision makers can be left dazed and confused. That is why we can benefit from choice architecture (when done well) to help make decision making simple, smarter, faster, and generally more user-centric.
>David F. D’Allesandro, the CEO of John Hancock insurance group has a bunch of wonderful books on building brand and career, such as “Brand Warfare”, “Career Warfare” and “Executive Warfare”.
All the books have three things in common. One, they are about the importance of brand. Two, they are about moving ahead in the corporate world. And three, they all end in “warfare.”
Brand is critical for building value. Brand is our reputation. It’s how we are known to others. It’s what people think and say about us. It’s a representation of our values and integrity.
We all know corporate brands such as those from consumer product companies and fashion designers. Those that have a “good” brand, tend to convey a higher status and cost a premium. We trust those brands and many people wear the brand labels as a status symbol.
We all carry a brand. Like a mark of “Grade A” or “Prime Beef” seared on a side of a hide of cattle, a brand is mark of distinction for us.
At work, we are branded as honest or not, fair or not, hard working or not, team players or not and so on and so forth.
As the CIO, it is imperative to have a brand that synthesizes the best of business and technology for the organization.
On one hand, many view the CIO as the technical leader for the organization; the wang-bang guru that leads the enterprise through the often confusing and fast-changing technology landscape. In this role, the CIO can make or break the future of the organization with wise or poor technical decisions that can put the enterprise on the cutting-edge, build competitive advantage, and increase revenue/profits, market share, and customer satisfaction. Or the CIO can lead the organization down a technical sinkhole with failed IT projects that jeopardize mission, alienate customers, drive out good employees out, and waste millions of dollars.
On the other hand, many like to say that the CIO is not and should not be tech-focused, but should be about the business—understanding the business strategy, operations, and requirements and then driving an IT organization that is responsive to it. Taken to an extreme, the CIO may not be required to have a technology background, an IT degree or even a technical certificate. This person may be from the business side of the house and could almost alien to the CIO organization and therefore, may not easily garner the respect of his more technical people.
The true successful CIO melds business and technology together. Their brand is one where business drives technology and where strategy is paramount, but operations is a given! This CIO is someone who can be relied on to make wise technical decisions today that will enhance the strategic success of the organization tomorrow. The CIO is a leader who manages not only upward, but who reaches across the organization to build partnership and understanding; who inspires, motivates, trains, recognizes, and rewards his people; and who conducts outreach and brings in best practices from beyond the strict organizational boundaries. This CIO is loyal, dedicated, hard-working, smart, and has the trust and confidence to get the job done!
So what with the “warfare” part in the books?
Well, unfortunately not everyone wants us to succeed. So, we must work on our brand to build it and make it shine, but at the same time, there are others inside and outside the organization who for various reasons would like to tarnish our brand: perhaps, they are jealous, competitive, nay-sayers, change resistant, oppositional, confrontational, troubled, or just plain crooked.
What D’Allesandro says is that to be successful, what sets us apart, is our ability to build relationship with others, even when it is challenging.
To be a successful CIO, we need a terrific personal brand, but more than that we need to have courage and conviction to stand by our beliefs and the vision and the ability to articulate it to guide and influence others to advance the organization’s long-term business and technical success.
>Operational efficiency can be the downfall of customer service.
Home Depot, with approximately $80 billion in sales is #22 on the Fortune 500. They are the world’s largest home improvement specialty retailer with over 2200 retail stores, and after Wal-Mart, they are the second largest retailer in the U.S.
Yet, Home Depot has been on a slide, according to Fortune Magazine, 29 September 2008.
“Over the past several years a trip to the big orange box has so often ended in frustration that the company once famous for its helpful employees became fodder for late-night TV jokes and home to hundreds of blog rants about bad experiences and disengaged or scarce employees.”
How has this affected business?
“On the University of Michigan’s American Customer Satisfaction Index, Home Depot fell eight points in seven years, to 67 at the end of 2007. It was the largest drop for any retailer in the index, while rival Lowe’s remained steady at 75…In this third year of decline, Home Depot’s same-store sales dropped 7.9% in 2008 second fiscal quarter; rival Lowe’s posted a 5.3% drop.”
What went wrong at Home Depot?
In 2000, Robert Nardelli of GE took over as CEO, acquired 30 companies and nearly doubled revenues, but he also imposed the rigorous GE style “systems- and data-culture, to help centralize purchasing and merchandising…[focusing] on growth and efficiency” and assessing store managers on 30 metrics, but “none related to customer service.”
Can you believe that Home Depot used 30 measures and NOT ONE had to do with customer service???
Unfortunately, says Ken Langone, one of the founders of Home Depot, Nardelli “didn’t appreciate the importance of a kid on the floor with an apron on.”
“The focus was on the metrics below the sales line, but not sales itself,” says a regional manager. “Stores became dirty, employees, surely or scarce. The result a company that looked better on paper, felt much unhappier in person. And in the retail business, where the customer experience is what matters most, that unhappiness eventually showed up at the cash register.”
Back to customer basics:
Now, under new CEO Frank Blake, Home Depot is returning to its customer-driven roots, and as a result they are closing the same-store sales gap with Lowes and stopping the slide in customer satisfaction. But regaining the trust of their customers will certainly be a challenge and a road to recovery.
As I read this story in Fortune about Home Depot and internalized it, I came to appreciate more than ever the duality and criticality of User-centric Enterprise Architecture (UCEA).
UCEA is not just developing the enterprise architecture with our users in mind (i.e. providing critical strategic information and governance services to the executive decision makers, line of business program and project managers, and IT professionals)—that is only one part. Perhaps the more critical element of User-centric EA is focusing the enterprise’s architecture on its customers. The way to continuously move the organization into the future is to always to focus and refocus on the organizations’ customers—on their needs, tastes, and continuous satisfaction.
The key is to align the business and technical architecture with customer needs. The organization will only succeed if its users are getting what they need and that is the architecture that must be developed and refined over time.