Category Archives: Change Leadership

How to create a customer centric transformation – Lessons from Air New Zealand

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A little more than a decade ago Air New Zealand posted the largest corporate loss in New Zealand corporate history. Inside 24 months it was turned around to a profit. Since that time it has been amongst the consistently highest profitability of full-service airlines around the world.

The catalyst for this change was Sir Ralph Norris, who was called in as CEO to transform the business. Sir Ralph’s customer-centric leadership and customer focused strategy was embodied in the mindset change from “we fly planes” to “we fly people”. He immediately engaged the top 800 leaders in Air NZ to think about, discuss and act on insights from customer feedback and observation that told them about what customers valued and what they hated about the flying experience.

His legacy, established over several years as CEO of the airline, has been continued by the current CEO, Christopher Luxon. You can see it when you fly with Air NZ – even the safety announcements are engaging as they feature some of New Zealand’s star rugby players, spectacular scenes of the country and references to some famous movies made in the country….

This is a testament to the sustained revenue and profit that can be generated by a culture and strategy embedded in the belief that “what’s best for the customer is best for the business.”

See The Customer Culture Imperative for a roadmap on how businesses like Air New Zealand have done it.

How do you get employees to care about customers?

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This is a question I often hear from leaders of large companies that want to create customer centered organizations.

It is one of the key challenges of becoming customer centric.  Here are a couple of ideas that we have seen work well.

Recalling your own Personal Customer Experiences

Given we are all customers of someone, at some stage in our lives, we can all recall having a great customer experience or a really bad customer experience.

We run an exercise with leaders and employees of our clients that is a really effective way to build empathy which hopefully leads to compassion for customers.

We ask them to recall the best or worst experience that have had and to break down the elements that made up that experience, why did it stick with them?

More often than not this experience brings back strong emotions, participants get excited or even angry recalling their experiences.

At the end of the exercise we ask participants, has your organization created any of those really great or really poor experiences? Most people will admit yes so the question is why do we as an organization allow those poor experiences to happen when we know how powerful the positive experiences can be?

As you can imagine this fosters great discussion and engages people emotionally and intellectually in firstly understanding why it happens and then what to do about it.

How can we help you

Creating a Service Mindset

Ultimately everyone in an organization is there to help others get their jobs done as well as their own, it is this combination and collaboration of people that creates compelling value. Think about companies like Apple and Amazon where smart teams of people work incredibly hard together to bring their products and services to life for millions of customers.

Building a service mindset helps all employees think about how they can help other parts of the organization be successful so that they can all win in the marketplace. A service mindset requires all employees to think about the impact of their decisions and work not only on customers but other teams across the organization.

Hear from Customers Directly

A key challenge in large organizations is the distance many leaders and employees have between them and direct customer feedback. There is nothing more powerful than hearing directly from customers. It is simply not the same to hear something second hand as it is usually devoid of emotion and context.

As a result another exercise we encourage is having leaders and employees hear directly from customers in open forums or focus groups. The goal is to not just get information or new insights but to gain a sense of how customers really perceive the organization and their top of mind issues. More often than not participants gain valuable new insights into how customers really think about their organizations.

Give people permission to care about customers and then expect it

It sounds strange but in many organizations customers are an afterthought. People are not encouraged to really think about customers in their decision making processes. There are limited rewards or recognition for people that go the extra mile for customers and as a result there is limited upside or downside.

The result is a lack of real passion for customers outside of a small number of salespeople who live and breath customers as their personal livelihood. We know however that this is simply not enough. Customer passion must be pervasive across the organization for both the customer and the company to benefit.

Leaders can give people permission to care about customers by demonstrating that they care through their actions. Then over time they need to expect employees to care and simply not tolerate bad customer experiences.

A great story comes from the NRMA in Australia (similar to AAA in the US), the leadership gave their employees permission by suggesting they could:

“Break all the rules for the customer”

One of NRMA’s services is roadside assistance. They have many great stories of NRMA staff going the extra mile for customers when they are at their most vulnerable, i.e. stranded with their broken down car. One emergency roadside assistance employee even dropped a customer’s groceries to their home so they would not spoil!

What else can you do to ensure employees act in the best interests of customers as well as the business?

What does Customer Centric Leadership look like?

There is plenty of research and anecdotal evidence that tells us if customers believe “we care” about what we sell them, how we serve them and the relationships we create with them, they will remain loyal advocates of our company. This also applies to the “care” senior leaders show to their staff and partners.

This is no better illustrated than by Howard Schultz, CEO of Starbucks. In the immediate wake of the stock market turmoil around the world on 24th and 25th August, Schultz sent a letter to all his 190,000 staff and partners. As well as assuring them of Starbuck’s continued growth plans despite the stock market volatility and sending his appreciation of their efforts in making Starbucks the number one coffee company worldwide he urged them to think of how their customers might be feeling in relation to this immediate uncertainty He encouraged them to show special care to their customers as follows:

“Our customers are likely to experience an increased level of anxiety and concern. Please recognize this and–as you always have–remember that our success is not an entitlement, but something we need to earn, every day. Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.”

Source: http://www.inc.com/justin-bariso/starbucks-ceo-sent-an-extraordinary-email-to-employees-due-to-the-stock-market-c.html

By being attuned to customer concerns in their everyday lives Schultz was able to translate this stock market event into a communication to staff and on to Starbucks customers that he and they care.

This is a great example of customer-centric leadership. It costs you nothing, but adds to the customer experience in a way that connects emotionally and creates loyal customers as advocates.

Customer Centricity Requires Resilient Leadership

 

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In practice, a customer-centric culture requires people in organizations to be able to adapt to change and provide new forms of value to their customers as an ongoing approach to doing business. Sustainable change demands resilient leaders at all levels of an organization. Resilience is often described as a personal quality that enables individuals to bounce back in the face of setbacks. Resilient leaders, however, do more than bounce back—they bound forward. With speed and commitment, resilient leaders take action that responds to new and ever-changing situations, even as they maintain the essential operations of the organizations they lead. (Reeves & Allison, 2009, 2010). But to be resilient a leader must have a vision of what is to be achieved, so that setbacks are recognized and opportunities acted upon.

Elle Allison in an article entitled “The Resilient Leader” outlines six practices of resilient leaders as follows:

  1. They engage in personal revitalization by taking time for activities to re-energize all aspects of life – physically, emotionally, spiritually and intellectually
  2. They communicate carefully to create a positive emotional climate in which the vision shines through to inspire individuals to create a better future
  3. They remain optimistic and use bad news and setbacks to galvanize action
  4. They re-prioritize initiatives and activities to overcome setbacks
  5. They continually work to cultivate new networks and sustain buy-in from individuals who are inspired by what the leader’s organization achieves and will provide support and resources
  6. They draw on diverse perspectives to make well-informed decisions that ultimately create new realities in their organization.

An example of resilient leadership was evident in the Virgin Trains saga in the UK. Tony Collins, CEO of Virgin Trains, had created a customer service culture over several years, successfully changing the ‘command and control’ culture it had inherited from British Rail. Collins, along with Richard Branson, showed resilience when the company lost its bid in 2012 to renew the British government franchise it had held for the previous 15 years for the West Coast passenger line in the UK. Supported by staff, unions and customers their resilience to progressive setbacks ended in a reversal of the government decision with a renewal of the franchise agreement.

Subsequently they also won a new franchise for the East Coast passenger service, having lost several previous bids for train services in the UK.

You will find the Virgin Trains story and the resilience required in The Customer Culture Imperative.

Is Telstra Australia’s Amazon? – Its Customer Centric Strategy is Paying Dividends

Making Customer Connections

While some may argue you cannot compare a telecommunications company with an online shopping mega star like Amazon, I beg to differ.

There is one core element both companies now share – their absolute commitment to being customer centric.

In 2009 when David Thodey took over as CEO of Australia’s largest telecommunications company, Telstra, he was asked what would differentiate his tenure from his predecessors. He said:

“I want to be an agent for the customer”.

It was a time when Australia’s highest profile company was being criticized on all fronts for its arrogance, poor customer service, unjustifiably high prices and monopolistic practices.

Thodey set about changing the culture at Telstra to a customer focused culture and invested heavily in defining and communicating internally a vision, values and strategy that had the customer at its center and customer service as its catch-cry. It included intense training of its 5,000 people leaders in Australia, India and the Philippines as well as new systems and processes that empowered customer facing staff to provide much better service to customers and solve their problems with least fuss. A new division was set up that enabled staff who heard of a friend’s problem at a barbeque to give them a direct line to a solution if they were having trouble getting it solved. Telstra embarked on a program to create advocacy with its customers and its staff. Use of the net promoter measurement system with daily feedback from thousands of customers fed to the areas in Telstra responsible was a trigger for focus on customers. Other customer feedback measures and progressive culture assessments have supported Telstra’s customer-centric journey.

Telstra: Improving Customer Advocacy

Now it is paying dividends. The company has posted seven successive half years of earnings growth to AUD$2.1 billion for this latest half – up 21% on last year. Dividends have been steady, but are now set to increase. Telstra is on a roll with its customer-centric strategy and stronger customer culture proving Thodey’s stance. Stock price is at an all-time high at around AUD$6.50 per share with steady and continuing growth up from around AUD$4.50 two years ago.

Telstra posts 22pc net profit rise

David Thodey is the first to say that Telstra still has some way to go. But his leadership of a strategy and culture in which the customer is at the center of decisions and service delivery is creating a highly sustainable profitable business.

If you want to see how it all began you will find it was originally initiated first in the Finance Group at Telstra and described in a case study about the CFO’s value service culture initiative. See Case Study Highlight: Telstra Transformation.

Telstra’s transformation story can also be found in “The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance”

Why are companies grappling with basic customer service?

employee fear of change

Adam Bender from Computerworld Australia recently reported on an event hosted by IPscape exploring the challenges companies continue to have delivering customer service that meets expectations.

With exploding connectivity and consumer expectations for instant service one would think businesses would be forced to respond.  However fear and other factors have made progress slow.

“the vast majority of organizations are still grappling with the absolute basics” of customer service, including how to minimize how much time customers spend on hold or being routed through automated telephone systems.

IPscape CEO Simon Burke

“Fear of change” has held back many companies from enhancing customer service, Burke said. Even if a call center agent recognizes improvements, the agent may not tell upper management because of a perceived unwillingness to change, he said.

Telstra, the large Australian telco sees “a distinct shift away from thinking about technology as a way to cheapen the customer contact,” but rather as a way “to deepen the customer contact,” said Telstra group general manager of industry development, Rocky Scopelliti. He said there’s a diminishing distinction among the many channels customers use to contact businesses. “Organisations have arranged their channels as though there are different customers who are using different channels,” he said. “But it’s one customer [who is] engaging in different ways.” Customers expect companies to know the “context” of their engagement so they don’t have to “explain themselves at every step of the process,” he said.

What’s the real problem here? It’s cultural! First, there seems to be fear at lower levels of large organizations that upper management does not want to change its customer service practices. Why? Because, it is believed that the whole focus is on reducing the costs of customer service. Second, there does not appear to be a deep understanding of customer buying behavior and preferences.

This will continue until upper management address the need for a strong customer culture – a belief at all levels (led and demonstrated by senior executives) that what’s best for the customer is best for the business. This belief must then be translated into customer focused practices at all levels that create a deep understanding of customer perceived value and delivery of relevant service for customers.

When will this occur? When executives measure their organization’s level of customer-centricity and discover the direct links of a much stronger customer culture with outstanding business performance.

Do you measure your business’s level of customer-centricity? If you don’t, how can you expect to manage it for superior business results?

How to sell the change necessary to create a powerful customer culture

Making the Case for Culture Change

In today’s world of intense competition, disruptive technology and the age of the customer, we know that we have to change and our organizations must change to survive.

But, how do you sell change to others when you know that on average there will be about 20% of people who will support you and look at change as an opportunity, about 50% will be fence-sitters and need to be actively sold, and the remaining 30% will be actively resisting change. Your change strategy requires you to continually sell through both planning and implementation as you need to reinforce the benefits from change.

You will need a strategy that includes six essential elements as the foundation plus two important personal characteristics.

Six Elements of Strategy

1. Recognition of the need to change – usually created by real or perceived external threats to a business from market changes, new competitors or disruptive technology.  A strong and determined leader or leadership group must be aware of the need to change, recognize the effects of this “burning platform” and the urgency for action and be willing to take the journey. You, as the leader must lead the change, not delegate it.

2. Timing – the single most important component to gaining initial “buy-in” to the change that you are selling. The right timing can build the required momentum to get your colleagues, management and the boardroom excited about your idea(s).   You must possess extreme patience with the right amount of knowledge to determine your timing. You will need a small core of influential leaders from the 20% of change advocates and from the 50% of fence-sitters. As you build this group you will be able to sense the best timing in relation to the external threats impacting the parts of the business you are wanting to change.

3. Assessment of the current level of customer culture – the leader initiates an assessment of the culture to establish a starting position from which specific objectives and targets are established. This takes two forms:

A. Qualitative assessment of the culture from interviews of a cross-section of people in the business. This provides in-depth insight into the culture, it builds relationships and additional buy-in and reduces the risk of resistance to skill development and culture change.

B. Quantitative measurement of the level of customer culture benchmarked against peers. This identifies strengths and weaknesses in relation to business strategy. It provides focus and targets for a transformation plan.

4. Clarity of customer culture vision and goals – you and your “change team” need to craft and refine the vision, goals, strategy and priorities. This needs to have within it a sense of urgency that can be easily communicated and understood by your target audiences in the organization.

5. Development of a change plan – as a leader you and your team need to develop a roadmap of steps and a realistic time plan to build a strong customer culture.

6. Displaying credibility through competency and know-how – Showcase strong competency levels by assembling a diverse team that can help you execute and sell the change all the way through to the end. You will need people with a shared set of values and agreement on a broad plan for change and a willingness to follow the roadmap. Members also agree that market needs should drive organizational change towards a strong customer culture. The team’s role is to implement a change plan that engages the targeted parts of the organization in the change effort. You will need to set some achievable targets and be confident you can deliver to them.

Two Personal characteristics

A change initiative to create and maintain a strong customer culture requires continual selling. It takes time to achieve and tenacity to follow through. Desire and mental toughness are the personal ingredients needed for success.

1. Desire

Having the required tenacity, endurance and passion to sell change all the way through to the end is never easy and could be the ultimate breaking point to your successful change management and change leadership efforts.    It requires a level of desire that makes it mandatory for you to get your hands dirty throughout the ongoing selling cycle.   This means that you need to be ready to face uncertainty head-on and welcome the fiercest battles from those among the 30% who want you to fail.

Desire is not just being willing and able to tackle any tension points through the journey of selling change – but more so an ability to accept the fact that you must continue to sell the change as much as you lead it.    Selling change is difficult and it takes a special level of desire in order to translate something that may be difficult for others to see into something that is concrete enough for people to believe in.

2. Mental toughness

To withstand the resistance by those affected by the change you are selling demands mental toughness.    For example, you may have the will, the skills  and desire to sell change – but you may not be mentality tough enough to finish each task at hand.

Mental toughness allows you to “separate issues” and compartmentalize them in a strategic fashion that strengthens your desire (rather than weakens your spirits).

Do you have a strategy for change? Do you have the selling skills to sell it? If so, do you have the desire and mental toughness to follow through until you get there?