Eric D. Brown, D.Sc.

Data Science | Entrepreneurship | ..and sometimes Photography

Tag: Business Services

Humanity and Business

Can an organization be built on individuality with a focus on bringing humanity back to business?

I think so.

The modern day corporation was developed to build ‘stuff’.  To build ‘stuff’, organization was needed.  To keep the organization flowing, management was needed.  Management created processes, procedures, flowcharts, operational efficiencies, human resources, etc etc etc.

Many of these things are necessary to manage production.  To build a car, you have to have an assembly line that is run by processes.

These operational processes were built to take the humanity away from production.  Processes are built to force compliance into an agreed to standard of doing things.

Processes kill individuality. This isn’t necessarily a bad thing on the production line or in mission critical areas. You wouldn’t want an airline pilot to be flying be the seat of her pants…you want to feel comfortable in the knowledge that they are following a set of procedures.

Processes are a good thing for an airline pilot…but what about someone trying to work in Customer Service or in the marketing team of an organization?

This operational mindset fails when you move into other areas of business.  The people facing areas require a much more humanity driven approach.  In these areas, people should be allowed to be people. Employees should be allowed to speak with their own voice and use their given talents.

Look at Zappos as an example.  Their Customer service reps have the authority to do whatever it takes to make the client happy.  The service reps don’t read from a script or follow a process…they help their customers. They have the authority to recommend their comeptitors if needed.  I’ve even hear that they can buy from their competitors and have the order shipped overnight to the client just to keep them happy.

What does Zappos management tell their reps?  “Use your best judgement“.  Zappos allows their employees to be themselves and USE THEIR JUDGEMENT. That’s what I mean about bringing humanity back into business.

Zappos used this approach to reach $1 billion per year in revenue. That’s BILLION. They’ve gone from zero to $1 Billion in less than 10 years. What are the other shoe companies doing?   Building processes.  Building operational efficiencies.  etc. etc.

Amber Naslund touched on this subject a few days ago.  She asked the question “Why IS it so hard to be human?”  She writes:

We’ve always drawn lines between business and personal. We’ve been told not to cross the streams, that business and personal are expressed in different languages somehow, and as marketers, we sure as hell developed a vocabulary all our own for the “business” application (often whether or not anyone was speaking that way).

Zappos has kept things human and so have a few other companies that understand the power of letting their folks be themselves. By telling their employees to ‘use their best judgement’, Zappos is letting their employees wing it.

Amber touches on this a bit too. She writes:

Winging it makes businesses especially uncomfortable. We have strategic plans, business plans, processes, flowcharts, and procedures all designed to make sure we color inside the lines. That we reduce the variables and mitigate the unexpected.

Exactly.  Businesses have built processes to mitigate risk.  But these same processes mitigate humanity as well. They kill individuality.

Perhaps you’re calling me a knucklehead right now…I am….but that’s beside the point. Processes are OK. Processes are good for certain parts of a business. Just don’t kill individuality by processing it out of your employees.

The only real advantage organizations have today is their people. Technology and processes can be mimicked…people can’t.  If you hire the right people and let them loose to do what they do best, you can bring humanity back to your business.

Give your team some ability to wing it and you’ll see how much they’ll surprise you. They may even stick around after the recession is over if they feel valued and trusted enough….but that’s a post for another day.

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Does Outsourcing affect Customer Loyalty?

A recent study by researchers at University of Michigan and University of Richmond shows that outsourcing/offshoring certain aspects of your business can affect customer loyalty. The research, titled “Does Offshoring Impact Customer Satisfaction?” and posted on the Social Science Research Network, points to collected data that shows:

offshoring of front office processes that interface directly with the customer has a negative association with customer satisfaction, customer loyalty, perceived quality and customer expectations. On the other hand, we find that offshoring back office processes that do not interface directly with the customer has a positive association with customer loyalty.

Well…I could have told you that myself…and many of you probably could have guessed this was the case.  It is good to have some academic research to back up my ‘gut’ feeling.  I’m still reading through the article, but so far the research methods seem fair and sound.

Hat tip to ArsTechnica for the link to this research.

BTW – You can download the paper in its entirety at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1010457

McKinsey on Responding to Competition

Interesting study released by McKinsey has just been released titled “How companies respond to competitors: A McKinsey Global Survey.”

The study, which is surprisingly concise, has some interesting information, but as all things McKinsey, there is a sales pitch involved.  The main ‘abstract’ of this report says:

Management theory suggests that companies facing serious competitive threats should extensively analyze how to fight back. Actual managers, however, say they are satisfied with the results of a less active approach, according to a McKinsey survey. Companies that understand how their competitors really react may be able to gain an edge.

The results of this research suggests that:

On the whole, as companies determine how to respond to a competitor’s moves, they generally assess three or fewer options and don’t look forward more than two years. About half don’t examine more than one round of countermoves by any competitor. A significant number rely on intuition to determine a response. And companies most frequently respond with whatever counteraction is most obvious in the moment—answering a price cut, for example, with a cut of their own, which often doesn’t hit the market until at least one or two sales cycles after the competitor’s move.

As I mentioned, the report has some good info, but there is an underlying ‘sales pitch’ that says the following:

  • most companies don’t have a clue what they are doing
  • Hire McKinsey and we’ll perform ongoing exhaustive analysis for you and help you make better decisions.

Now…personally, I think McKinsey has some good folks and they offer some excellent services, but I think this particular research report does more harm than good.  Why?

It makes it very obvious that organizations are clueless and that in order to make the ‘right’ decision, an organization should hire McKinsey so they can make those decisions for you.

What I’d like to see is another report from McKinsey that outlines what value their decision making process on competitive moves brings to an organization.  Can they guarantee better results than can be had by assessing ‘three or four options’ and/or using intuition?  Perhaps…but would those results make more economic sense? If i have to pay them a million bucks for them to give me two more options to choose from, does that really help me?   If the option generates multiple millions of dollars in savings and/revenue, yes…but if not, then perhaps no.

I’d recommend reading the article regardless of what the size of your organization.  If you take anything away from it, have it be this:

When thinking about your competition, take the straightforward route and follow your instinct.  Create options for how you can out-maneuver your competitors…and when you think you’ve thought through the options, take a step back and think again.  Try another angle…see if you can come up with other options.  At the end of the day, your intuition has to lead you through whatever decision you make…if it feels right, then it probably is.

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