You Only Thought You Were the Customer
How Silo Thinking Impacts Your Most Important Stakeholders
by Paul King, President, Orion Development Group
Imagine you just moved into a new apartment and your house warming party is on Saturday, the day of the big game. You need a broadband line for TV (and Internet and phone) service. Fortunately, your local ISP has a great scheduling app you can access from your smart phone. Friday afternoon between 1:30 and 4:30 seems like a good window because it will minimize lost office time. Two clicks and your appointment is set!
Fast forward to Friday night at 6:00 p.m. and you realize no one will be watching the big game at your new home tomorrow. The Installation Technician never showed up. Of course you are outraged. “Doesn’t he realize I am the customer?”
Therein lies the rub. At Midwest Internet Services (MIS) you are NOT the technician’s customer.
The Installation Technician works in the Network Services silo. Their “customer” is the sales division from which you ordered your service. Since the Tech is not answerable to you, the consumer, he is naturally more concerned about the needs of his primary customer – the Installation Supervisor.
While Network Services does have some performance metrics related to consumer performance (percentage of on-time installations) the primary focus of its performance management and rewards system is efficiency. The Supervisor’s bonus is heavily dependent upon keeping costs down, limiting overtime and reducing fuel costs.
On the Friday that you were supposed to have your fiber-optic cable and modem installed, the Tech lost an hour completing a challenging installation across town. At 2:45, he was prepared to travel to your apartment but the GPS routing system, installed in all trucks to minimize travel time and fuel costs, indicated that the trip –which would normally take 20 minutes– would instead take 57 minutes due to Friday afternoon traffic. This made completing your installation by 4:30 highly unlikely. When you add in the extra time to get back to the MIS station, overtime would be triggered. That would be a serious infraction of the Supervisor’s rules.
The Installation Technician made the “logical” choice. He headed back to the station early, thereby avoiding OT and coming in under budget for gas utilization. His Supervisor would be happy and a different Tech could do your installation on Monday or Tuesday.
Sound ludicrous? At MIS (fictitious name for a real company), these types of decisions happened regularly.
No one set out to create a customer-hostile system at MIS. The company expanded over the years through both organic growth and acquisitions. Functional fiefdoms evolved as the company relied on its technical expertise to meet the challenges of growth and innovation. No one at a senior level was responsible for the value chains that delivered services to the consumer.
Senior Vice Presidents managed their fiefdoms very well. Most directors, managers and supervisors hit their targets every quarter and received handsome bonuses. No one could quite understand why the organization did so poorly every year in the J.D. Power customer satisfaction rankings. Was something amiss in the Customer Service department?
Of course not. Customer Service simply had the misfortune at being on the tail end of a fragmented value chain. The problems that created customer dissatisfaction (missed appointments, delayed service, poor communication, slow problem resolution) all began far upstream, sometimes in a fiefdom far, far away. MIS had 13 functional silos. Cross-functional, customer-focused collaboration was impossible.
Orion helped MIS rethink its management practices and establish core process governance. Despite its many departments, Orion identified five main value-creating flows. You cannot flip an organization that has more than 20,000 employees on its side and simply reorganize around those five core business processes. Instead, we helped MIS create a matrix management approach that altered measurement systems throughout the company. We also facilitated the creation of dashboards that linked local, functional activity to customer outcomes and enabled senior leaders to balance functional excellence with the necessary process/customer focus.
The results? MIS improved performance in hundreds of operational metrics. Customer satisfaction soared and while costs shifted between departments, the overall expense of running the company decreased. The bottom line grew due to both operational efficiency and new orders from happy customers.
Internally, employee satisfaction improved. Having a clearer link between day-to-day work and consumer satisfaction was motivational. Knocking down walls between silos created a more cooperative culture and more enjoyable work environment.
Moral of the Story: If you want to be customer-centric, your organization must operate in a way that allows employees to collaborate across silos. It’s a win-win-win solution.
To learn more about cross-functional process management, consider these learning opportunities: