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Copyright © President & Fellows of Harvard College What Great Service Leaders Know and Do: Creating Breakthroughs in Service Firms Leonard A. Schlesinger Baker Foundation Professor
Copyright © President & Fellows of Harvard College
What Great Service Leaders Know and Do: Creating Breakthroughs in Service Firms
Leonard A. Schlesinger
Baker Foundation Professor
Turning Knowledge into Action
• Why before how • Knowing comes from doing and teaching others how • Action counts more than elegant plans and concepts • There is no doing without mistakes • Fear fosters knowing-doing gaps, so drive out fear • Fight the competition, not each other • Measure what matters and what can help turn
knowledge into action • What leaders do, how they spend their time and how
they allocate resources, matters
Source: Jeffrey Pfeffer and Robert Sutton, The Knowing-Doing Gap, 2000
1. Leading a Breakthrough Service is Different
What GSLs know:
Leading a breakthrough service is different What GSLs do:
Take steps to ensure repeated memorable service encounters
Breakthrough Service Defined: (The Service Trifecta)
Breakthrough services are those that provide 1) extraordinary results and a high quality experience for customers and employees alike, 2) high value (not necessarily low costs) to customers, and 3) relatively high returns (for the industry) to employees and investors.
2. Shaping Service Strategies That Deliver Results
What GSLs know:
Customers buy results and value, not services or products What GSLs do:
Focus on results and value for the right customers and the employee and customer value equations that will produce them
The Strategic Service Vision
3. Designing Operating Strategies that Support the Service Vision
What GSLs know:
The best service operating strategies don’t require tradeoffs What GSLs do:
Foster “both/and” thinking in designing winning service operating strategies
Best Places to Work, Best Service and Profitability (2009-2013)
Best places to work produced 3+ times the profitability of S&P 500
firms between 1998 and 2009
Companies providing best customer service in
2011 produced customers more willing to recommend (62% to 41%) and repurchase (55% to 38% than the rest of the companies
surveyed**
Edward JonesFour Seasons Hotels & ResortsJ.W. MarriottNordstromPublixQuicken LoansSouthwest Airlines*Starbuck’sUSAAWegmansWhole Foods MarketsZappos.com
* Southwest Airlines, repeatedly included near the top of the “Fortune Best Places to Work,” lists prior to 2009, chose not to participate in the ratings for these years.
144 Best Placesto Work—
Fortune survey
57 organizations providing best
customer service on Bloomberg,
Business Week, and J.D. Power
surveys**
The Service-Profit Chain 1.0
RevenueGrowth
Profit-‐ability
• workplace design
• job design
• employee selectionand development
• employee rewards and recognition
• tools for servingcustomers
• Service Concept:Results for Customers
• service designed and delivered to meet targeted customer’s needs
• retention• repeat business• referral
Internal ServiceQuality
EmployeeProductivity
Operating Strategy and Service Delivery System
EmployeeRetention
EmployeeSatisfaction
ExternalServiceValue
CustomerSatisfaction
CustomerLoyalty
The Service-Profit Chain 2.0 Factors Leading to “Both/And” Service Results
Leadership PracticesHire for attitudeTrain for skillsProvide excellent support systemsAllow latitude (within limits) to deliver resultsEnsure accountability
Practice “no surprises” management; meet expectations for: quality of leadership and associates, personal development,quality of feedback, latitude on the job, reasonable compensationFoster transparency in the workplace
Internal QualityHigh trust workplaceHigh “internal quality”
Employee Attitudes and BehaviorsHigh employee satisfactionHigh employee loyaltyHigh employee commitmentHigh employee “ownership”High trust customer relationshipHigh organization productivity
External Service ValueHigh qualityLow cost
Meeting or exceeding customer expectations for:ResultsQuality of service experienceReasonable priceOverall value
Customer Attitudes and BehaviorsHigh customer satisfactionHigh customer loyaltyHigh customer commitmentHigh customer “ownership”
Financial ResultsRapid growthHigh marginsHigh profitability
Arrows Indicate Relationships for Which There are Concentrations of Largely Confirmatory Research
Directional Progress in the Search for “DeepJndicators” of “Both/ And” Service Results
4. Creating and Capitalizing on Internal Quality—a “Great Place to Work”
What GSLs know:
Great service starts with the frontline employee What GSLs do:
Hire for attitude; train for skills
The Logic of a Low-Retention Strategy in Services Simplified,
tech-Assisted0Jobs
Confirmation0of0Rightness0of0Strategy
ReasonableProfit0Margins
Continued0Customer0Loyalty0if0Serviceis0Noncritical
Mediocre0CustomerSatisfaction
Can0Afford0Marketingto0Replace0Customers
Customer0Reflectionsif0Service0is0Critical
Low0Price
Mediocre0ServiceQuality
High0Productivity;0Low0Labor0Cost
Little0Latitudeto0Deliver0Results
Low-CostEmployee0Selection
Little0Training
Low0Pay
Repetitive,0Boring0Work
Low0Trustof0Employees
Emphasis0on0Rules(Possibly0Tech0Imposed)vs.0Results0for0CustomersLow0Employee
Satisfaction
Low0EmployeeRetention
>
The Logic of a High-Retention Strategy in Services Complex(Jobs
Requiring(EmployeeJudgment
Confirmationof(Rightnessof(Strategy
ReasonableProfit(Margins
Customers(ShareMarketing(Efforts(toNew(CustomersThrough(Referrals
High(Customer(Loyalty(for
Critical(Services
High(ServiceQuality
High(Employee(Loyalty
High(Employee(Satisfaction
Emphasis(on(EmployeeFProducedResults(for(Customers
High(Levels(ofTrust(Placedin(Employees
Interesting(Work
AboveFMarketPay
ExtensiveTraining
EmployeeCareful(Selection
Extensive(EmployeeLatitude(to(
Deliver(Results
Confirmation(of(Rightness(of(Strategy
ReasonableProfit(Margins
Lost(Customers(are(Not(Replaced
Customer(Defectionif(Service(is(Noncritical
High(Price
Moderate(Productivity;High(Labor(Cost
High(Service(Quality
5. Designing Operating Strategies for Service Futures
What GSLs know:
Operating strategies have to serve both employees and customers What GSLs do:
Ensure the design and implementation of operating strategies that deliver both leverage and edge
Where leverage involves doing more with less edge is about competitive advantage. Sources of leverage may or may not provide edge. These are the “nuts and bolts” of a service operation.
6. Developing Support Systems for Service Futures
What GSLs know:
The best uses of technology create frontline service heroes and heroines What GSLs do:
Use technology to elevate important service jobs and eliminate the worst service jobs
To Replace CustomerInteraction with a Service Worker
To Expand Capabilityand Enhance Talentsof Service Workers
Source of Input to ServiceEncounter
To Enhance Productivity
and Quality of Resultsby Replacing Portions
of Service Jobs
Human
Technology-Oriented
Characteristics of the Service Encounter
Need for human “face”
Need for flexibility and judgment
Customer perceived risk
Negative impact of technology onservice worker self-perceptions
Degree to which service quality canbe enhanced by technology
Importance to customer oflow-cost affordedvby technology
Degree to which technology canenhance customer co-creation
of service
LowLowLow
?
High
High
High
HighHighHigh
High
Low
Low
Low
The Role of Technology in the Service EncounterThe Role of Technology in the Service Encounter
7. Fostering Customer “Ownership”: The Future Face of Services
What GSLs know:
Satisfying customers is not enough What GSLs do:
Take steps to develop a core of customers who are “owners”
The Customer Ownership Curve
8. Leading the Next Transformations in Service
What GSLs know:
Their current beliefs about the future of services are wrong What GSLs do:
Build agile service organizations that learn, innovate, and adapt
The Leader’s Role in Service Futures
Propagate, visibly act out, and enforce through measurement and action a set of values and behaviors that characterize learning organizations.
The Leader’s Role in Service Futures (continued)
Organize for learning. Rely heavily on team efforts. Propagate a “test, then invest” mentality. If it is necessary, create separate “laboratories” for innovation and learning staffed with people who are not burdened with the day-to-day responsibility for producing short-term profits.
The Leader’s Role in Service Futures (continued)
Mobilize the organization to foster the changes needed to preserve strategic advantage, however transient it might be.
The Leader’s Role in Service Futures (continued)
Set specific goals and recognition for innovation, whether it is the proportion of revenue and profit from new value-centered services or some other measure.
The Leader’s Role in Service Futures (continued)
Constantly seek ways of bringing people from various functions and businesses together for a consideration of agendas designed to foster the exchange of ideas and learning.
The Leader’s Role in Service Futures (continued)
Allocate human and other assets across the entire organization, recognizing those making the greatest contributions in terms of shared values and behaviors for a learning organization.
The Leader’s Role in Service Futures (continued)
Ensure that short-term results are strong enough to provide “cover” for the learning and innovation required for long-term success, satisfying a need for “ambidexterity” in an organization.
The Leader’s Role in Service Futures (continued)
Serve as a window to the public, providing the kind of transparency that anticipates and eliminates public surprises.
