"Building a Customer Satisfaction System: Effective Listening When the Customer Speaks"

Martin Stein and Maurice Bowen

Journal of Organizational Excellence

Summer 2003, pp. 23-34

After analyzing 28 customer satisfaction programs in the automotive industry, the authors of this article found that typical program elements included:

1. initial product quality survey
2. service reminders
3. initial service survey
4. loyalty service survey
5. loyalty appreciation
6. loyalty survey
7. thank you letters
8. referral letters

The article contains an exhaustive list of potential areas where a company may want to develop measures and indicators that "can help it understand what influences customer behavior and loyalty (positively and negatively); track the effects of actions it takes to attract customers and to increase satisfaction and loyalty; discover opportunities for additional revenues/sales; and other factors important to its goals." A total of eighty different potential areas are listed under the following categories:

1. Product Quality—This includes product-related factors; service-related factors; and information
2. Loyalty—This includes repeat purchase factors; purchase intentions factors; and advocacy factors
3. Customer Satisfaction—This includes pre-purchase factors; purchase factors; and post-purchase factors
4. Customer Database—This includes demographic factors; product history factors; psychographic factors; and internet/technology factors

Key steps used by companies to develop a customer satisfaction program are:

1. Obtain commitment from CEO (CEO involvement is a critical success factor)
2. Evaluate existing programs (threats and opportunities)
3. Design program architecture (specify functionality)
4. Develop grassroots support (get buy-in at all levels)
5. Define program components (surveys, letters, processes)
6. Specify program indicators and measures (perception and behavior)
7. Define and test response mechanisms (continuous learning loops)
8. Develop database (links surveys and other data)
9. Design tracking system (longitudinal, action-oriented)
10. Design reports (cockpit charts, easy to read)

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"Beyond the Balanced Scorecard: Refining the Search for Organizational Success Measures"

Alan Maltz, Aaron Shenhar, and Richard Reilly

Long Range Planning

2003, 36, pp. 187-204

After a review of the limitations of two major approaches to measuring organizational success (Kaplan and Norton's Balanced Scorecard and Shenhar and Dvir's Success Dimensions), the authors of this article propose a new performance model called the Dynamic Multi-dimensional Performance (DMP) framework. This model synthesizes previous empirical work on performance into five distinct success dimensions. Research has identified twelve potential measures across these dimensions. The five major dimensions are:

1. Financial Measures: These "represent the traditional approach to organizational success. In essence, it would involve measures such as sales, profits, or return on investment." The three primary measures identified in this article are: sales, profit margin, and revenue growth.
2. Customer/Market Measures: These "represent the relationship between an organization and its customers. Customer-centric companies are adept at understanding customer needs and wants, building products that meets these needs, and keeping them satisfied, resulting in high retention rates." The three primary measures identified in the article are: customer satisfaction index, customer retention rate, and service quality.
3. Process Measures: These "reflect the organizational efficiency and improvement view. Many of the influential business themes in the past decade have focused on process improvement—TQM, learning organizations, and team-based efforts." The two primary measures identified in the article are: time to market with new products/services and quality of New Product Development and Preventive Maintenance processes.
4. People Development Measures: These "recognize the critical role of stakeholders in organizational success. The level of employee skills, commitment to technological leadership, personnel development, staff slack resources are indicative of the essential role of employees in organizational success." The two primary measures identified in the article are: retention of top employees and quality of leadership development.
5. Preparing for the Future Measures: These "are clearly measures of foresight. This dimension must be viewed as a critical organizational issue and includes measures such as depth/quality of strategic planning, indicators of partnerships and alliances, anticipating and preparing for changes in the environment, and investments in new markets and technologies." The two primary measures identified in the article are: depth & quality of strategic planning and anticipating/preparing for unexpected changes in external environment.

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"Implementing Lean Principles with the Six Sigma Advantage: How a Battery Company Realized Significant Improvements"

Udit Sharma

Journal of Organizational Excellence

Summer 2003, pp. 43-52

This article provides a well-written case study of a successful implementation of combined Six Sigma and Lean manufacturing.

An interesting table is included that identifies common "root cause" problems a firm may face, and the corresponding Lean solutions. These are:

1. Root Cause: Lack of adequate production control exists between different production units.
   Lean Solution: Pull scheduling.
2. Root Cause: Poor batch size control among different production departments.
   Lean Solution: Kanban system.
3. Root Cause: Frequent machine breakdowns result in high level of safety stock.
   Lean Solution: Total Productive Maintenance and Overall Equipment Effectiveness.
4. Root Cause: Long equipment changeover times result in big runs and high cycle inventory stock.
   Lean Solution: SMED.
5. Root Cause: Several operator errors decrease the first time throughput.
   Lean Solution: QCPC and Poka-yoke.
6. Root Cause: Average assembly time for a product is several times higher than the actual process time required of assembly machines.
   Lean Solution: Standard work sheets and determination of takt time.

See also: Further Details on Lean Solutions, by GP Deltapoint.

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"The Empathetic Organization"

David Lei and Charles Greer

Organizational Dynamics

Vol. 32, No. 2, pp. 142-164, 2003

The authors of this article state that "the empathetic organization attempts to build competitive advantage by harnessing the knowledge it learns from each customer to conceive entirely new products and solutions that ultimately set a key performance standard for the industry."

The article first looks at how the empathetic organization differs from two other paradigms—the knowing organization, which "places great emphasis on the establishment of rules, practices, procedures, and processes that are to be strictly followed throughout the firm to create value" (McDonald's, United Parcel Service, Intel, and Discount Tire Company are discussed as examples) and the learning organization which "places a great value on harnessing multiple perspectives and insights within the firm to develop and to improve upon ideas" (Sony Corp., 3M Company, and Frito-Lay are discussed as examples). Compared with these two paradigms, empathetic organizations are characterized by "the saliency of their belief that they should learn from and grow with the customer."

The management practices of empathetic organizations include

1. extensive training and development
2. comparatively high compensation
3. openness and empowerment
4. high selectivity in hiring
5. trust, egalitarianism, and caring

The competitive strategy of empathetic organizations focuses and differentiates on the basis of

1. service intimacy
2. individualized service
3. empowering the customer
4. empathetic product or service design
5. inclusion of customers in the social context

Leadership for the empathetic organization has a clear sense of direction deeply imbued in the organization. This is strongly influenced by the values of the founders, as well as an emphasis on personal development.

In addition, empathetic organizations are likely to embrace many practices that are strongly associated with clan cultures, such as

1. commitment
2. loyalty
3. participation
4. flexibility
5. cohesion
6. requirements for common beliefs and behavior
7. concern for people
8. emphasis on identity via rituals, traditions, etc.,
9. belief in importance of individuals
10. emphasis on internal stability
11. extended family
12. trust and organizational honor

Four empathetic organizations are discussed in detail in the article: The Container Store, Apple Computer, Harley-Davidson, and Mary Kay.

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"How 'Leading Quietly' Offers Realistic Help with the Difficult, Important Human Problems"

Joseph Baldaracco

Journal of Organizational Excellence

Summer 2003, pp. 3-16

This unusual article on leadership is written by a Harvard Business School professor who states, "I have observed that the most effective leaders are rarely public heroes. These men and women aren't high-profile champions of causes, and don't want to be. They don't spearhead ethical crusades. They move patiently, carefully and incrementally. They do what is right—for their organizations, for the people around them, and for themselves—inconspicuously and without casualties. I have come to call these people quiet leaders because their modesty and restraint are in large measure responsible for their impressive achievements."

The specific guidelines that quiet leaders often follow are:

1. When facing a difficult problem, do not kid yourself about how well you understand the situation or how much you can control.
2. In difficult situations, you should expect your motives to be mixed and even confused, but mixed motives can be valuable and useful.
3. Count your political capital and spend it carefully.
4. If your situation is uncertain or hazardous, find ways to buy time before you do anything.
5. Use the time not to moralize or preach, but to drill down into the technical and political aspects of your situation.
6. Search hard for imaginative ways to bend the rules.
7. Instead of moving aggressively to solve a problem, try to nudge, test, and escalate gradually.
8. Finally, don't dismiss compromises as an invaluable practical art and the essence of responsible leadership.

The author gives some cautions, however: "Each of the guidelines for quiet leadership is a two-edged sword, and all of them can become excuses for doing nothing or taking sleazy shortcuts. Hence, each guideline has to be understood fully and examined carefully. The guidelines can also be misleading if they are viewed as the right way to deal with all really hard organizational problems."

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Further Detail on Lean Solutions

GP Deltapoint

In the review of the Sharma article, we mention nine lean tools. Here is some further detail on their application and our approach to implementing them.

Pull Scheduling

A pull system of production is an essential part of Just in Time manufacturing. A pull system produces and moves products and services only when customers need them, often using a signal or kanban.

When teaching teams about pull systems, we use exercises and simulations that emphasize the new thinking required: employees will be idle when no kanban is present and need other useful work to fill gaps; all inventory is waste and can be reduced; pull systems are dynamic and teams should strive for continuing reduction in the number of kanbans.

Kanban

Organizations often consider kanban signals to be applicable only to the shop floor and for highly repetitive work. But office environments such as sales quotations are rich opportunities for pull systems and a “generic” kanban system works for varied work in small volumes. Kanbans are often cards that are passed to the supplying function, but they also can be squares, boxes, pigeon holes, lights, or even faxes!

TPM

Total Productive Maintenance is productive maintenance performed by all employees - rather than just by the maintenance function – and eliminates the six big losses: breakdowns, setups, idling, slowdowns, defects and slow startups.

GP Deltapoint’s Rapid Improvement® process includes analysis, planning and workshops that engage front-line people in change and build a maintenance culture. We have found that successful TPM requires a balance of methods such as Rapid®, processes, skills and commitment realized through education, analysis, hands-on support, and learn-do implementation.

OEE

The goal of TPM is to increase equipment effectiveness so that each piece of equipment operates to its full potential and is maintained at that level. To do this, we have found that a measurement tool is needed. Overall Equipment Effectiveness links the time the machine is running to the production rate and the quantity of good output. Of course the measure is only the beginning: autonomous maintenance, quick changeovers, poka-yoke and maintenance analysis all play a role in improving OEE.

SMED

Quick changeovers are aided by deploying Single Minute Exchange of Dies (SMED) techniques. While these methods were developed for use in the metal stamping function, they are applicable across many activities. We have found the SMED steps (separate internal and external setup, convert internal to external, and streamline) simple to appreciate yet as powerful in a sales office as an automotive plant.

QCPC

Quality Control Process Charts (QCPC) identify and track quality and manufacturing issues so that checking for and tracking defects becomes a role for everybody. By analyzing the data, problems can be identified, prioritized and eliminated.

Poka-Yoke

Mistake proofing relies on sensing mechanisms (poka-yoke devices), which check conditions automatically and signal or reject or disallow further actions. An example is the designed shape of diskettes which prevent them being inserted upside down. CDs don’t possess this mistake proofing. We have conducted audits of existing mistake-proof systems and designed new mechanisms and found that the key to implementation is to determine the root cause of defect-causing conditions and then figure out how to eliminate them completely. Quality cannot be inspected in; it must be built into the process.

Standard Work

When work is standardized, benchmarks can be established from which improvements are made. A key point we make in introducing standard work is that it allows implementation of visual controls, 5S, pull and other lean techniques. We show how work is best standardized when it is observed and benchmarked and that standard work leads to less waste and balanced process flows. Standard work becomes a Best Demonstrated Practice when it is consciously developed, consistently followed, currently believed to be the best practice, consists of documentation and has an owner responsible to improve and maintain the standard.

Takt Time

In an ideal system, production occurs and material flows at the rate of real-time consumption by the customer. The takt time is the time available in a period divided by the quantity required. Producing evenly at this rate eliminates over-production, which causes excess inventory and hides problems. It also enables organizations to balance resources against needs. Our hands-on education for Lean includes simulations of standard and varied work in which takt time drives work rather than more common measures such as personnel or machine utilization.

See also: "Implementing Lean Principles with the Six Sigma Advantage: How a Battery Company Realized Significant Improvements", by Udit Sharma.

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