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 Services
companies have traditionally been born whenever there is a disruption
and discontinuity. Successful services companies used the disruptive
technology as their lever to scale, but once scale was reached,
they offered a full range of services to the client. The client-server
wave, enterprise resource planning wave, Y2K wave, and the e-biz
wave spawned new breeds of companies-Scient, Cambridge Technology
Partners, Viant and Indian it companies-but only a few survived
as pure-plays. The rest have either closed down or become full-service
companies. This shows that timing is important, but having the right
mix of innovation, customer service and operational excellence is
crucial for longevity.
3M is known for innovation, the Ritz Carlton
hotels for customer service and Motorola for excellence in operations.
All have won the Malcom Baldrige award at some time. Even so, they
are known for just one area of strength.
Typically, a successful company has a threshold
level of performance in three parameters-customer service, product
innovation and operational excellence-and a clear leadership in
one dimension. This means that in any market there could easily
be three players, each with an established set of customers, with
one that values a particular dimension over the other two. In the
pc world this allows Apple, Dell and hp-Compaq to co-exist.
Which leads us to the question-wouldn't a company which excelled
in all three dimensions, be a clear winner? Of course. So, why don't
more companies achieve this? To answer that question, we need to
look into the drivers of excellence in each of these dimensions
and the different approaches required for each. We will also explore
what it would take for these diverse skill-sets, capabilities and
objectives to co-exist in a services organisation.
Customer Service Organisation
This organisation is designed around the customer.
For example, the Ritz Carlton prides itself on anticipating and
fulfiling a customer's wishes. Each employee is empowered to break
away from regular duties to solve a customer problem. To bring a
sense of caring they moved away from a factory approach, where a
person performs just one task, to a craftsman approach where one
person performs the entire sequence of tasks. The hallmarks of a
such an organisation are flexibility, personal attention and pride
of ownership. This is often at the cost of automation, standardisation
and repeatability.
The reward system in such an organisation is
aligned closely with customer satisfaction and loyalty. The training
programs are geared towards enhancing this value. Staff are hired
for their communication skills as much as for their functional expertise.
The cost of service delivery is relatively high because of the lack
of automation and standardisation.
Operational Excellence Organisation
In some ways this is the antithesis of the
customer service organisation. Here the attitude is almost "I
wish these customers would get out of my way so that I can get on
with my work more efficiently." Often, companies operating
in volatile environments or in mature industries focus on operational
excellence as a means to retain their profit margins. Here every
task is analysed and broken down into its most efficient component
and assigned to the best person for the task. The emphasis is on
efficiency and cost reduction.
The reward system in this organisation is tied
to operational efficiencies. These organisations place a high premium
on functional skills and training is focused on skill enhancement.
Repeatability is important and deviations from set norms are frowned
upon.
Product Innovation
Organisations that are built on this dimension
tend to be adhocracies. They nurture independence and thinking out-of-the-box.
As Richard Carlton, 3M's director of manufacturing and author of
its first testing manual, wrote, "Every idea should have a
chance to prove its worth, and this is true for two reasons, one:
If it is good, we want it. And two: If it is not good, we will have
purchased peace of mind when we have proved it impractical."
The cost of these failed products is built into the pricing and
hence costs are relatively high. However, the products often tend
to be unique and can thus command a premium.
Innovative organisations hire innovative people
and give them the freedom to create. There are not too many rules
in these organisations and rewards are linked to innovation. As
in the customer service organisation, the focus is not on automation
or standardisation.
Putting All Three Together
What does it take to put all three together?
Interestingly, we can't think of a company which has done it successfully.
Yet companies continue to search for the elusive pot of gold at
the end of the rainbow. The primary barrier to achieving excellence
in all three dimensions is culture. So it is clear that we need
to decouple these three organisations within one company and figure
out a way and level to integrate it.
In the context of a global services organisation,
what does this mean? What would these three 'mini-organisations'
be? How would they function as a cohesive unit?
Customer Service Layer
This organisation is the front-end and is responsible
for ensuring customer satisfaction. People here are empowered to
do whatever it takes-even break rules-in order to satisfy the customer.
Their incentives are aligned with customer retention and satisfaction.
The people in this organisation are located near the customer and
ensure a personal response to customer issues. Because of the flexibility
inherent in the role and the location of these teams, the cost of
operations is relatively high. This is also the layer which is responsible
for ensuring the stickiness of the customer with the company and
institutionalising customer relationships. This layer will ensure
that the services organisation has visibility and the predictability
of revenue. Sandwiched between the project delivery organisation
and the customer, this is the layer which invariably will be the
first and last point of escalation. Building a strong customer services
team is critical to the success of a services company.
Product Innovation Group
This group defines new services or products
and constantly innovates services and delivery models to transform
the customer business. The focus here is on innovation and business
understanding. The reward system for this organisation is linked
to the ability to identify unique services and put in place a mechanism
to deliver these for maximum business benefit. This brings together
a diverse set of people with expertise in product development, business
consulting and process excellence. Product innovation prevents a
company from getting commoditised and is often the plank on which
services brands are built. In the services context, product innovation
manifests itself in newer services, transforms services which were
previously offered on-site to offshore and delivers through new
business models.
Operational Excellence Team
Taking a cue from Henry Ford, planning is separated
from doing, and the focus in this team is standardisation, automation
and minimising cost. Functional expertise is the most important
value and rewards are linked to process excellence. A six sigma
approach ensures that the solutions are geared to the customer.
SEI CMM Level 5, ISO and similar frameworks
are all geared to work in an operationally excellent manner, assuming
the customer gives an input in a particular format. Most Indian
companies are operationally efficient, which is key to ensuring
that there's no hole-in-the-bucket syndrome-customers being acquired
from one side and being dropped from the other.
Conclusion
In the absence of timing as a catalyst of growth,
innovation in organisational design can provide the necessary platform
to scale. Therefore, it is imperative that services organisations
aspire to be the best in all three dimension, and we hope that we
will be the first company to achieve this.
Phaneesh Murthy is CEO and Jessie
Paul, Vice President, Marketing, at iGATE Solutions
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