Hardwiring" an organization's service performance

and

Measuring Business Excellence

ISSN: 1368-3047

Article publication date: 1 June 2003

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Citation

Cord, R.E. and Goldman, H.H. (2003), "Hardwiring" an organization's service performance", Measuring Business Excellence, Vol. 7 No. 2. https://doi.org/10.1108/mbe.2003.26707bab.006

Publisher

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Emerald Group Publishing Limited

Copyright © 2003, MCB UP Limited


"Hardwiring" an organization's service performance

"Hardwiring" an organization's service performance

Leonard A. Schlesinger, Executive Vice President and Chief Operating Officer of Limited Brands, Inc., Columbus, Ohio, USA. This article was originally published in Managing Service Quality, Vol. 13 No. 1, 2003, pp. 6-9, ISSN 0960-4529 DOI 10.1108/13683040310478039

A common practice among those who have lost a key to their automobile, or more commonly among those who steal autos, has involved "hotwiring", bringing the ignition wire into direct contact with the power source to the starter, bypassing the ignition key. The field of computer hardware and software development has more recently coined a related term, "hardwiring". Hardwiring describes what leaders in their industries are doing to link the success of their employees so closely to that of customers and others that gains achieved in the past can be more confidently assume for the future.

Hardwiring can be achieved at several levels. Each of these levels – transactional, strategic, cultural and organic – may be most appropriate to a given organization. Those able to achieve organic hardwiring have been able to achieve the most dramatic results from the process.

Requirements for hardwiring

Hardwiring is a method of preserving gains and staking out a long-term competitive position, not a way of turning a poorly performing organization around. As Jack Welch would say, "Not everyone can play this game". You have to ask if your organization is good enough. Why? Because of the requirements for a successful hardwiring initiative.

Proven success and results

All levels of hardwiring are based on a certain amount of trust between an organization, its customers and its employees. Trust is built from a base of credibility, the sum of past actions and successes and a reputation for not only capability, but also integrity. A product warranty from General Motors means much more than one from a competitor with a poorly regarded dealer and service network. The promise of operating capability provided by 24-hour worldwide availability for replacement parts for construction and earth-moving equipment means much more coming from Caterpillar than from a much smaller competitor. Neither of these organizations built their capabilities and reputations overnight.

Hardwiring puts employees under the gun to perform up to the promises made by the organization to its customers. In a sense, they risk severe exposure for failure to perform. The positive side of this is that it encourages a great deal of acceptance of responsibility for delivering improved results and process quality on the part of employees. The downside is that failure to perform may put them at risk. This requires an emphasis on retraining, where desirable, rather than the creation of negative incentives or the threat of dismissal. Above all, employees have to perceive the organization as treating them fairly.

A willingness to put the business on the line

In guaranteeing satisfaction of its product at an early stage in development, Intuit's management literally put the business on the line. Failure to deliver on the company's promise of easy-to-use software could have resulted not only in a loss of revenue, but also in excessively expensive product returns one reason why dissatisfied customers were encouraged not to return the product. But the most important cost of all would have been that resulting from customer dissatisfaction, which meant that there would have been very little word-of-mouth promotion for the product, the only kind that the company could afford at this time.

It was a moment of truth for Intuit that Scott Cook will never forget. As it turned out, it provided the breakthrough from which Intuit never turned back in its domination of its competition. However, it could have spelled the end of the company.

Highly sensitive listening devices

Organizations that hardwire themselves to their customers have to listen better than others. At the same time, the process naturally turns up the volume on the feedback loudspeaker. Consider the eBay experience. eBay has developed several of its new trading sites by merely watching trends in trading behavior. According to one account, "After noticing random car sales (on its site), eBay created a separate site called eBay Motors in 1999, with special features such as vehicle inspections and shipping. This year [2001], eBay expects to gross some $1 billion worth of autos and parts – many of them sold by dealers."

An attitude of ownership on the part of customers, however, carries with it the expectation that owners will be heard. As a result, eBay regularly organizes voice of the customer meetings at which selected buyers and sellers on the site are given a chance to provide feedback. New site revisions are posted on the Internet so that potential users can test them and provide feedback; in one recent case, 10,000 responded, many with suggestions for the proposed revision. eBay executives, led by CEO Meg Whitman, are regularly encouraged to put things up for sale on the company's auction site in order to sensitize themselves to how it is working. Even so, eBay's users often spot problems before management. As Maynard Webb, president of its technology unit, says, "They catch things we don't. The community actually moves faster than we do." And when it does, it sometimes exposes eBay's management to ridicule.

If necessary, reorganization

Both Procter and Gamble and General Electric have altered their organizations to partner with Wal-Mart. In both cases, newly-formed teams of managers were established near Wal-Mart headquarters to manage nearby inventories as well as other issues of coordination that arose in the administration of their partnerships.

At a more fundamental level, organizations have had to eliminate "silos", barriers to the cross- and inter-organization coordination required in most hardwiring initiatives.

A partnering mentality: a willingness to be "owned"

The kind of partnering forged by hardwiring initiatives sounds logical and straightforward. But it has rarely proven so, because it often requires a high degree of trust as well as assurances that the trust will not be violated. For example, Federal Express has built a substantial business by taking responsibility for the integrated supply chain management of some of its clients, literally assuming responsibility for meeting inventory and customer service goals.

Many of FedEx's clients have come to it out of a sense of desperation and the knowledge that they have failed at the task. Others, upon seeing the potential advantages of superior supply chain coordination that might result from hardwiring, have been willing to engage in the exchange of employees, the reassignment of responsibilities, and the design of incentives designed to bring the needs of both partnering organizations into alignment required by the process.

Those who use eBay's services have assumed such a sense of ownership that eBay has come to be known as "The People's Company", one operated under a stated corporate goal of creating a "global economic democracy". The benefits have been priceless. But it has held management to a high standard of behavior in addressing the needs of users ranging from the occasional purveyor of junk from the attic to a large corporation, such as Disney, using eBay as an alternative channel for its merchandise.

The payoff

The real impact of actions such as those described above is to engineer lasting change in the way in which, for example, managers choose customers, select employees, organize work and are measured and compensated. This helps sustain the gains in value achieved by an organization, regardless of leadership succession or a changing competitive environment.

The rewards from hardwiring can far outpace the risks. Without it, organizations like eBay and Intuit, both with roughly 90 percent market shares in their respective industries, would not exist today. The GEs and IBMs would exist, but with fewer ways to bring their enormous resources and capabilities to bear on customer relations that establish long-lasting competitive advantage. Hardwiring is something that presents itself only to those companies who are making the most of information and technology to distance themselves from their competition. But information and technology alone will not do it. It takes leadership to be able to see the opportunities inherent in such a strategy for learning and innovations.

Reference

Heskett, J.L., Sasser, W.E. and Schlesinger, L.A. (2003), The Value for Profit Chain, Free Press, New York, NY.

KEY READINGS

Singapore Airlines: what it takes to sustain service excellence – a senior management perspective

Wirtz, J. and Johnston, R., Managing Service Quality, 2003, Vol. 13 No. 1.

Observing that Singapore Airlines is consistently recognized as the "best" airline in the world, interviews a number of senior managers from the organization to discover their views of how that advantage is sustained; reports their perspective on service excellence and key challenges, the challenge of delivering service excellence via a "total approach", understanding customers and anticipating their needs (by listening to customers and front-line staff, understanding lifestyles, and taking seriously both compliments and complaints), training and motivating the front line (particularly using teams), and managing with an eye for details and profits. Distils a number of lessons for other companies aspiring to the service quality excellence of Singapore Airlines.

Rethinking paradigms of service – service in a virtual environment

Voss, C.A., International Journal of Operations and Production Management, 2003, Vol. 23 No. 1.

Examines two particular theories of service quality and service management in the context of the Web-based environment: the concept that automation leads to mediation between customer and the service organization; and the dimensions of service quality. Discusses the findings of a study of responses to E-mail queries through the Web site of a sample of firms from the retail banking, retailing, travel, utilities, content providers and computer hardware sectors. Finds that the performance on responsiveness as a measure of service was substantially below customer expectation, and that many organizations are finding difficulties in delivering a good service. Drawing on this outcome, proposes that there is a sequence dependency in the development of service on the Web, contending that capabilities and levels of performance must be in place before a company can sustain a presence on the Web. Explores the areas of customer-centered service and value added as ingredients of creating service on the Web. Considers e-service in the context of non-virtual service, and how SERVQUAL, the service quality standard, may be modified in an e-service environment.

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