Customer Culture: How FedEx and Other Great Companies Put the Customer First Every Day

Description

• Copyright 2002
• Edition: 1st

• Book
• ISBN-10: 0-13-035331-0
• ISBN-13: 978-0-13-035331-3

Everyone talks about creating a "customer-centered culture." In CustomerCulture: How FedEx and Other Great Companies Put Their Customer First Every Day, the executive who pioneered FedExÕs legendary customer culture shows exactly how to go beyond talk and make it happen Ñ for real! Drawing on lessons learned at FedEx, Michael Basch identifies key cultural obstacles and leadership failures that dilute customer focus, and demonstrates exactly how to build systems and structures that help good people deliver outstanding service.

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Table of Contents

Foreword.


Introduction.

PART 1. THE THEORY.

1. America, You Have a New Airline and...A New Standard of Service.
2. Systems Drive People.

A UPS Systems Example: Reducing Transaction Costsú. Another UPS Example: An Elegant Solution to Reduce Mis-sorts. A Federal Express Example: On-time Departure.

3. Vision.

The First Need of People Is to Have Their Physical Needs Met. Stage Two Is Meeting Informational Needs. Stage Three Is Meeting Emotional Needs. Stage Four Is Spiritual Needs.

4. Values as Words Versus Values as Actions.
5. Goals.
6. Relevance.

You Get What You Recognize. Invention of the EAGLE Card. Legendary Stories Encourage Legendary Behaviors.

7. You Can't Manage or Innovate What You Can't Measure.

A Good Example Where Feedback Has Been Lost Is the U.S. Healthcare System.

8. Extraordinary Service Is Delivered by its Creators.

PART 2. THE APPLICATION.

9. The Phoenix Dog Piss Theory.
10. Big Companies Are Like Big Ships—Slow to Move and Slow to Change.
11. Systemize the Routine; Humanize the Exception.

You Can Turn Angry Customers into Raving Fans Simply by Solving Their Problems.

12. The Single Egg Organization.

The Single Egg Organization. Federal Express Creates FedEx Services. Larson-Juhl Combines Sales and Service Locally. Bell Sports Sets Up Separate Companies.

13. The Hierarchy of Horrors.
14. The Seven Dynamics of Change.

Dynamics of Change Exercise. How to Deal with the Dynamics of Change. The Two Ingredients to Innovative Success. What Is the Process and How Is It Compatible with Systems Thinking? Reducing the Workforce. The Hudson River Runway.

PART 3. THE RESULTS.

15. The Paddi Lund Story.

The Courtesy System.

16. Anatomy of a Start-Up: Innovation in Action.
17. Anatomy of a Turnaround: Customer Culture in Transition.
Appendix A. The Vision of the Ideal at a Federal Express Station.

The Federal Express Station: An Ideal. The Ideal Station. Postscript.

Appendix B. The UPS Philosophy As Stated by Its Founder.

Quotes. Determined Men.

Index.

Preface

Introduction

Culture drives performance in an organization. Culture is everything. As one Chief Executive Officer (CEO) recently put it: "Get the culture right, and your people will do what is necessary to serve their customers and make owners piles of money." Put an average human being in an above-average culture, and the person will change behaviors to adapt to the new culture. Change the culture in an existing company, and the people will change with it.

An organizational culture is a system. That system can drive people to high performance directed toward profitable customer loyalty, or it can drive apathy, internally directed, or any number of destructive "customer cancerous" activities.

We are creatures of habit. Action and reaction are programmed early in life, and we respond the way that we have always responded, unless there is a change in the action/reaction structures, which are those structures that give us the opportunity to experience pleasure or to avoid pain.

Nearly all that we do is conditioned by habit, and habit is the result of culture. Build a culture where the behaviors you desire are clear and recognized, and people will gradually build habits around those behaviors. Then, the organization will habitually serve its customers with ever-increasing value.

People change, not because managers direct them to change, but because they find themselves in a culture where personal change is in their best interest.

Assuming you, as a corporate or group leader or even as an employee, want to become part of changing the way that people behave in some way, you must change the culture that these people operate in. In effect, you must change the system or the action/reaction paradigm that makes up your corporate (or family) culture.

People instinctively adapt to the culture they step into. If the culture is high performing, people will be high performing or will leave if they are not willing to perform to the cultural standards.

CustomerCulture is about consciously building the customer-centered organization where employees are focused on serving their customers (internal or external) for sustained, profitable growth.

Back to systems that drive our behaviors. Some simple examples of systems in action?

You step into a shower and turn the water on. With one hand in the water and the other on the valve, you gradually move the valve until the water is the right temperature. You sense the water temperature, unconsciously compare it to the temperature you desire, adjust the valve to change it if it's not right, and continue to go through this cycle until the temperature is right.

Over time, innovative people and manufacturers develop valves where, as a customer, you set the right temperature on the front end and simply turn the water on.

This is a simple example of how systems work and how customer focus evolves products and solutions to customers' needs.

Another example...

You're late for an important appointment. You get in your car and quickly accelerate up to the speed limit. You constantly look at the speedometer and press and release the gas pedal to reach the optimum speed. You observe the traffic and what is going on around you and take the necessary actions to minimize your time on the road and to meet your goal of getting to your appointment on time.

Over time, innovative people and manufacturers developed cruise control, and now you simply get your car up to speed and press the button to maintain the ideal speed. Your mind and behaviors can then concentrate on other issues, increasing your performance.

These are two simple examples of systems in action.

You have a goal, whether it is the right temperature or the right speed. The goal is relevant to you at the moment. You take action to meet the goal, and you get feedback. If the goal is not being met, the cycle continues with another action and feedback until you have reached equilibrium (satisfaction) in the process.

On a macro scale, this becomes an evolutionary process. You go through the goal, relevance, action, feedback cycle again and again in nearly everything you do. As you go through this cycle, you get inventive looking for solutions to make it simpler, easier, faster, less expensive, more comfortable, and so forth.

The people and companies that do this constantly are the evolutionary forces that continue to grow and innovate in their never-ending quest for finding better ways. This is the definition of CustomerCulture.

The purpose of this book is to (a) consciously develop cultural structures or systems to get your employees into this process and (b) look for better, more cost effective, and more valuable ways to serve your customers.

When you have every employee and every customer looking for ways to improve your effectiveness as an organization, you grow and thrive.

When these simple and natural cultural structures are given conscious direction in an organization, the organization performs at much higher levels. People have a sense of purpose and learn to work together to innovate and grow constantly.

A company or organization either grows or decays. There is no steady state over time. Change and growth is a core human need and phenomenon. It cannot be denied. It is possible, however, to set up the success structures to relearn your business every day.

This book is about getting conscious about understanding cultural structures and building and applying them in ways that enable you and your people to relearn your business every day, to help you constantly grow in delivering products and services focused on customers, products, and services that customers are willing to pay for and that make you lots of money.

CustomerCulture seeks to apply a systems foundation to your cultural structures and then to provide examples of how systems thinking built Federal Express, United Parcel Service (UPS), Larson-Juhl, a very exciting dental practice, a company turnaround, a start-up, and many other companies.

The principles discussed in this book go back nearly 100 years to UPS and its vision. They were then applied at Federal Express during its embryonic phase and currently are being applied by companies exercising these principles both in revamping existing cultures and starting up new businesses.

Federal Express is the primary example because I participated in the initial development of the culture from the ground up. The company's culture has withstood the test of time and continues to flourish against enormous competition from one of the best companies in their industry—UPS.

Little is known about UPS, but it is one of the strongest, if not the strongest, company in existence today. It is nearly 100 years old and has developed a business that makes nearly every career management employee (supervisors and higher) a millionaire by the time they retire. It has consistently performed through tough times, is relatively debt free, and has a very low employee turnover rate in an industry with high turnover. Finally, I defy anyone to catch a UPS driver napping on the job.

Larson-Juhl is a privately held midsized company (1,300 employees) that dominates its market for the manufacture and distribution of picture-framing products. Larson-Juhl is run by a visionary CEO who has demonstrated the success that comes from walking the talk when it comes to the values that drive an organization.

To round out the example companies with a smaller business, we use an eight-person dental office in Brisbane, Australia. Paddi Lund, the dentist, went from near suicide and working 60 hours a week making average dental pay to a by-invitation-only business.

This business makes two and a half times as much as the average dental office, locks its doors, took its name out of the phone book, and fired 75% of its customers. Paddi's book, Building the Happiness Centered Business, has been a favorite for the small business that wants a CustomerCulture. Many of his principles have been applied to larger businesses as well.

A couple of examples are also shown from organizations that have what we call a cancerous culture, a culture that drives people away from the customer and toward self-serving, destructive practices.

The principles in this book can be applied to family, nonprofit groups, or any number of other group activities where there is a desire to change behaviors to better meet the needs of the people who are part of the organization and its mission.

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