As companies grow, they become more complex. This is a natural part of the aging process of a company, and like aging in humans, it can’t be avoided. But just as a proper diet and solid exercise can slow or even reverse the development of plaque in your arteries, the right steps taken by a company can prevent “organizational plaque,” the needless complexities that block the flow of information and innovation. This is especially true when it comes to your customers.
Let the Customer Be Your Guide When Cutting Complexity
The customer’s wants and needs are the most important considerations when working to reduce complexity. Your ability to hear your customer’s voice is key to your success.
When I say “voice,” I don’t mean something general, like “feedback” or “input.” I mean this literally: you should do everything you can to actually hear what the customer says, in their own words. When you can’t speak to them face to face, the next best thing is a word-for-word transcription, not a summary.
Aggregated or summarized customer feedback can actually add complexity. For example, let’s say a customer says, “I really loved the efficiency of the delivery and the intuitive design of the product.” If the customer relations team just summarizes that as, “Great job,” then nobody on the product development or delivery teams knows what went well. They can’t see what to improve and what to leave as is. Thus, partial information gums up the innovating capacity of the entire team.
Find Areas to Simplify
Once you’ve made sure that you can hear the customer’s voice, you can let their needs and wants guide you in the hunt for areas to simplify. You’ll find the best opportunities when you detangle three main loci of complexity: points of friction, anchors, and monuments.
Reduce Points of Friction
Friction can arise at any point where a company interacts with customers. By friction, I mean anything that might negatively impact a customer’s experience. To find unnecessary friction, start by mapping out the entire customer journey — from the first interaction through the entire sales cycle, delivery, and follow-up; be sure to include returns and refunds.
For example, let’s say that the first interaction comes when the customer orders a product online. Do they have to follow up with order status, or do you send them status updates as you’re fulfilling the order? Do they get a notice of when the order has shipped? Do they have the ability to track the package? Do they receive a notification when the product is delivered? Do they receive information about the product’s warranty? Do they know how to use the product once they receive it? To reduce friction, make each step of the process as simple and intuitive for the customer as possible.
It should come as no surprise that the most successful companies in the twenty-first century are also the companies with the smoothest customer interface procedures.
Part of this is likely due to their youth. The major innovations of the late twentieth and early twenty-first century all focused on simplifying the customer’s life. Younger companies understand this. They recognize that any company that wants to compete must be a service company first. No one can rely on their products alone.
Older companies still fall into the trap of thinking of themselves as product companies that don’t have to worry about service. For example, many car dealerships think they sell cars, not experiences. This manifests in the countless little annoyances that come with buying a car or getting your vehicle serviced.
Contrast this experience with what happens when someone buys a vehicle from a younger company, like Tesla. A 2018 Experian survey found that Tesla had the most loyal customer base, with over 80 percent of new Tesla owners/leasers deciding to buy/lease a Tesla as their next car. This customer retention mark trounced the next closest competitors — Ford and Subaru — by a full eight points.
Tesla owes part of this loyalty to the quality and novelty of their product, but a large part of this has to do with Tesla’s customer service and how they reduce points of friction for their customers. For one, they control every part of the customer experience. They don’t contract their sales out to multiple third-party dealers as other car companies do. This gives them unprecedented levels of control over the buying and repair experience and allows them to institute uniform high standards that have become synonymous with the brand.
Tesla also invests in the customer experience after the point of purchase, including ongoing funding to construct a network of charging stations for Tesla’s and other electric vehicles with matching ports across the US and Europe.
Cut Anchors
Anchors are old ways of operating or beliefs that restrict thinking. These shouldn’t be confused with a founding purpose or core competitive advantage.
Take Blockbuster, for example, one of their points of friction (late fees) had become an anchor. Their CEO in the early aughts, John Antioco, realized that Netflix was crushing them because of their late fees, so he got rid of them, a move that shrank their revenue by $200 million. Some factions within Blockbuster leadership, still tethered to the old mindset, got nervous about the drop in revenue during already lean times and argued that what they really needed to do was double down on what got the brand to their dominant position in the first place, which was late fees and brick and mortar retail stores. That faction got Antioco fired, and his replacement promptly reinstated late fees. They were out of business in five years.
Antioco also recognized that a hybrid brick and mortar/streaming business model wouldn’t compromise Blockbuster’s purpose and that if they didn’t shift to streaming, they’d fail in the information age. His successor couldn’t see anything other than what had helped them in the past. In the end, he made an inexcusably shortsighted decision and steered his company to certain disaster
Remove Monuments
Monuments are the physical testaments to anchors. They are the statues that companies build to pay homage to old ways of operating. To an outside observer, monuments usually look like trash, but the people in the organization feel a nostalgic attachment to them.
Let’s look at Blockbuster once more. Those brick-and-mortar stores became monuments. They represented what Blockbuster used to stand for — a type of community, the local workers who developed a face-to-face rapport with customers, a place where you could run into your neighbors and say hello or make a beeline to your favorite section with your kids, grab the newest release, and buy them some popcorn or candy, maybe even their favorite action figure. Blockbuster had this monument on such a high pedestal, they couldn’t see it being battered by outside forces until it came crashing down.
This is an extreme example; most companies don’t have to detonate the very backbone of their operations to remove their monuments. Still, some monuments clutter up almost every company — stuff like old fax machines, poor broadband internet, even extra staplers — any remnant of times past that doesn’t contribute to the flow of business. This sort of innocuous debris accumulates far faster than most people imagine, and it reduces both efficiency and employees’ ability to innovate.
Conversely, removing monuments greatly improves efficiency and inspires innovation.
When processes are simplified, your company can better hear and respond to the voice of the customer, and you can innovate purposefully, in a way that grows profits without sacrificing core values and commitments.
An excellent and well written overall Eric.
Of particular note for me was “any company that wants to compete must be a service company first. No one can rely on their products alone.”
PJ