Category Archives: Psychology

Cater to Customers Desires to Achieve Customer Delight

Customer delight requires understanding your customers needs and desires. Often even your customers don’t understand these well. Businesses that have a deep appreciation for what their customers, and potential customers, desire and that create systems to deliver solutions that delight those customers benefit greatly from that effort.

To build a sustainable enterprise you must provide value customers will appreciate.

Your customers do not have one unified set of desires. Some customers may want as good an experience as is possible and if that costs substantially more they are happy to pay. Others want to pay the least possible while having an acceptable experience.

Singapore Airlines can cater to creating a great experience. And even within that system they can segment the offering a bit and create coach class, business class and first class. They seek to provide a great experience for everyone but have extra space and amenities offered for higher classes of service for those wanting that given the cost.

Southwest Airlines can cater to providing a friendly and inexpensive experience while passing on providing certain amenities. Southwest understands that they are creating a system to deliver value to customers that appreciate a no frills environment that still treats them with respect. treat customers honestly and with respect.

Aligning what is delivered with what is marketed is also important and something Southwest does well. Other airlines market as if they will provide what Singapore Airlines does and provides a miserable experience instead. I think it helps provide Southwest focus in marketing and operations seeing how badly many of their competitors frustrate customers continually in very visible ways.

To delight customers determine what they desire based on a deep understanding of them. Make sure you understand what they act on not just what they say.

Even if you determine what they want is to spend as little as possible don’t try to trick them with false claims about low prices. The most despised companies all seem to do this (cable TV companies, airlines, mobile phone plans, some contractors…). Essentially they play bait and switch except they don’t even offer the choice to decline once they provide the real price. They just slap on extra fees after they sold you with promises of the cheaper cost.

Instead cater to meet the importance of low price but still treat customers with respect. Yes, you might cut some corners a bit so customers have to wait longer for support or don’t have as much hand holding as they could get for a higher price. But there are many things that can be done with well designed systems to provide very good service while keeping costs low. In fact often better service can be provided at lower costs because systems designed well include less waste and create fewer problems. Those problems are costly to solve and damaging to customers.

Your customers will not have monolithic desires. A big factor in the success of providing solutions that delight customers. Sometimes that means creating products and services that delight people with a wide range of expectations. Other times it means delivering different solutions to delight the different audiences.

My mechanic is trustworthy and less expensive than my other options. He also lacks many of the amenities others might desire. But for me I am delighted with his service. I am happy to drive 30 minutes to get service from him, passing by many other options. I trust him to know what to do and act in my best interest while charging a fair price.

My dentist is very good and expensive. He doesn’t accept insurance (if you have insurance you can submit the bills yourself but his office doesn’t get involved). He does all the dental work himself, including cleaning (which is rare in my experience – often the simple tasks are assigned to others). Assistants deal with scheduling and billing. His market is to provide great service to those customers willing to pay. This is not a strategy that would work for most dentists I don’t think, but it works very well for him and his delighted customers (like me). The customers willing to pay for this level of service is limited but if you delight enough people who are willing to pay you create a sustainable business.

Knowing what your customers want and creating systems to deliver that to them is how to build a great business. It sounds easy but few businesses really do know what their customers want. And even fewer focus on delighting them by continually improving the value they offer.

Related: The Customer is the Purpose of Our Work (2012)
Customer Focus with a Deming Perspective (2013)the most important customer focus is on the end users (2012)What Job Does Your Product Do? (2007)What one thing could we do better? (2006)

Integrating Technical and Human Management Systems

ASQ has asked the Influential Voices on quality management to look at the question of integrating technical quality and human management systems. How do different systems—technical or human—work together? How should they work together?

My view is that the management system must integrate these facets together. A common problem that companies face is that they bring in technical tools (such as control charts, PDSA improvement cycle, design of experiments, kanban, etc.) without an appreciation for the organization as a system. Part of understanding the organization as a system is understanding psychology within this context (as W. Edwards Deming discussed frequently and emphasized in his management system).

To try and implement quality tools without addressing the systemic barriers (due to the management system and specifically the human component of that system) is a path to very limited success. The failure to address how the organization’s existing management system drives behaviors that are often counter to the professed aims of the organization greatly reduces the ability to use technical tools to improve.

If the organization rewards those in one silo (say purchasing) based on savings they make in cutting the cost of supplies it will be very difficult for the organization to optimize the system as a whole. If the purchasing department gets bonuses and promotions by cutting costs that is where they will focus and the total costs to the organization are not going to be their focus. Attempts to create ever more complex extrinsic incentives to make sure the incentives don’t leave to sub-optimization are rarely effective. They can avoid the most obvious sub-optimization but rarely lead to anything close to actually optimizing the overall system.

image of the cover of Managmenet Matters by John Hunter

Management Matters by John Hunter

It is critical to create an integrated system that focuses on letting people use their brains to continually improve the organization. This process doesn’t lend itself to easy recipes for success. It requires thoughtful application of good management improvement ideas based on the current capabilities of the organization and the short, medium and long term priorities the organization is willing to commit to.

There are principles that must be present:

  • a commitment to treating everyone in the organization as a valuable partner
  • allowing those closest to issues to figure out how to deal with them (and to provide them the tools, training and management system necessary to do so effectively) – see the last point
  • a commitment to continual improvement, learning and experimentation
  • providing everyone the tools (often, this means mental tools as much as physical tools or even quality tools such as a control chart). By mental tools, I mean the ability to use the quality tools and concepts. This often requires training and coaching in addition to a management system that allows it. Each of these is often a problem that is not adequately addressed in most organizations.
  • an understanding of what data is and is not telling us.

An integrated management system with an appreciation for the importance of people centered management is the only way to get the true benefit of the technical tools available.

I have discussed the various offshoots of the ideas discussed here and delved into more details in many previous posts and in my book – Management Matters: Building Enterprise Capability. An article, by my father, also addresses this area very well, while explaining how to capture and improve using two resources, largely untapped in American organizations, are potential information and employee creativity. It is only by engaging the minds of everyone that the tools of “technical” quality will result in even a decent fraction of the benefit they potentially can provide if used well.

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Seek to Improve How You Learn, Don’t Just Accept That You Can’t Do Better

photo of several people around a table smiling with red plastic pieces on the table.

Red Squares exercize at the 2 1/2 Deming Seminar in Hong Kong (2014).

As a speaker or coach or teacher it is wise to learn what impacts how people absorb information and learn. Factoring those ideas into how you communicate (one on one, coaching, training, presenting…) is wise.

Learning about how people learn and remember is important to allow you to communite well. And most people seem to understand this. But they also seem to have no shame in not improving their performance in relation to these common weaknesses.

I have never understood why so many people talk about weaknesses in how people learn (people only remember “10% of what they hear, 20% of what they read, and 80% of what they see and do”; you must repeat something 7,9,12… times before most people will remember it; people will retain more if they are given concrete examples relevant to them; people will remember more if they speak or write than if they just passively listen; a good visual will make an idea presented much more likely to be remembered…) but never seem to seek to improve their weaknesses in these areas.

Yes, it is harder for us to retain new information when we just hear about it or if good information is presented poorly. But if you do a much better job of learning and succeed in retaining what you hear or see (even if often people fail to do this well) you will be better off.

Yet what I see is people spouting these statistics, not as a way of learning what they need to improve themselves but as a way of explaining that it is inevitable and they won’t do any better (or even bother to attempt to do so). It just isn’t true that you can’t do better. You can train yourself to learn more than most people when the material is presented in a less than perfect manner by learning how we commonly fail to learn and making efforts to do better yourself.

Sure, learn these common traits to know how you need to take them into account when communicating with others. But also examine yourself and see if you have the same weaknesses and improve in those areas you are weak. Also you can learn from them how to be more successful in retaining good ideas (write them down, think about applying them in your context, make a note to actually apply them at work tomorrow or next week…). You can blame whoever was communicating the ideas to you for failing to present it as well as they should but that won’t help you learn more.

Also companies would be wise to put more effort into helping people learn better. I see lots of focus on how presenters should do better, but very little on how people can improve their capacity to listen and learn. Yes, those presenting should continually seek to improve and be aware of their customers (those they are communicating with). Those that are learning should also seek to improve their ability to learn, even if the way material is presented isn’t optimal.

By the way, you might also want to question much of the claims of what people remember: Mythical Retention Data & The Corrupted Cone.

Related: Effective Communication is ExplicitCommunicating ChangeHow Could They Know? They could learn about the job they were paid to do.A Powerful Tool for Learning: The Capacity Matrix

Change Management: Create a Culture Seeking Continual Improvement or Use Band-Aids?

Successfully shepherding change within an organization is often a challenge. Often change management strategies are mainly about how to cope with a toxic culture but exclude the option of fixing the toxic culture. Why not address the root causes instead of trying band-aids?

The most effective strategy is to build an organizational culture into one that promotes continual improvement. A continual improvement culture is one that is constantly changing to improve (grounded in long term principles: respect for people, experiment, iterate quickly, etc.).

You can try to push change in an ad hoc basis by adopting some strategies to create a similar feeling about the individual change effort. But that isn’t as effective as establishing them in the culture are. Strategies such as: going the gemba, pdsa, build trust via respect for people…

These tools and concepts build trust within the organization. The do that by showing people are respected and that the change effort isn’t just another in the long line of wasted effort for ineffectual change. The first part can be addressed, normally the second part can’t be addressed effectively. Often that is at the core of the issue with why the change effort isn’t working. It is a bad solutions. It hasn’t been tested on a small scale. It hasn’t been iterated numerous times to take a seed of an idea and grow it into a proven and effective change that will be successful. If it had been, many people would be clamoring for the improvement (not everyone, true, but enough people).

But still you can use strategies to cope with lack of trust in your intentions with the change and lack of trust in the effectiveness and fear of change. Some of those are included in the links below. But mainly my strategy is based on focusing on building the proper culture for long term excellence and the change management strategies are just short term coping mechanisms to help deal with the initial challenges. Using those strategies as a long term solution for dealing with change in a toxic culture isn’t a very sensible way to manage.

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What to Do To Create a Continual Improvement Culture

This month the ASQ Influential Voices discussion explores what to do and avoid in order to create a performance culture? James Lawther shared his ideas on what not to do to get things started.

I have discussed steps to take in order to build a culture of continual improvement in numerous posts over the years (see related links below). What it boils down to is building a system that supports that culture. Your culture is the result not your aim.

David Heinemeier Hansson put it well recently in his essay, CEO’s are the last to know:

But the bottom line is that culture is what culture does. Culture isn’t what you intend it to be. It’s not what you hope or aspire for it to be. It’s what you do.

In order to create a culture that enhances your effort to continually improve you must crate systems that move things in that direction. Part of that system will be the continual assessment of how your organization is falling short of your desired culture. This requires honest assessment of the current state. And it requires those in leadership to design systems to get a clear picture on what is really happening in their organization.

As I said on Twitter in relation to that article leaders need to understand danger of “losing touch” and take steps to counter that risk. Often the explanation for why something happened (a process producing a failure, a leader not being aware of the real culture…) is an explanation of what the system needs to be designed to address.

wall mosaic with tree, animals and people

Mosaic on an outside wall of a temple at Wat Xieng Thong in Luang Prabang, Laos. By John Hunter.

In many organization CEOs are not aware of what is going on. This is a weakness that must be addressed systemically. Many of the better management methods proposed by W. Edwards Deming address this issue. CEOs are given a false picture when they focus on results instead of the management system. CEOs are given a false picture when they crate a climate of fear. CEOs are given a false picture in organizations focused on achieving bonuses instead of continual improvement.

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The Road Not Taken

Two roads diverged in a wood, and I–
I took the one less traveled by,
And that has made all the difference.

Wonderful advice and so poignant. But actually, if you read the whole poem, what we take from the quote isn’t what the poem was saying. Earlier in the poem it says

Though as for that the passing there
Had worn them really about the same

view out windows of a temple

photo from a temple in Siem Reap, Cambodia by John Hunter

Robert Frost was poking fun at his friend who would obsess over what fork to take in the path as they walked when in reality the choice made no difference.

And “that has made all the difference” is poking fun at self justifications of our actions; congratulating ourselves for doing something not really worthy of accolades.

Still the top three lines do seem like insightful advice. Of course what is really needed is insight into when choosing the road less traveled is wise (or at least a sensible gamble) and when it is less traveled for very good reasons.

I do believe we far too easily slip into habits encouraged by the well worn path most people take. And therefore think balancing that tendency with at least considering the road less traveled more often is wise. But I actually like that when you read the full poem it really isn’t saying that.

Related: Chomphet Hike, Luang Prabang, LaosOlympic National Park PhotosThe Aim Should be the Best Life – Not Work v. Life BalanceMaking Better DecisionsRhinoceros Hornbills on Mount Santubong

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Top 21 Executives at Toyota Getting a Raise to a Combined US$14.9 Million

The difference between Toyota and so many other companies is obvious in many ways. One of the stark differences is how executives are paid. Toyota’s belief in a strong management system contrasts with the self worship many USA executives practice. How the executives pay themselves illustrates this very well.

Even with a proposed 19% pay boost the top 21 executives at Toyota would get a combined US$14.9 million in the proposal for this year.

Toyota Plans 19% Boost in Director Pay After Record Profit

Toyota proposed 1.52 billion yen ($14.9 million) in combined compensation and bonuses to 21 directors, including President Akio Toyoda, in a notice to shareholders today. The Toyota City, Japan-based company paid 1.28 billion yen the previous fiscal year.

After recording an unprecedented 1.82 trillion yen profit last fiscal year, Toyota forecast this month that net income will slip 2.4 percent in the year ending March 31. The company predicts deliveries to increase in every major region except Japan, where the nation’s first sales-tax increase in 17 years is expected to temper demand.

Toyota has proposed raising its year-end dividend to 100 yen a share, or 165 yen for the full year.

The deadly disease of extremely excessive executive pay has been doing more and more damage every year in the USA. Toyota has avoided the pitfall shared by so many self-centered USA CEOs. The 19% raise does possibly indicate that Toyota is slipping (they also received a 19% increase last year). But they have a long way to go before executive pay becomes a serious problem at Toyota.

The 21 Toyota executives together don’t get paid what CEOs at companies in the USA that make as much as Toyota does (few companies are as successful as Toyota). Many senior executives that are not CEOs in companies in the USA make much more that all 21 Toyota executives together. Europe has largely adopted the massively overpaid practices for senior executives from the USA. Most European companies lag behind the abuse of USA executives, but the European companies use the excuse of the USA to grab ever increasing amounts from corporate treasuries. In do so they adopt similar reckless management practices in order to justify taking so much.

For now, executive pay (and with it all the management distortions caused by massively unjust pay packages for executives cause within companies) is a big competitive advantage for Toyota. Not all USA companies allow executives to loot the company, for example, Costco continues to pay executives and staff fairly and does very well. But many USA companies are being torn apart by executives seeking and taking hugely unjust pay packages.

Total pay for union workers at Toyota will increase 8.2% on average from last year (I think this is pay for Japanese union workers, though I am not sure about that). This was also the same amount as the increase was in 2014. This seems an unlikely coincidence, it seems intentional. If you see data like this from a process it often indicated an artificial cap exists (or there are restraining forces on the process that make data points beyond certain limits very unlikely).

If you have seen lower figures for pay increases for Toyota workers, that was for the regular pay level which did not go up much. Toyota has a very large profit sharing plan. Profit sharing payments to union workers were over 6 months of regular pay. The main increase in pay for employees was in profit sharing. The “profit sharing” payments are negotiated so it isn’t exactly like what you may think of as profit sharing but it is essentially what those payments are it seems to me.

Related: Toyota Post Record Profit and Splits $15 million in Pay and Bonus for top 21 Executives (2014)CEOs Plundering Corporate CoffersToo often, executive compensation in the U.S. is ridiculously out of line with performance – Warren Buffett (2006 – it is even worse today)No Excessive Senior Executive Pay at Toyota (2007)Honda’s 36 board members, included the CEO, were paid $13 million in 2008

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The Aim Should be the Best Life – Not Work v. Life Balance

My father had the most job satisfaction of anyone I have known. He had no separation between work and life. We toured factories on vacation. I visited Davidson College in North Carolina because he was consulting with a client in Charlotte before we went up to Duke and North Carolina for visits and asked the CEO what school I should visit. His grad students would call the house frequently.

Many of his best friends were colleagues. That is how I grew to know people like George Box, Brian Joiner, Soren Bisgaard and Peter Scholtes as I grew up. Various permutations of our family lived overseas based on his jobs in London (before kids), Singapore, Nigeria and China. Those experiences dramatically impacted all our lives and they were not about separating work from life.

The desire for a life embedded in other cultures and for travel drove decisions about work. He lived in Japan (because of his Dad’s job) for 2 years as a kid and that sparked his desire to do more of that as an adult.

My little brother, Justin, pushing me on a scooter at our house in Singapore.

My little brother, Justin, pushing me on a scooter at our house in Singapore.

The sensible aim is to optimize your life. Work is a big part of life. As with any system the results depend on the overall system not the performance of individual parts taken separately. Dad also died young. He was happy to have lived such a good life, even if he wished he could have lived longer he wasn’t bitter about missing anything.

When he learned he would die (of cancer) he mainly continued what he had always been doing living life and working on what he thought was worthwhile. One project he did take on, along with George Box, was creating the Center of Quality and Productivity Improvement at the University of Wisconsin-Madison. George’s speech about Dad’s work provides a nice look at how work and life – William G. Hunter: An Innovator and Catalyst for Quality Improvement.

He honestly looked back on his life and felt he had a life that few could have topped, even though it was cut short. He was certainly optimistic and positive. But my sense was this was his honest assessment, it wasn’t just some fake front he put on for others. He had been living his life as well as he could his whole life. And continuing to live it as long as he could was all he wanted to do.

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Remembering Peter Scholtes

Guest Post by Fazel Hayati

Fall always reminds me of my friend Peter Scholtes. It was during 2008 annual Deming Institute fall conference in Madison, Wisconsin when Peter said farewell to his friends and colleagues. He gave a keynote titled Deming 101 (that full speech can be watched online). Although inactive for many years and managing numerous health challenges, he was sharp, witty and very happy to be talking about Dr. Deming, systems thinking, problems with performance appraisal, talking to his old friends and reminiscing. Anticipating this event had really energized him. He told me numerous times he was very grateful for the opportunity. He passed away in July 11, 2009.

Peter Scholtes, 2008

Peter Scholtes at Deming Conference in Madison, Wisconsin, 2008

Peter wrote two seminal books, both remain relevant years after their publication. The Team Handbook remains one of the best in developing teams and it has helped many organizations to improve quality and productivity through team building. The Leader’s Handbook is one of the best elaborations on Dr. Deming’s System of Profound Knowledge.

Peter articulated Dr. Deming’s teaching and incorporated his own experience in six competencies for leaders:

  1. The ability to think in terms of systems and knowing how to lead systems,
  2. the ability to understand the variability of work in planning and problem solving,
  3. understanding how we learn, develop, and improve; leading true learning and improvement,
  4. understanding people and why they behave as they do,
  5. understanding the interaction and interdependence between systems, variability, learning, and human behavior; knowing how each affects others (Figure 2-16, Page 44, Leader’s Handbook),
  6. giving vision, meaning, direction, and focus to the organization.

No one has done a better job of operationalizing Dr. Deming’s teachings.

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Out of Touch Executives Damage Companies: Go to the Gemba

When your customer service organization is universally recognized as horrible adding sales requirements to customer service representatives jobs is a really bad practice. Sadly it isn’t at all surprising to learn of management doing just that at our largest companies. Within a system where cash and corruption buys freedom from market forces (see below for more details) such practices can continue.

Such customer hostile practices shouldn’t continue. They shouldn’t be allowed to continue. And even though the company’s cash has bought politically corrupt parties to allow such a system to survive it isn’t even in the selfish interest of the business. They could use the cover provided by bought-and-paid-for-politicians-and-parties to maintain monopolistic pricing (which is wrong ethically and economically but could be seen as in the self interest of a business). But still provide good service (even while you take monopolistic profits allowed with corrupt, though legal, cash payments).

Of course, Adam Smith knew the likely path to corruption of markets made up of people; and he specifically cautioned that a capitalist economic system has to prevent powerful entities efforts to distort markets for individual gain (perfect competition = capitalism, non-competitive markets = what business want, as Adam Smith well knew, but this is precisely not capitalism). Sadly few people taking about the free-market or capitalism understand that their support of cronyist policies are not capitalist (I suppose some people mouthing those words are just preaching false ideas to people known to be idiots, but really most don’t seem to understand capitalism).

Anyway, this class of protected businesses supported by a corrupt political and government (regulators in government) sector is a significant part of the system that allows the customer hostility of those politically connected large businesses to get away with a business model based on customer hostility, but wasn’t really what I meant to write about here.

Comcast executives have to know they are running a company either rated the worst company in the country or close to it year after year. They, along with several others in their industry, as well as the cell phone service providers and too-big-to-fail-banks routinely are the leaders of companies most reviled by customers. Airlines are also up their for treating customer horribly but they are a bit different than the others (political corruption is much less of the reason for their ability to abuse customers for decades than is for the others listed above).

Leaked Comcast employee metrics show what we figured: Sell or perish [Updated]
Training materials explicitly require a “sell” phase, even in support calls.

The company’s choice to transform what is traditionally a non-revenue-generating area—customer service—into a revenue-generating one is playing out with almost hilariously Kafkaesque consequences. It is the nature of large corporations like Comcast to have dozens of layers of management through which leadership instructions and directives are filtered. The bigger the company, the more likely that members of senior leadership (like Tom Karinshak) typically make broad policy and leave specific implementations to lower levels.

Here, what was likely praised in the boardroom as an “innovative” strategy to raise revenue is instead doing much to alienate customers and employees alike. Karinshak’s assurances that he doesn’t want employees to feel pressured to sell in spite of hard evidence that Comcast demands just that are hard to square with the content of the document.

So what is going on here? Most people can easily see this is likely a horrible practice. It is a practice that a well run company theoretically could pull off without harming customers too much. But for a company like Comcast to do this it is obviously going to be horrible for customers (same for all those too-big to fail banks, cell phone service providers and other ISPs and cable TV providers).

Lets just pretend Comcast’s current leadership executives were all replaced with readers of the Curious Cat Management Improvement blog. And lets say that for now you are suppose to focus on improving the policies in place (while thinking about policy changes for later but not making them yet).

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