Authors@Google: Frances Frei & Anne Morriss: Uncommon Service

Uploaded by AtGoogleTalks on 09.05.2012

>>Lexi: So please help me a welcome Frances Frei and Anne Morriss.
I'm gonna do a 4 minute intro because Frances does not like long intros and you didn't come
to see me or Gretchen. But Frances is one of the few people that
have had such a lasting and profound effect on people's lives, not just mine and Gretchen's.
But how many people here have known Frances, took her class, love her, raise it high and
proud. Yes, the ripple effect goes far and wide across
the nation and many countries. Frances teaches at Harvard Business School.
She, after pit diving her on my first day looking at some regression models I asked
her a series of questions that apparently were so JV she then had a famous quote that
lives on in my entire family which Is, "If I can get you to graduate I am definitely
making tenure." [laughter]
>>Lexi: She is, she doesn't lack bluntness, let's put that, let's put that out there.
So intros are full of long credentials. Both of these women have a ton.
Frances is published in every journal you can imagine.
She has more awards than I can count. And one of them is teaching excellence.
She's had so many awards for teaching excellence. When I asked her if I could nominate her,
she said please don't. [laughter]
>>Lexi: Apparently, it's like having too many soft skills in business school, you don't
want to be nominated for teaching excellence too much.
Her work is especially relevant to all of us at Google.
As she is an expert in helping create value through service.
She's helped organizations like Southwest, Zappo's, eBay.
Think of service as a profit pool rather than a loss leader.
Can I get little "woot- woot"? [laughter]
>>Lexi: Frances has found a kindred spirit in Anne Morriss.
Anne has worked with companies, governments and social entrepreneurs to unlock great potential.
She focuses especially on leadership and institutional change.
She has cofounded an organization called Concire Leadership Institute.
And I read an interview with Anne that I think is very relevant to those of us who are people
leaders or who have people leaders which is everyone.
In this group she discussed three things when asked what's holding people back from being
great leaders. The first is, and I think kind of encapsulates
all three, Is, leaders make the mistake that thinking
that leadership is about them which is absolutely wrong.
Leadership is all about how do you help other people unlock the greatness and themselves.
Which really resonated with me. In uncommon service which is a book that most
you have on your chairs or should buy immediately Frances and Anne mapped a.
Thank you Gretchen. Have mapped a roadmap for Google at this point
in our lives. As we are approaching our teen years and we
need to make really tough decisions about how we're gonna deliver great products and
great service. We have 13 million paid and unpaid businesses
using our products and billions of users. And service is not something that comes naturally
to Google. We believe you build great products and they
shouldn't need to be serviced. But those of us in this room are doing a lot
of the service heavy lifting. So I'm gonna turn it over to them to read
from their book and then Gretchen will ask a couple questions and we'll open it up.
So please give a warm welcome to Frances and Anne.
[applause] >>Frances: This is our first book reading.
And given the modern way that books are sold it's our last book reading.
[laughter] >>Frances: So thank you for indulging us.
But we're thrilled to have the opportunity to do this.
We, a lot of the motivation in writing the book was to get to go and do a book reading.
So— [laughter]
>>Frances: So I'll just read little bit from the, from the introduction and then I think
Anne will read a little from the conclusion. And then we can fill out everything in between
with a Q&A. So we live and work in a service economy.
In 1950 industrial workers represented the single largest employment sector in any developed
country. Today 80% of jobs are in service and service
represents 80% of the GNP. We cherish good service.
In survey after survey it's an enormous differentiator in our experience as consumers.
Companies that deliver service excellence get a disproportionate share of our income
and our loyalty to them is often very difficult to shake.
In researching this book, we encountered more than a few people who were brought to tears
as they recalled an empathetic insurance provider or an airline experience that made them feel
human despite their screaming infants or lost luggage.
We find deep meaning in the act of service. We've been devising ways to take care of each
other. And celebrating the results since the human
story was first documented. Developmental psychologists tell us that a
willingness to help strangers is a trait that most people exhibit at as young an age as
18 months. It's an almost universal impulse to serve.
One they can get crowded out by other instincts certainly but if you peel back the layers
of what motivates us more often than not you'll find a very core ambition to be useful to
others. And yet, good service is still rare.
In our experience as economic actors we're increasingly frustrated and disappointed.
The customers, employees, owners, no one wants to deliver bad service.
And no one wants to endure it. But that's the experience we continue to inflict
on each other. Why is that?
That's the question frankly that animates this book.
Why is service so hard to get right despite the fact that we are literally wired for it?
Our message begins simply enough. You can't be good at everything.
In services, trying to do it all brilliantly will lead almost inevitably to mediocrity.
Excellence requires sacrifice. To deliver great service on the dimensions
that your customers value most you must underperform on dimensions they value less.
This means you must have the stomach to do some things are badly.
The number one obstacle to service excellence in every organization on the planet.
The number one obstacle is not having the courage to be bad at anything.
You want to be great? You have to be bad.
If we try to be great at everything, we will end up with exhausted mediocrity.
And I think the thing that was so moving to us is that well-intentioned energetic people
try to be great at everything. It literally, it's a natural instinct.
And it is precisely why the act of great service is rare.
So in the book, we talk about, in order to be great you have to be bad.
And the courage to be bad is what's holding us back.
We have to be very smart about which. We have to pay for great service.
We need to design a reliable funding mechanism which I think Google could.
Would be helpful for some parts of the organization. [laughter]
>>Frances: We have to design reliable funding mechanisms into our service offerings or else
it risks being gratuitous or overlooked service. And there's a whole bunch of ways that you
can do that. So in order to be great, you have to be bad.
You have to pay for it. We have to set our employees up for success.
If we're not delivering excellence. If we're delivering episodic excellence it
is that we have designed the wrong jobs for our employees.
The argument we make in the book, and we believe it in our hearts is that it is our obligation
to set our employees up to thrive casually. And if they're not delivering excellence,
we have not designed the right system for them.
So in order to be great, you have to be bad. You have to pay for it.
You have to set your employees up for success. And you have to manage and train customers
pretty aggressively in order to get there. But the one part I think that, I think that
my experience with Google is that they get that part, the first half of the sentence
manage and train customers aggressively. But the second half of the sentence is, and
they have to like you more for it. [laughter]
>>Frances: So those are the, Those of the first part of the design.
And I'll just read one last part and then Anne will go.
Which is that the reason we wrote this book and we wrote it together.
It was just a, it was just a beautiful project to work on together.
The reason, well I'll just read to you the last part of the introduction.
In short, you want to be helpful. Our collaboration was born from the shared
belief that the commitment to serve is ingrained in the human soul.
And the shared observation that this commitment often fails to translate into sustained acts
of service even with the best of intentions. I first saw this challenge in my academic
research and with executives trying to improve service in their own companies.
Anne first saw it on the front lines of mission driven organizations in the public and nonprofit
sectors. She saw that good people with good ideas were
not enough. So our ambition with this book is to help
you build an organization that truly reflects your humanity.
One that can shamelessly deliver uncommon service.
[Laughter and Applause] >>Frances: And I can't see any of you because
I can't read with my glasses on. And so you're just all a, like a very polite
blur. [laughter]
>>Anne: Do you want your glasses? >>Frances: No I don't.
>>Anne: Are you sure? Yeah, no I like them this way.
[laughter] >>Anne: So I'm gonna read a little bit more.
I was particularly excited about the dramatic reading portion of the book tour.
[laughter] >>Anne: So this is been pent-up for a long
time. [laughter]
I want to read a section from chapter 5 which is where we focus on culture.
And because of the way we wrote the book and how we present the ideas, culture often gets
a little bit sidelined in the organization. But in our worldview, excellence equals design
times culture. Though both are equally as important.
I mean some smart people would argue that culture is even more important.
Peter Drucker said, "Culture eats strategy for breakfast."
And I think there's a serious argument to be made for, we would probably argue that
they're about equally important. You got a get the design right.
So what Frances outlined. What we call our four service truths.
And you got to get the culture right for the values that animate that design.
And the often unspoken rules of engagement. So, this is an ode to culture.
You know, the other piece that I think is important in the service concept is that you
know culture arguably is particularly important in service organizations where employees have
so much influence over the value creation process.
You know we all make thousands of tiny little decisions every day.
Whether it's how you answer the phone or how you respond to an unprecedented request.
And those are the choices that end up defining the service experience.
We sometimes say its culture. You know culture tells you what to do when
the CEO isn't the room which is of course most of the time.
[laughter] >>Anne: So our ode to culture,
>>Frances: Not that they're bad people >>Anne: No, definitely lot.
This is at a Publix supermarket which I don't know is Publix out here, it's a big supermarket
chain in the South and Midwest. >>Lexi: Do we have Publix?
>>Audience: No. Lexi: But we know of it.
>>Anne: We love Publix. >>Lexi: It's a good shop online.
>>Anne: A sticky misperception out there is that a strong service culture is a luxury
of small companies without the growth and profitability pressure that the big boys have
to endure. The commitment to serve is for hobby businesses.
Publix supermarkets blows up this assumption in magnificent ways.
A Fortune 500 company, Publix is one of the biggest supermarket chains in the US with
annual revenues in the 25 billion range. The company employs more than 150,000 people,
the vast majority at the low end of the wage scale.
And they've earned every customer service award that exists.
How has it pulled off such an exceptional service culture at this scale?
An important part of making sure everyone gets it is the Publix guarantee.
Which goes like this. "We will never knowingly disappoint you."
And I love that phrase. >>Frances: I know, it's incredible
Anne: I think it should be in standard marriage vows.
[laughter] >Anne: We will never, 'cause it's about disappointment.
>>Frances: I know it is. Forget sickness and health, whatever.
Yeah, exactly. [laughter]
>>Anne: Yeah, yeah That's the issue.
"We will never knowingly disappoint you. If for any reason your purchase does not give
you complete satisfaction, the full purchase price will be cheerfully refunded immediately
upon your request." These words are emblazoned everywhere Publix
employees looks. They're on the walls of stores, they're printed
on the back of every business card of every employee all the way to the very top of the
organization. Seriously the CEO gave you a card with.
>>Frances: The guarantee was on the back. >>Anne: And the selection of words from the
cheerfully and immediately to the commitment and never intentionally disappoint, makes
exactly what the company stands for palpable to everyone who puts on a Publix name tag.
The guarantee is not a mission statement that lives and dies in the glossy annual report.
It's alive and well guiding employees towards the right behavior even in situations that
are confronting them and the company for the first time.
This was true for Jim Rhodes who started out as a meat manager in one store and 30 years
later is now working as VP of human resources for all Publix.
One day the president of the company telephoned to deploy him to go handle an irate customer
who was claiming that are frozen Publix pizza had ruined her oven.
It was Rhodes day off, but he put away the lawnmower and jumped into action, arriving
at the woman's house within a few minutes. There he discovered a well-used oven that
hadn't been cleaned, ever. [laughter]
>>Anne: The woman had a taste for cooking pizza preferably right on the baking rack,
no pan. And so the accumulation of years of rogue
burnt ingredients had finally caught fire. As Rhodes recalled, "I didn't know anything
about customer service." But in that moment he thought about the guarantee,
the guarantee promised complete satisfaction and so that became his goal.
He drove to the store, picked up a few items. Two pizzas, baking pan, putty scraper, cans
of oven cleaner and then he got on his knees and cleaned the woman's oven for her.
It's the same ethos at leads Publix employees to regularly carry packages to customers cars.
To drop off groceries when customers are sick. To never knowingly disappoint.
Not only has the culture survived in spite of the company size and success, it has been
a central driver of it. It's a deadly serious asset cultivated by
a soberly ambitious company. >>Frances: I got goose bumps.
[laughter] >>Anne: That's so sweet.
>>Frances: Yeah, I know. >>Anne: And so I'm just gonna read then the
conclusion which is only, which is only a page.
But we like it because it speaks to why we think it's worth our time to think about how
to get better at service. And as Frances spoke to in the introduction
essentially we have to get this right. This is the primary driver of our economy.
That's true now and that's gonna be true tomorrow. You know 50 years ago it was about 50/50 manufacturing
and services. Right now it's 80% and it doesn't matter how
nostalgic we get about making things or how many speeches our President makes about the
importance of the manufacturing sector our futures is in services.
That's true for the US and that's increasingly true for developing countries, where the stakes
are even higher. So we need to figure out how to build great
service companies and we need to figure out how to create great service jobs.
And this is our final plea for that. A maddening thing about service organizations
is that they permit you to lie to yourself. You get to believe that you can be great at
everything. You get to pretend that your employees are
your problem or that your customers won't notice when your commitment to them falters.
And the cost is not failure, at least not at first.
Just an insistent unsatisfying mediocrity. The antidote is honesty.
The path to uncommon service goes directly and sometimes painfully through the mirror.
Our goal in writing this book is to help you hold that mirror up to yourself and to your
own organization. If you haven't averted your eyes at this point
in the story than were optimistic about your capacity to excel.
It's of course easier for us as outsiders to look without blinking.
But here's why were credible in pushing you to do it.
After studying the design and culture of countless organizations, we know that what you'll discover
is likely to amaze you. Customers who are yearning to be of service,
or employees who are yearning to be of service. Customers who are eager to do their part.
Organizations that can in fact change overnight. And not just organizations.
In 1995 when Carlos Rodriguez Pastor return from Peru, returned to Peru from the United
States to take a hard look at his own family business a financial services company known
as Interbank. He saw his companies and his country's weaknesses
with great clarity. But everywhere he looked he also saw the potential
for greatness. He saw opportunities to create unprecedented
prosperity in a nation still fighting its way out of entrenched poverty and economic
turmoil. Rodriguez bet on the future of both Interbank
and Peru by building a services empire. Everything from grocery stores to insurance
to schools that delivers excellence to the country's emerging middle class.
The Interbank Group's $8 billion portfolio takes his inspiration from global service
leaders. And its exceptional performance is fueled
by an unflinching look at the gaps between its own companies and the world's best.
The result, Interbank is now generated wealth for more than 30,000 employees who are in
turn nurturing the wealth of a nation. The way Rodriguez tells it.
The country's motto was once a dispiriting and fatalistic "si pero."
Spanish for "Yes, but..." [laughter]
>>Anne: His life's ambition is to turn the country signature phrase into "Si Peru", "Yes
Peru." He's already made extraordinary progress.
Interbank is arguably the most influential company in an economy that's now booming at
a pace that's convinced Peru's brightest minds to turn down jobs in New York and London and
Silicon Valley and build their careers at home.
With the humility of someone in a much bigger game than personal advancement Rodriguez has
deep calm about him. His impatience for a new Peru is filtered
into a careful mix of words and actions starting with his bedrock refusal to accept mediocrity
around him. He is standing for excellence and that choice
is changing a country. People ask us all the time where they should
begin. Our advice is to first believe in an alternate
reality where ordinary people create extraordinary value for customers ready to take on the world.
Like Rodriguez, you must believe in the possibility and then look fearlessly at your distance
from it. And if you start to doubt where the journey
ends, please track us down. We'd be delighted to tell you another story
of uncommon service. [applause]
>>Gretchen: We just want you to do that iambic pentameter next, okay.
[laughter] >>Anne: Yeah but you're the only ones.
>>Gretchen: Okay so I'm gonna, I want you to all start thinking of questions.
And again if the VC folks have questions, e-mail aparde, A-P-A-R-D-E and we will ask
them for you. So at Google and in this room we have different
types of, we're not known as a service organization
per se. >>Frances: Yes
>>Gretchen: As Google as a whole. Right?
But in this room we have folks that manage internal service operations.
So within group to group. But also the service operations to our customers.
What, I think to Anne's point, one of the things that keeps sticking in my mind is the
Publix mission statement of not, what is it, knowingly disappoint
>>Anne: Yep. >>Gretchen: I'm having a hard time, and I
would love your perspective on applying that to Google's philosophy.
Because I think in our launch and iterate culture where we put things out there knowingly
that they're not perfect. We definitely knowingly disappoint our users
at times. The idea is that we will get to a better place
because we're going to listen and iterate on it.
But I think that also presents challenges for our service folks both internally and
externally with our customers. But also with our users for understanding
why we would make some of these decisions. Can you comment on just your thoughts on sort
of that? >>Frances: Can I go first?
>>Anne: Yeah Frances: Please.
So I don't think that you disappoint customers when you put things out there in a beta version
and they experience the functionality not working.
You, that's what you stand for. It's what you communicate.
Those constraints are very clear. I think you disappoint customers when you
won't talk to them. [laughter]
>>Frances: When you make it really, really difficult for them to talk to you about what
they are experiencing. But I think the put out early and iterate
with them and have them create more value with you.
That is, that is in my sense not at all where you have disappointment.
And you shouldn't hesitate for doing that. It's what makes, so the products in which
you thrive, thrive because of that. So that's part of the secret sauce.
>>Anne: Yeah I would agree. That feels like a collaborative iteration.
Innovation experience. The definition of excellence that we use is
that is being great at the things your customers value most?
And then making trade-offs in the area that they value least or at least value less.
And I think where some service organization stumble is that they're making trade-offs
but they're not making trade-offs in the areas that customers don't value, they're making
trade-offs in areas that the customers do value.
And, you know, answering the phone when you call hypothetically could be you know a thing
your customers value right? >>Gretchen: So going back to an earlier point
you made following up on this is that we you know, you want to be excellent you need to
do some things poorly. Right?
Or bad. >>Frances: Bad.
>>Gretchen: As you said bad. Just purely bad.
[laughter] >>Gretchen: In terms of talking to our customers
our ability to do that. I think we have made great strides and hopefully
we'll get questions from the audience or comments around talking to our advertisers or people
who are paying for our products. Probably still not perfect yet.
But over the last couple years we've made huge strides there.
We still don't have that for our free products. And that's a trade-off that we've had to make
right? One funds—
>>Frances: Yeah >>Gretchen: the other.
Thoughts on that in terms of the brand as a whole and how, again, we can balance that
complication. >>Frances: So it's definitely the case that
you don't have to treat everyone the same way.
Like I think that Armani boutique and Armani exchange have two very different service models
and the customers are very accepting of it. And so I think that is fine.
I think the challenge is when you struggle to meet the needs of the customers I think
it's really well-intentioned. I've never seen your management reports.
But I suspect they're some version of color-coded. So these are Green, these are Yellow, and
these are Red. That will lead to exhausted mediocrity.
Because you'll play some corporate version of whack-a-mole going after the current Reds.
There are some Reds that we should be proud of.
Go onboard Southwest Airlines and ask for a meal.
[laughter] >>Frances: They will not have shame.
They might mock you. But we have to be equally unapologetic about
what were designed to be great at and what were designed to be bad at.
And so I would say that if you have read yellow and green, we need two shades of red.
There's some red that if it's not in the service of great, get better at it.
There's another red that is in the service of excellence that's the last thing we should
do is get better at it. I like to call that red maroon.
>>Lexi: Red Moon? >>Frances: Not red, maroon.
>>Gretchen: Red maroon. >>Male audience member: Is that a thing against
HBS? >>Frances It's a cheap, no that's a bad part
of being bad that you should be proud of. We have plenty of that at HBS
>>Lexi: So maroon also has multiple meanings. "Marooned on an island."
[laughter] >>Lexi: And I like just going with the dramatic.
[laughter] >>Gretchen: I like that.
>>Lexi: I thought you were already there. >>Gretchen: I'm so slowly literal.
We're gonna open up questions. Does anyone have questions in the audience?
Alright, were gonna have to run around to, to mikes.
Ms. Minnie. >>Lexi: I think we'll just repeat maybe.
>>Gretchen: Oh, ok. >>Lexi: To save pregnant ladies not running.
[laughter] >>Minnie: I wanted to talk about culture some
more. >>Frances: Yep.
So people always ask me what I like most about Google and I always say well I really like
the culture and I've never known what I'm saying when I say that.
[laughter] >>Minnie: And people often ask me what I mean
when I say that. And I sort of give a different answer every
time. And I think your answer was that you know
what to do when CEO is not in the room. Could you elaborate on that 'cause that doesn't
quite answer my question. >>Frances: Sure.
>>Anne: Sure. >>Frances: So you want to or do you want me
to. >>Anne: Why don't you start?
So our definition of culture is that culture guides discretionary behavior in the absence
of a stated policy, in the absence of direct supervision.
The whole purpose to have a culture is that people are behaving as we want them to behave
even when they're not being watched. Right?
So that's the purpose of it. Here's the "secret sauce" of culture.
Culture exists to guide discretionary behavior. If you want people to change their behavior
you can't address behavior directly. Will-power doesn't work.
So, but here is how you can influence people's behavior and change can happen in an instant.
When we realize that the way in which we behave manifests from how we think.
Thinking manifests behavior. You want someone to behave differently?
You have to credibly get them to think differently. I think the reason you love Google's culture
is because everyone, all of the unspoken things, everyone here is great and kind and they take
care of each other in ways that are, it's inspiring.
I mean when I'm walking around here today it's inspiring how much care people take.
It's there discretionary acts. I don't think people were told to do that.
I think we have influenced how people think and that manifests in that behavior.
>>Minnie: I actually always answer that it's the morality of the place.
>>Frances: I think that's good. >>Anne: But I think you know values are a
big part of it. I mean we're very, very practical people.
I'm from Ohio and you studied math. [laughter]
>>Anne: So you know in the book. [laughter]
>>Anne: We actually get into, you know hands dirty in the question of actually how do you
design a culture? How do you build it?
How do you make it happen? And we divided up basically into kinda three
challenges. And the first, unfortunately they're all C,
I really tried hard not to make them all C's coming from a business school environment.
The three C's of culture. So, but the first piece is clarity which is
really understanding what kind of culture you want to build and why.
You know what's important in terms of Google competing is gonna be very different from
Publix or another organization. So really understanding, you know, what are
those values? Know how do you want people think?
And some of the great examples of companies that have crystal clear understanding of that.
You know Zappo's is the one that really stands out.
And you know Tony Shay talks about the 10 Google values literally almost every time
he gets a microphone. >>Frances: He does Zappo's.
>>Audience: Yeah. >>Lexi: Instead of Google values.
>>Anne: Yeah. I'm already getting excited.
[laughter] >>Anne: So and then the other pieces is then
communicating those values, and particularly in moments where employees hearts and minds
are open. So in training environments.
You know right when people walk in. Making sure that you're signaling that.
And then the consistency piece which is making sure that there aren't what we call cultural
breaks. All over the organization which happens a
lot. Which is, you know, we declare service matters
and then in fact you're not picking up the phone.
And you know that's a good place to start in many organization is to root out those
breaks. >>Frances: And we just, I know you want to
talk, let me just say one. Call centers are sort of notoriously designed
to fail, so they're a great place to think about it when we tell the employees in the
morning that the customer is what we're about. And then we tell the employees in the afternoon
that you have to do it in 180 second increments [laughter]
>>Frances: Those are the disconnects that really make you.
It would be impossible to have a great culture in that environment.
>>male audience member #1: Hi I'm [inaudible], I'm actually working in customer service department
here. >>Frances: I don't think you're mike's on.
>>male audience member #1: I'm actually working in the customer service department here.
I had a question about your Publix example which is relatively, like a big organization.
And I understand that culture kind of is the kit of bringing this all together.
But can you say something about incentive systems to incentivize this?
This kind of culture. And kind of empower like the employees to
fulfill this promise to the customer. >>Frances: So the, the most powerful incentives
in any organization are informal status. So we all think that it's monetary rewards.
And there's not a single study that shows that that, that those instrumental things
work much at all. Incentives, formal incentives solve almost
no problems. Dysfunctional incentives create a lot of problems.
The biggest barometer, the biggest lever you have to influence culture is how you bestow
informal status. Who do you give your attention to?
Who do you give your distraction to? At what moments do you celebrate?
That is what infuses a culture. So incentives matter madly but it's the informal,
it's the informal ones that matter. I often say that your biggest cultural weapon
is your, and I don't, it's probably politically incorrect to have this.
>>Anne: Go for it. >>Frances: Is your Blackberry.
[laughter] >>Frances: Because for whom when they're speaking
do you bring out your Blackberry. That is what is infusing your culture every
day. Everything else pales in comparison.
>>male audience member #2: I also work with a lot of the advertisers.
So you know we're all part of a team that actually talks directly to our advertisers.
At least the small and medium-size businesses. And it's interesting, I kind of gave a little
squeal when you mentioned that you talked to somebody that worked at Interbank or kind
of the president of Interbank. 'Cause I lived in Peru for a year.
And when I went there, I would constantly go to Interbank to do my currency exchanges
because they were always open so late. So, I'd go to the grocery store, they're open
'til like 9 PM most nights. Then it got me thinking we're only available
9 AM to 8 PM Eastern Standard Time. So what is your opinion on kind of 24-hour
service? Or how long, if we're going to be interacting
with our advertisers, how long do you think is an acceptable time frame to be available?
>>Frances: So the, I met Carlos when he came to take an Exec Ed course called achieving
breakthrough service. And he brought 11 people from Interbank.
In the first case we taught there was a case called Commerce Bank.
And Commerce Bank became the fastest-growing bank in the US.
By differentiating on a couple of aspects of service.
By trying to be great at some aspects. And realizing that the only way to do it was
to be really bad at others. And this Commerce Bank really infused Carlos.
And when he went back to Interbank he used this in most of his organizations.
So the trick that we learn from Commerce is that they're open, all night, all day Saturday,
all day Sunday with full-service banking. And the first question you ask is how can
they afford it? Their tagline was that they're America's most
convenient Bank. But their unofficial tagline was "No one will
pay you less for your money than we will." [laughter]
>>Frances: You received a half a percentage point less on deposits.
And it was open beyond banker's hours. And so when Carlos and Interbank are giving
you extended hours they're optimizing to be best in class at that.
They're absolutely doing something else to fund it.
And so what you don't want to do is just incur more and more cost on service.
We want to really figure it out from an optimization, and it's a constrained optimization.
And if you're gonna be disproportionately great at that, what are you gonna be less
good at? >>Anne: And we would argue that of course
depends very heavily on your, the needs of your target customers.
And probably the most painful part of the book.
We spend a lot of time just describing a customer learning tool and process that helps you to
surface what are your customer needs, and how would you prioritize them and help you
work through some of the tradeoffs. And so if your customers care about 24-hour
service then we would say yes definitely it's worth considering you know extending the hours.
>>Frances: And when Anne says it's the most painful, I mean beautifully written, but painful
to go through. But if you are looking to use it in a practical
way, it's the second half of Chapter 1. >>Anne: And we actually created a tool on
our website which is that is—
>>Frances: Tells you exactly how to do it >>Anne: That walks you through it step by
step. And it was our attempt to make that part of
the book less painful. And you can just download it.
>>Michelle: Hi, my name is Michelle. And I work in the REWS division which is real
estate and workplace services. Our tagline is "We are what makes Google googly."
We take care the employees. My area is—
>>Frances: What an awesome job to do at this company.
>>Michelle: It's an awesome job, and I think it relates to customer service.
My specific area is in health and productivity management and how we take care of our employees
for sustained performance and peak performance. Who are your top leaders do you see in this
area? And I'm particularly interested in your chapter
around successful employee management systems. What are companies doing, the cutting-edge
innovative companies doing to take care of our employees?
They work very hard 12, 15, 17 hours a day. We also give them incredible food, fitness,
massage, top-of-the-line health care benefits. But at a price.
And when does the service person burnout. >>Frances: Yeah.
Do you wanna repeat any of that? I'm just, I can just—
>>Lexi: Yeah, that's fine I think it's just that our mikes are a little
low. So the question is really, this is a woman
who works for providing services for all of us.
From real estate to benefits. Who are some top leaders who are providing
similar services in other companies? And how do you keep doing this when that is
most definitely high cost? And when you make trade-offs.
>>Frances: So we have in the introduction we call the cast of characters.
And we introduce, and so I'll just, the companies that make a lot of appearances
are the ones that are gonna be disproportionately useful to look at.
So Commerce Bank is the first one that we talk about.
But they were bought by Toronto Dominion and ruined.
[laughter] >>Frances: Which, you know most great service
organizations when they get bought by someone else.
They get unintentionally ruined right? You bought them for a premium and then you
didn't understand their model. But you change a lot of numbers on spreadsheet
that made investment bankers go "Wow." Anyway that's a separate issue.
[laughter] >>Frances: But I think Southwest Airlines
is a great one even though it's been talked about for a long time.
We talk about Ochsner Health Systems which is a place in New Orleans that, they have
it figured out. Maybe my favorite example is "Bugs" Burger
Bug Killer. [laughter]
>>Lexi: Say that again. >>Frances: "Bugs" Burger Bug Killer.
And it's in an industry where pest control was what was given to everybody.
And everyone bought pest control until it became commoditized.
And these guys came in and they gave I think similar to Publix.
They promised an unconditional guarantee that we will have pest elimination.
"We guarantee you'll have no pests." And in order to do that, they, and they got
a 700% price premium to do it. Because it turned out know what he wanted
you to control their pests they just wanted you to eliminate them.
But to do it. I mean if you think about it.
So when pests, you know this is like, you know you get like you spray until things stop
moving right. That's like what the job is.
[laughter] >>Frances: Employees got six months of training
as an example. Six months of training.
>>female audience member: Sorry, but I have a question on the DBC
>>Gretchen: She's not done. >>female audience member: Oh sorry.
No, that's okay. No, but anyway I think we got, you were right,
you felt that moment. [laughter]
>>Frances: Please go ahead. Yeah, yeah, yeah.
>>Lexi: I think I need that so they can access live.
>>Frances: Okay, yeah. So the way in which they designed the system
was to make sure that they set the employees up for success.
And you couldn't do this job and the culture and the discretion without having that much
training. And so when I think about what you guys are
doing. And you are blessed with having the best and
the brightest wanting to come here. And the ones with morality I think it's a
great. It's a great word.
I've never interact with someone who doesn't casually work really hard.
But isn't also just in a discretionary way ready to help everyone else.
It's lovely. And it would be criminal if you burned people
out. One of the things we talk about is that if
you're relying on the heroic efforts of individuals, it is not sustainable.
So even if you have heroes today. I would design systems where heroics are not
required or it will, we will talk about you in retrospect as the company with the great
first decade. Yeah.
>>Gretchen: We're gonna get a question here and then we're on the VC
>>male audience member #3: So, would love your perspective on something we think about
a lot here which is the trade-off between scale and service.
So for example, we have a lot of products that are in you know 190 countries, 60 languages
it's a real value to try and get our products out to as many people as possible.
And of course that creates conditions where it's hard to be able to give great service
across that kind of scale. How would you, you know help us to think about
that. >>Frances: Yeah so I think the, most growth
is less profitable right? So most growth makes you more unprofitable,
Right? So the, everyone says they wanna get bigger
'cause they'll get more profitable. But if you look at organizations it turns
out not to be true. It needn't be that way.
And here's why it happens. If you're doing one thing today the only reason
you should do another thing tomorrow, a different thing is if by doing this it makes this better.
And if by doing this it makes this better. So if you scale in a smart way it will become
profitable. If you scale, not thinking about that.
That is if I'm doing this today and I do that tomorrow and it makes my doing this worse,
that will be a predictable challenge. And so when you think about scale, what I
would say is make sure you're only doing the things that make everything else you're doing
better. Only grow in a way that makes the core stronger.
And only do the things in the core that make the growth part stronger.
I have no idea what your growth is, but I bet you're doing some things that are more
of a sled on the rest of the organization. And that is what is tempting because we think
growth is the goal. Growth is a magnificent manifestation of doing
everything else right. >>male audience member #3: I think the question,
and that's a good point. I think the question is a bit of a slightly
different angle on it. >>Frances: But that was a great answer though.
[laughter] >>male audience member #3: It was a great
answer. It was a great answer about—
>>Frances: But it wasn't your question? Economies of scope and we have absolutely
do a lot of things that could be considered a sled I think.
>>Frances: Yeah. >>male audience member #3: But this is more
about the scale of the volume of people that we serve.
It's actually a core value of Google. To not just serve English markets, not just
serve developed markets but to serve all markets. As much as possible.
And that's what I mean by serving tens or hundreds of millions of people in 190 countries
in 60 languages. >>Frances: So I think it's the same answer,
but I'll phrase is differently. [laughter]
>>Frances: No and I mean that genuinely. That you're, I love the ambition.
The ambition of Google is to serve maybe from what you're saying all people on the planet.
And what I would say is that if serving a subset of those people meant serving the rest
of them had to be worse, would you make that trade-off?
And if so, just do it with an open heart. In general, because you have a lot of scope.
Even if it's doing the same thing in different countries it's doing a different thing.
So I think it does apply to this that I would argue that you should prudently only do the,
only do additional things that make the core of what you're doing better.
That's where we want to think really creatively. So how can going into this new market or into
these 10 new markets make what I'm doing over here better?
By the way, there's lots of reasons, lots of ways to do it.
Lots of innovation that can occur here can get fueled back and to make this better.
But that has to be the guiding principle for. >>Anne: And to affirm the question.
[laughter] >>Anne: I mean this is, that is the interesting
question. It's definitely a bias that shows up in the
book is, I mean all of the examples that we go after
are organizations that have figured out how to do this on a big scale.
And that's where it gets really hard. You know and there, we spend a chapter just
talking about the growth question, Chapter 6.
[laughter] >>Anne: I never thought I would be this guy.
But it's a great question. >>Frances: It is a great question.
>>Anne: And it's much harder at a bigger scale than at a lower scale.
>>Frances: Yeah. I didn't mean to have a, uh, anyway.
>>Gretchen: It was great, it was great. >>male audience member #3: It's a variable.
>>Frances: Yeah no I get, >>Gretchen: Alright, you're done now, we're
on to something else. [laughter]
>>male audience member #3: Harvard spirit. >>Gretchen: I know.
We're gonna test our technology now and were gonna take a question from the VC from Deepak.
So you should be unmuted. >>Deepak: All right, can you hear me?
>>Gretchen: Yes. >>Frances: Awesome.
>>Deepak: Ah perfect it works. All right first off I just wanted to say Frances
and Anne, thank you so much to coming to the session today I apologize I can't be there
person. For those that know me I joined Google about
two years ago with a little mission of trying to make this a world class organization.
And I actually lead our global customer services for Google now.
I just wanted to make one comment. I would love your reaction to it.
Is in your theme around, you have to be bad at certain areas.
I firmly believe that you want to pick one or two areas to be distinctive in.
So you really want to excel on things such as customers truly value and they're willing
to pay for in some sense as well. But are truly valuable.
But I would've used a slightly different word than bad.
I would've used there's a minimum threshold that you need to meet across all these other
dimensions. >>Frances: Yeah
>>Deepak: Because if you truly are bad, it actually negatively comes back as a horrible
experience that someone has with you. >>Frances: Yeah
>>Deepak: It sounds much better to say bad. But in the sense of at least in the work I've
done, there is a minimum threshold. >>Frances : Yeah, so.
Can I? >>Deepak: I just wanted to get your commentary
on that. >>Lexi: I just wanted to make one thing.
Deepak is a hero to all service organizations in that he's brought our service levels with
Françoise in the small-medium business space from 20% to 80%.
In terms of satisfaction. So he would say that's not heroic, he needs
to do more. Just so you know.
>>Frances: Yeah, and here's what I would say. In order to be great, you do have to be bad,
and I know it would be better to be average on a set of things and above average on another
set. It's the world we all want to live in.
Let me give an example that might make the trade-off, and I don't even know where to
look because I don't know where you are. So I'm just gonna look in front of me.
[laughter] >>Frances: Okay they are.
So here's an example I would just, I would offer.
And then I'll say something about the hygiene factors.
What you have to, the minimum order, the minimum quality you have to be.
So a health care organization may decide it wants to compete on access, speed of access.
So I will see you today. Like you get sick, call up and I'll see you
today. In order to do that, they will not likely
be able to give you a very high status person. It's not to be a world renowned doctor that
you can come in and see on-demand. It's a case where access and status trade-off
against each other. You want be best in class at access, you're
gonna be worst in class at status. If you want be best in class at status, you're
gonna be bad, below average at access. Or you could say you know what a charismatic
leader could stand up and say we're gonna be best in class at status and access.
And were gonna push on both. And what we have found is that that will lead
to exhausted mediocrity. And so I know it doesn't sound right, and
it's not what I would use perhaps to motivate the troops.
But literally, in order to be great, you have to be bad.
And understanding where those trade-offs are. And they're not shameful trade-offs.
You know MacBook Air is the lightest weight computer.
It traded off on things like ports and memory. There's no angst.
Every year they try to push the frontier but literally these things trade-off against each
other. And so what our plea is, is to find out where
those trade-offs are. So that's the first part, and then very quickly
on the second part. There are a set of high, so there's a notion
of hygiene factors. That is, if you don't do it a certain level,
you don't get to be in the consideration set. So a hypodermic needle is our favorite example
that I think. You have to be 99% sterile to be called a
hypodermic needle. If you're 98.5% sterile, you're not a hypodermic
needle. So you just, that's not good enough.
But if you're 99.5% and I'm 99.3%, you get no extra credit for doing it.
Don't differentiate on hygiene factors. Be good enough so you can be in the consideration
set. But don't spend the extra part on it.
>>Anne: And when we talk with audiences that are filled with engineers, there's nothing
controversial about this message. They can't believe that we're being paid to
be there. That we wrote a book.
[laughter] >>Anne: I mean like for people who work with
physics every day, this is intuitive and obvious. And I think where we get stuck as a species
is when we think that those rules actually don't apply in service organizations.
>>Gretchen: Okay were gonna take one more from the VC from Ann Arbor.
Let's try this, and then we'll go back to the audience.
>>male VC speaker: Hi can you hear me? >>Gretchen, Frances, Anne: Yes.
>>male VC speaker: All right, perfect. So this actually follows up on the Deepak's
question fairly well so I'm glad he went first. But I work on our customer support team for
advertisers on the phone. And as our numbers continue to roll in, it
does seem more and more that they're looking for perfection from the service that we provide.
And as you said there is always going to be a bad involved.
So how do we help our customers understand and accept the bad that we're going to be
offering. >>Frances: Yeah, so I think that that's a
great question because customers rarely If you ask customers of these 10 things rank
how important they there is no incentive for them not to say all 10 are important.
So the market is what, and what their alternatives are what help you do that.
It's not that Southwest Airlines customers are not hungry.
[laughter] >>Frances: It's not that they, I mean if you
said would you like a meal, customers would say yes.
But what they've done is made it clear to customers that if we provide you a meal we
have to have catering. If we have catering, it'll slow down the turnaround
time. If we slow down the turnaround time, we'll
have to have about 100 more planes a year and we'll have to raise ticket prices by about
40%. So they, if you make the trade-offs clear
we're optimized to be great is this. So I can see you same day.
You'll see a nurse practitioner. Or you wanna wait for the best person, you
want to see the best person the world, people are likely to wait a month in order to do
that. So I think we can get customers to understand
it if we make the, what we're optimizing for very clear to them.
>>Anne: Yeah and Herb Keller is a great example of someone who you know, you have to sell
it to your employees. You have to make sure everybody gets it.
And then you have to sell it to your customers. And it's absolutely part of the marketing
messaging. >>Frances: If you're unapologetic about what
you are bad at, you will get better at it. Can't help it.
And then that's the only reason that's bad is if it makes what you're distinct at worse.
>>Anne: And if you're apologetic. >>Frances: Yeah, unapologetic, thank you.
>>male audience member #4: So maybe were gonna leave you with the wrong impression but I
want to focus on the bad again. So I run the organization that provides support
for local businesses. And particularly people that have locations
and you go there. And often something's wrong.
We're really bad about getting everyone's information right.
We're terrible at it. And that's the one thing as far as I can tell
that's the number one thing the customer values. >>Frances: Awesome.
[laughter] >>Frances: Like just give like a 20% job to
somebody in this room, they'll fix it in like a week.
[laughter] >>male audience member #4: We can't.
>>Frances: You haven't yet. As, okay.
Yes, I've been doing it for about five or six years.
So we've been working on the problem sense the beginnings of Google.
Right? So the question is in the interim of creating
an engineering solution that really truly fixes this problem's how you approach the
support team that can't always fix the problem, but wants to provide a positive support experience?
>>Frances: Yeah, so I think, I think that's the, that's probably going to be the situation
always right. 'cause you'll always be going to the next
frontier. The first part is I'm inspired by Google that
anything is possible. And that if you've been doing something for
five years, coming up with a fresh new way to do it, that's not always just by the engineers
making a better product. That's why I think that there are,
I suspect that the next generation of Google will be as innovative on non-engineering fronts.
So anyway that's just a side comment there. But having people, people thrive in the presence
of constraints. We have to just make what the constraints
are clear and then unleashed them. So right now, the constraint is we're gonna
give you incomplete information with which to serve your customers is what it sounds
like. And I'm not, I wouldn't play poker with you.
The face you're giving me gives nothing back. [laughter]
>>Frances: So like is that right? >>Gretchen: It's more, we have 90 million
places listed on Google so if you're trying to find a place that's what we're talking
about. And we get something wrong in that information.
>>male audience member #4: Incorrect data. >>Frances: Yeah.
>>male audience member #4: About a location, about your business.
>>Gretchen: Where it's from, phone number. >>Lexi: So you got it right.
It's you could say engineering is not providing us the right data they would say, it's impossible
to map the world. But either way.
>>Frances: And so you have— >>male audience member #4: Your cell phone
is listed as the HBS main phone, right. >>Frances: Really.
>>male audience member #4: You can't get it. [laughter]
Those are the kinds of circumstances. >>Frances: Yeah, okay.
Okay. You just scared me.
[laughter] >>Frances: So now I got it and thank you for
being patient. You're just a role model for me you were more
patient with me then I was with you and I still feel badly about that.
[laughter] >>Frances: So there's incomplete data.
So now I'll layer question on top of it. >>male audience member #4: So we know we're
not gonna get 100%. That's our section of being bad.
So now we know that we're bad at that. Right?
>>Frances: Yeah. >>male audience member #4: We just can't always
fix that. So now we know that's bad, we know the customer
values that the most how as a service organization do we make them feel better about our brand?
>>Frances: So yeah I think, and I'm not stipulating to that's the place where you're gonna be
bad. But anyway.
The, you have to be, its relative performance. You have to be better than the alternatives.
Right? If this is a thing that the customer, so you
want to be best in class. You want to be best in class at the things
customers value most. And in exchange worse in class at things they
value less. So if this really is the competitive dynamic
that they're competing on. You have to be best in class.
So it's not how far are you from perfect, it's what's the distance between you and the
alternatives. That's the.
Yeah nothing, you're giving me nothing. [laughter]
>>Gretchen: It's him. >>male audience member #4: It's me.
>>Gretchen: Alright so unfortunately we only have time for one more question Anne and Frances
will be around a little while— >>Frances: We'll stay around as long as you
like. Pit dive as Lexi was saying.
So we're gonna go to the man with the mike, last question, close us out.
>>male audience member #5: Thanks. So at Google we have a lot of support channels
for customers to get in touch with us. There's self-help like help centers where
they can browse for solutions. There's a community which is basically a message
board where users can help other users. >>Frances: Awesome
>>Male audience member: We have people who jump in there as well.
>>Frances: Yep. >>male audience member #5: And we have e-mail
and phone options. A lot of times those e-mail options have auto
responses where they just refer you back to the self-help option.
And then you can e-mail back and maybe you'll get an answer.
>>Frances: Yeah. >>male audience member #5: But it's a bit
unclear. I'd love to hear your opinion and any comments
you have on how best to get in touch with and interact with customers in the digital
age where we aren't like a supermarket. >>Frances: Yeah.
Go ahead. >>Anne: The I mean, you spoke of something
that we didn't have a chance to talk a lot about which is the management training customers
piece. And how do you bring customers into the organization
operationally. And one way that we see a lot of tech companies.
And eBay is a good example. Of deploying customers to take care of each
other in a very strategic way. So I think eBay has done a fantastic job of
creating, not just creating online support systems, but creating off-line support systems
and figuring out. And it's in the context culturally to where
eBay has outsourced almost every function to the customer.
So customers do merchandising, customers create the product, they sell it, they support each
other. And I think there's an opportunity there that
a lot of tech companies that grew out of engineering companies were they assume that the solution
is always gonna be engineering. I think there are some opportunities that
are being missed. >>Frances: And so what I would just say is
the guiding principal that we talk about there is that you want self-service if that's what
we want the customer doing in the absence of employees.
We want the design imperative for self-service is that it's preferred by the customer to
a readily available full-service alternative. So think airline kiosk check-in, that really
cool seat map. Think airline kiosk check-in not supermarket
checkout. Like the only reason we do that is either
were embarrassed by our choices or else, mostly we do that because we don't want to wait in
a longer line. The airline kiosk check-in is, they design
the self-service so that we prefer it. So you want to make the need for full-service
rare not the access to it rare. You'll never get there if you make it from
the access rare part. You just won't hold yourself to a high enough
imperative. >>Anne: And at the scale you're talking about,
there is no way that employees will be able to deliver all of, meet all of the service
needs. >>Frances: So that's where we wanna unleash
the innate creativity of everyone in the organization. And it's not just engineering solutions to
figure out how to do it. >>Gretchen: That can be the next title of
your next book, "Unleashed." >>Frances: Yeah.
>>Anne: Mmm good. >>Gretchen: Right?
OK All right, why don't you guys join me in thanking
and Anne and Frances. [applause]