III. Phase A: The Outcome-Thinking Tools

The two applications in this chapter center on Phase A of the A-B-C-D Systems Model: output and the future state. As we have seen, the question associated with this phase is:

	Where do we want to be?
	(What are our outcomes? purposes? goals?)

These Phase A tools offer you key, practical assistance in becoming outcome/results-oriented and customer-focused.

Application of Standard Systems Dynamics
— 4. Input-Output
— 6. Multiple Outcomes

Focusing on outcomes means defining and meeting customer wants and needs. The value to the customer is always a mix of five outcomes:

• Choice and customization

• Service excellence, ease of doing business

• High-quality goods and services

• Speed, timeliness, responsiveness

• Total cost (in all ways)

The “star model,” below, shows these outcomes in an easyto-remember form. Outstanding strength in any of these outcomes can help you gain an advantageous position in the marketplace.

FIGURE 5. CUSTOMER-VALUE STAR MODEL

The Customer-Value Assessment Instrument

Use the following instrument to assess what your customers currently value (later, in this tool’s guidelines, we will look at optional uses for the instrument). Once you have your assessment results, write a competitive-positioning statement of what differentiates you from your competition—a statement that indicates your core competitive strategy.

Competitive-Positioning

An organization’s competitive positioning may also be called its driving force, strategic intent, or grand strategy; it is sometimes referred to as “the mother of all core strategies.” Such strategy is the main way we achieve a sustained competitive edge over the competition. In developing your competitive-positioning statement, you should capture that way in clear and precise terms, keeping in mind the information below.

•  To avoid competitive disadvantage, you must focus the strategic thrust on one or two customer values; any more than that and you’re attempting to be “all things to all people.” The other customer-desired values of the Star Model should be accomplished at just the level needed to be competitive.

•  This positioning is the key strategic thrust in your vision and mission statements. All other functions, directions, decisions, and criteria are subordinate to it. Competitive positioning also is (or can be):

— The organization’s core or distinctive competency

— The who, what, or how of your mission and values (why is a given)

— The organization’s current reality or possible reality within a planned period of time

— What the organization is known for—its reputation or distinctiveness

— What the organization’s rallying cry is derived from, and what it reinforces

— Something sustainable as an edge over a period of years and not readily duplicated

A Closing Note on Positioning

Remember that competitive business advantages are difficult to achieve. Sustainable advantage requires the organization to build and deliver a capability that others cannot duplicate easily or quickly. Therefore you can gain a competitive advantage only by doing something difficult; if it’s easy to do, too many other people can do it also.

Application of Standard Systems Dynamics
— 4. Input-Output

The only reason for the existence of any organization is to serve someone else. This is your primary outcome. Thus once you’ve identified your customer, the organization’s entire focus should be on serving that customer.

  For Example

If Cadillac has upscale older folks as its customers, the total organization—its people, plant, products—should be focused on those customers.

  For Example

If part of your purpose in life is to raise your children well, then you must focus on them properly, giving them quality time, ensuring they receive a good education, instilling values in them, and so on.

The “Ten Commandments” of a Customer-Focused Organization

One way to focus on outcomes is to see whether your organization is a customer-focused one. Best-practices research has shown there are 10 primary indicators of a customer-focused organization. They are presented as commandments in the following rating sheet (see next page).

Rate your organization on each commandment, using a scale from 1 (low) to 10 (high); then simply tally your total score. Pay attention to the commandments your organization did not score well on, and work to improve those areas of weakness. Celebrate that which you do well.

“Moments of Truth” and Customer Recovery Strategy

Handling “moments of truth” (the sixth commandment) and employing customer recovery strategy (CRS; the ninth commandment) are the keys to providing unsurpassed customer service. If customers are happy with you, they tell three or four people; if unhappy, they tell a dozen or more. Thus a major issue for any organization is how to handle customer problems and complaints in a productive, customer-satisfying way.

  For Example

Each problem or complaint has a story behind it, which the customer will tell to friends. The question is, how will the story end? On a good note, or a bad one? The bottom line is, if the story ends well, both the organization and the customer benefit.

Checklist: Moments of Truth
The checklist below comprises a number of essentials for providing unsurpassed customer service. How many do you act on when a customer-related problem occurs?

CHECKLIST: MOMENTS OF TRUTH

	Focus on the 5-to-10-year ROI of the customer.
	Focus on your long-term image and reputation.
	Empower employees to be creative and innovative at the “moment of truth,” so you will surpass the customer’s expectations for solutions to the problem.
	Provide expenditure authority to do the above.
	Ensure accountability equals responsibility.
	Focus recovery on future business (e.g., 50 percent price reduction or free next time).
	Speed up the recovery—at the “moment of truth.”
	Develop a “customer guarantee” and live up to it or surpass it.
	Ensure your CRS has measures in place for quick response, knowledgeability, and empathy and sensitivity, as well as tangibles and other intangibles.

Mastery of Customer Recovery Strategy
There are four levels of responses to customer problems and complaints, ranging from undesirable responses to CRS mastery.

The Four Levels of Response to Customer Problems

1. Deny it’s our problem. (“We just work here.”)

2. Fight the customers’ concerns but eventually give in to them. (“They won.”)

3. Meet customer expectations. (“The customer is always right.”)

4. Meet customer expectations; then do something extra that the customer doesn’t expect (including offering an apology).

At what level are you now operating? What might you do to attain a higher level? What improvement steps are needed? Answer these questions using the following CRS checklist and worksheet.