Caselets

What do you do when your bank branch becomes a fish market, where customers grow irritable while waiting in long queues, and the staff feel stressed about handling so many queries? This was what HDFC Bank faced at its Fort branch in Mumbai’s business district, which saw average footfalls of over 3,000 customers a day. Not only was this overcrowding leading to general customer irritation, but the bank could not even ensure that its best customers (Preferred and Imperia) were served better. The answer was better lobby management, felt the bank’s Quality Initiatives Group (QIG), which defined the problem as one of high turnaround time for customers (over five minutes of waiting for key transactions), and a very high ratio of transactions to customer base (defined as average daily transactions at the branch as a percentage of the total customer base).

Operating in the knowledge economy is distinctly different from the product economy, as firms are finding out. Changes in technology, markets and regulation have made geographical boundaries more or less redundant. The good news is that firms have a wide and deep consumer pool to fight for. The only caveat being that firms need to constantly have their ear to the ground to create value for their consumers, shareholders, partners and employees.

Acquiring good customers, earning their loyalty and retaining them for the long haul has been declared the only mantra to developing sustainable competitive advantage in a market landscape where technology ensures that firms and their competitors can duplicate any and every new development in a jiffy. From call centres dealing with client’s clients to banks and restaurants selling intangibles; from FMCG majors to the local kirana shop, businesses are grown by not merely delivering to customer’s satisfaction but by achieving customer delight. All strategies leading to this goal are two-pronged. In other words, firms pursuing the loyal customer have to work towards building long-term relationships as well as measuring satisfaction and effecting improvements to better its score.

Whether you look at it as customer satisfaction, loyalty or engagement, it is essential to translate your relationship with the customer into tangible results. This is especially true since any effort to appease the customer involves a cost — often huge — and customer-focused efforts are a cost centre in the short run. Customer retention and engagement efforts cannot succeed without buy-in from the top management and other functions within the organisation. Outcome metrics should, hence, be quantifiable and linked to the mission and strategic focus of the organisation.

The knowledge economy has, perhaps, rendered this degree of personal interface to a Utopian dream, but the final word in quality still belongs to the customer. Business has become more customer-centric than ever before, with customer satisfaction being the raison de etre as well as the acid test of every organisation. Consequently, quality can no longer be defined in terms of statutory requirements or standards alone. These need to be accompanied by customer-centric metrics, and all modern quality management systems are based on the principle that the customer is the best judge of quality.

HR initiatives enable organisations to allocate necessary people resources that eventually sum up to customer satisfaction and better business performance. Here’s how. The first step towards meeting and exceeding customer expectation is hiring the right people whose skills and mind-set are aligned with organisational objectives. Team-building exercises include formation of teams, defining team functions and determining team success criteria. This is essential for fostering cooperation amongst employees.

Dhirubhai Ambani, one of India’s biggest business icons, believed that “cost centres” virtually had no place in business — every business unit or function had to be a profit centre. His vision is embodied in the success of Jamnagar Farms — a venture that was initially started to improve the environs of the Reliance refinery. Today, it is a profit-making subsidiary, which owns Asia’s largest mango orchard. Reliance Industries’ refinery at Jamnagar is the world’s first fully-integrated petrochemicals complex of its kind. Given the inherent threats in petroleum processing, RIL has installed state-of-the-art security and disaster recovery systems at the complex.

Human resource is the mainstay of the modern competitive organisation. In today’s highly volatile and uncertain business environment, change is the only certainty. The organisation needs strategic capabilities to survive change and adapt to it. Often, the best organisational strategies fail because they are not supported by people with the right capabilities to execute them. In order to remain competitive, organisations need to mould every employee as a change agent and thought leader. They can do this only by building a culture of constant learning and development. As Charles Darwin famously remarked, “It is not the strongest of the species that will survive, or the most intelligent. It is the one most adaptable to change.”

In a business environment where labour” is not just another input but the ultimate source of competitive advantage, every organisation aspires to identify factors that can attract and retain human capital.Organisations have to not only ensure that their employees remain engaged and productive on a continual basis, but also maintain levels of engagement higher than competition. Any failure to ensure relatively higher satisfaction levels vis-a-vis the competition would culminate in higher attrition levels and exit of key talent.

The need to focus on the customer and be responsive to the demands of the market has long been recognised by organisations, the best testimony being the emergence and sensational growth of the advertising industry. However, globalisation and technological revolution have transformed the dynamics of business and with it, the definition of customer and market knowledge. Today, being a market-driven organisation entails developing a culture of constantly listening to the customer, analysing competition and defining strategies that fulfil existing, anticipated and even unanticipated needs of the customer. Customer relationship management has given way to a new paradigm — customer knowledge management. For world-class organisations operating in the knowledge economy, market and customer intelligence is a core competency and a fundamental source of competitive advantage.

In recent years, globally competitive companies have discovered the importance of an organisation-wide knowledge management system (KMS). KMS provides employees with instant access to knowledge gained throughout the organisation, thereby enhancing business effectiveness. From being a hygiene factor, KMS has now evolved into a “must-have” component for customer-facing units or departments. For organisations that are spread across the globe, this is a necessity.

Organisations are increasingly discovering that building and managing knowledge assets, or knowledge management (KM) as it is popularly known, is the key to providing immediate and easy access to information to employees, customers, suppliers and other stakeholders. A KM system aggregates organisational learning with external knowledge from customers and suppliers to help the organisation turn this asset into a sustainable competitive advantage.

Performance measurement, analysis and review are critical steps in an organisation’s progress towards its goals and vision. The objective of performance measurement is to steer the company to goal attainment, and enable it to respond to changes in the environment.

Performance is all about people, the organisation’s most valuable resource and its most vulnerable. Any strategic decision or change in an organisation has huge implications on its employees. The Malcolm Baldrige Criteria for Excellence state that action plans for deploying strategy “should include human resource plans that are aligned with and support the overall strategy.” Human resource strategy operates at two levels: one is the individual level, addressing issues such as job specifications, performance indicators, assessment and compensation. The other is the organisational level, involving the structure and broader issues like ethics and corporate culture.

Visit any company website, or read any corporate brochure, the words “customer focus” invariably leap at you. What makes this a powerful trend is that it is not only restricted to the FMCG or the services sector. Now we have cement companies talking directly to end users on primetime television spots. We also have manufacturers of telecom cables and water pipes jostling for the customer’s mind space alongside cola majors. The foregone conclusion: customer focus is the new-age mantra for long-term success.

The movement towards total quality or performance excellence as the operating model for organisations is growing at an accelerated pace. This approach is applicable to organisations of all sizes, in the manufacturing, service, education and healthcare sectors. In India, the criteria for performance excellence come in two avatars: The Malcolm Baldrige performance excellence criteria have been adopted for the IMC Ramkrishna Bajaj National Quality Award; and the European Quality Award criteria for the CII-Exim Business Excellence Award. In terms of core values, the two are similar. Each of the two models emphasises that work flows horizontally across functions to the customer. This work, a process, should be managed efficiently in order to deliver quality outputs to the customer.

Globally, concern for environmental damage by polluting industries has reached fever pitch. Companies are increasingly waking up to the fact that the only sustainable path into the future is through embracing the zero emissions doctrine. In India, however, companies are still largely practising what is known as the “end-of-the-step” approach. They need to move beyond recycling to minimisation of waste generation.

After the terror attack on November 26, 2008, business continuity management (BCM) seems to have become the buzzword in the Indian industry. BCM is a key leadership responsibility and needs to be integrated into the strategic plans of a business. Earlier, global players aspiring to do business with India would enquire about BCM plans as part of their business assessment exercise, but they invariably did not verify the same. Now, global players seek independent third party assessment of the organisation’s BCM plans.