Master Class: How to Improve a Service Culture Fast

hello welcome to our session on service revolution on how to improve a service culture fast and my favorite case study here is really lux resorts and hotels what is so spectacular about this case study is that lux was virtually bankrupt after the financial crisis and with a very low investment and no money and without firing anyone lux managed to turn around into really a fast growing company that even started to even continue to add growth in adding hotels even during the covet 19 crisis so let me share with you some of the learnings from this it's actually quite a well-documented case study so we did the case study here in my textbook on on lux which really writes up the whole story and then we had a harvard business review paper on this which was we submitted a 40-page paper to hbr and they published i think two pages of it so the other 38 pages we published in a white paper here and then we had a webinar also on a harvard business review on the same topic because after our hbr paper was published there was so much resonance that they asked us a year later can you do a webinar which is still available online and i was lucky enough to have paul jones the ceo who drove this revolution and uh i had him as a guest speaker at nus and then whatever i whenever i bring a very excellent guest speaker here then i also make sure we take a few videos with this guest speaker it was quite interesting because in our typical enba class i scheduled a guest speaker for 30 minutes uh to present 30 minutes q a and when paul jones was here in the class um you should have finished at six six o'clock and then go for dinner with him we have dinner here with all the students and those who want to network and sit with him on the table to discuss and the discussion was going on until 7 pm and you could hear needle drop in the classroom because his service revolution story was so fascinating that the class didn't want to end right so i stopped it he went for dinner but we did the same with the videos i wanted to do one video of three minutes and for this we did a 15 minute shot but the video we shot in the end was like an hour and we cut three videos which by the way are all available on you on youtube so you can see here i mean it's quite a story on looking at a turnaround a very fast revolution on how to improve service quality without much money and without much time and with the same team now when when we did the wrote this paper for harvard business review they pushed us very hard they said look you know yes we know our 40 page paper we know all of this but tell us stuff we don't know yet so what is different and lux is only one of about 20 companies we worked with where we did a rapid transformation for them so what did you learn from all of those transformations here what sort of unique and different and what would change how a ceo drives a turnaround in a service organization and what we came up with are these four key learnings here that is what i thought or we thought and hbr thought was many of these are misunderstood and run badly in organizations and the first one is do not start a service revolution with customer facing employees instead involve everyone with a special focus on internal and shared services and i mean i've had many requests by organizations please help us to improve service some of them were banks and i myself used to be a banker in my first career and have a guess who which department or unit and those companies approached me yeah and it usually was hr and usually hr wanted me to train their branch staff their customer contact center staff so it's all the customer facing staff me being a banker by myself i i before i met them i always had to look at their service and what i usually found is that actually frontline staff is doing already a great job what is problematic is very often products policies processes and then i usually because i looked at it i gave the team that came to see me a few concrete examples where these products processes policies are wrong and guess what that was usually the end of the conversation because all they were interested is in training the front line whereas what i asked them to do was much bigger in scope i mean to really go back to fix the root causes and why focus on internal service providers i mean i work with so many service organizations the problems the front line faces usually do not originate from the front line yes these problems come from finance from marketing uh from uh um [Music] i.t yes from everyone else who comes who sort of policies processes impact how the customer is being served and i mean one of the big companies here in singapore i worked with them and they brought in a change agent a lady who was in charge of all customer service in singapore that included customer contact centers service centers retail shops deployment teams service teams and all of this and um she had a weekly meeting with the other with the other svps and the ceo and where she always presented the issues they were facing right now where the complaints about and most of the time the original of those was from somewhere else in the organization so that's why it is so important to focus to make sure that all of these other parts of the organization are customer focused customer centric and in understand the the downside sort of implications of their decisions so rule number one is start with everyone with a special focus on internal people and processes and service people selling to the front line is like selling snow to the eskimos here the next is don't start by training people on specific service skills and scripts and procedures instead educate them first to a better understanding of what service excellence truly means so basic service skills is you train how to answer the phone how to do a certain process and so on what language to use whereas what does if you train what does service excellence means for your organization this is we define service excellence very often as you take action to create value for someone else so it is active you do something for your customer and to get the big picture for lux that the vision purpose and values here and it was really about we help people celebrate life the mission and the vision was we make every moment matter so imagine if you get this into the hearts on the minds of every associate in in this resort chain here our job is to help people celebrate life and why they save the whole year to have this time together with their loved ones to have this family holiday and our job is here to make sure they connect they have a good time we help them to celebrate life and to make every moment matter is also important you're here on holiday right so whether you wait for the dive shop or somewhere else how do i make this time great for you yeah make every moment matter and help people celebrate life now the third rule here is don't pilot change instead go fast and go big to build momentum you can pilot individual ideas concepts services but not a culture you want to have a culture change don't allow people to fall back into the old rotten routine it's like caesar went to england he burned the ships the soldiers you you win or there's no back for you similar here don't allow people to go back so don't do change and then and uh don't don't do do pre-testing here and the the last rule here is which i think many companies get wrong don't focus on your traditional kpis i mean this is your satisfaction sales market share contribution and all of this while you shouldn't focus on those during a revolution they all will tank they will come down yes so it will be very demotivating for your team so what you want to focus on instead is sort of leading revolution indicators so what you want during this revolution is people to create many new ideas and implement many of those ideas so for doing the service revolution what lux measured and sort of tracked was at your resort and within the resort in your team how many ideas that you have and how many of those ideas that you implement okay so that's a very difference a very ideal implementation kind of you view here to to drive the service revolution so these are the four learnings we took which we thought many companies get wrong because what they do is they do teach frontline they do start with scripts and skills and procedures they do pilot here and they still keep their traditional kpis so don't do that so these were this the four learnings where which we thought many many organizations get wrong now let me look at the four thrusts this how do you okay so this one just cut it out don't worry let's continue so let's look at the how to get it right so we discussed what is it companies shouldn't do and some of the key learnings but how can you think about getting a revolution right and it really starts with service leadership values vision and purpose so what lux did they the entire top management team all the resort general managers and everyone came together for a two-day workshop on what's our vision what's our purpose what is our values and this is where this every moment matters and we help people celebrate life came from plus the values and they translated this into nice very nice uh uh storyboards here so that's the first thing so the service leadership then the next thing they did right after the training the next day all the general managers all the division heads came back or to their own units that was around the world service culture and training started with a ton of workshops where they really came together there was a half a day of workshop on customer expectations and and sort of understand customers better but the rest was really on on on making things better so the idea was how do i get myself to take personal responsibility to take action to create value and be part of an uplifting service culture and these workshops then came together and and thought okay let's create ideas what can we do and then after all these ideas they had three very simple sort of assessment criteria for each of these ideas and the first one was can i do it now meaning i could start implementing this or developing and implementing this idea now the next one was could i do it alone or do i need an accenture for this or some other provider so can i do it now can i do it alone and the last one was can i do it with no money or little money okay and you can see where this is going about 50 to 60 percent of all ideas could be done now could be done alone and could be done without a lot of funding here then the the message was why don't we do it just go and implement right so you can see that culture and training and and then doing things so taking action uh really resulted in a lot of change and and doing uh and doing things yeah one of my service heroes is tony the late tony and he became famous as the ceo of zappos and he wrote a book which i can really recommend to everyone that's called delivering happiness it's a very cute story about his own story as an entrepreneur so he had this first venture where he made a hundred million dollars as a young mid-twenties almost wanted to retire but then of course your way to board so he had a lofty sports car and and tons of time so he then started zappos which was a uh started with retailing shoes it's quite interesting by shoes sizes and taste and gunners what is not so easy to retail on on on on a e-commerce platform which he did but he pulled it off and it's quite interesting the tough decisions he made i mean he was based in san francisco silicon valley and they're not known for customer service and at some point he made this really hard decision which cost him a lot of associates who didn't want to move but he said let's go somewhere in america where customer service is great and so i looked at where is the best customer service in the whole of the united states and don't laugh but he came up with las vegas yeah so he moved the whole company to vegas and their headquarters there until today and the whole company was sold to to amazon at over 1 billion us dollars so he almost lost everything you know i mean there was the dot-com crisis and and also he almost lost everything he made in his first venture but he pulled it through and made zappos zappos successful and today they are very successful e-commerce part of of amazon but there's one thing tony said it which i really love this was part of the culture that everyone has to improve one thing every week there should be every week something you do better than you did last week and if it is how you know how to operate excel or how do you use outlook or calendar or whatever yeah the idea was if everyone in the whole organization has this growth and innovation and learning attitude and however small if it is sort of sop to do one thing better this week than last week can you imagine the cumulative improvement of the organization now the third thrust is really innovation and differentiation and i very much like this here because why when you hear restructuring what do you think and all you hear in the media is so many head count cards and so many what it's always cutting cutting cutting now how motivating is this for the people who are still in the organization it's terrible right i mean i've been a long-term suffering shareholder of deutsche bank there was one restructuring after another so i wonder who are the people who are still in the bank so i think god is turning around now right but lux did went the other way of course they did cost cutting but they didn't fire any of the associates um they had a hard time and i mean uh paul jones during his lecture he said i without my cfo i i wouldn't have known how to survive this i couldn't sleep because i couldn't pay payroll yeah something you think about this here and and then he went into innovation and differentiation as a cost strategy and i mean without mentioning any names i've been teaching a case study for many years on an asian resort chain this resort chain was unbelievably innovative in the 1990s and early 2000s and after that nothing happened so i thought well maybe everything that's important in a resort chain has been invented and is there but whenever you think this stop yourself is not true there's always room for innovation and this is why i was so blown away by lux hotels and resorts because they got the whole company to innovate and think and came up with this what they call r2g's reasons to go to lux and until today every resort the teams think about what could we innovate what could we do new what is exciting for our guests and the winning team in a resort then goes to mauritius to present to the board and the board then picks the winners of of those ideas that have the best potential they pilot them in a few resorts and if successful they get rolled out system-wide when you go into a luxe hotel and resort and you ask staff they tell you with gleaming eyes about cinema paradiso cafe lux the wishing tree and all the rtgs they developed why they were built in-house by the team many of them no team members who did them so it's it's an exciting story here and just to show you some this is cinema paradiso so i can ask you so what is so different between cinema paradiso and then let's say a beach movie screening in a five-star resort like a marriott or any of this big chains so what's the difference they both show a movie on the beach they have maybe music before and after they and so on now the difference is that only lux hotels and resorts has a branded experience it's called cinema paradiso they had a product development team sit down and think through exactly what this branded experience will be like so all the features all the processes and then they come up with things like oh there's an afternoon or 6 p.m show for children there's an 8 p.m show for adults for the kids we have ice cream and popcorn for the adults there's also a glass of wine there are noise cancellation wireless headsets so everyone has a great sound experience without disturbing others uh during the day uh there are very simple voting mechanisms where guests can vote what movie they want to see so they have two little glasses here with with uh with the blue and red for example post and whichever movie you want you put into this class or into that class so it's a bit of fun around how the movies are being selected so that's cinema paradiso so it is a properly developed experience so somebody sat down and really designed what should this thing look like and the other thing is then that this is rolled out um system-wide that means every staff know exactly what it is it can be explained by every staff there's language vocabulary for it there are service standards for it it can be shown on the website exactly what it is and even customers have a language so if you write something on advice on cinema paradiso it is going to be lux right and you can talk about it so that's cinema paradiso this is cafe lux actually paul jones was already [Music] retired when he was called back to become the ceo of lux and his passion was coffee so he wanted to start his own coffee chain before joining luck so he didn't do it in in as an independent chain but he started a cafe lux and you can read the text here they give it again they call it cafe lux it is again the whole thing is developed they even developed what they call island blend what they serve which is a selection of organic renowned coffee beans from three blends of arabica from 45 percent from brazil 10 from ethiopia 45 from guatemala right so there's this whole story behind the coffee and when you look at the door here at the cafe this is where the coffee is roasted on site and every afternoon i think at four o'clock you can go there and and have a look at the roast you can nibble on the different types of beans they show you how the coffee is being roasted you can smell it you can see it you can ask tons of questions and afterwards you go in front again into the cafe lux and you taste that coffee and i mean i hear a lot of stuff i forget a lot of stuff but you look at the clock there in cafe lux it is at 4 pm so i still remember when it they talked to us about it every cafe lux at every resort this clock is there and it's always 4 p.m and why it's quite cute because 4 pm is coffee time and coffee time is anytime right so you can see how again how they develop cafe lux this is the beach route that is a club at the beach and one of the team members of cafe lux went to the bar rouge which is on a rooftop in shanghai next to the peace hotel overlooking the bund so that's quite an exciting sort of light spot with nice cocktails and drinks and so on and so forth so they loved it so much that they said let's develop an exciting club for lux hotels and resorts which turned out to be then the beach rouge and it's quite exciting and as you can see and at night is quite nice they have these at least in maldives they have these jetties out into the sea they are white and illuminated from the bottom and there are these islands on this jetty coming out where people can dance and the sound system is the furthest out on this jetty and it's kind of nice you can hear the sound traveling on the sea and you can dance on these islands and if you if you're tipsy and you fall off the island there's a fishing net around every one of these islands and you can lie in this island and look up into the sky and see the moon and the stars and enjoy the music right so it's again a fully developed concept with a brand name and an innovation and what what really wowed me was that lux was dying and rather than going the cost cutting route they cut costs but the entire conversation internally was about innovation and differentiation and that is the case until today they really really are one of the most innovative resort chains i know so these are the four thrusts here and the last one is measurement incentives and feedback so we said during the revolution you focus on what ideas generated ideas implemented after the revolution is over maybe six to 12 months after you started this you go back to your standard measures so you look at at uh key measures is what um ebitda profitability is one of the key measures here and paul jones was very very adamant on on the measurement and the incentives here and he said you have to achieve two hurdle rates if you don't achieve them there's no bonus no incentive for you and these hurdle rates are number one customer satisfaction guest experience so are guests happy with with what this resort is doing if they're not happy you don't have a sound basis for the future so there's a minimum hurdle rate for guest satisfaction and the second one is staff engagement if your team is not happy how you're going to sustain anything you're doing right so guest satisfaction guest experience and and staff engagement you achieve a hurdle rate and once you achieve a hurdle rate there's sort of an increasing bonus payment that is linked to evidence to the profitability of this resort that goes up as guest experience and staff engagement team engagement is increasing yeah and paul jones he really used trip advisor to also track what's happening so every evening before he goes to bed he was looking at every resort's trip advisors posts and if there was a bad post the general manager already was expecting his call and by that time most likely they already would have addressed that issue and the result was that lux was nowhere on trip advisor i think today you can look online the lux hotels and resorts are usually number one number two number three even in highly competitive markets like maldives or mauritius so they really moved up thanks to this here and the measurement again uh they have robust external systems that are completely out of the control of the resort for measuring the guest experiences done centrally and the same for for team engagement okay so these are the four thrusts here on how to get it right so let me close here on on the lux story so again think what what did you learn from here what are some key takeaways from lux what are the key success factors in this lux service revolution what did they what did they do right and also what could have gone wrong and importantly what can you learn from lux for your own organization what ideas could you implement you

Channel: Professor Jochen Wirtz

Views: 453

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Id: Kn8htbwIb7g

Length: 30min 24sec (1824 seconds)

Published: Tue May 25 2021