Month: August 2019

Thinking about Service Excellence

In the last 18 months my mind has been on service excellence, especially when the merger between naked Hub and WeWork China completed, I finally found time to reflect.

In many ways service excellence is a very straightforward subject. Everyone knows it is a must for any business to grow, and the general consensus on this topic includes being extraordinary at every aspect of the offer, treating your customers the way you want to be treated, keeping your promises, surprising your customers (in a good way of course), and delivering beyond customers’ expectations. Yet service excellence is complicated and difficult to standardize. We have heard stories of extraordinary employees going out their way to deliver extraordinary services, but how do we ensure such excellence is the norm in an organization, how do we consistently fulfill the promises, surprise customers and deliver beyond their ever growing expectations?

Reflection 1: Articulation is the first step of any kind of excellence

For a small company of 34 people, Akiyama Carpentry Corporation generates an impressive annual revenue of 11 hundred million yen (USD104 million). The founder of the corporation, Akiyama Toshiteru, wrote in his best-selling book Training the Best that the apprentices of Akiyama School are not allowed to practice carpentry techniques before they could clearly articulate who they are and why carpentry matters to them within a minute. Danny Meyer, author of Setting the Table and one of the most successful restauranteurs in New York, explicitly expressed the importance of enunciating a founder’s vision and expectations for the business in organization, across all levels. Both legends strongly believed knowing the raison d’etre of a decision, an action, and the existence of a business is the prerequisite of anyone who can truly reach excellence, be it mastering a craft, or running a restaurant group.

Professor Julie Brownell from Cornell University believes that in order to develop service excellence, it is critical to define the very core of a business and be clear about boundaries. Leaders need to communicate this clearly to everyone in the organization without ambiguity, so that everyone knows what the priority is, what kind of behavior would be celebrated, and what should be avoided at all cost. This is even more pertinent when the company is growing and expanding every minute. Being a restauranteur, Danny Meyer calls this process “setting the table”; for many others, this is the process of nurturing a business culture.

How is culture relevant in understanding service excellence? Listen to this:

  • Service Excellence = (System) Design x Culture (Francis Frei & Anne Morriss)
  • Service is a byproduct of culture. (Alfred Lin, former CFO of Zappos)

When I joined WeWork a year ago I was not totally convinced about the company’s culture. Over the years I have had developed an allergy towards any kind of “-ism” and “spirituality”, it just didn’t resonate with me naturally when I heard this company talking about impact and consciousness so much. But as days go by, my skepticism dwindled. WeWork bound employees around the world with sense of mission and shared purpose. There are monthly newsletters to collect staff feedback from all levels, across all offices. In every city there is at least one “Impact Lead” who organizes community outreach initiatives. Each year the company gathers everyone (except for those who have to stay behind to hold the fort) to one place for three days to share, connect, exchange, and be aligned about the company’s directions and strategies. When you understand how a decision is made, and why a decision is made, you are more likely to welcome that decision and execute it better. 

Reflection 2: You don’t have to be excellent at everything to achieve excellence. 

Harvard Business School professors Frances Frei and Anne Morriss raised an interesting point in their book Uncommon Service: for a business to excel, it must concurrently be bad at something. In other words, the business must understand that when targeting a particular market segment, what service attributes matter the most, and what can be trade-offs. Deciding where to be good and where to be bad is often a hard decision that takes both courage and insights.

Many would choose to play it safe by attempting to be good at everything instead of focusing all attention to resolving customers’ real pain points, because they are convinced the consequence of having anything “bad” would be unthinkable. I was one of them. At my previous position prior to naked Hub, I was responsible for several high-profile events. At these events, what my team and I were most proud of was that we truly cared about every stakeholder’s experience, be it athletes, officials, sponsors, spectators, and volunteers, be it accommodation, travel, parking, viewing, catering, merchandising, etc. We wanted to give everyone the best thing possible, at the lowest cost possible, because I still had a budget to watch and a projection to hit. It ended up making our team very stretched, and for a long time we were far too dependent on our army of interns. If I had read Uncommon Service back then, I would have plucked up the courage and made a couple of trade-offs. This would most definitely have enabled my team to make several elements world-class (and not just better than the 2nd place) and equally importantly prevented burnout. 

Reflection 3: Service vs Hospitality – a monologue vs a dialogue

That said, it is worth noting that the “bad” Frei and Morriss referred to is limited to the product offering (tangible and intangible), never the human interactions. For instance, Commerce Bank has the worst interest rate, Southwest Airlines has limited network, Walmart’s stores are not brightly lit, Zappos’ shoe prices are not necessarily the lowest… But when it comes to human interaction, these companies are second to none. They didn’t just win business, they won hearts and loyalty.

That human interaction is hospitality.

Contrary to the general impression that hospitality is for hotels and restaurants only, the truth is it should be ubiquitous. Cambridge English Dictionary defines hospitality as “the friendly act of welcoming guests and visitors”. It is impossible to talk about service excellence without touching upon hospitality, for the latter is how we treat each other – our peers, our customers, the community we belong to, the suppliers we rely on, and the investors who believe in us.

With regard to the nuances between service and hospitality, Danny Meyer wrote:

“Service is the technical delivery of a product. Hospitality is how the delivery of that product makes its recipient feel. Service is a monologue – we decide how we want to do things and set our own standards for service. Hospitality, on the other hand, is a dialogue.”

When naked Hub merged with WeWork China, I noticed that although both brands emphasized hospitality, there were two versions of interpretations. Riding on the success of its award-winning resorts, hospitality in naked Hub was demonstrated in elaborate arrangements of amenities, seasonal food offerings, and courteous interactions, hospitality there meant thoughtfulness, and the purpose of hospitality was to please. In WeWork, hospitality accentuates the interactions with members, i.e. the celebrations of every milestone: move-ins, birthdays, anniversaries, festivals, etc. Built on the ideation of community, the purpose of hospitality here in WeWork is to establish connections.

Reflection 4: Employees first from the beginning to the end 

 In Setting the Table, Danny Meyer attributed his success to “Enlightened Hospitality”, which is the sequence of priorities that he follows – first the employees, followed by customers, then the community, the suppliers, and at the last – investors. Some may question the logic and/or practicality of this concept, but here is a fact to ponder over – in the US 90% of restaurants fail in the first year, and the average lifespan of restaurant is five years. Danny Meyer first opened Union Square Café in 1985, he then went on to open eight other establishments including the international chain Shake Shack and a catering company. All of these businesses are still going strong, three decades later. He must have got something right.

Professor Julie Brownell repeatedly reminded service leaders that employee care is a key aspect for any business that wishes to foster a culture of service excellence. Prioritizing employees before customers enables an individual to reach his/her potential, improves customer satisfaction, and reduces staff turnover.

Frei and Morriss believed that an employees-first policy should start from the very beginning – selection and job design. Just like how businesses need to understand what customers care for the most when designing a product, organizations also need to understand what qualities are most critical when hiring employees. Danny Meyer and his team only recruit “51 percenters”- those who possess 49% technical knowledge and 51% innate emotional skills. He is very clear about the five emotional skills that each employee must possess. Some companies set up unusual selection processes to ensure they get who they want. For instance, Southwest Airlines brought in candidates groups and when one is asked to share his/her most embarrassing moment, recruiters would observe the other applicants. Only those that demonstrated empathy would be hired. Zappos’ month-long vigorous training is also a filtering process. Those who are not aligned with the company’s values would be paid to drop out early. These mechanisms not only help to ensure companies are hiring the best fit for the role, but will also reduce the company cost on replacing and retraining employees down the road.

I’m pleased to report WeWork introduced a series of employees-first initiatives: from the revamped new hire orientation program “NiHao Creator”, to the community immersion program fostering understandings and empathy; from online classes on personal development in collaboration with Harvard Business School, to the exchange program encouraging the sharing of best practices. These exercises ensure employees are not only the best fit when they are hired, but also offer opportunities for the staff to grow together with the company and continue to be the best fit.

Alexander Den Heijer once said, “When a flower doesn’t bloom, you fix the environment in which it grows, not the flower”. The biggest myth in service excellence is that it relies on few superstars to provide great service to customers, while it may be an admirable ambition for an individual but is hardly scalable nor sustainable for the company. However, Akiyama Toshiteru and Danny Meyer’s successes proved service excellence can be normalized and be “profitable, sustainable, and scalable”, like Frei and Morriss concluded from their studies.

“Excellence is never an accident, it’s the result of high intention, sincere effort, intelligent directions, and skillful execution. And the vision to see obstacles as opportunities”, I don’t know who said it, but whoever said it must be wise. 

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