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argit's three Tom Stewart and Patricia O'Connell and we're going to talk up to
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them about their book Wow and win service design strategy and the art of customer delight Tom and Patricia thank
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you so much for joining us today on knowledge at Wharton thank you for having us delighted to be here McCool
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great but maybe we can start with you Patricia for the first question what inspired you to write this book I
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confess I had never heard of service design until four years ago and I was working with a client at the Savannah
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College of Art and Design and they started talking about service design classes and I said what's that and they
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said service design is when we teach people how to imagine and think through and then design a customer experience
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they said people think about user experience there's been a lot of emphasis on user experience because of
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all the emphasis on things going online but they said when you walk into a restaurant you walk into a hotel you
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interact with a company you go into the lobby of a business every step of that interaction between you and that company
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that brand of that business needs to be designed in order to give you a satisfactory customer experience and I
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thought this is absolutely fascinating and I started looking around and I realized that there was not a lot
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written on that for for the service market there's a lot about design from manufacturing and I realized that there
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was really a gap here too to connect the idea of service to strategy and that's
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part of where Tom came in and what inspired me to write the book was Patricia obviously no but seriously one
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of the things that's really interesting is when you think about it and particularly in service businesses and
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you know that a lot of what we know about management comes from automobile assembly plants
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and your Deming and and and and Frederick Taylor and and and and all of that but but when it comes to a service
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these things need to be can be should be designed as carefully as products are and when you think about it estate this
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is also this is the strategy connection that's the differentiation really and
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more and more studies are starting to show this that the differentiation is not the product or the service per se
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it's not price it's the experience you have what it's like to go into that restaurant what
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it's like to work with that law firm and it goes from from you know B to B the B
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to C and and in all areas and it also connects to what it's like to go to that
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auto dealership and and that what it's like I mean that's the strategic point
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and by the way that's really hard to copy I can match you on price and I can
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match you on how many thread counts are on the sheets in the hotel but what it's
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like is is is is a different is a strategic point of strategic differentiation that's hard to be I'd
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like to come back to the question of strategy in a bit but what you said reminded me of something really
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fascinating that I read right at the beginning of your book you start with this astonishing fact that most
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companies are not set up to design service as well and I was wondering why not well you know I think it's partly that
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in many respects this first of all the discipline is relatively new and the idea of I'm just in the management
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literature managing services has been done by analogy with managing manufacturing for a long time
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so I think that's part of it but I think at Patricia pick on this to pick up on
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this because you're really smart about it and so much of what companies do is
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about organizing internal operations but when it comes to services the act of production is with the customer it's not
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in the factory and then we hand it to the customer so the act of production has the girl right there with me when it
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happens the customer is co-creating the experience one thing we like to say is products are about handoffs services are
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about handshakes a service requires the participation of both parties and that is a very different thing than what we
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know about products and manufacturing and that's why there has been so little
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written about it and also this shift in our economy now such that 80% of our economy is
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services based now recognize that that is everything other than agricultural agriculture manufacturing and mining so
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that really is just about everything people have multiple interactions with every day whether it's b2b b2c whether
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it's something mundane getting a cup of coffee whether it's something really
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important calling your insurance company I mean I can't even imagine what how
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hard it must be for the insurance companies right now to try to deliver good customer experiences to you know
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the poor people in in Texas and and people so often confuse customer service with customer experience and those are
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two very very different things customer service is something you do usually it's
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designed around once something has gone wrong customer experience is the totality of my interaction with you from
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the moment I first come across your your name whether I google you know a service
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that I'm looking for whether someway an ad on television yeah yeah to when I'm
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done whenever our our business is finished you hear a lot about things like design
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thinking these days or industrial design manufacturing design or designing user experiences what is how do you separate
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service design from some some of these other buzz words that you hear about design it is that helping everybody
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integrate them I mean but but but I think that's one of the things that that's interesting and in fact you know
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Tim Brown of idea when we were talking to him said that if you think about it the ATM which is 50 years old this year
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was one of the first cases where people had to design in a thoughtful way how the customer interacted with in this
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case the user interface of an ATM before that the user interface of the bank was
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you know this smiling teller behind the cage and that person did all the touching and computer jet you know all
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the work with the bank systems so so design thinking is a way of approaching problems
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dust reel design is a way of course of making beautiful and functional designs and service design takes someone takes
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design thinking and take some of the same sort of aesthetic if you will of of industrial design but says how do we use
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that to apply to this train journey this ATM experience this you know how to what
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what are we trying to convey with the look and feel of what's happening in our
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interaction in the store and in the office or whatever it might be and actually something we include in service
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design is also service delivery because design with that the ability to execute on it is really meaningless that's part
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of that handshake yeah so in the course of the researching and writing the book which you have some of the companies
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that you encounter that are really good at this could you offer some examples and what can others learn from their
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experience eyes I think there are a few well there were many terrific companies that we wrote about ranging from you
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know strict services companies a company like Weber shadow collectors of PR and strategic communications company to
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Warby Parker you can started by you Pentagon's you know with the eyeglasses but one of the classic examples we use
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to explain service design really quickly is Starbucks versus Dunkin Donuts who's the Starbucks person who's a
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Dunkin Donuts person and people usually have a very strong preference and ostensibly they're both selling the same
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thing they're selling coffee but that's really not what they're selling they're
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selling two very different experiences Duncan is a grab-and-go there's a reason
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the slogan is America runs on Dunkin you know the logo is is very hot hot pink hot green Starbucks is much more
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designed about being relaxed and leisurely it's not for the person who who wants to get up and go and you know
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there were there were new companies like stitch fix which which even since we wrote the book has evolved at the time
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that we were doing the book it only did women's clothing it now includes men
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Edmonds the the car buying service which has evolved so much there a great example of a company that has
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just kept on evolving they started as you know almost a blue book yeah we also we also looked at an airline serf air
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which is a subscription all you call you can fly air service on on the west coast
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in California we look at a hospital system theta care in northern Wisconsin some of the trickiest I mean we all know
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how badly the design of medical care services is and these guys applying the Toyota Production system have actually
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redesigned hospital service so we looked across a whole a whole spectrum and and
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and but this the Starbucks Duncan example is wonder who even we're talking to an audience in Seattle once and asked
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for show of hands who's a Duncan person is the star effects person you know one
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person but if you think about it it's really interesting you know at Starbucks
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the seating is right back and it Dunkin their little stools if there's anything
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at all so these are examples of how you're selling coffee you're selling
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better than average coffee but what you're doing is creating two very different experiences and people are in
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one camp or the other they're not very many people who say whichever is closest
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that's they have a preference and that preference is because the experience is
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different and it's designed that way very very consciously on both sides I think one of the fun things that we also
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discovered intuitively we believed this but our research bored out was that the principles of service design hold across
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whether it's b2b b2c and across industries I'm glad you mentioned the principles because that's exactly what I
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wanted to come to next so you identify for among all the examples they gave that there are some common principles
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that these companies seem to follow which makes them good at designing effective services or service
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experiences and you start with you take the odd numbers and I'll take the okay
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all right and you start with the first which is that the customer is always right
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yeah or and and that but you to make sure the customer is right for you yes could you let's talk about that because
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there's this idea it's it's one of the first cliches anyone ever worked in a shop in service of any
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kind years that the customer is always right and you know something that's really not true
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if I go to McDonald's I have no business asking for a hamburger medium rare that's not what they are designed to do
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I am the wrong customer maybe just at that moment there are times I'm perfectly happy to go to McDonald's and
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get what's on the menu but if I want something very specific and custom-made
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that's not the place for me to go if I want a luxury shopping experience I should not go to t.j.maxx just as if I'm
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looking for a bargain I shouldn't go to Barneys so in those circumstances I'm not the
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right customer and it is incumbent upon both the customer and the company to ensure and that's part of that
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co-creation we were talking about is first of all companies have have to do two things they have to decide who the
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right customer is and be diligent about serving those customers well and they also have to be good about communicating
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who they are and that's with everything from their branding to the way they look
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to the experience that you have when you go on their website whether or whether you go into their store the people you
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encounter you know there's a very different feel when you walk into a Hyatt Regency versus an Andaz which is
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another high brand Andaz is there hip you know sleeker brand where everyone sort of dressed in black and someone's
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going to check you in with an iPad go into the Hyatt Regency and there's going
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to be a big ornate desk and you know people in sort of old-fashioned uniforms and those are two different experiences
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if I'm looking for this sleek hip I want to feel so so cool I shouldn't be at the
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Hyatt Regency I'll get a very different kind of experience it'll be a luxury
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experience but it'll be very different so so customers then also have to understand what they are buying and they
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need to understand that they should only they need to recognize whether or not they are the right customer in a given
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situation so what you just said reminds me a lot of some very interesting research that has been going on at
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Wharton in the marketing department led by Professor Peter fader on customer centricity who we introduced the book
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and he actually does he makes that point that you know customer centricity part partly depends on your own center of
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gravity to that you want to find the right thing we were talking to some people who want professional services
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for them actually we did we didn't listen many survey of some professional services firms and one of the things
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they said is a big problem is that they are lured from their sweet spot by clients who ask them to do things that
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aren't because they want to be customer centric but they're sort of getting the
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customers putting them on the wrong foot and and it's hard to say now our second
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principle which is is is don't surprise and delight just delight is is sort of
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expands or sort of it is another turn of the crank around around that idea and one of the things we we realized is that
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the people say surprise and delight surprising lies right what are you you know our point is focus on delight and
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delight is meeting expectations every time now if you wanna put up you know maraschino cherry on top of the sundae
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fine but get the sundae right and and the problem with that surprise and delight thing is it starts putting the
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monkey on the individual employees back and it doesn't focus on reliably robustly delivering on those promises
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that you make and that your customer expects I think it's Francis Frye at Harvard Business School who's now a new
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bird that's right that's right who says that that that if you're doing this
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you're creating sort of your almost institutionalizing the inability to do what you what your customers expect
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constantly and so that's our second principle the third principle is great service should not require heroics
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either on the part of the employee or the customer so this then is an extension of what you were just talking
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about so it's about consistency and when I'm delivering a service so now I'm in
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the company's seat I need to know what I'm doing it I should be able to do it
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repeatedly scalably and profitably and when you start requiring the heroics it means that something has gone wrong with
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the design look I'm not talking about emergency situations of course you deal
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with emergency situations but if you find yourself constantly running around you know like the fire alarm has just
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gone off something is wrong you were either not designing your services properly you're not communicating the
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expectations appropriately to the customers or you are being lured away from your sweet spot and then that's a
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strategy problem so these heroics are an indication to you of something's wrong now from the
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customers perspective it should not be impossible for me to get what you promised me
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and again when when you see consistent customer complaints that's also a signal
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to you we call those we have our moments that our moment is you know when a customer knows that they're in good
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hands and they know that they are in your hands you know don't just do it owl
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the owl moments are so the owl moments are the things that companies eat to look at those are the things that
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customers complain about and that is a signal that something is wrong either for some reason you are attracting the
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wrong customers or you are you don't have your services designed in such a way that it's easy for customers to get
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what they want need and have a right to expect from you is easy to do business with right I mean it's a simple question
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and most companies don't actually systematically ask it and what is an aha moment an aha moment is when I get it I
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as the Excel or save aha I know how this works I see the pain point I see the ah moment
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I know how to fix the pain point I know how to create the aha moment I understand what we're trying to do here
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and how to design it this is getting complicated in a world of omni-channel on the one hand this is the fourth press
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difference the fourth principle is that you've got to be able to deliver to your
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clients or customers at every point on the journey and in every channel so whether I'm on the web on the phone
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in their store it should feel like I'm in your hands and this what people are
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now sometimes trying to call even a post channel world is is is critical and we see all kinds of companies screwing up
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and in some cases it's because by the way they're still dealing with old
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computer stacks that and the middleware isn't very good sometimes it's simply a
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technical issue sometimes it's an issue of silos and failure to make handoffs
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classically for a long time it's been an issue of the analog guys and the web
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guys who just don't connect and that's complicated even more because it's not
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just the stuff under my control as a seller but in service environments I'm usually working in an ecosystem it's bad
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enough what the airlines can do to me but then add tsa the airport's the traffic you know the transportation
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system to the airport you know there's a whole ecosystem built around these things and so even one of the biggest
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challenges in service design is to work with ecosystem partners where you may not have authority but to try to sort of
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collectively work together to create an experience that you all want to create for the customers you want to serve and
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should we talk about the fifth principle the fifth principle is you're never done
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and that's really important because it's not a static thing people's expectations
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will change products will change markets will change your strategy will change and you've got to adapt to those things
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and there's a fine line between you're never done and as we were saying distorting yourself outside your sweet
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spot so that you're no longer recognizable as to who you are and and that's why it really does come down to
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service design needs to be part of the strategic fabric of the company all these decisions about service you know
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too often as we say it's lumped in with with customers the customer service department which is not sufficient or
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people think that only is a function of marketing and marketing is certainly a department that has responsibility for
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helping to create the notion of what that brand promise is but strategy is about deciding what that brand promise
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is going to be there's another thing about this innovation point which is that it's another difference between
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products and services right in products you know it's guy roll gear loose in the
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lab with the white coat then I mean innovation takes place in a place general you know in a lab but in
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services innovation can take place all across the value chain so how do you manage it how do you keep it coherent so
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they're not running off in different directions and how do you sort of give these sort of innovation skills to
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people who may not actually think of themselves as being innovators so that's
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a really interesting organizational and strategic question is the management of innovation and services which is
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different from that in Provence I wonder we could know more deeply into the relationship you see between strategy
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and service design how can doing service design will help you develop a really strong competitive strategy that can
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take you forward you know we we created in the book a set of nine archetypes and
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they're basically expressions of value propositions so one of the archetypes is
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the trend setter you know we're we are the apple of whatever industry is another is the bargain we're the Walmart
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of whatever industry is another is the classic we're the best you know we're
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the Mercedes of the Cadillac of whatever is and there are nine of them and you can find almost all of them in every
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industry but if you think about these archetypes as expressions of a value proposition that means they are actually
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sort of they're our strategy our strategy is to be the safe choice our strategy is to be the best whatever it
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is and these sort of help you envision then you know value proposition and strategy are pretty closely related
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right these help you envision what how we're going to take the value proposition and manifest it in the
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experience customers have and also in the tangible evidence of that experience the look and feel the things that
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customers can look at and say yes that's what this is going to be and I think
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when you're there you know that's really a strategic conversation and having one
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of those archetypes in mind it helps you I mean strategies partly the art of saying no right what you're
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not doing and the customers you're not serving and and having those archetypes
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in minds help you think helps you think now this this isn't us but this is us we
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can do this and this is what it means for the organization as a whole and for the customers we seek wonder if you
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could tell us a little bit about what are the biggest mistakes you find companies make in coming up with service
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design what did you find in your research well I will say one of the things we did do is we tried to focus a
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lot on the companies who were doing it right which isn't to say that there are
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only happy stories out there there are a lot of companies that aren't doing it
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right but I think a few of the things that we all see just from our own experiences on a day-to-day basis is
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people just they just don't walk in the customer shoes literally you know try to
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be your own customer that's that's part of how you find out if you're easy to do
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business with people just don't think it through you know crazy things that you'll see that that just makes no sense
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that why is why do I have to walk from here to there to get something done when when logic would flow that I need to
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only go from here to there it's not even about all the things I'm going to do
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from here to there it's just it's just a waste of my time it's and it's they also again they're
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not firm enough about their strategy and I think the biggest mistake though and I
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think this is one of the really fundamental things we've tried to do with the book is help companies feel
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empowered I think in an age of social media and it's too easy for customers to
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just go online and tweet you know I've had a really bad experience with with X
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and such and then so many customer service goes oh my god we better reach out to this per
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because there's going to be what if this goes viral companies need to feel empowered to be able to make these
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strategic decisions I think Patricia's mentioned it several times one of the biggest mistakes
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companies make is they confuse customer service I'm calling up I got a problem
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with customer experience and and and you know customer service is at the end and
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that's anymore it's important to make a good last impression but but that's
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that's you know failing to see the whole customer journey and as Patricia said to
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walk in the customers shoes and then failing to to make that as coherent as possible I think those are the are two
00:25:07
of the two of the biggest mistakes that we see companies make another way of looking at it as we mentioned five
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principles you know and it's the it's the violation of those five principles
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you know saying yes to everything every customer asks you asks you to do you know not being coherent not being
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innovative you know requiring heroic efforts or making your customers work you are those
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are the you know those principles the flipside of those principles is what we see too darn many companies doing all
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the time bettan focus on surprise instead of delight you know I ask why should good service be a surprise now if
00:25:44
companies want to become better at service design what advice would you give them how can they become better at
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this I think they need to be willing to be honest with themselves it is a gut check and it's not always pretty and I
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think they really need to make sure that it is going into the really decision level making of the organization we had
00:26:13
a we created a little equation in blue bow and win and that's that customer delight is the product of the customers
00:26:23
experience and technical excellence experience times excellence and we put five points under each one of those
00:26:30
things empathy and engineering and and the economics of it and created a quiz I mean you can pay a report card so so I
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think too you know being honest with yourself sometimes requires let's sit down and audit and
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that report card is a way to audit and you can sit down and you can take it within a management team take it with a
00:26:54
diagonal slice of the organization ask some of your customers or clients to rate you and then you can get you can
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get a report card and from there you can begin to say this is what's wrong another thing is this idea of charting
00:27:11
the customer journey you know have we looked at that journey and what's gonna
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happen what is my customer experiencing at each what do we want the whole journey to be like the classic the
00:27:23
bargain what do you want the whole journeyed to be like and what's happening at the key moments along that
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if you can do those two things audit and map and we're good start and when you're
00:27:33
mapping you have to map both on stage and off stage if you will you know what the customer sees what the customer
00:27:40
experiences and then what's happening offstage to make that possible or to screw it up they say I'd like to focus
00:27:47
on the positive one last question that is are there any questions that you wanted to answer in this book but you
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didn't get to so well but what's coming up next know that you have done this I think
00:28:03
something we realized is that the principles also apply internally as strongly as they do externally and I
00:28:12
think it would it will be really interesting to explore it from the from the inside perspective as opposed to the
00:28:21
outside perspective because your employees are stakeholders as well you know this was focused mostly on the
00:28:29
external stakeholders but I think we'd like to focus more on the internal stakeholders and creating how to create
00:28:35
a good service culture yeah and you know Jean Meister is doing some interesting stuff on the employee experience and if
00:28:42
you think about the employee experience and the customer experience and think about that point that Patricia made that
00:28:48
services are handshakes so an employee or a group of employees is interacting you know so looking
00:28:55
those two sides the cult a culture that creates a great experience and a great experience that then feeds off of that I
00:29:04
think that's something that we that we would like to learn a lot in fact you
00:29:08
might find that one leads to the other precisely very happy employees will automatically yes that old research on
00:29:18
the service value chain suggests that and then if you think about that in conjunction with this idea of experience
00:29:25
who that gives you a whole new way to think about that classic insight well Tom Patricia thank
00:29:34
you so much for speaking with knowledge at working about your book this has been
00:29:38
a great experience angle yes exactly thank you thank you thank you very much [Music]
00:29:58
you