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argit's three Tom Stewart and Patricia
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O'Connell and we're going to talk up to
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them about their book Wow and win
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service design strategy and the art of
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customer delight Tom and Patricia thank
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you so much for joining us today on
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knowledge at Wharton thank you for
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having us delighted to be here McCool
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great but maybe we can start with you
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Patricia for the first question what
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inspired you to write this book I
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confess I had never heard of service
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design until four years ago and I was
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working with a client at the Savannah
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College of Art and Design and they
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started talking about service design
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classes and I said what's that and they
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said service design is when we teach
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people how to imagine and think through
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and then design a customer experience
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they said people think about user
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experience there's been a lot of
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emphasis on user experience because of
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all the emphasis on things going online
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but they said when you walk into a
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restaurant you walk into a hotel you
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interact with a company you go into the
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lobby of a business every step of that
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interaction between you and that company
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that brand of that business needs to be
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designed in order to give you a
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satisfactory customer experience and I
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thought this is absolutely fascinating
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and I started looking around and I
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realized that there was not a lot
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written on that for for the service
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market there's a lot about design from
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manufacturing and I realized that there
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was really a gap here too to connect the
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idea of service to strategy and that's
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part of where Tom came in and what
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inspired me to write the book was
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Patricia obviously no but seriously one
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of the things that's really interesting
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is when you think about it and
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particularly in service businesses and
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you know that
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a lot of what we know about management
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comes from automobile assembly plants
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and your Deming and and and and
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Frederick Taylor and and and and all of
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that but but when it comes to a service
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these things need to be can be should be
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designed as carefully as products are
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and when you think about it estate this
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is also this is the strategy connection
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that's the differentiation really and
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more and more studies are starting to
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show this that the differentiation is
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not the product or the service per se
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it's not price
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it's the experience you have what it's
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like to go into that restaurant what
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it's like to work with that law firm and
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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
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connects to what it's like to go to that
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auto dealership and and that what it's
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like I mean that's the strategic point
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and by the way that's really hard to
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copy I can match you on price and I can
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match you on how many thread counts are
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on the sheets in the hotel but what it's
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like is is is is a different is a
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strategic point of strategic
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differentiation that's hard to be I'd
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like to come back to the question of
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strategy in a bit but what you said
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reminded me of something really
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fascinating that I read right at the
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beginning of your book you start with
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this astonishing fact that most
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companies are not set up to design
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service as well and I was wondering why
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not
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well you know I think it's partly that
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in many respects this first of all the
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discipline is relatively new and the
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idea of I'm just in the management
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literature managing services has been
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done by analogy with managing
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manufacturing for a long time
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so I think that's part of it but I think
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at Patricia pick on this to pick up on
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this because you're really smart about
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it and so much of what companies do is
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about organizing internal operations but
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when it comes to services the act of
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production is with the customer it's not
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in the factory and then we hand it to
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the customer so the act of production
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has the girl right there with me when it
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happens the customer is co-creating the
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experience one thing we like to say is
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products are about handoffs services are
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about handshakes a service requires the
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participation of both parties and that
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is a very different thing than what we
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know about products and manufacturing
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and that's why there has been so little
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written about it and also this shift in
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our economy
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now such that 80% of our economy is
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services based now recognize that that
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is everything other than agricultural
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agriculture manufacturing and mining so
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that really is just about everything
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people have multiple interactions with
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every day whether it's b2b b2c whether
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it's something mundane getting a cup of
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coffee whether it's something really
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important calling your insurance company
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I mean I can't even imagine what how
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hard it must be for the insurance
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companies right now to try to deliver
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good customer experiences to you know
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the poor people in in Texas and and
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people so often confuse customer service
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with customer experience and those are
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two very very different things customer
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service is something you do usually it's
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designed around once something has gone
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wrong customer experience is the
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totality of my interaction with you from
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the moment I first come across your your
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name whether I google you know a service
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that I'm looking for whether someway an
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ad on television yeah yeah to when I'm
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done
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whenever our our business is finished
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you hear a lot about things like design
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thinking these days or industrial design
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manufacturing design or designing user
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experiences what is how do you separate
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service design from some some of these
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other buzz words that you hear about
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design it is that helping everybody
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integrate them I mean but but but I
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think that's one of the things that
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that's interesting and in fact you know
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Tim Brown of idea when we were talking
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to him said that if you think about it
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the ATM which is 50 years old this year
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was one of the first cases where people
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had to design in a thoughtful way how
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the customer interacted with in this
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case the user interface of an ATM before
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that the user interface of the bank was
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you know this smiling teller behind the
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cage and that person did all the
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touching and computer jet you know all
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the work with the bank systems so so
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design thinking is a way of approaching
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problems
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dust reel design is a way of course of
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making beautiful and functional designs
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and service design takes someone takes
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design thinking and take some of the
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same sort of aesthetic if you will of of
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industrial design but says how do we use
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that to apply to this train journey this
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ATM experience this you know how to what
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what are we trying to convey with the
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look and feel of what's happening in our
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interaction in the store and in the
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office or whatever it might be and
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actually something we include in service
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design is also service delivery because
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design with that the ability to execute
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on it is really meaningless that's part
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of that handshake yeah so in the course
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of the researching and writing the book
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which you have some of the companies
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that you encounter that are really good
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at this could you offer some examples
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and what can others learn from their
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experience eyes I think there are a few
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well there were many terrific companies
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that we wrote about ranging from you
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know strict services companies a company
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like Weber shadow collectors of PR and
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strategic communications company to
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Warby Parker you can started by you
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Pentagon's you know with the eyeglasses
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but one of the classic examples we use
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to explain service design really quickly
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is Starbucks versus Dunkin Donuts
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who's the Starbucks person who's a
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Dunkin Donuts person and people usually
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have a very strong preference and
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ostensibly they're both selling the same
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thing they're selling coffee but that's
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really not what they're selling they're
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selling two very different experiences
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Duncan is a grab-and-go there's a reason
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the slogan is America runs on Dunkin you
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know the logo is is very hot hot pink
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hot green Starbucks is much more
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designed about being relaxed and
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leisurely it's not for the person who
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who wants to get up and go and you know
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there were there were new companies like
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stitch fix which which even since we
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wrote the book has evolved at the time
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that we were doing the book it only did
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women's clothing it now includes men
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Edmonds the the car buying service which
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has evolved so much there
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a great example of a company that has
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just kept on evolving they started as
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you know almost a blue book yeah we also
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we also looked at an airline serf air
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which is a subscription all you call you
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can fly air service on on the west coast
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in California we look at a hospital
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system theta care in northern Wisconsin
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some of the trickiest I mean we all know
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how badly the design of medical care
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services is and these guys applying the
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Toyota Production system have actually
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redesigned hospital service so we looked
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across a whole a whole spectrum and and
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and but this the Starbucks Duncan
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example is wonder who even we're talking
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to an audience in Seattle once and asked
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for show of hands who's a Duncan person
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is the star effects person you know one
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person but if you think about it it's
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really interesting you know at Starbucks
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the seating is right back and it Dunkin
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their little stools if there's anything
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at all so these are examples of how
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you're selling coffee you're selling
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better than average coffee but what
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you're doing is creating two very
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different experiences and people are in
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one camp or the other they're not very
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many people who say whichever is closest
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that's they have a preference and that
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preference is because the experience is
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different and it's designed that way
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very very consciously on both sides I
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think one of the fun things that we also
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discovered intuitively we believed this
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but our research bored out was that the
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principles of service design hold across
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whether it's b2b b2c and across
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industries I'm glad you mentioned the
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principles because that's exactly what I
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wanted to come to next so you identify
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for among all the examples they gave
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that there are some common principles
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that these companies seem to follow
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which makes them good at designing
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effective services or service
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experiences and you start with you take
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the odd numbers and I'll take the okay
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all right and you start with the first
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which is that the customer is always
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right
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yeah or and and that but you to make
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sure the customer is right for you yes
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could you let's talk about that because
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there's this idea it's it's one of the
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first cliches anyone
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ever worked in a shop in service of any
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kind years that the customer is always
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right and you know something that's
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really not true
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if I go to McDonald's I have no business
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asking for a hamburger medium rare
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that's not what they are designed to do
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I am the wrong customer maybe just at
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that moment there are times I'm
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perfectly happy to go to McDonald's and
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get what's on the menu but if I want
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something very specific and custom-made
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that's not the place for me to go if I
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want a luxury shopping experience I
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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
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Barneys
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so in those circumstances I'm not the
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right customer and it is incumbent upon
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both the customer and the company to
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ensure and that's part of that
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co-creation we were talking about is
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first of all companies have have to do
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two things they have to decide who the
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right customer is and be diligent about
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serving those customers well and they
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also have to be good about communicating
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who they are and that's with everything
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from their branding to the way they look
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to the experience that you have when you
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go on their website whether or whether
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you go into their store the people you
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encounter you know there's a very
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different feel when you walk into a
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Hyatt Regency versus an Andaz which is
00:12:22
another high brand Andaz is there hip
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you know sleeker brand where everyone
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sort of dressed in black and someone's
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going to check you in with an iPad go
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into the Hyatt Regency and there's going
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to be a big ornate desk and you know
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people in sort of old-fashioned uniforms
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and those are two different experiences
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if I'm looking for this sleek hip I want
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to feel so so cool I shouldn't be at the
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Hyatt Regency I'll get a very different
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kind of experience it'll be a luxury
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experience but it'll be very different
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so so customers then also have to
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understand what they are buying and they
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need to understand that they should only
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they need to recognize whether or not
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they are the right customer in a given
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situation so what you just said reminds
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me a lot of some very interesting
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research that has been going on at
00:13:10
Wharton in the marketing department led
00:13:13
by Professor Peter fader on customer
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centricity who we introduced the book
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and he actually does he makes that point
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that you know customer centricity part
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partly depends on your own center of
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gravity to that you want to find the
00:13:29
right thing we were talking to some
00:13:31
people who want professional services
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for them actually we did we didn't
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listen many survey of some professional
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services firms and one of the things
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they said is a big problem is that they
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are lured from their sweet spot by
00:13:42
clients who ask them to do things that
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aren't because they want to be customer
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centric but they're sort of getting the
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customers putting them on the wrong foot
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and and it's hard to say now our second
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principle which is is is don't surprise
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and delight just delight is is sort of
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expands or sort of it is another turn of
00:14:05
the crank around around that idea and
00:14:07
one of the things we we realized is that
00:14:10
the people say surprise and delight
00:14:13
surprising lies right what are you you
00:14:15
know our point is focus on delight and
00:14:18
delight is meeting expectations every
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time now if you wanna put up you know
00:14:24
maraschino cherry on top of the sundae
00:14:27
fine but get the sundae right and and
00:14:31
the problem with that surprise and
00:14:32
delight thing is it starts putting the
00:14:34
monkey on the individual employees back
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and it doesn't focus on reliably
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robustly delivering on those promises
00:14:43
that you make and that your customer
00:14:45
expects I think it's Francis Frye at
00:14:50
Harvard Business School who's now a new
00:14:52
bird that's right that's right who says
00:14:56
that that that if you're doing this
00:14:58
you're creating sort of your almost
00:15:03
institutionalizing the inability to do
00:15:05
what you what your customers expect
00:15:08
constantly and so that's our second
00:15:10
principle the third principle is great
00:15:15
service should not require heroics
00:15:17
either on the part of the employee or
00:15:19
the customer so this then is an
00:15:21
extension of what you were just talking
00:15:23
about so it's about consistency and when
00:15:28
I'm delivering a service so now I'm in
00:15:30
the company's seat I need to know what
00:15:34
I'm doing it I should be able to do it
00:15:36
repeatedly scalably and profitably and
00:15:40
when you start requiring the heroics it
00:15:43
means that something has gone wrong with
00:15:45
the design look I'm not talking about
00:15:48
emergency situations of course you deal
00:15:49
with emergency situations but if you
00:15:52
find yourself constantly running around
00:15:54
you know like the fire alarm has just
00:15:56
gone off something is wrong you were
00:15:58
either not designing your services
00:16:00
properly you're not communicating the
00:16:02
expectations appropriately to the
00:16:03
customers or you are being lured away
00:16:05
from your sweet spot and then that's a
00:16:08
strategy problem
00:16:09
so these heroics are an indication to
00:16:11
you of something's wrong now from the
00:16:13
customers perspective it should not be
00:16:15
impossible for me to get what you
00:16:17
promised me
00:16:18
and again when when you see consistent
00:16:22
customer complaints that's also a signal
00:16:24
to you we call those we have our moments
00:16:28
that our moment is you know when a
00:16:30
customer knows that they're in good
00:16:33
hands and they know that they are in
00:16:34
your hands you know don't just do it owl
00:16:37
the owl moments are so the owl moments
00:16:40
are the things that companies eat to
00:16:42
look at those are the things that
00:16:44
customers complain about and that is a
00:16:46
signal that something is wrong either
00:16:47
for some reason you are attracting the
00:16:49
wrong customers or you are you don't
00:16:52
have your services designed in such a
00:16:54
way that it's easy for customers to get
00:16:56
what they want need and have a right to
00:16:59
expect from you is easy to do business
00:17:01
with right I mean it's a simple question
00:17:03
and most companies don't actually
00:17:05
systematically ask it and what is an aha
00:17:07
moment an aha moment is when I get it I
00:17:12
as the Excel or save aha I know how this
00:17:15
works
00:17:15
I see the pain point I see the ah moment
00:17:18
I know how to fix the pain point I know
00:17:20
how to create the aha moment I
00:17:22
understand what we're trying to do here
00:17:25
and how to design it this is getting
00:17:29
complicated in a world of omni-channel
00:17:33
on the one hand this is the fourth press
00:17:34
difference the fourth principle is that
00:17:37
you've got to be able to deliver to your
00:17:39
clients or customers at every point on
00:17:43
the journey and in every channel so
00:17:45
whether I'm on the web on the phone
00:17:47
in their store it should feel like I'm
00:17:49
in your hands and this what people are
00:17:54
now sometimes trying to call even a post
00:17:56
channel world is is is critical and we
00:18:00
see all kinds of companies screwing up
00:18:02
and in some cases it's because by the
00:18:04
way they're still dealing with old
00:18:05
computer stacks that and the middleware
00:18:07
isn't very good sometimes it's simply a
00:18:09
technical issue sometimes it's an issue
00:18:11
of silos and failure to make handoffs
00:18:15
classically for a long time it's been an
00:18:17
issue of the analog guys and the web
00:18:19
guys who just don't connect and that's
00:18:23
complicated even more because it's not
00:18:26
just the stuff under my control as a
00:18:29
seller but in service environments I'm
00:18:32
usually working in an ecosystem it's bad
00:18:35
enough what the airlines can do to me
00:18:37
but then add tsa the airport's the
00:18:40
traffic you know the transportation
00:18:43
system to the airport you know there's a
00:18:45
whole ecosystem built around these
00:18:48
things and so even one of the biggest
00:18:52
challenges in service design is to work
00:18:55
with ecosystem partners where you may
00:18:57
not have authority but to try to sort of
00:19:01
collectively work together to create an
00:19:04
experience that you all want to create
00:19:07
for the customers you want to serve and
00:19:10
should we talk about the fifth principle
00:19:12
the fifth principle is you're never done
00:19:13
and that's really important because it's
00:19:17
not a static thing people's expectations
00:19:19
will change products will change markets
00:19:22
will change your strategy will change
00:19:24
and you've got to adapt to those things
00:19:26
and there's a fine line between you're
00:19:30
never done and as we were saying
00:19:32
distorting yourself outside your sweet
00:19:35
spot so that you're no longer
00:19:36
recognizable as to who you are and and
00:19:40
that's why it really does come down to
00:19:42
service design needs to be part of the
00:19:45
strategic fabric of the company all
00:19:48
these decisions about service you know
00:19:50
too often as we say it's lumped in with
00:19:52
with customers the customer service
00:19:54
department which is not sufficient or
00:19:56
people think that only is a function of
00:19:58
marketing and marketing is certainly
00:20:00
a department that has responsibility for
00:20:03
helping to create the notion of what
00:20:06
that brand promise is but strategy is
00:20:08
about deciding what that brand promise
00:20:10
is going to be there's another thing
00:20:13
about this innovation point which is
00:20:15
that it's another difference between
00:20:16
products and services right in products
00:20:18
you know it's guy roll gear loose in the
00:20:20
lab with the white coat then I mean
00:20:22
innovation takes place in a place
00:20:24
general you know in a lab but in
00:20:27
services innovation can take place all
00:20:29
across the value chain so how do you
00:20:31
manage it how do you keep it coherent so
00:20:34
they're not running off in different
00:20:35
directions and how do you sort of give
00:20:37
these sort of innovation skills to
00:20:41
people who may not actually think of
00:20:42
themselves as being innovators so that's
00:20:45
a really interesting organizational and
00:20:48
strategic question is the management of
00:20:50
innovation and services which is
00:20:52
different from that in Provence I wonder
00:20:54
we could know more deeply into the
00:20:56
relationship you see between strategy
00:20:59
and service design how can doing service
00:21:03
design will help you develop a really
00:21:06
strong competitive strategy that can
00:21:09
take you forward you know we we created
00:21:12
in the book a set of nine archetypes and
00:21:19
they're basically expressions of value
00:21:21
propositions so one of the archetypes is
00:21:23
the trend setter you know we're we are
00:21:26
the apple of whatever industry is
00:21:28
another is the bargain we're the Walmart
00:21:31
of whatever industry is another is the
00:21:35
classic we're the best you know we're
00:21:36
the Mercedes of the Cadillac of whatever
00:21:39
is and there are nine of them and you
00:21:42
can find almost all of them in every
00:21:44
industry but if you think about these
00:21:47
archetypes as expressions of a value
00:21:50
proposition that means they are actually
00:21:54
sort of they're our strategy our
00:21:57
strategy is to be the safe choice our
00:22:00
strategy is to be the best whatever it
00:22:02
is and these sort of help you envision
00:22:05
then you know value proposition and
00:22:09
strategy are pretty closely related
00:22:10
right these help you envision what how
00:22:13
we're going to take the
00:22:14
value proposition and manifest it in the
00:22:18
experience customers have and also in
00:22:21
the tangible evidence of that experience
00:22:24
the look and feel the things that
00:22:26
customers can look at and say yes that's
00:22:28
what this is going to be and I think
00:22:30
when you're there you know that's really
00:22:34
a strategic conversation and having one
00:22:36
of those archetypes in mind
00:22:37
it helps you I mean strategies partly
00:22:40
the art of saying no right what you're
00:22:42
not doing and the customers you're not
00:22:43
serving and and having those archetypes
00:22:46
in minds help you think helps you think
00:22:47
now this this isn't us but this is us we
00:22:51
can do this and this is what it means
00:22:52
for the organization as a whole and for
00:22:55
the customers we seek wonder if you
00:22:58
could tell us a little bit about what
00:23:02
are the biggest mistakes you find
00:23:03
companies make in coming up with service
00:23:07
design what did you find in your
00:23:09
research well I will say one of the
00:23:12
things we did do is we tried to focus a
00:23:14
lot on the companies who were doing it
00:23:16
right which isn't to say that there are
00:23:18
only happy stories out there there are a
00:23:19
lot of companies that aren't doing it
00:23:21
right but I think a few of the things
00:23:22
that we all see just from our own
00:23:24
experiences on a day-to-day basis is
00:23:27
people just they just don't walk in the
00:23:29
customer shoes literally you know try to
00:23:33
be your own customer that's that's part
00:23:35
of how you find out if you're easy to do
00:23:36
business with people just don't think it
00:23:39
through you know crazy things that
00:23:43
you'll see that that just makes no sense
00:23:44
that why is why do I have to walk from
00:23:47
here to there to get something done when
00:23:50
when logic would flow that I need to
00:23:53
only go from here to there it's not even
00:23:55
about all the things I'm going to do
00:23:56
from here to there it's just it's just a
00:23:58
waste of my time
00:24:00
it's and it's they also again they're
00:24:04
not firm enough about their strategy and
00:24:06
I think the biggest mistake though and I
00:24:08
think this is one of the really
00:24:09
fundamental things we've tried to do
00:24:11
with the book is help companies feel
00:24:14
empowered I think in an age of social
00:24:16
media and it's too easy for customers to
00:24:19
just go online and tweet you know I've
00:24:22
had a really bad experience with with X
00:24:23
and such and then so many customer
00:24:25
service goes oh my god we better reach
00:24:27
out to this per
00:24:28
because there's going to be what if this
00:24:30
goes viral companies need to feel
00:24:32
empowered to be able to make these
00:24:34
strategic decisions
00:24:35
I think Patricia's mentioned it several
00:24:38
times one of the biggest mistakes
00:24:39
companies make is they confuse customer
00:24:42
service I'm calling up I got a problem
00:24:44
with customer experience and and and you
00:24:47
know customer service is at the end and
00:24:48
that's anymore it's important to make a
00:24:50
good last impression but but that's
00:24:52
that's you know failing to see the whole
00:24:54
customer journey and as Patricia said to
00:24:56
walk in the customers shoes and then
00:24:59
failing to to make that as coherent as
00:25:04
possible I think those are the are two
00:25:07
of the two of the biggest mistakes that
00:25:09
we see companies make another way of
00:25:11
looking at it as we mentioned five
00:25:12
principles you know and it's the it's
00:25:15
the violation of those five principles
00:25:16
you know saying yes to everything every
00:25:18
customer asks you asks you to do you
00:25:21
know not being coherent not being
00:25:23
innovative
00:25:24
you know requiring heroic efforts or
00:25:26
making your customers work you are those
00:25:29
are the you know those principles the
00:25:32
flipside of those principles is what we
00:25:34
see too darn many companies doing all
00:25:36
the time bettan focus on surprise
00:25:37
instead of delight you know I ask why
00:25:39
should good service be a surprise now if
00:25:44
companies want to become better at
00:25:46
service design what advice would you
00:25:49
give them how can they become better at
00:25:52
this I think they need to be willing to
00:25:57
be honest with themselves it is a gut
00:26:00
check and it's not always pretty and I
00:26:03
think they really need to make sure that
00:26:06
it is going into the really decision
00:26:09
level making of the organization we had
00:26:13
a we created a little equation in blue
00:26:18
bow and win and that's that customer
00:26:20
delight is the product of the customers
00:26:23
experience and technical excellence
00:26:25
experience times excellence and we put
00:26:27
five points under each one of those
00:26:30
things empathy and engineering and and
00:26:33
the economics of it and created a quiz I
00:26:37
mean you can pay a report card so so I
00:26:40
think too you know
00:26:41
being honest with yourself sometimes
00:26:44
requires let's sit down and audit and
00:26:47
that report card is a way to audit and
00:26:51
you can sit down and you can take it
00:26:52
within a management team take it with a
00:26:54
diagonal slice of the organization ask
00:26:57
some of your customers or clients to
00:27:00
rate you and then you can get you can
00:27:03
get a report card and from there you can
00:27:05
begin to say this is what's wrong
00:27:08
another thing is this idea of charting
00:27:11
the customer journey you know have we
00:27:13
looked at that journey and what's gonna
00:27:15
happen what is my customer experiencing
00:27:18
at each what do we want the whole
00:27:20
journey to be like the classic the
00:27:23
bargain what do you want the whole
00:27:24
journeyed to be like and what's
00:27:25
happening at the key moments along that
00:27:27
if you can do those two things audit and
00:27:30
map and we're good start and when you're
00:27:33
mapping you have to map both on stage
00:27:36
and off stage if you will you know what
00:27:39
the customer sees what the customer
00:27:40
experiences and then what's happening
00:27:42
offstage to make that possible or to
00:27:44
screw it up they say I'd like to focus
00:27:47
on the positive one last question that
00:27:51
is are there any questions that you
00:27:54
wanted to answer in this book but you
00:27:56
didn't get to so well but what's coming
00:27:59
up next
00:28:00
know that you have done this I think
00:28:03
something we realized is that the
00:28:06
principles also apply internally as
00:28:08
strongly as they do externally and I
00:28:12
think it would it will be really
00:28:14
interesting to explore it from the from
00:28:18
the inside perspective as opposed to the
00:28:21
outside perspective because your
00:28:24
employees are stakeholders as well you
00:28:27
know this was focused mostly on the
00:28:29
external stakeholders but I think we'd
00:28:31
like to focus more on the internal
00:28:33
stakeholders and creating how to create
00:28:35
a good service culture yeah and you know
00:28:38
Jean Meister is doing some interesting
00:28:39
stuff on the employee experience and if
00:28:42
you think about the employee experience
00:28:44
and the customer experience and think
00:28:46
about that point that Patricia made that
00:28:48
services are handshakes so an employee
00:28:50
or a group of employees is interacting
00:28:54
you know so looking
00:28:55
those two sides the cult a culture that
00:28:58
creates a great experience and a great
00:29:01
experience that then feeds off of that I
00:29:04
think that's something that we that we
00:29:06
would like to learn a lot in fact you
00:29:08
might find that one leads to the other
00:29:10
precisely very happy employees will
00:29:14
automatically yes that old research on
00:29:18
the service value chain suggests that
00:29:20
and then if you think about that in
00:29:23
conjunction with this idea of experience
00:29:25
who that gives you a whole new way to
00:29:28
think about that
00:29:30
classic insight well Tom Patricia thank
00:29:34
you so much for speaking with knowledge
00:29:36
at working about your book this has been
00:29:38
a great experience angle yes exactly
00:29:40
thank you thank you thank you very much
00:29:53
[Music]
00:29:58
you
