Customer Crossroads

Innovation: What you gain by moving up the experience chain

If you worry about adding to costs when you enhance the customer experience, there's a chart in the current BusinessWeek that might give you some comfort:

• Coffee as a commodity has a value of about $.01 - .02 per cup
• Ground coffee in the grocery store has a value of about $.05 -.25 per cup
• Adding service, a la Dunkin Donuts or Tim Hortons gets you up to $.75 - $1.50 per cup
• Adding experience, a la Starbucks, gets you up to $2.00 - 5.00 per cup

I think we are all sick of the ubiquitous Starbucks example, so I welcome other examples in comments.  However, the point here is simple:  the value of the service you deliver increases exponentially when you bring in experience components.

What the heck is an experience component, you ask?

It's what happens inside your customer: 

• Emotional benefits, like feeling happy, content, relaxed, comfortable
• Psychological benefits, like feeling successful or confident
• Sensory benefits, like taste, smell, and a soft place to sit
• Rational benefits, like convenience or a better interest rate

The brilliant Starbucks strategy to create the "third place" is clearly only part of the story.  Because some people already had a third place:  it was their local coffee shop, their Tim Horton's, or their diner.  That part wasn't as new as everyone says, although we didn't have a good label for it before.

The new thing, the brilliant thing, was designing a third place for people who can afford a $5.00 cup of coffee on a regular basis.  And that was indeed brilliant.

So instead of trying to cut a few pennies from your per-unit costs, consider trying to add to the experience in a way that engages all the benefits: rational, emotional, psychological and sensory. 

You will reap the margins of robber-barons if you do it right.

Ethnography at McDonald's

Grant McCracken has posted a nice tale about doing ethnography at McDonald's to figure out why people order smaller drink sizes in the drive-thru than inside.  And in the process, provides a nice concise explanation of a research approach.

For what it's worth, my guess is 1) cup-holder size or 2) the drink gets hot before you finish it.  (The reverse being true with coffee, of course -- if the air conditioning is blowing on it, it gets cold before you finish it.)  3) Possibly people think they will not get the drink finished before they reach their destination -- after all, that's why they're in the drive-thru, right?

However, the real point here is using thoughtful research approaches to figure out otherwise intractable mysteries of human behavior.

Postscript August 16, 2005

The comment list on the post linked above is an amazing testament to homo sapiens desire to solve problems.  People are still posting about the McDonald's soft drink issue, and I have to admit, it's still bugging me ... my latest observation is that you can see the size of the cups when you are inside, but there are no cups to observe outside. 

The other telling thing about this conversation is that it really highlights the importance of actually doing the research, not just thinking about a problem.  Because when you actually do the research, you see many things that are not readily apparent from  just thinking about something.  (I may have to start hanging out at the drive through just to prevent myself from going bonkers trying to figure out the one correct answer.)

Trends in Customer Experience: is it a Field? A Movement?

Kyle Coolbroth thinks we are part of a movement.  Gosh I sure hope so.  Kyle shares my belief that managing the customer experience has really become the essence of marketing; is in fact changing the practice of marketing quite fundamentally because it is very operationally intensive.  You actually have to change the experience, not just the messaging. 

Kyle discussed some of these ideas in a recent podcast available on his blog, The Experience Journal.  The attached blog post highlights some of the more interesting sites on this topic, including this blog (heh, heh, thanks Kyle!)

If, like me, you're still crossing the chasm on podcasting -- click here for a simple explanation and great graphic)

Some of the more interesting points made:

• Customer Experience is about what you do, not what you say you do.

• If you want word-of-mouth, bring a more holistic approach to your brand, so that people have a reason to share word of mouth.  Don't create artificial events that create short-term buzz -- build a relationship with the brand experience. 

• In a 2005 study on marketing receptivity, Yankelovich found that 70% of consumers say they are interested in products that enable them to block out advertising. 

(As I have been saying for some time, the trend towards spam in every communication channel is simply an opportunity for someone to create and sell blocking technology.)

• But, Yankelovich also found interest in advertising as a form of entertainment is actually increasing.

401k Latte Company

 

About halfway through the Experience Journal podcast they interview Peter McClellan about his financial advisory firm, 401k Latte company.  Inspired by Seth Godin's Purple Cow approach to making yourself stand out from the competition, Peter meets people at public events and offers them a free latte from his backpack. This is just a tactic of course, but expresses his core brand value about the need for feeling comfortable with your financial advisor.  Peter says:

It is an invitation to have an open, informative, friendly conversation about you, your retirement plan choices, and your financial future over a warm cup of delicious coffee.

He has supported his mission with a new office environment designed to capture the comfort of a coffee shop, lacking the sterility and serious feel that characterizes the financial advisory business. 

Peter says his existing customers like the new look and the new expression of the core values they already were experiencing from their advisor.  Peter knows this because he talked to a lot of the customers individually, he tested logo designs with them, he put together a questionnaire, and took anything but a small business approach to this change:

"We didn't just do this and hope it worked.  We talked to a lot of clients ahead of time."

And yes, his clients like the new image and the new company name.  It's all about creating that take-away, that feeling of well-being when they leave".  (Just like that Peak-End rule we told you about).

Don't Throw the Research out with the Focus Groups

It's become popular to disparage focus groups -- even smart people I like and admire are doing it (like author Malcolm Gladwell in Blink, for instance).  What people often hear is that research is bad, or people who rely on it are lacking in leadership ability.  Most of the people making these disparaging comments about marketing research are also usually trumpeting the importance of getting close to your customer.   

So if getting close to your customers is a good thing, what's wrong with focus groups as a method? 

The focus group is only one method

Focus groups are only one method.  And there's a fair bit of encrustation around the business, what with dedicated facilities, specialized recruiting firms, etc. etc.  But they do have their uses, and they are relatively fast and relatively cheap compared to some other methods.

The leaders in customer experience use a lot of other methods.  Check out this list  in Designing a Better Customer Experience, from BusinessWeek Online, that summarizes IDEO's approach. 

• Shadowing
• Behavioral mapping
• Consumer journey
• Camera journals
• Extreme user interviews,
• Storytelling
• Unfocus groups

These are all qualitative methods, and a good researcher could add to this list of methods. 

There's a lot of bad research out there

Running a focus group looks like just about the easiest thing in the world to do.  Here are the kinds of problems you'll see when someone doesn't know what they are doing:

• It sounds like a serial interview
• There's a lot of voting and consensus building going on
• The people in the discussion are talking to the moderator, not to each other

I could go on, but you get the idea.  A much bigger issue, and probably the real reason  it's suddenly cool to trash focus group is too much reliance on consumers to do management's thinking for them.

Don't expect the consumers to design your next product or make the decision for you

 People are experts on their own lives and experiences, not on new product development.  They can tell you how they clean the grout between the bathroom tiles, or show you how, or communicate many other aspects of that experience.  But it's up to the company to take that learning and do something with it, a la Clorox Bleach Pen.   

The right use of qualitative research is to learn a lot more about your customers' lives and problems.  What do they love about their job, their home, their hobby?  What's the good, the bad, and the ugly?  What happens before, during and after using your product?  What are their goals and their problems? 

Learning these things will help you figure out ways to innovate and create competitive advantage.  You might even be able to do some product testing (although this can be fraught with peril, and you need to know the pitfalls). 

But you're starting onto thin ice if you want a group of average folks to come up with a market-leading product innovation in two hours in a focus group room, when your own product development team is stumped.

Four things that work to understand customer experience

If you want to understand your customer's experience, you can basically do four things.

1. You can have the experience yourself.   Try calling the call centre with a problem.   Install the software.  Eat the pudding.  Wear the deodorant.  You get the idea.  While you're at it, why not try out the competitor experience too?
2. You can hear about the experience.  These are the traditional methods of interviewing and focus group discussion.  But who says they had to happen in a focus group room?  How about having the conversation in the Starbucks?  How about sitting at the table with the customers.  How about doing it in an online bulletin board, or using an online video meeting? And how about trying some more creative methods, like story-telling or collage?  People are even doing hypnosis now. 
3. You can observe the experience.  Get out there and watch what's happening.   Go into the branch on a Saturday and see how it's different than on a Tuesday.  Sit in the waiting area for a couple of hours.  Watch what people are doing.  Job shadow a customer service officer (and yes, it's okay to talk to them too) 
4. You can measure the experience. How long are people on hold?  What time do they call?  How long does it take to process the paperwork?  Get some hard data to support the rest of the research, and compare to the perceptual information. 

But please don't trash the focus group, which has been a loyal servant for decades.  Just don't ask it to play every position on the team.

Acknowledgements
To smart cookie and awesome researcher Lisa Elder, who created the categories in the list above for a presentation we made to QRCA.

Customer Experience and Pets: Are you Pet-Centric?

Is your business pet friendly?  It should be, and here's why: 

1. It's a big business and growing bigger all the time
2. People don't think of their animal companions as instinct-driven foreign species -- they think of them as permanent children.  Owners believe "pets are people too", and many refer to themselves as the "mommy" or "daddy" of the pet
3. If you're not pet-friendly, you're missing opportunities

According to the American Pet Products Manufacturers Association, 63% of American households owned at least one pet in 2005.   Total industry expenditures are expected to approach $36 Billion this year. By way of comparison, that's bigger than toys, which were $21 Billion in 2003. 
Canadian statistics are similar, with 53% of urban households owning pets in 2001, with spending on food and veterinary services alone accounting for $3 Billion in annual spending. 

Pet friendly accommodations can be found nearly anywhere now.  Extra goodies included by some hotels include doggie pillows, gift packages at check-in, doggie treats at turn-down time, and  spa services such as massage.   

You don't have to be in the pet products business to see an impact on your business from pets.  Pet-families make many purchase decisions based on the presence of a pet, from furniture to fragrance. 

Pet owners are mainly in that sweet spot of high-consumption households with children, and adults ranging from 35 - 54. Because dog ownership tends to be a bigger responsibility and generally more expensive, dog owners tend to be a bit more well to do than cat owners. (NPD)

Pets are part of the family, and they have their picture in the family gallery to prove it. 

"This perception of the pet as family translates into “parental” behaviour for many pet owners: seven in ten (69%) pet owners allow their pets to sleep on their beds and six in ten have their pet’s pictures in their wallets or on display with other family photos. Almost all pet owners (98%) admit to talking to their pets."

Pets travel with the family more than in the past, and some airlines are leveraging this to advantage.  Both Midwest and United have special programs that earn frequent flyer miles for pet travel.  Midwest attributes the new program with creating a 25% increase in pet travel in it's first year, and expects to double it in the second year.

What to do

Any business should consider including images of family pets in any advertising targeted at families.

If you have any kind of a store-front operation, including a bank, take a cue from Starbucks and ensure you have a doggy rest area complete with bowl of water outside your store, as well as a place to tie up pets. 

Want to run a community event? Then consider getting your local humane society to set up an adoption event in your parking lot or front entrance. 

In short, start thinking about pets as part of your customer's family -- if you wouldn't ignore their children, don't ignore their pet.

Acknowledgements: 
Hy Mariampolski's article in QRCA Views, Spring 2005 "Arf, Arf! Meow, Meow! The Pet Market is Growing by Leaps and Bounds" (members only) got me thinking.

Canadian statistics came from the NPD Paws and Claws syndicated research study for 2001, available online from University of Guelph.

Hot Weather Reading

We're having a heat wave combined with a record number of smog alert days where I am, and it's making us all as slow as slugs.  Today in the paper, there was an article suggesting ways of overcoming productivity problems caused by summer.   

That whole concept just made me sad.  We've all sacrificed so much of our humanity in favor of corporatism we're not even allowed to enjoy summer weather anymore. 

If you want to rebel, but you're stuck in the office, steal a little time for this very interesting read by Scott Berkun about why smart people defend dumb ideas. 

Personally, I'm giving in and taking the rest of the day off.  (yeah, big deal, it's already 3:00 pm.  Oh well, it's a start.)

Culture and Service Standards

There's a resort I like to go to in Northern Ontario where you can canoe all day, see stars at night, and listen to the loons, but still drink fine wine and have a good meal in the evening.  This resort, like many lodges, is actually quite renowned for the consistent high quality of their food.  It's not noveau by any stretch, but it is always good. 
There's a big banner in their kitchen only visible to staff.  It says:

If you're not proud of it, don't serve it

That's a great service standard that covers a lot of ground and is very clear. 
More important is that the organization tells stories that reinforce this standard... like remaking a whole batch of cheese sauce that wasn't cheesy enough, and that type of thing.

In earlier posts, I have commented favorably on Marriott Hotels -- they actually have an official repository for collected stories of customer service.

I have heard several times of people witnessing Clive Beddoe, Chairman and CEO at Westjet go through the cabin collecting garbage and having friendly chats with the other passengers. 

So here are the questions for today:

1. Are you proud of the things you are serving in your organization?
2. What kind of stories do your people tell? 
3. Can you explain the objective in one sentence that everyone can understand?
4. And have you demonstrated the importance of your standards with your own behaviors? 

Here's a Shocker: Few are Investing in Loyalty, Despite the Lip Service

You may be shocked to learn this (or not...), but according to CRM Guru guy Bob Thompson (registration required), business leaders are only paying lip service to loyalty, and not backing it up with budget or action:

Most business leaders say they are devoted to loyalty, but new CRMGuru.com research shows that management systems and budgets often don’t back it up.

As a customer, you know this is true.  You are on hold, listening to "your call is important to us".  You get caught in the "blabberynth" of  automated phone directory systems, or the new and even worse voice recognition systems that won't let you press zero.

And yet execs continue to believe they are doing everything necessary for loyalty. 

It's the "everything necessary" element that is the problem, of course, because it often gets translated into the minimum necessary. 

Bob's article references a number of leading authors and researchers, and reminds us that:

• More customers leave over service issues (70%) than price or other issues
• Loyalty leaders have faster revenue growth rates than companies with poor customer retention (twice as high, according to Frederick Reicheld)
• It costs much more to get a new customer than to keep an existing one
• Sales efforts targeted at existing customers are much more likely to be successful (60 - 70% probability) than sales efforts targeted at lost customers (20 - 40%) or prospects (5 - 20%)

Bob's prescription begins with understanding customers using data, not anecdote:

In customer loyalty, there's no substitute for good research and planning. No matter the size or type of your business, you must start by understanding why customers stay and why they leave. Taking this customer-centric view will enlighten your management on why customers behave the way they do so that you can create a profit-generating loyalty strategy

The full paper is worth the registration required to read it. 

What Bob does not say, and that needs saying, is that the chief issue is not tactics, it's motivation.  The first objective in moving the business forward on loyalty is to create an experience for the executives that is so compelling that the see the whole issue in a new way and can get mobilized.   Once that happens, the  tactics will be relatively easy.

Picture:  I found a bunch of wonderful images in a 1945 edition of Grimm's.  Companies aren't really evil witches luring innocents with promises of candy.  But sometimes it feels that way.  And of course, trapping your customers with high barriers to exit only works in the short term.   

Handling Complaints Effectively: Give People Justice, But Watch Out for the Rocky Shoals of Embarassment

A lot of research has been done on the topic of complaint handling.  Having an unhappy customer in the first place has a lot to do with what the customer was expecting. 

I got a necklace and earrings as a Christmas gift from my beloved, and the clasp on the necklace recently broke.  I know it was not an expensive item, as necklaces go, but I had only worn it three, perhaps four times.  So I thought perhaps the store would fix it, replace it, or something. 

A dissatisfied consumer will consider their options:

• Seek redress for the problem i.e. complain to the company
• Complain to others -- negative word of mouth
• Vote with their feet -- change suppliers

Individual factors have a lot to do with who complains and who doesn't, but most people don't complain, and only about 5% of complaints ever get beyond the front line.   If people think their complaint is likely to be successful, they are more likely to complain.

Expectations Rising
When I took the necklace in, the nice clerk raised my expectations considerably, and asked to keep the necklace so she could talk to the owner, and told me she was confident they would either replace the necklace or repair it for me.  She wasn't sure they could replace it with an identical necklace (no problem, I said).

She called back later and crashed me on to the shores of disappointment, by telling me approximately this:

• The necklace was several months old (but I only wore it a few times, I protested)
• The necklace is out of stock, so they could not replace it (but what about something similar -- that would be fine...)
  
• They are not jewellers, and do not repair jewellery, however they were confident the necklace could be repaired by a jeweller, so I should come by and pick it up
• She was personally sorry to have to tell me this

I was disappointed with this, and said I wished to talk to the owner myself.  Naturally, she could not give out the number, but promised to pass the message along.

Distributive Justice, Procedural Justice, Interactional Justice

People expect a fair outcome from a complaint (distributive justice).  They expect not to have to jump through a lot of procedural hoops to make the complaint (such as returning the item in the original packaging); that's procedural justice.  And they want to be treated fairly throughout the process by the people involved (interactional justice).

When I got a call the next day from a second store clerk, I started experiencing some injustice.  The second clerk basically implied that I had been wearing the necklace for months, that the store was a small business just trying to survive, and that they couldn't exchange things months after their purchase. 

As the conversation went on, I was lumped in with all sorts of people who try to exchange things months after they have been wearing them, because they want something different. 

She then suggested several times that she should take the necklace to her friend, the jeweller Zack, and he would fix it for me, she was sure it would not be too expensive.  (thanks, but no thanks).

When I reviewed all the details (yet again - only wore it a few times), I said I still wanted the opportunity to talk to the owner.  But the owner was now out of town, and did not have time to speak with me.  (Okay, I confess, this really ticked me off, and I suggested the owner just didn't want to talk to an unhappy customer)  On and on this horrid conversation went, to the point where I was actually starting to get upset and lose my cool. 

The second clerk told me that when the owner heard the full circumstances, that she now understood I wasn't trying to "scam" the store, she was also confident that the owner would do something to rectify things.  They would be in touch. 

Meanwhile, my small problem, and probably a $10 repair bill was starting to grow horns and expand into an ugly lump of discomfort.  And in making my point, I started feeling like I was abusing these young women working in the store.  Now we are all unhappy, and getting unhappier by the minute.

Service Recovery Effort

Later that same day, the owner left me a voice-message.  She said she could no longer return the necklace to the manufacturer, and their policy was two week replacement only (first I'd heard of that...perhaps a training issue with the clerks?), and closed off by saying she was hoping I would continue to be a customer.

Is it Cognitive Consistency, or Just The Embarassment Factor

I was glad to have had the call from the owner.  I think she should have thrown me a small treat of some sort, like a discount on next purchase.  But here's the big problem.  Now I'm embarassed at making a fuss out of something small, and getting upset, and I don't even want to go in to pick up the necklace. 

This is not at all unusual for people.  The biggest problem in retaining a customer after things get ugly is that there is no happy feeling anymore.  Let me give you another example, this time of a resort.

My friend and loyal reader, R.B., told me that he thought a resort we have both enjoyed --  a premium priced lodge in Northern Ontario, had gone downhill.  After his last stay, he sent a letter outlining his unhappiness to the resort.  They never replied.

Now, he says he feels he can't go back.  "I would have gone back if they'd only replied to my letter", he says.  There aren't that many nice lodges in the wilderness, so now he's got a problem.  I am in total sympathy with this. 

My law firm sends out a survey every time you conduct any real business with them.  But knowing how dependent we are on a lawyer when we really need them, who can respond honestly to such a thing unless it's anonymous?  And as I discovered recently, it's not anonymous.  (I gave them high ratings on everything, but indicated in my comments that they should not bill me six minutes for sending me a follow-up e-mail asking if they can invoice me, and then call it client correspondence.  How sorry I was that I said that, triggering a series of phone calls and hand-wringing. What on earth was I thinking?)

Doing it Right
Service recovery is really an art.  It needs to be fast, it needs to be fair (probably more than fair, actually), it needs to come with a smile, and it needs to leave the relationship intact or better. 

When service recovery is done well, people who experience it are more loyal than people who have never had a problem, never complained.  This has been well documented in reams of research, and is a secret weapon for the firms that do it well. 

Speaking personally, I have put in extra unbilled days on lots of client projects to ensure that the final outcome met or exceeded the client's expectations, even when this was well beyond our contractual commitment.  But I doubt I'll ever get the chance to respond to a complaint, because I suspect clients to vote with their feet as their opening response. (all input welcome on that subject, what's your experience?)

Wish Me Luck
Here's my plan.  I'm going to drop by the store later today and pick up the offending necklace, and take it to a jeweller down the street.  I'm hoping to hit the store when it's busy enough that I can avoid a reprise of the entire conversation wherein they try to convince of their point of view.   And I'm hoping the jeweller doesn't give me a lecture about how the thing is too cheap to be worth fixing.  If he does, I'm using the "senitmental value" gambit.  I might even wear the matching earrings (which I really love) into the shop in an expression of goodwill.   

Cross your fingers for me, okay?

Acknowledgements:
Thanks to Andy Hayward at stock.xchng for the great picture
Thanks to Tom at True Talk for the inspiration for this post
And to R.B. for sharing such interesting conversations with me
 

How Not to Manage a Contest -- American Airlines Giveaway

American Airlines recently ran a contest giving away 12 round-trip tickets for 2 to anywhere in the world.  Sounds good right?  (Of course, in the US of A such a prize attracts federal tax.)   The winner declined to accept the prize when he discovered it would come with a $20,000 tax bill, because of the value given to the tickets. 

The story in the New York Daily News indicates some effort by American to repackage the prize, short of paying the tax, of course. 

American placed a value of $2200 per ticket on the prize, bringing the total to about $52 ,000.  Another case of something that made perfect sense to the company, but no sense at all viewed from the eyes of a customer.  Here's what the winner had to say:

"You can't sell these tickets, and if you could, no one would buy them at that inflated value anyway."

Yes, anyone can make a mistake.  But they didn't manage it very well once things started to go wrong.  And then they asked the fellow if they could still use the home video he used to win the contest on their web-site.  (Oh my...!)

So instead of having a nice contest to promote, the airline now looks cheap.

In related news... you know those warranty card questionnaires that come with everything now?  I got a giant one with my new solar garden lights. 

Detailed questions about HH income, hobbies, employment, media habits, etc.  I wondered why a lighting manufacturer would care about some of this stuff. 

A potentially big prize caught my attention ... then I read the fine print and realized this was a syndicated research product and the prize draw would be made from participants over a 2 year period!  (I'd be much better off putting $2 on Lucky Strike in the 5th at Woodbine -- or even buying a lottery ticket!)

Contests can be a good thing, but it's important to think the whole thing through from the standpoint of the customer, not just the company. 

Thanks to B.L. Ochman for bringing this to my attention.
And thanks to Andy Hayward for the photo, a prize he created for a kid's magazine.

RSS feeds, Feedburner, Usability and creeping corporate non-speak: we apologize for asking you to resub

Randy Charles Morin at the RSS Blog commented on my request to readers to resubscribe:

This is so wrong! You shouldn't have to tell your subscribers to resub. Typepad needs a checkbox+textbox option that says you'd like to burn your feed over there.

Randy, you may be right. I suspect that Typepad wants to keep control of their feeds for the same reason that Feedburner wants them over at Feedburner:  potential future revenue from enhanced tracking tools, advertising revenue, etc. 

The world is never as open-source for customers as customers want it to be, regardless of the category.  And blogs are rapidly becoming commercialized.  But maybe that's okay too.  (Speaking as a major fan of Typepad's comfortable usability, and amazing low subscription price.)

The real culprit here is moi, who should never have posted anything like that post, which didn't offer a clear benefit to readers.  (What was I thinking?  d'oh)  Like Mom always said, the fact that everyone else is doing it is hardly an excuse. 

Creeping corporate non-speak is everywhere.  The Clue-Train Manifesto needs to be republished.  Remember these inspiring words?

...learning to speak in a human voice is not some trick, nor will corporations convince us they are human with lip service about "listening to customers." They will only sound human when they empower real human beings to speak on their behalf.

We now return to our regular programming.

Design Watch: Dutch Boy Ready to Roll

This is too cool -- a paint can with the roller-tray built in.  Plus an easy-to-reseal lid.  Dutch Boy does it again.  (They were the ones who introduced the easy-pour, screw-top paint container.  Why the rest of the industry hasn't copied it, we'll never understand.)

Diving deep into customer needs can take you to these kinds of places -- making an unpleasant job less unpleasant, and at the same time defining your brand as one that really gets the customer experience. 

Moving to Feedburner

We've heard so many good things about Feedburner that we are moving our RSS feed there.  (No need to panic! This is a non-technical notice!)

If you are already subscribed, we would appreciate you re-subscribing using one of the buttons at left (I just learned they're called "chickets", isn't that cute?). 

In the interests of transparent communications, here's what's in it for you (not all that much, actually):

1. About 2 minutes of work, even if you are a klutz with your blog reader, eg. Bloglines
2. We will have better data to use to improve our content.  That's the plan, anyway -- you be the judge. 

The old RSS feed will still be there, so you don't actually have to do anything.

And if you still prefer the Bot-A-Blog e-mail notification, that will still work.  If you'd really rather we had a proper e-mail newsletter, please let us know with a comment, or by e-mailing susan.

Here's the new Feedster link for those that want it. 

 

What's Wrong With Business Schools: Warren Bennis was Right

Warren Bennis thinks we should be worried about the current direction of business schools, where many of those doing the teaching have never set foot inside a real business except as a customer.  I'm sorry to report that he's right. 

Tenured professors in business schools largely appear to be studying business the way an entomologist studies bugs -- for the sake of the study alone, and not to improve the lives of the bugs. 

A visit to the PhD recruiters:  who is finding our future teachers and researchers?
I attended a recent information session for aspiring PhD students (I confess to harboring notions of this kind) where we could talk to representatives of a dozen or so major business schools, including notables such as Harvard, McGill, Kellogg, Rotman, Ross and others.

Although the average age was about 38, or perhaps older, most of the speakers talked as if we were all just embarking on a career, and deigned to offer patronizing advice such as "be nice to other people".  Asked directly by one audience member if his experience as a C level executive in a major business was considered a desirable asset, I was as shocked as he was to learn that the answer to this question is "no".  (One of the panelists actually used the phrase "golden years" to describe a graduate student in their forties.)   

Academic Life is Competitive:  You're Kidding!
Amazingly, several representatives suggested that mid-career individuals NOT sign up for a PhD because academic life is "very competitive".  I've got a news bulletin for them:  life as a practicing manager is competitive, and in the executive ranks it's winner-take-all.  I'd be amazed if a 28 year old graduate student could outthink, outsmart or outlast  a seasoned executive on anything other than the ability to pull all night writing sessions or put up with BS.

I stopped by a few recruiting booths where I thought saner heads might prevail.  Michigan's Ross School, home of the pragmatic Positive Organizational Scholarship knowledge centre.  Surely McGill, home of the brilliant and practical Henry Mintzberg, author of Managers, Not MBAs, would be more interested in experienced managers that are interested in pursuing scholarship and teaching? Their recruiters were spouting the same lines about it being very difficult for "older people", and that experience is much less important than GRE or GMAT scores.

Focusing on Academic Research
At Rotman's booth, one of the 3rd year PhD students told me her research was about consumer behavior.  (What could be more practical than that?) I told her how inspired I have been by the work of Daniel Kahneman, whose research has enlightened my consulting work.  Whereupon she told me that her research would probably not be useful to people working in a major brand consultancy, and it was likely that "they wouldn't even understand it". 

As Mr. Bennis and co-author James O'Toole note in the HBR article (reference below),

Some of what is published in A-list journals is excellent, imaginative, and valuable.  But much is not.  A renowned CEO doubtless speaks for many when he labels academic publishing a "vast wasteland" from the point of view of business practitioners.  In fact, relevance is often systematically expunged from these journals.

Bennis believes that business schools are being criticized for

failing to impart useful skills, prepare leaders, instill norms of ethical behavior, and even lead graduates to good corporate jobs... Instead of measuring themselves in terms of the competence of their graduates, or by how well their faculty members understand important drivers of business performance, they assess themselves almost solely by the rigor of their scientific research. This scientific model is predicated on the faulty assumption that business is an academic discipline like chemistry or geology when, in fact, business is a profession and business schools are professional schools--or should be.

So What -- Where's the Connection to Customer Experience?
Just this -- if we hope to improve customer experience, we need managers that can think in a nuanced way about real life situations. 

And if you happen to hold one of these business degrees, if this trend continues you can expect to see the brand value of your degree plummet.

And one more thing -- what about distance learning?
I spoke to an interesting gentleman at the end of the session, the unofficial representative of distance learning school Athabasca.  He thinks it is completely antediluvian that anyone should be asked to uproot their family, abandon their business and live on the $20K a year that a PhD business student can expect while they pursue full time studies on-site. 
I could only agree.

References:

How Business Schools Lost Their Way, HBR, May 2005.  Summary available for free, full article for USD 6.00
Who is Warren Bennis?