Strengths and Limitations of Using Customer Focused Interactions - Essay Example

Running Head: STRENGTHS AND LIMITATIONS OF USING FOCUSED Strengths and Limitations of using focused interactions to standardise and improve business operations [Author’s Name] [Institution’s Name] Strengths and Limitations of using customer focused interactions to standardise and improve business operations Introduction Customer focused interaction of the transformation process focuses on adding features, functions, value-added processes, and new services to the core business. The pursuit of business precision and customer service leads inevitably to extension and enhancement of a companys product, service, and market portfolios. New services, features, options, and other business enhancements fuel Customer focused interaction of the business transformation process, and lead to the growth of business units and redefinition of the core business (Fraser, Shobrys & Kruse, 2003, 10-13). Focusing on precision and customer service accelerates the transformation process. British Telecom chose not to rely on such systems to solve its immediate problem. British Telecom saw a dramatic expansion in the number of services offered to its customers. Additional revenues from these services and related ventures have been sufficient to justify further investments of more than five billion dollars in second-generation packet switching, terminal technology, and support systems. (Johnson and Clark, 2001, 115-120) Business redefinition and new business development While new business units may become the principal vehicles for growth, the existing core business can also be redefined from within. New capabilities cannot only alter how the original business is conducted, but can alter the nature of the business itself. British Telecoms business focus a decade ago was voice transmission (Fraser, Shobrys & Kruse, 2003, 10-13); today it has a much broader scope of activities and services. Not all companies choose to spawn new businesses (Johnson and Clark, 2001, 115-120). New information processing capabilities can be viewed as central to the success of a traditional business and treated as a proprietary asset to be kept closely guarded in the inner sanctum of the enterprise. Yet even in such cases, those new core competencies will drive redefinition and transformation of the traditional business from within. In this way, successful customer interaction efforts ultimately lead to business transformation. (Slack, 2001, 1100-1121) “Quality management approaches can be categorized broadly into three stages according to the evolution of management control. Management can implement control before an activity commences, while the activity occurs, or after the activity has been completed.” (Hsieh, Chang & Lu, 2000, 191–201) For example, British Telecom might have chosen to address its directory services crisis with a limited solution that automated operator database access and audio response--the type of directory service offered by most telephone companies today. Instead of relying on discrete solutions in this and other areas, British Telecom focused on the development of a single integrated infrastructure. The Minitel system served as a platform for addressing immediate operating problems and for the development of a multitude of new services and business opportunities. (Seddon, 2002, 326-344) Information sharing can become difficult, and multiple, conflicting metrics usually appear in management reports. Systems development resources are consumed attempting to rectify problems and build bridges between heterogeneous systems (Johnson, 2004, 22-23). Customer service levels may deteriorate, and the company may become mired in a fragmented operating infrastructure. Without alignment of customer interaction projects, and without an integrated infrastructure, the typical company cannot access the power curve of business transformation (Greenberg, 2002, 65-77). The shift to macro customer interaction can be facilitated by efforts to align multiple, discrete operating improvement projects with broader programs, plans, and visions. Each specific project can be assessed and modified to ensure compatibility with other functional efforts, infrastructure standards, and long-term business plans. (Johnson and Clark, 2001, 115-120) Strengths of customer focused interactions on business operations The answer, based on the research sample to date, seems to be that it is not always necessary to have a vision in order to realize the benefits of business transformation. Had either of these companies initiated dozens of discrete, unrelated applications and technologies, instead of core infrastructure programs, it is doubtful that they could have achieved the results in any of the three phases that they have realized to date (Ciraulo & Auman, 2002, S27-28). Both of these companies transformed their business profile through enlightened pursuit of operating excellence in their core businesses. But vision is a powerful factor in business transformation (Fitzsimmons and Fitzsimmons, 2007, 75-88). The operational management had a clear and explicit initial vision of a future state when they initiated the advanced system. (Johnson, 2004, 22-23). Without that vision, it is highly unlikely that a directory services initiative could ever have evolved into what is today by far the most advanced videotext system in the world. A powerful business vision, when coupled with enlightened efforts to achieve operating excellence, accelerates the transformation process (Kelemen, 2003, 38-47). The operating principle here is that of grounded vision. The Minitel exercise, while aimed at a future vision of a radically transformed telecommunications enterprise, was also focused in the near term, or grounded in immediate operating concerns. By linking immediate improvements in operations to long-term transformation, British Telecom was successful in realizing benefits in all three phases (Greenberg, 2002, 65-77). While vision is a positive force in transformation, it can also be a negative factor if it is not disciplined by operating considerations. (Snipes, 2005, 1330-1339) “Service processes with indirect customer contact or with no customer contact need not be constrained by issues that arise from the physical presence of the customer in the system. Because the customer is decoupled from the service delivery system, a more manufacturing type of approach can be taken.” (Fitzsimmons and Fitzsimmons, 2007, 93) The Business operations manage protocol and format conversion, minimizes administrative costs, and speeds settlement. The infrastructure installed to manage this claims processing function will become a critical channel of distribution for a series of other health care information services, such as precertification, diagnostic support, utilization review, and health provider assessment (Gustafsson and Ekdahl, 1999, 344-358). This discrete project, justified on a stand-alone basis as an improved claims management process, is potentially central to transformation of the health insurance business. “For a long time the telecom industry has found itself struggling not just in terms of profitability, but also in customer satisfaction and loyalty. The industry has been dominated by subsidized national monopolies and suffering from over-capacity.” (Gustafsson and Ekdahl, 1999, 344-358) The potential value of customer focused interactions should also be reflected in the business case. In the best scenario, a compelling business case for a long-term program integrating business vision, operating improvements and infrastructure development removes the need for frequent, intensive financial justification for individual investments (Konicki, 2002, 26). It is also critical in focusing management attention on areas of expected gains, to ensure that they are realized. Business performance measures designed to highlight areas of expected gains should be introduced with the initiation of customer interaction programs (Slack, 2001, 1100-1121). For example, Scandinavian Telecom introduced a set of one hundred performance measures to focus its information technology deployment programs. Those measures are reported weekly, and management has a clear sense of the many benefits derived from investments in information technology. Each of the enterprises in this research sample realized unexpected benefits as transformation occurred. Many of these benefits may be available to other firms. (Fitzsimmons and Fitzsimmons, 2007, 75-88) Analysis Techniques GAP Analysis Gap 1: Consumer expectation - Management perception gap Gap 2: Management perception - Service quality specification gap Gap 3: Service quality specifications - Service delivery gap Gap 4. Service delivery - External communication gap Gap 5. Expected service - Experienced service In order to accomplish this, several things must take place, most importantly determining the optimal capital structure for financing future growth opportunities that uses more equity than debt. Using more equity to finance projects would decrease the risks associated with leverage. A thorough analysis of medium- and long-term financing instruments will help the British Telecom determine the optimal path to wealth maximization. As British Telecom is in the initial stages of their proposed change, it would be beneficial to create a financial-planning model that would assist the companies in determining their optimal capital structure. Can customer expectations be met without hindering financial performance? Do existing operating systems enable customer expectations to be met? Are resources and personnel available to deliver the service levels that customers demand? Does management change policies and procedures to meet the needs of customers? This model should reflect the finances and activities of the business in terms of forecasts and budgets; assessing possible funding requirements; and exploring the likely financial consequences of alternative funding, marketing or operational strategies. When used effectively a financial model can help prevent major planning errors; identify or evaluate opportunities; attract external funding; provide strategic guidance; evaluate financial and development options; and monitor progress. For British Telecom, this would include an evaluation of variables used by a financial model to produce projected P&Ls, cash flows and balance sheets for a manufacturing business. SERVQUAL Tangibles: - The appearance of physical facilities, equipment, personnel, and communications materials. (Bebko, 2000, 9 – 26) Reliability: - The ability to perform the promised service dependably and accurately. (Bebko, 2000, 9 – 26) Responsiveness: - The willingness to help customers and provide prompt service. (Bebko, 2000, 9 – 26) Assurance: - The competence of the system and its credibility in providing a courteous and secure service. (Bebko, 2000, 9 – 26) Empathy: - The approachability, ease of access and effort taken to understand customers needs. (Bebko, 2000, 9 – 26) British Telecom management does not address all of the system issues concerning service quality, and it has limited diagnostic value. British Telecom staff and the management is very helpful to the customers e.g. if customers need any help they prove at the same time. They take care of customers private moments and entertain them through various activities that are not done at any mobile telecom company. Therefore, the SERVQUAL instrument was not used, though some of its items were adapted and included in the survey. It is recognized that in medical services, instead of polling the customers, by carefully studying the objective characteristics of orders the market requirements can be understood. However, what BT can achieve in services, is that the customer expectations that are crucial, and they can be assessed only by surveying the customers. There is always the possibility that, when surveyed, the customers will indicate levels of expectations that are very high, even for attributes that are not important to them. Blueprinting Blueprinting is a delivery process in order to understand the nature of the customers experience. It is used to create and deliver a service as well as specifying them between the activities. This method range from simple to complex; some of them were first developed in the context of manufacturing. At the complex end of the spectrum, British Telecom have quality function deployment (QFD), which is a tool for systematically translating the requirements of the customers into the characteristics of the product, the parts, the process and the operating controls. It has been applied successfully in manufacturing. In recent years, the underlying approach of QFD--mapping the voice of the customer--has been adapted to services by linking the customer needs to the essential facets of British Telecom service systems. This approach, though fairly comprehensive, could be overwhelming in terms of the data requirement. British Telecom service blueprinting method is less complex and makes use of visual means, such as flow charts that can indicate the extent of fit. However, the construction of the blueprint is not easy. Specifying service quality as the gap between the perceptions and the expectations of certain service attributes related to quality, they have developed the SERVQUAL instrument to quantify this gap. Recently, consumers and analysts raised concerns about this conceptualization, and proposed a performance-based measure of service quality operationalised through their model. Limitations Functional units whose scale or even existences are threatened by transformation programs may resist such initiatives. General inertia or resistance to change must also be overcome. In many cases, customer interaction requires cross-functional cooperation that is difficult to achieve (Palmer, 2005, 56-78). Many executives use formal planning challenges to elicit response and initiative from individual operating units. These challenges should be linked to a broader vision or direction for the enterprise, and should cause each unit to identify areas in which it can contribute to the achievement of the broader objective (Greenberg, 2002, 65-77). Responses to planning challenges can then serve as a basis for identifying and aligning initiatives to the broader transformation thrust. Outsourcing, or shifting from an internal source of a product or service to an external source, is often linked to cost reduction initiatives, but it is also an important transition tactic. (Snipes, 2005, 1330-1339) Shifting an internal organizational relationship to an outsourcing business relationship can facilitate fundamental changes in operations. This benefit applies to internal (to the company) outsourcing agreements as well as external relationships. By shifting an internal unit from hierarchical mode to a market transaction mode, it is possible to unfreeze resistance that is difficult to deal with in a traditional organizational setting (Kelemen, 2003, 38-47). An additional barrier of great importance is customer acceptance. A number of enterprises have overcome financial and organizational barriers only to find their programs rejected by intended customers (Johns, 1998, 958-973). This initiative overcame significant technical, financial, and internal barriers, but failed when potential customers failed to accept the offering. Customer acceptance barriers can be reduced or eliminated through a series of tactics in the early stages of program development. (Schneider and White, 2004, 141-158) Legal issues surrounding questions of privacy may also pose barriers for any number of segments, notably in the health care field, but also in many other sectors as well. Anticipation of such issues and participation in public policy proceedings can help overcome these barriers. Finally, technical barriers may also exist (Fitzsimmons and Fitzsimmons, 2007, 75-88). Many transformation programs require technical improvements or breakthroughs in order to realize their full potential. In many cases it is possible to anticipate or even to force such breakthroughs, but technical shortcomings can stop aggressive transformation programs (Konicki, 2002, 26). Careful technology monitoring, planning, and forecasting is central to successful transformation programs (Palmer, 2005, 56-78). Executives promoting transformation programs must be aware of each of these potential barriers. Any one of these factors can slow or freeze transformation programs. Companies that have successfully overcome these barriers have practiced a wide number of tactics to reduce or eliminate barriers. In some cases, many of these barriers are minimal and progress moves forward rapidly (Johns, 1998, 958-973). However, most enterprises will find that some combination of barriers poses a serious constraint to their ability to transform the business and organization. It is difficult therefore to achieve transformation without sensitive, skilled, and committed senior leadership (Witkowski and Wolfinbarger, 2002, 875-881). The philosophy of transformation senior leaders must be as concerned with the implementation of their transformation programs as they are with the design and development of those programs. However, the appropriate focus of these programs should be business transformation first and organizational change second. The aim is not to find organizational solutions to business problems. Historically, many companies have responded to business problems with organizational initiatives. Business process customer interaction focuses attention on the heart of business operations. (Slack, 2001, 1100-1121) Summary & Conclusion Organizational change follows in response to new business requirements and realities. Without skilled leadership and management of organizational change, however, the benefits of business transformation cannot be realized. The transformation process also poses another fundamental shift in management thought (Kelemen, 2003, 38-47). Most business development activities in the 1970s and 1980s were pursued at the periphery of the existing enterprise. Acquisitions, diversification activities, and new ventures were all essentially removed from the core activities of the enterprise. Transformation begins by focusing on core activities in the current business. It focuses on developing central infrastructures and systems to radically improve the performance of the core business. (Seddon, 2002, 326-344) Business customer interaction efforts encompassing a wide scope of activities can drive radical gains in business performance. When linked to integrated infrastructure development and long-term business vision, customer interaction can trigger a three-phase process of business transformation reaching far beyond the immediate objectives of operating excellence (Ciraulo & Auman, 2002, S27-28). The alignment of infrastructure development efforts, operations improvement programs, and long-term business planning is central to realization of the full potential of business transformation (Johnson, 2004, 22-23). The transformation process faces many barriers and anticipation of those barriers and use of appropriate tactics. However, efforts to improve operations through a series of discrete local initiatives, utilizing independent technology infrastructures, aligning such discrete initiatives with broader programs of larger potential is an issue of relevance to a growing number of organizations today. (Greenberg, 2002, 65-77) References Bebko, Charlene Pleger. 2000. Service intangibility and its impact on consumer expectations of service quality. Journal of Services Marketing, pp: 9 – 26. Retrieved from (http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=56B521D81CFB51B84AF56A52A56AE7ED?contentType=Article&hdAction=lnkhtml&contentId=855862) Ciraulo, R.M., Auman, K.S. (2002). Insurers Can Unlock Value Via CRM. National Underwriter / Property & Casualty Risk & Benefits, 106(20), S27-28. Dale, B. (ed) (2003) Managing Quality 4th edition. Blackwell. Oxford. pp: 54-72. Fitzsimmons, J. and Fitzsimmons, M. (2007) Service management: operations, strategy and information technology. 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