Quality and the Experience Economy

Over the past two decades consumers have been gravitating towards purchases that are of both high quality and provide an experience. Quality of a product or service alone is no longer a differentiator, quality of experience is. Consumers are buying what will not only satisfy a need, but will illicit an emotion or establish a connection.

How will this new economic structure affect the quality industry?

Babette Ten Haken

The Experience Economy, by Joe Pine and Jim Gilmore (1999, 2011), created the blueprint for how B2C (business-to-consumer) industries created customer experiences to build customer engagement, loyalty and marketshare.

Today, the Age of Mass Production is gone. Customers expect a company’s products and services to do more than remain “as good as the day I bought them.” Instead, customers make purchase decisions, expecting products and services to continuously become better and better over the duration of their life cycles. As a result, customers expect their own emotional experiences, interacting with their purchases, to become better and better.

The Experience Economy principles offer competitive advantages to the B2B (business-to-business) space, especially industry and manufacturing. However, this scenario sets up legacy cultural and methodological plate tectonics. Operations and Quality processes and mindset crash into Business processes and mindset. After all, Operations and Quality traditionally focus on issues and risk. Business traditionally focuses on possibilities and opportunities.

Can the two cultures not only co-exist within The Experience Economy industrial IoT ecosystem? Can they collaborate, cross-functionally, to create extraordinary and enduring customer outcomes and experiences?

Yes! Quality tools like design thinking and qualitative Voice of the Customer (VoC) methodologies have a tremendous impact on delivering product- and service-based designs which deliver remarkable customer experiences and catalyze customer retention. These insights give breadth and depth to periodic, quantitative customer experience survey results, conducted on the business side of the table.

However, to successfully deploy these tools and methodologies, Quality professionals must walk Quality talk across the organization, from the plant floor to the C-Suite. How does the Voice of Operations-based end-users relate to the Voice of Business-based decision makers? That is the Quality Challenge. Because once the dots are connected, organizations create a powerful, customized, experience-based blueprint for growth, expansion and sustainability.

John Hunter

It is very difficult to create great customer experiences if the management system doesn’t provide those interacting with customers the authority, tools, training and support to make decisions and continually improve the systems in place to deliver great customer experiences.

The management system must not only give people the authority to react to specific customer desires individually but must integrate continual improvement of the processes and systems to continually enhance the ability of the organization to delight – even in the face of ever greater customer expectations.

There is not a magic bullet solution to creating the capabilities to delight customers with the overall customer experience. It requires creating a management system that encourages that focus and supports acting based on those principles every day.

Luciana Paulise

Instead of spending a big budget on advertising, some companies decide to bet on free marketing by investing in their customer’s experience instead. For companies Like Johnny Cupcakes, Zappos or Delivering Happiness, their driver for growth has been repeating customers and word of mouth to actually get free advertising . Most of the money they would have spent on paid advertising like regular companies do, they invested it into customer service and the customer experience instead, letting customers do the marketing for them through word of mouth and relationships. They will recommend your brand to their friends, talk about you on their social networks, generate repetitive sales and sometimes even give you ideas for potential new products. Basically, customers become what I call “lovers” of your brand.

So what is a great experience? it is not just regular customer service. It is to take care of every detail in every contact with your customer, face to face, online or even on the phone. Tony Hsieh, founder of Zappo’s says that “If you get a 10 minutes interaction right, the customer remembers the experience for a very long time and tell his or her friends about it. You need to make sure that we use that opportunity to create a lasting memory”. So, the key is to focus on building engagement and trust, seeing every interaction through an experience of a long-life relationship lens instead of an expense-minimization lens.

This shift from buzz marketing to experience marketing can only be possible through a cultural transformation within the company. All the old habits of just minimizing cost need to shift towards customer centered habits.

Edwards Deming, proposed a cultural transformation in his last work, the System of Profound knowledge. This method shifts organization from “Me” to “we”. a “We ” organization means that departments work together, and make decisions considering the interactions they have with each other. As Deming puts it, we need to mind not only about doing “good parts” but also about “the gaps” between the parts. That is, your report can be done correctly, but if it doesn’t fit the needs of your customer, it may not be as good for him. We need the customer or the preparer to raise the voice to make a change in the process.

“We” thinking is crucial in an experience-based marketing, as everybody needs to be involved in getting the right interaction to the customer, everybody needs to be open to see how the company can do better and be part of it.

The cultural change needs to be lead by the head of the organizations by example (top-down) and specific principles, and provide the appropriate training of those principles to the employees to offer bottom-up solutions.

Chris Moustakas

Remember the first time you used Google Maps? Compared to the experience of Mapquest, it looked and felt like magic, and what was state of the art just the day before became obsolete overnight.

A wealth of open resources, plus a step change in what “good” looks like, has reset people’s expectations. At its core, “Quality of Experience” is a holistic definition. It used to be that a company could be judged by specific criteria – a widget’s reliability measures, for example – but those days are over. Today it’s not only that widget’s reliability that matters, but how and from where you source the raw materials, how responsive your support hotline is, even what your employees are saying about you on Glassdoor.

This change makes perfect sense in a world dominated by instant information and social media. It has nothing to do with producing a warm-and-fuzzy feeling, and everything to do with smart business. Your supplier may provide cost-effective, high-quality products, but if those products were developed in repressive environments, you expose yourself to the risk of social backlash (especially if you’re a bigger company). You don’t have to think for long to remember recent examples of this.

How can quality professional contribute positively to this new reality?

  • Use tools like NPS to gauge how your customers feel about you.
  • Apply metrics to qualitative measures (such as your NPS scores), and use those metrics to communicate management expectations.
  • Open your organization to suggestions from employees, who often have the best ideas, and track those with the same attention you would a corrective action.

The techniques are the same. The only thing that’s different is the larger scope – and with that larger scope, the opportunity to effect more meaningful change than ever before.

Luigi Sille

Nowadays customers are much more educated, they know exactly what they want. They read and do research (using internet) about the products they want. In an experience economy an external customer is referred to as a “guest”, and not just a customer.  A guest does not just buy a product, but he or she pays for the experience.

How will this shift to experience economy affect the quality industry, and what quality practices can be applied or adapted to ensure success in this new economic structure? The answer is simple: SERVICE

Companies should invest in training and development of their employees to:

  • Deliver better services
  • Communicate better
  • Handle and help solve complaints/problems… “Service Recovery”
  • Expand their knowledge
  • Work on team-building

Managers should:

  • Be more flexible
  • Brainstorm (with the team) for new ideas and possibilities (Creativity & Innovation are very hot topics in the quality industry)
  • Help / guide / advise the team
  • Quality of work-life is also important
  • Deal with conflicts, and never neglect them

We have to remember that Managers have to guide, control, and motivate employees (team members) so everyone will feel that they are part of the organization. We also have to measure, one way or another, the quality of service we are delivering. But measurement of Service quality is not an easy task. Compared to measuring tangible products, it’s difficult.

Aspects of service quality that can be measured:

  • Reliability: Deliver promised service in a consistent way
  • Tangibles: physical appearance
  • Responsiveness: Willingness to offer a fast service
  • Credibility
  • Access: Easy to do business
  • Customer complaints

Maybe we (Quality professionals) have to do more on this measuring aspect. New and improved measuring methods will have a positive value for both organizations and your customers.

So the experience economy and the quality industry, go hand in hand. Improving the quality of your service will in turn deliver the experience your customers are looking for.

Dr. Suresh Gettala

Joseph Pine and James Gilmore, the two protagonists of the experience economy, argued that the transformation of the economic progress has gone through four-stages of evolution – from agrarian (commodity based) to industrial (goods based) to service (service based) and finally to experience based economy.

Source: B. Joseph Pine II and James H. Gilmore, “A leader’s guide to innovation in the experience economy”, Strategy & Leadership, Vol. 42, Issue: 1, pp.24-29, 2014.

Today, experiences are construed as a distinct construct and economic offering from services just like how services were seen distinctive from goods in the earlier decades. Experiences are perceived to be unique, memorable and sustainable over time that would involve customers’ involvement at multiple levels – physical, emotional, intellectual, behavioral, social and spiritual.

The primary question that arises is: “Can the quality of the experience be measured”? Earlier dimensions of quality, predominantly were explained from a goods/services perspective, quality of the experience transcends such limited thought process and details that experience quality encompasses the “total experience” ranging from the pursuit, procurement, consumption and post-sales phases of the experience.

It has been proven through research studies that customers do construe customer experience quality and therefore able to perceive the relative superiority or inferiority of their experiences. While we can be forgiven for thinking that managing customer experiences is apropos only to the consumer industry, it must be noted that business to business milieu also provides definitive stages for experiences.

Pine and Gilmore postulates five value creating quality approaches that drive progress in the dynamic experience economy that include, customized goods, enhanced services, charging for experiences, fusing digital technology with reality and transformative experiences.

To encapsulate, “Experience” is not an immeasurable, amorphous construct but a concrete economic offering which if carefully designed and staged would result in a lasting impression on the customers. Needless to mention, this would in turn help to carve a niche for the seller organization if they can stage an experience that is going to create some memorabilia in the minds of the players that results in a transformation within the customers.

As more and more focus is being given to the quality of the experience, by both the business and the academia, prudent practitioners have realized that they can command a fee for the experience per se. Consequently, companies enabling such transformational experiences can charge not just for the goods and services or the time spent with the customers but for the transformation resulting from such experiences.

Several research and practitioner oriented articles have dwelled on the dimensions of experience quality and how they positively influence other constructs such as customer satisfaction, loyalty, retention and repeat purchases. There has been substantial proof to illustrate that effective management of experience quality is extremely crucial for achieving sustained financial success.

Big Data and Quality Professionals

Based in Dallas, TX, Ponmurugarajan Thiyagarajan  (Rajan) is a business development manager for Digital Enterprise at Tata Consultancy Services and a senior member of ASQ.  He is passionate about quality, digital reimagination solutions and is a “Mac head.”

He blogs at Quality Matters, http://pmr-blog.blogspot.com/

Were you pleasantly surprised when the receptionist at a hotel proactively identified you with a greeting as you were about to check-in?   Did a relevant coupon pop-up in your smartphone when you were shopping at a retail store recently?  Did you receive a reply to your tweet in social media from your telephone company with an apology note for the service inconvenience caused?  If you could answer “Yes” to any of these questions, then big data is mostly that magical element that helped those companies to manage and deliver this customer experience for you.  Big data has evolved as an effective tool that can be used by companies to continuously improve aspects such as customer experience, product quality, business processes etc.

Big data is in play when data size is huge (Volume), moves in high speeds (Velocity), comes in variety of forms (Variety) and in varied quality (Veracity) which conventional database systems cannot efficiently process.

Analytics built over big data enable organizations to process structured and unstructured data to derive useful intelligence and provide actionable insights for end-users.  The advent of high-speed network connectivity, commodity computer hardware, and open source software such as Hadoop and Non-Hadoop (for example: NoSQL) technologies have made big data a popular technology choice.

There are interesting use cases of big data that can help organizations that are committed to differentiate, innovate, and embrace disruption of conventional processes.  For example, wearables (watches, bands, etc.) and connected devices (Internet-of-Things glucometers, connected cars, connected homes, etc.) utilize big data technologies to collect and process huge amounts of real-time data from machines (logs), people (social), and other sensors (internet of things).   From these data, organizations get to understand customers’ 360 degree view and derive the ability to contextualize and deliver a personalized experience.

That being said, big data is still a buzzword for many and often perceived as a misused terminology.  While some organizations have tested it to work, to a good extent, other companies are still researching it, and some are even hesitant to adopt it at all. One of the key challenges that I can think of is the accuracy and uncertainty around the quality of data that is gathered and processed.

Lack of good data governance is a major cause for this challenge.  Also, outliers and incorrect data misdirect users during the decision-making process.  Business users demand high quality of data to derive actionable insights.   Being an emerging technology area, I believe that big data has to be further researched from a quality point of view.  I have these questions for the quality professionals:

All of this has interesting implications for quality professionals who may become involved with big data efforts. Assurance of quality is key in such projects: data clean-up must happen in an automated fashion and reconciliation reports to be produced in real-time to track quality parameters. Thus, relevant tools needs to be built for quality assurance. It will be interesting to see how quality tools such as Plan-Do-Check-Act, the 7 quality tools (Fishbone diagram, Check sheets, Control charts, Histogram, Pareto Charts, Scatter Diagrams, Flow Charts) etc., can be customized for a big data project.

I believe there’s a lot of possibility in this area for quality professionals, as I’ve yet to see any concrete maturity models around big data. This is a potential topic for future research.

To conclude, let me state an example of a large corporation that probably is making the best use of big data.  It is Google that really attempts to help users, like me, to plan vacation or business travel in a modern digital way.  Right before a recent trip, Google provided relevant notifications and guidance to my smartphone on when to start to the airport, the best route to take to avoid delays, the status of the flight with gate information, hotel booking information, etc.

Google seems to collect a lot of information from users’ mobile devices, emails, internet browsing history etc., to derive and offer useful analytics.  It is interesting to note that users, like me, are ready to slightly compromise on privacy (by opt-in) for the benefits we can enjoy.  I think this is another good example to demonstrate big data in action.

I invite you to share further thoughts and views on big data and how quality professionals can play a vital role in this digital era.

A Leader’s Roadmap to a Culture of Quality: Building on Forbes Insights-ASQ Leadership Research: Part 3 of 3

This is a guest post by Rob Lawton, an author, executive coach, and expert in creating rapid strategic alignment between enterprise objectives and customer priorities. He has directed strategic and operational improvement initiatives since 1985. Lawton coined the term “customer-centered culture” with his first book, Creating a Customer-Centered Culture: Leadership in Quality, Innovation and Speed (ASQ Quality Press, 1993). He has been published in Brazil, China, the U.K., and is referenced widely. Many of his articles are available at www.imtc3.com. Contact him at Robin.Lawton@icloud.com.

Part one

Part two

The Forbes Insights-ASQ research published in fall of 2014 distills several guidelines from interviewees that can be especially useful with more detail.  My purpose in this three-part series is to provide details and references to the missing specifics for successful action.

This blog post is the last in the series.  It spells out how to successfully address point #3, below (page numbers from the report are shown in parenthesis):

1.    All employees must apply the four key elements of any strategy for building a quality culture.  (Page 8: Boeing’s Ken Shead.)
2.    Closely understand customer expectations so you can focus and give them what they want.  Study respondents overwhelmingly report low effectiveness by their organizations in doing so.  (Page 16: Intel’s Stan Miller and Rudy Hacker.)
3.    Develop a formal quality policy, common language and leader behaviors as deployment mechanisms. (Pages 18-19, HP’s Rodney Donaville.)

DEVELOP QUALITY POLICY, COMMON LANGUAGE, AND LEADER BEHAVIORS

Mr. Donaville states in the study that establishing a common language (absent ambiguity) is essential for the culture leader.  We have found there are six essential levers that a leader can push on to strengthen and change the culture: language, values, measures, power, assumptions and modeling.  Specific guidance was provided in the preceding two blogs on the first four.

The moment we talk about a quality policy, we encounter another frequent stumbling block on the road to a strong quality culture.  Just about everyone in the study agrees that quality starts and ends with the customer’s definition of it.  If that is true, is there a difference between a customer satisfaction and quality policy? The evidence suggests there is.

A traditional quality policy generally points us toward technical product or process performance.  In practice, it is common to find that quality policies encourage action to find and reduce defects and errors. If it is possible to have a product with a very low defect rate but a high customer defection rate, there is a difference between quality and satisfaction that matters.  Likewise, if we can have a product with a modest defect rate but fanatically loyal customers, there is a difference between quality and satisfaction that matters.

Sadly, we find quality policies are far more common than those on customer satisfaction. Let’s solve the issue by putting the emphasis where all the leaders in the study say it should go, on customer satisfaction.   The following Customer Satisfaction Policy, displayed prominently by a major retailer, is a typical approach to the matter.

We guarantee customer satisfaction by refund, replacement or return. (Labeled as Walmart’s customer satisfaction policy and displayed on the wall at the returns or customer service desk.)

Is this really a policy on satisfaction?  Does is address Dimensions 1 or 2 in the graphic below (discussed in part two of this series)?

Since the intent is to describe the corrective action the company will take when the customer is unhappy with a purchase, it is a dissatisfaction policy focused on Dimension 2.

Consider a second example.

All employees, associates and partners will:

•    Proactively solicit customer needs and expectations.
•    Confirm that we have understood those expectations.
•    Develop, package, deliver and support our products to meet those expectations.
•    Measure the degree to which our customers’ product and outcome expectations are achieved.
•    Never blame the user when he or she cannot make a product or process work; provide understanding then help.   Assume they have done their best.
•    Aggressively seek to close any gap between what our customers expect and what they experience. (Developed by International Management Technologies, Inc. and provided to many of its clients with permission to use.)

This policy puts all six cultural levers to work here: language, values, measures, power, assumptions and modeling.  Bullets 1-4 are related to Dimension 1, bullets 5-6 cover Dimension 2.

SUMMARY

ASQ and Forbes Insights have provided us with great food for thought.  My purpose in this three-part blog series has been to put some practical guidelines and references on the table for those wanting to take action.  I invite you to spend about six minutes on a self-assessment and see where you are on the road map to excellence.  The questions are designed in such a way that, once you give your response, you’ll already have the start of an action plan forming in your mind.  Just select item #1 here. The average score across thousands of responders is about 70 (out of a possible 125).

You can also take the Forbes Insights/ASQ Culture of Quality self-assessment, which gives an overview of your organization’s culture of quality.

ASQ provides a catalyst to apply culture-strengthening practices to your own organization: the course Excellence in 8 Dimensions. My hope is the short action plan outlined in this series, or implied by your self-assessment results, has offered you useful insights and a practical path forward.

The Ps and Qs of the new General Motors

Hello, readers and ASQ Influential Voices. This is Laurel Nelson-Rowe, ASQ Managing Director. This month, I’m guest blogging on View From the Q. (Paul Borawski will be back in October with a preview of World Quality Month.)

A few weeks ago, I had the opportunity to get an up-close look at GM’s quality culture during a trip to the GM Tech Center in Warren, Michigan. There’s been a lot written lately about the “New GM,” even to “Report Cards” on its performance in Fortune Magazine, and reports in ASQ’s Quality Progress. A highlight to the visit was a conversation with Terry Woychowski, GM’s new vice president of global quality and launch. He talked a lot about performance—one of the three “Ps” of GM’s emerging quality culture. At GM, Terry says, quality is “promise, personal, and performance”–quite clear and concise for GM, an ASQ Enterprise Quality Roundtable member.

I invite you to watch clips from our conversation, below, and to reflect on the following:

Terry, a GM veteran, says the GM promise starts with quality—“that the product will do everything we said it would do.” He wants customers and employees to hold GM to that promise, for every product, every service, in the every segment and every market, where the GM brand plays. He’s on the phone, on video, on the Internet, and in the field with constant reminders to GM employees everywhere of their individual, personal responsibility for quality—that quality needs to be part of their personal, and their organization, character. “There can be no spectators when it comes to quality,” Terry emphasizes.

I was particularly struck by Terry’s comment that GM’s 2009 bankruptcy, though difficult and painful, “clarified as never before the GM mission: GM will design, build and sell the world’s best vehicles.” I say that’s another essential “P:” Pointing everyone in GM, around the globe, in the same direction.

Do you think companies must sometimes (often? regularly?) undergo radical organizational change or substantial economic shifts to get back to the rigorous quality systems? To rededicate individuals and corporate cultures to performance excellence? What lessons must we learn, and how many times must we re-learn these lessons, to make quality a constant priority?

(By the way, that’s a soon-to-be-released Chevy Sonic in the background.)

GM Culture of Quality—Promise, Personal, Performance

Working on Quality “Cradle to Grave”

Making Quality a Top Priority

The Story of Chevy Volt

Global Standards

Quality Surprises

Predicting Future Quality Headlines