The CX Leader Podcast: Operational Excellence Leads to Better CX: Audio automatically transcribed by Sonix

The CX Leader Podcast: Operational Excellence Leads to Better CX: this wav audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Steve:
Every organization has some level of back end process or logistics that are often unseen from the customer. But regardless of its visibility, it can affect your customers' experience.

John:
There's a huge, long chain that has to happen in order to actually enable that change to really get back to the customer in a positive way. But if I can flatten the organization such as the customer service and the supply chain, I can now take that customer data and directly enhance or influence my processes and products that I'm delivering.

Steve:
A look at how operational efficiency can affect the customer from a CX perspective on this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is produced by Walker, an experience management firm that helps our clients accelerate their XM success. You can find out more at walkerinfo.com.

Steve:
Hello, everyone. I'm Steve Walker, host of The CX Leader Podcast and thank you for listening. It's never been a better time to be a leader and this podcast explores topics and themes to help leaders like you leverage all the benefits of your customer experience and help your customers and prospects want to do more business with you. So you want to buy a new car? Well, good luck. Car manufacturers are struggling to keep up with inventory demands due in part to the microchip shortage. And consumers who are looking for new cars are feeling the pinch. This is a great example of how operational logistics can affect the customer experience, but it's not just limited to manufacturing. All companies have some sort of operational processes: shipping, legal work, graphic design is a few examples, so it's important to consider how the efficiency of your operations affect the customer experience. Well, I'm very happy and proud to welcome Dr. John Olson, professor of operations and supply chain management, and also program director of the Masters of Business Analytics at the University of Saint Thomas, located in Saint Paul, Minnesota. And Dr. John is going to help us learn more and better understand how CX interacts with operational efficiency. Dr. Olson, thank you for being a guest on The CX Leader Podcast.

John:
Well, I'm happy to be here. And this is a, I think, a very important topic for businesses today, and I'm looking forward to have our conversation.

Steve:
Yeah, I know you're an academic today, but I think you have an interesting background. So if you wouldn't mind, just for a little bit of context, give us your CV and how you became a professor of supply chain management. But I know you have some real practical experience, but I think that might just be helpful to set the table for our conversation today.

John:
Sure, I'd be happy to. So early on, as a as a kid in just high school, I worked in a variety of manufacturing plants in Minnesota. I worked in International Paper, and I worked at a place called Viking Aluminum, which makes like aluminum pans. And I always had an affiliation for being on sort of an engineering and process side of the business. I went to the University of Minnesota for my undergraduate program in engineering, mechanical engineering, and then eventually I started working for 3M as a process engineer. Technically, I guess I was a mechanical engineer working in a process engineering space, but everybody at 3M is a process engineer. So how do things get in through and to the customer from an operations standpoint? Well, I spent several years in sort of the engineering role and eventually converted over into kind of a quality and operation excellence perspective. So I was very fortunate at that point in time. There were two sort of quality revolutions going on in the world, one being Six Sigma and the other being Lean. Both were sort of continuous improvement programs aimed at getting operations to be more efficient, more effective, more productive without increasing extreme expenses in the business from a CapEx standpoint, I did that for several years at 3M., got promoted into a sort of a vice president of quality role in an area called Applications in Abrasives. And I worked there for several years until I decided to transition out into academia. I did my PhD program at the University of Nebraska in Operations Research, finished that up in the late nineties, and I've been in academia ever since I joined the faculty at Saint Thomas in 2004, and I was sort of a return home for me back to the Minneapolis area. And I've thoroughly enjoyed my career there ever since.

Steve:
Well, I think a lot of us would be envious of your transition back to academia. I think all of us would at a certain point would like to have a second career helping shape the careers and minds of of young people and being in that kind of environment. So kudos for you for that. But I did think it was important to talk about because you really I mean, 3M is one of the great companies of all time. And you mentioned Six Sigma and Lean, and I might throw in the Baldrige Award because all of these were were huge initiatives in business at that time, eighties, nineties. But one thing I think that goes underrecognized in those because they were technical and kind of engineering driven and more operations management, but they all of them required some sort of input from the customer. And so these were these were some of the early on things that drove us to the sort of the customer satisfaction side. You know, it's always interesting the people I have on the program, their different backgrounds. Yours is a little unique, but most of them came up through customer service like contact center or fulfillment type of operations or kind of the more traditional market research, which is which is my background. But a lot of this early on was driven out of quality functions or operational excellence. So your background is very valid and I can't wait to get into this topic because, you know, really the real value of, of customer feedback and listening to customers is can you make something positive happen in your organization? So again, from your perspective in supply chain and more coming at it from that, what are some of the most important things that a CX Pro ought to think about or encourage the culture in their organizations around this to help guide the decisions and also, I think, to be relevant to the operating managers.

John:
So you ask a great question here because it's something I've been preaching in both the classroom and then I still have the fortunate ability to consult with local organizations. And I talk about this subject at least three or four times a week. So I think this is a spot on question, Steve. And one of the things that kind of struck me and there's a parallel from the Six Sigma space that I'll use here to kind of bring it full circle to this space. When Six Sigma started back in the nineties as the evolution of GE, everyone thought it was a quick fix, a way to kind of get our processes to just suddenly be working great. And all of a sudden we were going to make a ton of money because we have these super efficient processes and we have no waste in the system. And and what everyone quickly realized is that on the backbone of those efficient processes are people and great management systems. And and and that's driven by, you know, really a culture. And so what I mean by that is it's not one person that can establish a program like this. It really is a culture that creates a program like this. It has to live and breathe in the organization and really then become not how you do your work. It is the work you do. And so having it become part of your daily life and your work is is vitally essential. And as you mentioned in your statement there, that the voice of the customer, which is a fundamental piece of the Six Sigma space, which is how do I take what a customer wants and translate it into something I can deliver? Becomes the the overarching theme of how we pull that culture together, right? We do things to better enhance the experience of our customers through the goods and services we deliver in the organization.

John:
And really, no person in the organization is better at doing that than someone that has an interface with the customer on a daily basis, which in today's language is that customer service experience professional. And so you you pull that forward to today and you start thinking about the new term analytics and business analytics and maybe data science, how does that take the same life that the Six Sigma programs did? And the reality is, never before have I ever seen in my years of work in academia the amount of software that's available to do crazy fancy graphs, analysis, generate on-the-spot reports, take data, reshape it, reformulate it than ever before. But the challenge inherently is, is those shiny objects don't actually seed in what makes a great business driven organization through data. And we have to see it in that through culture, right. You have to establish a culture around data is important. Why the data is important, how the analytics are relevant to the business, what makes the analytics useful in making decisions, what types of decisions we make from them? And that that's a cultural element as much as it is a technical element. And the two together have to merge to really make it work. And if you're just going to buy the shiny object, you're going to fail. But if you buy the shiny object and understand how it can fit into the fold of your organization, you have a chance to leverage that technology and enhance your business decisions and go forward.

Steve:
Yeah, actually, just a couple of weeks ago, I interviewed a person that coined the phrase "it's a SaaS economy today", that everybody is driven by these software subscriptions that create incredible tools for the business. But what you just said is right. It does provide great visualization of the data, but you still got to take humans and management talent to actually convert those insights and then be able to drive it back through the organization to create things that customers value and willing to pay for. So actually, I was thinking back, you know, I always really liked operations management and still I think that's that's one of my skills I think I bring to our company is I can look at data, I can think about how we might do things differently. I could pull in kind of like what the customer is saying, and I could look at the kind of the financial data or the operational data. And I say, you know, this is how we could tweak this or change that. For most of our audience. They're really much more on the customer feedback side. So can we talk just a little bit about how do you think that fits? And I, I can think of 100 ways, but I really want to hear it from you. But how do you think CX kind of fits into the concept of supply chain?

John:
That's an interesting question. So I probably also could generate a thousand ways to to think of of how that generates in there. I guess I would see two elements here, right? When I think of customer service, I think way back to when I was working in manufacturing first part of my career, customer service was really in the manufacturing space, nothing more than my customer complained, fielding what that complaint was, and then running out to the manufacturing and engineering groups and saying, How do I change or rectify the problem that this complaint created? And so the customer service group was seen largely as. Adversarial or at worst. And I suppose at best they were seen as a nuisance. It always meant extra work because they only came to me when I had to make a spec change on a product or I had to make a customer delivery date change that wasn't within the parameters of what we could do. So. And today, as I think about customer service groups, how do I get that customer service group closer to the pulse of what we actually do as a business and why is that important? Right. So in the old days when it was layered, call the customer service person, then complain and then get the engineering group.

John:
There's a huge long chain that has to happen in order to actually enable that change to really get back to the customer in a positive way. But if I can flatten the organization, such as the customer service and the supply chain, meaning engineering operations, working together and purchasing logistics. That they're closer together, I can now take that customer data and directly enhance or influence my processes and products that I'm delivering. And the lag time to getting change to the customer has been shortened by a ton. And when you do that right, it gives that organization the ability to capture a marketplace that others can't. And so if I have a quick turnaround time from customer service to response to the customer through the organization, all of a sudden I'm known as a responsive and agile organization, and that agility can win business from the operations standpoint, not from the customer service standpoint, but it is truly fulfilling the customer's needs. And so that's a that's an external perspective, right? How do I get a better external relationship with a customer through my operations? On the second side of it, it's kind of an internal perspective, right? What does a professional know that is important for the operations in the business, because when I think about operations, I always think about the levers of lead time.

John:
I think about the levers of cost. I think about the levers that are related to quality. Right. All of these are key elements from an operations supply chain perspective that are critical. And so if I have an internal perspective from customer service, if I can take their data that they're learning from the customers directly through surveys, Qualtrics, through conversations, through focus groups, quality circles, I'm now going to be able to take that data and say, okay, where do we have gaps in performance from what the customer needs? And if I can now address those gaps in a meaningful way, I'm going to be able to retain customers better. And so there's one capturing new customers, delivering new products and services quicker, and then there's the other one of retaining customers through stronger contracts, longer term relationships. And really then we know that there's stickiness to a good operations program. If I'm able to deliver to you, Steve, you know, a cell phone case effectively and you like the product, there's no reason for you to look somewhere else for a new product. There's stickiness to that contract and that has residual value financially to the organization. But if I don't know what the customer is complaining about, maybe it doesn't do a good job holding the phone in the case, I can't resolve that issue. And now customers are no longer sticky. They're going to look elsewhere and the cost to get new customers is way more expensive, is the cost to retain customers. And and so truly that that is an important piece of that whole puzzle is the quality element of your goods and services. And then finally, the supply chain. For the first time that I can remember, customer service people are no longer just customer facing their supply chain facing. I can use customer service techniques, interviews, focus groups, surveys and actually talk to my vendors upstream in the supply chain as well. Because the reality is we are their customer and by being the customer of your vendor, if I can learn how I can become a better partner, I also am going to be able to leverage that into longer term contracts, better quality, better reliability, better supply in the organization. And by using that customer service as an overarching function as opposed to just a one way function to the customer, you know, we're now able to get visibility that we've never been able to see before to improve the whole supply chain and not just the downstream supply chain.

Steve:
My guest on the podcast this week is Dr. John Olson, professor of operations and supply chain management, and also the program director of the Masters in Business Analytics at the University of Saint Thomas in Saint Paul, Minnesota. He is both a academic and a previous practitioner, having spent a lot of his career at 3M in operations management supply chain, and we've been having a fascinating discussion about how CX pros can integrate back in with the supply chain and operations management executives in their organizations. So you said a lot of things there I want to parse out. I think it's important for for our audience to understand. But you gave, I think, a very familiar scenario of sort of historically what the customer service or the customer complaints would be handled in a traditional manufacturing organization. And in our parlance, we call that break-fix you know that was kind of the early things. Let's go fix what was broken. But also the you know, the customer service folks was really the repository of poor design or poor quality, right? The product of the service didn't fit with the customer thought they bought. So then they're in there trying to get it resolved. But then I think what the real key for us here is to take that and then build that back in and design that back into our processes. And I loved your concept about going into the supply chain because that's really where the the value gets added all along the way. And really where we create value is when we help our customers serve their customers better. So really great dialog. And you know, I don't know how many of our listeners have actually spent time with their operating managers. But again, with your background, how would you propose that if I'm a customer listening executive or I'm a customer experience person and I have not really reached out to the folks in my supply chain at my organization, what would be kind of those first steps in that process to to start building a relationship with the operating side?

John:
You know, I think first, it's a mentality piece, Steve. So if you really kind of think about how the organization structured that operations group is a customer of the CX professional. They need the data and the relationship from that individual to really be successful as an operations group. And so if you then take the relationship of that perspective and how you treat your own customers, that's really the opening starting point for me. So if I came up to the operations group and gave as a non adversarial break fix model, but came into it as saying We're here to work together on supply chain issues. What are the current issues that I need to be aware of as a professional that will let me inform my customers better of the challenges that we face of as an organization? In addition to what's the type of information or processes that I can provide you in the operations that will help enable you to resolve issues you're facing today. And so you might find that there's a number of opportunities simply with that dialog, right? And I think all great cultures start with good dialog. And if we can create that dialog first, that's going to open up the door whether they're going to want you to help you help understand the supply chain from a vendor perspective better or we really don't have a pulse of what the customers think about this new feature that we've added to our product or simply, Hey, I need you to be aware of that we're having lead time challenges buying product right now, and we can't necessarily get our product to the customer on time.

John:
And do you have a relationship with the sales department as a professional that we can open up that dialog to so that we don't get ourselves in trouble promising something in four weeks when it takes me six weeks to get my supplies in. And I think that dialog is where I would ultimately start. And then from there the second piece is. You know, if we really think about the CX professional, what are the I'll call them KPIs to use an analytics term the key process indicators that really drive the performance of the the products and services we're offering. And how can I, as a CX professional, give a better lens to the designers of those goods and services from an operations standpoint such that we are directly enhancing the value to the customers? Right. And that can only happen if I take out waste out of the system and simultaneously deliver value to the customers. And and really those two things together, I think we'll end up enhancing the customer's overall experience with the firm. You know, I think of Disney, for example, people think of Disney as an ultimately a theme park and a tremendous family experience. But I could argue to you that they're the most efficient and effective operations group in the planet. They study every piece of data around a customer that exists, and they build products and services to them that are extremely specific and targeted. And that that only comes if they have a great relationship with that group.

Steve:
Yeah, I've always been fascinated with Disney, you know, like you never see any trash. I guess they have tunnels underneath that. I've actually had a couple of family members that have been part of their cast and their culture around customer service is just phenomenal.

John:
Yeah, and they study sightlines where people stand. They have convenient… Nothing is done by chance in a Disney theme park, even though as a consumer, what do you think? I'm having a great time with my family, enjoying the day, but all of a sudden you smell garbage or you're in a super long line that you didn't expect or you know, the performance isn't what you thought it should be that just detracts that value statement away from the customer. But that can only happen if their operations are just iron tight.

Steve:
Well, actually, they're world class are getting money out of you, too. I mean, they were the innovator of your room key was also a charge card.

John:
Yes.

Steve:
And you know, when you've got teenage kids or young teens, that kind of becomes a little bit problematic for the the breadwinner in the family. But, no, they again, they just made it so easy to do business that it was…

John:
You know, Steve, that kind of brings me to a point that you just kind of touched on there that's fascinating. The other side of this is that I think it's really important for CX professionals to understand how closely they're connected to the finances of the organization. Right. And by finding out what those key process indicators or customer value statements are, it actually enhances the operations group to deliver services and products that we don't currently offer. That can change the margin delta incrementally, but also delta dramatically. And you can't learn where those opportunities are if you are if you're not asking those questions. I got a great story for you here just really quickly. So I did some work with a company that made light bars for police vehicles and rescue vehicles and ambulances. And one of the challenges that they had in the development of this product was they were extremely difficult to install on the vehicles after market. Right. So there's a there's a police car and you're going to put this light bar on top of the police car. Just a challenging process in terms of cutting the holes, drilling it in, connecting it with the with the electricity, etc., etc., in the vehicle.

John:
Well, in the process, what happened was we did some continuous improvement work and one of the operators in the plant kind of created the most ingenious process I've ever seen, which was they were able to package the light bar exactly how you would install it on the vehicle. In other words, instruction manual in the the box itself became the instruction manual. Well, it dramatically reduced the cost to install the vehicle light bars in the field. But the process was so successful that they were able to patent the process and now sell the residual process as value to the organization as well. And that only comes if I'm engaged in operational excellence, right? I'm challenging my employees through effective continuous improvement systems to think differently about how we deliver and how we manufacture and how we make our products and services. And those types of opportunities can only happen if I'm integrated with what the customer is complaining about in this particular instance, about the challenges that were associated with the installation.

Steve:
Yeah. You know, again, that's kind of the the extension from brake fix into actual anticipating or getting ahead of the customer in terms of solutions that they may not even know they need yet, but. That's when you really can tell you, I've got a mature program and you're right, it all does come back to the operations and the how much you can design in and and speak the language of the folks that are actually delivering the value. Dr. Olson, it's we come to that point in the program where I ask all of our guests to give our listeners their best tip, their take home value, if you will. The idea here is it's your best idea for them to take back to their organization and make something positive happen in their CX program. So. Dr. John Olson, your take home value this week.

John:
Thanks, Steve. I would say my take home value is this. Understand how your process is integrated with the operations of the business. And one of the things that you can do to very specifically help with that is simply create a list of the activities that you perform and how it feeds the operations. That becomes the starting conversation with the operations group and how you can make that more integrated and improve it for the organization for creating value for the customer.

Steve:
That's a great tip. And again, if any of our listeners would have any desire to have a future dialog about that, can we find you on LinkedIn or can we find you at the university website?

John:
Or for sure you can reach me on LinkedIn. I'm out there and I also you can always reach me at my email at Saint Thomas as well, right from our… just put in John Olson, University of Saint Thomas. You'll see my profile pop up and go ahead and feel free to connect with me that way as well.

Steve:
Thank you for being a guest on this week's podcast. It was a fascinating discussion and I hope we can have you back again sometime.

John:
Yeah, I thoroughly enjoyed it. Thank you, Steve.

Steve:
And if you want to talk about anything else you heard on this podcast or about how Walker can help your business' customer experience, feel free to email me at podcast@walkerinfo.com. Be sure to check out our website cxleaderpodcast.com to subscribe to the show and find all our previous episodes, podcast series and contact information so you can let us know how we're doing or suggest a topic for a future podcast. The CX Leader Podcast is a production of Walker. We're an experience management firm that helps companies accelerate their experience management success. You can read more about us at walkerinfo.com. Thank you for listening. And remember, it's a great time to be a CX leader. So go out there and do that work. And thanks for joining us this week and we'll see you again next time.

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