InformationWeek

December 11, 2000

Free Advice:
The Customer As Co-Developer

Who has more product knowledge: 10,000 workers or 1 million customers?

Christopher Locke ost companies treat customer service as a cost center, and, in the process, are burning money like autumn leaves. They've outsourced their help desks to third parties whose only concern is closing trouble tickets. Customers call with complaints and, once in a while, their problems are efficiently resolved. However, in a hyperdynamic business environment, efficiency can be fatal. What if those complaints are the market's way of contributing innovative ideas in the guise of angry rants? What if these problems are really suggestions for improvement, for new products and services that could make the company more competitive? Then what's going up in smoke is precious intellectual capital.

In this common scenario, companies literally aren't listening. They've made customer problems somebody else's job and destroyed any incentive for service reps to report valuable market intelligence. This is often true even when outsourcing isn't the issue.

I recently had immense difficulty signing up with an online banking service. After much sleuthing and swearing, I realized what the problem was: brain-dead Web design. I called the toll-free number and got a knowledgeable person on the line. When I described the sign-up procedure, he instantly agreed it was a deal-breaker. Most potential customers had doubtless encountered the same problem and then gone away angry. Why hadn't a company executive ever looked at this and driven an overhaul of the process? I asked the guy on the phone if he could alert the bank that it was turning away more than 99% of prospects enticed by its glitzy $10 million ad campaign. "No," he said. "That's a different organization."

He didn't mean a different company. He meant that the customer-service group had no contact with the marketing team. His job was closing trouble tickets, and I'm sure my call is logged in the bank's database as a successfully completed service transaction. What it won't say is how much this failure to communicate ends up costing the company in market erosion and lost opportunity.

Decades ago, companies realized they couldn't add quality after the fact. "Quality control" was revealed as a joke. Some companies made quality, well � Job One. Ford was the first major company to bring in quality guru W. Edwards Deming, and the result was a radically reinvented company culture. One of Deming's dicta was "Drive out fear." Command-and-control management made everyone afraid to disagree with those sitting next-layer-up in the grand pyramid of self-important bureaucratic pooh-bahs. But pooh-bahs don't know how to do the work. Only workers do. Yet, managers didn't stoop so low as to consult with workers; they gave them orders. There was a lot of arrogance in this setup, and it took a lot of soul searching and humility to bust through it.

A handful of companies braved the transformation. In the early '90s, Jack Welch drove a cultural revolution at General Electric that forced managers to turn to workers for insight and innovation, and he nuked anybody who stood in the way. The result was a companywide program of continuous process improvement that increased productivity as much as 40% in many areas. Mere production workers turned out to be savvier about the operations they performed than high-powered consultants from McKinsey.

While quality became a near-universal buzzword in almost every industry, few companies walk the talk. Most large businesses are still encumbered by layers of stove-piped noncommunicating business functions and continue to treat the people who do the real work as peons.

But this is all just parable from yesteryear. Today, eliciting ideas for continuous improvement must go beyond the company. It must embrace the customer as a co-developer. This is how the open-source approach produces surprises such as Linux and Napster. If a company has 10,000 employees, but a million customers using its products, on which side of the company firewall does most knowledge about the product reside? It's a no-brainer. Yet companies continue to pour far more resources into marketing--telling customers what to believe--than they spend on listening to what those customers already know.

Eventually, somebody is going to pay for this arrogance. And if experience is any guide, it won't be the customer.

Christopher Locke (clocke@panix.com) is co-author of The Cluetrain Manifesto. He is working on Gonzo Marketing: Winning Through Worst Practices (Perseus Books, 2001).

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