The following article was written by Tuck Aikin several decades ago. It looks at how as your business implements more internal processes to increase efficiencies, it is often at the expense of the customer. The piece underscores the value of being more customer-centric vs. business-centric. Even though it was written several decades ago, it is as true today as it was then. I hope you enjoy it.
Austrian economist Joseph Schumpeter (1993-1950), who immigrated to the United States in the 1930s, is credited with describing volatile capitalist free enterprise economies as being in a “…perennial gale of creative destruction.” What he means by this is that over time individual businesses thrive and then decline, pretty much as a natural product of the economic process itself. He explains that the great entrepreneurial adventure comes to an end simply because the business’s atmosphere has changed because of the very success of the business! Personality and force of entrepreneurial character count for less, and bureaucratic management takes over.
Innovation itself becomes institutionalized and reduced to routine, “…there is a tendency toward another civilization [business organization] that slowly works deep down below.” What’s interesting about this is that the evidence of this seemingly inevitable process is all around us.
IBM used to be the undisputed world leader in computer hardware and software, then it was DEC and later Microsoft and Intel. General Motors used to sell the great majority of cars and trucks worldwide, now, the world market is divided among at least a dozen large companies; Sears used to be the world’s largest retailer, and now it’s Wal-Mart.
“But that only affects the big guys,” I can hear you saying, “we small businesses stay fast on our feet, keep innovating, keep giving the customer what he wants.” Don’t bet on it. Hundreds of thousands of small businesses fail or are voluntarily closed each year in the U.S., and in my experience, it’s not because they failed to innovate – it’s because they unthinkingly began to expose their customers to processes designed to meet the business’s internal organizational, usually cost control, needs.
If you think about it, the examples are numerous. Just the other day, I was second in a long line of customers at a photo development counter, and all of us were made to wait while two employees scrupulously followed their company’s procedures for accepting a check from the customer in front. This process alone must have taken ten minutes. Evidently that company, and millions like them, feel that their cost control process is more important than serving customers.
And when you ask a merchant for help finding something or ask if they carry a particular product, how many times have you gotten the dreaded response, “Oh, you’ll have to … go to a different department, ask someone else who knows something, go to another store, stand in line, etc.
As customers, do we really have to do anything except, perhaps, take our business elsewhere? Then of course, who hasn’t had to weed through those automated “press two…” telephone answering systems to try to get some customer service?
Probably one of the most irritating of all for those of us who must take prescription drugs on a continuous basis is the insurance company requirement that only a 30-day supply may be obtained, even though the doctor is perfectly willing to write a 90-day or longer prescription. I found this rule was established because some covered individuals change insurance carriers from time to time and the current carrier doesn’t want to pay for a 90-day supply and then have a few insureds cancel their coverage with a paid-up multi-month cache in the medicine cabinet. This practice alone requires us ‘customers’ to take 12 trips to the pharmacy each year, or 36 if you have three prescriptions whose expirations don’t coincide.
In essence, health insurance companies are battering the overwhelming majority of their good customers in order to avoid losses from a minority of customers who cancel. As is easy to see, these business processes are all designed to meet the business’s needs, not the customer’s needs.
So, if you’ve been in business a year or longer, you have probably instituted a variety of processes that meet your firm’s natural internal business cost control or production smoothing needs. It’s just as likely too that many of those processes have been ‘exported’ to the customer so he or she has to pay the cost through reduced customer service and increased customer inconvenience, time, and irritation.
Your entrepreneurial startup competitors just love it when you do that – it’s what gives them their opportunity to enter the marketplace. As Schumpeter would observe, at first, you created, then you set into motion bureaucratic processes designed to serve your business needs, but you imposed them on your customers, thereby inviting your own destruction.
Take an inventory of the administrative procedures you’ve established that unnecessarily adversely impact your customer service, then pull them back in house, where they belong, as best you can. Show some creativity and imagination. Prove Schumpeter wrong.
Tuck Aikin was a former SCORE colleague of mine for many years until his retirement. Tuck is a prolific writer and wrote small business-themed articles for the Colorado Springs Gazette for many years. As a co-mentor, Tuck was my inspiration for me starting this blog. The preceding post is reproduced with permission from the author.
