CHAPTER 3 Designing Operating Strategies That Support the Service Vision

What great service leaders know: the best service operating strategies don't require trade-offs.

What great service leaders do: they foster both/and thinking in designing winning operating strategies.

One or two companies in an industry produce off-the-chart performance while changing the rules of the game by which competition occurs around the world. Each of these organizations exhibits a well-thought-out strategic service vision. You know these breakthrough service organizations when you see them, hear what their leaders have to say, and watch them act out their beliefs. While they are not necessarily the largest in their respective industries, they do share a few things in common. For example, organizations producing outstanding performance on two important dimensions of breakthrough service, "best places to work" and "best customer service," show an unusually high, statistically significant overlap. In fact, 20 percent of the organizations found among Bloomberg Businessweek's Customer Service Champs from 2009 through 2013 also appeared on Fortune's 100 Best Companies to Work For, after eliminating manufacturers from both lists (figure 3-1).

Figure 3-1 Relationships between Best Places to Work, Companies Providing Best Customer Service, and Profitability, U.S., 2009 through 2013

To understand the significance of this overlap, Michael Burchell and Jennifer Robin analyzed Fortune's 100 Best Companies to Work For in the United States and concluded that companies on the list earned more than three times the market returns of companies in the S&P 500 between the years 1998 and 2009. Another study concluded that organizations that provide the best customer service nurture customers who are 21 percentage points (62 percent to 41 percent) more willing to say they would "definitely recommend" their service provider and 17 percentage points (55 percent to 38 percent) more willing to say they would "definitely repurchase" the service. Putting these findings together, one has to conclude that there is something going on here that should be of interest to anyone managing a service organization.

These organizations have figured out how to create outstanding operating strategies—ones that deliver a great deal of value to employees, customers, and investors alike. By and large, this is the way they have done it: first they create value for employees. That value encourages employees' commitment and ownership, drives employee loyalty, fosters productivity, and enhances value for customers. That value in turn produces similar attitudes and behaviors among customers. It results in customer loyalty—the single greatest contributor to revenue growth and profit. These are organizations managed by dashboards comprising deep indicators of success. One such organization is the United Services Automobile Association (USAA).