While there are no easy answers, there are two organizational capabilities that are increasingly critical for success. The first is developing clear strategies for what should be done inside the organization, and what should be done outside. These are difficult decisions to make, and even harder to implement well.
The second capability is aligning business processes with your external partners. In the following excerpt from Chapter 3 of Living Networks (available for download here), I describe the approaches call center giant Convergys takes to try to align culture and process with its clients.
At 6:53pm on November 9, 1989, an official of the East German government stated in a press conference that a new policy had been instituted to allow its citizens to travel to the West. Within minutes mobs formed outside the Berlin Wall. Before long the first bold few scrambled over the Wall unscathed, unlike the 61 people shot dead trying to escape during its grim 28-year history, while others grabbed hammers and anything else they could find to begin destruction of the hated barrier to freedom. An artificial, rigid, and guarded boundary dividing a country and millions of families had succumbed to the fluidity of the times. The same sense of rigidity and boundaries were also evident in the Eastern Germany economy. The East Berlin post office, before the fall, incorporated not just a restaurant and kindergarten for its employees, but also an auto repair shop and fishery. The difficulties in getting anything done meant that managers put boundaries around their organizations and tried to do everything possible inside them, resulting in immense duplication within the economy.
In the West too, it’s not so long now since an organization’s boundaries were crystal clear. The organization was where the organization man went to work a steady job and get a regular salary. It bought raw materials, made things from them, and then sold the final product to consumers. The salespeople did their rounds, took orders, and tidy rows of delivery trucks streamed out from the warehouses to deliver the products. It was totally clear what was inside and outside the organization, and if you dealt with a company you were almost certainly either a buyer of their products or selling something to them in a straightforward relationship. The world has changed dramatically since then. Blurred relationships and ambiguity are the order of the day.
Take a look at Convergys, the world’s largest operator of outsourced call centers. Some outsourcing initiatives, like fleet management or running corporate cafeterias, simply take functions that are peripheral to a company’s mission, and place them in the hands of outsiders. In the case of call centers, it’s a completely different ball game. For many firms, the only direct contact they have with their end-customers is through call centers. Don’t they feel they are losing control and valuable information if they outsource customer contact? The deep integration and alignment of processes between Convergys and its clients means that they can often get even better information flows than if they run customer contact internally.
Sometimes Convergys’ clients—which include AT&T, Compaq, Microsoft, Sony and other corporate leaders—outsource all of their call centers, but more often they already run their own call centers, and choose outsourcing to cope with growth and expansion. In this case—just as when a single firm runs multiple call centers—the key issue is utterly seamless consistency across the operations. When a customer calls Sony’s 1-800 number, she should get exactly the same experience whether it’s routed to a Sony call center, or one of the Convergys call centers that service Sony. To achieve this, Convergys and its clients create almost perfect mirror images of their technologies, processes, training, and work environment. Almost every Convergys call center employee works on a single client account, immersed every day in that company’s products and issues, some even work at the client’s premises, and understandably they can sometimes feel a greater affiliation to the client than the company that pays their wages.
In order not only to make itself transparent but to actually enhance the free flow of information from the end-customers back to its clients, Convergys uses a variety of technologies and processes. Many firms are attracted to Convergys because it provides detailed recording and reporting systems. A company may run its own call center, but unless it has the right systems, processes, and culture in place, management may still not learn much about its clients. In addition to monitoring calls on call center visits or remotely as they choose, clients are encouraged to run focus groups with the Convergys agents that answer their customers’ calls. After all, these are the people who have the richest, most detailed interaction with their customers. One Convergys client invites the call center staff to man its booths at industry fairs, so they can get and share different perspectives on their customers. These feedback channels can flow into all sorts of problem-solving and product development processes. One large European sports drink manufacturer redesigned its distinctive bottles on the basis of customer feedback reaped through Convergys.
Convergys creates value together with its clients, with their joint processes so deeply integrated that it’s next to impossible to say where one company ends and the next begins. Information flows richly on myriad levels between the firms, as it has to, since otherwise Convergys’ clients would be working in a vacuum, totally isolated from their customer community. The whole economy is shifting to one built entirely on these rich flows of information across as well as within firms, in which success is based largely on how well you can integrate your operations with others.