June 14, 2009

General Motors Let Us Rest in Peace

After a long process, GM is officially under bankruptcy protection.

The CEO has been turfed, dealers slashed, lay-offs happening (with more planned) and business recovery plans iterating back and forth with Government hoping to land on a version that is believable and will not place an undue burden on the taxpayer.

Lets see… about $180 billion in debt and around $80 billion in assets. Certainly one of the ugliest balance sheets I have seen in quite some time. In addition I am advised that taxpayers are contributing approximately $2 million for each GM employee to keep this company going….. (for now at least).

The irony is that the very reasons people wanted GM saved (avoid slashing dealers, not laying off people to mention just two) are indeed the things that the Company is relying on to turn it around. In previous blog I suggested that they had to do some serious Cutting of CRAP which they intend to do by way of rationalizing their product line. Good stuff, just decades too late! So, if the benefits of saving them are illusional why are we trying to save them? Is there some grand national purpose at play here?

GM has a demand challenge. How can they convince prospective buyers to buy a GM vehicle with the attendant risks involved. Like they might not be here for neither a long time nor for a good time. People can buy Ford or Honda or Hyundai with little or no risk. So what is GM’s value proposition? Lower prices? It won’t work. Price competition never does unless the provider has sufficient economies of scale and scope, both of which GM’s restructuring plan diminishes.

GM’s market share has plummeted. They have no customer loyalty. They are in a downward spiral. They are approaching death. Taxpayers should not be asked to (try to) save them; let natural market forces play out. We will be asked to contribute more money and more money and more money under the illusion that the Company can be salvaged.

My mind goes back to the days of the opening up of the long distance (LD) market to competition. Historically LD cross subsidized basic local local service. Local service was underpriced relative to its cost in order to provide it to remote high cost areas of North America. The introduction of competition in LD service meant that LD prices would have to be reduced and brought closer to their economic costs; the price of local service, on the other hand, would have to be increased to its costs. Prices were Rebalanced; the revenue impact was neutral and that the shareholder was kept whole.

In this case taxpayers are being asked to subsidize GM even tough there is no economic proposition that suggests they will be able to make a comeback. National deficits and hence the debt ill rise with what recourse to prevent a return to debt levels (at least in Canada) of bygone years? What’s the Government’s Rebalancing Plan to prevent a burden being placed on the Country’s shareholders i.e. the taxpayers?

There isn’t one. I know I am cynical, but this is the likely outcome:
- the chances are that GM won’t be financially healthy for a long time (if ever) because the required BE DiFFERENT position will elude them.
- the subsidy of $2 million per GM employee by the taxpayer will increase
- deficits and debt will escalate
- either taxes will rise or government services will be cut back (a political nightmare)
- taxpayers get it in the ear either way, AND FOR WHAT BENEFIT?

Deafening silence ensues…..

Cheers, Roy Osing

Related Blogs
GM Introduction
GM Part 1
GM Part 2

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Posted 6.14.09 at 11:24 am by Roy Osing | Permalink | Comments (0)

June 11, 2009

Dazzle your Customers #4 - Bend Your Rules and Policies

Rule #4 of the four step process to dazzle customers deals with the often encountered situation when your rules clash with what the customer wants, and how your frontline employees are empowered (or not) to deal with the situation. Do your frontline employees spend a great deal of their time enforcing the rules, policies and procedures of your organization and, as a result, are constantly saying NO to your most precious asset? The most frustrating thing for frontliners is to have to be a rule enforcer and halving customers constantly pushing back. Do you really think it is possible to dazzle anyone when you are constantly trying to get someone to ‘tow the line’ on something they don’t agree with?

Every organization has a rule infrastructure to govern their operations; its a necessity. BUT when your rules start to butt heads with a customer to the point that they get upset (and yes, enraged sometimes) and recoil from you due to your rules, you need to introduce the notion of flexing to the customer when it makes sense to do so. Frontline people need to be able to bend a rule on the customer’s behalf if it means keeping the customer loyal.

I’m not talking about doing anything illegal or anything with this type of consequence; rather the internal policies that can be bended for a customer who has special circumstances that were not foreseen by the policy. Rules and policies are created in the image of an ‘average’ customer but the reality is that the average customer doesn’t exist. They are ALL different; if you don’t believe so, you haven’t look closely enough ad for sure you haven’t asked a frontliner.

So, empower your frontline people to bend one of your ‘standardized’ rules, policies or procedures when the customer needs a different treatment; when their needs are quite reasonable but out-of-bounds to what the book says. First of all, your frontline will NOT ‘give away the store’ and chaos will NOT result from this. In fact in my experience, empowering frontliners to ‘say yes’ actually produces a greater degree of rule enforcement as they typically reserve flexible treatment for those customers who truly need it.

You will be rewarded by a customer who is dazzled by how they are being treated as a human being rather than as a transaction that has to be controlled by the rules. And, in addition, you will have a loyal customer who will tell others how truly great you are.

Cheers. Roy Osing

Other blogs in this series
Hire Human Being Lovers
Recover from Your Blunders
Kill Dumb Rules

Remember to follow me on Twitter

Posted 6.11.09 at 03:20 pm by Roy Osing | Permalink | Comments (0)

June 6, 2009

Dazzle your Customers #3 - Kill Dumb Rules

Rule #3 of the four step process to dazzle customers involves a common occurrence in most organizations every day: customers run head on into an internal rule, practice or procedure that annoys them makes them go postal.

This is the Dumb Rule, a rule that was given birth probably by some control freak with a nonsensical purist view that a customer should behave in a certain way that serves the organizations purposes with little regard for whether or not a customer will react favorably to getting treated in a prescribed manner. In my experience the fathers and mothers of dumb rules can be found in staff jobs whose role is to develop and implement operating procedures to govern, among other things, customer transactions. And, unfortunately, in some cases customers where customers are not the prime target they become collateral damage in the rule’s application. Dumb Rule origination can come from internal audit, staff marketing, credit and collections, finance, and systems and procedures functional areas who wouldn’t know a customer if they jumped up and bit them in the behind.

In Section Four of my book, I mention numerous examples of Dumb Rules. One of my favorite stories took place at The Mirage Hotel Resort and Casino in Las Vegas. There is a wonderful de in the casino that serve the best deli sandwhiches ever but the customer friendliness of their rules sucks. My wife and I show up at the deli about midnight with an insatiable appetite for a rueben. We asked the hostess for a booth and were told flatly that our request was not possible since it was their policy to offer booths only for parties of 6 or more. I get that some analyst wanted to maximize the check value from these specific seats, but in this case the store was empty save my wife and me! Maximizing revenue beyond the two of us was an impossibility! Not only is this rule Dumb (since the appropriate way to deal with customers from a hostess point of view is to ask the customer where they would like to be seated), the hostess was not empowered to break it when it made sense to do so. Oh no, she enforced this stupid policy mindlessly with utter disregard to the impact it was having on us. Not her fault really as the organization had their rule enforcer glasses on and were not about to bend even a fraction of a standard deviation from it.

Dumb Rules need to be killed ir they will kill the business! They serve as nothing more than a de-dazzler in the customer experience and people will definitely take their business elsewhere.

How do you go about identifying and wacking these ugly loyalty threateners? Well, go ask your frontline what Dumb Rules they are constantly having to deal with. They know them. The issue is do you have the courage to listen and do something about them? I created Dumb Rules Committees in operations divisions and appointed a ‘CEO’ for each committee responsible to seek out and destroy (or otherwise modify) rules that made customers crazy. Fun was had by all over this concept. All divisions welcomed this initiative; they all were passionate about the purpose; all made stupendous progress. We had contests among the DRC’s and celebrated the ‘winners’; these committees that not only identified the most aggravating customer rule (judged by their peer group)but also took whatever action necessary to get it resolved. My role and that of my direct reports was to remove any roadblock’s preventing the committees from getting a rule dealt with.

What about rules that are ‘required’ by law or regulatory governance? Well, first of all do careful due diligence to make sure that the claim is real and not posturing of a DR champion who doesn’t want their object of control removed. If the rule IS necessary, however, then at least look for ways to make it customer friendly. And reconsider how the rule is enforced with a customer; what communications strategy is used. Is it friendly and helpful or is it demanding and intimidating? You need to take the time to design the customer communications content to minimize an adverse reaction; not always possible but it is worth doing nevertheless.

At the end of the day, if you purify your organization of 80-90% of DR’s you have succeeded and your customers will reward you with continuing loyalty and your reputation will soon attract new customers as well.

Know a Dumb Rule? Share it with me and I will pass it on .

Cheers, Roy Osing

Other blogs in this series
Hire Human Being Lovers
Recover from Your Blunders
Bend the Rules

Remember to follow me on Twitter

Posted 6.6.09 at 01:54 pm by Roy Osing | Permalink | Comments (0)