Figure 1. Twitter Stream Graph where the subject includes "Toyota" (Image Provided by Neoformix

Most companies are still struggling to deploy VoIP, IP Contact Centers, and Multi-Channel technologies to create a more customer-centric service experience. Meanwhile, Social Media (e.g. Twitter, Facebook, Blogs, YouTube, etc.) is quickly “moving the cheese” again. Executives concerned about customer loyalty find themselves facing a torrent of unsolicited customer input from the web.

The cascading impact of one consumer’s web input feeding another, compounded by the shear volume of data that can be generated by the viral connections of social networks has put the reins of brand management in the hands of consumers on the web. Where even ten-years ago word-of-mouth gave companies at least days to mitigate customer service issues, today hours are an eternity.

The recent customer service and brand debacle at Toyota is an albeit out-of-control, but useful case to examine. Figure 1, is  a “stream graph” created by a technology from Neoformix of 1000 twitter messages that included the topic “Toyota” on Feb 5, 2010 at approximately 4:00 to 5:00PM EST. The Y-axis represents the number of messages and the X-axis represents time in 5 minute increments. Each band of color represents a different sub-topic (I suggest clicking on the picture to expand it and the link to play with it). The graph shows the volume and tenor of the discussion on Twitter that afternoon raging albeit out of control like a wildfire. Every Toyota owner who ever had their foot slip off the brake and onto the gas pedal is blogging, twittering, and video posting about how they were nearly killed by a faulty gas pedal assembly.

While the Toyota incident maybe a tsunami, smaller but nonetheless important consumer input is winging its way across the SocialSphere influencing other consumers and creating shifts in consumer loyalty for all types of product and service companies. In the call center world of just yesterday, Post-Call Surveys by voice, IVR, or web have been the traditional measurement to gauge consumer sentiment about the customer care process for at least 15 years.  Polling results were rarely published unless the story they told was nothing short of phenomenal and then only anecdotal. Poor results and trends, are reviewed behind close doors, and in complete secrecy.

Social Media has completely turned that world, upside-down. Today, consumers (and God forbid call center agents) have a self-directed and additively simple way to make their opinions a public broadcast to millions. With the average Twitter user gaining 5 to 25 new followers everyday, the viral impact of good or bad consumer sentiments ripple quickly across millions world-wide within minutes. Customer care departments live in fear today of a clandestine recordings forever chronicling bad customer service experience, on public forums instead of controlled corporate websites.

A few examples from Twitter on Friday afternoon between 3 and 4pm:

• Lauren writes: “I have been on hold with [national office supply chain's] call center for 15 minutes. Unacceptable. And their store here won’t answer their phone.”
• Manuel a call center agent writes: “If yall work or have worked in a call center yall know how thankful we are for HOLD. lmao I’m sick a u can I place u on hold?? POW!!”
• Rachel writes: “On hold with [Large Bank] for over 20 mins now. They said it would be a “short” delay b/c of storms in their call center area.”
• Jamie writes: “i’m a horrible person for yelling at the poor indian guy at the [Large Bank] call center trying to sell me credit monitoring during card activation
• Rachel another call center agent writes: “i work at a call center temporarily. its not to bad but sometime i just want to slap a bitch through the phone!!”
• Last, but not least there is Mark who took the time to record a 10 minute video (like a news story) about how  [large credit card company] would not help him solve his identity theft problem.

All of these gems were generated in about 30 minutes, and are the tip of the iceberg. These messages and thousands like them are influencing millions of current and potential customers everyday. Nielsen surveyed 25,000 online consumers worldwide, and their analysis of social networks indicated, “Peer recommendation is the most trusted channel, trusted ‘completely’ or ’somewhat’ by 9 out of 10 respondents worldwide.”

Now that we have determined that the sky is falling. What should Customer Care executives be doing? While the future may bring complete integration of social media and customer information systems, the path today has to be more practical. Unfortunately, it will create another silo of information and customer service processes.

The first step is to develop the goals and objectives of a Social Media Directorate within the Customer Care organization. Different than their Marketing brethren, this unit will be focused on the post-sale and up-sale world of customer care. While the goal is similar the tactics are different. Marketing groups are generally trying to generate an image of the brand for new customers that resonates with their goals as consumers, while the customer care unit is trying to maintain or improve customer loyalty. The goals will fall into the responsibility of four teams: SWOT, Crisis Management, Redirection, and Brand Support and Improvement.

• SWOT Team – SWOT (i.e. Strengths, Weaknesses, Opportunities, and Threats) is an Intelligence Unit within the Directorate. As it sounds the objective here is to monitor the social media world for consumer sentiment about the company or competitors and to feed that information in the form of daily and weekly reports to an executive steering committee that can quickly react.
• Crisis Management Team - More of a process than a team, a single manager may be given the role of pulling together a crisis management team when a problem erupts. This manager will have the role of organizing a series of activities in reaction to a crisis utilizing each of the other groups, as well as liaising with the rest of the Customer Care organization.
• Redirection Team - This organization will be focused on real time monitoring of social media feeds (in conjunction with the SWOT Team) looking specifically for prospective, new, or existing customers. When they find them they quickly move them off social media and into a special handling queue where there issue can be resolved. As much as possible these “rescues” need to be carefully documented to help create changes in policy or process in the rest of customer care. Generally these are problems that are slipping through the cracks. Jumping on these issues is critical to the Social Media Directorates mission.
• Brand Support and Improvement Team – Where the Redirection team is involved in reacting to problems, the BSI Team is focused on aggressively improving and maintaining the image. This type of function should be closely aligned and integrated into the Marketing strategy, but represents a grass roots approach to changing consumer sentiment by finding new or existing customers that can be community influencers and then enlisting there help (or paying them) to support the effort by moderating social networking communities, or creating an brand image based on their personal experiences.  The BSI team is focused on hammering through Marketing and Advertising’s plan by reinforcing the brand image within the ordering, fulfillment, delivery, installation, and support processes. While this has been the purview of marketing in the past, this is a critical customer care function in the post-Social Media world.

These represent the major functional  areas of a practical Social Media Directorate. In addition to this activity CRM/CIS managers need to begin to develop methods of capturing the Social Media handles of customers so that information can be cross referenced, and eventually these capabilities can be integrated within the Customer Care operation.

Ed Fullman
Partner, Adam Smith Consulting
ed.fullman@adamsmithconsulting.com
www.adamsmithconsulting.com

There maybe examples of a

Strong strategies are developed from the top of the organization down, versus from the bottom up. In the past 15 years I have watched as process improvement approaches have driven bottoms-up strategy development. I have seen many instances where executives within an organization typically are asked to build strategies only for the next level up in the organization. The goal is to create a solution which can be delivered within existing operational budgets (the next level up in the organization) and do not require consensus with other operational groups.

A Strong strategy typically involves more than just one goal, for instance sales, revenue, and net income. Not just cost improvements. When a company engages in cost improvement strategies at the operational level to meet a budgetary target they typically end-up with weak strategies that can leave a negative impact on the whole organization. For example, a company jumps into offshoring in order to decrease the labor cost per hour for their operations, but they take offshore processes that have not been transformed and optimized. As a result, it is a new mess for less, over-achieving on cost reduction and creating bonuses for operational management, but sales and revenues suffer because customer loyalty is negatively impacted.

Strong strategy finds its grace in a balance of goals not in brevity or simplicity. Balance requires investigation of multiple scenarios and a thoughtful decision-making process. In the end a Strong strategy is one that is adaptable, because the organization knows exactly why it chose it, and for what reasons it will have to change in order to meet changing objectives.

Ed Fullman
Partner, Adam Smith Consulting
ed.fullman@adamsmithconsulting.com

Outsourcing has been with us since the beginning of time, and offshoring although a new term has been with us since sailing ships began to move commerce. I don’t think either solution is going away anytime soon nor should it. Offshoring is a basic commercial transaction, and while the impact of offshoring on domestic unemployment may not be positive, you can’t blame offshoring for delivering more cost effective labor rates than domestic labor.

However, offshoring without a clear strategy can lead organizations to mixed results and potentially great harm. Labor arbitrage is always a fleeting value proposition, because it is completely based on the temporary imbalance of two labor-markets. It is the nature of labor arbitrage that the act of investing in a depressed labor-market causes those labor-related costs to rise as the oversupply of labor is exhausted. As oversupply is exhausted, attrition increases as new jobs reap higher pay than older jobs. The combination of increasing salaries, increased labor-related costs, rising currency exchange rates, and increased attrition quickly exhausts what Adam Smith called the, “Absolute Advantage” in 1776.

In my experience offshoring is a strategy often relied upon when the business strategy for the category is overly simplistic and focused only on cost reduction. A GOOD business strategy is rarely so monochromatic, and requires a more comprehensive set of goals and objectives including sales, revenue, net income as well as cost. When the strategy is broader, a more holistic sourcing strategy can be created delivering a result that is built upon consensus from more than one part of the organization. When a business process is outsourced, the profit of the outsourcer is based almost entirely on the ability to standardize the service and carefully control and optimize the use of labor to operate within a shared operation. Taking a business process offshore is even more complex where the added complexities of naturalization and accent neutralization are required for every new recruit.

Offshoring under these conditions can render business processes very fragile, and difficult to adapt and transform over time. The biggest challenge that offshore category sourcing faces over the long-term is the impact of this fragility on customer satisfaction, quality, and eventually customer-loyalty which translates into an impact on sales, revenues and net income. When a more comprehensive business strategy for the category includes a transformation program, the results are more consistent with the objectives of the overall business and most importantly can be sustained regardless of the changes in labor markets.

By reducing the labor requirements in general, the strategic importance of a lower labor rate in an offshore market can be reduced. When the labor requirements are reduced to the most important process steps, labor can be sourced more directly based on value, and where domestic labor produces a more valuable outcome it can be justified.

The bottom-line is that we need transformation to drive strategic sourcing especially in categories considering offshoring.

Ed Fullman Partner, Adam Smith Consulting
ed.fullman@adamsmithconsulting.com
www.adamsmithconsulting.com

Very generally, Genesys definitely wins the battle when integration of multiple hardware companies is the objective. Genesys will work as well whether bonding a group of Avaya 4800s or Cisco Call Managers. This makes Genesys a potentially cheaper solution in cases when the operation has a lot of diverse equipment that is only partially depreciated, and also delivers ROI faster. However, this also implies a significant level of integration risk and integration skill. In a complex Genesys environment with multiple hardware vendors the organization will need access to experienced Genesys, Avaya, and Cisco technical resources both for the launch as well as operation. This implies a more expensive and complex operation, but it may be the only solution for some companies. Again, this isn’t a hard and fast rule and requires significant analysis. This probably also means that there will be one of these or another vendors voice gateways, IVRs, etc. A global operation with multiple vendor’s PBX platforms at the premise level may create many integration complexities that limit benefits.

In contrast, Cisco is a hardware company, and while Cisco can operate as a software umbrella over Avaya and Cisco platforms, Cisco excels when an organization has a large call center operation with a majority of hardware that is end of life. Additionally the Cisco Unified Communication and Unified Contact Center solutions are built upon the same basic building blocks, and as a result there are significant economies of scale created when the focus is initially IP Telephony with Cisco Unified Communication focused on the back-office and then transitions into a front-office, call center replacement with Unified Contact Center. This approach creates an environment where the client’s intentions can be translated into routing logic and deliver a client to any IP Phone inside the network or outside the network.

Clearly these are two very high level scenarios, and client’s often find themselves in the gray zone somewhere between these two somewhat opposite situations. What’s hidden inside this technical analysis of these two scenarios, is that they are essentially devoid of business requirements. If the company with a lot of under-depreciated Avaya and Cisco PBXs was facing standing up a new customer service function with highly complex routing requirements, they maybe able to create an accretive business case for a full Cisco deployment. Likewise a company with hardware that was end-of-life, but with relatively simple inside-sales and support requirements might find that a full Cisco solution is overkill.

The best advice is to begin with a comprehensive business requirement analysis with the objective of building a requirement plan and a high-level benefit analysis. From here a complete As-Is technology inventory, and a detailed analysis of technology options will enable management to make an informed decision. Bottom-line, don’t start with a technology analysis, it could inadvertently lead in the wrong direction.

• US executives have extreme pressure to increase quarterly profits and offshoring, and specifically offshore labor arbitrage (e.g. taking advantage of lower cost offshore workers) is a fast way to decrease costs with out committing significant capital.
• Corporations get more gratification from Wall Street for cost improvement without capital investment because Wall Street’s time horizon is short, and they don’t like waiting for benefits to catch up with depreciation.
• The constraints (e.g. infrastructure, communication, transport) that limited an absolute advantage of one labor market over another in the past have been largely eliminated, making it easier to launch an offshore program.
• Sarbanes Oxley has driven the commitment and control of capital to very senior levels in corporations and cost cutting programs like offshoring that involve little or less capital are an easier path to approval.

The value of offshoring is most often represented by a labor arbitrage benefit (e.g. lowered costs associated with workers), which is reaped as soon as the offshore operation can be established, but then diminishes over time as labor costs rise. The downside of offshoring is that often business processes become harder to improve and evolve once they are delivered offshore making continued innovation difficult and expensive to deliver. This slowdown in innovation can erode Customer Loyalty making product and service upgrades harder to sell, increasing service cancellations, and creating opportunities for new market entrants to outpace market incumbents.

Offshoring may appear less attractive to businesses after considering a transformative strategy.  Innovation and transformation diminish the advantage of lower cost offshore labor by yielding substantially more productive, transformed onshore processes that deliver the same or more output with less labor. However, the key to transformative strategy is broadening the focus of the analysis beyond a labor cost analysis, to a focus on revenues and net income. Focusing strategies completely on cost improvement, especially at the operating unit level, leads quickly to ideas like offshoring where the benefit is relatively fast, and uses less capital resources. Broadening the analysis to an impact on revenues leads to conclusions that include the impact to Customer Loyalty and Quality. A slight increase in revenues without a similar increase in cost can eliminate the advantage of offshore labor. When businesses consider the potential offshore impact to sales and revenue, the quick benefits of offshoring may seem less attractive. Transformative strategy by its nature engages leaders across the business in the same analysis and strategy resulting in a more comprehensive idea that blends the needs of all units into a single plan, and builds consensus and commitment.

As an economic strategy, transformative strategy can play a role in stemming the tide of continued job loss due to offshoring. While businesses can take on some of this burden to create jobs onshore instead of offshore with transformative strategy, the US Government can also share the burden by by enacting tax changes that stimulate capital formation to provide incentives for corporations to invest in transformational programs. Similar actions were taken by President Kennedy in 1962 and President Reagan in 1982, although this time around the goal of any tax changes should specifically target the early years of a transformation program before a return on investment has been reaped from increased productivity and performance. A tax credit targeted at the initial years of a transformation program could substantially diminish the advantage of offshoring, stimulating more capital investment in transformation and making offshoring less attractive.

Ed Fullman, Managing Partner
Adam Smith Consulting
www.adamsmithconsulting.com

The city (e.g. NYC DoITT) already has a program Telecommunications Franchise to help mitigate the problem with a local WiFi-mesh. While this is an AT&T problem right now, plan on other carriers having similar issues when they get big concentrations of users under one 3G cell tower. The answer is and always has been WiFi instead of total reliance on 3G. Additionally this creates financial opportunities for small businesses to develop building-size WiFi hotspots under various auspices. The challenge will be some kind of unifying pass into the cloud of potential commercial or government WiFi providers in the city.

The benefits to NYC government and citizens could be substantial.

There is a lot of buzz in anticipation of the expected Spring 2010 launch of the Apple Tablet. Most of the buzz is focused on the user experience, but there are now enough threads about a revamped iTunes, eBooks, and IPTV, as well as the built-in web-cam and a price under $1000 is where the value proposition talk will soon begin to shift.

Similar to the iPhone App Store, I believe the talk will soon begin to turn to the application and a new App Store. The promise of a fully featured tablet MAC with 3G Wireless, a web

-cam, voice and video communication, and a high density display will not be the just the cool-factor of the interface and features, but the potential of a development platform and another prolific development platform similar to the iPhone App Store.

I believe we will soon begin to hear how social networking (e.g. Facebook, FLICKR, and YouTube will begin to sign up. It is easy to see how the IPTV side of the device will be driven not by the traditional TV network community, but by a ground swell of applications for such a device similar to the ground swell for location-based apps that didn’t move beyond the early adopters until the advent of the iPhone.

Why this device will be more important than the Kindle is not the eBook feature that will be a commodity in short order. The importance is the ability to have that feature as well as video and voice communication in a small foot print device the size of half a notebook (e.g. just the screen of an MAC Book Pro). With this device and the advances made by Cisco in Unified Communication the Apple Tablet suddenly becomes a more important business device. With the number of iPhone’s in use by corporate users and the slow and methodical infection of Mac Books into the corporate world, the time may be right for the eventual displacement of non-Apple corporate notebooks.

The weak commercial markets in the last 18 months, layoffs, and better Windows-based notebooks has slowed the never-ending PC-upgrade schedule in large corporations around the globe. Most corporate users replace notebooks every 2 to 3 years, and the financial crisis may have created a window (excuse the pun) where the Apple Tablet has the advantage.

When I bought my Mac Book Pro recently I priced out fully featured HP and Dell notebooks with built-in webcams 8GB memory, 2+GHz dual processors, and 500GB hard disks. All the equipment was the same and when you include Parallels (e.g. Runs Windows on the Mac), Windows, and Microsoft Office it was still very close in price. If the new Apple Tablet with 3G and Webcams could eliminate one or two airline flights per year per middle management employee and above, the cost reductions easily would pay any differential.

I imagine Apple will push the Apple Tablet to the early adopters first in the same way that they did for the iPhone, pushing the cool factor. With less fanfare they will have likely begun to already out flank Microsoft, HP, and Dell with a corporate campaign focused on video communication, home and mobile offices.

What this means for corporate IT and Network executives is that 2010 will be the year that video communication will begin to reach new heights of demand pushing IP-bandwidth requirements inside the firm, and bring into question router capacities. It also means that it is probably time to create a business case and strategy to move toward a more cohesive IP-communication platform like Cisco’s UCC where the Apple Tablet becomes a part of driving demand and transformation of communication cost. By aligning the cost of two travel weeks for a year for 1000 employees above middle manager in a large corporation comes to $5,000,000 a year. Throw in the improvement in services and revenue driven by IP-based capabilities in the traditional call center, and home-based call centers and you have may have an accretive case.

If the Apple Tablet has the same effect on video communication as the iPhone did on location based applications this could be the push the IP communication market needs to have a good 2010-2011.

Ed Fullman, Partner
Adam Smith Consulting
www.adamsmithconsulting.com
ed.fullman@adamsmithconsulting.com

All Rights Reserved

Similar Articles:

• “Apple’s Hard-to-Swallow Tablet”, WSJ.com, 12/29/2009, http://online.wsj.com/article/SB10001424052748703510304574626213985068436.html#articleTabs%3Dcomments
• “Apple to launch tablet next spring, says analyst”, Telegraph.co.uk, 12/10/2009,

  http://www.telegraph.co.uk/technology/apple/6778667/Apple-to-launch-tablet-next-spring-says-analyst.html

• “Apple tablet: One tech gadget for all”, CNNMoney.com, 11/16/2009,

  http://money.cnn.com/2009/11/16/technology/apple_tablet/

• “Everything We Know About Apple’s Touchscreen Tablet”, Wired.com, 9/29/2009,

  http://www.wired.com/gadgetlab/2009/09/apple-tablet-everything/

First, the improvement of the dexterity of the workmen, necessarily increases the quantity of the work he can perform; and the division of labour, by reducing every man’s business to some one simple operation, and by making this operation the sole employment of his life, necessarily increases very much the dexterity of the workman.

Secondly, the advantage which is gained by saving the time commonly lost in passing from one sort of work to another, is much greater than we should at first view be apt to imagine it. It is impossible to pass very quickly from one kind of work to another, that is carried on in a different place, and with quite different tools.

Thirdly, and lastly, everybody must be sensible how much labour is facilitated and abridged by the application of proper machinery. It is unnecessary to give any example. I shall only observe, therefore, that the invention of all those machines by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour.

There it is, a 233 year-old recipe for a business case. You don’t have to fix what isn’t broken. Smith describes the major levers in our business case:

1. Business Process Output (e.g. calls served, cases served, AHT, FCR, etc.)
2. Labor Output and Cost (e.g. calls and cases per agent per day/hour/shift, management pyramid, cost per hour, cost per minute, utilization, etc.)
3. Technology Output and Cost (e.g. capacity of various components expressed in calls, agents, etc.; as well as cost per relevant component for both as-is and to-be architecture)
4. Sales, Revenue and Net Income (e.g. as-is and to-be plan based on new capabilities)

The objective of the business case is to create a modeler that simulates the impact of the transformation program on two areas:

1. The reduction in Total Cost of Ownership (TCO) by new technology and improved customer loyalty
2. The increase in Sales, Revenue, and Net Income driven by new technology and improved customer loyalty.

Many strategists are compelled to stop the business case after step 1 above, but it is step 2 (the impact on Sales, Revenue, and Net Income) which is the key for modeling a major technology overhaul such as shifting call center infrastructure to Cisco UCC. Business leaders fall in love with Cisco UCC not because it is cheaper to operate or buy, but because of the promise it brings to transforming operations and improving customer loyalty. Characterizing and building expectations around this outcome is key to a simple and elegant business case, and will drive decision-making very quickly.

The business case itself needs to be developed using a spreadsheet in such a way that the main levers are represented as variable input fields with the spreadsheet. The challenge with these spreadsheets is that the various sub levels of each input are very interdependent. This means that one area such as depreciation schedules becomes an output, but if it could be made longer (e.g. 5-years instead of 3-years) it actually drives decision-making and becomes an input. The problem here is that you can’t have it both ways without receiving the all-to-familiar “Circular Reference” error in Microsoft Excel where the spreadsheet stops working.

Therefore before you start coding spreadsheets and find yourself lost in the possible permutations, the first step is a preliminary strategy document. The purpose here is to gain some amount of consensus as to:

1. The breadth of the analysis?
   • Usually the key here is how many front-office and back-office seats are going to be included?
     • The larger the number of seats and the sooner they will convert to the new technology the better the ROI especially with IP-based solutions like Cisco UCC which has a larger foundational base of cost than tradition premise based TDM call center solutions
   • Is growth and the impact on revenues going to be included?
     • If you have read some of my other posts you will find that this is a key point with me. Moving from an old depreciated TDM solution to a shiny new IP-based solution is going to require capital, as well as new expenses. Including growth and the impact on revenue as well as the associated net income after the investment makes the entire plan go down easier.
2. How much capital is available?
   • What is the process for approval?
     • Who really needs to be involved for approval, and what are there key objectives? This is where many plans fall apart, failing to satisfy the top executive in the decision-making chain, instead serving the needs of a lesser executive. It is better to have a sit down with the C-level that will make the final decision before even starting to write anything.
   • What is amount of capital potentially available?
     • This comes from meeting with the C-Level executives, but the key point here is don’t walk away with the executive saying, “I’ll get you whatever money you need if you can make it accretive.” That is another way to quickly fall into an abyss where you make assumptions that are incorrect at the beginning and waste precious time.  Get a clear view of how much cash is available maximum by quarter, and what the potential for change will be (e.g. probability factoring).
   • How will the new assets be depreciated? This is a challenging area for most treasurers and auditors, because the easy answer, “faster depreciation is better,” is not what you want to hear when you ask the question. IP-based call center infrastructure is very different structurally than older premise-based TDM PBX equipment. IP-based call center infrastructure like Cisco UCC is heavily centralized and very modular. Aside from the Gateways and CVPs the majority of the rest of the solution is platformed on simple Intel-based servers running Microsoft OS or Linux. The majority of the solution is software that is automatically updated and maintained under contract. Therefore, the opportunity is to get your auditor to divide up the solution into hardware and software, and depreciate the software much slower than the hardware. Essentially the software will be functional until Cisco finally retires the UCC software platform which won’t be in the next 5-years.
3. What other factors will drive the decision and the ROI?
   • Potential competitive market changes
   • Potential changes within the target customer market
   • Planned product or service marketing plan introductions
   • Current product lifecycles and demand

Using this information you can create a very high level estimate of potential impact to TCO and Revenue. From here you can gain consensus, and lock-down some of your variables possibly helping competing leaders in the business to understand the value of consolidating their efforts on the new platform.

The key is strategy, and the next leg of the effort is a detailed technical architecture and strategy. This will likely require rounds of analysis of potential architectures, and then deep analysis with the most promising solution. Then you can build a detailed business case that provides the ability to model various outcomes based on your C-Level analysis.

Adam Smith wrote about strategy saying,

Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things.

It is critical that you get senior leadership attention and that the key decision-maker doesn’t become a customer of the strategy, but the owner. You should have a steering committee that includes all the key competing factions of the company, and you need the key decision-makers commitment to clear the road of obstacles along the journey to the final decision.

Ed Fullman, Partner
Adam Smith Consulting
www.adamsmithconsulting.com
ed.fullman@adamsmithconsulting.com

The majority of front-office operating cost is borne in call center agent labor cost, facilities, and administrative expense. Additionally front-office operations have a significant impact on the success of the organization and often either drives or impedes growth and profitability. As a result developing a business case for a front-office transformation involving a solution like Cisco’s UCC Enterprise product requires analysis of existing infrastructure costs, the new Cisco solution as well as the projecting the future transformation of the call center operation once the new contact center capabilities are available.

However, where strategies and their accompanying business cases often fall short in this arena is holistically considering the positive impact of a transformative technology like UCC on customer loyalty. The typical mistake is focusing only on cost and leaving out growth and the potential positive impact on sales and net income or the opposite outcome for doing nothing over an extended period. The typical challenge is that a holistic strategy requires top leadership to drive consensus across sales, marketing, customer care, and the supply-chain in order to gain long-term commitments (e.g. typically 5-years to coincide with depreciation of the investment) on improvements in customer loyalty.

When strategies for transforming customer loyalty bubble-up from the bottom of the organization rather than being driven down from the top leadership often departmental leaders attempt to use Infrastructure as a Service (IaaS) models such as British Telecom’s OneVoice Cisco UCC  solution or AT&T’s Avaya/Genesys solution to solve the problem without making a large capital investment. While this strategy often makes sense for small or mid-sized companies or departmental organizations it often has limited benefit for larger growing organizations.

Moving to IP-based technology creates opportunities for consolidating call center operations, optimizing utilization of agents, creating multi-channel contact centers operations, and deploying the latest constructs such as home-based agents. In the final analysis end customers benefit directly from these transformative strategies obtaining call center service that can be aligned closer to their intentions for calling.

Ed Fullman, Partner
Adam Smith Consulting
www.adamsmithconsulting.com

RYSSDAL: So when we look back on this period, on 2008-2009, what lessons will we have learned? Will we have learned anything do you think?
KOEHN: I think we’ll have learned several things. One, that we are incredibly tightly connected. We really are a global village in a way we’ve never been. Second, I think we’ll learn that we overlook history, and its lessons at our own peril. And I think we’re going to have to learn that Adam Smith’s invisible hand of self-interest is really no longer a useful descriptive of the way that market capitalism in the 21st century works. We simply cannot pursue a marketplace that is motivated and fueled by individuals pursuing their isolated self-interest.

As the founder of a company named Adam Smith Consulting, and the author of a book about innovation that I am currently writing called, “The Invisible Hand,” I put considerable thought into Nancy Koehn’s assertion that Adam Smith’s ideas may not be as valid today as they were in 1776.

Adam Smith’s book, “An Inquiry Into the Wealth of Nations” was first published in London in 1776. Smith was concerned that politicians in his time were protecting industries and “favored” businesses and the result would be that England’s national strength would be diminished by industries that would be weaker than foreign competitors. Eighty-Three years before Darwin, Adam Smith had a notion of natural order, and the strength derived from the healthiest domestic businesses prevailing in an open market. He said,

To give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must in almost all cases be either a useless or a hurtful regulation. If the produce of domestic can be brought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.
- Adam Smith, 1776, “An Inquiry into the Nature and Causes of the Wealth of Nations”, Book 4, Chapter 2

What Adam Smith did say about individual self-interest and the, “Invisible Hand” was,

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.
- Adam Smith, 1776, “An Inquiry into the Nature and Causes of the Wealth of Nations”, Book 4, Chapter 2

Smith believed that in a free-market, individual business leaders in pursuit of their own self-interest would continually improve their business processes, the training and skill of their workers, and the use of technology to decrease labor. Adam Smith deduced from his now famous analysis of British Pin Manufacturers (the scene depicted on the front of the UK 20 pound note) that the most successful businesses were focused on continually improving (e.g. transformation).

My personal and corporate allegiance to Adam Smith is that a focus on transformation and continuous improvement will lead to strong and vibrant businesses that do lead to a better society. Smith said,

Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things.
- Adam Smith, 1776, “An Inquiry into the Nature and Causes of the Wealth of Nations”, Book 1, Chapter 1

I would answer Kai Ryssdal’s original question a little differently, “So when we look back on this period, on 2008-2009, what lessons will we have learned?” Adam Smith said that individual self-interest would lead like an “Invisible Hand” to a healthy nation and society. Contrary to popular belief Adam Smith also believed in a balance of regulation and freedom-of-choice not a blind notion of unregulated free-markets. When Adam Smith raised the concept of self-interest driven economies in 1776 he was trying to raise the awareness about the power of freedom-of-choice versus traditional royal and political decree. I believe trying to align Adam Smith to Gordon Gecko proclaiming in the movie Wall Street, “Greed is Good,” is a mistake. The 2008-2009 economic crisis is the result of the visible hand of government. Our politicians were lobbied into economic policy that: unnaturally deregulated the financial institutions encouraging bad behavior, tightened immigration policy that encouraged offshore outsourcing, and diminished incentives to invest in domestic industry while increasing visibility on quarterly profits. We need to rebalance our economy by reversing these political influences, and once again our economy will naturally be led by a focus on innovation and improvement that drove the industrial and technological revolution of the last two centuries.

Ed Fullman, Partner, Adam Smith Consulting
www.adamsmithconsulting.com