Development of organizations designed to change

THE TRANSFORMATION OF MECK INSURANCE

The internal Organization Development (OD) team at MECK Insurance had just com-pleted a full-day session with the Customer Service Organization (CSO) leadership team. Together, they were leading the journey to shift the culture and drive performance in one of MECK's largest business areas?and the hard part was just beginning. Customer, client relationship, and employee engagement measures had improved in the first 18 months of the transformation. However, the OD team knew from experience that the project was at an exciting and daunting moment in the journey. Their interventions could either accelerate the change or allow the customer service organiza-tion to slide back towards the status quo. This was not the first time the OD team had collaborated with a MECK business area to create cultural transformation. Two other busi-ness areas, Customer & Enterprise Services and Technology, had been on similar journeys beginning in 2008. Through the highs, lows, and lessons learned, the OD team has adapted methods based on the business area's struc-ture, the leader's objectives, and the unit's particular culture. Additionally, the OD team shared a continued belief that bringing the employees and their culture into alignment with the business strategy was a critical lever for performance. There had been visible success along the way, but this time it felt different. Given the size of the CSO, success could represent the tipping point for the whole company. The task ahead of the OD team was to partner with the clients to determine the next steps in the change pro-cess, accelerate the change, and ensure the shifts were sustainable.

THE CULTURAL TRANSFORMATION METHODOLOGY

The CSO was the third business area to engage in large-scale transformation at MECK Insurance, a large, broad line provider of property, casualty, and life insurance sold through a multichannel business model that included call centers, the web and an agency force. Together with Customer & Enterprise Services and Technology, these three areas represented approximately 70 percent of the company's workforce. While the three business areas served very different functions for the company, the motivation for change was similar: to improve business performance and to respond to feed-back from the business areas' internal clients and external customers. A differentiated client and customer experience was critical to being competitive in the future. In addition, these business areas recognized that the desired impact on financial performance and customer experience could not be achieved through a single-solution approach, such as restructuring the organization, reducing expenses, or hiring a few new leaders. Instead, the leader of each business area knew change needed to be holis-tic to achieve better and sustainable levels of performance. In each case, the OD team worked with the leaders of the business areas and their leadership teams to define clear and sup-ported strategies as the first phase of work. With this foundation, the OD team leveraged several design and change tools, including Galbraith's Star Model, Sullivan's Whole System Transformation process, and Beckhard's change formula, to frame the change process across all three business areas. For example, Beckhard's change formula, C = R

WHERE IT ALL STARTED?CUSTOMER AND ENTERPRISES SERVICES

The Customer and Enterprise Services (CES) orga-nization operated most of the company's call cen-ters and back office functions. CES's employees engaged in hundreds of millions of customer inter-actions each year, were spread across the country, and delivered crucial services to policy holders as well as internal business units. Unfortunately, in 2008, CES customer loyalty and satisfaction scores had been stagnant at best, and feedback suggested significant improvements were needed in sales, service quality, and product support. In addition, internal business clients were demanding signifi-cant cost reductions and more support to help them meet their business goals. CES's challenges stemmed largely from an internally focused, shared-service structure and culture that had been in place for two decades. Locations and functions were isolated from each other and tolerated the creation of "kingdoms." The result was little to no collaboration across loca-tions, functions, or top leadership as well as lost efficiencies, lack of shared purpose, inconsistent practices to serve customer needs, and subcul-tures that varied widely across CES. CES also faced additional complexities: their recent merger with the Technology area formed a larger Technology & Operations organization under a single leader, and the appointment of a new CES leader resulted in a lack of clarity and focus on what was most import-ant and how to best drive business performance.

The CES Transformation Process?Launches and Waves

The new CES leader initiated the change pro-cess. Leveraging both internal and external OD resources, the transformation process consisted of four phases or "launches." Within two years, CES saw most every business metric move in a positive direction, including enhanced cost effectiveness and increased customer service. ?

Launch 1: Ensuring Clear Sponsorship and Leadership Alignment.

Launch 1 began with ensuring that the CES leadership team was ready to support transformation and was will-ing to make the changes needed to impact business performance. The leadership team needed to be aligned and committed to the CES strategy, the need for change, and their role and accountability for the change before the OD team engaged others in the effort. The modeling of transformation by the leadership team was paramount in inspiring the remainder of the CES organization. This was no small task as the CES leader-ship team had a long history of competition and distrust, and lacked any shared commitment to a collective vision. The conversations and dialogue over multiple sessions shaped the direction of the team and the organization. The tipping point in the team's transformation came at one of those sessions. Following a period of continued ques-tioning by the CES leader about how best to oper-ate the function, the whole team?without the leader?stood up, walked over to the easel pad, and designed their ideal service delivery model. The team took full ownership of that future vision and operated collaboratively to design it. They left that session with a common purpose, guid-ing principles, operating norms, and a new par-adigm about their value to the company. Based on the new delivery model, the leadership team was able to articulate a business goal to become more innovative, cost effective, and value added as perceived by customers. They eventually shortened everything into two key sentiments: Thrill the Customer and Get Different. Following these sessions, the leadership team spoke openly and publicly of their fears and perceptions, took ownership of the barri-ers and challenges they had created through their past leadership decisions and behaviors, listened to the organization, and accepted crit-ical feedback. Later, when qualitative data was gathered about the role of leaders in the CES transformation effort, employees noted that it was the first time in years that everyone, at all levels, felt heard. Employees had a renewed sense of trust in and commitment to the lead-ership and the company. As part of the transformation, the lead-ership team agreed to engage people from across CES together in large-group events and formed a design team to plan and execute the Launch 2 phase. The design team was a micro-cosm of the organization and ensured that the large-group event agendas would meet the needs, concerns, and reality of the people who would attend them. The design team's respon-sibilities included: ? Building relationships with each other as a way to learn about the experiences that people were having in different parts of CES; ? Understanding the current state of the business; ? Completing a scan of the internal environment; ? Reviewing the organizational vision and all the work that was underway to help achieve it; ? Identifying and aligning on a clear purpose and the outcomes for the large-group sessions; ? Designing all the activities and conversa-tions that would occur in the large-group sessions

Launch 2: Engaging the Organization.

Launch 2 activities engaged CES members in a series of four two-and-a-half-day, large-group events or "waves" of about 200 people to understand the case for change, create the vision for the future, identify how to make the change hap-pen at an organization and individual level, and consider ways to sustain the change. Wave I focused on understanding the current state and the sources of dissatisfaction (the "D" in Beckhard's change formula). Wave II focused on identifying a future vision (the "V" in Beckhard's formula). Wave III developed action plans or "first steps," and Wave IV focused on sustainability and system-wide transformation issues. Although the focus of each wave was dif-ferent, there were a significant number of sim-ilarities in the way in which the waves were designed to ensure that the transformation principles were reflected. For example: ? The first day of a session involved context setting, group connections, and a sharing of dissatisfactions with the current state. ? The second day connected people to aspira-tions and visions of what was possible. For CES, this meant that the leadership team's common purpose?Thrill Our Customer?was embedded in every activity so that employees began to make a meaningful connection to what was possible given their customer facing roles. The third day generated confidence and enthusiasm as they developed actions to take at the individual, group, and organiza-tion levels as they walked out of the wave and returned to their day-to-day jobs. ? Small-group discussions always took place among a "max mix" of CES members?every table had a mixture of people repre-senting different levels, geographies, and functions so that there was a microcosm of the organization?much like the make-up of the design team. ? The design of each day addressed both orga-nization transformation and personal trans-formation. To change the organization, each individual also needed to make the commit-ment to change. Together, the four waves engaged about 20 percent of the CES workforce, and gener-ated visible alignment and excitement around the common purpose. The waves also formed relationships across locations, business func-tions and people, and brought collaboration and innovation to life. The experience shifted individual beliefs about the organization, their role, and how they could work differently to truly thrill the customer. Participants took the shared sense of excite-ment and unity back to their work locations and became catalysts for the change. Individuals brought new ideas and business solutions to their leaders and people began to work differ-ently across boundaries. This collective excite-ment and action from the participants after the sessions, combined with the broader sustain-ability efforts across CES (described below), shifted the organization and began to translate into business results. Importantly, the invest-ment in leadership's transformation as a part of Launch 1 paid off when, about midway through the effort, it became clear that not all CES lead-ers were supporting the change or were taking steps to make an environment where employ-ees could be heard and empowered. The CES leader held those leaders accountable for their actions?and eventually moved some out of their positions if they did not change. This action was a critical sign to the rest of the organization of the CES leader's commitment to move the organization into its vision.

Launch 3: Evaluation and Sustainability.

The output of Wave IV was a CES-wide action plan with "Six Bold Steps" to address the organi-zation's design. The Six Bold Steps were to introduce a 360-degree feedback process for all employees, create a new online recognition program, design a business results dashboard, develop business acumen training, host a one-day wave event at every geographic office loca-tion, and document best practice process flows. These "bold steps" served as the basis of a sus-tainability plan to monitor and measure progress across CES. While CES made progress in achiev-ing the "bold steps," sustainability efforts moni-tored overall progress and action to ensure that change was systemic and purposeful in bringing the CES common purpose and vision to life. The CES senior leadership team worked with the design team and the OD team to hold review sessions at 6-and 14-month intervals after the completion of the four waves. These sessions assessed the leadership team's devel-opment, created an organizational strategy for the next two years, and established an elab-orate ongoing measurement process, struc-ture, and planning system to ensure long term sustainability.

CES?Results and Impact of the Transformation

The inclusiveness and depth of the CES transforma-tion generated near-immediate business improve-ments. For example, after years of no movement, the satisfaction survey that customers take follow-ing a call center transaction improved for seven months in a row, from 77 percent to 84 percent, and has been maintained by the organization. A vari-ety of other expense and operations improvements were made as well. For example, half way through the fiscal year, there was concern about whether the CES organization would meet their sales goals, but after the four waves, the numbers rose and CES eventually exceeded their sales objectives.

BUILDING MOMENTUM?TRANSFORMATION IN TECHNOLOGY CES's

success convinced MECK's Chief Information Officer (CIO) to expand the work to the Technology organization?the remaining part of the overall Technology & Operations function. Services pro-vided by the Technology organization play a critical role in supporting agencies and serving customers. They build and deliver applications and infrastruc-ture that enable a wide range of business transac-tions. For example, technology allows the agencies to sell and service customers, supports the claims process in catastrophe situations, and provides cus-tomers with the ability to quote and buy policies on the web. At the time the transformation effort began in 2009, the availability and stability of these services had room for improvement and the pres-sure from internal clients, agencies, and customers to make a change was growing. Prior to 2009, the technology organization had restructured and changed leaders several times. The most significant of these was a merger between the application development and infrastructure devel-opment areas. It brought two leadership teams under one CIO and aligned the organization to the different enterprise functions. Unfortunately, peo-ple were unclear about whether Technology's true objective was to be a world class center of excel-lence or a low-cost service provider. Additionally, increasing amounts of work were being outsourced to both domestic and foreign locations and contrib-uted to confusion about individual and organization purpose, value, and future direction.

ISSN 1822-6515 ISSN 1822-6515 EKONOMIKA IR VADYBA: 2009. 14 ECONOMICS & MANAGEMENT: 2009. 14 CUSTOMER SERVICES AND THEIR ROLE FOR INDUSTRIAL SMALL AND MEDIUM COMPANIES Lucie Kanovska Brno University of Technology, Czech Republic, kanovska@fom. vuthr.cz Abstract The aim of this paper is to present the problems of customer services and their important role for small and medium companies from the theoretical view and also selected results of research held in industrial SME's. Customer services are kind of services being provided by companies to their products. Customer services can be found in all economic spheres, such as in primary sphere, as well as in secondary and tertiary ones. The first part of the paper briefly describes the main characteristics of customer services, such as definitions, benefits (using as a competitive advantage as well) and typical examples provided in industry. The second part is focused on the brief overview on the research held in industrial SME's (the producers and sellers of saws and saw bands and their customers) in the Czech Republic. The last part of paper, conclusion part, suggests a proposal of general rules for providing customer. Keywords: Marketing, customer services, SME's, the Czech Republic. Introduction Nowadays many companies realize that all advantages, which they want to establish through their core products and services, are quickly wore away as others mimic them. Companies are always looking around them to find out some strategies to differentiate their production from their competitors because of fierce competitive climate. One possible and important strategy is focused on providing high-quality customer services. Services should try to lead companies to their success. Customer services can be one possible competitive advantage for companies in all resorts. Services are an important object of many scientific researches nowadays (Mathieu, 2001, Matthyssens & Vandenbempt, 1998, Oliva & Kallenberg, 2003). Levitt (1972) made the provocative statement more than 36 years ago that everybody is in the business of service. Also Berry & Parasuraman (1991) suggested that manufacturing companies are also service companies. Bitner (1997) emphasized similarly that all businesses are service businesses in some form. Moreover, the introductions of many service marketing textbooks stress the importance of service in the manufacturing sector (Lovelock, 1996). The aim of this paper is to present the problems of customer services and their important role for small and medium companies from the theoretical view and also selected results of research held in industrial SME's. Research method used in the paper is comparable analysis of scientific sources and also the qualitative research. Mathematical and statistical functions were used for elaborating of the research results. Conceptual Framework Customer Services Services added to products were seen until the 1980s as a harmful necessity, limited to after-sale services and generating important costs. Slowly a more market-focused vision has found that services can be an important competitive weapon. In the 1990s, some surveys discovered that manufacturers focused on service as one of the most critical competitive factors and they often included it in their global approaches to quality (Mathieu, 2001) Zeithaml & Bitner (1996) suggest that competitive equality has been reached with many manufactured goods. Technological superiority is increasingly more difficult to maintain as a lasting strategy and maintaining low prices is equally challenging as a differentiating strategy. Therefore, one potential competitive strategy is the development of a service strategy. According to Mathieu (2001), service is becoming a smart strategy, because it provides a strong competitive advantage through differentiation opportunities even within the commodities market. Furthermore, Mathe & Shapiro (1993) think that a service strategy can help in building industry barriers to entry. Customer services are everything, what company does for satisfaction of its customers. They help to gain higher profit from sold products. According to Bovee & Thill (1992), quality and customer services 413