As the former CEO of a multi-billion dollar company and a business school professor at Northwestern Kellogg, I definitely understand the concepts of efficiency and economies of scale. I also realize the benefit of leveraging operating expenses and improving the operating margin. Yup, that all makes sense. However, as two recent incidents reminded me yet again, too many businesses take this approach to an extreme, forgetting the most important requirement for a successful business: CUSTOMERS!!!!!!
The first incident occurred a few nights ago. I was driving home and stopped at my bank branch in my town of Wilmette to deposit a check in the ATM located in the bank’s parking lot. When I tried to deposit the check, the ATM pulled my check in, but for some reason the deposit wasn’t recorded. Realizing that nobody was around that late in the evening to help me, I decided not to worry about it and call the bank the following morning. Here’s where the “fun” started. When I called the number of my local branch where I had made the deposit, my call was answered by a fellow in Phoenix, Arizona. When I tried to explain that it made sense to speak to someone in my town of Wilmette so someone could simply go outside to check the machine, he informed me not to worry and that he could take care of it. When his first question was “Where is Wilmette?”, I began to realize this wasn’t going to be easy. After several more questions, I asked nicely to be transferred to my local branch. A fellow in my branch answered the phone and repeated all of the questions that the fellow in Phoenix had asked. I asked him if he could go out and check the machine. He responded that he couldn’t do that, and he would have to transfer me to the “operations department” where someone could immediately help me. Well, when the next guy answered the phone with, “Phil in operations, how can I help you?”, I thought I was beginning to get somewhere. I asked Phil if he could look out the window and see the ATM that had eaten my check. He responded by asking me which ATM I was referring to. When I once again explained that I was in Wilmette, he explained that he would be happy to help me, but that he (and the operations department) were in Columbus, Ohio! I remained very calm (that’s what happens when you have just returned from a three-day silent retreat 😉 ) and asked him how I could recover my check. He explained that he would email a form to me and “keep a close eye on my completed claim form.” Yes, efficiency and economy of scale are important, but are we forgetting about that other relatively important thing called a “CUSTOMER”???
Okay, one more example. I realize that with the prevalence of smartphones most people would never think of calling up an operator to ask for a phone number, but sometimes, I still do. I dialed the operator a few days ago to request the phone number of the movie theater in Wilmette (I should stop here and clarify for the younger folks out there that when you used to do this 20 years ago, the operator would not only give you the phone number, but he or she would even tell you what movies were playing). I was not so lucky. When I asked for the number of the movie theater in Wilmette, the operator asked me where Wilmette was located. When I told him it was in Illinois, he informed me there was no such town in Illinois. Okay then. I took a deep breath and spelled the name of my town. I thought that would clear things up. Not quite. The operator explained that there was no movie theater in Wilmette. I insisted that I was sure there was a movie theater in Wilmette since I had watched a movie there just three nights earlier. After several more minutes of investigating, he finally informed me that if there was indeed a movie theater in Wilmette, he did not have a phone number for it.
Well, just to bring closure for sanity’s sake, I did drive by the movie theater tonight to make sure it was still there (and I saw the ticket person speaking on the phone!!!). I also drove by the ATM that ate my check — not sure whether I will ever see it again. After all, I am only a CUSTOMER 😉
One final concluding thought: When I was at Baxter, even as a CFO and most certainly later as the CEO, I made it a point to know as many of our customers as possible. I would walk into HR and Legal meetings and ask them to name as many customers as they could. The point was to constantly remind ourselves that no matter what function or role we were in, ultimately we were only there because we had customers. Without customers, there was no Baxter. That’s a principle all businesses must embrace!