Service Profit Chain

One thing that will dramatically improve your performance

July 5, 2017By Mike Hohnen

Think about it for a moment…, what is one thing you could work at that would dramatically improve your performance as a leader?

My theory is that most of us could improve the quality of our decisions. When I look at my own life and try to identify some of the main causes of difficult times, frustrations, etc., they can quite clearly be attributed to decisions that I have taken or possibly not take, which is in itself a decision.

So why is it hard for us to take consistently great decisions?

We are not as rational as we would like to be. We like to think of ourselves as super rational, but in reality, we are not. We make up a story that explains the irrational decision we took in order to convince ourselves and others how rational we are. Often, not always, it is bullsh*t.
We don’t understand what is really going on. We are looking at a situation through our own limiting mental models, and we confuse what in reality is just our perspective with reality or the truth.
We don’t take the trouble to gather enough information. We take decisions based on a few facts plus our own gut feeling. Sometimes it works brilliantly, but more often than not is doesn’t. A classic in this category is confusing our assumptions with facts. We think we know, but in reality, we are just assuming, and as my favourite coaching colleague from the US always used to say: Never forget Mike, that assumption is the mother of all f… ups.

So how do we work on improving the quality of our decisions? Once again it comes back to awareness. What we are aware of we can control, what we are not aware of controls us.

So the first thing to do is to start a decision journal.

Dedicate a notebook to this. And whenever you need to make a consequential decision, take a moment to think through: What are the options? What is your decision and what do you expect to happen? Make a note as well of your current state (tired, happy, stressed or whatever). Make space on the page for you to come back at a later time and note down what actually happened and what your key learning has been.

Start the decision journal today, by which I mean get it ready and commit to using it. Then the next time you need to take a significant decision, take the trouble to document it. Then on a regular basis go back and review your notes. Is there a pattern? What are you learning?

If you would like to get more sophisticated about this, check out this blog post from Farnam Street.

My personal experience of doing this is that I became aware that I had a tendency to take a certain type of decision very quickly, typically when something had not turned out as I expected and I felt an urgent need to correct the course. But what I had not previously noticed is that whenever something turns out different than what we expect, it triggers an emotional reaction and that emotional reaction would often tilt my decision toward the first idea that came into my mind.

Once I became aware of this, I have tried to postpone that kind of decision, to give myself time to get a different perspective, to resist the urge and that has definitely prevented me from a few bad decisions in the past 6 months.

Proving the point that more than anything, becoming aware of our own decision-making process helps us avoid the really bad decisions more than it makes us genius decision makers, but already that is not too shabby an outcome for many of us.

Once we have the decision journal in place, it’s time to practice getting better. A good place to start is to read Decisive: How to Make Better Choices in Life and Work by Chip and Dan Heath.

And what about your team? What is the one thing that really causes you frustration when you look at the people who report to you? If you in any way resemble many of the leaders that I coach, you will say: The quality of their decision… If only they could be trusted to take better decisions, my life would be so much easier.

Can you help your team make better decisions as well? Absolutely! It’s all about awareness, remember. We will have a look at how to do that in next week’s blog post.

This the thirteenth blog post in a series where Mike is exploring: Why is it important to develop not just yourself but also the people around you? You can read other posts in this series on Mike’s blog.

Building capacity is at the heart of the Service Profit Chain. If you are not familiar with the intricacies of is model, don’t forget to check out Mike’s online courses where you will find a lot of great tools, resources and knowledge on Leadership Development and The Service Profit Chain.

Are you an accidental diminisher?

April 14, 2022By Mike Hohnen

In my previous blog post, we looked at two very different leadership approaches: multipliers vs. diminishers.

In this blog post, we’ll take a closer look at the diminisher.

So how much output do we get from someone when we hire them to do a fair day’s work?

Well, there is quite a lot of research that indicates that on average, we are getting somewhere between 30 and 50% of what people are actually capable of.

This is also reflected in the Gallup engagement research that shows that +/- 65% of the workforce is not particularly engaged in their work. If you are not engaged, you are probably also not giving it your best.

So what are the barriers for our people to give their best? The top three, according to the research are:

Rules, regulations, and structure in the organisation
Lack of feedback and encouragement
The leadership style of the immediate supervisor

So to put it in a nutshell: If you are not getting max output from your team, it is probably because of you.

Yes, let that sink in for a moment.

That is not because you are a slave driver with psychopathic tendencies, at least I hope not.

More likely your are just an accidental diminisher. Accidental because when you have a diminishing impact, you are likely to be completely unaware of it and probably the last to know.

The first thing you need to think about is your own assumptions and beliefs.

You see, diminishers see intelligence as based on elitism and scarcity. Diminishers appear to believe that really intelligent people are a rare breed and that they are of that rare breed. This naturally leads them to conclude that they are special and that other people will never work out what to do without them.

They also seem to follow a logic that says people that don’t ‘get it’ now probably never will. Therefore, I need to do all the thinking around here.

This is what Caroll Dweck, author of Mindset, would call a limiting mindset.

The Multipliers, on the other hand, have a growth mindset, which is a fundamental belief that basic qualities like intelligence and ability can be cultivated through effort.

Multipliers get more from their people because they are leaders who look beyond their own genius and focus their energy on extracting and extending the genius of others. And they don’t get just a little more back; they get vastly more.
_Liz Wiseman

As we all well know, our assumptions and beliefs govern our behaviour.

So the diminisher typically displays some or all of the following behaviours:

Micromanage things
Do most or all of the talking at team meetings
Have the answers and ask few questions
Be judgmental and critical of others
Create stressful environments that often do not feel safe
Take fast decisions (as opposed to getting everyone buy in)
Drown the team with new ideas and initiatives

So here are a few questions to ask yourself and reflect on:

How might I be shutting down the ideas and actions of others, despite having the best of intentions?
What am I inadvertently doing that might be having a diminishing impact on others?
How might my intentions be interpreted differently by others?
What messages might my actions actually be conveying?
What could I do differently, that would make more space for the to contribute and grow?
These questions can be tricky to get feedback on from your direct reports, for obvious reasons. But what you can ask when there is the right opportunity is: Is there anything that I could do differently that would help you do a better job?

And then listen very very carefully.

Check out Lis Wiseman’s book for yourself: Multipliers, Revised and Updated: How the Best Leaders Make Everyone Smarter

This the twelveth blog post in a series where Mike is exploring: Why is it important to develop not just yourself but also the people around you? You can read other posts in this series on Mike’s blog.

How to replace the drama with real learning

April 14, 2022By Mike Hohnen

Have you found yourself binge-watching the Netflix series or impatiently waiting for next week’s Scandinavian Noir episode to come on screen?

If you have, it is probably because you were attracted by the unfolding drama.

So let me quickly show you how it is done.

All the great stories are built on the same principle. You need three elements. A victim, someone who get into trouble. And in order for that to happen, we need a persecutor, someone or something that does the bad stuff. And then of course, we need someone to save our poor victim, a hero.

That in all its simplicity is the mechanics of the drama triangle. And if you pay attention, you will see that many of your favourite books and films follow that structure.

Now if you would like to spice this up a bit and make it run forever and ever. You let the participants change roles. Suddenly the hero is the victim. The persecutor becomes the new hero and the former victim is now the persecutor. If you have ever had the opportunity to watch Elisabeth Taylor and Richard Burton in “Who’s afraid of Virginia Woolf”, then you will recognise that this is what unfolds for the two riveting hours the movie runs. It is a masterful demonstration of the drama triangle.

Great entertainment, emotions all over the place, but no learning and no solutions.

Unfortunately, many of us chose to play out these drama triangles in our own lives with the same result. Lots of emotion no solution.

We make victims of ourselves as we complain about traffic, the boss or the weather. We call our best friend each Friday evening and once again ask so how is the job going, well knowing that it will be the same sob-story as last week (The job is a disaster, the boss is an idiot etc.) but we satisfy our inner hero by encouraging our poor friend to tell that story again and again.

Or even worse, we give space to our inner persecutor by criticising a spouse or colleague only to turn around the next minute and be their hero by telling them not to take it so hard etc.

On and on it goes, you probably have your own version.

Just watch in your next management meeting, how this unfolds time and again, and how you already know who is going to play what role. Only here there is not much entertainment because we know the script and it is so, so boring.

We need to break the habit and stop playing this game with each other. The trick is to make a conscious decision to GROW out of it. There are no constructive solutions in a drama triangle. And the way to stop it is to ask yourself or your colleague the magic question: What would you like to do about it? Or what do we need to achieve?

This is where the GROW coaching process comes in handy. It is your magic wand that instantly dissolves the drama triangle:

What would we like to achieve? (Goal)
What is the current Reality?
What are our Options?
What are we going to do now? (Will)

Every time we find ourselves in one of the three drama triangle roles, we need to apply this simple but powerful process. It stops the drama, creates solutions and furthers our learning and development.

And all it takes is one simple question: What would I like to create?

This the eighth blog post in a series where Mike is exploring: Why and how to develop not just yourself but also the people around you?

Building capacity is at the heart of the Service Profit Chain. If you are not familiar with the intricacies of the Service Profit Chain, we have a special treat for you:

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Service Profit Chain or Service Design?

April 13, 2022By Mike Hohnen

Service Profit Chain and Service Design

This is a question I get quite often. And the short answer is that it’s not an either-or, it is a both-and.

The Service Profit Chain is, in my view, a strategic approach. What kind of an organisation would we like to be? It is very much about why we do what we do.

Service Design, on the other hand, is all about how we actually do it. It is the step by step approach to looking at all our interactions with the customer and making sure that they actually contribute to generating values for this customer persona.

“The activity of planning and organising people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers”
– Service Design Network

In simpler terms, you could say that on the one hand, we need to create an organisation that is willing and able to create fantastic customer experiences. That is what happens when we start implementing the principles of the Service Profit Chain.

With Service Design, we then make sure that the service that we are providing is a contribution in the best possible way to create value for the customer.

In practical terms, that means that we take the value equation from the Service Profit Chain frameworks and use that as a key tool to understand what a given customer persona actually wants. Value is deeply subjective and can only be defined and understood from the perspective of the customer.

Once we have that clear understanding of what certain customer personas are looking for, AND how each persona profile is slightly different from other persona profiles, then we can work through our customer journey, and touch point by touch point develop the best possible experience.

In that way, the Service Profit Chain and Service Design complement each other beautifully.

This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future’s posts, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

Why the Service Profit Chain concept is more important now than ever before?

April 13, 2022By Mike Hohnen

Service Business

Check out Google trends, the interest in customer service and customer experience is steadily rising year by year and has been for the past 5 years.

Why?

Because we live in an age of abundance – this is one of my key points when I give live presentations. By abundance I mean that there is too much of everything. There are more hotel rooms, restaurant seats, cars for hire or consultants etc. than the market actually needs. So we are all trying to survive in a hyper-competitive environment.

In a hyper-competitive environment, it is not enough to try and compete on product specifications. Because within a given price bracket, the specifications for most product are more or less identical. So in order to differentiate, we need to look at the experience and that typically means that we add some service components.

On top of that, we are rapidly moving away from products and into services (Just think cars, in a few years when cars become self driving, they will no longer be products but we will see them as a service). So society is moving to service dominant logic. And when products are turned into services, the focus shifts, it is not about the product spec but the customer need.

If we want to compete on experience and service, we need to focus on the interaction between the frontline staff and the guest/customer – what we also call the touch points. That is the critical interface – that interaction can lift what is otherwise just a bland run of the mill experience into a memorable experience. And when that happens, we create loyalty. High customer loyalty is the key profits a growth.

So some companies launch major initiatives around creating loyalty. They see that as their main objective.

But that is only because they are not paying attention to the principles of the Service Profit Chain – in a sense they have got the wrong end of the stick.

There is no shortcut to the profits and growth. You need to take the long haul and that starts with creating an inspiring and engaging workplace, and that is what the concept of the Service Profit Chain can help you do – and that is why understanding this key framework is the best way to survive in a hyper competitive environment.

Check our my course The Service Profit Chain explained!

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This blog post is part of a series of answers to frequent questions that I get around the concept of the Service Profit Chain. In future post, we will continue to explore other key points. If you would like the full concept served up in one go, you will find Mike’s book “Best! No need to be cheap if…” HERE.

What is your declaration of incompetence?

December 27, 2016By Mike Hohnen

Learning

Learning and development is a key component in our overall wellbeing.

In order for you to learn – there needs to be a gap: A gap between your desired results/performance and your current ability. This was the topic of last week’s post where you can find a more detailed explanation.

You may of course not be getting the results you hoped for despite the fact that you have the ability. I.e. you know what to do but you are not doing it. That is not a learning challenge but a motivational challenge – the cure for that could be a bit of coaching but that is topic for another day.

We can look at our roles from two perspectives. There is a management perspective and a leadership perspective. Identifying the gap from a management perspective is often quite easy. In our roles as managers, there are typically some quite explicit expectations that have measurable metrics attached to them.

But the other part of our job – the leadership aspect does not come with the same set of quantifiable metrics. So how can we identify the gaps here?

One way of doing it is to use the DAC framework developed by Center for Creative Leadership. I wrote about that in a previous post that you will find here.

So to what extent do you feel that there is direction, alignment and commitment on the team that you are leading?

Take look at the matrix below and ask you self that hard questions on each of these. Where is my team and where would I like them to be?

	Happening	Not Happening
Direction	– There is a clear vision of a desired future that everyone buys into. – Team members are individually clear on what the team is trying to achieve as a whole.	– No agreement on priorities – Team members feel they are bingo pulled in multiple directions. – There is lots of activity but not much progress.
Alignment	– Roles and goals are clear individually. – There is a clear understanding of how each and everyone contributes to the larger picture. – There is a sense that this is a well coordinated and synchronised effort.	– Deadlines are missed. Rework required and lots of errors resulting in double work. – People feel disconnected from each other. – Internal competition and blame games are the norm.
Commitment	– Team members go the extra mile. – There is a sense of mutual understating and trust. – There are visibly high levels of engagement.	– Only the easy things get done. – Team members are questioning what is in it for them. – Individuals avoid taking ownership and responsibility.

Is there a gap?

So back to the learning – for learning to happen you must declare your incompetence. “I would like to achieve xyz but actually I don’t quite know how to get there.”

How does that feel? Scary, intriguing, motivating? Whatever you are feeling, what is important is that you are slightly out of your comfort zone – because that is where learning, growth and development actually take place. So if it feels a bit uncomfortable – great, you are on track.
There is a great learning opportunity.

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If you have the curiosity to take a deeper dive into the subject of how we produce engagement on our teams, you are welcome to download my ebook Understanding Engagement.

Enter your email below and download the ebook now!

In this brief e-book, we will look at how the lack of engagement is to a large extent a function of leadership. And that if we really want to change the engagement levels on our teams, we will need to make radical shift in how we understand the world of work. The shift is all about moving from a transactional mindset to a transformational mindset. We will look into what that means, how it can help you as a manager and why it is so important.

Are you the chief employee experience officer?

March 31, 2016By Mike Hohnen

Focusing on the customer experience is the key to high customer loyalty – it’s well established.

That is also why around 70% of medium to large UK companies have a customer experience manager at the level of VP or equivalent. The current buzz-tool for developing these customer experiences is ‘service design thinking’.

So far so good.

But if you’re familiar with the service profit chain, you also know that the key to an exceptional customer experience starts somewhere else. We need to create what we call ‘internal quality’ – more popularly referred to as ‘a dream team cycle’.

So what would happen if we were to turn all this service design thinking on its head and focus more on the employee experience? When did we last sit down to analyse the employee journey as it unfolds throughout the day?

Do we know what the critical touch points are? Have we done some emotional mapping that could help us understand what the possible frustrations are during a day?

What are the learning opportunities? Does this job have varying challenges, or is it just the same thing day in, day out?

This idea came to me as I read Global Human Capital Trends 2016, published by Deloitte University Press. According to this latest survey, 92% of executives listed organisational design as very important and something they will be focusing on this year.

So designing our service organisations from the employee perspective should receive the same kind of attention and resources as we use when looking at the customer experience. Yes?

This leaves the question of who the chief employee experience officer is going to be in your organisation. Will they be part of HR, or will your organisation create a totally separate role?

I would love to hear your views on this, so please feel free to reply to this mail.

Service is a Contact Sport

April 13, 2022By Mike Hohnen

And that needs to be reflected in the way you manage who gets to play on your team.

Step number one, when we are trying to create a service dream team, is having the right people on the bus. There are two parts to this: recruiting and developing.
Before we explore those two aspects further, let’s just take a look at why this is important. The name of the game, when we are running our service company using the Service Profit Chain framework, is employee loyalty.
In this context, loyalty has two dimensions: retention and attitude.
So, if we want to keep our best people and ensure that they continue to have that world-class, can-do-attitude, we need to be careful not to take away their job satisfaction.

How to Insult Your Best People

Ask them to work alongside an idiot!
Nothing demotivates a great service provider as much as having to work with a colleague who is not performing or, even worse, is blatantly annoying our clients. And if you – their manager – are not seen as doing something about what is obvious to everyone, one of two things will happen.

Either…
1) They will leave the team and find a place to work where they are sure to work with other star performers. (This is one of the secrets to Ritz-Carlton’s success, in my opinion – the best service people want to work there. Why – because they know they are going to work with the best in the industry.)
Or…
2) They will reduce their efforts so that they match the underperforming colleague.
In either case, your customer will be at the receiving end of a lousy service experience.
So, when we look at the best companies in a given service category, we always see that they are picky about who they hire. They do not adhere to the warm-body principle, “As long as they have a pulse, we’ll take ‘em,” to the extent that they prefer not hiring to hiring someone they are not 100% sure fits. And ‘fit,’ in this instance, is about values and attitude – not about skills.

Deal with the Bad Apples

Secondly, great managers do not put up with bad performance. If someone is not performing, they are coached. And if they are not seen to be making an effort to improve, they will need to go.
Great service organizations play to win – consequently, they have no room for players who are not performing – it’s that simple.

Seven Steps to a Dream Team

There are 7 more steps to creating a dream team – I have outlined them in a handy Checklist that you are welcome to download here.

Building a great service business begins with understanding the Service Profit Chain framework. In my view, that is the foundation. Check out my free introduction here