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August 2007

• Australia, Hawaii and back

• Three years of the Verghis Group, Inc.

• Two interesting cover stories on innovation

• Innovation in the Support & Services space

• Boston, Seattle and Santa Clara workshops tentative dates

August 1 marked the three year anniversary of the Verghis Group, Inc. This was an important self-imposed milestone. It was the point when I would decide whether or not this business was sustainable. (The U.S. Small Business Administration notes that 50% of all small businesses fail within the first five years.)

Well, I’m happy to note it is not just sustainable, it is thriving. A big thank you to all my clients, both current and prospective, as well as to colleagues for the intellectual debates and collaboration, and to my family for encouraging me to continue doing what I love.

Judging by the number of comments I’ve received, many of you nurse a secret desire to start your own business. If you are interested in hearing more about what it’s like, reply to this newsletter and I’ll share my thoughts in a future issue.

That’s the sound most companies make when they try to force-fit innovation into a process-driven business culture.

Innovation is a hot topic, of course. Two major business magazines featured cover stories on innovation at the same time: the June 9 edition of the Economist and the June 11 edition of Business Week.

Business Week’s cover story, titled “3M’s Innovation Crisis: How Six Sigma Almost Smothered its Idea Culture,” examined how that enterprise’s long-standing culture of innovation was radically transformed by CEO Jim McNerney, a GE alumnus, and why incoming CEO George Buckley decided to make changes to 3M’s Six Sigma approach after he took over the top spot.

An interesting Harvard Business Review article examined “The Ambidextrous Organization.” Charles O’Reilly III and Michael Tushman explained how innovation differs from process optimization efforts such as Six Sigma. Their research suggests that smart companies separate projects that require innovation from those requiring ongoing process improvement. This is critically important. It is not an all-or-nothing approach.

Finally, the Economist cover story, “Apple and the Art of Innovation,” presented four lessons that companies can learn from Apple.

The first is ‘Not Invented Here, But Very Welcome’ – also known as network innovation. The iPod and iTunes, it turns out, were not developed in-house, but bought by Apple. The iPod was actually conceived by a consultant who was working at Apple, then stitched together using a combination of off-the-shelf parts and in-house ingredients.

Apple’s second lesson is to design new products around the needs of the user, not the demands of technology. That’s a trap many of us geeks still tend to fall into.

Smart companies should sometimes ignore what the market says it wants, according to the third lesson. The iPod was laughed at when it was first introduced — but so was its innovative predecessor, the Sony Walkman. As Greg Oxton of the Consortium of Service Innovation is fond of saying, “Sometimes the best new ideas are laughable at first.” (Hmm. Is that why you laugh so much when I suggest things, Greg?)

The fourth lesson is to fail wisely. In Apple’s case, the Macintosh was born from the bones of the failed Lisa computer. The iPhone rose from the ashes of the first Motorola/Apple phone.

Does your company have a culture that unleashes innovation — or smashes it? Don’t worry about the rest of the company if you don’t control it. What about your own teams? Are you encouraging innovative approaches to resolving the root cause of problems? If not, why not?

I believe the service and support field has become stagnant and ossified over the past two decades. In fact, not much has really changed since I started in the field in 1990.

For example, we continue to depend on highly lucrative maintenance fees — what I call the ‘crack cocaine’ services revenue. Customers hate paying them but are forced to, and we make life very difficult if they don’t.

Most organizations also continue using an assembly-line approach to support. Tasks are handed off from one group to another. Instead we should be building teams, processes and metrics that reward knowledge-economy issues like collaboration and initiative.

But there is great news in this arena. The service world has recently initiated several efforts that attempt to place the customer at the center of the conversation, right where s/he should be.

I’m involved in four different efforts in this area. Perhaps the longest-running effort has been with the non-profit Consortium for Service Innovation, which has been working on knowledge management (Knowledge Centered Support) since 1992. Apart from being part of the interesting conversations and initiatives they have kicked off, I’ve been collaborating closely with them in two of my recent client engagements. Both involve large KCS projects that span multiple countries.

A second promising project is the Research Roundtable on Service Performance Measurement, founded by Dr. Dean Spitzer of IBM Research and his academic colleagues. As part of this by-invitation-only roundtable, we are starting to frame a research agenda for the performance measurement of services, create a process for ongoing collaboration, and identify opportunities for the dissemination of the knowledge we create to gain greater visibility for performance measurement.

Another effort is the Service Research and Innovation Initiative which is bringing together academia and industry to jumpstart innovative efforts in the services sector.

The fourth project is more location-specific. It involves a 112-year old non-governmental, non-profit organization called the Confederation of Indian Industry and a group of service leaders based in India. I am an advisor to this group, whose goal is to help ensure that all parts of the globe contribute to service innovation.

That’s how John Ragsdale, VP of Research at the Service and Support Professionals Association, described me on the SSPA website. He goes on to say “Phil is intimately familiar with the challenges facing SSPA members, and is ready to help members achieve their business goals.”

Thanks, John!

Events & Upcoming Talks

• November trip planned:
  Be the Voice of the Customer workshop tentative dates:
  
      Nov. 1   Boston
      Nov. 5   Seattle
      Nov. 7   San Jose

Are you ready for an independent management consultant who specializes in service and support to take a brutally honest look at your support operations? To discuss your specific needs, give me a call.

What's On Your Mind? 

I want to hear from you! Your ideas, insights and feedback are important to me. What topics or books would you like to see discussed? Who would you like to see interviewed? Your comments, questions, ideas, suggestions, feedback and contributions are welcome. Send them to the editor here.

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Previous issues:
May 2007
 

About Phil Verghis
A preeminent expert on global service delivery, Phil was vice president of Infrastructure & Support at Akamai Technologies and a member of the Senior Executive Operations Group. Among other responsibilities, he launched Akamai's award- winning Customer Care Department and ran the world's largest IP network: 15,000 servers in 66 countries handling billions of hits per day. More about Phil.

About The Verghis Group
We unleash the power of your customer (SM). The Verghis Group brings years of expertise with innovative solutions that enable companies like yours to conceptualize and implement world-class customer support strategies that delight your customers and enhance your bottom line. Our strategies encompass your people, processes and technology. For the right clients, we can add significant value by taking a comprehensive look at issues from your customer's point of view.

We are vendor-neutral. Our mentorship and facilitation based model emphasizes the speedy transfer of knowledge to your internal teams.

For more information or a no-obligation initial consultation, contact:

This publication is a presentation of The Verghis Group, which is solely responsible for its contents. 
©2007 The Verghis Group. All rights reserved.