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28 | 4Th - 10Th JULY 2014 | UTILITY WEEK Customers Market view C hange can be radical or evolutionary. When evolutionary change catches you unawares, then you may need to apply radical change to get back on track. In the past decade our customers have been evolv- ing and so have our teams, and we have now reached the point where this requires a radi- cally new style of management. As if this wasn't enough, the pressure to do more for less is at its height, especially now that Ofwat has joined Ofgem in lower- ing the guaranteed cost of capital in return for higher rewards for higher performance. The utility industry is well versed in meeting the challenges of increased regulation, lower prices, and efficiency programmes, but doing more of the same (especially more of the same change) and treating teams and cus- tomers as we always have done, is not going to drive a radical performance improvement. So where should utilities focus to achieve ever stretching targets? Technological inno- vation, lean process improvement and restructuring are oen viewed as the three levers of change. However, to harness the benefits these levers can bring, we need a fresh perspective on two important stake- holder groups: customers and managers. A recent survey by Uswitch revealed that 72 per cent of customers would switch to a smaller supplier. Energy companies would be foolishly complacent if they let their customers' apathy (note the survey said "would" not "will") prevent them from act- ing. We know that price is the major driver of switching, however the same survey revealed that 22 per cent of customers would move for better customer service. That is where the question of competition becomes interesting. Do we really understand who our customers compare us to? Today's customers live in an on-demand, just-in-time world where boundaries between industries are non-existent, where they can purchase goods and services, change their personal details and share experiences at any time, anywhere and using any device. They transfer their expectations of customer service from one industry to another so, for example, if Amazon can guarantee delivery the following day, why does it take so long for my leak to be fixed or my power to be restored? Retailers, even banks, now recog- nise and reward customer loyalty, but what incentives are there for utility customers to report leaks or faults? Customer service should be at the heart of how we operate, not just the by-product of regulation compliance or the response to competing suppliers. So whether we inno- vate through technology, restructure or improve our processes, we should be asking how our customers will feel the benefits. For example, water companies should be driving through service incentive mechanism (SIM) continuous improvement on a daily basis, not just demonstrating SIM awareness when Ofwat comes looking. So what kind of manager do we need to meet and ideally exceed these customer expectations? If you thought they were the sporting equivalent of a football coach, think again – think of a track and field relay coach. The introduction of innovative technol- ogy, the need to reduce manpower and the need to comply with a growing array of poli- cies and procedures have all contributed to the evolution of frontline teams. The result is smaller, more specialised, more dispersed teams, relying heavily on handovers within and between teams, problem solving in real time. They must work seamlessly together ensuring critical information is passed, with- out error, within and between teams. Econo- mists call this challenge a "Weakest-Link Game", because the output is determined by the weakest person's contribution, making it damaging to carry under-performers. Leadership is essentially distributed within these new teams and there is an expectation that these dynamic, multi- skilled, multi-site, real-time operators have the skill and the will to resolve issues as they arise. For teams working in the same place at the same time, towards a clear single aim, visibly supported on site by their man- ager, a football coach analogy would make sense. For the relay teams, however, once the first runner is off, the handovers have to be smooth and the runners have to organise themselves. The coach can only influence in goal setting, training and review. That does not mean that the manager is redundant, far from it, but it does mean that the expectations of that role have to change radically. The communication challenge is not just about passing information on accu- rately. If relay teams are to succeed and to continuously improve then they need to be expert at applying learning and embedding change. Getting a consistent message to each team member when they are rarely in the same place at the same time is challeng- ing. Getting timely unbiased feedback about how that message has landed is even more challenging. A "relay" manager needs to act differently if he or she is going to support their teams. Here are six steps they should be taking: 1. Support the transition to becoming a relay team through active change management. 2. Develop end-to-end process improvement dashboards to ensure team learning and holistic decision making. Dashboards should have metrics for hand-offs, failure points and input compliance. This ensures measure- ment of each teams' contribution to success from the perspective of both parties. 3. Instil standardised management disci- plines rigorously with supporting tools and techniques for the frontline. 4. Judge leaders of relay teams by their poorest performers and how much they are improving, while ensuring they are sup- ported to face into the difficult performance management conversations. 5. Evolve the leadership approach to develop connected leaders who prize consistency, rig- our and constructive communication. 6. Use IT tools (web conferences, Yammer, SharePoint, etc) to support, but not replace, two-way communication. By all means look to technology, process improvement and restructuring to achieve higher performance and higher rewards, but as Einstein famously observed: "Insanity is doing the same thing over and over again and expecting different results. Alex Graham, programme manager, Egremont Group The race for customer service To radically improve customer service, utilities first need to radically change the way managers train their teams, because a team is only as good as its weakest link, says Alex Graham.