"A House Divided... Cannot Stand"​ ~ Abraham Lincoln

Updated: Aug 18, 2021

Let us imagine a customer service call center, the sole purpose of which is to serve the customer by answering phone calls. Customer service has been identified by management as a crucial issue, and outstanding managers operate this department. Moreover, like all good managers, they understand businesses generate revenues in only two ways: 1. Increase sales, and 2. Cut costs. Additionally, they have worked hard to achieve their positions and would like to keep their jobs.

When this department was first created, the company noticed a boost in sales. However, over time, the call center only shows up in the expense column on the income statement. Customers have become habituated to the call center, which is now a standard feature offered by the company. Even the company's competitors added customer service centers to remain competitive. Sadly, this great idea has become an expense, and you will recall that cutting costs is one of the two ways businesses increase revenues on the bottom line.

You can see where we are heading, which is why systems thinking is essential. Expenses in one area cannot be cut without affecting other areas. Cutting call center costs means fewer representatives on the phones, longer wait times, reduced training, and unhappy customers. Call center cuts result in the company losing sales, offsetting any revenue gains from the initial cuts [1]. What should those good managers do?

The problem here is that the call center started without consideration for the business' systems. The goal was initially to serve customers by addressing complaints and responding to questions. However, adding a department to a company adds a piece to a system. This piece could have been an essential part of obtaining customer feedback to make the product better, instead of being treated as a separate piece.

What are the customer complaints causing calls? What issues are customers having with products? What are customers not understanding about the products? Within a system, the call center could have been a vital feedback mechanism to identify problems, to make improvements, or predict customer wants and needs. 

Instead, the call center became an autonomous piece which drove up long-term expenses. Once the initial sales bump evaporated, good managers to wanted cuts. Cuts could have been possible by utilizing customer feedback instead. "We get many calls about broken whats-its" or "we get many calls because customers do not understand so-and-so." This information could make the product better, had it been passed along to the design or manufacturing or marketing departments. These departments could have executed manufacturing, product or advertising changes, resulting in fewer call center calls. The original goal of customer service could have been realized by recognizing that customers are an essential part of the company's system.

Other departments may also have asked the call center to start randomly sampling customers during its less busy hours, seeking other areas of feedback which did not produce calls. Why did customers buy from us instead of the competitor? What would customers like to see in the future? What features do not matter? Customers are part of the business' system too. They are the part generating the revenue and feedback from them is vital to success.

As it happens, many businesses, despite actually being systems, are not run as systems but as separate, independent pieces. When Eddie Lampert bought Sears, he isolated departments and created incentives to compete with one another instead of working as a unified system [2]. Departments made cutthroat attacks against each other to perform more favorably in comparison. Sears, once the nation's largest retailer, destroyed itself from within through lousy management.

My question this week is "Where is your business running as independent or competing pieces instead of as a unified system?"

[1] Regan, K. (2003, November 25). Dell Recalls Tech Support from India After Complaints. Retrieved April 28, 2019, from https://www.ecommercetimes.com/story/32248.html

[2] Kimes, M. (2013, July 11). At Sears, Eddie Lampert's Warring Divisions Model Adds to the Troubles. Retrieved April 28, 2019, from https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles