MIT Sloan Management Review

Everyone has experienced the frustration of having to repeat voice commands multiple times before finally asking to speak to a service representative. Many large companies have become so focused on optimizing their business processes and systems that they have become all too willing to forget about cultivating emotional connections with customers. But in order to detect and respond to shifting customer needs, companies need to show more, not less, empathy with their customers.

Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles. The article discusses two root causes for Toyota’s quality problems.

MIT Sloan’s Andrew McAfee reflects on “the amazingly bad design and execution of customer-facing processes among financial services firms.” He wonders if they’ll only get better “when competitors appear who take process design and execution seriously, and digitize them to the maximum extent possible.”

Designers at restaurants, theme parks and elsewhere have investigated how to make waiting in line more pleasant. What they have learned has profound implications for all managers.

How leading companies use price, speed, quality and flexibility to drive innovation and shareholder value.

Effective product returns strategies and programs can result in increased revenues, lower costs, improved profitability and enhanced levels of customer service.

Online retailers must distinguish themselves in three aspects of a transaction: customer interaction with the Web site, delivery of the product and ability to address problems when they occur

Breaking free of linear chain thinking and viewing value creation from a multidimensional grid perspective provides the greatest opportunities for innovation.

In service businesses as in others, work can be performed and stored in anticipation of demand. By wisely choosing what kind of inventory to hold, companies can improve quality, response times, customization and pricing.

Early in our careers, when we worked for the General Electric Co. in Schenectady, New York, there was no road map for a young manager desperately trying to find ways to lead. One had to experiment, employing various mechanisms such as motivational sessions, inventory control, budgetary control and information management.

Even the best companies let their customers down sometimes, and many disappoint frequently. The authors lay much of the blame for this on companies’ obsession with uniqueness and differentiation. According to their analysis, companies are too quick to dismiss “category benefits” as a source of advantage. They explain why companies such as Toyota, Cemex, Orange, Medtronic and Sony are successful because they are simply better at offering what customers really want.

Companies with the best connections to their customers unwaveringly focus their orientation, configuration and use of information on the people and businesses that buy from them.

Sometimes large-scale operational efficiencies can mask opportunities. In their research, the authors found that small-scale operations provide significant advantages in four areas. Using case studies, the authors illustrate how companies in a wide variety of industries have found the hidden benefits of small-scale approaches, concluding that executives who learn when it is better to think small can have a potentially huge impact on their companies‘ long-term success.

Just as early adopters are the most valuable customers to acquire, “disadopters” are the most damaging to lose.

Product-development and marketing managers know that customers make purchasing decisions on the basis of many criteria, including service quality, delivery speed and price.

In a world of mobile talent, open markets and brutal competition, it’s increasingly difficult to maintain an advantage over competitors through product innovation. As a result, some companies have figured out how to outdistance rivals through customer-focused strategies that are virtually imitation-proof.

In recent years, managers have become increasingly aware of the need to create value for their customers in the form of experiences. Unfortunately, they have often proceeded as if managing experiences simply meant providing entertainment or being engagingly creative. The issue is far more complex than that.1

Not long ago, continuity and stability were the watchwords of corporate operations. Now, with companies facing ever more demanding customers and tougher competition, ongoing operational performance improvement has become a strategic imperative.

All companies wish they could produce exactly what customers want when they want it. The ability to be that precise would not only delight customers but reduce costs. The challenges, however, are formidable, and most companies settle for manufacturing standard products in bulk, guided by long-term forecasts.

As the holiday season drew near, e-commerce retailers were either working anxiously to get their in-house processes ready or were double-checking with partners and service providers on order-fulfillment operations. Fears of revisiting the previous year’s fulfillment problems hounded them during their preparations for the projected high sales of Christmas 2000.1