We’re currently finalizing the design of a quantative project that will allow us to discern how good banks and insurance companies are, from an operational perspective, at responding to internal and external customer demands, as well as the impact that responsiveness (or operational agility) has on key success measures such as unit costs, operating margins and revenue growth.  The big argument on the team is whether in a Financial Services environment, Operations can have ANY impact on revenue growth through an avenue other than service fulfillment.  I say yes – not only CAN Operations impact revenue, they MUST enable revenue growth in order guarantee organizational success and protect efficiency gains.  Some of my colleagues say nay, that is not Operations’ job, leave that up to the revenue folks.  Let me tell you why I think they are wrong, and ask you to settle the argument for us.

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As many of you may have read in my bio, I grew up in a developing country, and recently visited my family there over the holidays. While I was there, I had the opportunity to make a pretty simple transaction at a banking institution, and was so annoyed by the time I left I was determined to make my next blog entry about the customer experience.

We’ve written about the customer experience before at the Operations Council. Some of the main conclusions I’ve personally derived from our research are that:

1) Factors critical to the customer experience with a financial institution are very different than factors that drive the experience in other industries we try to model ourselves after. Banks and insurance companies are not hotels!

2) The biggest loyalty gains (as defined by a customer’s intent to continue to do business with, give more business to, and recommend an institution) come from truly understanding customer expectations and meeting those expectations, rather than arbitrarily crafting a strategy to create “customer delight”.

3) The customer experience is about much more than customer service, and factors under Operations’ control, such as processes, forms and systems, just to name a few, have a big impact on that experience.

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I used to work as a Group Branch Manager for a small regional institution – the kind that still has queue problems at the branch.  We had a policy of having no closed teller windows – EVER – because it made customers angry to see that big old “Closed” sign when they were standing in a long line.  One of my biggest nightmares was when a teller called in sick, missed work unexpectedly or quit on short notice.  When things went wrong unexpectedly, we were usually not very quick at fixing them, so often times I found myself on the wrong end of a heated debate – to put it politely – with our General Manager (who I happened to report to), even though often times I had been unable to take action because he had not provided a decision quickly enough.

I’ve been thinking about agility a lot lately.  Not because I’m getting older and can’t move as fast as I used to but because it’s going to be a major area of focus for us in the first half of next year.  Up until now, we’ve worked under the assumption that the main goal of every Operations executive is to provide the best service at the lowest cost.  It’s been pretty clear to me in speaking to some of our more progressive members that while our industry has made great strides in creating efficiency – either because we were forced to by the global crisis or because we’ve been working at it for a long time – some of that efficiency has also led to rigidity, particularly at larger institutions.  We get so bogged down in the day-to-day, and our organizations have become so complex that it is difficult to predict what changes we’re likely to encounter, and even more difficult to decide on how to react to those potential changes once they become a certainty.

My task now and for the next few months will be to reconcile agility and efficiency, find a crystal ball that will allow my members to have a better sense for what lies in their future, and figure out how those same members can move the 800 pound gorilla that is most of their operations without spending a lot of money.

Any suggestions?