Thursday, October 15, 2009

How the Disney magic continues.

Post 347 - Businesses can be placed along the following continuum depending on how they treat their customers:

• Passive = Satisfaction-based

• Active = Performance-based

• Interactive = Commitment-based

Many companies I deal with on a day-to-day basis treat their customers passively. They do their work and get paid, and never take the customer relationship beyond fulfilling a particular need. It’s estimated that 75% of businesses have passive relationships with their customers.

Operating in the active phase means regularly asking for feedback from customers about what they want and need. As the recent financial meltdown and the current health care debate illustrate, professional firms especially tend to put too much focus on what they do rather than on the customer who’s supposed to benefit from what they do. It’s estimated that 15 - 20% of firms operate in the active phase.

That leaves about 5% of businesses in the interactive phase. These firms (Starbucks, Lands' End, Ritz Carlton) have developed a partnership with their customers that’s so deep, it can anticipate the customer’s needs and desires. Here, the onus is on the service provider to exceed the customer’s expectations. Disney has over the years achieved the interactive level with its guests, so much so it says it views them as “paying consultants.”

Disney faces competition, government regulation, labor shortages, union problems and all of the other hassles that businesses have to cope with in a recession. Walt Disney World has over three dozen unions to contend with (I’ll bet you didn’t know that Mickey Mouse is a Teamster!) Some of its unions have been quite vocal and public of late as the company has outsourced considerable technical work (over 1,000 IT jobs in 2008 to IBM for example, plus the manufacturing of all Audio-Animatronics figures) to reduce costs and to keep pace with the latest technology.

In addition, 2100 full-time cast members at three Disney hotels have been asked to pay 25% of their premiums if they seek company healthcare. Currently, they pay nothing and this new charge, which would be phased in over five years, pits the image-conscious Disney against Unite Here, an aggressive union known for its street-theater militancy. (President Barack Obama has been such a strong backer of Unite Here that in 2007 he walked its Congress Hotel picket line in Chicago and vowed to return after winning the presidency).

In their latest contract offer Disney also proposed to create a new "casual regular" status for employees who average less than 30-hours a week. Casual regular workers would be ineligible for health insurance benefits. Last month, Unite Here Local 11 members in Anaheim, California overwhelmingly rejected Disney's latest contract offer, with healthcare the major sticking point. And the two sides currently seem far from an agreement. This dispute is indicative of how fast-rising healthcare costs have pushed the issue to the forefront of labor-management relations, just as it’s center stage on Capitol Hill. Many other firms across the country are struggling with these same issues as they try to contain runaway healthcare costs.

Walt Disney believed, “You can dream, create, design, and build the most wonderful place in the world but it requires people to make the dream a reality.” Over the past 50+ years, through careful, thoughtful management of its people, settings, and processes, Disney has created a seamless and deeply impressive service experience that’s a legend to its many customers all over the world. It’s shown that the secret to the practical magic of superior customer service is a full-time business of shared values, enforced standards, focused tasks, flexible assignments, self-discipline, and attention to detail that’s virtually transparent to guests.


Anti-Laureate said...

If proper health cover were provided by the state private firms would not be under so much pressure to pay directly for it. It would therefore be in the interests of much private capital to support public health provision. The increase in taxation required would probably be less than the costs of having to pay private health care directly. Ther American health system proves that health provision is one of the few markets where private industry is less efficient and more costly than public-owned.

john cotter said...

The "would probably" part is a dilemma for business executives. They want to see the proof first.