One of the things I love about working at a university is that sometimes we are lucky enough to get world-class people come and give us their time, experience and wisdom.Today, we were fortunate to have Gurcharan Das speak to a small group of us and give us his thoughts on strategy and customer service.
Gurcharan Das is probably best known from his time as CEO of Proctor and Gamble in India and as VP and MD of Proctor and Gamble world-wide.
One of the most important things that I gained from his talk was to ask this question: ”Who is paying my salary?“
This question was answered time and time again by stories that he shared that all had a common theme - the customer pays the salaries.
Now, for those of you who have a strategy background, or who can remember your Strategy 101 class, you won’t be surprised by his claims that there are basically three ways in which you can gain competitive advantage in your market:
- By having a superior price
- By having a superior product
- By having superior service
You can’t do all three well; but you can excel at one of them. Gurcharan’s argument was that in a globalised and interconnected world where 70% of the economy is service based, that it doesn’t really make sense to concentrate on price or product. Of course, you have to be good at all three, but it pays to be excellent at service.
The problem that we often face is that although you can learn the skills of customer service, it is much harder to learn the attitude. It’s the attitude of customer service where the real value lies in an organisation.
Having a price that is cheaper than your competitor only works if your costs are lower. This is a strategy that is hard to sustain and is counter-intuitive as cheaper prices (including those that are the result of price wars) come straight off the bottom line. That’s expensive.
Having a product that is superior than your competitors is desirable, but ultimately copyable. Ask those ‘elite’ companies that licensed their brands to be used in handbags and luggage and fragrances how their overall brand value has been destroyed by cheap copies from places like Hong Kong, Vietnam and Indonesia. You might have a technology that gives you an advantage today, but in 6 months time, your competitor probably will have it too. When you are investing millions of dollars on R&D to invent a new technology, a 6 month advantage seems an expensive way to spend your money.
So, to gain an advantage, you need to develop a capability in something that is inexpensive yet difficult to copy. Service to the rescue.
Gurcharan was an engaging speaker, and we were lucky to have him talk to and with us for an hour and a half. If you would like a copy of my notes on what we covered, send me an email, or drop a comment at the end of this post, and I’ll send you a PDF.
