Providing a Legendary Service

"A company's culture and a company's brand are really just to sides of the same coin. The brand

is just a lagging indicator of company's culture". These words belong to Tony Hsieh, CEO of one of the most admirable companies in delivering incredible service: Zappos.com.

I thought a good idea to bring Zappos' case together with others to remarking how important it is for

hospitality companies to focus first on leading indicators when managing. Leading indicators are the types of indicators signalling future events; so if you invest in your leadership, training, hiring and company culture, you should be credited for providing better lagging indicators, such as profits, brand positioning, customer satisfaction, etc. Indeed, a lagging indicator is an indicator that follows an event.

Once we have clarified this, there follows the million-dollar question: Why are hotel

companies, that provide great assets and good services, and well trained and very professional employees still not capable of differentiating themselves from their competitors?

Being able to differentiate a brand is a tough goal nowadays. This is because the world has evolved

into a hyper-consumption and hyper-competition situation. In the past, it was relatively easy to set up for a strategy and differentiate your brand from your competitors; just by developing a good product, or by delivering good service and making your operations more efficient, profits were pretty much assured. It was then easier to focus on lagging indicators: "We are going to be very profitable even though we don't prioritize our customers or employees strategy. What mattered most was to maximize profits because of our fiduciary responsibility to shareholders". So it was enough to provide an average level of service and good assets. Marketing would do the rest.

Now, the new hospitality scenario has turned out into hyper competitive markets.This situation results

in a market with oversupply and very strong competition, in which hotel properties do not have real competitive advantage; operating in a hyper-competitive market means that your hotel might be seen as a commodity product. Commoditization occurs when a product or service market loses differentiation across its supply base. In the eyes of the customer there is no significant value differentiation among brands, or even between luxury and stylish hotels; so low price is the main consideration for customers when making their decision. In a commodity market the one with the lowest price is better positioned to attract the guests' purchase decision.

In this situation, even global hotel groups though having more advantages in better brand positioning,

are not exempt from having their troubles. The same is true for other industries such as airlines. Of course, exceptions to this rule occur and are a consequence of a good strategy. One successful strategy could be to focus on differentiating your brand by delivering exceptional service, or by innovating, or both. Another good strategy could be offering the lowest price because you have the lowest cost structure, since you might have innovated and changed the traditional business model.

Whatever strategy is adopted, it would seem that there would always be one pre-condition to

succeed, and this it providing an exceptional service.

We are all aware of well-positioned and recognized hotel companies like, for example, Accor or Hyatt.

These hotels companies are serious about providing good services and hotel products. Within the airline industry, we all think of airlines such as Delta or British Airways as being reliable. Do these brands deliver exceptional service? We doubt so. Although these brands –and many others- might be considered to be customer focus, there is still something they lack: they are not able to provide what is called a legendary service.

We take the concept "legendary service" from Southwest Airlines. This company was pioneer in

providing outstanding service notwithstanding their lower prices. In the hotel industry, there are well known groups that provide this type of service in the luxury segment: Ritz-Carlton and Four Seasons Hotels. However, "legendary service" is not limited to the luxury market. To start with, many luxury hotel properties are far away of such outcome. Providing that level of service is not even limited to concepts such as delivering service with the best technical skills, seriousness, finest elegance and 24 hours personalized service. Southwest airlines for example is know for having fun at work but work hard; it is also known for its informality but at the same time professionalism when taking care of its guests. It's okay to be yourself, irreverence it's fine, but take competition very seriously.

Union Square Hospitality Group, for example, provides luxury dining but also casual dining services in

its restaurants. As a result, all of its properties, and ultimately its brand, have been positioned as one of the best hospitality companies in New York. Danny Meyer, founder and CEO of the group, refers to this sort of legendary service as "enlightened hospitality", but we are talking more or less about the same concept. Danny Meyer, ultimately defines its idea of enlightened hospitality by saying that service could be seen as a "monologue", that is, we decide how we want to do things and set our own standards for service. Hospitality, on the other hand, is a "dialogue". It means that to be on a guest side, it requires listening to your client with all your senses, and following up with a thoughtful, gracious, appropriate response. So it takes both, great service and hospitality to rise to the top. Not all employees are capable of delivering hospitality even though they might have excellent skills.

In order to be able to differentiate your brand based on your service, you need to

consistently surpass guests' expectations.

Achieving such legendary service or enlightened hospitality is a big outcome not easy to obtain. It is

related to going beyond customers' expectations, and guests' expectations are ultimately related to what customers are paying for their services. It's not rocket science that I would expect more from any hotel, if am paying $600 a room night, than I would in any other hotel in which I would pay $140. In any of these two cases, however, there is often a gap between what customers' expect and what they do really experience. To reduce that gap is a goal of mainstream companies whose mission is to providing good but average services. To surpass it, is the mission for those other companies such as Southwest Airlines, Jet Blue, Virgin Atlantic, Ritz Carlton, Joie de Vivre hospitality, Four Seasons, Union Square Hospitality, Zappos, and Whole Food. These brands overcome expectations by producing continued and sustainable WOW experiences.

It is easier to put this goal in a written plan than being able to accomplish it. The fact is that it is very

difficult to differentiate a business through service in a context of hyper-competition. Nowadays, customers are more unpredictable, variable and less loyal to brands in general. They do expect on average higher levels of service and quality.

Deliver WOW through service is the number one core value at Zappo's. To them it's a

way of differentiation by delivering service above and beyond what is expected. They say that they are not an average company, providing average service, so they don't want their people to be average. They expect every employee to deliver WOW.

Herb Kelleher, former CEO of Southwest Airlines and many other companies, stated that there is a part

in this legendary service which is spiritual, rather than technical or mechanical. It matters how do customers perceive service. Is service authentic, honest and does it come naturally from employees? Or, is it mechanical, superficial and canned?

What is then the common management input, which links these businesses to its unique

service? How is it possible for these companies to sustain such level of service even though some of them are huge companies having more than 44,000 employees?

There isn't just one management input, rather there are several. However, there are four things that

most of these great companies have in common.

Jim Collin's book Good to Great put things in clear. His research study focused on those

companies that were financially outperforming in the long run. Counterintuitively, he discovered that those businesses obtaining wider profits in the long-term were indeed the companies that did not focus in maximizing profits, but instead the ones that had a greater vision and purpose – rather than making money or being number one- and also the companies that had a unique culture.

How come these "soft" management concepts such as "culture" or "purpose", usually discarded by

executives and the mainstream of businesses, are not among the top priorities when managing? Well, this is a big conundrum.

There is also a third, and a fourth, indispensable input that come together: empowerment and

leadership. Role Models -and also my personal experience- confirm that in order to get higher levels of service, people in organizations have to be empowered. Otherwise service workers wouldn't be capable to handle that part of the service which is unpredictable, variable, unique, or atypical. On top of that, trust is essential. Employees must trust their managers and managers must trust their employees.

In order to empowering employees you need specific attitudes and skills in managers. Two basic ones

are: confidence in themselves but perfectly counterbalanced with humbleness.

First Input to providing a legendary service: Company purpose

It was Victor Frankl, an Austrian neurologist and psychiatrist and survivor of the Holocaust, who

referred to "Meaning" as the highest form of realization. In his stunning and unique book Man's Search of Meaning, he mentioned that happiness cannot be pursued by itself; it comes up as a consequence of living a life of meaning and purpose.

There are many pathways to get to that sort of personal meaning, but one thing should be clear,

having a meaningful job matters a lot. It matters because as human beings we do spend a great amount of time in our jobs. It also matters because in spite of what the majority of managers and business people think, our personal life cannot be totally separated from our work life. It is an illusion to think that we can live our personal baggage at the door when we start our job shift. It is also a big mistake when managing, not taking in consideration employees' inner work life.

The fact is that we all have an inner work life as Teresa Amabile pointed out in her book The

Progress Principle. "Inner work life is life because it is an ongoing, inevitable part of the human experience at work every day. We continually react to everything that happens at work. We determine whether the work we are doing is important and how much effort to exert. We also make judgments about the people we work with, including our superiors". She also remarked "If people do not perceive that they and their work are valued by a trustworthy organization, if they derive no pride or happiness from their work, they will have little drive to dig into the project".

What is a "meaningful work" for example at Joie de Vive hospitality? Chip Conley, CEO and founder of

the company, says that the company purpose is "delivering dreams". How do they do it? "Meaning in work", at Joie de Vivre, relates to how an employee feels about the company, their work environment, and the company´s mission. Meaning in work also relates to how an employee feels about their specific job task. In this way, Joie de Vivre mission is "developing dreams"; a purpose that certainly inspires employees. Joie de Vivre's Dream-maker program encourages above-and-beyond commonplace service solutions delighting customers with the unexpected. Dream-maker services are meant to meet a guest's needs or desires even before they are articulated. Employees are encouraged to pull a "dream-maker" act for a loyal, repeat guest or one who would seem willing to spread the word.

Chip Conley, as Danny Meyer, Collen Barrett, Herb Kelleher, John Mackey, Tony Hsieh and many other

enlightened entrepreneurs know that it is possible to transcend what is thought to be the motivation average within a company when most of the employees share a vision and purpose. People in their companies are not just working because of the money, titles, or individual interests, but also because of the company purpose and its meaningful work. In Southwest Airlines, for example, people are really moved from a higher source of motivation. Most of the 44,000 employees see their work as a cause; no longer see as vocation, rather as an avocation. It's a mission, a calling.

Southwest is different from many other companies, because its employees are different and see

themselves as making a difference too. It's a compendium of having the right people who fit in the right culture; these people are lead by the right managers, and they share a common purpose.

Second input to providing a legendary service: Creating a unique company culture

A company's culture can be a severe constraint on the success of many businesses, a source of

strength and sustained competitive advantage. As with so much else in life and business, it takes conscious intent and effort to create and maintain a strong, open and positive culture.

Peter Drucker, one of the pioneering conscious-management thinkers is credited with the expression

"culture eats strategy for breakfast". What he wanted to say was that it doesn't matter if you have the brightest idea and plan for your business, if you lack the proper company culture.

Let's focus on what is meant by a company culture and how strong company cultures can be

developed. A company culture is formed by core values, and these values are like the DNA. Tony Hsieh delivered a great analogy in one of his speeches: "When you watch the Discovery Channel and over the Serengeti or whatever, there's a flock of 50.000 birds flying. If you take a step back, it looks like this giant organism is flying in unison. And the reality is that there is no head bird leading the group, but there are various. Every bird has pretty much the same DNA and they have very simple instructions in their encoded DNA, like: stay this many number of inches away from the bird of the right, this many from the left, and so on. And when they follow these same rules, they're able to flock together. Analogously, the core values are like the DNA that enables the birds to function as a unit, whether it's 10 birds or 50,000 birds".

Thus, the primary reason Zappos is able to create WOW experiences and often surpass

guests expectations is a consequence of its unique culture. Zappos will hire or fire people because of its core values. The 10 core values are: (1) Deliver WOW through service; (2) Embrace and drive change; (3) Create fun and a little of weirdness; (4) Be adventurous, creative, and open-minded; (5) Pursue growth and learning; (6) Build open and honest relationships with communication; (7) Build a positive team and family spirit; (8) Do more with less; (9) Be passionate and determined; (10) Be humble.

Zappos' core values, like Southwest Airlines, or Whole Foods go beyond words. These companies

understand that the reason they are capable of providing such legendary service is due, primarily, to their cultures. It's very difficult, almost impossible for competitors to replicate it. It takes lots of time and tons of leadership to make it happening. At the same time, these companies are also capable of providing more value to their guests because of their continuous innovations. A sort of innovative spirit is spread all over.

Richard T. Pascale has been one of the pioneers in studying and writing about company culture. In his

book The Paradox of Company Culture: Reconciling Ourselves to Socialization he noticed different steps to solidify the acceptance of core values and ensure that the culture maintains itself. These practices can be described in terms of several socialization steps starting with a careful selection of the entry-level personnel; evaluating how the person is fitting with the company values -new personnel are subjected to a carefully orchestrated series of different experiences whose purpose is to cause them to question the organization´s norms and values and to decide whether or not they can accept them. The experience is designed to convey the message, "Although you´re smart in some ways, you´re in kindergarten as far as what you know about this organization"; measure and reward performance of those employees who are an example to the company, and thus reinforce company values; reinforce the stories and folklore -create and spread the best cases, practices and stories as an example to employees and the rest of stakeholders; and recognize and promote the role models -by pointing out these people as winners, the organization encourages others to follow their example.

Third and Fourth inputs to providing a legendary service: Leadership and

empowerment

Empowerment is the authority (and ability) to make decisions within one's areas of responsibility

without first having to get approval from someone else. If we empower employees we expect also higher levels of accountability and responsibility. Here accountability is understood as not punishing mistakes but rather learning from mistakes.

To be capable of providing a legendary service is a matter of leadership too. These companies know

that leadership is the other side of the coin. Management and leadership are both totally blended and cannot be separated while working.

Hiring the right managers is key, because they are going to be the mirror in which everyone is going to

be reflected. Managing by example and being a role model goes without saying; is a must. How could these companies maintain their core values otherwise?

What is very interesting in these companies is the way they understand leadership. They don't see

leadership exclusively as a top-down approach but also bottom-up. In words of Colleen Barrett, "I don't think leadership is a title nor a position, it is a way of life". This means that every single contribution counts a big deal for the whole picture. Leadership in this context is seen as source of energy, from the center instead of being at the top giving orders. Managers here, of course apply the traditional managerial approaches too but they also have a purpose of serving their teams. They teach, coach and boost organizational learning.

If the company mission is to provide a legendary service, these managers know that jobs must be

designed with higher levels of accountability and responsibility. They are aware that it is not possible to provide such higher levels of service just by following a rigid manual. In these companies it is enough to have guidelines instead of deep job instructions and procedures. Adherence to company values, guidelines, employees' experience, knowledge and common sense is all that is needed for empowered employees to handle difficult and unexpected situations in service. It is an illusion to think that it is possible to provide an outstanding service just by following instructions from corporate manuals.

Employees' judgment and common sense are crucial because the nature of service is unpredictable.

Both common sense and judgment are only possible when trust is established as a core value within the company. When facing atypical situations, employees are instructed to do what is right for the company and what is right for the customer. Gordon Bethune, former CEO of Continental Airlines and responsible for the turnaround of what was considered to be a dysfunctional company, wrote: "every company ought to burn their employee manual every now and then […] if you start writing rules to cover every tiny eventuality, you kill your employee's creativity, their ability to solve problems". In fact, you will kill organizational learning and knowledge too.

Colleen Barrett tells this story that happened in Southwest Airlines. This is a story among thousands in

Southwest Airlines, and a good example of legendary service, bottom-up leadership and empowerment.

Starting from the principle that security can never been compromised, what empowerment means for

Southwest is that people can make their own decisions and break the company rules and policies, based on what they are personally witnessing, as long as they understand that what they are about to do, and the decision they are about to take is not (1) illegal, (2) unethical and (3) immoral.

So, the situation is as follows: a passenger had a call with the dramatic news: his grandson had been

shot. This person was attending a conference and his original returning flight was not scheduled for that day.

He called Southwest to see what the next flight was to his destination and the operator at the phone

told him that there was a flight leaving in 15 minutes. The customer told her about his dramatic situation and urgency to get home and said that he was in his way to the airport to try to catch that flight. Because 9/11 policies, he could not make the reservation straightaway since it is not allowed for a customer to make any reservation less that 16 minutes before a flight. However, the operator understood the exceptional situation and called another service agent at the airport station. This service agent at the airport station also understood the dramatic situation and exceptionality, and took care of the issue. In spite of the lack of data, she informed her supervisor. The supervisor said "OK. Fine, but you need a full name that it must be the same of his ID in order to generate a boarding pass". Yet she neither had any customer credit card, not even the passenger full name, nor could she contact him to ask.

Doing the right thing for her was to keep going, so she bought a flight ticket under her name and paid it

with her credit card. So she generated a boarding pass on her name with her own money. She also had the good idea of handling the reservation as "disable people" so she could escort him to the gate through security. She also called security at the airport and told a security agent she knew, about the situation. In any circumstances security wouldn't allow it, but because of the service agent's pressure and the relationship with that security agent an exception was made.

Meanwhile, she called the employee at the gate who reported that the plane was about to leave. The

gate employee called the captain who was doing his check list report. The captain got out of the cockpit and walked to the front of the airplane, took the PA looking at the rest of the passengers and told the story. They were going to wait for this passenger to arrive. All the passengers agreed and they even applauded the captain's decision.

At this point, it is very important to understand how this exceptional decision could be affecting

Southwest on-time performance in terms of punctuality, for instance. This company is proud to be the number one on it. However, in this atypical situation, the employees decided to break the rules in order to do the right thing for the customer.

The captain realized that this man who was going to get to the plane very stressed and horribly

frustrated, so he waited for him at the gate. When he arrived the captain gave him a hug and told him they were praying for his grandson.

The incredible thing about this empowerment and customer service story is how Southwest corporative

office knew about it. Did they notice because of the captain, the service agent or the gate agent? No. Those employees did what they understood was their duty, and they did not expect any special recognition, or awards,. This story was known because the grandfather told it at the funeral, and was reported by the media weeks later.