Innovate competitively by using new technology, namely academics

As companies shift from product to services focus, they face the challenge of a larger, more dynamic and more diverse customer base. Some are turning to universities for assistance from academics to find ways to improve operations or customer relations. It's a mutually beneficial relationship: professors and graduate students get first-hand access to business realities while companies receive data that can translate to new, innovative strategies. Recently top executives met with a group of marketing academics at the 42nd American Marketing Association Sheth Foundation Doctoral Consortium hosted by the W. P. Carey School of Business.

Dell's customer service woes became public earlier this month when New York state Attorney General Andrew Cuomo alleged that the company's "award-winning service" was actually a nightmare. The State of New York alone had received 700 complaints about Dell's customer service. Dell, which made its name building computers to order and selling direct to customers, is still grappling to provide excellent services.

The company is the world's largest distributor of personal computers, but as its customer base grew, its customer service stretched thin. In 2004, a University of Michigan study highlighted Dell's growing need to repair its service delivery. Dell has since made improvements, but not enough to quiet complaints. Dell's legal trouble makes the point clear: a company's value is no longer defined by its products, but rather by how well it serves the customer.

The Dell example shows that customer satisfaction can plummet when services innovation cannot keep up with growth. The challenge is twofold: companies must make good on their services promises, and they also must cater to the individual needs of customers — who can and do leave for better service. As companies shift from product to services focus, they face the challenge of a larger, more dynamic and more diverse customer base. It's a brand new landscape, and many companies are discovering that they need fresh ideas to solve their problems.

Some companies are turning to universities for assistance from academics to find ways to improve operations or customer relations. It's a mutually beneficial relationship: professors and graduate students get first-hand access to business realities while companies receive data that can translate to new, innovative strategies. Recently top executives met with a group of marketing academics at the 42nd American Marketing Association Sheth Foundation Doctoral Consortium hosted by the W. P. Carey School of Business.

The consortium brings the best marketing doctoral students from around the world together with marketing scholars and business leaders to discuss new research. "We need you," Bernie Clark, Senior Vice President of Charles Schwab told a room full of leading professors and doctoral students. Academic expertise is like a new technology, he said, and like any new technology companies must figure out how it applies.

"Most corporations want and need [academic] relationships and quite honestly they don't know how." But, establishing these relationships early on can set companies apart from their competitors. Understanding how to use this new technology — academics — can expose dust under the rug and dark alleys that the company may not have noticed.

The benefits

In the past 20 years, companies have learned that services as well as products can be a source of revenues and customer loyalty. In fact, at a time when many products have become commodities, successful companies have learned to differentiate themselves through their services. The Center for Services Leadership (CSL) at the W. P. Carey School has pioneered research in services science.

The Mayo Clinic has been involved in several projects with ASU and the Center for Services Leadership. "Health care is a pure service industry," says Vic Trastek, M.D., Chair of the Board of Governors for the Mayo Clinic in Arizona. This includes delivery of a service to the patient. Trastek explains that research in the health care industry does not produce goods, but discovery. The Mayo Clinic's partnership with CSL has strengthened their customer service culture and provided accurate and meaningful data that can translates to improved processes.

"Things are moving so fast locally and globally we need collaboration to solve problems because no one can do it alone anymore," said Trastek. He added, however that companies can't wait years for results. The Center for Services Leadership was Avnet's window to thought leadership outside its own industry. Terry Cain, vice president of Avnet, says that Avnet has partnered with the W. P. Carey School on many projects that dealt with Avnet's customer engagement and loyalty. "We agreed on a project that would be beneficial to us.

And what we have learned has taken us on a journey [to] find out what does it really take to establish customer loyalty." Dan Wiersma, Senior Vice President for Sony, explains that his company had to incorporate and engage customer service due to the growing demand of the service component. "Although Sony continues to invent," says Wiersma, "service and services have become a much stronger part of our overall business proposition, not only in the U.S. but from a global standpoint."

Companies are still struggling with the concept of globalization as they outsource customer service in order to compete economically. "We haven't been able to define 'global' yet," says Cain. "Every company has its own context for what globalization means. Hopefully marketing scholars can help us further define it." In the mean time Avnet and other companies must be able to establish consistency in the customer engagement experience and turn that into a global process.

The challenge

"I am not sure that you as students or professors actually 'get' the real world challenge, or the corollary, I'm not sure in the business, as business leaders, that we always understand how to apply your research," says Cain. Cain adds that the greatest thing an academic can do is find a series of questions that will help uncover a problem that managers did not know they had. "And when that happens you've got our attention."

Companies may see the potential of university research; however, there is a learning curve that comes with implementing new ideas. With each new research project comes new information, ideas and results. Businesses tend to use the same old tools to solve problems. Academia can offer unfettered thinking, fresh ideas and a new variable to solutions and innovation. Bernie Clark from Schwab offered an example from financial services. "It is the nature of the financial industry to have an insular thought process," says Clark.

Businesses may apply the same answers and solutions without introducing new concepts. That is where academia can help, he said. Stephen Brown, a marketing professor at the W. P. Carey School and founder of the Center for Services Leadership, has launched many successful university and business partnerships. "We try to put ourselves in the shoes and minds of the organizations that we are working with, develop the plan of research with them, and let them have joint ownership in the project," he said.

Bottom Line:

• A company's value is no longer defined by its products, but rather how well it serves the customer.
• Successful companies have learned to differentiate themselves through their services.
• Establishing relationships with academia can set companies apart from their competitors because academia can offer unfettered thinking, fresh ideas and a new variable to solutions and innovation.
• The Center for Services Leadership at the W. P. Carey School of Business develops mutually beneficial relationships with businesses and organizations by giving them joint ownership of the research projects.

To comment on this and other stories go to the Knowledge@W. P. Carey Blog.