June 2006 Archives

I just read the current HBR in a bookstore near me - more specifically the interview of GE's Immelt on his new "organic growth" process. One statistic jumped out at me.. In GE's white goods appliances business, the pricing process was less than optimal. Apparently 5 BILLION dollars was simply given away discretionally by the sales force. Immelt himself believes that there's 50 BILLION dollars given away over all the GE businesses due to sub-optimal pricing processes. The question you need to ask yourself is -
If an incredibly well-run company like GE can find opportunities in improving pricing after 10+ years of Six Sigma, How much of an opportunity is there in your company??

Here's a link to the review I wrote on the 800-CEO-Read blog: 10 Rules for Strategic Innovators reviewed by Arun Sadhashivan Here's a link to the book by Vijay Govindarajan and Chris Trimble published by Harvard Business School Press: Ten Rules for Strategic Innovators. Do buy it. Seriously, it's really good! I'm an incredibly happy man! woohoo!

I came across this often discussed and debated topic on the BBC website. Child labour - India's 'cheap commodity' The thing is politicians and the society at large need to make huge necessary investments to fix this situation. What's it all about? A lot of people who are poor, illiterate and from less developed areas in India tend to get their daughters married off as soon as they can. 18 is the legal age for a girl to get married, but some of them get married even earlier by fudging birth certificates. These girls (and their bridegrooms) are rarely ever taught anything about family planning, and end up having a few babies. The parents of these children find out that with their meagre resources, they cannot support so many mouths. So they send some of their children with "agents" who place these children in kitchens, factories, shops, homes - where they do menial and sometimes dangerous work. They work 12 hours a day, 6 - 7 days a week. They're fed and housed (not too well, but they don't have much choice) They get paid a meagre amount every month which - if all goes well - is sent by their "employer" to their parents, who use this money to survive and raise the other children. Why do Indians tolerate this? There is no social security net in India. The government has recently set up a program to pay out money in the poorest districts of India, but this has yet to be implemented. So what happens to folks with no money for food, water and shelter? Well, they do without it. Now think of those kids whose parent's cannot support them. There is a horrible choice to be made here:

1. Let them work, and earn the money to live
2. Don't let them work, and they die

I would choose to let them work, as would any rational person. Better that they work and have a chance to live, rather than starve to death. Can we solve this in some way? Kids should stop working all the time, and get a chance at an education. The government should set up such a program to foster this: Funding

1. Get the employer of the child garnishee a certain amount of money = say 100 rupees a month from the child and pay it into a fund set up by the government and administered on the district level. This amount should be capped at say 250 rupees per month.
2. The government matches this by 200% i.e. 200 rupees. Of this sum which 150 rupees goes towards subsidising the child's contribution completely. 25 rupees goes to the employer. And 25 rupees goes to the family of the child. If there is no family, this money goes to the fund. This means that the family and the employer get extra money from the government.
3. Along with this money comes an obligation. The employer needs to let the child attend school for a number of hours proportional to the amount garnisheed by the employer. So 100 rupees would mean 10 hours of education per month. 200 rupees would mean 20 hours of education per month and so on.
4. Private companies and individuals should be allowed to fund this program as well. Their contributions should be completely tax deductible.

Tutors

1. The tutors should be drawn from huge community of retired teachers and an older kids teach younger kids kind of scheme.
2. Their incentives will be money (any salary is welcome, as teachers are always paid less than they should be), recognition for above average performance of children and free travel for them anywhere in India on all surface transportation. They should also get access to internet based resources to help them teach better (- Thanks a billion Mr. Negroponte)
3. They should be judged on performance of their students as appraised by teachers in neighbouring villages/cities; preferably teachers who are unconnected with each other. They should also be appraised by the students themselves. Their appraisal should govern their pay.

Checks and Balances This is the toughest thing to manage.

1. A part of the incentives for all stakeholders should be the academic success of the children. A part of the checks should be on the manner in which the funds are allocated and spent.
2. Local NGOs and university students would be a great asset in this regard. They can monitor what's being spent and where, seek out and stamp out the corruption that they can find.
3. One incredibly important resource could be the children themselves. They must know how much they have been paying, and how much the others have been paying, and how the budget of their particular school is created and run. This might seem like a long shot, but these kids are among the bravest and most tenacious human beings I have ever seen in my life.

Apple has decided to shut its call centre in India as seen in this Yahoo! News article. I have mixed reactions: I'm Indian and an Apple customer. But I think there are a few issues in play here.

Branding
Any process must support the brand of the company. What's Apple's brand all about? It sells products that have the most basic set of features, which are incredibly easy to use, thanks to great design. They charge a premium for their products. A huge number of fans buy this stuff, and enjoy the Apple experience - buying, fixing (to a very limited extent) and recycling.

Now there are a lot of products out there, that also have minimum feature sets, work incredibly well, and are well designed. Apple's brand thrives because of the experience they provide to their fans. Experience is a very fickle beast. Miss out on a couple of expectations, and your fans will dig your grave (maybe not as dire, but you get the point)

An outsourced call centre is a recipe for mismanaging expectations. Without casting aspersions on the excellence of many call centre employees all over the world, someone who's paying a premium will expect personal customised attention and help. Call centres are geared more for standardising existing processes and providing consistent service. It's very tough to customise something for someone at a call centre, although some folks do a hell of a good job!

Employee Attrition
It takes between 6 and 9 months to train a call centre employee in all the tangible and intangible aspects of handling customers of that specific company. Sadly, the employee attrition in Indian call centres is sky high. I've heard figures of up to 70% per year. It's very tough to keep employees and build up on existing knowledge when you have to handle such levels of attrition.

This complicates the problem of providing an incredible level of support and service as expected by an Apple customer.

Substitutes
There are a lot of substitutes for the proposed Apple call centre in India.
Buying Apple stuff
There are call centres all over the world where you can buy Apple products. There are also a lot of retailers who carry Apple products and there are the hugely successful Apple Stores. You could also buy Apple products directly from the Apple website.
Tech support
The Apple website is very good with support available for free. There are Genius bars in all Apple Stores. There is definitely at least one tech support person in any independent retailer carrying Apple equipment. There are also multiple websites that give free advice and content to aid almost any problem that a Mac User may face.

Conclusion
Perhaps Apple figured that it was better to use the same things that have worked well for them in the past, and improve their current channels for providing support to their customers rather than create yet another channel, whose risk of failing and harming the Apple brand were high.

Tags: Apple, branding, processes, customer service, employee attrition, substitutes, outsourcing

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