How to Lap the Competition

Charles L. Fred loves a good track-and-field metaphor. Pick up the pace. Go the distance. Break away from the pack. Lap the competition.

Once a nationally ranked NCAA track athlete, Fred sees a strong correlation between today's cautious economy and the first half of a competitive race -- before the fastest competitors pull away from the status quo. That outburst of speed and fitness is the focus of Fred's first book, Breakaway: Deliver Value to Your Customers -- Fast! (Jossey-Bass, 2002), and of his lifework as an accelerator of corporate learning.

"Corporations are naked in the press," says Fred, president and CEO of the e-learning software company Avaltus Inc. "Their stocks are devalued, their people are disgruntled, and the Feds are asking questions. Consumers don't know whom to trust, so they trust no one. Every company is being pushed back into the pack. Industries are becoming normalized. And we all need to re-earn consumers' loyalty. Really, this is an opportune time for a company to find its edge and break away from the pack."

How can a company sprint ahead of its competitors? By delivering exemplary customer service, even when its customers are few, far between, and frugal. "Consumers care more about service quality than they did during the high-flying days of the 1990s," Fred says. "They have less money to spend, they are more discriminate about what they buy, and they are less trusting."

Consumer confidence is the key to economic recovery. According to Fred, companies can no longer spur recuperation through capital and scale -- by incurring more debt to erect buildings or launch new marketing campaigns. In this service economy, companies can only break away from the pack by delivering great service. "And delivering service means delivering on promises," Fred says. "Capital doesn't deliver on promises. Scale doesn't deliver on promises. It's the people in your business who deliver on your promises."

Obvious, right? Perhaps. But if the link between service and profits is so plain, why are so many consumers receiving such lousy service on so many fronts? Why isn't four-star service an industry standard in every industry? Why aren't more people smiling?

The disconnect is happening in the classroom, Fred says. Too often, employee training is an obligatory line on the corporate budget -- a gobbler of time and money that remains intact thanks to guilt and tradition. No manager wants to be the first one to cut training. At the same time, few people are willing to reassess its effectiveness and overhaul the system to teach great methods in customer service.

"We've improved every aspect of business in the past 20 years," Fred says. "We've dumped them out, reengineered them, and reduced their cycle times, but we still run with old, outdated operational-process assumptions for training. It's not a training issue; it's an operational-process issue."

In Breakaway, Fred asks why most training programs fail to support the bottom-line goal of great customer service. How can companies dedicate 3% to 5% of their net revenue to training and still fail to meet the most basic consumer demands? The problem, he finds, begins in the design phase.

Before any training begins, company leaders should establish what Fred calls a "proficiency threshold," his first rule for effective corporate training. In other words, companies should outline the exact training needed for employees to convert knowledge into value for the customer. Leaders should set proficiency goals for departments and then explain how corporate training will help each department achieve those objectives.

"If you want to create a bigger gap of anxiety with your employees, send them to some training course that has nothing to do with their job," he says. "Anyone who's halfway decent at their job will question what in the world they are doing there."

Rule two: Accelerate the accumulation of experience. Fred says most companies devote a disproportionate amount of time and money to classroom teaching -- the introduction, assimilation, and translation of information during a three- or five-day seminar. Most employers miss or ignore the most crucial stage of learning: helping people gain hands-on experience with the theories and techniques introduced during those training sessions.

"Training events are usually fine, but all that learning is totally left to chance when employees leave; there is no follow-up," Fred says. "Companies that want to deliver on promises should work on the delivery, practice, and accumulation of experience rather than on the training event itself."