Four Who Know How

2. Do you create a learning relationship with your customers?

Company: Hitachi Data Systems

Service Innovator: Al Mascha (mascha@hdshq.com) , vice president of service operations

Customer Service Program: Customer Advisory Panel

In the world of new product development, user groups and customer advisory panels are nothing new: car companies, software operations, even sneaker manufacturers have been using them for years. But the service business? For some reason, service companies have been slow to appreciate the insight -- and foresight -- that listening to customers can provide. One exception is Hitachi Data Systems (HDS), a $2 billion mainframe, storage devices, and service company headquartered in Santa Clara, California. Says Al Mascha, vice president of service operations at HDS, "Because we're in such a rapidly changing industry, we need first-hand information, directly from the customer."

To get as close to the customer as possible, Mascha developed and launched a customer advisory panel (CAP). In early 1993 he brought together about 20 of HDS's most significant customers for a three-day meeting to discuss service issues, new technological developments, and emerging strategic directions at their companies. Fast Company talked with Mascha about the ideas behind the CAP, its implementation, and the lessons HDS has learned from it.

The CAP allows a small group of customers to get together to discuss service issues, problems, and new ideas. It's straight talk, direct to us -- our customers talking about where they're going and what services they think they'll require. There's no pressure and there are no salespeople present. Even the agenda is developed with the participation of the customers.

We've learned a lot about what it takes to make a CAP work. The most important thing is to pick the right people. You have to select the members very carefully -- which means that you need to know your customers very well before you even start this kind of a program. We want people from companies using state-of-the-art information systems for critical applications -- companies that are really stretching the technological envelope. Usually they're the ones who are under the gun and need leading-edge services. So our CAP has several large banks, an airline, a large shipping company, and other big information technology users.

Overall, we want no more than 20 companies to participate. And from each company, I'm not looking for a buyer; I'm looking for a technocrat. I want a technical recommender -- someone who knows about the technology and how it's used within the company. Most important, all members of the CAP must be outspoken! We want strong opinions and heated debates, because that's how you get useful information.

We're looking for these people to give us clear signals on what state-of-the-art service means to them. They help us design different delivery structures, different training programs, different service offerings. For instance, we asked them to talk about product reliability and availability, and ended up redesigning the specifications for one of our products because of what they told us.

The full group meets every nine months at a different location, which we and the CAP members select jointly. Sometimes we bring in an outside speaker to stimulate their thinking. One thing we have learned: you cannot have a full agenda. These are people who want some freedom to decide what they will talk about. So we leave a lot of white space on the agenda.

Now that we've been doing this for four years, the customers are using the meetings to make presentations to each other. They share their own best practices or identify improvements they've made to their own operations.

The biggest benefit to us is clear: we get direct input from our customers on what they think we need to do -- what services we should design and deliver. But there are also real benefits to our customers. When a product comes out, for example, they get it before anyone else. For three or four months, they're ahead of the rest of their industry because they have the product first and know it better than anyone else.

They also benefit from communicating with each other on a regular basis. They have ongoing conversations among themselves about technical and service issues. The CAP is a community of companies that not only help us improve service performance but also help themselves.