January 14, 2010

"Revamping Practices" - Article by Sanjay Anandaram

I received a letter by courier yet again last week from a well known financial institution. It took me a while to reach the letter since the envelope in which the letter was enclosed had been fortified by no less than 9 staple pins. In addition, the envelope was tightly sealed with gum and two strips of sticky tape. I finally retrieved the letter but not after some cursing and a bruised finger. This was the nth such letter I had received from the company, complaints notwithstanding!

Why did this company deem it fit to send me a letter that was so cumbersome (not to speak of, painful!) to retrieve? Clearly, security for their letter was a high priority but was it necessary? Did they pause and think about their customer’s experience at all? Am not sure they did because then they might have considered emailing me the letter. Or were they simply following an age-old practice mandated in response to a case where someone’s letter was pilfered? In all probability, a ritual that had come into being on account of a stray incident in the distant past had become established practice. This practice was now being meaninglessly practiced as part of standard operating procedure.

An incident from yesterday: the large cloth banner stretched across the road. It read “Customer Service Week” and was from a well known public sector bank. The incongruity of this obviously was missed by the bank. Being in the service business, wasn’t every day supposed to be a customer service day (let alone week)? Were customers not expected to get any service the remaining 51 weeks? Again, it appears that a stray ritual that had come into being on account of a decision or incident had ossified into established practice. The decision may have been perfectly legitimate and logical at a point in time but was it still relevant today? Wasn’t the bank, like the financial institution, simply following a practice that had long outlived its raison d’etre?

The CEO of the fast growing startup told me that he was under intense pressure from his board to reduce the dues from various customers. He was upset and angry saying that they didn’t understand the nature of his relationship with customers, that his customers always paid up. I asked him for some more data and we met again after a week. Turned out that customers were, in general, paying 120 days after the due date! After some more analysis, it transpired that the sales force was just not following up for payment. Apparently in its early days, the CEO had not pushed his initial “brand-name” customers with regard to payments for fear of losing their business. Over time, this habit of not asking for payment and not paying for months after receipt of an invoice had become ingrained not just with the startup but with these customers as well!

I met the startup CEO earlier this morning and enquired about the dues. He smiled and said that sustained pressure over the past couple of months had very significantly brought down the amounts and that he was confident that all payments would henceforth be collected on time. He had also sensitized his customers about their need to pay on time as it impacted his ability to service them.

Entrepreneurial ventures, like other companies and people, tend to also become creatures of habit sooner or later. The mantra of the entrepreneur at the start namely “there are no holy cows” becomes harder to chant as the company grows! The successful entrepreneurs and companies are those that continuously challenge themselves, examine their internal practices, policies and procedures, map themselves to the changing demands of the market and customers, invest in technology, training and talented people. As the company matures, it becomes harder to let go of existing behaviours and practices and to learn or acquire new ones.

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.