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Event Review

Watching Larry Hochman talk about business is like watching a strong presidential candidate give a stump speech. He growls in the way that only East-Coast Americans can. He shouts, he implores, he strides around the stage with vigour. But above all he conveys absolute certitude, with his chin raised and his chest puffed out continuously. By the time he's finished, you're left in no doubt about his views, or about his credentials as a former senior executive; a leadership mentor; and a well-travelled speaker.

Walking on stage to address the London Business Forum, Hochman looked a traditional company-man - white shirt, gold tie, grey hair. Yet within a few minutes he was warning the audience never to appoint a "director of customer services," the very position he once held at Air Miles, the customer loyalty firm. If this role exists at your organisation, he suggested, then "you are 10 years behind where you should be. Customer service doesn't sit in a department. It is every single person's responsibility in the organisation, isn't it?"

At Air Miles, Hochman's title was eventually changed to "director of people and culture". Embracing change, it turns out, is one of his guiding principles. "I think there are three questions that need to be asked throughout perhaps your entire career," he said. "(1) How adaptable is my company and what am I doing to influence that? (2) How adaptable are the people who work with me and for me and what am I doing to influence them? And (3), most important, how adaptable am I as an individual and how honest am I being with myself about that?"

The key issues facing business today are completely different from those of "ten, five or even two years ago," he said. They are (1) transparency - customers can find out anything about you in real-time, and are more sensitive than ever to companies that over-promise and under-deliver; (2) technology - as customers are given more choice, power and control, so they come to expect these things in increasing amounts; and (3) globalisation - "The rules are changing in terms of the way we work, play, shop, communicate, educate our children. How we buy and sell. How we govern. And every single business is underestimating the impact these things are having," he said.

These broad trends have, in turn, given rise to a handful of generic desires that we can safely say are common to all the world's consumers, he argued. These include the removal of unnecessary complications from our lives and "service at the speed of life," a natural consequence of the Internet revolution.

More significant is the desire for greater collaboration and control over the buyer/seller relationship. "Information and choice give customers power and control," Hochman said, suggesting that attendees should adopt this as a mantra if they wanted a best-practice customer service ethic. "If you try to inhibit my participation with you, I am going to go to somebody else."

He pointed out that the term "command and control" became widespread in business because it was originally a military term, and because, in the post-war era, 90% of managers had backgrounds either in accountancy or the army. It's a perspective that is now hopelessly out of date, he said. "All I want to know is: 'What are you going to do for me as a customer?'"

To determine how advanced the LBF attendees were in their efforts to communicate with customers, Hochman carried out a quick straw poll. It turned out that less than 10% of the audience had a corporate weblog. "Do you understand that, as we speak, no matter what business you are in, no matter what you do or sell, your customers are talking about you on-line with other people?" Hochman asked, incredulous. "Do you know what they are saying? Are you collecting that information? Are you responding? Are you building brand awareness by going back to them? Are you organising them like you would a union before a competitor does so?" The sheepish silence around the room suggested the attendees were not.

Hochman was scathing. Leading organisations, he pointed out, have already gone much further on-line. "This is the year that social networking becomes part and parcel to your ability to build relationships with customers," he said, citing the recent acquisitions of websites such as MySpace and YouTube as evidence of an epoch-making shift. "And what about building relationships on mobile phones? Twice as many people in the world have a mobile phone than have a PC and... 80% of the population of the planet lives within range of being able to use a mobile device? Do you all know that people [in emerging markets] will be skipping technologies that we had to grow up with and going right to whatever the latest mobile device is?"

Such technologies are the final nails in the coffin of so-called customer relationship management (CRM) systems, Hochman argued. "CRM is the most over-rated, over-hyped term... You do not build relationships by installing software, you do not." Ultimately, he said, loyalty cards, reward points and other data-capture methods are just tools. "How you build relationships is by building trust into your brand at every point of contact by every single person, every day, every week, every hour."

Hochman said he met numerous leaders "on five continents" in 2006, and that the biggest issue for all of them, whether in the private or public sector, was "trust". "The single most important piece of research you can ever do is to just ask one question of your customers and that question is: 'Do you trust us?'" he suggested. Why? Because the communications revolution has made it so much easier to expose honesty and punish dishonesty. "I want each of you to just take a minute to think about the most important relationship in your life... and I am going to make a prediction," he said. "The day the trust [between you] disappears, it is over, or it will be over... It is no different with any of your customers."

Politicians face the same risks to some extent, but they have it easier than business people, he added. "People only get to vote out politicians every four or five or seven years... customers get to vote every single day and they can simply walk away from you tomorrow and never come back."

When a customer grows cynical it's generally the result of a "promise gap," Hochman argued, "when the customer experience does not mirror the brand promise." Every business has a tendency to over-promise and under-deliver, he said. It's human nature. The question is: do you know where your promise gaps are and what are you doing to fix them? Perhaps the best example in the Information Age, he suggested, is "call centre hell". "When you are moving any service-related function offshore, you had better have a way to measure what happens," he warned, because the trade-off won't look so good if "the service is diabolical and your best customers walk away."

Related to the issue of broken promises is that of corporate ethics, and here Hochman was especially strident: "Your ethics will determine your fate," he said. Just consider the case of Arthur Andersen, the former accountancy firm that shredded its own reputation along with documents related to Enron, the bankrupt energy trading company. "Arthur Andersen was in business for 100 years... it failed in under a month," he stressed. So why is it that so few companies make a point of discussing ethics at every level, especially when talking about how to build relationships with customers?

Hochman said you should not have a "director of ethics" any more than you should have a director of customer services, because both disciplines should be "every single person's responsibility in the organisation". Indeed, he suggested, corporate honesty and transparency should be extended to staff as well as customers. "I think the most switched on organisations are willing to take the final leap... and that means posting everybody's salary. Because, after that, there are no more secrets," he said. "Anybody brave enough in this room [to reveal] everybody's salary in the organization? You know what? People know anyway, don't they? They have away of finding out."

To conclude his presentation, Hochman made an appeal: "Spend a couple of hours asking yourself: what are we in denial about? What are we nostalgic about? What are we arrogant about?" It's only by asking ourselves these questions regularly, he suggested, that we can "move beyond those [underlying] issues to build a better business."