The purpose of KM is to support creation of market value or/and social value. Who is the judge whether in fact value was created?
The answer: your internal and external customers. In the non-government and development sectors, the answer is the same, but the language is different: stakeholders. The user of the output of an action is the best judge of the effectiveness of the action, and the effectiveness of the knowledge assets utilized for that action.
When an action results in satisfaction of customers or stakeholders, value is created. Wherever the results of action is traded, then a measure of the value created is the price customers are willing to pay for a good or service less the production and distribution costs
of that good or service.
In the development sector, where the results of actions are often not traded, what is the measure of value creation? It is the stakeholders’ degree of satisfaction. Within a corporation, results of actions are also not traded and there is no price for an internal good or service. Similarly, the measure of value creation here is the internal customers’ degree of satisfaction.
Improvement or innovation of a product or service that will result in even greater customer or stakeholder satisfaction is another objective of KM. How do we do this? Where do we start? One answer: ask the customer!
In most cases, customers know what they want and they know what will satisfy them better (in the case of breakthrough or exceptionally novel technologies, customers will realize what they want only when the new technology is in front of them). They also definitely know what they don’t want; for this reason, customer complaints are good sources of ideas for product or service innovation.
Making improvements or innovations is faster and easier when the output is a service and not a product. The service delivery process is also subject to greater variability than a product manufacturing process. Improving a service output requires a broadening of perspective: from focus only on the internal business process to focus also on the customer experience process. The two processes overlap in delivering a service. Keep in mind that value creation takes place in the latter process, and not in the former, which is only preparatory.
Based on the above, a low-cost way of mining customer knowledge for service improvement is to ask just two questions. It will take the customer only a couple of minutes to answer, but it can lead to solid creation of greater value for customers. “XX” is where you indicate the name or description of the service.
Question 1: On a scale of 0-100, what is your degree of satisfaction with our XX service or output?
(If the answer is 100, stop and do not proceed to Question 2)
Question 2: What improvements on XX can you suggest to increase your degree of satisfaction?
From asking these two questions numerous times in over a hundred organizational contexts, I observed that:
- Most of the ideas on product or process improvement from employees who perform a process do not match with those from internal or external customers who use the output of such process.
- Employees who perform a business process are better judges of process efficiency than of process effectiveness.
- In many organizations including in the private sector, asking feedback from internal customers is often not a systematic procedure nor a personal habit.
- The answer to Question 2 is high-value knowledge; acting on that knowledge will surely increase customer value.
- The entire customer experience process constitute what some calls the “Moment of Truth” or the moment when the value of an output is finally validated. Actually, it is not just one moment or one minute, but it can extend over hours or days.
Tags: customer complaints, customer experience process, customer knowledge, innovation, knowledge management, moment of truth, process effectiveness, process efficiency, process improvement, service improvement, value creation