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A Simulation That Makes Employees Feel Customer Pain

Texas Instruments' customer-loyalty training program dramatizes for key employees how it feels to be in a disappointed customer's shoes. The chip maker sees results by market-share gains.

July 30, 2004
Related Topics: Behavioral Training

It’s certainly not bragging when Jeff McCreary Sr., Texas Instruments’ senior vice president and manager of worldwide sales, says that a company’s customers will put up with bad service as long as they’re benefiting from first-to-market technology. He’s just describing a problem his company confronted in 2001.

    Dallas-based Texas Instruments is a top manufacturer of semiconductors, particularly for communications equipment. But competitors are never far behind, and three years ago, it was watching market share slip away. "Ultimately, that’s probably the best measure of whether your customer is satisfied with you," McCreary says. "We really needed to improve how we were serving our customers."

    Texas Instruments found a novel way to do that. It turned to a training organization, BTS, to create a two-and-a-half-day customer-loyalty boot camp. BTS had been customizing training simulations for the chip maker since 1998. This one would dramatize to key employees how it felt to be in the disappointed customer’s shoes, and was based on actual complaints gleaned from customer interviews.

    The boot camp got under way in 2002 with Texas Instruments’ 300 top executives. Since then more than 2,000 of the company’s 34,000 employees have gone through, down to the level of design engineer. And while not every improvement at the company can be attributed to the training, there have been measurable results.

    Texas Instruments was the No. 5 manufacturer in the overall semiconductor market in 1999, says Gartner Dataquest analyst Stan Bruederle. By 2003, it had moved up to No. 4.

    In submarkets where Texas Instruments is strongest, the change is more pronounced. In wireless-communication chips, the company’s market share had slipped from 13 percent in 2000 to 12 percent the next year. Now it is the top supplier, with 17 percent of the market.

    "We’re working on our third consecutive year of market-share gains, and we feel that’s the best metric," says McCreary. "Even more important, we’ve been able to interview customers. We know our customer-satisfaction scores: they’re better."

    BTS, founded in 1985 in Stockholm, Sweden, had found that traditional consultants’ reports and analysis didn’t have much impact on changing behavior, says senior vice president Dan Parisi. The company began to develop simulations to connect the information to real jobs. "It’s your business model, it’s your market dynamics, it’s your internal dynamics between finance, marketing and sales," says Parisi.

    In the customer-loyalty boot camp for Texas Instruments, employees play out two or three years in the life of a customer. They become part of a make-believe company called Streavo, which is adding streaming video capability to its cell phones. The sole supplier of chips is a company called Terrific Instruments.

    Each boot camp session splits 25 employees into five groups of five, each designing its own phone. A computer model instantly tells them the impact of various choices on the finished product, including power consumption, time to market and profit margins. A sense of competition helps them get into their roles. "They know there is a prize at the end: Jeff McCreary is going to be watching this thing," says Parisi.

    The teams have three hours to lock in their specifications. Then BTS trainers, posing as Terrific Instruments reps, drop by with the first of what Parisi calls "wobblers." The Terrific Instruments rep may say that a fabrication problem will make the custom chip five weeks late, "but we’ve seen worse, so count your blessings."

    "We deliver it with an arrogance and cockiness and lack of sympathy because TI coached us to do this," says Parisi.

    The delay means that Streavo will miss the back-to-school market. And while the teams are wrestling with that, the callous Terrific Instruments crew comes back with another wobbler. They might announce that chip specs will be less than originally promised, or that Terrific Instruments can’t provide as much engineering help to integrate the chips.

"If the company culture is one of great individual competition, mistrust, cynicism and/or backbiting, you probably are not going to have a successful simulation experience."

    The sixth and final wobbler comes from Streavo’s biggest retail customer, dubbed Circus City. It doesn’t care about Streavo’s problems with its chip supplier, and demands more point-of-sale support to make up for the late delivery.

    "By the end of this simulation of year one, they are cursing and literally blocking the door so I can’t get into the room with the next wobbler," says Parisi.

    In Streavo’s second year, BTS offers each team a chance to change chip suppliers. BTS trainers then play the role of a competing supplier, one that asks Streavo about its business goals instead of just touting chip specs.

    "To make it real, we even build in switching costs; it will cost you $2 million, and your engineering efficiency will drop by 10 percent," says Parisi. Usually, four out of five teams switch anyway.

    The simulation is just one element of the boot camp. The five teams are also brought together to discuss what they’ve been through. And that, says Parisi "is where we really spring the trap on them."

    He asks them to describe how they felt about Terrific Instruments, and writes the answers on a whiteboard: "betrayed," "frustrated," "angry," "not sure if I want to do business with them again." He also asks about the impact on Streavo’s market share, gross margins and customer satisfaction.

    Then BTS rolls a videotape, which includes interviews that Texas Instruments did with real customers such as Nokia and Nortel. "The scary part is that the things they are saying exactly parallel what I’ve written on the whiteboard," says Parisi. "By the end of that video it’s dead silent in the room. You can see that it hurts."

    Participants then have to write down what they’ll do differently back in the real world, including commitments to managers.

    "You don’t put people in a two-and-a-half-day simulation and expect the world to change," Parisi says. "This is lighting the fuse. It makes customer loyalty actionable."

    McCreary says that at first, Texas Instruments executives resisted the idea of change, moving through the classic steps from denial to anger to negotiation to acceptance. "Our current chairman of the board, Tom Engibous, really wanted the company to embrace this probably a year before we did," he says.

    One early graduate of the boot camp is John Daniels, worldwide marketing manager for Texas Instruments’ digital still camera processors. Although he had a decade of sales experience, he says, the boot camp showed him that he didn’t really understand his customers’ market dynamics. He also realized that Texas Instruments’ engineers made development and design decisions in a vacuum.

    "I can count on less than one hand the number of times we had chip designers in front of customers that I have worked with," he says. But since the lessons of the boot camp have filtered into the company culture, "there has been almost at times friction because everybody in the business unit wants to visit the customer all of a sudden." Now when he asks an engineer to visit a customer like Hewlett-Packard, says Daniels, "he doesn’t look at me like I have three heads."

    McCreary doesn’t think Texas Instruments has completely absorbed the lessons, but he’s looking for new ways to stimulate employees. This may be the last year for the boot camp.

    Meanwhile, BTS is adapting it for other clients. In the boom of the late 1990s, many companies lost touch with customer needs, and are now struggling to fix that, says Parisi.

    But for one client, Weyerhaeuser, BTS is toning it down. Not every company wants the jolt that Texas Instruments asked for, and leading a client too strongly could create a backlash, Parisi says.

Simulation, pro and con
    Parisi says a customized simulation can cost $1,000 to $3,000 per person, with the price dropping as development costs are spread across a larger group.

    High costs have been one reason why simulations aren’t in the business mainstream, says Ryann Ellis, editor of Learning Circuits, an online magazine for the American Society for Training & Development. An early adopter was the military, which instituted war games and flight simulations. "They are the ones who have been able to afford it," she says.

    Cheaper, faster computers brought simulations to the private sector, primarily to train people in specific tasks. But when simulations have to mimic human interaction, they quickly get complex, Ellis says. If designed poorly, the simulation will grind to a halt. It doesn’t have an answer for every situation that develops.

    Success also depends on a sense of teamwork among participants, according to Jack Green, associate professor of strategy at Pepperdine University’s Graziadio School of Business and Management in Los Angeles. Writing for a university publication in the summer of 2002, he noted that simulations suffer if participants have different personal styles or are antagonistic. "If the company culture is one of great individual competition, mistrust, cynicism and/or backbiting, you probably are not going to have a successful simulation experience. But then, that is likely the least of your problems," Green wrote.

    While the Texas Instruments boot camp has a simulation at its core, it is better described as "experiential learning," says Hugh Cannon, vice president and executive director of the Association for Business Simulation and Experiential Learning, and professor of marketing at Wayne State University in Detroit. "We have a bias toward what we might call ‘cognitive learning,’ or head learning," says Cannon. It’s valuable, but takes for granted that the learner knows how it fits into the greater strategic picture.

    "None of that would even touch the incredible impact of something where you are emotionally involved, where you are frustrated," he says. But if the company culture doesn’t support the lessons, he adds, either the lessons won’t stick or employees will get frustrated and ultimately leave.

    "You have to have a commitment from the very top," says Cannon. "Then it’s in the details, how you build your reward structures and reporting criteria within the company so that people are constantly getting a reinforcing message."

    Parisi of BTS says that was one reason why the boot camp started with the top executives. Customer satisfaction can now influence careers at the company.

Workforce Management, August 2004, pp. 67-69 -- Subscribe Now!

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