Stephen Van Coller Says Removing Friction Is Key To Business Success

What should CEO’s focus on when they are trying to build a successful business?

This is the question I posed to one of South Africa’s most respected business leaders, Stephen Van Coller, Group CEO of EOH. 

And what was his answer?

“Colin.., you have to manage and reduce friction”.

So what did Stephen mean by this, can such a simple statement really be a guide for CEO’s who are running complex businesses and how is he using this approach at EOH?

Reducing Friction Explained

Let’s start by digging a bit deeper in to what Stephen meant.

I asked him to expand his statement, to make sure I wouldn’t misunderstand his point.

He said…

‘If you want your product or service to become a market leader, it has to remove friction from your customer’s life. If you want to create a culture that allows for innovation and experimentation, you have to remove friction from your staff’s life’.

It’s difficult to fault the logic here.

Take a moment to think about the companies and brands you love the most. Then consider the ones you hate with a passion.

I’d be surprised if ‘friction’ isn’t a key determinant in shaping your opinion.

Here are some examples of brands I love to use because they not only solve a need, but they do so frictionlessly.

Uber removes friction because it’s much easier to pick up a ride than the metered taxi model its replaced.

Amazon removes friction by helping me find, order and receive products seamlessly, without expending the effort of going to a shop.

Netflix removes friction by delivering quality, bingable content, without delaying my gratification with adverts or timetables.

Google (frictionless search), LinkedIn (frictionless networking), Wise (frictionless x-border payments), Airbnb (frictionless accommodation) and Letsdeel (frictionless contractor management) are also great examples of companies that I love using because they make transacting so easy.

On the other hand, the brands I love to hate are the ones that waste my time, or resources.

In this photo I’m trying to collect a car from Bidvest.

(To be fair to Bidvest, I could have used virtually any of the main hire-car companies for my example).

Anyway, why despite having booked online, am I still faced with unnecessary queues, form filling, deposit taking and licence checking?

Hiring a car, at least in this case is still a long way from being frictionless

Another personal example comes from dealing with the dreaded call centre. Telco's (e.g. Vodacom and Telkom) have been particularly painful experiences for me.

I get quite cross when I think how many hours I’ve wasted on-hold or talking to operators who haven’t been empowered to resolve the issues being raised.

It took, for example, approximately 3 months for Vodacom to approve and transfer my personal mobile to a business account and cost at least 8 hours of my life (if not more), emailing, phoning, completing applications, visiting branches, chasing up and so on...and so on.

An article on friction wouldn't be complete without a special mention for banks.

The majority still offer their customers plenty of pointless form filling opportunities, to learn things they should already know or to get answers to questions which are not needed for the specific service being requested.

Absa, for example asked me to fill out forms where I'd have to enter my name, address, employers name, salary and mortgage details, so I could increase my credit card limits.

Absolute insanity, when at the time I was one of their employee's and they were my mortgage provider!

It seems incredulous to me how many CEO’s seem unable to guide their organisations towards reducing these friction points for their customers.

Government agencies, like home affairs or SARS, can probably get away with it.

Businesses, however, cannot if they want to survive, especially in a world where technology is opening up so many more opportunities to reduce customers friction points.

Can CEO’s turnaround a Companies Fortunes by Just Focusing on Reducing Friction?

I believe the answer is absolutely they can.

Not only does it make sense intuitively, but there are great examples of companies that have transformed, by doing exactly that.

Take DBS Bank.

They transformed from being one of the most hated banks in Singapore to one of the most loved in just a few short years.

According to Paul Cobban, who is credited with turning around the bank, Singaporeans used to use DBS as an acronym for ‘Damn Bloody Slow’.

Therefore Cobban focused on transforming the bank’s fortunes by trying to improve just one metric.

“That metric was the customer hour,” Cobban says. “We took out 250 million customer hours of waste per year.”( Forbes Magazine).

By reducing the amount of time customers wasted dealing with DBS, 250 millions hours to be specific, they were able to go from last to first in all customer satisfaction surveys within the space of 12 months.

Reducing wasted customer hours is just another way of saying they removed friction from the customers experiences.

Is Reducing Friction The Missing Metric?

If reducing customer and staff friction is such an important determinant for the success of your business, why do so many large brands fail to create frictionless experiences?

Perhaps the answer is as simple as they don't measure it?

Having worked with CEO's from many different industries, I've seen only a very small minority place removing friction at the heart and centre of their strategic plans.

The majority seem to rely on net promotor scores and surveys, but these of course are generic, lagging indicators, that will highlight dissatisfaction, but not what the underlying problems actually are.

Even worse, many of the key metrics direct leadership teams to solve problems in ways that makes the customer experience worse.

For example...

Imagine you have a problem with your bank account and therefore decide to call the call centre.

You are quickly patched through to an operator. The operator is efficient and quickly provides you with the correct advice to resolve your problem.

From the companies perspective everything looks great.

No call abandonment, no queue time, no escalation and the operator time was just a few minutes.

But from your perspective the experience might well have been incredibly frustrating.

What if the advice received was that you'd have to visit a branch to resolve the problem, because the agent didn't have the authority to resolve it?

What if this was the third time you'd had to call the call-centre, as the first time around the call was dropped (and no call back was made) and the second time the advice given was incorrect?

And of course the fact you having to call a call-centre at all also needs to be understood.

Why for example couldn't they identify the problem you now face and resolve it without an interaction being required?

The metrics in this example obviously didn't surface the fact that the organisation has created friction in their customers lives.

And that's because the metrics typically are the companies metrics, not our metrics.

All of which makes me wonder how companies would transform if they simplified their focus to answering just one question being...

How can we reduce the time we steal from our customers lives?

And from that, then developing measurements to track progress supported with incentives that rewarded the business lines and individuals who gave back time to people just like you and me?

Perhaps you could even take it a level further by compensating us, for the time that we were forced to waste, and charging these costs back to the business lines who'd created the friction points in the first place?

If you want to reduce customer friction, you have to empower your staff first.

CEO's that really want to reduce customer friction, will only succeed if they empower their teams.

Multi-layered approvals, more and more policies and procedures and enhanced governance frameworks might reduce internal risks, but they create an environment which staff feel is similar to wading through mud.

And for organisations where the shareholders have become accustomed to regular dividends, the mud just gets thicker still, as CEO’s try to protect the franchise by focusing on managing financial outcomes, rather than customer time.

In the call centre case, the goal of financially motivated CEO’s isn’t to reduce friction for their customers. It's rather too ‘service’ customers in the cheapest, most economical way possible.

Therefore it makes perfect sense to the financially motivated CEO to treat call centres as an ‘operational’ unit and look to outsource to 3rd parties to efficiently run it on their behalf.

This ‘cookie cutter approach’ kills any opportunity for the call centre employee’s to innovate or take their own day to day decisions as they are forced to follow the prescribed operational procedures.

It also introduces another silo within the organisation that doesn't consider the customer-journey holistically.

Yet, when you look at the attributes of the most successful companies in the world, you’ll typically find their CEO’s have found ways to reduce friction for their staff too.

This is usually done by finding ways to empower them.

Zappos, for example, is one of the worlds’ most loved online retailers.

Yet it doesn’t give its call centre teams scripts and mangers don’t pressure their agents to limit the times that they can spend on a call.

Staff are instead given the power and autonomy to build personalised relationships with their customers. This could mean chatting with someone like you or I for hours or deciding to add an extra gift to our orders. Whatever the agent believes will improve our life and make us love the Zappos experience even more.

Another example of removing friction from staff’s lives comes from Netflix.

When staff complained about the holiday policies, they scrapped them. Staff now self determine how they split their time between delivering on their objectives and spending time outside of the organisation.

Google removes friction in innovation, by encouraging their teams to spend 20% of their time on their own projects. Gmail and Google Maps are two examples of new products that were curated from these sidebar initiatives.

So CEO’s that want to develop a client-first, collaborative and innovative culture, where teams are empowered to experiment and fail and develop the new sets of products and services that drive future revenues, should consistently think of how to remove the frictional points from their teams day to day working lives.

This not only frees up time, but also signals a new sense of trust between management and their staff.

How is Stephen Reducing Friction at EOH

First some history to give context.

Stephen was brought in to EOH to implement a turnaround strategy.

He knew a large part of the initial focus would be around improving corporate governance and repairing the brand’s image, which had become tainted due to allegations of corruption and involvement in state capture.

EOH’s share price had been in free-fall mode since the end of 2016. And the bad news kept rolling-in when, in early 2019, Microsoft announced they’d be cutting business ties because of reputational risk concerns.

Stephen knew he’d have to investigate the various allegations. But he took a very different approach than the secretive, introspective methods that KPMG, Bain and McKinsey used when they had faced similar allegations.

He decided to remove friction to accelerate the process.

Perhaps the most visible example was the creation of a purpose-built whistleblowing app, that was not only made available for staff, but was prominently displayed on their main website, encouraging anyone with information to come forward.

This is a brilliantly simple way to essentially ‘crowdsource’ information from anyone who is able to help the investigation.

Where other organisations tried to protect themselves through quiet introspection, with the hope perhaps the public noise would quickly die down, Stephen decided to loudly seek help from both the public and his staff, to expedite the investigation.

And that required the removal of friction.

I felt at the time that Stephen’s approach would, not only improve the speed and quality of the forensic audits, but ultimately rebuild trust in the brand faster and I'm certainly seeing evidence of this already, from the many positive news articles now being written about both Stephen's approach and the firm at large.

As an aside, I'll be asking Stephen to share more on this idea of removing friction when I talk to him about the future of mobile finance on 22nd June at 11:30. Just click here to register.

Managing Friction Has To Be Led By the CEO

Now, I’m not suggesting that CEO’s should solely try to run their business by focusing on how to remove friction.

Setting a clear purpose to build the company around, and developing products and services that align to that purpose have always to come first.

But Boards and CEO’s need to elevate the importance of ‘removing friction’ in their day to day decision making.

The friction that companies create for their staff and customers, is like a weed. It grows quickly. Effortlessly. Everywhere.

And therefore it requires very deliberate, dedicated and consistent efforts from all levels of leadership to remove it.

Which is why CEO's are really the only people with the necessary mandate, to push for the removing of friction to become a primary focus, with the appropriate allocation of capital and resources.

They alone have the power to start challenging whether the decisions being taken within the firm will create or reduce friction for their customers and lobbying key stakeholders for the necessary funding to invoke the changes.

But, for those CEO’s that perhaps lack the courage to make the change, it's important that they remember this.

Somewhere out there, a leader is already developing a new way to solve our problems frictionlessly.

And when they release their solutions to the marketplace, I will move very quickly.

And I'd expect millions of others to think the same, as I don’t know anyone that wants to waste unnecessary time hiring a car, opening an account or just sorting out a phone bill.

Stay safe,

Col

Drop a note to me at [email protected] if you are are looking for more ideas on how to either develop an exponential mindset throughout your organisation or how to spread your message to those that matter using fireside-chat style interviews and webinars.