BP Lessons: Why Cutting Costs Always Increases Costs

Like most of us, I watched in horror as another man-made disaster cost lives and livelihoods, ruined the environment, siphoned away multiple millions of dollars to clean-up and destroyed the reputation of another major company. This is not as bad as the banking crisis, but when things like this happen the malaise that it creates in the public is depressing. Organizations face choices everyday on how to conduct business and I can’t help but speculate on what really caused this disaster.

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Regardless, one has to suspect it has something to do with the focus of BP. Using the systems thinking methodology I have burned into my skull, I can’t help think that this disaster is rooted in an effort to reduce costs. Without fail, when organizations look to reduce costs they increase costs . . . always.

Contact centers make cost choices that result in unwanted endings too. Interactive Voice Response technologies (IVRs) that chase away customers, scripts that paralyze contact center agents, call monitoring for compliance to arbitrary management rules and dictates, entrapping technology, poor work design filled with front office/back office arrangements and many more all increase costs when the intent was to save costs. Although these are not as horrific as the BP spill, they all carry a cost to a service organization.

Clearning Up the Mess

The other thing I learned from the BP incident was that partnerships with vendors are only as good as when things go well. Last weeks finger pointing between BP, Halliburton and Transocean during a legislative grilling was pathetic. No one is responsible for this mess?

For contact centers that are outsourced this should be a loud warning. Customers and the public are unsympathetic to "my vendor screwed up my service." Pointing the finger for vendor problems does no good as customers view service end-to-end from their perspective.

Lastly, the Minerals Management Service (MMS) that was to provide government regulation was too cozy with the industry. MMS supposedly ignored warnings about this rig as a safety problem. We have played this song before in the banking industry.

What contact centers can learn is that we cannot rely on regulation to do the right thing. Service organizations have to have it in their DNA that they will do right by the customer and not see what regulations they can ignore.

In the end, all organizations have a choice in how they will conduct business. The future is made by the decisions we make today about the systems we build. Make sure the customer is the focus of that system

First published on Customer Management IQ