Guest Intimacy

IdeaConnection Interview with Bill Capodagli, Co-author with Lynn Jackson of Innovate the Pixar Way, The Disney Way, The Disney Way Fieldbook, and Leading at the Speed of Change
By Vern Burkhardt
"Innovation cannot be ordered like a pizza. It requires dedicated leadership and a collaborative culture!" Innovate the Pixar Way, page 149

VB: Do you think the overall level of customer service in the U.S. has improved over the years?

photo of Bill CapodalgiBill Capodagli: At first blush, I'd say no. Today most leaders manage by bottom line numbers rather than frontline experience. They don't seem to understand that if they take care of the customer experience and of the front line service provider, the bottom line will follow.

Since 1994, the University of Michigan has been publishing an American Customer Service Index using over 200 companies and 45 to 50 industries. In 1994, the index was 75%. In the last quarter of 2011, I think it was a little under 76%. Seventeen years and only a 1-percentage point increase!

VB: Not much of an increase.

Bill Capodagli: It isn't. Since 1955, Disney has been the poster child for exceptional customer service. They're open 7 days a week, 365 days a year, 24 hours a day. They're there for everybody to observe and learn from. It's one of the best, if not the best, customer-centric organizations on the planet.

When Apple releases a new product, their competitors have it copied in less than 6 months. Yet Disney operates in a fishbowl and no one gets it.

VB: What about customer service in other countries?

Bill Capodagli: I don't think customer service levels are much better. I've given keynotes in quite a few countries, mainly South America, some European countries, and some in Africa, and they have similar problems.

In answer to your earlier question, I said at first blush I didn't think the level of service was increasing in the U.S. This may well be the case, but the level of consumer expectation has certainly also been increasing. There's a recent Customer Service Impact Report that claims 80% of consumers will never go back to an organization after a bad experience. In 2006, this figure was 68%.

VB: It's a major wake-up call for business leaders.

Bill Capodagli: Yes, it sure is. Walt Disney World attracts about 50 million visitors a year. People are beginning to expect 'Disneyesque' levels of service from their local drycleaner, gas station, and grocery store.

VB: And if they don't get it they'll go elsewhere.

Bill Capodagli: Exactly.

VB: What should companies do to be competitive?

Bill Capodagli: Companies today have two choices. They can compete on price alone and hope they can maintain a cost structure that will generate a profit or, if they're non-profit, at least break even. Or they can choose to not just meet customers' needs but rather to solve their problems and fulfill their dreams. Their customers can either see a product or service as a commodity that any one of their competitors can equally provide, or see the whole interaction as a magical, unique experience that only they can provide. What they need to do is create something special, to provide a magical experience.

VB: If your business strategy is competing on price alone you risk failure in the long-term and low profit margins in the short-term.

Bill Capodagli: You sure are.

VB: Do you have any other examples of magical experiences created by Disney?

Bill Capodagli: Yes. We all know Walt Disney re-invented the amusement park experience, but I don't think many people realize that the Disney organization re-invented the time-share experience.

In 1993, I spent 2 hours at the top of the mountain in Lake Tahoe listening to one of those high-pressure timeshare condominium pitches where they tell you you've got to buy today. They're determined to not let you out of their sight until you agree to buy. I should have known better because I had been through other such presentations, but I got sucked into this one.

A month or two later I was at Walt Disney World doing some work and noticed a kiosk sporting a timeshare advertisement. It sparked my interest. I wondered, 'Why would Disney want to get into the sleazy, hard sell timeshare business?' I had a few minutes before my next meeting so went over and asked the gentleman "What's this all about?" He replied, "We're selling timeshare condos." I thought I'd bait him a bit and asked, "How much are they?" He told me the price right upfront, which shocked me a bit, and then he asked, "Do you want to see a unit?" I thought, 'Here is where the hard sell is going to start'. I said, "No, I'm going to a meeting." I expected he would try to get me to schedule a time, but he said, "Do you have a VCR at home?" and I replied, "Yes, I do." This was before DVD's. He responded, "I'll send a package to your hotel room. Give me your room number and you can look at it on the VCR at your leisure here or at home." And, when I was finished viewing the piece, I was hooked.

I called Byron, the sales representative and told him I wanted to buy some timeshare time. It was different than all the other timeshares because you bought a block of time that you could use a day, 2 days, or a week at a time, or whatever. Other timeshare units tend to be in week blocks. I said, "I've been through closings with other properties I've purchased and they've been boring and hard to understand, so how am I going to close? I'm 1500 miles away. Do I have to fly down there, or what's the story?" He said, "Don't worry about it. We'll handle it. We'll send you the information. Expect it in a few days."

I received a color-coded accordion file, and another video that walked me through the process. Each form explained in non-legalese what I was about to sign. I was so excited about the closing process that I almost wanted to buy another one!

Over the years, I've bought more timeshare time and Byron, my original sales representative, is still my sales representative nearly 20 years later.

VB: So it's more than the product. You've enjoyed the total sales process experience.

Bill Capodagli: Exactly. They've reinvented the process, the experience – the whole nine yards.

Sometime later, I learned Disney's unique soft sell time-share philosophy was adopted because former Disney CEO Michael Eisner couldn't stomach the high-pressure sales racket that characterized the time share industry. He challenged a team of cast members to reinvent the time-share experience. And in my opinion, it worked! After watching such a fun and informative video that allowed me to tour the units at my leisure, I was hooked.

Disney reinvented the entire sales and closing process that has been standard in the real estate industry since time immemorial. The result for me and for every other Disney time-share condo buyer is fabulous service.

VB: Given the bad reputation of time-share sales, does it surprise you that hard sell continues to be successful enough for vendors to still use that approach?

Bill Capodagli: Some still use it, but others have followed the softer sell. Some of the larger hotel chains are now selling time-shares more on the Disney model than the old tactic of 'here's the price for today. Good for today only. When you walk out the door the price goes up 40%'. But many are still doing it the old way.

VB: You write about "Guest Intimacy." What is that all about?

Bill Capodagli: I use the term "intimacy" because it conjures up lust, passion, and love, which was how Walt Disney felt about his customers – his guests. He loved them. He wanted to make the best products for them, and give them the best possible experience. Earlier I talked about how Disney's culture is defined by treating customers as guests. From the first day on the job, Disney cast members learn the culture. 'Never a customer, always a guest' is cemented in the minds of these trainees.

VB: How can one go about reinventing a product or service?

Bill Capodagli: You need to redefine your product. Find ways to engage your customers in a memorable, fun experience. Make it easy for your customers to do business with you. Turn troublesome, boring processes into memorable events – like my Disney closing experience.

Walt Disney World is not just a resort. It's a larger-than-life fantasy. It's about being able to go back to your childhood and be Peter Pan or Cinderella for a couple of days.

Companies need to start asking how they can redefine each element of their product or service. I use the term "moments of truth," coined by Jan Carlson of SAS Airlines in 1981. He managed a miraculous turnaround for that airline without mergers, acquisitions, or laying-off a ton of people. When the international airline industry was losing billions of dollars, he turned SAS Airlines around from losing, I think it was $8 million annually, to making about $71 million profit in two years. He did it through customer service training. He used the term "moments of truth" to mean "any situation in which a customer comes in contact with any aspect of the company, however remote or brief, and thereby has an opportunity to form an impression." Companies need to look at all of their "moments of truth" and examine them to see how they can make these exceptional moments.

One example I use in my keynotes and seminars came from a Disney customer service representative who shared a letter from a young couple who had just returned home from their first visit to Walt Disney World with their three daughters. Each of their daughters had traveled with their favorite teddy bear, as many youngsters do, and the first night they returned to their Walt Disney Hotel room the three teddy bears were seated at a little round table in the hotel room with milk and cookies in front of them. The next night they were tucked into their beds with little Disney books in front of them, and the third night they had Disney playing cards dealt out to them like they were in a card game. The couple said their girls were more excited about coming back to their hotel room to see what their teddy bears were up to than they were about going out to the Park in the morning.

The lesson is that these 'moments of truth' are important and it's everybody's job to provide them even if you're the person cleaning the hotel rooms. Over 70% of Walt Disney World's 50 million annual guests are return visitors. I bet this family with the three daughters is among those return visitors.

VB: How has Disney maintained such high levels of service for over half a century?

Bill Capodagli: I'm asked this question quite frequently. People ask, "How do they paint those smiles on their people?" But it's not about smiling and being nice to customers; it's about creating a culture.

Walt Disney created an organization that has become the quintessential model for customer service, perhaps in the entire world. There are five elements that produce Disney's magical customer service experience: vision, values, show, casting, and reviews.

Their "vision" describes the organization – their story. Their "values" guide behaviors and decisions. Their "show" molds the guest experience. In "casting," they attract and retain dedicated employees. And they use "reviews" to measure and evaluate the guest experience.

VB: Any tips about how to figure out what your "show" is going to be, or does it vary with each company?

Bill Capodagli: When it comes to the "show," you need to look at your operation in the same way a director looks at a play or movie. Of first importance is the story. What is the story line going to be? How do you engage your audience? Is the story a comedy, tragedy or drama? How do you want the audience to feel as they leave the theatre: for example happy, sad, inspired, thoughtful, or engaged? You need to do the same thing with your business organization. What mood are you trying to set for your guests, and how do you engage them? How do you make them part of the "show?"

The second thing you would do as director of the "show" – and we've already touched on this a little bit – is have a set director and a costume director. Their jobs should be to make sure the visual journey of the audience complements the story line. You need to do the same thing in your business. Is the setting – your workplace – conducive to innovation? Is it conducive to the mood you want your customers to experience from the time they look at your signs, enter the parking lot, observe how your grounds are kept, and see your product displays? All these things are important. Even your service vehicles and website create an impression.

VB: Would you share with us some how-to's for creating a "magical" customer-centric service culture?

cover of Innovate the Pixar WayBill Capodagli: Once you've defined your vision, you need to communicate it to all stakeholders in your organization. This includes employees, potential employees, suppliers, investors, and stockholders. I don't mean simply communicating via memos, business cards, or plaques on the wall. You need to persistently and consistently convey your dream so everybody gets it. It's important that people internalize the message. It's important to never compromise your vision. Your vision is a journey that you must live by.

As with your vision, you must communicate your values to all stakeholders. Find new ways to have fun on the job and to engage your guests or customers in your "show." My favorite quote In the Disney Way comes from Walt's big brother, Roy, who said, "When values are clear, decisions are easy." It's important that values are clear in any organization.

Earlier we talked about the "show." Look at the customer experience as though you were a director of a movie or play. Pay attention to your story, setting, cast (employee) performances, and backstage processes. Everyone's role needs to be clear. The backstage processes must be working well. No matter how good the play, if the lighting isn't working, the curtain isn't functioning properly, or the sound systems aren't working, the "show" is not going to be a success.

In casting, it's important to take your time and hire the person who'll make their job come alive. It's just like casting someone for a play. You want the role to come alive. You want the job to come alive. It's important to hire to the culture, which means hire for attitude, train for skill.

Treat your orientation process as an important part of casting for new hires. Orientation should be at least two days to focus on the vision, values and culture of the organization. People need time to embrace a new set of values.

Most orientation programs in the U.S. would have to improve by a factor of 10 to rise to the level of pathetic. What is currently typical is a 10 or 15 minute meeting in the morning, or a couple of hours meeting during which you're signing papers and getting your picture taken for your badge and other such administrative details. About mid-morning, in some organizations, you may see a video where Mr. or Ms. Big tells you how pleased they are to have you as part of the team – not pleased enough to be there in person – but pleased enough to have created the video. Then you're escorted to your cubicle and given a policy manual that's about 4 inches thick.

I believe the policy manual is one of the biggest barriers to achieving great customer service. As a consumer, how many times have you had a problem and the person on the other end of the phone, or the other side of the counter, has been polite, kind, and understood your problem but at the end of the discussion said, "I'd like to help you Mr. Capodagli, but it's against our policy to do this or to do what you want."

VB: And the customer has to take the service as is or go elsewhere.

Bill Capodagli: Right. I was discussing this with a friend who told me when he was named dean of the business department at the University of Evansville, the head of the anthropology department gave him their department's newly revised policy manual. It was thick and he told Terry, "Feel free to copy and steal anything you think would be applicable to the business department." Terry read it, and then wrote his own. It's not very long. He wrote, "Work hard. Be clever. Use good judgment. And have fun." Doesn't that say it all?

VB: It says it all. You also mentioned reviews as part of generating and maintaining a high level of service.

Bill Capodagli: Yes, it is so important. You need to understand and measure what the guest experience is like. Organizations can do this by spending thousands, or even tens of thousands, having marketing studies done periodically, or they can use one of the many low-cost alternatives on the Internet.

In Chapter 10 of The Disney Way, we talk about a storyboarding technique you can use to identify the things that are important to your customers, the things you're doing well, and the things you need to improve. It involves spending about 4 hours with about 4 groups of customers. It's a low-cost alternative to expensive marketing studies.

You need to capture the perceptions of your guests. Most frontline employees have a wealth of information on this topic that many organizations ignore. You need to capture this data from your frontline employees.

VB: How do you respond to company leaders who say they don't have the resources to provide an orientation for every employee?

Bill Capodagli: If a company is committed to creating a new culture and a new set of values for all employees to embrace, they must understand that it will take time. The best place to begin is with a comprehensive orientation process. Customer-centric values cannot merely be dictated… if that was all there was to it then every company would have great customer service. Through a series of experiential exercises, employees can see why their old values don't work and they begin to embrace the new values.

This is one of the secrets of Disney. For years they have had a multi-day orientation process that focuses on the vision, values, and culture of the organization, not the policies, rules, and regulations.

I also tell company leaders that orientation has a direct relationship to turnover and to costs, not to mention the importance of it for a customer-centric culture. Two independent studies done by Workforce Magazine and the Hay Group show that replacing an $8.50 an hour employee costs a typical organization anywhere from $10,000 to $12,000.

A client of mine in the financial services industry recently conducted a study that showed that replacing a mid-level manager costs them $50,000.

VB: Is this only related to the cost of recruitment, or does it also include the cost of lost output and the time required to learn an organization's culture and business processes?

Bill Capodagli: The cost of recruitment, lost output, and losing a customer were all factored into both of these studies. Disney, Four Seasons, Men's Wearhouse, and many other organizations we've studied and documented have 2 to 3 times lower turnover rates than their competition. When you tell me you don't have time to dedicate 2 days to properly orient new people to your organization, and to its culture, values, and vision, I say an orientation program costs a lot less than not having one.

Disney's turnover rate of hourly employees is 30%. In the hospitality industry the turnover rate for hourly employees is 150%.

VB: How do you support training for organizations that are striving to produce a customer-centric culture?

Bill Capodagli: As you know, the current economy has led to huge cuts in travel and training budgets. We've listened to our customers and have developed an Internet-based Webinar series. Our signature webinar is entitled 'Creating Magical Customer Service the Disney Way'. In 90 minutes, I present the five elements of the model we've talked about along with a 13-step implementation plan, and provide an opportunity for questions and answers. It is quite affordable. You can assemble an entire team to experience the webinar and pose questions. We send bonus material as a follow-up. Your readers can learn more about webinar by visiting our website at capojac.com.

But make no mistake. In 90 minutes, you're not going to suddenly become a customer-centric organization. A lot of hard work is required in following the 13-step implementation plan.

VB: I understand you've been working with Dowagiac, a town in Michigan, to establish a Disney Way culture. Would you tell us how this?

Bill Capodagli: Sure. One day, the president of the school board in Dowagiac called my office and requested a conference call with the new superintendant of schools, the head of the local hospital; the city manager, one of the vice presidents at the local community college, and me.

During our conversation, they told me they were concerned about their community and had read The Disney Way. They were having a hard time attracting families, doctors, and professionals into their area because the school system wasn't up to the standard they wanted. Their new superintendent had fabulous ideas about how to become more student-centered, but he knew changing the school culture would be difficult. He knew I had experience changing cultures and wanted to know how I could help with their transformation.

During the discussion, we came up with an idea. Wouldn't it be wonderful if the entire community, especially these four entities, embraced a 'Disney Way' customer-centric culture and started the journey together? They could be trained together and help one another along the way. After I got off the phone with them, I really didn't think anything would come of it. It's hard enough to get one organization focused on a vision and a direction let alone four, but boy was I mistaken. They called back and said, "We're ready to go. We want to do this. How do we start?"

I gave an hour and a half keynote address that was open to the entire community – 700 people attended. I've spoken to larger groups but what's amazing about this is that the city population of Dowagiac is only about 6400. That's over 10% who attended my keynote! This was followed by three days of intensive training with teams from the city, hospital, college, and schools.

They're a little over a year into their journey and they've made a lot of changes. They're becoming more customer-centric. They've changed the way they educate students, which is so important. One of my passions is our need to do a better job of training our youth, or we're not going to be competitive within the next 20 years.

VB: Do you think this community is going to become a positive model in the future?

Bill Capodagli: I hope so. I keep in contact with them and try to help them as much as I can. It sure would be nice to consider them as a model for other communities.

VB: Would other towns or cities also benefit from building a Disney Way culture?

Bill Capodagli: Certainly. We've received inquiries from other communities. They think this is a great way of improving their customer service.

VB: Word of mouth is spreading?

Bill Capodagli: Yes.

VB: What is the biggest obstacle in creating a customer-centric culture?

Bill Capodagli: We touched on this a little when we talked earlier about Walt Disney's leadership definition. The biggest obstacle is people having a short-term mentality. It's living for today at the expense of tomorrow. This virus has infected our economy.

Consider this. A decade ago the average tenure of a CEO in a Fortune 500 company was 12 years. Today it's less than 5 years. What's GM had… three CEO's in the past 30 months? Wall Street expects new CEOs to have a new strategy in place in the first 100 days in office! Instead of investing in the future, these CEO's are manipulating costs, profit margins, and accounting data. They're eliminating jobs and eliminating training. They're ignoring new markets as well as research and development, and compromising quality for the next quarterly earnings report.

VB: There are many companies experiencing this situation.

Bill Capodagli: Yes. Having a long-term strategy, as we talked about, can be done, but it takes passion and leadership to stay the course.

VB: Are some companies forgetting about the basics of a customer-centric culture as they deal with today's global economic challenges?

Bill Capodagli: I think so. Some leaders are doing short-term thinking, especially in the upper echelons. They're looking at how they can manipulate their business results data, stay in there for 3 to 5 years, come out wealthy with stock options, and live the rest of their lives in luxury.

VB: You spent a year with W. Edwards Deming in the 1980s. What advice do you think he would offer business leaders today?

Bill Capodagli: I was just thinking about this. I was looking at our previous interview and remembered we talked about Deming.

A lot of people know him as the father of measurement and statistical process control, and he was. He did make it popular. All of the Six Sigma initiatives which companies are engaged in began with his teachings in Japan, and later in the U.S.

But when you examine his 14 points, most of them are about creating a culture and creating trust in the organization. Creating a customer-centric culture includes all the things Walt Disney did without the benefit of Dr. Deming preaching to him.

When I first began taking clients to Walt Disney World I said, "I'm bringing a client who is thinking about putting a Total Quality Management Program in their organization." Disney responded, "We don't have a Total Quality Management Program." I replied, "Yes you do. You just don't call it that."

VB: Do you have any final advice for developing a culture of customer service in today's highly competitive world?

Bill Capodagli: Dream, Believe, Dare, Do! You have to dream of ways of doing business that have never been done before; believe in the values that guide your organization – and good decisions will be easy – and believe in your teammates; dare to make a difference – try something wacky… don't be afraid to fail, then learn from your mistakes; and then just do it.

These principles may seem like common sense and appear to be simplistic. They seem so easy, but are so hard. The German philosopher Goethe said, "Simplicity is the ultimate sophistication." Like many simple things, it's hard to achieve, but the "dream, believe, dare, do culture" has passed the test of time with the success of Disney and Pixar.

VB: Thank you.

Dream, Believe, Dare, and Do.

Conclusion:
Bill Capodagli describes "key learnings" from Walt Disney's four principles as being:

  1. Dream – Discover your story and communicate it!

  2. Believe – Examine your values and codes of conduct, and understand the importance of using them in decision-making.

  3. Dare – Create a unique culture that breaks down barriers, celebrates failure, and promotes a climate of fun.

  4. Do – Understand the Story, the Setting, the Roles, and the Backstage "Magic."

There is much to be learned from author Bill Capodagli's analysis of the incredible success and longevity of the Walt Disney Company and from Pixar Animation Studios. He says it boils down to 'guest intimacy'. He asks, "Will your clients view your service as a unique, intimate experience that only you can provide, or a run-of-the-mill, mundane commodity that any one of your competitors can provide?"

We will watch with interest to see how successful Dowagiac, Michigan is in transforming to a customer-centric culture.

Bill Capodagli's Bio:
Bill Capodagli is cofounder, with Lynn Jackson, of Capodagli Jackson Consulting in West Olive, Michigan. They help companies revamp their customer services and approaches to innovation and production based upon Walt Disney's "Dream, Believe, Dare, and Do" philosophy for business success. Prior to founding Capodagli Jackson Consulting in 1993, Bill Capodagli held managerial and consulting positions at the firms of AT Kearney, Ernst & Whinney (now Ernst and Young), and Coopers & Lybrand.

He is a highly acclaimed international speaker on the cultures of both Disney and Pixar. He brings to his audiences a unique perspective on how Dream, Believe, Dare and Do are being applied in industries from hotel management to health care.

Bill Capodagli co-authored (with Lynn Jackson) Innovate the Pixar Way: Business Lessons from the World's Most Creative Corporate Playground (2009), The Disney Way: Harnessing the Management Secrets of Disney in Your Company (Revised 2006), Leading at the Speed of Change: Using New Economy rules to Invigorate Old Economy Companies (2001), and The Disney Way Fieldbook: How to Implement Walt Disney's Vision of "Dream, Believe, Dare, Do" in Your Own Company (2000). Fortune Magazine cited the 2001 1st Edition of The Disney Way as "so useful you may whistle while you work."

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