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Executive Interviews: Interview with Richard B Chase
Building trust
February 2011
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By Dr. Nagendra V Chowdary
Richard B Chase
Richard B Chase is considered the founder
of the field of Service Operations
Management.
One often successful way of building
trust is to offer a service guarantee such
as pioneered by FedEx and Domino's
Pizza. What this does is to signal to the
customer that the organization will go
out of its way to fulfill the promise that is
being made by a guarantee. When I was
teaching at USC, I frequently offered the
following service guarantee for my MBA
service operations course: "If you are not
satisfied with the quality of the course, I
will refund the cost of your books and
cases and $250 of your course fees." Here
I showed the students that I was
dedicated to providing an outstanding
classroom experience. This had a
marketing impact by increasing my
enrollment from 30 students prior to it
being
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offered to 85 afterward. The trust
generated here was that I would do my
best and that I would trust students to be
honest in their evaluation. After all, no
one would want to spend a semester in a
lousy course, and I would certainly not
want to pay out a large amount of money.
(For the record, nobody requested a
refund, even though they could collect
the same after the final grades were
posted. The only requirement was that
students must tell me before the end of
the semester if they were unhappy so I
could make adjustments.)Recent research, by the way, suggests that
having a guarantee is almost always
better than no guarantee.
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Can you give a few definitive and
illustrative examples of best practices
that have reigned in extraordinary trust,
may be in workplaces, in customers, in
citizenry, etc?
In a recent MIT Sloan Management
Review article, "Designing the Soft Side
of Customer Service," (Fall 2010) my
colleague, Sriram Dasu and I suggest that
companies that are willing to "take the
high road" can enhance trust. The reason
is that in most service situations, the
service provider has the upper hand in
terms of power and/or information and
the customer or client is at a
disadvantage. We contend that trust
increases significantly when the
dominant party signals that it will not
exploit the other's vulnerability. For
example, when I returned a car to Hertz
Rental Car in Hawaii, it had three
quarters of a tank of gas even though I
paid extra for a full tank option at the
time I picked the car up. Essentially, I had
paid twice for the car. Recognizing this,
the agent who checked in the car
credited my credit card account for the price of the remaining gas. He didn't
have to do this, but his not taking
advantage of the situation made me a
dedicated customer of Hertz.
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To what extent do you think the
mandatory governance practices -
corporate governance codes, internal
audit processes, board structures, etc -
would help fostering trusted companies,
trusted employees?
The most important thing other than
having senior management model
honesty and fairness is to modify reward
systems so that they don't drive
employees towards shoddy practices. It
also helps to have regulators do their jobs
of providing real oversight, which was
not the case in the US financial crisis.
1.
The Multi-Branding Strategy Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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