and energy testing and developing new products, ranging from the transistor to the Unix operating system. That dedication to research and development paid off, and, beginning in 1937, the company was awarded eight Nobel Prizes over a seventy-seven-year period. However, creating the technology for the transistor (Nobel Prize awarded in 1956) is one thing; ensuring that the product will work when mass-produced is another. Luckily, by that time, a system had been developed to do just that.
The formal recognition that quality was an important factor in production began in the 1920s, when Walter Shewhart, an American physicist and statistician commonly known as the “father of statistical quality control,” identified the need to control the quality of industrial products. He invented an elaborate system that introduced tracking charts to monitor quality in mass production, and then named the concept “statistical process control.” The process was later adopted by Bell Labs as a way to ensure that their mass-produced telephone products and consumer goods were meeting company standards. In fact, Shewhart’s methods were considered so sound that they were later implemented in weapons production during World War II.
Unfortunately for American consumers and businesses, the lessons learned before the war about tracking service quality were largely forgotten after it. There was a general and unquestioned sense that America’s superior ingenuity and systems were simply better than their foreign competitors and did not require any systemized quality control. In contrast, the Japanese, during their post-World War II reconstruction, realized how important quality was to the success of a product, and they famously adopted the theories developed and pitched to them by two Westerners, W. Edwards Deming and Joseph Juran, in the 1950s.
Both Deming and Juran believed that the majority of product defects were caused by poor management, not inept line workers, whom Americans usually blamed. Additionally, the two men thought implementing superior quality control processes while a product was being made was a far better use of resources than hiring a team of inspectors to find and assess flaws afterward. This sounds like a no-brainer now, but it was a revolutionary idea for its time. Deming and Juran convinced Japanese business leaders that if workers were given the right tools and the responsibility for making sure things were done correctly, quality would improve and there would be no need to hire teams of inspectors after the product was made. As you probably know, their argument was a persuasive one. Beginning in the 1960s, their theories strongly influenced Japanese manufacturers from Toyota to Sony and helped the “Made in Japan” phrase signify consistent, reliable products, whether a consumer was buying a Toyota car or a Sony Walkman.
While the Japanese were reorganizing their manufacturing processes around Deming and Juran’s theories, few American entrepreneurs similarly recognized the importance of structuring a company around consistently delivering a quality product. In general, American manufacturing took a step backward and focused on a “top-down,” hierarchical management style, where managers outlined expectations and demanded results, with an emphasis on short-term financial gain.
In fact, even now—in a climate where there are extraordinary demands on profitability—many organizations still have this mentality baked into their culture. For many years, the American automotive industry was a good example of this shortsighted attitude. It’s no coincidence that the industry is now a shadow of what it once was. Ignoring quality during previous decades adversely affected sales, and this choice still affects the industry’s reputation today. Consistent progress is being made in the American auto industry, but the memories linger.
The Dawn of Customer Service in America
In the nineteenth and twentieth centuries, urbanization expanded in the United States at a remarkable rate, from one out of four Americans living in cities in the 1870s, to two out three Americans in the 1960s. As a result, the need for services rather than goods also increased exponentially, and American companies began to recognize the significance of the shift from a manufacturing-based economy to one that was (and remains) service-driven. This shift in the economic landscape led companies to rethink their organizational approach—not to mention that at that point, the Japanese manufacturing success story was a clearly defined marker for success. Finally, American companies also began to heed Deming and Juran’s advice and rethink their organizational structures, since it was becoming glaringly obvious that the relationship between managers and workers directly affected outcomes such as job productivity, job satisfaction, and employee retention. During the 1990s, companies realized it wasn’t enough to just mass produce consistent products. They also needed a more holistic approach, with the entire organization acting as one team to ensure consistent products and offering great customer service to complement them.
Even though it may be hard to believe, the concept of “quality customer service” has only existed for about forty years. As companies realized it wasn’t good enough to simply engineer a good product, the best organizations recognized that offering quality services, or the idea that the organization would meet or beat customer expectations and remain economically competitive, would distinguish themselves from their competitors. This opened up a whole new conceptualization of the relationship between businesses and their consumers and ultimately forced companies to rethink their internal and external relationships. Relationships between managers and line employees, managers and the company culture, and the company and the public were seen as equal parts of a triad.
This being the case, some creative business leaders from firms as large as Hyatt Hotels Corporation and as small as Zingerman’s Delicatessen in Ann Arbor, Michigan, understood that in order to excel they had to make sure that employees had the right tools and training to communicate with their customers in a different way. At an early stage, they figured out that the emotional connection between the customer and the brand was the key to differentiating themselves from the competition. Effectively, these companies reimagined customer service as a more emotional connection between provider and consumer.
Take Steve Hindy, who revolutionized the craft beer industry through his company, Brooklyn Brewery. Though he had no hospitality background, he inherently understood the importance of training his sales team and creating a culture around the brewery that has sustained his business from 1988 to today. Although he focused on building brand loyalty through a great product, he quickly realized that customer service could be a defining characteristic of a great company. Steve Hindy is not alone in this belief, as you will see.
Meeting Rising Expectations
As customer service delivery became more sophisticated and more American businesses sought to build loyalty by offering better service delivery, consumers developed higher expectations about the brands themselves, which, in turn, directly affected brand identity. The growing challenge for companies was to ensure that there was no gap between the consumer’s expectation and the company’s product and delivery (or, if a gap occurred, it was as small as possible). While that might sound intuitive today, it was still a work in progress less than thirty years ago. (And even today, as my earlier example about the nonresponsive mattress company made abundantly clear, it is still a work in progress.) If anything, a kind of arms race ensued as companies began to work harder and harder to exceed expectations, knowing a disconnect between their brands and their service delivery could be disastrous.
To demonstrate what this means, let’s think about airline travel. After scouring the internet and spending hundreds of dollars on an airline ticket, the average flyer knows the flight won’t necessarily be relaxing or pleasant, but she does expect it will take off and land at approximately the prescribed time. However, if there is an extended delay, she will become annoyed, and it becomes the responsibility of the airline to recognize and apologize for the inconvenience, even in cases when it’s beyond the airline’s control. If an airline does not have a service recovery protocol in place, the airline will lose customers and tarnish its image; the damage to the airline’s brand will be long-lasting and expensive. What to do? For just a small cost, the airline can mitigate the gap between expectations and reality by offering an incentive or compensation for the delay (free snack, or travel voucher with compensation determined by the length and severity
