At the Canadian Information Productivity Awards gala in Toronto last November, Toyota Canada captured the Diamond Award for Excellence, top prize in the ‘For Profit’ category, for its “Customer One” project.
When CIO Hao Tien walked on stage to collect the award, it was the culmination of an eight-year journey. He joined Toyota Canada as IT National Manager in 1999, was promoted to CIO the following year, and by 2004 he had earned the credibility to launch Customer One. He has subsequently delivered the project domestically with great success, and is now watching it being rolled out as a global best practice.
This article explores the Customer One project, and looks at how Tien enhanced his strategic role at Toyota Canada, to the point where he is now also the head of corporate planning – a rare achievement for a CIO.
The birth of ‘Customer One’
Customer One was born out of the need to drive company growth in an industry where the competition is fierce and products gaps are closing.
“One of the fundamental issues that vehicle manufacturers struggle with is customer service – not only at the dealership level but also in other areas, such as financial services and dealings with head office,” said Tien. “So we decided that we needed to focus on improving customer satisfaction. By providing our customers with a better experience every time they deal with us, we have a chance to improve customer retention and maintain our leadership in the industry.”
After winning support from executive management, the Customer One initiative was launched in 2004. Toyota Canada began to look at all its customer touch points, applying the firm’s Kaizen philosophy of continuous improvement based on input from employees and stakeholders at all levels.
“We weren’t looking for something that would land with a big splash,” said Tien. “We were looking at consistent, day after day improvements that would make things better for the customer.”
Through the use of an intensive customer survey and feedback process, the company was able to gain a good understanding of the entire ownership lifecycle. This research pointed out 14 areas in which customers interacted with the company – through a dealership, the call centre, or through the corporate Web site. And within those 14 areas, several hot points were identified where things could be improved, thereby giving the customer a better overall experience in dealing with the brand.
The research pointed to two areas that needed to be tackled right away: customer problem resolution and customer follow-up. Though the two areas are intertwined, they occupy somewhat different spaces in the customer lifecycle. Speeding up the problem resolution process
With regard to problem resolution, the company looked at how it could improve the response to the customer at the appropriate time. If, for example, the average closing date of a call-centre ticket was a week, how could that be reduced to four or five days? This was the challenge, and it wasn’t an easy one to resolve. The company studied the process and learned just how complex it could be. For example, customers with problems too difficult to diagnose at the dealer level sometimes found themselves in a maddening game of ping pong. They would take the vehicle to their dealer, and the symptoms would be fixed without getting at the root cause. This could lead to one or more return trips to the dealer, with the customer having to explain the problem over and over again. At this point the customer might try another dealer, resulting in more explaining and still no resolution to the problem. In frustration, the customer would likely phone the call centre and have to explain things yet again. But lacking any background information on the problem, the call centre contact could only jot down the complaint, hang up the phone and call the dealer to find out what was done to the vehicle. As well, the warranty people would have to be informed of the details of the claim. Finally, at the end of a process that might have taken up to several weeks, Toyota would get back to the customer with a fix for the root problem.
“The process needed to be faster, and the task for me, as CIO, was to improve that situation,” said Tien. “We needed to tighten up the communication between our dealers, our call centre people, our technical engineers and our warranty people.”
In order to do this, Toyota Canada implemented a case management system that would act as a central “nerve-system” to connect its dealers, call centre people, and any department involved in the customer transaction, such as warranty-claim and technical-operations staff. The technology platform used to do this was PeopleSoft CRM 8, with direct links to the central customer and vehicle databases.
The technology solution was really quite simple, Tien said, but the results have been dramatic. Now when a customer comes into the dealership with a problem, the dealer can query the system for a possible solution, or he may decide to log it into the customer management system and then send head office an alert, indicating a possible customer satisfaction issue, if the dealer feels the customer is not happy. In this alert, the dealer also describes what has been done to the vehicle so far. Now when the customer phones the call centre, the contact person can pull the record up – and in the process of doing that, the system automatically pulls all the claim information related to that vehicle and all the fixes related to that problem from the technical operations area.
“When a customer calls in with a complaint we already know what their problem is, how many dealers they’ve dealt with, and how many fixes they’ve had,” said Tien. “The customer doesn’t have to describe the problem again – we already know. And if it’s something that we’ve seen before, our technical engineers may already have a counter-measure for it.” Needless to say, the system has saved many of Toyota Canada’s customers a great deal of frustration. And it has cut down many of the inefficiencies in solving the problem.
Benefits of a quick fix
A lot of work is now being done to support the central customer-information system. For example, every night the vehicle repair orders are pulled from 260 dealers. The company knows about every transaction happening to every vehicle at the dealership level. This kind of knowledge is bringing some fringe benefits as well. With the daily extraction of repair data, the company can now spot glitches quickly and can diagnose difficult problems a lot faster, before they become big problems. This is especially helpful with new model launches.
“We watch the first 30 to 120 days of a new model very carefully. If there are any problems with the vehicle, we can spot them quickly and feed that information back to the plant so that they can take countermeasures right away,” said Tien.
With a car coming off the assembly line every two minutes, this kind of rapid feedback is critical. Even a one-day delay in reporting an issue can have a significant impact on the company, both in money paid out in warranty claims and in customer dissatisfaction. “We’re also able to feed the information back to our Engineering Division in Japan, which records it and fixes the problem for any subsequent models that use the same module. That’s been a huge saving for Toyota overall,” added Tien.
In fact, this made-in-Canada ‘early detection, early resolution’ system has been so successful that it is being studied by the company as a best practice for use in Toyota operations around the world. Another key touch-point Toyota Canada is working to improve is customer follow-up. The company realized that an opportunity was sometimes being missed with customers at the end of their vehicle lease. Dealers were often too busy with walk-in traffic to appropriately follow up with end-of-lease customers. That was resulting in lost opportunities, as the sale closing ratio for people with an existing relationship with the company is significantly higher than for those who walk in off the street.
“Paying more attention to the renewal relationship was a quantifiable opportunity for us, and it also enabled us to increase customer satisfaction and show these customers that we care about their loyalty,” said Tien. “So we’ve now created a lease renewal process, using our CRM tool. And we’re training our dealers in this best practice. We’re also working on enhancing this best practice to include finance customer renewal.”
Climbing the influence ladder
The Customer One project is great example of how a strategic-thinking CIO can impact a company’s bottom line. Most CIOs would love to have the opportunity to play such an important role their company, but most will never get the chance. Those that do get the opportunity have to earn it – and that’s exactly what Tien did.
A graduate of the University of Waterloo in electrical engineering, with a specialisation in computer engineering, Tien spent nearly a decade at CP Rail, mostly in software development and project management, moving around the company in an IT capacity and often interfacing with senior business executives.
When he joined Toyota in 1999, a huge number of major initiatives were on the books. Most of them were associated with a project called ‘Vision 2000’, which had the objective of predictably growing the company’s market share to ten percent. And the initiatives had to be delivered within a year.
Tien immediately set about tackling the many items on his ‘to do’ list. “I have to establish my credibility by getting things done,” he said. “There was a lot of excitement about Vision 2000, and everyone cooperated, so I got a lot of things done in that 12-month period.”
At the time of Tien’s arrival, Toyota was very focussed on selling vehicles and had little awareness of what IT could do for it. “Fortunately, we were blessed to have a president that really supported IT,” said Tien. “He understood the potential and he said, What can I do to help you?” Tien responded by proposing an experiment. He wanted to coach the executive team on how to handle IT and understand what it could do for them. But for the experiment to work, the executives would at some point have to own IT.
“This resulted in me having a two-year reporting relationship with each of the functions,” said Tien. “Initially I reported to an executive responsible for the dealer department, two years later I reported to a sales executive, and another two years later I reported to an after-sales executive. Each of them owned the IT department during that two-year period. When it came to IT budgeting, they weren’t just sitting and commenting on it from the other side of the table.” Needless to say, this is a great benefit when trying to position IT as a strategic enabler for the company with strong executive understanding and support.
Expanding the role of CIO
Tien believes that CIOs have an important role to play in the organization, and he often shares his thoughts on this when he meets with other IT executives. “We are in a good position to help the company in thinking ahead and strategising what the enterprise should be doing. We should take the leadership in that area,” he said.
Even though the CIO may not have the control or authority to get certain things done, sometimes those things can be accomplished by influencing people, he believes, adding that CIOs are well positioned to do this, using their knowledge of process and of what’s going on within the company.
“We have to listen to people and think win/win. If we give them the rationale for why they should be doing what we tell them to do, things will fall into place,” he said. It also takes a lot of initiative to get things done, and Tien isn’t one for sitting still. If he sees an opportunity for improving something, he will go out and make it known, talking directly to the executive responsible for the area. The approach works well in Toyota’s Kaizen-based culture.
Tien is also a strong believer in self-learning and self-improvement, and fortunately Toyota offers a wide range of executive development opportunities that he has been able to take advantage of.
“The company has a global executive development centre, which the president recommended I attend. You go through a lot of leadership development material, and on top of that they layer networking with the executives at head office in Japan and in other affiliates around the world that are doing the same thing,” he said. “We also have global knowledge centres where best practices are captured and presented. With network access to the best practices library, we’re able to improve ourselves anywhere and in any way we want to.”
Tien has also benefited from executive coaching. “I was venturing into some new areas for a CIO, and I did need some coaching going in, and this was really helpful,” he said. “I also coach many of my staff who are one or two levels down. They will come and ask if they can talk to me once a month. We’ll set up a half-hour or an hour meeting and go over things like what they want to do, where their opportunities are, and what they need to work on.”
Words of advice
Reflecting on the Customer One project, Tien offered some advice to other CIOs. “When you want to make a big impact you will likely have to deal with cultural change, and it won’t come overnight. You need to be persistent. Also, it’s important to set the right expectations. If you set them too low, you are not tapping people’s full potential. If you set them too high, people will declare failure on your behalf before you get there,” he said. He added that it’s important not to make the mistake of under-marketing the capability of IT and the competitive edge it can bring to the organization.
“I would strongly encourage everyone to continue to promote IT and its benefits. But first you need to earn the credibility – you need to deliver,” he added. “Operational excellence is a necessary step one. If you can’t get your shop in order, don’t talk about anything else. Once that is fixed, you can talk about the ways in which IT can further benefit the company.”
