Providing Excellent Customer Service

1. Providing Excellent Customer Service 2010 Annual Conference May 24, 2010 Prepared by: Bob Moore President ICM

2. Presentation Goals • To promote discussion regarding client centered business models • Introduce concepts of Frugal and Disruptive Innovation • Examine factors driving change in local government • Prepare for the “Fog of the Future”

3. My Perspective • Economist – theory, reality and Mark Twain • Businessman – entrepreneurship and change • Teacher – to examine ideas, new thoughts and solutions

4. The Power of Connessione - Systems Thinking Genius combined creativity with analytic capabilities, utilized powers of observation and the scientific method to illustrate the universal order of nature - systems. • 4 Main Themes - Illustrated Notebooks • Painting • Architecture • Mechanics/Physics • Anatomy/Botany Designed and Illustrated: helicopters tanks Astronomy parachutes submarines Genetics canals cannon Diet/Heart Disease bridges Human Anatomy

5. Adam Smith, Wealth of Nations (1776) >The Invisible Hand >Division of Labor What makes the text valuable 230 years later: • Understanding the Industrial Revolution • Technological spark transforms social and economic fabric of America • Impact on society, labor, methods of production Key Concept – economic models transform, expand, then succumb to competition and profit compression The “alarms” of High Profits and High Wages call entrepreneurs to action

6. Joseph Schumpeter and Creative Destruction Follows Adam Smith’s lead……….. • Entrepreneurs are drawn to high profit/wage opportunities • Introduce competition for market share • Cut production costs • Technology, Innovation • Occasional revolution – existing matrix destroyed in favor of new design • Business Models become Obsolete Joseph Schumpeter (1883- 1950) 6

7. Nikolai Kondratieff (1892 – 1938) • Kondratieff Cycles • Capitalism is subject to long waves – 50 years • Business Cycles within waves • Waves end in deep recession/depression • Schumpeter Adds a Twist • Creative Destruction • Each new wave an industrial/technological revolution • “Clusters of Critical Innovation” • Innovation and Capital spur new wave 7

8. Social Structure of Capital Accumulation • David Gordon • Economic Growth depends upon: – profits – capital accumulation • Social structure includes relationships between: – capitalists (competition) – capital and labor (combative / cooperative) – among workers (globalization) – capital and government (taxes, regulation) – labor and government (labor laws) – among governments (free trade)

9. Social Structure of Capital Accumulation cont. • Social Structure includes – laws – institutions – business structures – infrastructure – culture Social Structures are vulnerable to obsolescence, out living the demographics, technology which spawn them *The “techno-global revolution” presents challenges to government at all levels. Don’t build yesterdays infrastructure with tomorrows dollars.

10. “Cultivate Change” • Anticipate change in your environment • Cultivate change in your processes and solutions • Prepare for change – resources, education, personnel • Perspective – view events in true relationship, relative importance • Perception – awareness of one’s environment • The immeasurable value of convergent and divergent thinking The “Techno-Global Revolution” – profound change may last 50 years.

11. Emerging Markets • Hotbeds of Frugal Innovation • Driven by the Henry Ford Dilemma: • BRIC nation salaries • - $15,000 – Russia • - $3,000 – India • India – Tata – Nano ~ world’s cheapest car - $3,000 • Kenya leads the world in mobile phone money transfers. • Innovation propelled by necessity slash’s costs. • The Globalization Trade Off • - manufacturing for “smart jobs”

12. Disruptive Innovation • R & D Moving to India and China • Fortune 500 Companies • - 98 facilities in China • - 63 facilities in India • *GE, Microsoft, Cisco – invest billions outside US • Emerging Markets have access to: • Management • Capital Markets • Technology • Education • Revolution in production and distribution that slashes costs and prices.

13. Cognitive Dissonance • “Discomfort felt at discrepancy between what you already know or believe and new information or interpretation.” • “When called upon to learn something which contradicts what we already “know”, particularly when committed to prior knowledge we are likely to resist new ideas.”

14. ICM and Disruptive Innovation • The Entrepreneurial Model of Change • The Existing Business Model • Company Centric • Product Distribution • Assembly Line Standardization • Economies of Scale • Conflicts of Interest • Marketing Machine • High Cost & Profit

15. John Bogle, Founder and Former CEO Vanguard Group, Author Fortune magazine, “Giants of the 20th Century” “Our financial system in driven by a giant marketing machine in which the interest of sellers directly conflict with the interests of buyers. The sellers having (as ever) the information advantage, nearly always win.” “Beware of financial innovation. Most of it is designed to enrich the innovators not the investors. These new products enriched their marketers in 2005-2007 only to impoverish their clients who held them in 2008.”

16. The Seven Year Customer Survey • 1990 – 1997 • Know Your Customer • responsibilities • job description • challenges • preferences • strengths & weaknesses How does the customer feel about his / her interaction with the business? *like most*like least The unspoken message was clear

18. ICM’s Business Model • ICM: Customer Service • is a service company • employs a client driven business model • provides unbiased education • provides individualized service ICM: Business Model • exclusively public funds investors • cultivates change, company and customers • is flexible, adaptive, innovative Evolution: • cash flow analysis – 1998 • comprehensive financial analysis – 2003 • consulting services – 2005

19. ICM Mission Statements • The most efficient delivery of the highest quality service. • Clients come first. • Our goal is your success. • Cultivate change. • Your partners in public funds management.

20. Developing a Customer Centered Business Model • Identify the Customer • 1. Who are your customers? • 2. Do they represent a homogenous group? • 3. If not homogenous how do their needs differ? How are they similar? • Survey Your Customers • 1. How would customers prioritize the services they use? • 2. Are there any unmet needs or expectations? • 3. What would they change if they could? • 4. Is there an unspoken message? • C. Evaluate the Current Service Model relative to Customer Demands • 1. Does the model direct resources to services customers values? • 2. Is the current delivery system efficient, properly scaled and cost effective? • 3. Is the model flexible with the ability to respond to changing demands and mandates? • D. Be the Expert • 1. Provide leadership, guidance and effective communication. • 2. Hear the unspoken message. • 3. Innovative; create new service bundles to direct resource and staff efficiently.

21. The Customer needs & preferences The Services value added The Business Model efficient delivery The Organization implement the model Build and Implement review process

22. The Service Model • Remember Frugal and Disruptive Innovation • Design Perfection is accomplished not when there is nothing left to add but when there is nothing left to strip away. • Pure Functionality • Necessity is the mother of Disruptive Innovation

23. Service Models Require Flexibility • “No battle plan survives contact with the enemy.” • Command Intent – a concise statement of purpose and desired end result. • - align behavior of all service providers without play by play instructions. • - know the desired result, provide flexibility to improvise. • Flexible Service Models include: • project managers, teams • personnel with multiple, evolving skills • communications networks • integrated departments • anticipatory training Good Command Intent provides just enough structure to promote creativity.

24. Identify Points of contact Points of Contact present opportunities to Re-write the Narrative • make or alter an impression • provide an incentive • alter behavior – efficiency • obtain timely feedback Each “Point of Contact” is an opportunity to shape or reframe a relationship.

25. Dissect the Points of Contact • Assure proper selection or mix of: • human contact • technology • remote communication • telephone • Employ the right tool for the job • Customer Satisfaction is the job • Training should evolve, service should reflect the changing world of customer

26. Cultivate Change with Sun Tzu in mind “Plan for what is difficult while it is easy, do what is great while it is small.” The Art of War “winning without fighting” “battles are won before they are fought” “The future belongs to those who prepare for it today.” ~Malcolm X

27. Revenue Funds Customer Service *Understand *Diversify *Service • Understand Nature of Revenue • 1. Shareholder vs. Stockholder • a) employee, community, customer • b) globalization and multinationals • c) industrialization – agrarian to industrial, rural to urban to global • Diversify Revenue Streams • 1. soften effects of recession • 2. maintain balance – quality of life • Support and Service Revenue Producers • 1. know your top ten taxpayers • 2. support your top ten taxpayers • 3. focus on value added services • Revenue Producers are important customers. • They are also business people.

28. Resource Utilization Revenue Funds Service Revenue Expenditures • Sources and Quality • Economic Sensitivity • Diversification • Fixed Costs • Variable Costs • Capital Projects • Optimum Resource Management • Integration of Budget and Investment Processes • Cash Flow Analysis • Asset Liability Matching • Liquidity Management • Cost Analysis – Best Practices – Technologies 28

29. Effective Communication • The Command Intent • 1. Within the Organization • a) Generals Field Command Soldiers • - clear, concise, concrete • 2. Organizations to Customers • a) command intent individual messages • b) efficient channels of exchange • c) consistent, repetitive • 3. Customers to Organization • a) control points of contact • b) support your staff • c) create opportunity for constructive interaction • Change the Narrative

30. The Curse of Knowledge • When knowledge , technical expertise, and jargon get in the way of effective communication • Strive to speak concretely about your subject. • Develop a “Universal Language” understood by participants. *Don’t assume you are communicating.* *Hear the unspoken message.*

31. Tappers & Listeners 1990 – Elizabeth Newton – Ph.D in Psychology, Stanford “Name That Tune” 10 Songs Every Child Should Know How many songs will be correctly indentified?

32. Tunes • The Star Spangled Banner • Mary Had a Little Lamb • Happy Birthday To You • Jingle Bells • Doggie In the Window • Take Me Out To The Ball Game • Somewhere Over The Rainbow • Here Comes The Bride • Yankee Doodle Dandy • Home On the Range • (Songs Every Child Should Know)

33. Curse of Knowledge Tappers & Listeners Elizabeth Newton’s Results - Tappers predicted 50% successful identification - Listeners success rate 2.5% (3/120) The Tapper hears the song in his / her head, overestimates ability to communicate what is known to those who do not.

34. “Break the Box” Develop Customer Service Ideas *Flatten the Organization *Remain Fluid *Bring in outsiders • venture capital • small business • college, universities • Top Ten Taxpayers Entertain Radical Ideas, solution, individuals Cultivate Change Remember: Punctuated Equilibrium, Cognitive DissonanceandDisruptive Innovation

35. Summary • Providing Excellent Customer Service • Customer Centered Service Model • Communicate Effectively • Revenue – diversify, protect, efficient • Change the Narrative • Hear the Unspoken Message

36. Bob Moore 808 South Public Rd. Suite 101 Lafayette, CO 80026 800-984-9392 bob@institutionalcapitalmanagement.com www.institutionalcapitalmanagement.com Institutional Capital Management, Inc.