Employee Led Transformation – With Lior Arussy Part I
Lior Arussy on the CX Human Lab Customer Experience conversation with Ricardo Saltz Gulko – Employee Led Transformation
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Lior Arussy – Introduction
More than ever before, through this pandemic, enterprise and human ability to embracing change is crucial. Our guest today is Mr. Lior Arussy, the founder and previous president and CEO of Strativity Group, one of the world’s leading authorities on customer experience, customer centricity, and transformation, a global thought leader, strategic consultant, and author of eight great books, a keynote speaker, and father of five children. Arussy delivers practical real results. We sit down in 2019 with him to discuss his new book, “Next is Now: Five Steps to Embracing Change,” and I must say, more actual than ever for our current reality.
His strategic framework converts organizations from the product-powered customer centricity. His work is with leading brands such as Mercedes, BMV, Delta, MasterCard, E.ON, SAP, Nova, Nordic, Walmart, and you name the rest. Strativity has also been named to the Inc 5000 list of fastest growing private companies five years in a row and we could go on and on with his achievements. His accomplishments have been recognized by leading players around the globe such as the “Wall Street Journal,” “Financial Times,” “MSNBC,” and so many others. Without further ado, Mr. Lior Arussy is with us today.
Thank you, Lior, for taking the time to talk with us. Lior, instead of starting with a business question, I wanna start about you. I wanna know about you. Tell us your hobbies, what you like to do in life, and how you came from NICE Systems and you evolved to become the CEO of Strativity.
Lior: So let’s start with the last part of your question, actually. So I spent about 15 years of my life in technology and I was at HP and I was at NICE and I was at other companies. And it was actually a Dutch client that made a very insightful point to me. So apparently in Holland, they’re very, very religious about their call centers and my client, when I was at NICE, he won the award of the worst call center in Holland, the worst. And apparently, the Dutch are taking very, very seriously their awards and they really humiliated him. And I asked him, “What happened? You took all the technology and you put everything.” And he said to me a simple line. He said, “Lior, even a fool with a tool is still a fool.” That was his insight.
And, well, I was reflected on what he was telling me. The technology companies are constantly selling you all their technology but without the strategic, operational, and human readiness, none of these things are gonna make a change. All they’re gonna do is they’re gonna take old processes and put them with new user interface. That’s all they’re gonna do. And this is where I saw the opportunity. I was trying to look for solutions for my clients. I need to find a consulting firm but the problem is, some people said, “No, it’s a consulting project.” Some people said, “No, it’s a research project. No, no, no, it’s a training project.” And the truth is everybody was right and wrong at the same time because the journey of transformation requires multi disciplines to get there.
And prior to Strativity, if you wanted to transform, you had to go to five different companies, one for branding, one for research, one for this, one for that, and your transformation was late. It was not coordinated. It didn’t make a lot of sense because every agency had their own ideas and their own point of view and their own methodology. And that’s where Strativity was born. Strativity was born on we’ve got to provide an alternative to companies where they can have one stop where we can take them from the first analysis, preparing the last employee in the company. And our whole company here is designed around what we call “Suzy from accounting.”
When Suzy from accounting is going to start doing something different, we’ve been successful. Until then, it’s all a bunch of decks and PowerPoints and all these type of things. So that was the impetus to starting Strativity. That’s why Strativity was born. Based on the learning, the technology itself cannot drive real change in organizations and you need to do a better job than that.
Ricardo: Yeah. That sounds Lior Arussy. And what about your hobbies and what you’re doing in terms of keeping fit and all the things that you like to do.
Lior: So I’m not gonna be able to tell people great stories about my other life because I don’t have a lot of it. I have five children so that’s pretty much my hobbies.
Ricardo: Five children. Wow.
Lior: I have five children. That’s pretty much my hobbies. Between work and family, that’s really what we do. I love traveling. I love writing. Obviously, I’m on my eighth book. So writing is a big hobby of mine. But it’s about priorities and I don’t need to go escape a hobby if what I do is what I love. And if my family is what I love, so…that’s what it is.
Ricardo: That’s a great reason to not doing other things. I think kids is the best blessing that we can have. So that’s a great thing.
Lior: Thank you.
Ricardo: My first question for you is…like I read many of your books. I read the…I wrote here because I don’t remember all the titles. 😊 So “Excellence Every Day” in 2008, later, “CX Strategy,” “Exceptionalize It,” I think was three years ago if I’m not wrong.
Ricardo: And now, “Next Is Now: Ways to Embrace Change.” I like the book and the initial example about change in relationships of doctors, which is really through about… Like, I’m diabetic. So for me you spoke to me directly. And in everything that you are doing today, we have the ability, to enquire, to get in front of someone with the right information. How can companies embrace change, man? Change is practically happening every day. Every day, something is changing and we have to adapt every day. And I don’t see companies…and we can mention one, [inaudible 00:07:11] adapting that fast for many different reasons. Lack of simplification, complexity and many other…complex project [inaudible 00:07:21] processes and procedures. What is your advice for those companies to start to focus more and to be faster adopter of change?
Lior: So I think that, Ricardo, what you’re using is a great example of possibly where the big insight of the book is. Do you look at a company as a set of processes that are complex or do you look at a company as a set of employees who are making decisions that are complex? And the traditional approach was a company is a set of processes. We need to simplify the processes and the rest are gonna work into play. And in today’s world where the customer is the new authority and the companies are losing authority, vis-à-vis their customers, we need to start looking at companies in a very different way.
We need to look at companies as the sum total of their employees and what their employees’ decisions are. So in order for declaring a company a complex company, I’m not gonna look at the process they put together. I’m gonna look at the 10,000 employees who are working there and ask myself, “Are they making decisions fast? Are their decisions making sense? Are they simplified? And if not, then why not?” When you start looking at the root cause and the why not, that’s when you discover that somebody gave them complex processes to execute.
But the biggest insight is you will need..In order to start getting used to changing fast, you need to go into the human side of the business, not the process side of the business. And if the human side will understand it, that’s why we call it employee-led transformation. It’s not about what the CEO decides. It’s actually not what the process determine either. Because the United…the famous United story about a year ago on April 7 when an employee decided to call the police and drag a passenger off the flight from Chicago to Louisville, she followed the process. She followed the process.
And I’ll tell you something, Ricardo. I followed this story a little bit from a different perspective. You know what I noticed? On the April 7, hundreds of thousands of passengers of United arrived beautifully to their destination. They watched a movie on the plane. They ate the food. We didn’t hear a word about them. There were tens of thousands of employees of United who, on April 7th, were working as a gate agent or as a flight attendant and they delivered beautifully. Nobody heard about them. And here’s the other thing, Ricardo, if she would have called Uber and asked to drive this passenger from Chicago to Louisville, which is a four-hour drive, it would have cost her less than the money she offered him to stay, yet she didn’t do any of that. Why?
She followed the process. She hid behind the process. Somebody gave her a process and said, “You better not deviate from that.” And that somebody is the other person I wanna go and understand why that person didn’t allow her the ability to think and call Uber instead of trying to follow a process.
Ricardo: Yeah, the empowerment of employee are the basics of any…
Lior: Right. So processes is not the reason. Somebody designed the process to behave that way. Somebody put the process in place and tried to control people and asked them to stop thinking. And that is the root cause. That’s what next is now we’re saying,”If you want to develop change resilience…” change resilience is not in processes. It’s in people. You need your people to start allowing themselves to think and adapt faster. When you put processes, you just asked them to stop thinking and stop adapting. You just institutionalized the thinking of don’t change.
Ricardo: But there’s one point about United that this history repeats itself every year with United. If you observe like last 10 years, the history is repeating themselves in different ways but always have something that they do wrong and that’s what they think damaged PR.
Lior: Yeah. But, you know what? To be honest with you, I don’t think that United has a license on tying the hands of their employees with processes. I think that we’ve seen these type of situations in other airlines. Maybe people did not use it in social media as much but those things happen. I mean, go back to even Anthony Robbins who just…you know, a couple of months ago, he made a stupid comment in front of participants and it went viral and there were threats and stuff like that.
I think the issue is less about United and not United. But yes, you will see companies that are sticking to very strict KPIs or sticking to very strict processes adherence and that’s when the hands of the employees are tied and the employees are hiding behind those processes as a security blanket. And they do what the process says and not what they need to do. That’s the simple truth.
Ricardo: And this leads me to another question. Big companies like SAP Oracle, SAP is doing right now the right things because they are trying to simplify processes. They understood that without changing inside, they cannot keep the pace of technology innovating. How do you see companies that are huge adopting change and changing exactly those processes that you were mentioning…that you mentioned about United but in such big organizations, as SAP is doing right now in Berlin, from Berlin, globally?
Lior: Yeah. So for those of us who have been in the business a little bit longer than others, you would remember that the traditional sales page of SAP and Oracle was, “Don’t change my software, change your processes,” because we’ve already optimized our software to the best processes out there. And they were actually asking companies to be less flexible, less unique, less differentiated, less empowering.
Ricardo: Yeah, that’s for me.
Lior: We already designed the best processes. It’s built into our systems and you need to adhere to it one size fits all. So they were actually part of the problem, not part of the solution. But unfortunately, they recogniz that the growth is not gonna come to them from selling one size fits all because that’s what they were selling.
If you’re a bank, one size fits all processes. If you’re a farmer, one size fits all processes. And they realized that A, companies are not buying into it, B, companies are moving faster, and C, if they want growth and they want to have the next generation of revenue, they have to provide some other things. I think that the issue there at companies like SAP, and I’ve recently listened to one of their senior executives speaking about the future, they’re actually repeating their mistakes. Right now, their newest thing is frictionless experience. This is their biggest new thing, which is repeating Amazon. However, if you look at Amazon’s performance in the last 20 years, the average profitability of Amazon is 0.78%, not even 1%. Not even 1%. Amazon is the only company I know of that for 20 years got permission from investors not to make profits.
Ricardo: Yeah, it’s a different model [inaudible 00:14:59].
Lior: Completely. And it’s not transferable. It’s not transferable. So unfortunately, while I hear SAP talking one talk on the stage, when they go with the frictionless experience, they are repeating the same exact mistake which is we’ve got the same frictionless experience concept and everybody is going to adapt to this thing. I don’t think that they are close to the flexibility and the ability to empower employees because their systems are not designed for employee empowerment. They’re designed for employee disempowerment.
Ricardo: Yeah. That’s exactly the issue that they are dealing right now. They created the… Bill, the new CEO, he created a division in Berlin exactly to tackle those problems, not just in terms of internally, but they beyond their sense clearly be to deliver something simple and what they call themselves today, this run simple, you must to simplify first inside. And because the technology cycles are so fast today, they have a problem already of [inaudible 00:16:10]
Lior: Yeah. My best advice for him is go fix your own processes with your own customers first before you come and talk to other companies about how to run simple because SAP and simple is totally opposite as one can imagine. And when their pricing will be simple, when their service will be simple…let them be a role model for other companies before they preach to other companies how to do it because SAP is still holding a certain reputation and the initials of SAP are a source of jokes for people of what SAP really stands for. So I think that they need to look in the mirror personally and internally and demonstrate it by their own processes before they go and tell it to the other world.
Ricardo: Got your point. They will listen to that.
Lior: No. The concept that Bill is doing of doing some kind of an incubator in a separate part of the world in Berlin, so they are not in the headquarter, this is all admirable but he did not invent this. He did not invent the concept. The issue is not if a group, a small group of people, can think about new ideas. The question is can you go and apply it to the rest of the organization? I have to tell you an example. I have right now a client who, four years ago, declared that they’re gonna be a simple company to do business with. It’s all over the buildings. It says, “We are simple. We are simple. We are simple.” After four years and nothing happened, they understand that all this simple message created is cynicism. And now, they’re asking us to come and figure out why they’re not simple even though it’s on the wall.
Ricardo: SAP, I love what they are doing right now because what you mentioned also about Amazon is really what they are trying to do. They’re trying to make the complex things behind the doors and put you simple things in front of you to make lives of customers simpler.
Lior: I think they should start with their own business before they preach to other companies.
Ricardo: They are doing that. They are doing…but it’s a huge company and it’s a problem. But that is interesting, your point of view, on that. How can we generate change in a very traditional market? And you, I assume you know where I am, what I’m referring to, where change is digested and adopted as late adopters do. And examples, just to give you a counter example, a culture example. USA, Israel, Australia, and maybe the UK in the middle maybe, and Holland, adopt change very fast. But unfortunately, some countries in Europe, here in Europe, they have many problems to adopt change.
When you talk about change, maybe they…now, you know, time to change but everybody gets scared, is really scary. It is not another definition of that. How we could change that in the complex world of business in DACH, Germany, Austria, and Switzerland?
Lior: Okay, so I’m gonna take an example, not from DACH, and then I’m gonna go to DACH as well. When you look at the PC transformation, Italy and Spain were relatively behind. But then they leapt into mobile faster and completely ignored the PC revolution. Many of the employees that…many of the people that never had a PC, now had the mobile. So that’s the first thing. I think that as the book is talking about, we need to recognize why is the change not being adopted? And in the book, we’re looking at five root causes. And within that, I think that there are some that are more relevant to DACH than they are relevant to the others. Okay?
The first step is facing the facts. We as human beings have ways of twisting the facts, making the facts fit whatever our perspective is. It can be a black lens. It can be a pink lens. It can be a green lens. It can be a yellow lens. We twist it to what we want as opposed to facing the facts as they are. One of the ways that we twist them in saying, “That’s true in the U.S. but until it’s gonna come to Germany or to Switzerland or to Austria, we have time.” The world is so global today that you don’t have time. Your customer is finding it faster than anyone else. So that’s the first one.
The second one, the second step is…so the rational is one. The second one is the emotional. And I think that we are in denial about the emotional challenge associated with change. And I think this is where DACH is probably stuck more than anything else because A, they refuse to admit that there are emotions. It’s the least emotional IQ, if you may, or EQ in the region.
Ricardo: Yeah. And regional in the sales and customer experience is really problematic.
Lior: And as a result of it, they don’t really deal with the emotional things. And let’s go about the emotional things for a second. One of the things that the book is discovering is that the fear of change is not about the fear of the future. It is actually about the fear of the past. Because what people are saying, “If you want me to change now from SAP to Oracle, what does it say about me? I was the SAP person. Now if you cancel that, are you saying this is wrong?” You see, when people hear the word change, it means to them, “I did something wrong.” And the traditional change approach does not provide a bridge from the past to the future. That’s in my humble opinion where DACH is stuck. DACH is stuck in finding change to be a negative judgment on the past and as a result of it, they’re not allowing room for the future.
Ricardo: And how do you see…? I’ll give you an example. Many companies here are starting to speak about customer experience and they understand that they have to change many different things. And as you mentioned, and I have an example in my web about [inaudible 00:22:32] that they have around the world, many masses, but they actually did nothing to change.
Lior: Of course.
Ricardo: Very strict with the employees and the stores, the people are not empowered at all. So the new guy that is coming as a client is getting a better deal than the previous guy like me that have a deal with them. How we can help those companies to change? I wrote even to the CEO trying to make the guy understand what is missing here. How we can take a company that is rigid as…oftentimes, we have here in Europe? I think the U.S. have the ability to adapt much faster.
Lior: Ricardo, when we talk again, I’m gonna bring you back to the main insight here. A company is not rigid by itself.
Ricardo: Yeah, for the people…
Lior: It’s 10,000 people who are rigid. If you break it down to that, it’s a different conversation because I would like to assure you, I’m always ready to bet, that the CEO of O2 has a report that McKinsey or BCG made for him about customer centricity and there charts and there are analyses and the execution has not happened. The execution has not happened because the CEO did not say, “Go do it,” in the boardroom. The execution has not happened because they don’t trust the people at the bottom and the people at the bottom don’t feel that they want to own that type of thing because it’s much easier to say no than to say yes.
You’ll never get in trouble for saying no, but you’ll get in trouble for saying yes. So if a company has a reputation of being very rigid and unempowering and untrusting with their employees, then you get the no and not the yes. So the real answer to your question is if I would be sitting with the CEO of O2, I’ll tell him, “The real issue is your employees don’t trust you when you say you empower them. So you need to look why and how are you delivering a message that doesn’t create trust between you and your employees? Why is Suzy from accounting and Yoachim from the store in Dusseldorf and Mary from the call center in Essen are deciding to basically say no to customers even though when they listen and they think about it, they should be saying yes? That’s the kind of question that should be…and I’ll give you a great example.
Just this week, we were reviewing one of our projects and we did an analysis for a call center just on their training material. And we found a training program, I mean, I want you to put this down because you will choke the moment I tell you this. ‘’We found a training program that was titled “Never Apologize.”
Ricardo: Wow. That’s…
Lior: In today’s world, this is a training program, a very progressive company, not in DACH, in the U.S. I will not expose the industry, but “Never Apologize.” That is the instruction. If I’m an employee who get this type of training and this type of reinforcement, and all of a sudden, one day you say, “Okay, now I trust you, go and be empowered,” I don’t trust that you’re ready for this. Why?
Lior: Let me finish my thought there. So face the facts without bias. Engage with the emotional and understand that you’re stuck. It’s a trust issue. It’s a fear of the past and not of the future. Then you need to find the connector. Why are you doing this? What is the intrinsic motivation? For the 10,000 employees to make the choice to do it, they need to understand what is the motivation. That’s the core cause. That’s step three. But here’s the other thing. There’s also a fear that I don’t know how to do it. I understand rationally what I need to do but I’ve never done it. So there is a heart issue, there’s a head issue, but then there’s a hand issue. And most companies don’t allow their employees to practice before they go on stage.
And the last stage is the fact that you need to continue to experiment in order to keep your head fresh with things. Because what happened with companies, you come, you get the process, you repeat the process and for the last 10 years, you repeated the same process and your head is not ready for fresh ideas and does not have room for that. But if you’re gonna experiment small things on a regular basis, you will allow your head to continue to stay focused. It’s like a muscle that you didn’t train so eventually, it kind of didn’t work.
Ricardo: I don’t know if you are aware about what happens in Europe but was business transformation in Europe and digital transformation was not exactly people initiative. It was the government of Germany that realized that they are late. So they tried to motivate the market to do that. I never saw a country doing something like that but that’s amazing also that they have the initiative. But this speaks by itself about the ability of change and adoption of new things in this region, that now, Industry 4.0 is a buzzword that everybody’s using. But that’s the origin of that, for the government of Germany.
What do you see that the people can improve in terms of…it’s absolute to say that in terms of adopting new technology and adopting…we spoke about that one minute ago. But what that tells you as a leader in your company, one of the best experience in the world in customer experience, what that tells you about the government have to, like, push the companies to change because they are not doing by themselves.
Lior: Any time that you see government interventions, it’s because people abuse the system in one way or another. I’ll give you another example. When we deal with pharmaceutical companies and they say, “Oh, no, no, we can’t do it because of the regulation.” I say, “Well, wait, stop for a second. Was the regulation created because you loved your customer so much that they told you to stop loving them?” No, it’s because you abuse your customers. So don’t use the regulation as an excuse. The government starts intervening when people are not doing what they’re supposed to be doing. And it is a very sad story that the government needs to be the first one to recognize that their private sector is staying behind and losing relevance, because it is a national economic agenda to stay ahead of the game and not to be left behind because there is a risk to taxes, to employment of employees, and everything else.
It only demonstrates how much people are holding on to their processes and best practices as their definition of success as opposed to the flexibility and empowerment as a definition of success. It really boils down from a CEO standpoint to a simple question which is what are your assets? Are your assets your processes or are your assets your people? Which one comes first? Which one serves what? Are your processes serve your people to deliver better value or your people serve your processes? And it shows a very traditional old thinking that says, “My business is my machines and my buildings and my processes and not the people in the interaction.” That requires a flipping of the coin but I’m gonna at least demonstrate some sympathy or empathy in the process.
When we do talk about those things with CEOs, when we actually have an honest conversation about what are their fears, they’re saying, “My employees is the one asset that leaves the building every day. It is the most vulnerable piece of my business because I can train them as much as you want me to train them and then they leave me.”
Ricardo: That’s nature.
Lior: But they say, “The machine doesn’t leave me.” And I say, “Yeah, but the machine gets old.” But that is part of that. I think that in any transformation, we forget to be empathetic to the pain of making the change. We come to it. We already know why we need to do it and everybody is excited and they’re not. They’re not ready mentally for that. And as practitioners of CX, we need to learn how to demonstrate that empathy when we even deal with the CEOs and bring them and say, “What are you afraid of? What is going on?” But that is a real fear.
They’re saying, “Look, I have a high turnover. I invest in people and then they leave. We give them good tools, good education, good training, and then they leave.” It’s a legitimate thing, especially with the current generation that doesn’t have a great loyalty to the workplace. They have loyalty to their own agenda. These are legitimate things that we need to help them solve and also overcome the fear.
Ricardo: Great answer. :-)
Lior: Thank you.
Ricardo: Lior, one thing that strikes me in the book, I have to mention that to you. You have mentioned in “Next And Now” that by attaining a strong commitment to your values, you make yourself future-ready. This somehow contradicts many things that you’ve said in the beginning but you are talking about personal beliefs and company beliefs or…? Can you explain a bit about that because it strike me, this phrase, and how you put it?
Lior: Let’s talk for a minute about the new concept that was evolving in the last couple of years called FOMO, fear of missing out. And the essence of FOMO is that you have so much information out there and so many stupid video on YouTube about dancing cats that you feel like “Oh, everybody is talking about the latest cat dancing video and I was not included,” and so on and so forth. FOMO represents a certain anxiety, a certain anxiety around which change, if I over generalize, which change is relevant to me and which change is not relevant? Because I cannot see all the videos of the dancing cats and I cannot adapt to every technology that is out there. How do I make sense out of it?
Again, it’s a human need to…give me tools because yes, I need to adapt to change on a regular basis but I need to have some kind of a rationalization mechanism to do that. That’s issue number one. Issue number two, if you remember, I told you that people are hearing the word change and they’re thinking about it as a negative judgment of the test. By using your value or what I call your core cause, you are actually creating a bridge, a positive bridge between the past and the future.
And your values become your lenses to say, “If this is my core value, if this is my mission in life, if this is my passion, then I can then take whatever change, whatever new technologies, and whatever new models that are coming out there and I can judge them more rationally and humanly. And maybe this change is applied to me. Maybe this change is not applied to me. Maybe this change is relevant to accelerate my passion and this change will be relevant to accelerate his passion.” But it gives us a human prioritizing tool to justify and to embrace faster than just being all over the map.
Ricardo: You cannot change yourself. You are going to evolve all the time but if you don’t have the empathy, if you never served somebody, it is not going to happen in a touch of magic. How companies that already hire many people and they are delivering services and experiences with this kind of people that are not the most empathetic people can change this kind of problems that many companies here in Europe have today, which is, in my terrible definition, is lack of empathy to deal with customers. I don’t understand how they hire this kind of people to interact with people but happens very often here and I see that repeating itself all the time. So that was a…I know that you don’t have…you’re not a reporter. You cannot solve by magic anything, but maybe perhaps some idea that can help people.
Lior: Yeah. So I’ll tell you a funny story.
Ricardo: Because that’s about Strativity work all the years.
Lior: That’s exactly what we do. And don’t forget, we do business with German companies as well. Mercedes Benz was a big client of ours. BMW is now a big client of ours. We do work and understand the mentality a little bit, but I’ll share with you first a funny story. So I was speaking in Sweden for a major bank and the chairman came to me at the end of the presentation and he said, “This was an okay presentation.” So I guess my facial expression, I couldn’t control it, and he could see that I was kind of, like, disappointed when he said it was an okay presentation. And he quickly captured that and he said, “Oh, I guess in America, you use words like awesome but we don’t say that. So okay in Sweden, it is like awesome in America.” So that was my little cultural education that there are differences in the shades of awesomeness.
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End of Part I
For part II follow the link here or click the picture below.
Ricardo Saltz Gulko is the Eglobalis managing director, a global strategist, thought leader, practitioner, and keynote speaker in the areas of simplification and change, customer experience, experience design, and global professional services. Ricardo has worked at numerous global technology companies, such as Oracle, Ericsson, Amdocs, Redknee, Inttra, Samsung among others as a global executive, focusing on enterprise technologies. He currently works with tech global companies aiming to transform themselves around simplification models, culture and digital transformation, customer and employee experience as professional services. He holds an MBA at J.L. Kellogg Graduate School of Management, Evanston, IL USA, and Undergraduate studies in Information Systems and Industrial Engineering. Ricardo is also a global citizen fluent in English, Portuguese, Spanish, Hebrew, and German. He is the co-founder of the European Customer Experience Organization and currently resides in Munich, Germany with his family.