Great Expectations

Expectations are powerful, and they affect our lives all day every day. High expectations are combinations of hope, optimism, and trust.

Negative expectations are based primarily on fears.

We set ourselves up for reality by expecting it to be either good or bad. When it happens and it’s better than our expectation, it’s a pleasant surprise.

Since the mid-’80s service companies have understood that customer satisfaction is tied directly to the customer’s expectation. If the service delivered meets or exceeds the customer’s expectation, then customer satisfaction has been achieved. The term ‘exceed expectations’ has become an idiom.

Negative expectations can also influence outcomes. Sociologist Robert K. Merton is credited with coining the term “self-fulfilling prophesy.”

In his book, Social Structure and Social Theory, Merton says, “The self-fulfilling prophecy is, in the beginning, a false definition of the situation evoking a new behaviour which makes the original false conception come ‘true’. This specious validity of the self-fulfilling prophecy perpetuates a reign of error. For the prophet will cite the actual course of events as proof that he was right from the very beginning.”

Examples of self-fulfilling prophesy happen many times in daily life. Every year it impacts grade school students, for example:

Little Johnny does ok in first grade, but he fidgets at his desk and talks a lot. At the end of the year, the first grade teacher notes these behaviors in Johnny’s record.

In August the second grade teacher is reviewing the students for the upcoming year, and Johnny’s behaviors in first grade are noted.

The second grade teacher decides to deal with Johnny right off the bat, and assigns him to the desk right in front of the teacher’s. His behavior is scrutinized by the teacher, more so than the other students’, and the first time Johnny fidgets or talks, the teacher comes down hard.

Pretty soon, Johnny starts forming his own expectations.


As we celebrate our national independence, it’s a good time to reflect on benefits of Independent Service.  Today we take for granted the freedom to choose our service provider for computers and medical equipment.  It wasn’t always so…

In late 1969 Control Data (CDC) launched a venture called “Comma.”  At the same time MAI launched “Sorbus.”  Until that point the company who manufactured and sold the product also provided the post-sale support.  Period.

This obviously limited customer options for migration and change.  Service served as an effective account control tactic.  The early Independent Service Organizations (ISOs) broke that control by offering service on primarily IBM equipment.

The ISOs (or 3rd-Party Maintenance Companies, as they were first known) flourished through the 70s, and into the late-80s.  In 1987 IBM declared “The Year of the Customer.”  Major customers were signed to NDAs and given 5-year contracts with drastic price reductions.  About $1B went off the IBM service revenue for the year.  (Of course ISOs immediately countered with, ‘If this is the year of the customer, what’s next year going to be…The Empire Strikes Back?’)

IBM went on to suffer some tough years in the early 90s, but then recovered, partly because IBM developed an effective, win/win, business model for co-existing with independent service companies.

By the 90s every major IT manufacturer was engaged in a “multivendor” service strategy, competing directly with the independents, but the existence of an alternative for support helped fuel the growth of open systems, and the cat was out of the bag.

Today, ISOs provide unique advantages over manufactuers’ services:

The infrastructure/cost structure of an ISO is totally and solely devoted to direct customer service productivity…Service is the ONLY business.  In OEMs the service organization absorbs costs from the manufacturing and product sales side of the house.

ISOs can be selective about what products they maintain.  OEM service organizations have to service EVERY product the company produces, in EVERY town and hamlet they sell the product.

ISOs are customer-, not product-, driven.

The existence of an alternative helps customers get better deals and service from their OEM service providers.

By their nature, Independent Service Organizations produce benefits for clients of high-end technology products…So happy 42nd birthday!


Organic vs Commodity Growth

Growth by acquisition has been a viable strategy in the technology service industry for decades, and there are some large “roll-up” plays currently active in the industry.

Growth by internal sales is hard work.  Selling service is harder than it looks.  When you’re selling a product, you’re selling a thing.  It is +85 concrete, real, you can take a picture of it, you can demo it working.

When you’re selling a service, you’re selling a promise.  It’s intangible.  Like beauty, it is in the eye of the beholder.  This requires a much more sophisticated sales model, worked by highly-skilled folks.

A services acquisition involves people (customers & employees).  The retention rate of the revenue of the base acquired is directly proportional to how well the acquired business is integrated.  An acquisition brings in a new culture.  Acquired workforces create horizontal pressure in the organization.

Internal sales growth extends the structure and staffing incrementally, driven by revenue increases.  Internally-driven sales extends the current culture.  Internal growth stretches the workforce and provides promotional opportunities.

There are some interesting parallels in Search Engine Optimization (SEO) marketing.  Pay-per-click commodity programs can acquire immediate results, while organic programs create long-term equity.

Service organizations are best served with a strategy that blends organic and commodity growth.




Service Industry Association

The Service Industry Association’s annual Summit of Industry Leaders, held last month in Las Vegas, was remarkable on a number of levels.

SIA, the organization itself, under the leadership of an excellent Executive Director and Board, is experiencing a remarkable growth spurt, including an increase globally.  The whole conference was, in fact, infused with enthusiasm and a positive outlook.

Also remarkable is that anti-competitive actions by original equipment manufacturers (OEMs)—in both IT and Medical Equipment services markets—are increasing.  Policies that tie hardware service to software service, or to equipment purchase, are intended to benefit only one party—the OEM.

The effect of OEMs tying services is to eliminate choices and options for enduser customers.  For decades Independent Service Organizations (ISOs) have provided a balance and an option for endusers.

ISOs maintain a wide range of manufacturers’ products.  For some enduser customers, this is the best-performing and most cost-effective solution to managing the full spectrum of technology services needed.  OEM actions and policies that eliminate that option harm those customers.

ISOs are typically profit center organizations.  They are not tied to the success or failure of a manufacturing or a product sales/marketing organization.  ISOs are positioned to provide a unique set of services to meet customer needs, and have historically stood closest to the customer.  In past decades when OEMs have attempted to monopolize the service market for their products, remedies have been found—both in the courts and in the offices of customers.

OEMs need to adhere to long-standing industry standards, as exemplified by IBM.  When policies are designed to meet the full range of customer needs, the customer, OEM, and ISO all benefit.

If I were a betting person, and having recently been to Vegas who isn’t, I’d bet on the customers, once again, versus the OEMs.


Blog will offer easy to access ideas and info.  Not just a platform to hear ourselves think– although there’s value in the exercise alone–but hopefully you will add some thoughts and ideas of your own.

We are actively engaged in the technology customer service industry, a huge ($350B annually in the US) arena offering an endless number of topics to discuss, ranging from web services to high-end technology and service industry consulting.