Dell Technologies vs. HP Inc: The Interesting Nuances of Applying NPS to Effect

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    A wide, though rarely spoken of, position in the tech industry says that customer satisfaction scores are BS. We’ve known for some time that they simply have become binary and reflect whether the customer is upset with you at the moment. There is no lasting meaning and the ratings are more closely tied to the mood of the respondent than any empirical vendor ranking. There is no penalty for scoring a vendor badly, customers don’t want to waste time on a call from someone if they don’t score the vendor high enough unless really pissed off, and vendors game the scores, often providing incentives if the customer provides a positive review.

    As a result, the smart vendors have largely switched to Net Promoter Score (NPS), which looks more at customer behavior and whether that customer will, and does, advocate a vendor. This system, when done right, is far more granular because it looks at the behavior the vendor actually wants, advocacy, and looks in detail at the reasons behind the score, providing a far more granular sense ranging from services to features for what motivates a customer to go beyond using and not complaining about a product, to recommending the product to friends and peers.

    Of the companies that I follow that use this metric, EMC, now Dell Technologies, stands out as turning this into a CEO-level effort, which passed largely intact from Joe Tucci to Michael Dell, who assigned the most powerful woman in his company, EVP and Chief Customer Officer Karen Quintos, to the effort, showcasing how highly he valued it.

    I was briefed this week on HP Inc’s methodology and, though it is different, its approach actually has advantages over Dell’s for a company like HP Inc., which is far less complex than EMC was or Dell Technologies is. In short, this isn’t about which tool is better overall, but how a different approach may be better for a far less complex company.

    On Quality: Zen and the Art of Motorcycle Maintenance

    Most people who work in quality don’t really understand it. The part that they don’t understand is that quality isn’t absolute. It has as much to do with the observer as it does the product. The best example of how failing to understand this bit a vendor in the butt was GM in the 1970s. The product was the Chevy Vega. It was created as a result of the most extensive analysis of a Japanese car ever attempted because customers felt the quality of those cars was far superior to GM. So, the Vega was created after five years of analysis on companies like Toyota. It was easily superior to the cars that had existed in the 1960s, but Japanese cars improved significantly between the 1960s and 1970s, making the Vega uncompetitive. It showcased that the quality bar had moved dramatically, and embarrassed both GM with the Vega and Ford with the Pinto, which had resulted from a similar effort.

    The best book I’ve ever read on quality is Zen and the Art of Motorcycle Maintenance which, through a story about a father and son trip on a motorcycle, explains quality in a way that allows you to understand how deeply it is nuanced and form a foundation for how and why you should measure it and why quality is never an absolute. It is also the most creative way I’ve seen to convey knowledge about a critical subject.

    On Quality: EMC vs. HP Inc. 

    EMC’s quality process was designed for that complex company. Through the merger, Dell Technologies is now even more complex. The effort is managed by an entirely separate unit and the performance metrics are factored into executive compensation to ensure that decision makers value the results. This separation assures that the executives can’t easily game the metrics, which is always a problem when metrics are factored into compensation and advancement, and that the top executives have a clear and unobstructed view of how their customers view them.

    HP Inc. has taken a very different path on the PC side of its business. The CTO/Product manager also owns NPS, placing the scoring far closer to the decision maker who is measured by the success of the products. Thus, it is in his best interest to use the scores to make decisions with regard to future products because that better assures greater sales and customer retention, which are factored into his compensation. Gaming the numbers has no tactical or strategic value, thus the scores not only maintain accuracy, but are correctly, and efficiently, tied to decisions for a positive outcome. This also requires that the product manager have a more diverse set of skills and a deep understanding of the nuances of quality. I’ve known Mike Nash, who heads HP Inc.’s approach, for decades, and he has the most diverse set of skills, gained at Microsoft and Amazon, of any product manager I’ve ever known. That is partially why this approach works so well at HP Inc. For instance, unlike with most vendors, he gets that since Apple stopped promoting the MacBook Air, users favor battery life over thinness; he has uniquely adapted HP’s products to take advantage of this change. (This again showcases that quality isn’t an absolute and that related perceptions can be manipulated.)

    The advantages of the EMC approach are that it scales and assures customer quality perception is a part of every senior executive so they are forced to always consider the customer. The disadvantage is that it may not be applied to product decisions in a timely manner and is one of many executive metrics that fall below financial performance, reducing the scores’ impact on decisions.

    The advantages of the HP Inc. approach are that it ties the scores directly into financial performance so there is no choice between the two, real or perceived, assuring that the scores drive decisions. The disadvantage is that higher executives won’t be as interested in the results and may become disconnected from what drives customer perceptions. It also doesn’t scale well in complex companies because the research isn’t centralized but distributed.

    In short, I don’t think the EMC/Dell Technologies approach, which works well there, would work in HP Inc. Nor do I think the HP Inc. approach would be ideal with EMC/Dell Technologies. Smaller, less complex firms should favor the HP Inc. approach, while larger more complex firms should follow the EMC/Dell approach.

    Wrapping Up: The Right Tool

    We often talk about tools as they relate to companies as absolute, but that is rarely the case. Each company is unique and, even in the same industry, the same tool and approach may not be ideal for a different size company or one that has a significantly different structure. Dell Technologies, because it is complex and private, doesn’t have the same needs or distractions that HP Inc., a smaller public company, does. Thus, the way both companies approach instrumenting customers is different and each approach favors the structure of the firm, its relative complexity, and the people running and using the NPS process.

    That doesn’t mean that elements of both approaches might not enhance each other, but that is a topic for another time and a different audience. This time, I’m focused on showcasing that different can be better and not absolute when tied to the differences between firms.

    Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+


    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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