Project Management Institute

The U-shaped customer satisfaction effect

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by Michael A.Rizzo Jr.

Program managers continually confront the phenomenon of changing customer satisfaction over the life of a program, from “high” at the beginning, to “low” at the midpoint during detailed design, back to “high” at delivery—the “U Effect”—as shown in Exhibit 1. Companies that misunderstand this natural phenomenon, when faced with the challenge of lowered customer satisfaction after the initial euphoria of a program beginning, make heroic efforts to keep customer satisfaction at the high level experienced at the program beginning. These changes usually exacerbate, rather than minimize, the negative affect of this phenomenon. The key is not to deny or overcompensate for this principle, but to minimize the natural dip level and effect on the program. By not understanding this phenomenon, companies may make changes that cause schedule and cost overruns that, in turn, prevent the natural increase in customer satisfaction that occurs at the end of the program.

The U effect is caused by unmet expectations and the lack of a working relationship between the customer and the supplier at the beginning of a project or program. During the competitive process, both teams are separately working toward a common goal: to be selected as or to select the best candidate to perform the effort. Both teams envision the perfect program and team. The supplier is working to solve the technical problems and write the winning offering while the customer is weighing the benefits of the received proposals. The customer then selects the “best value” supplier to provide the contracted product or service. The customer evaluators and their management become convinced that the selected supplier is the best qualified to complete the effort. On the supplier side, the personnel working on the proposal are caught up in the process of writing a proposal that meets specifications. At the same time, the proposal most probably contains several cost and schedule “challenges,” dictated by management to achieve the expected winning number. When the winner is announced, both teams are jubilant; the supplier feels their offer's acceptance means all their assumptions perfectly satisfy customer desires, and the customer is convinced that the selected supplier is best suited to complete the program according to their explicit and nonexplicit desires.

This curve shows the natural phenomenon of changing customer satisfaction over the project period from authority-to-proceed to the end of the program. Assumption mismatches between the customer and contractor cause team dissention after ATP, leading to reduced customer satisfaction during the requirements and design phase. Customer satisfaction increases as the program matures, caused by alignment of expectations and team cooperation. The program manager's goal is to minimize the depth of customer despair during this process

Exhibit 1. This curve shows the natural phenomenon of changing customer satisfaction over the project period from authority-to-proceed to the end of the program. Assumption mismatches between the customer and contractor cause team dissention after ATP, leading to reduced customer satisfaction during the requirements and design phase. Customer satisfaction increases as the program matures, caused by alignment of expectations and team cooperation. The program manager's goal is to minimize the depth of customer despair during this process.

A built-in setup for disappointment occurs when both teams realize that, due to the competitive process and nonperfect specifications, several misunderstandings have taken place in the detailed requirements and in customer/supplier expectations.

When negotiations immediately follow contract award, these differences are sometimes noticed immediately. In other cases, these differences may not surface until detailed design begins, or even later during prototype product delivery. Most often, it is during preliminary and critical design reviews that differences in expectations and misunderstandings, as well as “challenges” in the areas of technical requirements, cost, and schedule, are exposed. Thus, the satisfaction of the customer with the supplier can be drastically reduced, causing the program to enter a crisis period. If not handled correctly, this crisis can result in the cancellation of the program.

As an example, the C-17 program entered into this crisis mode because of differences between the U.S. Air Force and contractor teams in their expectations for requirement implementation and verification. The customer/supplier teams had not established any cooperative relationships to work together toward a common goal of contract completion. After months of public squabbling, customer satisfaction had deteriorated to the point that the United States Congress was about to kill the program.

Toward the end of a successfully navigated program, the customer/supplier teams have had the opportunity to work together to form relationships to solve the program challenges and to work toward the goal of completing the effort. By this time, their expectations have merged into the final product design, and personnel changes have often reduced the number of people from those involved at the program beginning. As new personnel are assigned to the program, they do not have as many predetermined expectations and thus tend more to take ownership in the design as it evolves. At this time, customer satisfaction typically increases and returns to the level seen at the program beginning. This is due to the fact that interpersonal relationships have matured as the program has matured from a design to a product. Also, as the end of the effort approaches, people want to be involved with a winner, both for personal satisfaction and to increase their chances of future opportunities.

What Can We Do About the U Effect?

Understanding the reality of the U effect, what steps should and should not be taken to minimize it? Here are some common problematic responses to reduced customer satisfaction at the beginning of a program.

Fire the Supplier Program Manager (obviously, this person cannot get along with the customer). The beginning of a program is a very difficult time. Contract negotiations, personnel assignments, prime and subcontractor relationships, developing cost, schedule, and technical baselines, as well as customer relations, all fight for time and energy. Removing the program manager at this critical time throws the entire program into a spin caused by lack of leadership at a time when it is most critically required.

Get Upper-Level Executive Management or Peer Reviews Involved (obviously, the team we declared in the proposal was the best in the world is not able to get this program going). Executive commitment and assistance is a prerequisite to a successful program. However, bringing in external “help” to a program as a reaction to a natural reduction in customer satisfaction does not help the program, unless a plan is in place for using these people. These well-meaning people cause delays while being brought up to speed and often dilute the program technical and management teams’ efforts. In extreme cases, outside experts may influence programmatic baseline changes that lead to needless schedule and cost overruns, causing irreparable reductions in customer satisfaction and program cancellation.

Do Nothing and Hope It Will Get Better (obviously, since we won, we have exactly the right team to do this program right). The personnel on the program are not blind. They can see the deterioration of customer satisfaction and its great affect on morale. Attitude problems causing a loss of the survival instinct, or worse yet, loss of key personnel to “greener pastures,” are the last thing the program can stand. At all levels of the program, people need help, support, and understanding to know they are trusted to complete the effort and that resources are available when needed.

Bring In a “Team Building” Guru (obviously, creating a team from the supplier and customer personnel will result in a successful program). The general concept of a team arrangement between the supplier and customer personnel is sound. The problem is the timing of the training. If done too early, during the euphoria phase of the program as is typical, the teams are not trained to deal with the conflicts that will inevitably arise when expectations are not met. Additionally, since the supplier and customer teams are usually not co-located, the result is two well-trained competing teams working against each other. This “we vs. they” attitude complicates the problem and adds to the depth and length of reduced customer satisfaction.

Manage, Understand, and Communicate Expectations on Both Sides

The need for free and open communications cannot be overstressed. This does not mean that every meeting should be a “love-in.” To the contrary, constructive differences in opinion cause people to reassess their own positions while trying to understand the opposing viewpoint. Some of the most productive meetings begin with a very tense environment, but it is the end of the meeting that counts. If the meeting led to greater understanding of the choices available and a direction was agreed upon, the meeting was successful.

In the C-17 example, the Air Force, realizing it would lose this much-needed capability if it did not stop fighting with the contractor, began working with the contractor to communicate their differences. Issues began to surface and be resolved in private. As a result, the number of “squawks” on each flight test aircraft delivered was reduced from several thousand to a handful. The program has continued and has become a rousing success because both sides realized the greater goal was more important than relatively minor individual differences.

Another recent example of opening communications to resolve issues is taken from a proprietary program at Boeing. This “Integrated Product Team” program was anything but an integrated team. The customer and contractor teams were openly hostile to each other, and program personnel were spending their time complaining to their management about how the “other side” was unreasonable and destroying the program.

The customer/supplier program managers got together and developed a team encounter called Acquisition Reform Day. The day began with the customer program manager meeting with the contractor personnel and asking two questions: What do you want the customer personnel to do? What do you think the customer personnel want you to do? At the same time, in another room, the supplier program manager asked the customer personnel the same questions regarding the supplier personnel. This provided an acceptable forum for the personnel on both sides to express their feelings to someone who was empowered to help them; namely, the “other side's” boss.

The U effect is caused by unmet expectations and the lack of a working relationship between the customer and the supplier at the beginning of a project or program.

The answers were written on transparencies and shown to the total group by both program managers in a joint session. This enabled clear communication of expectations. For the answers that matched, the groups asked, If you know what I am expecting, why aren't you doing it? For answers that did not match, issues bothering one group that were completely unknown to the other were discussed and resolved. Other issues yielded honest disagreement between the groups, but the issues became known and understood and could be worked on at the program manager level or higher, as appropriate. The day ended with a softball game with mixed supplier and contractor personnel. This meeting was so successful that it became a yearly event.

This example epitomizes the usefulness of executive management in the process by providing a forum for the program personnel to be heard and to take corrective action as necessary.

EXECUTING A COMPLEX PROGRAM is like getting married the day after a blind date. The external attraction between the bride and groom may be very strong, but, for the marriage to succeed, their expectations and desires for the relationship must be openly communicated and understood through difficult times.

Change in customer satisfaction over the life of a program is a natural phenomenon. The key is not to deny the U effect phenomenon, but to reduce its depth and effect on the overall program. The tool to combat this phenomenon is communication. Understanding the expectations of the customer through open communications and working as a team to meet those expectations within contractual guidelines will get the program through the “bumps in the road” with minimal erosion of customer satisfaction along the way. img

Michael A. Rizzo Jr. is a division director/program manager for Integrated Defense Systems at the Boeing Co. He joined McDonnell Douglas in 1985 as a senior engineer/scientist and has served as program manager since 1994, specializing in programs supporting communications/processing system deployed worldwide.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network May 2001

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