Customer Reviews

Moments of Truth

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In "Moments of Truth" Jan Carlzon, the then president of Scandinavian Airlines System, tells the extraordinary story of turning a lacklustre state-run airline into a profitable business that consistently won passenger preference surveys. The central element of Carlzon's line of reasoning is the "moment of truth", a concept that was first formulated by Richard Normann in 1984 and which comprises the notion that a service company's overall performance is the sum of countless interactions between customers and employees, the so-called moments of truth that either help to retain a customer or send him to the competition. As Carlzon does emphasize, the implementation of the idea behind this concept is hardly an easy task to accomplish, especially so because it implies the transition from a production-oriented to a market-oriented approach within the company. The measures to be taken in order to make this strategic realignment possible include flattening the organizational pyramid, making sure everyone knows about the company's vision and, last but not least, empowering "front line" employees. Once these changes have been successfully implemented and are being pursued with perseverance, chances are that the outcome will be, as Carlzon puts it, "millions of satisfied customers and thousands of motivated employees".

"Moments of Truth" can be considered a prime example of how to explain a business strategy on very few pages and in an entertaining way. Although the book is written in an anecdotal style and can easily be read within a couple of hours, its contents are of interest and potential value to every manager in the service industry. Congratulations to Mr. Carlzon on a book that is both enlightening and very witty!

I see this book referenced in the literature of customer service, complexity science, and employee-oriented studies. Having now read the book, I can see why so many people refer to it. First, the book is extremely clear and easy to understand. It operates at a common sense level that is missing from many management books. Second, the author is describing case examples from his own first-hand experience. And he is certainly not Al Dunlap. Almost anyone would identify with the principles espoused here, which is to focus your resources and attention on where it will do the most good. Although people who refer to this book are clear about seeing the customer service aspects of Carlzon's thinking, I found that his strategic thinking about where trends force improved performance was even more impressive. Put the two together, and you have a remarkable opportunity to improve. Three, he explains very well the context of why he did things and how Scandinavia is different from the United States. That added a lot of meaning for me of case examples that I am not familiar with. If you want to see three examples of how unstalled thinking can make a big difference in your company, I urge you to read this book. Carlzon is a true stallbuster in areas like overcoming communications, bureaucracy, disbelief, unattractiveness, and misconception stalls. If we ever do another edition of The 2,000 Percent Solution, I would certainly like to use some of these examples in it. I particularly recommend chapters 5 (setting the strategy), 6 (flattening the pyramid), 7 (taking risks), 8 (communicating), 10 (measuring results), and 12 (the second wave). You will not find better advice anywhere else on these subjects. Unlike most management and leadership books, this one is a quick and easy read. Yet it contains a lot of meat. Carlzon seems to be able to get his point across in about one-third the space of most business authors. You'll like the difference.

This short book is an examination of three companies that Jan Carlzon worked for and how he turned them around. The first is unremarkable and is not relevant to his later insights. He was responsible for a company which was a subsidiary of a airline which sold holidays. He reduced costs to get it through an economic downturn.

The next job he had was working for a Swedish domestic airline. The airline was losing money but the ability to cut costs was limited. The reason for this was that the airline schedules and routes had been determined politically. There was limited ability to cut costs. The strategy he used to overcome the problem was to try to increase revenue by fare discounting. The problem was that previous fair discounting attempts had not been that effective. He developed a advertising strategy which aimed at expressing the cost by referring it to notes of currency. This was successful and traffic increased not by an anticipated 20,000 but by 120,000.

Following that he was put in charge of SAS an international airline company that was owned by Norway Sweden and Denmark. His strategy to make the airline profitable was to sell full fare seats. Up to this time Carlzon had made a habit of firing internal marketing units in his airlines and depending on the knowledge of his staff at the front line. He was able to use this knowledge to make his airline attractive to business class passengers.

He removed first class and created a business class.(In his view the only people who used first class with any regularity were airline executives) The business class had a distinct section of the plane which was curtained off. They got on the plane last and left first. They had a distinct waiting area. He worked out that the most significant thing of importance to business class travellers was prompt departure. He asked one of his employees to come up with a strategy of moving to 100% success of leaving at the right time. They came up with a strategy which identified the reasons for airplanes leaving late. They were:

* Waiting for passengers on connecting flights
* Waiting as a result of meals not turning up for the passengers
* Waiting for late staff
* Compressing flights

A strategy was worked out that would cost an estimated $1.8 million dollars to make flights go on time. From now on no one would wait for connecting flights. Passengers would be put on other carriers. If meals did no turn up it was thought that in most cases there would be a surplus and if there was not customers could be given vouchers for restaurant meals at the next embarkation point. If cabin (as opposed to flight) staff did not turn up the aircraft would take off. The compression of flights means that if a plane was half full it would be cancelled with the aim of trying to fill up the next plane to a full load. Flights simply were to be flown regardless of whether the flight was full. This in fact was going to be the major part of the $1.8 million cost.

What happened was that the strategy of flying on time was so successful flight compression was not a problem. All flights were now full and the strategy only cost $200,000 with the pay off the increased revenue from the full flights.
Another strategy was Carlzon's moth balling of newly purchased airbuses. One of the things which characterizes the airline industry is the use of new technology. To this extent the industry is production driven. The advantage of the new airbuses was that they had a lower cost per-passenger mile. The problem with them was that they were a bigger aircraft and for them to run cost effectively the airline would have to have less scheduled flights and have more people flying on each scheduled flight. This however had the potential downside that the airline would lose attraction to the customer as there was less flexibility in the schedule. For that reason Carlzon kept his older DC 9 aircraft in service as he was customer focused.

The conclusions that Carlzon draws about how to run a company is that marketing and sales are the key. The reality of a company and how it is seen is based on the individual moments of contact that a customer has with the representatives of the company. As these contacts are so important it is his view that the representatives of the company at the client interface be highly motivated and skilled. Further that they have the ability to make decisions about what they do. Lastly that they be in a position to feedback to the management what the realities are. In his view a flatter empowered structure is the key to the success of the modern corporation.

The sorts of things that he did were counter intuitive. It would be thought that aircraft which flew cheaper would be good for the bottom line. It makes good sense to compress flights so that aircraft fly full. Yet it was these things which potentially had the cost of reducing market share. Managers who were isolated from the customers might think it was attractive to cut costs in this way but front line staff are better able to sense the market dynamics of the industry.

This book is an excellent introduction to defining and managing customer touch points. It will help you to develop business processes which will empower your work force in the art of ongoing customer satisfaction. This is something that needs to be part of a company's core values, not just a buzz word.

More important, this is the book that Saturn used to define their world class retail facilities and processes.

The lesson's from the author's personal experience with Scandanavian Airlines are easily translatable to your business.

Jan Carlzon is a business leader who learned how to diversify his strengths and fortify his weaknesses. He is one of the few CEO's (before Jack Welch :) who had the boldness, bordering on foolishness, to take huge risks. He had 'safer' options available to him but he earned his salary by pioneering the expansion of product-service development beyond aircraft; maneuvering past the notion that market share is everything; and shifting emphasis to a value organization nurturing the best customer service in the world for the business traveler under extremely competitive conditions. Surprisingly, he made SAS profitable over and above everyone's expectations, including his own!

Carlzon presented a clearly defined strategy and it was effectively communicated to the stakeholders and employees, focused internally and externally, in equal portions. Carlzon took the innovative step of training his workforce to take responsibility for reaching goals, directing managers to support and encourage "frontline" employees to make decisions normally reserved, and maintain a steady work environment that was flexible enough to immediately respond to pursuing quality customer service.

At the time Carlzon wrote this book, the timing was before the rapid expansion of powerhouse Southwest Airlines. He focused on the best technology, concentrated on the type of aircraft, upgraded systems at the airport and improved distribution systems, which were key elements towards a profitable company. On the technology side, Robert Crandall, former CEO at American Airlines proved technology was related to profitability when he introduced the Sabre yield/reservations system.

Among the legends of aviation, Jan Carlzon, Robert Crandall and Herb Kelleher propelled the airline industry into a future that remains obscure. However, with the right dose of courage, discipline (wisdom) and imagination, the search for corporate excellence is not restricted to the little 'blue'-suited (I really mean green) men sitting in the Ivory Towers.

One final point. I truly appreciate the fact that Jan Carlzon wrote this book for us. He represents the best of Denmark, the culture of the Scandinavian countries and the 'individual' way they do business.

Consider reading "Unique, Now or Never," by Jesper Kunde and then read "Moments of Truth." Carlzon's leadership was before his time and he is still absolutely SPECTACULAR!

Jan Carlzon was promoted from middle management to run Scandinacia's biggest airline. He is sometimes quite modest about the reasons for this rise to the top. His airline, SAS, had sunk to the bottom of the league tables for profitability and customer satisfaction. This is half the story of how Carlzon turned around the airline, and half a desctiption of what a Moment of Truth is and how to use the idea of a Moment of Truth to improve customer service businesses. Carlzon defines a moment of truth as that moment when an employee has a choice, and depending on that choice the customer will be either delighted or disgusted with the service. Carlzon goes into the reasons why employees do not always make the customer delighted, and what he did to change these factors at SAS. The book is readable, but the key idea, the moment of truth, is overed in a few pages, and easily remembered. For those who feel no need to proceed through life burdened with a large number of business books, this volume is just the right size to mail with a letter of complaint to a utility company whih has recently given ou poor service. It earned this reviewer a full refund on 4 months of bills for two telephone lines.

If you are a business leader, you should read this book. It is a fascinating story of a corporate turnaround.

Moments of truth occur when your company touches a stakeholder and proceeds to deliver products or services that satisfy or disatisfy. It is that simple and yet very difficult to execute consistently.

If you have heard of "Service Maps" or touchpoints where customer contact occurs, my hunch is that the consultant or leader proposing the concept has read this book or been instructed by someone who has.

The book is a good read and provides deep business insights that you can you use to motivate and lead people and organizations.

IF you work for government or non-profit entities you too can learn from this book because its messages and concepts are applicable to all leaders and organizations.

In this short book, Jan Carlzon relates how he righted three travel companies as CEO by listening to the knowledge accumulated by frontline employees and helping them do their jobs, rather than the other way around. Mr. Carlzon was spectacular in turning around the fortunes of Vingresor, Linjeflyg, and finally SAS. As head of SAS he was able to dispense with business as usual by listening more to the frontline employees, and scrupulously insisting on removing 'yes-men' from his inner circle, a policy that has also served Southwest amazingly well over the years. Although his tenure was not totally without controversy, Carlzon talks frankly about unions (he looks on them as partners and long-term stakeholders), and tough decisions, such as sticking with the trusted DC-9 when other airlines were buying newer planes merely for the sake of having newer planes, despite negative balance sheet implications.

This is a book that should be read by every business major, MBA, and airline employee about what is possible by working together. Sadly in recent US history most airline executives have been self-centered boors who don't care about the airline business, and have no long term stake in the company. Largely they have stayed around a couple of years, raked in millions (in some cases hundreds of millions) of dollars and then left a bankrupt or weak carrier in the lurch. Carlzon makes it clear that he is a capitalist, but a capitalist that realizes that if management and employees work together, solutions can be reached that will benefit all over the long term.

To the Boards of Directors of any airline anywhere I say this: read this book, learn how it should be done, and go out and get a Carlzon-school thinker for every executive position in your company. The long term results will amaze you. I could not recommend this book any more highly.

In this new millenium it's funny to think how things used to be only 20 years ago. A lot of the principles of this book would be second nature now but it definitely highlights how you can develop a struggling business by focussing on what the customer wants - gee radical thinking!!
I'm of the opinion that it's good to read about the past lest we forget and make the same mistakes - in life and in business.
A good simple read but perhaps a little rose tinted. Left me wanting to know what happened in the late 80's (i.e. part 2).

I read Carlzon's book as research for a book of my own. I only gave it three stars because it's a bit dated in 2003, but it most probably deserved it five-star reputation in the 1980's. As one who spent thirty-four years as a mechanic for United, many of Carlzon's revolutionary ideas were fairly obvious to the rank and file. The title really describes what is at the heart of Carlzon's genius. There is a "moment of truth" for each and every employee. Making sure that the employee, whether they be CEO or file clerk, is ready for that moment is what Carlzon is preaching. If this book is must reading for business leaders, then very few got the message. When Carlzon tried to flatten the pyramid and empower workers to make on the spot decisions at SAS, he got the most resistance in the USA. He blamed this on job insecurity in America and credited Sweden's strict labor laws as the reason that it worked there. His workers didn't have to worry about losing ther jobs if they made an honest mistake. Many of Carlzon's ideas are reflected at Southwest, so that proves that he was on the right track. This is not a "how to do it" book. It's a "how to learn how to do it" book.