Kaihan Krippendorff wrote about the restaurant on Fast Company’s Web site. He teaches a service innovation class using an 8-P framework that helps companies find the disruptive innovations that will differentiate it from the competition. Andres Carne de Res is a case study in disruptive innovation:

1. Product. Check out the restaurant’s amazing menus on its Web site. It pastes yellow butterflies to its local beer bottles and serves wine in hand-painted bottles. While the products may be different from those of its competitors, they certainly are packaged and presented in unique ways.

2. Price. Krippendorff got a menu that was a metal case about the size of shirt box that had a scroll inside and you turned a handle to roll it up or down to see menu items and prices.

3. Place. Andres Carne de Res is only open from Thursday to Sunday but it’s packed every night.

4. Promotion. The restaurant doesn’t do any. Word-of-mouth is enough.

5. Position. Call it “unique.” Andres Carne de Res has three dance floors, a stage, a piano, a DJ, and actors who interrupt your meal with improvisational scenes.

6. Processes. Krippendorff had at least seven different people helping him while he was at the restaurant, and the service was excellent. No single server here.

7. People. About one-third of the restaurant’s 1,000 employees seemed to be actors hired to play interesting characters and entertain the guests.

8. Physical Experience. Here are a few of the memorable experiences Krippendorff recounts: fresh-cut roses hanging on strings above diners’ heads; butterfly-shaped confetti falling from the sky; metal staircases leading you from “hell” to “purgatory” to “heaven”; diners becoming dancers as the DJ’s music replaced the eating.

What could you do across all eight of these dimensions to design an unparalleled, disruptive customer experience?

To read more about creating a disruptive experience, click on these articles:

• Do You Trust Your Customers?
• Walk in Your Customer’s Body Armor
• Bottom-Line Value of Customer Engagement
• 10 Critical Questions: Your Customers
• Ground Zero for Customer Service

I’m talking about Delta Airlines. I was scheduled to fly back from Lexington, Kentucky, on Monday night at 7:30. I heard an announcement that a flight from Atlanta to Lexington had been delayed so I checked with the Delta rep at the gate to see if that was my airplane. It wasn’t. I joked about how lucky I was to get a plane coming from Detroit. She said the flights from Atlanta and Detroit seemed to alternate having trouble.

As take-off time approached, we were told that the plane’s engine wouldn’t start and a mechanic had been called. Twenty minutes later he showed up. About 45 minutes later we were told the plane was ready to go and we trudged out to the last plane leaving Lexington that night.

Once everyone was settled and the door closed, we waited and waited and waited for the engines to start and cheered when they finally kicked in. We taxied for take-off and then we taxied some more. Lexington is a small airport so if you taxi for ten minutes, you know something is wrong and, sure enough, we found ourselves back at the gate. The pilot told us the crew had reached its time limit and couldn’t continue. Did I mention this was the last plane out of Lexington?

So we stood in line for a half-hour to get rebooked the next morning and get hotel vouchers. The hotel shuttle driver joked about how often he picks up Delta fliers that time of night. The hotel clerks joked about Delta being its best customer. We who could not get home were not amused.

Flying back Tuesday morning, I sat next to a woman who flies Delta regularly from Atlanta to Minneapolis and she said when she gets to the company she’s working with, the people always ask for her travel horror stories. One time the plane flew with the landing gear down because they feared that if they retracted it, it would stay retracted. She had lots of stories.

I want to add that every Delta employee I interacted with was polite and helpful. This is not a people problem. It’s a system failure. The system for maintaining airplanes and scheduling them and meeting the schedules isn’t working. It sounds like it hasn’t been working for awhile. System failures are management’s problem. Delta has a serious leadership problem.

Customers beware.

To read about excellent customer service, click on these articles:

• Stakeholder Mapping
• Do You Trust Your Customers
• Walk in Your Customer’s Body Armor
• 9 Ways to Get Closer to Customers
• Bottom-Line Value of Customer Engagement

Pal’s continues to conduct annual internal assessments because, as Crosby states, “I’m a real big believer.” Like other world-class companies, Pal’s benefits from asking and answering key questions that reveal how the organization works. The snapshot produced by this exercise becomes the engine for change, improvement, and success.

The questions explore all areas that are critical to an effective management system. Many of the questions have never been asked, which means many of the areas they address have never been evaluated. And therein lays their power.

A few years ago I asked these questions of senior leaders at an organization that dominated market share in its industry. One question in particular solicited a variety of responses. The question was: How do you determine key customer requirements and expectations?

Many of the leaders talked about how they interacted with their customers daily. Others mentioned customer surveys, complaints, and lost customer interviews, among other approaches. Nobody described a process. I asked how they used the information from these sources to determine customer requirements and they said they knew what their customers required because they talked to them every day. In other words, they had no process for determining customer requirements. When the resulting assessment pointed this out, the senior leaders heatedly debated the issue until the head of the organization agreed with its accuracy. A few months later they hired a market research firm to help them formally nail down those requirements.

Now consider how Pal’s answers that question. First, it describes of number of listening and learning posts for gathering information from its customers: telephone and mall interviews, drop-in and mail-in surveys, “Marketing by Wandering Around,” on-site interviews, and Web-based surveys. It feeds the information from these sources into an extensive marketing research process that includes what customers like or dislike about Pal’s and specific competitors and why they choose one restaurant as their favorite. It also evaluates competitor products and services, uses industry and competitive data to predict future trends in customer tastes, and analyzes sales data and customer input to rank their requirements and expectations. The Customer Focus Assessment Team analyzes all of the data to build customer relationships, while the Leadership Team uses the data evaluate and improve existing customer/market focus processes.

They began by using the data to identify customer requirements. They then translated these requirements into key business drivers for the company. Based on sound research and thoughtful analysis, Pal’s knows what its customers require and it knows what it must do to meet and exceed those requirements. That’s a firm foundation for any company.

To read more about knowing your customers, click on these articles:

• Be Careful How You Measure Customer Satisfaction
• Bottom-Line Value of Customer Engagement
• KEYSTONE: Customer Knowledge
• 9 Ways to Get Closer to Customers
• Ground Zero for Customer Service
• Customer Loyalty Myths

In “The Art of Corporate Listening” (Bloomberg BusinessWeek, May 11, 2010), Peter Firestein writes about how a good stakeholder map displays not only the issues that concern each stakeholder group, but it clusters the groups by shared interests. In Baldrige language, this would be stakeholder requirements instead of issues and the list of groups would likely be different. Firestein mentions investors, NGOs, communities, regulators, and news reporters. It seems to me that customers and employees are major key influencers that certainly participate in the public dialogue about a company.

I think Firestein is exactly right when he states that the “most powerful part of stakeholder map-building is the culture change it brings to the management team. They must commit to becoming the source of the map’s content, and the only way they can fulfill that commitment is by engaging actively with the company’s stakeholders. Such engagement sensitizes them to external attitudes about the company.”

In the Organizational Profile of the Baldrige Criteria, one area to address asks about this specific issue:

• What are your key stakeholder groups?
• What are their key requirements and expectations of your products, customer support services, and operations?
• What are the differences in these requirements and expectations among stakeholder groups?

It sounds like a stakeholder map would go a long way toward answering these questions while demonstrating a high level of sophistication about stakeholder requirements. I look forward to seeing the first Baldrige Award winner to embrace the idea.

To read more about stakeholder requirements, click on these articles:

• The Priorities of Leadership
• The Best Performing CEOs in the World
• Walk in Your Customer’s Body Armor
• 9 Ways to Get Closer to Customers
• Dangerous Assumptions about Customers

He offers three examples.

The first is Amazon, which offered honest customer reviews about every product on its site right from the start. Remember, online retail was still a new concept and people were reluctant to buy something they hadn’t paged through or tried on or tested. Amazon trusted its customers to provide honest feedback and they did. And Amazon redefined the retail experience.

The second example is Zappos, which offered free shipping both ways on any shoe purchase with one-year no-questions-asked returns. It knew people would hesitate to buy shoes they couldn’t try on and they trusted their customers not to buy shoes, wear them for 364 days, and return them. And they were right.

The third example is USAA, which I’ve written about on Baldrige.com before. USAA allows its customers to take a picture of their paycheck and “deposit” it by email. Most financial institutions follow policies and procedures that demonstrate disdain for their customers. USAA trusts its customers, and that allows it to offer services no competitors can match.

Very few organizations can act like Amazon, Zappos, and USAA even if they want to. First, you have to know what your value proposition is. Are you selling low prices, high quality, speedy delivery, or top-notch service, or some combination of these? Because your bold move needs to align with and support your value proposition.

Second, you need a profound understanding of what your customers want. Look at each example above. These companies made bold moves because they knew what mattered to, and what motivated, their customers.

Third, you need to trust your customers to do the right thing. Not all of them will, and you have to plan for that, but the vast majority will behave like responsible adults.

And they will reward you for treating them as such.

To read more about serving customer needs, click on these articles:

• Recommendability Boosts Revenues
• Walk in Your Customer’s Body Armor
• Leaders in Customer Service
• Bottom-Line Value of Customer Engagement
• 10 Critical Questions: Your Customers
• 9 Ways to Get Closer to Customers

You determine your NPS by subtracting the percent of Detractors from the percent of Promoters. Scores of 75% or higher are considered very good.

Church of the Customer Blog recently reported on the 2010 NPS Industry Benchmark reports released by Satmetrix. The NPS leaders by industry are:

• Airlines: Jet Blue (64%)
• Auto Insurance: USAA (78%)
• Banking: USAA (81%)
• Brokerage & Investments: Charles Schwab (46%)
• Cable & Satellite TV: DIRECTV (27%)
• Cellular Phone Service: Verizon (41%)
• Computer Hardware: Apple (78%)
• Consumer Software: Adobe Systems (37%)
• Credit Cards: American Express (27%)
• Department, Wholesale & Specialty Stores: Costco (66%)
• Grocery & Supermarkets: Trader Joe’s (69%)
• Health Insurance: BlueCross BlueShield of Illinois (5%)
• Homeowners Insurance: USAA (69%)
• Internet Service: Road Runner/Time Warner (21%)
• Life Insurance: State Farm (34%)
• Online Search & Information: Facebook (65%)
• Online Shopping: Amazon.com (71%)

A few things jump out of this list. First, health insurance companies stink. If 5% is the best NPS score, this is indeed a sorry bunch. Second, being the best in credit cards, internet service, life insurance, and consumer software is no great accomplishment. Third, USAA is really good.

Church of the Customer blog points out this correlation between recommendability and revenue growth: USAA announced that 2009 was its best year ever—and it came in the middle of a serious recession.

Or how about these correlations:

• JetBlue made a profit in 2009 while passenger revenue in the industry dropped 18%.
• Apple earned nearly half of the U.S. PC desktop retail industry revenue in 2009.
• Verizon’s 2009 revenue was up 10.7% over 2008 while revenue declined for AT&T, Sprint, and T-Mobile.

To read more about customer satisfaction and loyalty, click on these articles:

• Be Careful How You Measure Customer Satisfaction
• Walk in Your Customer’s Body Armor
• When “Very Satisfied” Is Impossible
• Bottom-Line Value of Customer Engagement
• 9 Ways to Get Closer to Customers

A month later I stayed in the same hotel. Same thing happened, although they were more efficient this time: They told us to ignore the alarm before I could get my shoes on.

The next morning, the hotel forgot my wake-up call.

When they sent an email asking me to take a short survey, I did, explaining why the false alarms and missed call accounted for the low scores and the likelihood that I wouldn’t stay there again.

A week later I received an email from one of the hotel’s managers apologizing for the alarms and missed call and promising changes to keep both from happening. He offered a coupon for a night’s stay the next time I was in the city. I took him up on it.

In “Hotels Answer Online ‘Tidal Wave of Whispers’” (USA Today, March 25, 2010), TripAdvisor states that less than 4% of negative reviews of hotels at its site get a response. And that’s after a 203% increase in responses from the previous year.

Some hotels are realizing that negative reviews are opportunities to lure back disgruntled customers and identify and correct the problems that upset them. Hilton is testing software that aggregates reviews on Web sites, blogs, and other social media sites. Marriott and Marriott-brand hotels monitor more than a dozen Web sites and list key phrases such as bedbugs, eviction, and security that get immediate attention.

Those hotels that are ignoring 96% of online negative reviews are missing an opportunity to increase customer satisfaction and loyalty, find and fix issues, and improve performance. And in this economy, who can afford to do that?

To read more about customer satisfaction and dissatisfaction, click on these articles:

• Be Careful How You Measure Customer Satisfaction
• Walk in Your Customer’s Body Armor
• Lessons Learned from Dell Hell
• 9 Ways to Get Closer to Customers
• Word of Mouse