How a Retailer has Adapted HRO Principles with Great Results

My wife and I recently downsized to a brand spanking new condo.  Along with fresh paint and a few other personal touches, purchasing new window treatments was high on our list of move-in priorities.  After diligent consumer research (and yes, influenced by a fairly intense advertising campaign), we chose to deal with that task.  The experience was exactly as advertised: not only was the initial customer experience thorough and professional, but when we discovered that there was a slight discrepancy regarding color selection, the company accepted full responsibility for the error.  They replaced about $2,000 worth of product – without hesitation.

I’m not writing this to endorse a product or company.  In fact, I would never have gone beyond a “thank you” but when I came across an article in the May, 2014 issue of INC magazine about the tremendous success of this company and its founder, Jay Steinfeld, I had to take a closer look.

Although the article never mentions “High Reliability Organizations” (HROs), what Steinfeld mobilizes in his business are in fact, the five principles of HROs outlined  by Weike & Sutcliffe in 2007 in their book Managing the Unexpected[1]:

  • Preoccupation with Failure: when made aware of the problem, the Customer Service Department was completely focused on getting it right and unrelenting in that pursuit;
  • Reluctance to Simplify: Without getting bogged down in the details of this very unique case, it would have been a convenient solution to find a pigeon hole in which to place my problem: give the customer a “take it or leave it” resolution and move on.  This did not happen and undoubtedly cost the company in the short term; but the long term benefits of being reluctant to simplify the problem will outweigh the short term gain through greater customer satisfaction, loyalty and that invaluable word of mouth endorsement.
  • Sensitivity to Operations: Steinfeld states, “If we want to get to the truth, we have to hear the truth.”  This could be straight out of  Weike & Sutcliffe.
  • Commitment to Resilience: “I’m risk averse; I hate making mistakes,” says Steinfeld. He learned to overcome that fear by recognizing that the consequences of failure are seldom catastrophic–a lesson he now shares with his employees. “‘You don’t have to fear the mistake. It will never kill you,’ I tell them,” he says.  One of the five HRO principles is accepting that yes, mistakes will happen, but a true HRO will not allow mistakes to disable it.
  • Deference to Expertise: In the interview, Steinfeld says that he tells new employees that he expects them to question his decisions.  There is no clearer example of management deferring to the expertise of those on the front lines than this invitation to challenge the boss’s decisions.

When I read the INC article, the reason for their success – on a personal and a corporate level – came clearly into focus.  Steinfeld has figured out- either intentionally – or just through luck – that the benefits of being an HRO do not need to be limited to high risk industries such as aviation or healthcare: They can be achieved in retail with very profitable results.   The principles that make an organization highly reliable can certainly be adapted with great success – and profitability – to other industries as well.  In fact, every organization can benefit from increasing reliability, as demonstrated here.

Aviation is an industry that carries enormously high risks, and we are well aware that people who work in any industry associated with life or death consequences may bristle at such comparisons.  But just as healthcare has been often resistant to accept the lessons from other high risk industries – such as aviation – this example merely bolsters the assertion that these principles work universally.

[1] Weick, Karl E., and Kathleen M. Sutcliffe. Managing the Unexpected: Resilient Performance in an Age of Uncertainty. San Francisco: Jossey-Bass, 2007.