MGT603 Systems Thinking Report: Analysis of Customer Loss at XYZ Bank

This report, focusing on systems thinking, analyzes the problem of customer loss at XYZ Bank, identified in a previous assessment. The report begins with a rich picture illustrating the customer loss scenario and its contributing factors, particularly the impact of poor employee morale on customer service. It then employs the CATWOE (Customers, Actors, Transformation, Worldview, Owners, Environment) framework to formulate a root definition of the problem. Based on these analyses, the report recommends two optimal solutions: building strong customer relationships and demonstrating value to customers. The report concludes by summarizing the key findings and referencing relevant literature on customer retention and systems thinking methodologies.

Title: Systems Thinking
MGT603: System Thinking
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Title: Systems Thinking
Contents
Rich Picture.....................................................................................................................................3
Root definition Report using CATWOE.........................................................................................4
And, based on these two tools, students will recommend a minimum of two (2) optimal solutions
to overcome the problem/policy challenge identified in Assessment 1..........................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................8
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Title: Systems Thinking
Rich Picture
In Assessment 1, the problem that was identified in XYZ Bank revolved around its significant
loss of customers to the competitors, which was required to overcome immediately. Below
depicted is the rich picture for the problem identified.
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Title: Systems Thinking
It had been observed that XYZ bank over past few years was dramatically losing out its
customers to other market competitors. A detailed review of the identified problem revealed that
the root cause behind customers switching over to competitors lied in the poor morale of the
staffs. The impact of employees’ poor morale can be seen in their decreased productivity, which
has further downgraded the bank’s standard of customer services and other conveniences
eventually leading loss of customers. According to Piha & Avlonitis (2015), the key reason
behind poor staff morale and individual productivity is the lack of any incentive system in the
bank. Employees are working on preset objectives and they go above and beyond for meeting the
targets however, their hard work is not reward. The absence of adequate incentives in place has
gradually and significantly contributed in decreasing the employees’ performance. Doing similar
things for same pay over a longer period of time is likely to become older fast. According to
Sudiardhita, et al., (2018), for keeping morale higher, constant motivation is needed by the
employees who need a reason for staying productive between pay days. It has been observed that
a majority of the bank’s customers were dissatisfied with the existing customer service
experience---they simply moved to competitor providing better facilities and customer services.
Root definition Report using CATWOE
According to Hanafizadeh & Mehrabioun (2018), formulating the Root Definition of the System
that is being studied, analysed or designed is the very first step involved in Soft Systems
Methodology (SSM). One can describe a Root Definition as a system’s structured description
further giving clear statement of activities taking place or may take place in the company that is
studied. What, how, why are the three elements of a root definition that is structured properly.
This what, how, why is perceived in the form of a system for doing X, through the means of Y
for the achievement of Z. The ‘what’ is the system’s immediate aim while the ‘how’ is perceived
as the method with the help of which that aim will be achieved whereas the ‘why’ is perceived as
the long-term objective of the activity that has been determined. According to Temesgen &
Beaumont (2017), the core strength of SSM lies in its tools in order to explicate various
viewpoints, and the hidden presumption and rational repercussion of them. CATWOE is one of
the most well known techniques used for doing this. CATWOE derived as fusion of instincts,
experiences of the real world and also desires for taking in consideration the perceptiveness
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Title: Systems Thinking
gathered during that time in formal systems thinking. The analysis suffers whenever any one of
the elements is excluded. A conjecture is set that CATWOE’s six elements can be traced in a
root definition that is well-formulated and tested through the review of a range of root definitions
and getting them related with the happenings. This helps in finding out if any of the elements
was missing and in case so, whether the absence matters. For establishing a logical connection,
the six elements of CATWOE are also compared with the 'formal system' model.
According to Óskarsdóttir & Guðmundur (2017), CATWOE analysis, which is a mnemonic,
makes significant contributions in properly formulating a Root Definition. The key purpose
behind conducting this analysis revolves around identifying and categorizing all the stakeholders
namely people, processes, environment, and entities of the system that is been studied with intent
to formulate the Root Definition. Described below is the CATWOE model that is broken down
into six stages
C = Clients/Customers
They are the system’s customers, clients or its beneficiaries. ‘Customers’ in this context
emphasizes on the people who are on the receiving end of whatever that is being done by the
system; what is their existing problem; how they will respond to what is been proposed; who are
the winners and losers.
A = Actors/Agents
‘Actors’ in this context emphasizes on the people accountable for carrying out the activities that
have in envisioned in the conceptual system being described in actual. Inputs are transformed
into outputs by the actors.
T= Transformation process
According to Zlatanović & Mulej (2015), the key focus of the transformation process revolves
around what is done by the system to the inputs for converting them into the outputs; what the
inputs are and where have they come from; what the outputs are and where will they go; what are
the steps that are involved in between the inputs and outputs.
W = World View
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Title: Systems Thinking
The ‘world view’ is something lying behind the root definition. It can be describes as the point of
view from which the root definition is designed. By placing a system into its broader
circumstances makes significant contributions in bringing into light the repercussion of the
system as a whole. Take for instance, a system is placed for help to make the world safer
environmentally, and significant pollution might be the repercussion of system failure.
O = Owners
‘Owner’ in this context is perceived as the person(s) commissioning the system, having ample
authorized power over the system in stopping its existence if they wished so (although this is not
done in general).
E= Environment
These are the environmental constraints and may comprise of things like ethical limits,
ordinances, financial and resource constraints, limits set by terms of reference, and so on. What
are the wider constraints acting on the situation and the ideas; how these may constrain the
solution and how one can get around them?
Below described is the Root Definition for the problem identified at XYZ Bank, which revolves
around its significant loss of customers to the competitors, using CATWOE model of a
hypothetical customer care system.
C – Customers
A – Employees
T – transforming less satisfied customers into more satisfied customers
W – Customers want and will benefit from more flexible and accessible customer services.
O: Banks, managers.
E: Technology, banking system.
Now from this CATWOE analysis, a Root Definition that can be yielded is that the particular
customer care system is a bank owned system for delivering satisfaction through instant banking
services to the existing customers (X) who are dissatisfied (Y) according to the standards
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Title: Systems Thinking
prescribed by the bank for certifying assurance (Z) to potential customers that the bank is
committed in delivering maximum satisfaction to its customers.
And, based on these two tools, students will recommend a minimum of two (2) optimal
solutions to overcome the problem/policy challenge identified in Assessment 1.
The problem that has been identified in Assessment 1 is that XYZ bank facing significant loss of
customers to the competitors. Based on the two tools that were used in the earlier section i.e.
Root Definition using CATWOE, the two optimal solutions that the bank can utilize for
overcoming the problem are,
1) Building Strong Relationships
According to Sehirli, Fidan & Cengiz (2018), for ensuring that the customers do not even
consider the competitors, XYZ Bank should proactively build strong relationships. This can be
done by partnering with the customers for taking their feedbacks thus, giving them a feeling an
integral part of the overall operations. In addition, the bank must also opt for getting connected
with their customers online to give response to their queries and asking questions.
Communication is the key in building good customer relationships. Instead of just business
promotion, the bank should also focus on to listen to its customers, finding out what their needs
are, and then showing a solution for the problem they have. According to Hamilton, Rust & Dev
(2017), employees should also be trained on how to communicate effectively. Also an employee
policy that includes timely customer follow-up for ensuring their needs are met must be
maintained. It should be ensured that voicemail messages and emails are promptly responded.
Demonstrating Value
According to Sherman (2017), XYZ Bank should focus that customers comprehend how
valuable they are for business prosperity. Monthly or quarterly business review can be scheduled
with the customers thereby, demonstrate what the bank is doing for them and what working with
them means for its business.
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Title: Systems Thinking
Conclusion
It can be concluded from the study that XYZ Bank is losing customer to its competitors owing to
its poor customer services. Poor employee morale is the significant factor that has affected their
productivity and hence, the overall customer services. The Root Definition using CATWOE
analysis reveals that the bank needs to improve the existing customer care system for turning the
customers’ dissatisfaction into satisfaction. The bank can prevent customers switching by
building strong relationships and demonstrating their value.
References
Hamilton, R. W., Rust, R. T., & Dev, C. S. (2017). Which features increase customer
retention? MIT Sloan Management Review, 58(2), 79-84. Retrieved from
https://search.proquest.com/docview/1877805251?accountid=30552
Hanafizadeh, P., & Mehrabioun, M. (2018). Application of SSM in tackling problematical
situations from academicians’ viewpoints. Systemic Practice and Action Research, 31(2),
179-220. Retrieved from http://dx.doi.org/10.1007/s11213-017-9422-y
Óskarsdóttir, H. G., & Guðmundur, V. O. (2017). A soft systems approach to knowledge worker
productivity-analysis of the problem situation. Economies, 5(3), 28. Retrieved from
http://dx.doi.org/10.3390/economies5030028
Piha, L. P., & Avlonitis, G. J. (2015). Customer defection in retail banking. Journal of Service
Theory and Practice, 25(3), 304-326. Retrieved from http://dx.doi.org/10.1108/JSTP-04-
2014-0080
Sehirli, M., Fidan, Y., & Cengiz, H. (2018). Why did they switch? how will they come
back? Journal of Marketing Development and Competitiveness, 12(3), 123-146.
Retrieved from https://search.proquest.com/docview/2151138229?accountid=30552
Sherman, L. (2017). If your market is a competitive dogfight, think like a cat. Strategy &
Leadership, 45(1), 11-19. Retrieved from
https://search.proquest.com/docview/1873677939?accountid=30552
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Title: Systems Thinking
Sudiardhita, K. I. R., Mukhtar, S., Hartono, B., Herlitah, Sariwulan, T., & Nikensari, S. I. (2018).
THE EFFECT OF COMPENSATION, MOTIVATION OF EMPLOYEE AND WORK
SATISFACTION TO EMPLOYEE PERFORMANCE PT. BANK XYZ (PERSERO)
TBK. Academy of Strategic Management Journal, 17(4), 1-14. Retrieved from
https://search.proquest.com/docview/2124080491?accountid=30552
Temesgen, K. D., & Beaumont, C. (2017). Analysing information security in a bank using soft
systems methodology. Information and Computer Security, 25(3), 240-258. Retrieved
from http://dx.doi.org/10.1108/ICS-07-2016-0053
Zlatanović, D., & Mulej, M. (2015). Soft-systems approaches to knowledge-cum-values
management as innovation drivers. Baltic Journal of Management, 10(4), 497-518.
Retrieved from http://dx.doi.org/10.1108/BJM-01-2015-0015
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