Designing a product and designing services have many similarities but also key differences.  Both need clean VOC, clear definition of CTQs, stakeholder input and intelligent tollgates.  But the differences in the design process for the two are far greater.  And those differences are defined by the nature of products versus the nature of services.  So here are the top ten differences in their nature.

How do these attributes change the design process?  Well imagine how difficult it is to know if you have the right design if you can’t easily measure different attempts since repeatability and storability are issues.  And you really aren’t sure what you can measure since quality is defined by the customer’s experience of an outcome more than measuring the attributes of output.  And imagine what happens to multi-generational planning when you have to factor in how difficult it is to maintain your moat of defensibility for a new service without the right of a patent. Time and again basic elements of a design process are scraped or reinvented in an attempt to build a proxy for what is normally taught and practiced as good design principles.

In the end, you essentially have to nearly start over n building your design process for a service.  Basics are retained but new elements must be introduced or emphasized.  In a recent blog post, I point out how the basic principle of tollgates must be retained but mapping becomes the foundation to test, validate and repeat due to the absence of data.

a short presentation on Service Blueprinting now ……..

At Qualtec, we’ve built a new design process or roadmap and established a set of tools to support each step of the way.  We will continue to write about this subject as we find there is a real dearth of information available.  But we also welcome your input and so if you’d like to discuss the differences and how to adapt to them, we invite you to contact us.

In our design course we present an argument that over 70% of a product’s total cost is captured within its design process.  Based on that assumption, we go on to argue the most impactful activity a company can make to lower the cost of new products is to improve its design process. While we don’t cite similar statistics for a service, we believe the basic principals are the same.

Within Service Design, we believe there are two activities that we have observed service companies don’t aggressively pursue and which, if improved, could dramatically improve its cycle times, costs and perceived customer service quality.  Specifically, intensive mapping and tollgating are two basic design process and design principles that service companies would be well served to improve.

Tollgates should serve as business reviews and not technical reviews.  Tollgate business reviews should include cross-functional teams that are named based upon the business risk of the project.  Some new service offerings should include the CEO and others shouldn’t require such attention.  Tollgate reviews should include discussions about project risk, customer requirements, financial objectives and schedule/timeline.

Certainly, when constructing customer requirements for the service, there should be some form of VOC, such as a quantitative or qualitative survey, and conversion to CTQs using some form of decision matrix or tool such as a QFD.  But customer input shouldn’t stop after setting initial customer requirements.

Customers should be part of the tollgate process.  They should be treated as a stakeholder just like everyone that is part of the cross-functional team.  Of course, design incorporates a lot of proprietary information that is part of an entity’s business model and which a company certainly doesn’t want to disclose to its customers as it risks the very essence of their value proposition.  This is especially true for B2B service companies.

a short .ppt dealing with tollgate reviews in the service design process …

The key to incorporating the customer in the tollgate process and still maintaining a protective shield on your value proposition is to know when and on what to include the client.  A valuable tool to identify those points is a service blueprint that details all the “on stage” points of customer interaction.  These are the customer input points.  It is here that they form their perception of service quality.

Service companies still have very ad hoc service design processes.  Process mapping and tollgate reviews are two simple tools that can put some initial structure into service design.  Service Blueprinting, a form of process mapping, is a great tool to understand how to extend tollgate reviews to include customer feedback during design.  The stronger the design process, the shorter the lead times, lower the costs and higher the perceived customer experience.  If you would like to discuss any of these concepts or how to implement them, contact me.

Recognizing co-production as the core concept of service innovation leads service providers to rich deposits of waste, the extraction of which adds tremendous value to a customer relationship.  And, failing to recognize the interdependence leads to suboptimal solutions.

When providing a service, whether B2B or B2C, we too often view the flow of activity as simply going one way.  In actuality, there is a constant flow of information and activity in both directions as you and your customer move along the continuum of operations that deliver the ultimate job.  This is especially true in B2B businesses that have another end consumer to a co-produced good or service.

Too often we give the notion of this relationship a friendly nod but fail to incorporate it into our work.  We fail to respect this interdependence because we all look for control in our work.  The introduction of the notion of reliance on the interrelationship with our customer brings a highly uncontrollable input.  We have a difficult time telling the person to whom or entity to which we are attempting to satisfy a need that we need something from them.

a short .ppt dealing with tollgate reviews in the service design process …

But as iconic movie star Tom Cruise, while playing sports agent Jerry McGuire, says to Cuba Gooding Jr.’s Rod Tidwell, playing his client, “Help Me Help You”.  It was when Jerry McGuire recognized the interdependence between his actions and his clients that success accrued to both of them.  Your clients’ actions as your partner may be uncontrollable but they remain undeniable.  And when they are recognized, great opportunities open to provide more value and earn more profit by capturing a portion of it themselves.

The first step in recognizing this co-production is to give it visibility.  The best way to do this is with various mapping activities.  You can value stream map the overall process, including both the service provider and clients’ activities.  This can be pursued further with customer mapping.  Another alternative is to perform service blueprinting, which specifically focuses on a service provider’s interactions with its customers.

For a further discussion on how to identify the interrelationships between you and your customer’s co-production so as to add value to your customer and capture value for your company, please contact me.

A service provider seeking to grow by innovating new services must have a competitive advantage versus existing service providers, whether internal or external, when positioning new services.  In services, with its low barriers to entry, it’s not good enough to simply say I’m the largest.  And when perceived quality is the final measure it is also not good enough to say I’m the cheapest.  A service provider must be able to provide a good value for the best work. And to meet that sort of test, it must design processes to do jobs and achieve outcomes better than whoever is doing them today.

Service and/or process design is a core capability that can be built. With stronger process design, companies can offer better deliverables at a lower price.  If gaining scale is one of the service designers goals, process design can produce more scalable services since an element of scalability is consistency which can be enhanced with better process design.  Process design is also an easier core capability to develop than many others because it can be contained in a small group of people that are leveraged across an entire organization.  It is the service business equivalent of an R&D function whose output is leveraged by manufacturing, sales, marketing and distribution.

It is also the building of such a capability that can be promoted to change a company’s brand image.  Many equipment manufacturers provide services in conjunction with equipment sales.  However, they are still viewed by their clients, employees and, most importantly, customers as equipment makers.   If the vision is to move from being an equipment maker, with all its inherent cycles, to a service provider that has greater stability and growth, expertise is designing and executing services is a key roadmap.

a short .ppt on service innovation ….

In a previous post, I wrote how service innovation is different from service excellence.  The latter requires knowledge of your processes while the former requires you to know your client’s and/or competitor’s processes.  I also wrote how even though you must have service excellence to establish the credibility to be given the opportunity to provide new services, expertise in delivery isn’t a guarantee to be able to define and design solutions that ensure better outcomes.  This article adds that one of the two basis on which you can differentiate yourself as a service provider is to design better solutions.

If you’d like to speak more about this, feel free to contact me.

Service organizations must grow by offering new solutions to customer needs.  The trust needed for a consumer of services to buy a new offering is obviously highly dependent on their perception of the service quality they are experiencing on current services.  If the customer has issues with service delivery on existing services, it is no surprise there will be a lack of confidence in buying new services.  However, service delivery excellence, while critical to successfully expanding new services, is a different capability from service innovation.

Successful service innovation depends on (i) defining unmet VOC for which the customer has not contracted as they currently are doing it themselves or have other vendors doing it and (ii) the ability to design better processes as measured by the customer than the customer or an existing third party provider can design.  Service delivery is about executing against customer expectations on existing contracts and internal processes.    Improving service delivery is about understanding the service provider’s processes.  Succeeding with new services about understanding the customer’s or a third parties processes.

a short overview of our service innovation approach ….

Never assume excellent service delivery ensures the ability to define, design and deliver new services.  In the end, the muscle tissue a service organization builds by improving service delivery will improve perception for new services but not necessarily the ability to define, design and deliver new services or to innovate. Service innovation must be addressed separately from Service delivery.  The upside of building service innovation ability is that if the service provider succeeds it will be able to extend beyond providing existing services.

If you’d like to speak more about this, feel free to contact me.

Warehouses and distribution centers are more and more being thought of as very strategic aspects of the supply chain and can be a gold mine for process improvement efforts.  Think about it, the warehouse directly shapes the experience customers have with your company.  Are products they need in stock? Are they getting what they ordered, when and where they need it? Does their product arrive undamaged, with an accurate invoice and documentation?  The bottom line is that your warehouses and DCs are definitely on the critical path to your customer.

What about other business-centric issues?  Production losses, inefficient pick and pack methods, inefficient use of labor, poor warehouse layout, etc all drain time, resources, and money. Lean, and a well-executed CI program in general, can help you get control of ALL of these things to streamline the entire order fulfillment process, from order receipt to the time of shipping. You can reduce cost, reduce order cycle time, and optimize labor …. And that is a WIN no matter how you look at it.  We’ve worked with a number of warehousing and distribution operations and have seen first-hand the impact that Lean and CI can have.

this short Executive Brief that discusses the importance of CI for companies whose business success is a clear function of effective and efficient warehouse and distribution operations – namely 3PLs.  Relevant reading even if you’re not a 3PL, but have warehousing and distribution operations.

I would argue that it’s difficult to justify NOT using Lean or other basic process improvement approaches in warehousing and distribution operations, as long as you keep it pragmatic and practical:

• Leverage the personnel and talent you likely already have working in its supply chain operations. No “super skills” should be required.
• Do it in a way that your people can coordinate and manage with their “day job” responsibilities. Don’t set up recipe for failure by making it too burdensome
• Make sure eliminating waste and inefficiency is viewed as a major positive, a win-win across the board, not something people fear is going to cost them their job.

Contact me if you’d like to discuss how Lean and continuous improvement might be applied in your warehouses and distribution operations.

Organizations that choose one-off solutions to react to regulatory and compliance requirements on a case-by-case basis, as they are impacted by them, will spend 10x as much as those who choose to design and implement business processes that have measurement, visibility, and proper controls built into them from the start ….

I believe it was Gartner that made this assertion some years back, and it has proven to be true for many.  Organizations with a solid process infrastructure already have much of what they need deal with compliance requirements. The fundamental tenets of good process management include measurement, visibility, predictability, consistency, and repeatability, and business practices implemented with these elements in place can easily be transferred into specific controls that can be measured and reported on a regular basis.    Organizations that do not have a good process infrastructure in place may find themselves expending huge resources to redesign bad processes and systems when new requirements come down the line, as they always do.  Ouch.

our short executive brief that discusses the importance of process management in meeting compliance challenges

If your company is like most, you face growing regulatory and compliance demands that absorb time, money, and other valuable resources and, ultimately, sap your competitiveness. However painful, this is reality and faced with these realities, you want to find a way to meet compliance requirements that is objective, reliable, and efficient. Merely managing the issue by opinion can be very dangerous and expensive. Opinions, not matter how smart the “opiner”, have a tendency to not match reality. A better answer is to drive compliance to an objective, measurable specification.  Management by fear can be even more expensive, inducing you to greatly overspend on compliance and to shy away from reasonably acceptable risks that could mean far better business results.

And, let’s be clear, policies and procedures are not controls. A policy merely states an intention to do something; a control ensures that it is done, done repeatedly, and done up to standard. Moreover, policies have to be read, understood, and remembered, all of which opens many possible routes to failure.

Bottom line — work is accomplished through processes – and in no other way.  To reliably achieve compliance you must be able to improve those work processes or design new ones. In other words, the way in which you meet a requirement must be embedded in the work itself, not merely displayed on a policy document. In order to sustain compliance, you must be able to establish measurements and controls within those processes. Certainly, you may have policies that apply, but the way in which you build, operate, and control work processes constitutes how we meet a requirement.

Contact me if you’d like to discuss how basic process management and improvement approaches might help with your compliance challenges.

Organizations are increasingly adding tried and true Lean principles, tools and techniques to their continuous improvement initiatives to eliminate waste, improve customer satisfaction and reduce unnecessary costs.  And rightly so.  Successful Lean routinely reduce operating costs 20% – 40% and cycle time by even greater margins, and those cost reductions often go straight to the bottom line.

Traditionally, in applying Lean, trained teams identify then eliminate or significantly reduce the non-value added activities and related costs for specific processes within their operation.  But what if there are no “trained teams”?  What if process boundaries are unclear in a functionally silo’d organization?  Does this mean you can’t do anything to get results until significant infrastructure is in place?  I think not.

a short overview of our approach to applying lean at an operations level to internal service functions

We’ve found that Lean concepts and tools can be leveraged at a higher, function or operation level  very effectively.  The good news is that this approach delivers impressive business results on its own in the short term AND sets the stage for even more impactful process level improvements.  This is especially true for back office / internal service operations like HR, finance, IT, sales and marketing, supply chain management, etc.

Lean applied at an Operation Level for internal service and back office functions like HR, Finance, Procurement, IT, Marketing and Sales, and Supply Chain Management can make an immediate business impact …

The idea is to identify a complete business operation‘s most impactful cost drivers, BEFORE tightening focus to any process/subprocess in the value stream.  For those of you that have done Lean at the process level, I know this sounds a bit strange and your first thought may be that the scope will be too big and nothing will get done. But, our experience is that this can work very well and be very impactful:

• It can serve as a front-end audit function, greatly helping to identify next tier focus areas.
• It recognizes and works within functional boundaries that exist in the enterprise, as opposed to attempting to force artificial process boundaries that, while may be desirable, do not exist
• It maps and costs all key value streams of a targeted business function or sub-function, a necessary prerequisite for lower level improvements
• Attacks waste organization wide,  in both the supply-side (internal function itself) and demand-side (customer, consumer of the output).
• It consistently identifies low hanging fruit opportunities that can be realized immediately
• It can be used to jumpstart a new lean initiative or address unrealized opportunities from earlier lean events.

Lean Operations (lean applied at an high-level operations level) can definitely be a powerful tool for enterprises that are looking for immediate cost savings and/or performance improvements in internal service operations, but don’t have the desire/bandwidth/budget to start up a formal Continuous Improvement program.   It can be applied to an entire operation (e.g. HR, finance, Legal, IT, etc)  in a relatively short time period, and it does not require a big investment in training and infrastructure.  For those organizations that do want to move to a more structured Continuous Improvement program, it can be an excellent way to jumpstart a BPM, Lean, Six Sigma, etc. program

Need to improve performance or lower costs in internal service functions like Human Resources (HR), Finance, Procurement, Supply Chain, IT, Marketing and Sales, or any other back office type function?   Contact me to learn more about our approach to applying lean at an operations level.

We’ve been working with a number of customers of late that are trying to improve service delivery processes, and move into the differentiating realm of service innovation.  In these very large enterprises, it’s always a challenge to get organizations to change behavior.  Immediately, voices start rising, touting the need for change management.

This is another of those terms that can have a lot of different meanings to a lot of different people.  Wikipedia defines change management as a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. If you google “change management”, you really enter the swamp.   Even if we narrow change management to the business / process improvement world that we at SSQ live in, there is still a lot of confusion.  How do you sort it all out?

our BPM Overview presentation

In the CI world, companies want and need to markedly improve their value-generating processes (value stream), but the question becomes how do you get people to embrace the changes that come as part of improving?  How do we get them to embrace the overall effort to improve processes, and theoretically improve service delivery?  Do we really have to indoctrinate them into some new philosophy of change?

Personally, I don’t think so.  I think that many times change management becomes a problem because people don’t have a clear picture of 3 simple (not really) things:

1. where they are now,
2. where they need to be
3. why they need to get there.

Most organizations have plenty of smart people (I know … there are exceptions!)  .  The fundamental trick to change management really boils down to getting all those smart people pulling in the same direction.   If you can get clarity around the 3 simple things above, you might be surprised to see that change management is not the big issue you thought it was.

I’ve used the term simple to describe these three things above, but getting there can be anything but.  With our engagements, we spend significant time on the front ending trying to get these answers, and I can assure you that it can be challenging.  But, we get there, and I firmly believe our success rates with business improvement efforts are better because of it.

There are other ways I’m sure, but we use a structured approach that attacks the problem by:

1. Understanding, for both the customer (voice of the customer) and the business (voice of the business), what constitutes high-performance and turning that into clearly defined metrics (efficiency and effectiveness).  We are looking for gaps in these indicators, between current state and where we need to be.
2. Understanding the top-level value stream from a process perspective (not function), the things that have to happen to deliver your services or products, and create customer and business value
3. Identifying metrics at the process level (VOP), and making sure they are aligned with top level VOB and VOC (#1).  Like #1, we are looking for the gaps.
4. Defining an objective prioritization scheme based on voice of the customer and voice of the business.
5. Identifying improvement ideas from the gaps, and evaluating and prioritizing those ideas objectively based on #4.  A prioritized project pipeline.
6. Turning high-value project ideas (business cases) into tightly scoped improvement projects that are clearly aligned with very visible objectives (#1)

Of course, this is over simplified. There’s a lot of work happening between the spaces, but think about it and ask … Is change management really as simple as being able to see clearly? As always, I welcome your thoughts on this.  Comment or contact me directly if you prefer.

I talk to companies every day about how they can best roll out business performance and process improvement programs.  Now, just to level-set, we aren’t zealots here pushing any one-size-fits-all model for programs. We do have some key principles that we adhere to when designing programs though. One of these is that it’s likely not feasible to have a program that builds infrastructure and trains for many months, before ever delivering any quantifiable return. That is simply not the world most of our clients live in these days.   Our philosophy is that it is always advantageous for the program to deliver near-immediate, visible, and quantifiable impact.

When looking at an enterprise, more often than not, we find that basic process management/improvement and Lean (i.e. Lean Enterprise, Lean Process, Lean Manufacturing, Lean Product or any of the other labels floating around out there) can solve a lot of high impact business problems, without incurring high training and infrastructure costs, and are the right place to start.

Lean Process Improvement efforts can yield big results fast, without big investment or big risk …

However, I get a lot of questions dealing with how an organization can get started with basic process management and Lean Enterprise, and how to fit in to an overall, enterprise wide process improvement / CI program strategy.    This is a good question in that, in the past, it was almost always preached that Process Improvement deployments (Six Sigma, Lean, etc) had to be top-down.  Start with executives to get support, develop champions, select projects, train black belts, build a 3-year plan, etc, and grow from there.  The challenge with this approach is that it requires a hefty up-front investment and it takes a long time before results are seen.  Read ….. high cost .. high risk!

our new Lean QuickStart powerpoint presentation.

In today’s business climate, this is simply not palatable for a lot of organizations.  For them, an approach that is much less top-down, and much more focused on near term, bottom line results may be far more attractive.  So, here is an approach sequence that I’ve seen effective over and over

1. Work with business leaders to identify pilot areas of the enterprise
2. Identify specific focus areas and business cases in that area(s)
3. Refine those down to a set of well-defined project charters, segmented by the nature of the problem (defect, cost, cycle time, etc), scale, and perceived complexity.
4. Select a set of low-hanging-fruit projects that can likely be solved in a relatively short amount of time and with basic lean and quality toolsets
5. Run 1 or more workshops with specific project teams, with specific well-defined projects that can be executed in 2-5 weeks.
6. Track real savings and ROI on projects, and publicize/promote heavily internally
7. After one or more workshops, train champions /sponsors and develop a formal project selection and prioritization methodology (see my recent post on this).  Refine continuously.
8. Continue with more workshops, to a broader segment of the enterprise

Processes are cleaned up, waste and complexity removed, measurement systems are put in place, and real bottom-line results are realized.  Results drive interest and commitment, so it becomes easier to get the broader organization engaged.  For enterprises that have done little formal process improvement work (or a lot for that matter), there will most assuredly be many Lean projects to be executed, yielding fast and consistent results. And, soon enough, larger and more complex problems that require higher level capability (e.g. six sigma) will show themselves.  Then, and only then, do you bridge up to and invest in the next level of capability …. Pay-as-you-go.

These efforts can easily and painlessly run in parallel with and, indeed, support and pay for the broader activities that are required to make the overall process improvement effort successful long-term, namely identifying CTQ measures for voice of the customer (VOC) and voice of the business (VOB), characterizing value streams and establishing process indicators and metrics, building a mechanism to constantly identify high value improvement opportunities (i.e. project pipeline), and constantly defining and executing improvement projects.

Contact me if talk about whether this model could work for your enterprise.