Qualtec's Business Performance Improvement Blog

For service organizations seeking to grow, excellent service delivery of existing offerings instills trust with the customer. That trust is the cornerstone to successfully launching new services. But the goodwill of that trust can only be leveraged if new service offerings provide NEW value. And excellence in what you do doesn’t guarantee providing that new value. To put it another way, doing something well for someone doesn’t mean you will add value in everything new you can think of or be asked to do for them in the future.
What is common between delivering on current services and new services is the ability to execute. What is different is that the Voice-of-the-Customer (VOC) is well defined in the former case and has yet to be defined in the latter. Defining VOC well is a function of listening well. Execution and listening are critical to both situations. Execution has the same definition in both cases. But the two situations call for two different types of listening.

How does the listening differ? Well, in Service Delivery the target had been acquired at the time of the sale. Therefore, you are listening to determine if you are hitting the target and, if not, how you’re missing and by how much.  In the case of new service design, you are trying to acquire the target. When delivering existing services, customer requirements are well known and VOC must be collected on how well you are performing vis a vis those requirements. With new services, you are more heavily involved in defining customer requirements.

a short training module that discusses Critical to Customer Requirements

Too often, I see companies launch new services with confidence based on their ability to stay tuned to a specific target and hit it consistently only to fail with a new service launch. The reason they failed is that they never properly defined the new target. Staying on a target and finding a new target are really very different.

For Service Delivery, the primary “listening” or “targeting” challenge is how to (i) monitor VOC and (ii) convert VOC to Critical to Quality. To launch new services, the primary “listening” or “targeting” challenge is to define the value to be delivered per the customer or define Critical to Customer Requirements.

In the end, service delivery VOC is about how to understand your processes while the VOC needed to successfully launch new services is about understanding the customer’s unexpressed needs.

If you would like to discuss, contact me directly.

Verizon Wireless “Can you hear me now?” commercials hit home because in our increasingly mobile connected lives we live that moment so many times. Verizon’s implicit message is that not only will you be heard on their network but that they hear you.  We all want to be heard and we are frustrated when ignored.

We live that moment when we question whether we are being heard in many other ways including as consumers and business customers.    How often do we feel as if we are asking the people from whom we buy goods and services both personally and professionally “Can you hear me now?”  How often do we feel as if we are ignored, misunderstood or altogether treated like a dropped call!  What do we do when we feel that way?  I know what I do.  I move to another network.  I move to one that will listen to me.

Let’s now reverse the question.  As a product or service provider, ow well do we listen?  Are we so busy with what we wish to accomplish that we are forget our goal in business, which is to meet client or customer requirements.  I recently heard an individual involved in a performance improvement program discussing the need for Voice of the Customer, VOC, as he explained his management scorecard and projects.  When asked if he’d reviewed either with a major customer, he replied that they’d given him a scorecard but he’d neither used it or presented his because his system was still immature.  I took a double-take.  He’d been handed the VOC he sought but failed to realize it as such as he was focused on his ability to execute.  Tell me – would a hunter increase the amount of venison he had for the winter if he could shoot straight but couldn’t find his quarry?  I think he’d have a cold, hungry winter. Good VOC helps your business see the target.

a short training module that discusses Critical to Customer Requirements

If you want to judge the ability to execute, we have lots of qualitative observations and quantitative measures with which to make an assessment.  Do you have the same so as to assess your ability to listen?   Do you know whether or not you are really listening to the voice of the customer?  We feel that just as there is a maturity model for the ability to execute improvement, there is a maturity model for the ability to listen.  If you’d like to hear more and discuss how you listen to your customer, please contact me.  We always like to listen to you.

Over the past 20 years of experience, we’ve learned the key to sustaining performance improvement gains rests on process management.  This role is entrusted to a broad group of employees who are often the process owners and, when not the process owners, are still the most affected by large scale improvements.  Providing them the proper skills forms a critical component of a robust quality management system.

Some have dubbed this person and the required skills Yellow Belt but that term hasn’t done the role justice.  Yellow Belts are often thought of as data collectors or Black Belt assistants.  But a Yellow Belt’s ability to control and manage processes using metrics and data as well as solve problems using basic quality tools gives them far more impact.  Their power doesn’t come from their place in a tiered pecking order of Master Black Belt, Black Belt and Green Belt but in their numbers, demographics, foundational skills and role.

our executive brief that discusses how Yellow Belts play a crucial role in sustaining process improvement efforts

Yellow Belt training introduces the majority of individual contributors to the concepts of process improvement and management and their position in their organizations make a direct connection to improvement efforts.  Yellow Belt training can be fit to how people will be expected to operate.  If positioned to assist Black Belts, they have little need for project selection or analytical tools.  However, if Yellow Belts are expected to sustain gains long after Black Belts have left, a more complete set of tools is required.

Many organizations have active Operational Excellence programs that consistently execute projects through to implementation successfully.  But to make it stick, drive it wide and take care of low hanging fruit, they should look at process management which forms the core of Yellow Belt capability.  If you’d like to see the core concepts covered in Yellow Belt training, contact us or go to our website’s Yellow Belt webpage where you can download complimentary Yellow Belt training materials.

It sounds so simple. Lean eliminates waste defined as any activity that does not provide value to the customer. Eliminate the waste and you will bring products and services to customers better, faster and at a lower price. Finally, combine it with Six Sigma to reduce variation and defects, and you make breakthrough results.

We all start by understanding that value is defined solely by what the customer actually desires and for which they are willing to pay and that value enabling activities, while not adding direct value, are necessary. We all then look for the true non-value added activities that add waste in the form of unnecessary time, effort or cost. We learn to seek and eliminate those non-value added activities.  That is the essence of a lean project.

So what is the lynchpin that makes this elegant equation work? Identify what your customer considers of value and how you deliver it. Once you have that line of site, if you maintain efforts to continually improve, you’ll get there. But without that clarity, your improvement efforts are a march to nowhere.

It is important when developing that line of sight to define value from the perspective of the customer, the Voice of the Customer (VOC). Understand clearly and exactly what product or service the customer desires, when it is to be delivered, and at what price.

Download a training module dealing with Critical to Customer Requirements, a key element of VOC

To understand how your company actually delivers what the customer considers of value, leverage lean tools to precisely map the set and sequence of all specific actions done to bring the product or service from conception to final delivery. This provides a visual display of exactly how a particular process is carried out. Mapping this “value stream” enables you to identify value-adding and non-value adding activities from the customer’s perspective thus setting the stage for improvement.

Along with providing a sense of alignment between your goal of delivering value and your opportunity for improvement, this exercise also carries the message of how problems and solutions are cross-functional in nature. If process owners participate in this process with an open mind, they will learn the futility of looking for a solution from someone else independent of their efforts. Thus, not only does value stream mapping provide alignment from the customer to performance improvement opportunities, but it continues through to an individual’s actions.

Yes it can be a simple equation – understand what your customer values (VOC), eliminate waste (Lean) and be more competitive. But to do that, make sure you get the front end right using VOC and value stream mapping to get the target and alignment to individual actions.

Feel free to contact me if you’d like to discuss ….

Outwit…Outplay…Outlast.  Wow, that says it all doesn’t it?  Reality TV is a kick. Throw a bunch of strangers onto an island and watch them dwindle down based on how well they can play to the desires of a group in a winner-take-all battle. Lots to learn from watching. How well and quickly can a player understand the group’s requirements? How well can they meet those requirements in a highly competitive situation? Each elimination changes the group’s dymanics so the requirements, competition and strategy all have to be adapted continuously and quickly. One slip up and you could be out. How does this relate to Service Industries?

 our critical to customer requirements VOC module

In previous articles, I’ve discussed how business and consumer patterns have gone through massive changes and how understanding the Voice of the Customer is the key to adapting to the new environment. The nascent recovery is providing an opportunity to survive and, for some businesses, to flourish. But the competition is still in the elimination phase and I believe that is very much the case for service businesses of nearly every nature.

It’s important to understand why things are different in services so as not to be lulled by more macroeconomic headlines. Before the crises, manufacturing went through years of driving productivity while services accelerated right up to the edge. The Federal Reserve’s strategy of depreciating the dollar and growing demand in emerging markets has helped the global competitive position and demand for manufacturing products while services are more tied to the domestic economy. Finally, we have a political environment that ramped regulation or restructured entire service industries such as banking and health care. And if that weren’t enough, services are going to be the start-ups of all the unemployed as they require less capital and can use the internet to gather and distribute information, the very essence of a services business, at a very low cost.

Change is not over in service businesses. Like Survivor, listening and adapting quickly to an ever changing customer is still the only protection from elimination. Several key points we consider imperative to driving alignment are:

1. However you capture VOC, keep improving it. We propose a five level maturity model that goes from what you need to simply stay alive to what you need to be innovative.
2. Balance how you respond to VOC with how you respond to other stakeholder demands. We have a checklist of behaviors that will give you the ammunition to point to an imbalance.
3. Segment your VOC. Meeting every item your customer sets out for you will not yield a purchase while some will yield tremendous results. We offer a framework for segmentation.
4. Convert what you hear to something you can measure. To make science out of art we use industry case studies and benchmarking as the best guide.
5. Align process metrics to the chosen customer measures in #4 above. Again, use industry benchmarking and cases to apply knowledge and experience and avoid the alchemy.

Now you are ready to drive change. But there is one more thing. Let’s return to the scenario painted at the start of this article…it’s not enough to just do this. You must do it fast. We are rebounding but demand for services isn’t returning to 2006 levels…at least not until around 2016…and competition is increasing. During that time, businesses will fail, be acquired or be rationalized. But there will also be winners and, like Survivor, they will win big. We urge you to recognize what is coming and act.  Outwit…Outplay…Outlast. 

If any of the pieces above would help you, let me know our thoughts.

Several years ago I wrote an article for iSixSigma entitled “Ask the Expert: Six Sigma and ROI” on the causes of falling ROI’s of Six Sigma programs. It was at a time when centralized Six Sigma programs were growing dramatically and possibly losing focus.

Recently iSixSigma republished the article on their website.  Let’s use the terms Performance Improvement or Operational Excellence, instead of Six Sigma, to reflect a broader view of improvement activities.  Then consider the focus on ROI is now driven by intense scrutiny of any corporate expenditure rather than declining returns on too much expenditure.  Add the two together and you realize the old ROI article is as applicable today as it was when written.

our short ROI and Six Sigma executive brief.

If you don’t have time to read the article, let me at least give you a short abstract from it which I believe was the most salient point. It is as follows:

Your company’s or business unit’s results are ticking up. Many of your processes need improvement to deal with the increased activity layered on a rationalized capability. But your pre-recession centralized group was taken away with the tide or one never existed. And your organization is still holding a lid on any personnel additions as it finally enjoys the fruits of painful decisions and remains concerned about the myriad of external factors threatening a nascent recovery. You are left wondering how to unravel Gordian’s Knot. The Alexandrian solution is to build a self-sustaining model that integrates CI into every day activities.

We propose three elements to a self sustaining model which are as follows:

• Find True North. What is it that your organization needs the most? Is your organization looking to solve a customer matter? Must your organization continue to find efficiencies to remain competitive? Whatever it is, find it and stay on it by making it visible and clear to everyone. The reason is simple. Organizations often used a centralized CI program to push improvement efforts. If you find True North, you won’t have to push improvement efforts. They will be pulled.
• Keep it simple. As you look to take on improvement activities, keep the challenges simple. Use basic tools and techniques to knock down the easy barriers and drive a “pay-as-you-go” model that yields traction. Often a centralized improvement group is there to maintain momentum. Our discussion here isn’t against a centralized effort as much as it is against having to wait for one before you can move forward. We’d argue that as successes and improvements yield returns, go back to a funded centralized improvement effort to take on the chronic, cross-functional challenges that require a higher level of expertise, full time devotion, cross functional latitude and can power through momentum killing barriers. But for now, avoid making momentum a challenge.
• Integrate rewards. If you want it to be broad based, make the rewards broad based and commensurate with the effort. Members of centralized groups are motivated to drive improvement because they have skin in the game. They pursue significant improvement, are measured on achieving it and rewarded if they accomplish their goals. Is it any wonder they are focused on improvement? To get broad efforts to yield results, take a broad view of rewarding success. Now we aren’t saying to weight such reward systems such that everyone becomes an improvement professional. The reward should match the effort and return.

our whitepaper that discusses using BPM and scorecards to align improvement efforts

Every day we talk to people in all functional areas of organizations wrestling with the question of how to move their effectiveness and efficiency forward in the new environment. They see feel the pain and see the potential reward. But they are frustrated that they don’t have a centralized group which to call and ask for help. They feel locked in place unable to move forward.

Our advice is to find a different solution than what you have considered to be “normal” in the past. Let your organization’s mission pull activity. Pursue simple, well targeted improvements that provide their own momentum. Integrate a broad based reward system that recognizes peoples’ accomplishments on a level commensurate with their efforts. Cut the knot! 

If you would like to discuss these ideas, feel free to contact me.

Every company says they want to satisfy their customer. They talk about customer surveys and gathering the Voice of the Customer. They might even have allocated responsibility for collecting and analyzing this information.

But looking past what is being said, how can you tell if your organization is doing the things? How can you tell if you are really there? In essence, let’s define what constitutes a Customer-Driven Enterprise.

our BPM Overview presentation

 In our experience, when we have seen strong performance related to customer relationships, we have observed the following characteristics;

• A focus on process rather than on functions. The reason for this is simple – when you focus on process you focus on resolving the causes of problems and you measure upstream metrics that give early warnings. When you see organizations focused on functions, its usually an indication of the desire to fix or deflect blame. Also, it is when you see a neglect of process that you see lagging indicators such as financial measures dominating attention.
• Employees know and accept their roles in the processes they either own or of which they are a member. In addition to their recognition, you see their incentive systems tied to the customer metrics. Beware of incentive systems solely tied to financial measures. There is no surer way to take your eye off the customer and develop a short term focus.
• Everyone understands how the organization’s processes are operating. People know how things fit. They don’t just look at their process or their role in a process but they begin to understand and relate to how the processes are linked. When people focus on the linkages, there is less white space and fewer hidden processes.
• Processes are measured objectively and measures are reported regularly. In other words, it’s not about the blame and there aren’t any secrets.

If you aren’t there, what do you have to do to achieve that state? Well first there are some prerequisites. An organization needs to bring together all its initiatives under one umbrella responsible for the business’ improvements. Next they need to communicate the seriousness of the need. One of the best ways to do that is to put the customer information in front of the process owners. Too many times the customer data is hidden. People are given just what the organization believes they need to know to do their jobs. The customer data, especially the most unpleasant, which by the way is the most motivating, is locked up so no one knows the bad news…but that just means no one knows the need to change. Finally, leadership must make their commitment. (See Leadership Steps in Becoming a Customer Driven Process Enterprise).

With prerequisites in place, the organization is ready to reorient ifself. Our process is based upon a system where we emphasize (i) Establish, (ii) Deploy, (iii) Implement and (iv) Review. We will get into that four step process in our next Customer Driven Enterprise article. In the meantime, identify if you are a customer driven organization and, if not, set the foundation on which to build. If you would like to discuss, contact me.

As we all know, the birth of Lean (usually with the word “Manufacturing”)  is often considered to be the Toyota Production System. Lean for Service Operations is so new it is defined on Wikipedia as the application of lean manufacturing principles to service operations. Yet when you search using Google the term Lean Manufacturing yields just over 1.5 million results while Lean Services yields a surprising 16.3 million results! The derivative outpaces the original because of its natural application. It’s as if it were always meant to be.

This natural fit lies in the very nature of manufacturing, service operations and the strengths of lean. Lean was first easily discovered in manufacturing because waste and WIP are easily found. Like in the California gold rush, you could bend down and pick up the nuggets. Manufacturing’s physical nature provides an easy route by which to follow the flow of work. As you move along, you can see raw materials, intermediate stages of inventory and final finished goods. And also along the way, you can see bins of rework and scrap as well as WIP between stations. You physically see the work, the WIP and the waste. Certainly it took brilliance to design what to do with it but the problem was evident.

our whitepaper that discusses how Lean and/or Six Sigma in a services environment differs from a traditional manufacturing environment

Service operations, however, by their very nature aren’t so easily observed. Work flows are unseen. Information representing WIP are sent over networks. Customers waiting on phones can’t be seen. Time lost is erased with the stroke of a delete key. Service operations, like spirits on a Halloween night, can pass before our eyes without a trace. Enter Lean. Lean with its highly visual tools like value stream maps performs the supernatural. It gives earthly form to the phantom.

As the invisible becomes visible, we make a great discovery – so many service operations occur between functional areas such that they aren’t owned by anyone. We learn that not only is there waste, but there isn’t anyone even worried about it. Thus Lean, with its visual tools, not only provides visibility to work flow, waste and WIP but raises the question of process ownership.

With processes made visible and ownership addressed, the race for improvement forces the question of where to attack first. Very simply put, once non-value added activities are made obvious by the accumulation of waste & WIP, you look for the actions and processes that drive up said waste & WIP. Therefore, when looking for projects, look within or between the processes to which waste and WIP demonstrate the greatest sensitivity. Then heavily rank that projects that improve those processes. They will have the greatest impact on eliminating non-value added activities.

People talk about the amount of low hanging fruit in service operations. It’s important to understand why it is there. People in service operations aren’t fools willing to let waste and WIP drag them down. But they haven’t been able to see the problem and where it resides. With the visibility lean brings, that has changed. And consider us your Ghostbusters! If you would like to discuss the visual tools embodied in lean and how they can help your service operations, please feel free to contact me.

It was more than 15 years ago that our firm was first engaged to help a client implement Six Sigma. Along the way, Lean was integrated and the term of art became Lean Six Sigma.  Yet even today, we still begin many conversations with prospective clients who say “we want to do Six Sigma?”   We try to determine what Six Sigma means to them and why they want to do Six Sigma.  Definitions and motivations vary.  None are wrong.  They are individual to the person, the company and the situation. 

But to determine the appropriateness of their conclusion, we ask about the nature of their business challenges and the state of their management system.  And at the end of that portion of the conversation we invariably begin to wonder whether the prospective client can benefit greatly by first paving the way with Lean.  And that is really most apparent in Service Organizations where so much of the waste is invisible and Lean’s visual tools brings the waste to light before introducing Six Sigma. 

our latest whitepaper, which discusses how Lean Six Sigma is different in a services environment, as compared to a traditional manufacturing environment.

Lean can be of great benefit before introducing Six Sigma for the following reasons:

1. Lean makes the implementation of Six Sigma easier by eliminating non-value added activities.  Six Sigma, while robust, like any program that aims to drive change can be a challenge to implement.  You can make Six Sigma’s implementation simpler and more cost effective by first applying Lean.  This is for two reasons. First, you will enhance the effectiveness of the Six sigma tools by enhancing the rate at which information is fed into the Six Sigma problem solving exercises.  Secondly, you may discover after applying Lean, there is insufficient improvement available to merit a Six Sigma project.
2. Lean develops a culture of improvement which makes implementing Six Sigma easier.  Lean can be implemented more quickly and easily than Six Sigma.  We facilitate workshops that by the end of a week introduce improvements.  People come out energized and feeling they made an impact.  Managers see an ROI on the improvement investment.  The result is a willingness by all levels of the organization to increase their commitment.
3. Sometimes the problem isn’t going to be solved with Six Sigma tools…or at least not quickly.  When you prioritize problems, you try to separate them into buckets by their fundamental nature so as to gain some economies and structure to any allocation of resources.  Part of the reason is that Six Sigma efforts require more time and effort.  Failing optimize the problem to the applied tools, you may end up trying to apply Six Sigma to problems that can be easily addressed with a Lean exercise.  Even worse, you can work at reducing variation when all you need is to reduce your cycle time to capture the available gain.

We have written a great deal about both Lean and Six Sigma.  We don’t favor one methodology over the other nor do we see them as an “either or” decision.  In the long run, we encourage all our clients to gain proficiency and apply both Lean and Six Sigma.  However, to help our clients succeed in driving ROI and organizational change, we believe that there are advantages to Lean paving the way for Six Sigma, especially in companies just starting out as well as Service Organizations. 

Now there is always an exception to a rule such as when prioritized projects clearly require Six Sigma tools.  The business should always “pull” the improvement efforts as outlined in “Let Your Business Define Your Improvement Program”.  But in the case of launching or re-launching a general program, allowing Lean to pave the way for Six Sigma increases the ROI of the continuous improvement effort by using the simplest and most applicable tools first while increasing the effectiveness of subsequent Six Sigma activities. 

 If you wish to discuss these points, contact me.