Qualtec's Business Performance Improvement Blog

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.

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.

Everyone in an organization has a responsibility and something to contribute to Process Management.  Executives, Process Owners and Process Team Members all have a role to play to create a Customer-Driven Process Enterprise.  But leadership’s role is the most impactful in truly achieving the end state.

Leaders need to have a map in their mind and understand their vital role.  They should know the foundation they can lay, the steps along the way and how to identify when they have arrived.  But first and foremost, they must understand what they can do as individuals and buy into those actions.

Our BPM Overview Presentation.

So what personal role must leadership take to create a customer-driven process enterprise?  We believe those steps are as follows:

• Demonstrate commitment.
  • Stake your own reputation to the transition
  • Commit to the goals in public
  • Adjust reward and recognition programs
• Commit the required resources
  • Fund in full the up-front investments to get started
  • Dedicate excellent people to the effort
• Demand participation and engagement
  • Stay personally engaged throughout the process
• Be passionate about change
  • Talk about it to everybody and get them emotionally engaged

If a leader can’t buy into those steps, don’t go any farther. But if they see the risk worth the reward, they should first focus on building a foundation in the organization which ensures success.  So here are the prerequisites for transitioning to a customer driven process enterprise.

• Bring all initiatives together under the umbrella of business process management
• Communicate the seriousness of the need for a customer-driven process enterprise
• Determine an implementation plan for becoming a customer-driven process enterprise

With a foundation in place, how do you get from point A to point B?  Here are the phases of the process and what you have to do at each step along the way –

• Stage 1 – Establish.  Set a Vision, Mission and the elements of a balanced scorecard.
• Stage 2 – Deploy. Identify Key Business Processes and their Process Metrics.
• Stage 3 – Implement. Provide Process Owners and Team Members the support to establish a management system which measures actual results, gaps to the desired state and actions by which to improve.
• Stage 4 – Review.  Evaluate and tie performance evaluation and rewards to how the management system operates.

Download our new executive brief discussing scorecards as part of BPM.

Often, you work so hard at something that it is difficult to know when you’ve realized your goal.  Keep in mind the goal isn’t simply achieving the numbers established for process metrics.  The goal is a cultural shift that orients the company to the customer using processes.  So how do you know when you’ve arrived.  When all is said and done, you’ll know you are there when you see the following –

• More focus on processes than on functions
• Employees know and accept process goals
• Everybody understands how the processes are performing
• Processes are measured objectively and frequently

So if you are a leader in an organization, or working closely with one, think about whether you exhibit those last four bullet points today.  And if your organization doesn’t, ask whether you need to before one of your competitors does.  If the answers tell you to start changing, feel free to contact me to begin your efforts.  In the meantime, if you want more information, see the complimentary downloads featured in this article.  Upon download, we’ll follow up to offer a complimentary copy of our two day course “Establishing the Strategic Vision” which gets into much deeper reviews of all my points above.

As my focus is on process improvement, I often get into dialogues about benchmarking and the importance of it.  Wikipedia describes benchmarking as the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost.   Just how important are benchmarks to the success of business and process improvement efforts?

Let me pose another question … which is more important: 1)  to meet your customers needs and expectations now or 2)  to look in the rear view mirror and find out how well you stacked up against the competition? I am obviously biased to #1.  Don’t get me wrong, I understand that some companies require benchmarking to justify the investment in a process improvement, but I submit that, if you look closely, you might find that those organizations aren’t as customer-centric as they need to be.

For me, customer feedback (VOC) is more important and, in many cases, it’s far easier to get good data from customer than it is to get good benchmark data. When customers give you consistent feedback over time to tell you that a process does or does not measure-up, that should be all the proof that is needed.

I’m interested in your thoughts. Have you been successful driving a large-scale complex improvement project without benchmarks? Have you used benchmarks successfully to get sponsorship and funding? Have you been able to use the customer voice solely as your rationale for improving?

We have just completed a historic business cycle.  Our last major recession was in the early 1980’s.  There were bumps along the way such as in the early ‘90’s and post 9/11.  But for the most part, we’ve enjoyed a very long expansion. During that time a new customer emerged and grew at both the business and consumer levels.  Unprecedented liquidity put money in everyone’s pockets and they spent it.  Bigger homes and cars ensued for consumers. Expansion of offices to house a growing service economy went with it.  And as these consumers and corporate customer came into their own, businesses grew to know and serve them with increasing process capability.  The customers matured and businesses with their processes followed.

But the fundamentals have changed.  We are embarking on a new day where first we must heal, then return to the values that made us a leading economy and finally build long term wealth as a nation again.  This means much of our economy will have to change including the goods and services we bought.   And so the customers’ requirements must be reacquired, the goods and services redesigned and the processes that delivered those goods and services must be rebuilt.

And with so much slack capacity in the economy, aligning ourselves with that dramatically changed customer moves to the fore as the most critical and immediate link in a value added chain.  It is just natural that what we need most when an economy is humming at full capacity with escalating input costs is quite different than when we have considerable slack and declining commodity demand.

Months ago we took this thesis to our customers and spoke to them about the challenges in their businesses.  We discovered they felt this pain acutely.  We began to work with them to accelerate their ability to listen to their customers, interpret what they heard, respond to the messages and monitor their responses.  We learned the most successful companies are making those factors part of everyday work.  Sequencing steps takes too long to deliver results.  And data collected in batches is extinct before it can even be acted upon.   Contact us to hear what we have learned about VOC and Customer Experience in this new environment.