Qualtec's Business Performance Improvement Blog

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.

Beware

Malcom Gladwell, in his #1 national bestseller “Blink” (2005), recounts fascinating results from Columbia University professors Sheena Iyengar and Raymond Fisman’s speed dating studies.  The professors ran speed dating nights across the street from Columbia University for university graduate students.  The events were like other speed dating events in which attendees would meet members of the opposite sex for a short set period of time (four to six minutes) and check a yes or no box on a form listing all their “dates” for the evening.  If both the man and woman checked each other’s names, they would given the information by which to meet each other and pursue a relationship.

But on a few occasions, in the interest of psychology and economics, Professor Iyengar and Fisman’s respective fields of study, attendees were asked to fill out a short questionnaire asking them to rate what they were looking for in a potential partner on a scale of 1 to 10 on six criteria that included attractiveness, shared interests, sense of humor, sincerity, intelligence and ambition.  They were asked to do so before the event, shortly after the event, a month later and then six months later.  In addition, at the end of each “date” during an event, they were asked to rate the person they’d just met on a scale of 1 – 10 and for the aforementioned attributes.

As you can tell, by the end of an event, attendees declared what they wanted, who they’ve chosen and how they rated who they’d chosen versus what they wanted.  So what happened?  Well, Mr. Gladwell reports that Professors Iyengar and Fisman found that the people to whom their subjects were actually attracted didn’t match the attributes to which they’d said they were attracted prior to the event.  But now it gets a little trickier.  If a subject said they wanted attractive, sincere mates but chose funny, intelligent ones, when asked after the event which attributes they preferred, they answered funny and intelligent. But when asked a month later, they could switch back to their initial preferences.

When the two professors were asked to interpret the results, the psychologist said she didn’t know what it meant while the economist said “the real me is the me revealed by my actions”.  Given the stated preferences changed and there is no report of the same candidates attending a second event so their actions could truly reveal the real them, I’m with the psychologist.

Download “Service Design & Innovation – Service Blueprinting”

What does this have to do with anything about which we write on this blog?  Well, I think the title says it all — “Beware the Voice of the Customer”.  If we don’t know what we want in a partner in whom we might vest our time and emotions, imagine the challenge to clearly and consistently state our preferences for a product or service over the time necessary for a company to recoup the investment to develop and launch?

So how do we successfully develop and launch new products and services if we can’t trust what customers tell us?  Well, we do have some tools and philosophies that more readily capture our fickle nature.  Namely observation linked with rapid prototyping.  Meet enough people and you don’t need a list of likes and dislikes.  The process of evolving preferences and product or service attributes meet.  If you wish to discuss VOC and or Design Thinking deployment models, feel free to contact me.

We recently completed an historic business cycle.  Before the Great Recession, our last major recession was in the early 1980’s.  From one major trough to the other, there were bumps such as in the early ‘90’s and post 9/11.  But for the most part, we enjoyed a very long expansion.  So much wealth was created during that time that a new customer emerged in both the business and consumer sectors.  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 customers 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 have spent years healing.   Balance sheets have been restructured.  Personal debt has been reduced.  Housing continues to rebound.  We are now back to building 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.

Download “Voice of the Customer – Deployment & Maturity Model”

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.

As the Great Recession continued, 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.  These companies have completely devoted themselves to orientating to either new customers or their existing customers new demands.   A maturity model developed to assess where they are and what they need to do to go to the next level.

If you’d like to discuss what we have learned and how we developed our model, contact me.

VOC – Getting to the Endzone

What is the fastest and surest way to success when designing a product or service?  Quite simply – Give customers what they want.  But easier said than done, right?  Which customers?  What do they want?  Which of their needs matter?  How do we answer those questions?

Let’s start by defining some basic terms.  First, user needs are characteristics or qualities that if present in a product or service result in user satisfaction. They close the gap you would have identified when you decided to produce a product or provide a service.  They are things the user wants the product or service to have in order to be satisfied.  But not all users are created equally nor will they value every need the same way.  So how do we capture their needs and stratify their relevance?

Well, while it’s not the topic for this post, to maintain a credible argument we start with segmentation.  For the greatest success, you search for the needs that are most important to the biggest segment that is growing the fastest.

Now every segment has four different types of user needs as best laid out by Kano.  The four categories depend on the way a user responds based upon either the presence or absence of the user need in the product or service.  The needs can be separated into those about which (i) the customer doesn’t care, (ii) the ones about which they care linearly, (iii) those that are must haves but for which you don’t get a lot of notice until missing and finally (iv) the latent needs whose absence isn’t noticed but whose presence delights.

It is these latent needs within the biggest and fastest growing segments for which we search primarily through observation and capturing verbal expressions.  Observation can be powerful and some argue the best method because verbal expression isn’t always understood or completely revealing.  Nonetheless, we inevitably want to speak to customers in some manner.

Download “Voice of the Customer Deployment & Maturity Model” PowerPoint Presentation

So now I get to a very interesting and possibly controversial point.  I recently read a paper by Abbie Griffin and John Hauser of the University of Chicago entitled Voice of the Customer which, if I understood correctly, postulates that between focus groups and one-on-one interviews, the interviews are considerably more effective.  With a small number of interviews, you’d collect nearly the same number of customer needs than with focus groups for the same amount of man hours.   And that by the time you conducted ten individual interviews, you’d collected 90% of the customer needs you’d collect in twice as many hours devoted to focus groups.  So Griffin and Hauser conclude that on a cost and time basis, one-on-one interviews is the way to go versus focus groups to find those latent needs.

So the path to success requires three capabilities.  First, know how to segment to find the sweet spot. Second, understand the nature of needs to find the ones that illicit the strongest positive reactions.  And finally, know the best method to listen to your customers.  Still easier said than done but at least it’s a plan.  If you’d like to discuss, contact me.

I get a kick out of solving a problem. The more complicated the more of a thrill.  I feel like a Master of the Universe when I solve a problem which has befuddled others.  I get this thrill in work and at home.  We all love being great problem solvers.  And our entire educational system is geared to solving problems.  We have problem sets in the back of every math chapter.  We are given problems to solve in every test in every subject.

But there is a problem with being taught to solve problems – the problems are defined and that is rarely the case in real life.  In real life, all we really have is a mess and the first step is to DEFINE the problem.  And nowhere is this truer than when trying to figure out why customers aren’t buying your product or service.  Or when you want to launch a new product or service for which you are being judged by customers’ acceptance.

The fact is that the first step in defining Voice of the Customer (VOC) is to define the problem.  And so there are three steps we must follow to properly capture VOC.

First, ask yourself “Who”.  I was recently working with a client and we were sifting through a pile of “customer” feedback.  Much of the feedback contradicted itself.  We were forced to take a step back and ask ourselves who has the problem we want to solve?  We needed to separate indirect from direct voices. We needed to separate primary from secondary customers.  We needed to focus on who was the customer we were trying to please and excite.

The next action was to ask ourselves “What”.  The key is to ensure the What is viewed from the customers point of view!  We can’t look at a customer and say “this is their problem”.  Start there and you are doomed to failure.

Once you know who has a problem and what that problem is, determine Importance.  Resources are finite. Fix the problems about which customers care and to which they react. The key is action.  And if a customer can’t or won’t tell you priority, focus on what actions are taking place.  How actively are they looking for a solution either internally or externally is certainly an indicator of priority?

a short QFD overview .ppt

Now we can talk a lot about tools such as Segmentation, Pugh Matrices, Houses of Quality and QFD. But at its core, any attempt to identify and address VOC with Designed Solutions will always come back to these three steps – Who do we care about…What is their problem…and How Important is it to them.

So often when we have product, service, process, or system failures, we find that the root cause is a lack of connection to what the customer really cares about …. Voice of the Customer (VOC).  Everyone sees the disconnect, agrees it is the problem, and now sets about obtaining VOC.  Now, things really get complicated for when you seek VOC you discover many voices struggling to be heard.  The challenge becomes to sift through all those competing voices and understand which are critical and what they are saying before trying to convert what you’re hearing into a design or redesign.

So, in an effort to help sort through all of this, there are some simple but very important concepts that can be used to put some structure around all those voices you hear when you set about gathering VOC and converting that information for use in design.

• Direct v. Indirect – When gathering customer information within your organization, make sure you distinguish between direct and indirect voices.  A direct voice is feedback coming from the end customer.  Indirect voices are the customer facing parts of your organization that theoretically act as a proxy for the external end customer.  Indirect voices are important as they represent can provide meaning to what you hear from the external end customer.  BUT, they are not the end customer voice.  Both direct and indirect are important, and are very different.
• Customer Requirements v. Product Requirements – Recognize when you are hearing a customer requirement or a product requirement.  A customer requirement is usually framed within the context of what the customer experiences while a product requirement is usually a key function or feature of the product.  I want a comfortable ride on my bicycle is a customer requirement.  I want a big soft seat is a product requirement – even if it’s direct feedback from the customer.  When a customer gives you a product requirement, you must ask “WHY?” before designating it as a desirable product requirement to be used in designing a solution.
• Qualitative v. Quantitative – Qualitative feedback is rich but expensive to get so it is normally provided from a smaller customer base.  Quantitative feedback can be easily obtained from a large population at a significantly lower cost but it is far less descriptive. The answer is not to solely rely on one or the other.  Use interviews to define your survey or your survey to define your script and interview population.  Go back and forth taking advantage of the deep aspects of one and the breadth of the other.
• Segmentation – Always segment but segment in whatever way is meaningful to your product, service, process or system.  As an example, in designing an internal software application many designers look at the functional departments that are going to use the system.  But you may find it more meaningful to segment according to the type of usage irrespective of functional area.
• Basic v. Performance v. Excitement – Applying the concepts of the Kano model are invaluable.  You must know what are basic, performance and excitement levels and their marginal returns as they all would receive different priorities depending on your objectives.   The nature of the requirement  becomes especially useful when you sort it by demographic or customer segment.

 a short intro to QFD and how it can be used to create linkage between customer and technical requirements.

After you have sorted, ranked and prioritized your assembled customer information, it is time to compare and rank product characteristics relative to the customer information.  This can be done in a planning matrix (see downloadable PowerPoint document).   The planning matrix can then be used to develop design alternatives. The design alternatives can be ranked and rated against both the product requirements to determine process and production feasibility and versus the customer requirements to determine impact to the customer. The two exercises can then be brought together to choose a design which factors in the value, cost, and feasibility of solutions.

It is incredibly valuable to have VOC information.  It is even more valuable if you understood how you got it and how you plan on using it.  Knowing the end game can also help you determine how you want to gather information and make it an efficient process.  The key is to gather, convert, analyze and use the information in the right way.  Otherwise, whatever you invest in getting VOC will go to waste and you’ll be right back where you started wondering how a newly launched product, service, process, or system, once again, missed the mark.  If you wish to discuss this article or any of its point, please feel free to contact me at jlopezona@ssqi.com.

We have just finished working with a large international services company which has had challenges rolling out new services.  The most difficult aspect of their business was in discovering the real customer requirements, and converting those requirements into service requirements and, ultimately, a service design.  Like many service companies, they just have an immature process for this.

The service design team is essentially the sales team. They get multiple voices from many parts of both their organization and the client.  It is literally a cacophony of noise which, when converted to a service, the service process map looks like a Rorschach image.  It is then “launched” for the bugs to be worked out as the service is being delivered.  The rework is expensive, taxes the company’s employees, and rarely produces a happy customer.

To help them, we built a Voice of the Customer (VOC) Maturity Model with laddered capabilities for them to climb. That model was built on some basic premises and observations after working with service companies for many, many engagements over the course of my entire career.  Let me lay these out to you so you understand our final recommendation to any service company struggling with the same problem.

 a short Powerpoint presentation that describes a 5-stage Voice of the Customer (VOC) Maturity Model

First, there are two aspects to VOC – getting it and using it. They are very different.  And there are two basic ways to Get VOC: 1) directly from the customer,  and 2) indirectly from all your company’s customer facing team members.

Our experience has been that companies are better at using what information they have than in getting good information. Further, that what they do to get the information often relies on customer facing team members as surrogates for the customer.    One thing is for sure, while only a small fraction of companies that use it well get it well, almost none of them that manage the information get good information. Why?

I think this is true because after crashing a few launches, companies suffer enough pain to cause them to start gathering information.  Then as they develop the disciplines in using it, they discover it isn’t very good and they need better information.  So until they try to use it, they don’t start improving the quality of the information gathered.  Just as an aside, along with discovering they aren’t getting good information, they often discover they aren’t getting the right information as the system focuses on product specifications rather than customer requirements. So the learning curve goes from we need information to …. we need good information to …. we need the right information.

As a company goes through this discovery process, they have to overcome some assumptions that are being taken as truths, and are really holding them back from progressing.  Why does this happen?

1. The assumption that customers don’t really know what they need.
2. Information is gathered once at the beginning by simply asking customers what they want.
3. They only gather information from surrogates.
4. They only gathering information from their best relationships (often happy customers).

These are the traps that get you stuck in bad information and more rework. To overcome these traps, information must be gathered both directly and indirectly. The information gathered must be prospective and from a broad population.  And gathering and incorporating information must be continuous, NOT a one-time event.

Needless to say, the process isn’t easy and requires a significant effort.  But the payoff is a multiple of the effort.  There is no doubt that companies that have structured processes for gathering and converting customer information outperform companies that don’t, regardless of whether they do it well or not.  Working with a plan, even if not perfect, outperforms no plan.  And needless to say, if your plan and execution are done well, then your company performs even better.

Take a look at the summary presentation of what we recommended.  If you have any experiences, comments or questions you’d like to share, let me know at jlopezona@ssqi.com.  And by the way, while this is all written based upon an experience with a B2B service organization, it is equally applicable to internal processes such as a Shared Services organization providing a service to operating units.

Capturing Voice of the Customer (VOC) is a critical first step in aligning your product or service delivery organization to the real needs, wants, and desires of your customer. Pretty common sense, right? But, when someone says “I’ve captured the voice of the customer”, what does that really mean?

Any interaction with the customer is an opportunity to capture VOC, but I would argue that a more proactive and structured approach may yield more useful and actionable information from the customer. Understand what’s important, from the customer’s perspective, clearly define it and make it measurable, then measure your performance. Sounds simple, right?

a short module on understanding customer requirements and the Kano Model

Well, not so fast. The relationship between how you perform and what the customer sees as real value is not always simple or direct. Many times, organizations are left utterly bewildered after making some “major” performance improvement only to find that the customer never even noticed! I’ve even seen a case where a business process outsourcer assumed an agreed upon SLA was their VOC, met every single measure in that “VOC”, and then lost the customer! How could this happen? Well, the customer expected them to optimize and improve the process for them, not just run it at current performance levels and meet the SLA. Their ideas of “Value” were very different.

One good way to look at customer requirements is through the lens of the “Kano Model”. Dr. Kano developed a model of the relationship between service or product delivery performance on the one hand, and value as perceived by the customer on the other. It is very simple and can be extremely useful in understanding the relationship between what you do and how that relates to what the customer perceives as value. The model defines 3 categories of customer requirements: basic, performance, and excitement.

Basic. These are the requirements that are just taken for granted. Customers will rarely mention them, because they are just expected. In the airline industry, getting to your destination in one piece is an example of a basic requirement. No matter how well you deliver on basic requirements, your customer will never be more than neutral in terms of satisfaction or perceived value. But fail to deliver one of these requirements and you can bet you’ll have a very dissatisfied customer, one that is likely to be out the door.

Bottom Line: Basic requirements are really only noticed when they aren’t met …..

Performance. These are the things that customers want, but don’t necessarily expect in all cases. They are the things that usually make up a service level agreement (SLA). Performance characteristics include faster service, lower cost, higher reliability, etc. They are usually stated by the customer, in some detail, and meeting them will drive customer satisfaction to some degree, and sales. But they do not guarantee customer loyalty (e.g. earlier example of business process outsourcer that lost customer after meeting SLA).

Bottom Line: Meeting performance requirements will drive near term customer satisfaction and sales, but will not guarantee customer loyalty.

Excitement (Wow). Excitement attributes are unspoken and mostly unexpected by customers but can result in extremely high levels of customer satisfaction and loyalty. Their absence doesn’t lead to overt dissatisfaction. Excitement attributes often satisfy latent needs – real needs of which customers are currently unaware. In an ultra-competitive marketplace where multiple vendors’ offerings provide similar levels of performance, delivering on excitement attributes that address “unknown needs” can provide a competitive advantage.

Bottom Line: Delivering on Excitement attributes drives customer satisfaction, new sales, and and customer loyalty. It enables the charging of a premium for goods and services.

One final thing to keep in mind is that this is a moving target. Today’s wow factors will soon become just basic requirements. Think about what was a “wow” factor on a mobile phone just a few years ago, and where things are today. Don’t sit still. Getting VOC is never a one-and-done.

Feel free to contact me directly to discuss how you might improve your efforts to capture voice of the customer (VOC).

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.