Historically, virtually all corporate entities have been designed from production/service delivery out (inside-out). And a few unlucky companies have been designed from accounting out (upside-down). In either case, when companies try to redesign strategy and process from the customer in (outside-in), they run smack up against their organizational structures.
Inside-out and upside-down companies are aligned and managed around functions. Customer-centric (outside-in) companies are aligned and managed around customers. Unfortunately for customer-centricity, companies can’t get from A to B by throwing a switch. The journey is rough and risky, which is a core reason why most customer-centric companies either started that way or transitioned before they were fully formed.
Based on my experience, the alignment change issue stops more companies in their path to customer-centricity than even lack of executive leadership. Do you agree?
If you’d like to do a deeper dive on this topic here’s a new white paper (parts of which will be folded into the book).
The optimist in me says, “Probably not.” The realist in me suspects we are, for several reasons.
-Customers were initially grateful that many companies appeared to be searching for comity. However, buyers now appear to be moving through this phase, which I call “play nice.” Now they’re seeing through the many insincere seller efforts to look and sound more customer-centric and becoming more cynical and mistrustful of sellers than ever. Hence, an increasing percentage is no longer “playing nice.”
-Influenced not only by transacting business over the web but by not seeing the “what’s in it for them” from forming relationships with sellers, many buyers are trying to minimize contact with sellers, preferring efficiency over spending time interacting with sellers.
-The more latitude sellers give buyers to “have it their way,” the more idiosyncratic customer behavior becomes – to the point where finding common approaches to satisfying varied customer preferences is becoming very difficult. “Process-on-demand” (term coined by my colleague Bob Starinsky) is beginning to replace customer best practices.
Can companies with inefficient, even “broken” process successfully go through ISO-certification? Over the years, I’ve encountered a number that have, which answers the question for me. ISO certifies that quality standards are in place, but it’s a poor indicator of how high the standards are and whether they’re the best the company can do. ISO certification also fails to gauge whether process has been designed to optimize customer experience, despite including numerous customer-related standards.
Nevertheless, organizations frequently confuse the two. Any thoughts on why?
We can talk customer-centric process specifically until we’re blue in the face, but if we can’t manage process in general it’s all talk. In among the best blog posts I’ve read in memory, Thomas Olbrich of Taraneon Consulting in Hamburg picks up on a conversation comparing U.S and European process we started several years back – and elevates it to a new level of perception. If you’re wondering why implementing customer-centric process is so tough, you must read Thomas’ incisive remarks.
A lightly edited excerpt:
“BPM in US companies has two extreme positions and practically no middle ground: either processes are a top management topic, but as an abstract concept only; or, process lives only at the business analyst and operations level – lots of work in the trenches of daily business but so buried beneath methods and tools process fails to get noticed. Accountability for processes? Nada. Process organisation? Nada. Middle management as the link between business strategy and processes? Doesn’t exist.
“By contrast continental Europe prides itself on its wait and see approach (nastier minds than mine would call it complacency or even ignorance) with the consequence that once they do pick up on an idea someone’s bound to come in to tell them that it’s old hat and they should be looking at what’s new instead.”
If you’re wondering why implementing customer-centric process in either continent (and elsewhere, such as in Australia) is so difficult, you must read this.
Used to be enterprise technology was designed for finance and/or manufacturing first – and all other functions, especially those directly affecting customer experience, as an afterthought. Still today finance and manufacturing technology needs are typically taken more seriously than other functions requirements. But that’s changing.
Increasingly, the business community is viewing technology’s first obligation as enabling and improving process. When process design starts out at the customer end, rather than deep in the bowels of the company, technology must start there too. Otherwise, process and technology inevitably wind up misaligned. Plus, as it turns out, supporting finance in particular with technology is much less demanding than supporting customer-affecting work. So why would any systems architect let the less demanding functions dominate systems design and decisions? For example, we’re working now with a client that hired us to redesign process and then help select a new ERP system to support process. But they now realize that managing service operations is their major challenge, while they have tons of accounting and finance options. So we’ll design around the application layer.
This customer-driven turn of events turns systems architecture and IT overall on their respective ears. But we would do well to step back and look at other functions to anticipate customer primacy turning them outside-in as well. Your observations?
What customers want from companies is becoming a common “conditioner” of organizational design and change management – but rarely a driver. That’s unfortunate, because empirical evidence shows the best way to build customer-centricity AND streamline companies is by starting with customer experience and redesigning the work (process) of the company from the customer in. Plus, putting customer interests first also greatly mitigates resistance to change by giving employees a much more palatable goal to work towards than “making more money for the company” (although that’s what ultimately happens.
But going “outside in” also involves serious change: changing work; who does it; how it’s done; and the underlying technology – all of which in turn require organizational change. Is that why companies continue designing change from the executive level down? Or is it more that management doesn’t like taking direction from customers.
Frankly, I suspect it’s the latter, although we always have to respect management resistance to change. “Taking orders from customers” flies in the face of the long-held belief that companies can manipulate customers into doing their bidding, buying into their brand, etc. And when you step back and considers how out of sync with today’s reality this belief is – you get a sense of how desperately senior management continues clinging to it.
Before you protest, I do understand that waste-cutting process approaches can be applied for the benefit of customers. But here’s the difference I’d like to highlight.
Waste-eliminating approaches change internal operations – albeit increasingly to benefit customers. In contrast, customer-experience focused approaches changes what happens at points of customer contact and works its way back inside the company, almost in concentric rings. While customer-sensitive, waste-focused process approaches work from inside the company outwards towards customers, trying to add more customer value at every step – customer experience process methods move in the opposite direction.
I’ve designed process both ways, depending on context. But I do find the outcomes radically different – with customer-experience-based process design triggering far more organizational change and involving much more application-layer technology support (which is not appropriate for every context).
How does my experience square with your hands-on process work? And I hope this doesn’t sound exclusionary, but this is such a ground-level experience that I’m especially interested in comments from experienced process practitioners who have “been there, seen that” for themselves.
Not only should good process design simplify work, it should also appeal to workers who must intuitively understand the method before they’ll embrace significant work changes that result from redesign – instead of fighting them. The Outside-In approaches – Visual Workflow, CEMM, IDEAS & Process Experience – all do the job.
So why are traditional, inside-out process design approaches complex, requiring special training to understand? And why apply them in front & back offices and service settings where knowledge workers not grasping “what’s being done to them and why” will almost automatically generate resistance to change? For the benefit of the change management industry, I guess. The growing interest in business process redesign has greatly expanded the change management community.
Of course, many approaches address these issues by deliberately not going far enough to “rock the employee boat.” But taking this tack doesn’t get companies remotely close to customer-driven process that adds significant new value to customers.
So far, the process industry as a whole seems unable to answer these questions. Which may be why interest in O-I process is growing.
I confess – I often don’t. But responding to emergencies requires thoroughly thought out process that mobilizes the right resources the right way at the right time. If you don’t plan out responses beforehand you get BP in the gulf coast or Toyota stomping all over its meticulously crafted brand.
But these disasters didn’t trigger me writing this. Instead, it was a superbly well-executed emergency response that still has me shaking my head in appreciation.
In the U.S., we have many, many people contracting salmonella from eating eggs. First, one egg-producing company had to recall about 350 million eggs. Then, a second producer had to recall 150 million more. This second producer supplied Costco, where we buy eggs.
Within scant hours of the recall, I received a well-produced robo-call (so well-produced I didn’t hang up) telling me I’d purchased eggs at Costco that could be carrying salmonella and had been recalled. I was instructed not to use the eggs but bring them back to a store for a full refund.
Can you imagine identifying a gazillion egg purchasers with their phone numbers from membership records and calling them in very little time with a cut-through” message? Yes, good intent towards customers is ultimately responsible. But executing the plan took exceptionally well predefined process and following it to a tee. Kudos to Costco, which I frequently include in my short list of Outside-In, customer first companies.
How about sharing some examples, good or bad, including the process or lack thereof apparently behind them?
Companies that achieve a significant measure of Outside-In, customer-centricity are at constant risk of “organizational memory” snapping them back or pulling them back to bad-old company-centric operations. And it’s not just internal organizational memory, but new management only familiar with inside-out settings pulling their function or new companies back inside their individual comfort zone. We just saw that happen with Continental Airline and their new CEO.
Best Buy is another example. After all their efforts to become customer-centric, they’ve now set draconian (to customers) customer service policies that reek of inside-out. The combination of these “customers-last” policies―plus the Geek Squad, which is becoming a parody of itself―has the potential to eventually unravel all the company’s good O-I work, and if service isn’t turned around it might not take long.