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Customer-Centricity: Let’s Not Let the New Block Out the Old

In our rush to see business through customer-centric lenses, we have a tendency let go of some valuable product-centric insight. A past client that asked me to return for a new initiative just reminded me of the value in holding onto some “old” business concepts and techniques – in this case focusing on the product lifecycle rather than the more popular (and trendy) customer lifecycle.

This company’s industry took a severe regulatory hit that all but eliminated the largest of four related industry sectors. And the larger two of the remaining three continue to shrink from Internet competition.  Now the stronger industry players are trying to morph into “something other,” creating a “new” – or more accurately “enhanced” – service sector. The jury is still out on their success. Weaker players are going away. But in the face of all these departures in a shrinking industry, my client decided to plant both feet in the smallest of the four industry sectors, the one with historically weakest service delivery because it’s hardest to provide – but a service sector they’re confident they can grow by raising service quality.

Gutsy move. But certainly not without precedent. Depending on which version of product life cycles we learned, we might label this dozens of different ways, but I’d call it the “last act standing” strategy. Much bigger piece of a smaller pie (and not as many forks). Ample customer need for the foreseeable future fortified by opportunity to grow demand. Plus opportunity to move smartly into the “enhanced” service category, but with a cornerstone service for many customers that competitors have either abandoned or deemphasized. Wise move. But a move you’re unlikely to make if you’re thinking all customer all the time.

For an analogy, think about incandescent light bulbs. Who would invest in incandescent bulb manufacturing today? Try a really smart operator with impeccable timing, While on one hand I’d shudder at the thought of investing in picking up where GE is leaving off, on the other I’d rub my hands with glee at the thought of being the last incandescent bulb maker standing, or even the strongest of the last few. Demand won’t dry up for a long, long time. And margins will grow as competition declines.

If you abandon the past and only focus on more fashionable customer-centricity and customer life cycles, you’ll miss opportunities like these.

Two Minute Test: How Far Are You Along the Continuum From Inside-Out Process (Company-centric) to Outside-In (Customer-centric)

No company or consultant I know of is at either end of the spectrum, nor should they be. But the vector definitely points towards Outside-In and customer-centricity. Rate yourself between 1O (the first statement is correct) and 0 (the second statement is correct) on each of these 10 statement pairs.

O/I:  You focus on finding breakthrough new ways to create customer value

I/O:  You feel you’re already creating enough value

 

O/I:  You try to deliver more value by changing what work you do and who does it

I/O:  You try to add value by changing how you work

 

O/I:  You redraw functional boundaries and merge or eliminate functions to align with customers

I/O:  You keep your organization the same and expect customers to adapt to it

 

O/I:  You base decisions for improving work purely on serving customers

I/O:  You base decisions for improving work purely on reaching internal goals

 

O/I:  You let customers decide how you should operate

I/O:  You let senior managers and function leaders decide how to operate

 

O/I: You consider redesigning your work, including company policies, the first step in building customer relationships

I/O: You consider building customer relationships solely up to sales, marketing and service

 

O/I:  You empower customer contact employees to make independent decisions

I/O:  You punish customer contact employees for varying from tightly defined policies

 

O/I:  You consider employee training far more important to customers than promotion

I/O:  You fund promotion to the hilt and pay lip service to training

 

O/I:  You consider adapting products, services and work to suit customers your first priority

I/O:  You consider brand-building your top priority

 

O/I:  You would never consider buying customer-related technology without first redesigning work to create maximum customer value with or without the technology

I/O:  You consider customer-related technology the best way to influence customers while controlling costs

Now add up your 10 scores. If you finish under 30, you or your company are probably so far behind the customer learning curve that you’re terminal. Scores in the 30-50 range would indicate that you’re behind, but not terminal. Scores in the 50 – 70 range indicate that you’re probably keeping pace with business trends. In the 70 – 90 range you’re leading edge. Scores over 90 indicate you’re in danger of sliding down a razor blade.

Are “Bolt-On” Business Process Management Systems Running Out of Market Space?

I confess–over many years designing office/service (O/S) process, I’ve never once introduced a client to free-standing BPM technology. Too expensive, especially for SMEs, but often in large company settings as well. Too hard to implement, complicated by increased IT outsourcing. But most of all, in O/S settings BPM technology is largely redundant and often irrelevant. Everything BPM systems do that’s appropriate for the O/S space, we provide using alternative methods–especially process management facilities embedded in more and more application software.

For example, SAP’s application layer workflow engine obviates using “bolt-on” BPM systems. And when ERP systems don’t offer BPM functionality, for O/S purposes we typically look to very extensible and configurable CRM systems for process management and measurement. That works especially well because HYM designs O/S process from the customer in, so we’re already enabling customer-company interactions with CRM software. And in the back office, supply chain management systems including SCOR, which is based on “outside-in” process principles, provides more granular process management support than generic BPM technology.

And speaking of granularity, a new wave of “communication-based process” applications embedded in telephony systems will soon appear, offering very granular management of unified communication across the enterprise. Still less need for freestanding BPM in the O/S space.

And there are other tools as well. In fact, although not yet widely used or understood, Microsoft’s XRM supports development of multiple “applications” on a single platform with replicable, multi-use code, which will enable users to integrate office/service process management technology at the application level, a huge advantage over using free-standing BPM technology. We’re drooling over the opportunity  to apply the XRM concept to our Visual Workflow O/S process approach.

 

 

Because office/service environments are so highly collaborative and interconnected, the exact opposite of manufacturing, content management tools including SharePoint (used by Microsoft as part of XRM) pitch in and carry part of the load. Project-heavy companies are adopting workflow managing project management applications, which again drill down much deeper than free-standing BPM systems. often much more robust than PM capabilities in freestanding BPM systems.
Add it all up and we have “bolt-on” BPM technology that most SME’s can’t cost-justify; that’s not specific enough to support much of O/S process; and that replicates application-level functionality already at work in many O/S settings. And ERP-based applications increasing have the manufacturing space covered.

Not exactly a rosy picture, when vendors are still stumbling over themselves to introduce new, “bolt-on” BPM systems.

A Shot Across the Bow

A warning to managers seeing the recession as an ideal time to streamline office/service process

 

Yes, this deep recession is an ideal time to restructure and streamline front and back office process to lower fixed cost and increase scalability for “low-hire” growth in the recovery. In fact, companies taking this critical step will enjoy a distinct competitive advantage once the rebound starts, which economists are predicting in Q3 (of 2009!). They will, that is, if they restructure and streamline office process using a 3rd generation, “outside-in” process approach (think “customer-in”) as applied by such customer-centric “stars” as Virgin Atlantic, Best Buy, Tesco and Amazon.

The right time but the wrong process approach

Unfortunately, most that restructure will instead use more traditional, “inside-out” approaches such as Lean or, worse yet, Six Sigma. What’s lost? I’d like to share with you a Linkedin reply I wrote to a Lean devotee who posted an offensive message dissing the process capabilities of everyone working in the office, front or back–while also spewing forth lots of process nonsense.

[I’ve CRM-ized the message a bit and removed the process-speak (this exchange occurred in the Linkedin Business Process Improvement group following a question regarding whether Lean and Six Sigma had run their course and what would replace them). And please forgive my tone. A large number of contributors had posted great stuff in this thread before this bloke came along and accused a whole bunch of deep thinkers of “not scratching the surface” because they didn’t dig down and find Lean.”]

My reply

(Name withheld) – your point #11, questioning how many office/service (O/S) managers can spell “Lean,” gives you away. You are the prototypical process professional fulfilling Maslow’s prophecy (introduced in this thread several times previously) of all the world tending to look like a nail when the only tool you have is a hammer.
Lean is hardly the be-all and end-all of process. Yes, it’s very effective in most manufacturing settings. But serious O/S process developers (including the ones you demean) eschew Lean because it’s relatively ineffective in most office settings. Unlike Six Sigma, it doesn’t typically damage the office environment. But Lean barely scratches the surface of O/S process opportunities.What’s wrong with Lean in O/S settings? Let’s start with lacking robust tools for assessing and redesigning systems architecture (and I’m not talking about “bolt-on” business process management systems that provide little value in the O/S world). Just as Lean is legendary for rearranging the factory floor, good O/S design methods rearrange the flow of work – which is now information rather than sheet metal, facts rather than components. Lean doesn’t go there.

Next, let’s talk about the application software that enables O/S process–CRM, supply-chain management, communications-based process management, SharePoint, project management applications, proposal development applications. This whole genre of automation software doesn’t exist on the production floor, so manufacturing-based process methods don’t have to account for them. A good O/S process approach should be able to define application software requirements, extending all the way out to fields, forms, views and navigation. Lean doesn’t go there.

And what about alignment? Effective O/S process design should be fronted by a systematic approach to aligning business strategies with customers, not just the desire to do so. Lean doesn’t go there, either. Then it needs to systematically align process to business strategies. As practiced, Lean rarely goes there. And lastly, effective O/S process design needs to align technology with process. Lean never goes there.

If you objectively read all the comments in this thread preceding yours (or read them at all), you’d realize that you are the one who hasn’t “scratched the surface.” Others have.

 

 


I would respectfully challenge you to visit
http://www.h-ym.com/officeprocess.htm, scroll down a bit, and study the chart differentiating the O/S process environment from manufacturing. Then I’d like to read your defense of how a process methodology designed for the latter could migrate to the former. And why anyone would bother trying? Or are we back to Maslow again.

If you’re going to restructure, do it right

If you’re going to restructure and streamline O/S process during the downturn, please use an appropriate process design approach. You’ll be amazed at the outcomes.

 

Poor Office Process, Poisonous Office Environment (and costs that will send you into toxic shock)

 

Are engineering and sales pointing fingers at each other? How about customer service and parts? Or HR and branch locations? How about sales and marketing management? Or IT and the rest of the front and back office? Okay, you’re like any other company. But do you have even the slightest sense of what all this dissonance is costing you?

Probably not. In which case you ought to grab or access the April 2009 edition of “Harvard Business Review” and read some sobering data. Very sobering.

April’s HBR features a very pithy one-page abstract by Christine Porath and Christine Pearson, How Toxic Colleagues Corrode Performance, which may very well peel back your eyelids. Their data alone might scare you into action–including running some toxic employees out of town.
You can’t fire the problem

But here’s the irony. Just firing these people won’t accomplish much, because a new set of “bad actors” will quickly fill their shoes. A relatively small percentage of inherently dysfunctional folks notwithstanding, the vast majority of these toxic employees didn’t start off toxic. Instead, their work environment created interpersonal strife by giving people and functions conflicting messages and conflicting goals, and they eventually succumbed to the venal side of human nature. 

The primary culprit is bad work design, not bad people.

That’s the case in almost every one of these toxic situations we’ve walked into over many years of consulting. Poorly designed office process creates conflicting sets of personal and functional interests, and when people and functions pursue their self-interests, the sparks fly. That, in turn, brings out the basest human instincts in some; causes others to withdraw or flee; pushes people who can get past their self-interests into the line of fire (punish the innocent); creates discord everywhere; triggers retribution–until the whole office goes dysfunctional. And then the company cans a few perps, only to have new ones almost immediately step up to the plate.

That’s usually the time when clients engage us–when it becomes painfully obvious that replacing people isn’t the answer–and eliminating sources of toxicity is. Unfortunately, a considerable amount of damage has already occurred.

But isn’t this the norm?

Hey–every office is a bit dysfunctional, no? So why get all bent out of shape? Here’s where Porath and Pearson really shine. While I don’t want to violate HBR’s copyright, I will give you this juicy quote:

Berating bosses; employees who take credit for others’ work, assign blame or spread rumors; and coworkers who exclude teammates from networks–all these can cut a swath of destruction visible only to the immediate victims.

Visible only to the immediate victims, perhaps, but damaging the entire company, especially the bottom line.

How much damage?

Unfortunately, the authors lack the data to convert negative employee behavior into specific dollar costs, but they have quantified the frequency of different types of negative employee reactions to office dysfunction. From there, it doesn’t take much imagination to project whether the size of the dollar loss is a golf ball, a baseball, a softball, a soccer ball or a basketball. It’s a damn blimp!

How employees react to dysfunctional office environments

Again, I don’t want to give away the goods so you won’t go buy the magazine, especially because the article is only a page long. But between 80% and 38% of employees reported specific reactions ranging from loss of commitment to the organization to decreased work quality.  From a process designer’s perspective, when I add it all up it’s not a trickle, not a flow, but a damn gusher of dollars flowing out the door.

But since we’re in a recession, we can afford it, eh?