From the desk of James Dodkins:In the first article in this four part theme we reviewed 'Understand and
applying Process diagnostics'. We now move our attention to the second way
we can rethink process forever -
Identify and aligning to Successful Customer Outcomes"Businesses can be very sloppy about deciding which customers to seek out
and acquire" Frederick F. Reichheld
The six questions we ask ourselves in this iterative process are:
I. Who is the customer?
At first glance should be an easy answer however it is not as obvious as it
seems. The ultimate customer for any profit making enterprise is the person,
or company who provides the revenue by purchasing the products or services
we produce. It is a matter of fact that in our inside-out legacy world we
have created multiple customer-supplier relationships which include internal
Œservice¹ providers such as Information Services, Human Resources and so on.
In mature Outside-In organizations the internal customer ceases to exist as
we progressively partner to align to Successful Customer Outcomes and
artifacts such as Service Level Agreements become a thing of the past.
II. What is the Customers current expectation?
The 2006 book ³Customer Expectation Management ³ Schurter/Towers reviewed in
detail the of creating and managing customer expectations and how through
clear articulation companies such as Virgin Mobile in the US redefine their
market place. In the context of the SCO map we need to understand the
customers (as identified in the answer to question 1) current expectation.
This often reveals both a challenge and opportunity. Customers will tell it
as it is, for instance in an insurance claim process ³I expect it is going
to take weeks, with lots of paperwork and many phone calls². That should
tell you the current service is most likely poor and fraught with problems,
delays and expensive to manage however this presents the opportunity. If
that is a market condition (all insurance claims are like this) then moving
to a new service proposition will be a potential competitive differentiator.
III. What process does the customer think they are involved with?
In the inside-out world we see process in a functional context. Therefore
insurance claims are dealt with by an insurance claims department. Customer
Retention is the baby of you guessed it, the Customer retention department
and marketing is done by the marketing people. This split of responsibility
is a legacy of functional specialization created by relating to business as
a production line. Adam Smith wrote in ŒThe Wealth of Nations¹ (1776) of an
English pin factory. He described the production of a pin in the following
way: ²One man draws out the wire, another straightens it, a third cuts it, a
fourth points it, a fifth grinds it at the top for receiving the head: to
make the head requires two or three distinct operations: to put it on is a
particular business, to whiten the pins is another ... and the important
business of making a pin is, in this manner, divided into about eighteen
distinct operations, which in some manufactories are all performed by
distinct hands, though in others the same man will sometime perform two or
three of them². The result of labor division in Smith¹s example resulted in
productivity increasing by 240 fold. i.e. that the same number of workers
made 240 times as many pins as they had been producing before the
introduction of labor division. The insights form Smith underpinned the
industrial revolution however using this principle to organise ourselves in
the 21st century is to a very large part the wrong approach. That is
precisely what the answer to the question will tell us ³sorry sir you are
talking to the wrong department, let me transfer you². Or even getting stuck
in automated response system hell ³press 1 for this, 2 for that, 3 for the
other and 4 if you have missed the first three options.² These are features
of the labor division mindset. Ask a customer what process they think they
are and you will frequently be surprised by the answer.
IV. What do we do that Impacts customer success?
Often we ask customers to do numerous many activities which appear sensible
to receive service or indeed buy products. Relating back to the insurance
claim we can see rules and procedure around how to make claims, the correct
way to complete forms, the process of collating the information, the
timeframes within which to claim, the way we can reimburse you and more.
Often times these restrictions that we impose made sense at some time in the
past however they may no longer be relevant.
The situation is compounded by the way internal functional specialism focus
on project objectives. Richard Prebble, a respected New Zealand politician
writes in his 1996 book ³I¹ve been thinking² of the inability of
organizations to think clearly of the amount of work they create and in fact
³they spend a million to save a thousand every time².
His story of the challenge within large organizations is typical "The Post
Office told me they were having terrible problems tracking telephone lines
... They found an excellent program in Sweden which the Swedes were prepared
to sell them for $2m .... So the managers decided to budget $1m for
translating into English and another $1m for contingencies. But, as the
general manager explained, it had turned out to be more expensive than the
contingency budget allowed and they needed another $7m. "How much", I asked,
"have you spent on it so far?" "Thirty-seven million dollars" was the reply.
"Why don't we cancel the program?" I asked "How can we cancel a program that
has cost $37m?" they asked "Do you believe the program will ever work?" I
asked "No, not properly" "Then write me a letter recommending its
cancellation and I will sign it" The relief was visible. I signed the
letter, but I knew I needed new managers."
This type of inside-out thinking causes companies to create apparently
sensible checks and controls within processes that actually manifest as
customer inconvenience, cost and delay. Are you making the customers lives
easier, simpler and more successful?
V. The Successful Customer Outcome what does the customer really need
from us?
At this point we should have enough information to objectively create
several statements that articulate the SCO. These statements should be
specific, measurable, attainable, relevant and time-bound (SMART). Usually
there will 6-10 such statements which become the actual key performance
measures as move the process Outside-In. For example a North American
business school completed the SCO map and created these statements from the
customer perspective for an ŒEducation loan application¹ process:
a. I need to receive my financial assistance
b. I need to receive aid before the semester starts
c. I need to attend the classes I have chosen
d. I do not want to call to chase progress
e. I need to receive the correct amount
f. I do not want to have to fix your mistakes
There is no ambiguity here and we avoid a common mistake of using management
weasel words such as Œefficient, effective, timely¹ which may mean things
internally but to a customer are of little help. Creating SCO statements
that may be used as measures for process success is a key aid on the journey
to Outside-In.
VI. And now we reach the core of the onion. What is the one line
statement that best articulates our Successful Customer Outcome?
This one-liner embodies the very nature of the process and sometimes the business
we are in. In ŒThrive- how to succeed in the Age of the Customer¹
McGregor/Towers (2005), Easyjet (Europe¹s second largest airline) is used as
an example in this quest. Their simple ³Bums on Seats² SCO sentence works
both from a company perspective (we must maximize utilization, offer
inexpensive seats, get people comfortably and safely to their destinations)
and the customers needs ³I need a cheap safe seat to get me to the sunshine
quickly without a fuss².
The company one liner will become part of a series which are measureable
through the SCO statements and can be tested and revised depending on
evolving customer expectations and needs. It may in fact ultimately replace
the inside-out strategic process and provide the organisation with its
Raison d'être.
Of course when we start the journey it is often sufficient to create SCO
maps to help grow understanding and even if the actual SCO Map is
subsequently replaced (as we take a broader view) the improvement in
understanding around the customer is invaluable.
In the third part of this four part series we will review "Re-frame where
the process starts and ends"
applying Process diagnostics'. We now move our attention to the second way
we can rethink process forever -
Identify and aligning to Successful Customer Outcomes"Businesses can be very sloppy about deciding which customers to seek out
and acquire" Frederick F. Reichheld
The six questions we ask ourselves in this iterative process are:
I. Who is the customer?
At first glance should be an easy answer however it is not as obvious as it
seems. The ultimate customer for any profit making enterprise is the person,
or company who provides the revenue by purchasing the products or services
we produce. It is a matter of fact that in our inside-out legacy world we
have created multiple customer-supplier relationships which include internal
Œservice¹ providers such as Information Services, Human Resources and so on.
In mature Outside-In organizations the internal customer ceases to exist as
we progressively partner to align to Successful Customer Outcomes and
artifacts such as Service Level Agreements become a thing of the past.
II. What is the Customers current expectation?
The 2006 book ³Customer Expectation Management ³ Schurter/Towers reviewed in
detail the of creating and managing customer expectations and how through
clear articulation companies such as Virgin Mobile in the US redefine their
market place. In the context of the SCO map we need to understand the
customers (as identified in the answer to question 1) current expectation.
This often reveals both a challenge and opportunity. Customers will tell it
as it is, for instance in an insurance claim process ³I expect it is going
to take weeks, with lots of paperwork and many phone calls². That should
tell you the current service is most likely poor and fraught with problems,
delays and expensive to manage however this presents the opportunity. If
that is a market condition (all insurance claims are like this) then moving
to a new service proposition will be a potential competitive differentiator.
III. What process does the customer think they are involved with?
In the inside-out world we see process in a functional context. Therefore
insurance claims are dealt with by an insurance claims department. Customer
Retention is the baby of you guessed it, the Customer retention department
and marketing is done by the marketing people. This split of responsibility
is a legacy of functional specialization created by relating to business as
a production line. Adam Smith wrote in ŒThe Wealth of Nations¹ (1776) of an
English pin factory. He described the production of a pin in the following
way: ²One man draws out the wire, another straightens it, a third cuts it, a
fourth points it, a fifth grinds it at the top for receiving the head: to
make the head requires two or three distinct operations: to put it on is a
particular business, to whiten the pins is another ... and the important
business of making a pin is, in this manner, divided into about eighteen
distinct operations, which in some manufactories are all performed by
distinct hands, though in others the same man will sometime perform two or
three of them². The result of labor division in Smith¹s example resulted in
productivity increasing by 240 fold. i.e. that the same number of workers
made 240 times as many pins as they had been producing before the
introduction of labor division. The insights form Smith underpinned the
industrial revolution however using this principle to organise ourselves in
the 21st century is to a very large part the wrong approach. That is
precisely what the answer to the question will tell us ³sorry sir you are
talking to the wrong department, let me transfer you². Or even getting stuck
in automated response system hell ³press 1 for this, 2 for that, 3 for the
other and 4 if you have missed the first three options.² These are features
of the labor division mindset. Ask a customer what process they think they
are and you will frequently be surprised by the answer.
IV. What do we do that Impacts customer success?
Often we ask customers to do numerous many activities which appear sensible
to receive service or indeed buy products. Relating back to the insurance
claim we can see rules and procedure around how to make claims, the correct
way to complete forms, the process of collating the information, the
timeframes within which to claim, the way we can reimburse you and more.
Often times these restrictions that we impose made sense at some time in the
past however they may no longer be relevant.
The situation is compounded by the way internal functional specialism focus
on project objectives. Richard Prebble, a respected New Zealand politician
writes in his 1996 book ³I¹ve been thinking² of the inability of
organizations to think clearly of the amount of work they create and in fact
³they spend a million to save a thousand every time².
His story of the challenge within large organizations is typical "The Post
Office told me they were having terrible problems tracking telephone lines
... They found an excellent program in Sweden which the Swedes were prepared
to sell them for $2m .... So the managers decided to budget $1m for
translating into English and another $1m for contingencies. But, as the
general manager explained, it had turned out to be more expensive than the
contingency budget allowed and they needed another $7m. "How much", I asked,
"have you spent on it so far?" "Thirty-seven million dollars" was the reply.
"Why don't we cancel the program?" I asked "How can we cancel a program that
has cost $37m?" they asked "Do you believe the program will ever work?" I
asked "No, not properly" "Then write me a letter recommending its
cancellation and I will sign it" The relief was visible. I signed the
letter, but I knew I needed new managers."
This type of inside-out thinking causes companies to create apparently
sensible checks and controls within processes that actually manifest as
customer inconvenience, cost and delay. Are you making the customers lives
easier, simpler and more successful?
V. The Successful Customer Outcome what does the customer really need
from us?
At this point we should have enough information to objectively create
several statements that articulate the SCO. These statements should be
specific, measurable, attainable, relevant and time-bound (SMART). Usually
there will 6-10 such statements which become the actual key performance
measures as move the process Outside-In. For example a North American
business school completed the SCO map and created these statements from the
customer perspective for an ŒEducation loan application¹ process:
a. I need to receive my financial assistance
b. I need to receive aid before the semester starts
c. I need to attend the classes I have chosen
d. I do not want to call to chase progress
e. I need to receive the correct amount
f. I do not want to have to fix your mistakes
There is no ambiguity here and we avoid a common mistake of using management
weasel words such as Œefficient, effective, timely¹ which may mean things
internally but to a customer are of little help. Creating SCO statements
that may be used as measures for process success is a key aid on the journey
to Outside-In.
VI. And now we reach the core of the onion. What is the one line
statement that best articulates our Successful Customer Outcome?
This one-liner embodies the very nature of the process and sometimes the business
we are in. In ŒThrive- how to succeed in the Age of the Customer¹
McGregor/Towers (2005), Easyjet (Europe¹s second largest airline) is used as
an example in this quest. Their simple ³Bums on Seats² SCO sentence works
both from a company perspective (we must maximize utilization, offer
inexpensive seats, get people comfortably and safely to their destinations)
and the customers needs ³I need a cheap safe seat to get me to the sunshine
quickly without a fuss².
The company one liner will become part of a series which are measureable
through the SCO statements and can be tested and revised depending on
evolving customer expectations and needs. It may in fact ultimately replace
the inside-out strategic process and provide the organisation with its
Raison d'être.
Of course when we start the journey it is often sufficient to create SCO
maps to help grow understanding and even if the actual SCO Map is
subsequently replaced (as we take a broader view) the improvement in
understanding around the customer is invaluable.
In the third part of this four part series we will review "Re-frame where
the process starts and ends"
