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 ‘service’ providers such as
Information Services, Human Resources and so on. In mature Outside-In
organisations the internal customer ceases to exist as we progressively
partner to align to Successful Customer Outcomes and artefacts such
as Service Level Agreements become a thing of the past.
II. What is the Customers current expectation?
The
2006 book “Customer Expectation Management “ 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 “I expect it is going to take weeks, with lots
of paperwork and many phone calls”. 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
specialisation created by relating to business as a production line.
Adam Smith wrote in ‘The Wealth of Nations’ (1776) of an English pin
factory. He described the production of a pin in the following way:
”One 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 them”. The result of labor
division in Smith’s 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 – “sorry sir
you are talking to the wrong department, let me transfer you”. Or even
getting stuck in automated response system hell “press 1 for this, 2
for that, 3 for the other and 4 if you have missed the first three
options.” 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
“I’ve been thinking” of the inability of organisations to think
clearly of the amount of work they create and in fact “they spend a
million to save a thousand every time”.
His story of the challenge
within large organisations 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 programme?" I asked
"How can we cancel a programme that has cost $37m?" they asked "Do
you believe the programme 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, measureable, 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 ‘Education loan
application’ 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 ‘efficient, effective, timely’ 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 ‘Thrive- how to succeed in
the Age of the Customer’ McGregor/Towers (2005), Easyjet (Europe’s
second largest airline) is used as an example in this quest. Their
simple “Bums on Seats” SCO sentence works both from a company
perspective (we must maximise utilisation, offer inexpensive seats,
get people comfortably and safely to their destinations) and the
customers needs “I need a cheap safe seat to get me to the sunshine
quickly without a fuss”.
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 "Reframe where the process starts and ends"
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