Archive for category Enterprise Performance

2011- Year of the Squirrel

What 2011 taught us about strategic distractions, and their impact on business value…

A few months back, I remember having a good chuckle while watching a Jon Stewart parody on the Republican candidate field.  The monologue poked fun at the media’s tendency, during its seemingly relentless coverage of the leading candidate on that day, to completely shift direction the moment a new contender entered the picture.In this case, Bachman was the leader du jour, the media was the dog in the Pixar movie “Up”, and the part of the squirrel was played by none other than Rick Perry, who these days appears to be succeeding only at distracting himself.

“Squirrel moments” happen all around us, and with greater frequency than we’d care to admit. As flawed human beings, it’s easy for us to get sidetracked from what we should be doing, by some urgent new distraction that seems terribly critical in the moment. Yet most of us eventually manage to refocus, once we become aware (through our own cognitive skills or because a friend or colleague points it out to us) of how badly the squirrel moment has driven us off-course. Typically it is the speed with which we are able to re-calibrate ourselves that ultimately determines the degree of damage, if any, that is caused by the distraction.

Some “squirrel moments” have far reaching impacts…

But for organizations, the challenge of refocusing after a significant distraction is far greater. Unlike individual distractions, those in organizations often require refocusing entire workgroups, business units, and processes that may have strayed far from the core focus and strategies of the business. It’s a bit like comparing a fighter jet to a large commercial airliner. While both are capable of course correction, larger aircraft don’t react “on a dime” and require a lot more time and space to maneuver.  The magnitude of the corporate distraction, the breadth of areas it touches, and the duration of the distraction, are just a few of the variables that determine the organization’s ability to react and readjust quickly.

2011 offered numerous examples of companies adversely affected by a loss of focus.

  • The enormous value that Netflix had created, based on a simple and straightforward product offer embraced by scores of customers, was severely jeopardized by the company’s ill-advised decision to migrate to a more complex, two-tiered pricing model driven largely by a short-term desire to justify an overinflated stock price. The outcome was both predictable and horrific, as customers departed in droves, destroying an enormous amount of company value in very short order.
  • Bank of America, arguably one of the better banks in terms of customer satisfaction and experience, watched much of that brand value evaporate following announcement of a pricing move (its now infamous $5 charge for debit card use) that evoked a similar customer outrage. While perhaps necessitated by financial realities (debatable), its positioning, execution, and ultimate response were painful to watch play out.
  • Research in Motion, maker of the Blackberry, whose loyal business following was predicated on its operational and reliability advantages, suffered a huge blow to its value on the heels of a long and poorly managed  network outage—a network on which it had based much of its service differentiation.
  • Berkshire Hathaway, a company whose entire business is based on the prudent, sober, and wise investing of its founder, ended up the subject of one of 2011’s stories of financial impropriety–an insider trading scandal the likes of which we’ve come to expect from the industry, just not from these guys.
  • HP announced another redirection of its product portfolio, and yet another shift in its leadership team–a true “squirrel moment” with a healthy dose of “been there, done that.”

S*** Happens! You just have to manage it…

Sure, one might argue, “bad things happen to good companies”, and in these and a myriad of other examples from 2011 there is certainly some truth to that. Sometimes, these blunders cannot always be attributed to bad strategies or failure to stick with a good one. Sometimes, it’s the tactical decisions that are “far removed” from the C-suite and its strategic decision making. Sometimes these decisions, as we saw above, are undertaken because of a financial necessity that in the short term might trump a marketing strategy.

But, by the same token, those seemingly small disconnects may, in fact, be symptomatic of the problem itself. While management may not be able to control ALL of the drivers that lead to negative consequences, effective development and MANAGEMENT of strategy can not only limit the damage caused by veering off course, but can play a very important role in course correction after the fact. For many companies the words “MANAGEMENT” and “STRATEGY” connote different, and often conflicting, disciplines. But for those successful at avoiding and responding to distractions, these are highly related and often inseparable competencies.

 Great strategy management is about the WHAT and the HOW…

So, how can you ensure that corporate distractions are kept to a minimum, and effectively refocus and re-center the business when they invariably do occur?

  1. Define and clarify your business strategy — This sounds like motherhood and apple pie. It always does. But it remains the preeminent cause of breakdowns during times of distraction, because the strategy is either too complex to begin with, or it lacks sufficient clarity to engender the necessary alignment and commitment to continue keeping the firm focused in times of distraction. Your strategy is more than simply a restatement of a vision or broad ambition. It is a specific answer to a specific question: What do we need to do to ensure success within your existing business environment? One of Apple’s most effective demonstrations of strategic clarity was Steve Jobs’ insistence on collapsing their previously expansive product portfolio into four clear product families that would redefine its future. Clear, compelling, with an easily-understood line of sight to renewing the value of the business.
  2. Do more than just communicate it — Management 101 preaches “communicate your strategy.” But communication alone is insufficient to create the alignment necessary to avoid distractions. One of the most rewarding aspects of this job is watching clients challenge ideas and recommendations (even from yours truly) based on an automatic and often deeply-felt narrative of how the suggested change(s) might conflict with their core strategy. For them, it’s more than just “talking points.” It’s a compelling narrative they have embodied through words and examples. Sure, these too can be misinterpreted occasionally, but just like a pilot who is expected to react with some degree of muscle memory, we must develop and nurture that level of alignment as a first line of defense against corporate distraction. Vision, values, and strategies. They all need to be seamlessly integrated within a crisp, clear, and compelling narrative.
  3. Build and use the right navigation systems — When NASA launches a probe to Mars, it must travel undistracted for about nine months in order to hit a fast-moving and very small target (the red planet). Even the slightest and briefest of external forces can cause the probe to miss the planet by millions of miles. Having the right navigation systems and a network of alerts and course-correction mechanisms is crucial to a mission like this, and it is just as critical to a business like yours. In business, such technologies and processes comprise your integrated performance management system, and they should include the KPI’s of the business, the network of leading and lagging business metrics we must monitor, and a clear understanding of the relationships between them.
  4. Scenario and contingency planning — Made popular by companies like Shell years ago, the discipline to do this, and do it well, has fallen out of vogue. Not sure why, other than what I heard from a client a few years back…that it “forced us to admit that we might have the wrong strategy”, or that it “would distract us from adhering to that strategy”. That’s as much hogwash today as it was when I first heard it, and failure to implement a rigorous scenario planning process is, as ever, tantamount to sticking your head in the sand. If subjecting your strategic plans to that level of scrutiny adversely affects your ability to execute the strategy as designed, while being agile enough to react and learn from mistakes, then you either have the wrong strategy, the wrong leadership, or both.
  5. The ability and agility to recover from distractions — Unlike the dogs in “UP”, we don’t have masters to yank our collars or order us back into focus. (unless we work in a purely autocratic environment). What we do have is the ability to learn and react. It helps if we have a contingency plan with automatic responses. But we must also have the ability to recognize when something is not working, and the agility to put that learning in motion quickly and effectively.

 History doesn’t have to repeat itself…

2011 wasn’t the first time we’ve seen these types of blunders. And it most certainly won’t be the last.

We all remember the Tylenol scare of many years ago. Drug companies like J&J, who exist largely at the mercy of safety protocols and regulations, can easily be crushed by such events. But J&J’s ability to identify and react to the crisis with agility prevented what could have been an historic business failure. Their “distraction,” which arguably could have been anticipated, was kept fairly well contained.

Others weren’t so fortunate. The Exxon-Valdez and BP-Macondo debacles are two great examples of this. Safety, which should be a core strategic underpinning for any company, but particularly those in this industry, in large measure fell victim to distraction. But, in both cases, it was the lack of a coherent, actionable response strategy that kept business value flowing out of the pipeline/tanker as fast as the oil.

If we have the right blueprint for managing strategy, we can limit the number of distractions, identify and react appropriately when they do occur, and respond with agility and effectiveness to keep adverse consequences to a minimum.

-b/b

Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience with primary emphasis on Customer Operations in the global energy and utilities sector. Bob has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

Brian Kenneth Swain is a Principal with onVector Consulting Group.  Brian has over 25 years of experience in Marketing, Product Management, and Customer Operations. He has managed organizations in highly competitive product environments,  and has consulted for numerous companies across the globe. Brian is an alumnus of McKinsey & Company, Bell Laboratories, and Reliant Energy, and is a graduate of Columbia University and the Wharton Business School. He can be contacted at brian.swain@onvectorconsulting.com. 

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Balancing Operational, Product and Customer Priorities…

Choosing your “strategic bias”…

We’ve had more than a few conversations with clients of late that revolve around the subject of core competency. What is it today? What should it be? What do we want it to be? Must we choose between product innovation, customer care, or operational excellence, or is it possible to have all three? While there isn’t a “one-size-fits-all” answer, the consensus philosophy (as espoused, for example, in the “The Discipline of Market Leaders”) is that there should most definitely be a bias toward choosing one axis of the model for optimization.

It certainly has been an issue that’s generated a lot of strategic debate in corporate boardrooms. Most provocative and paradoxical questions will do that. But the reason this debate so energizes meetings is because it also taps into something deeper–corporate culture and emotion. Operations, R&D, and Customer Service, among other departmental factions, continue to fight for precious budget and capital, and as these resources become increasingly constrained, the consequence of failing to “choose” begins to look like compromise or watered-down decision making. Clearly, it seems, steering a majority of our resources into one of these areas offers the opportunity to create some short-term wins in that area, but it also risks undermining our overall strategy, which could, in the end, leave us with nothing to show.

When a “bias” becomes “THE end game”…

Unfortunately, the very essence of what has made this discussion so valuable is, as well, now creating an unhealthy dynamic in some leadership circles. With resource constraints and the passions of business unit executives both reaching fever pitch, the push to make the core competency declaration is stronger than ever, and the tendency to push for a “clear choice” rather than just a “bias” (which was the original intent of the management model) is more often than not the desired end game of each of these respective operating executives (so long as its THEIR area that benefits from the increased emphasis).

Rather than focus on optimizing just one dimension of the business, we should, instead, look to companies that have managed to assemble the complete package, or, more accurately, perhaps an edge in one domain but without apparent sacrifices in the other two. Apologies in advance for more “Apple advocacy”, but clearly this is an example of a company that not only balances these three dimensions skillfully, but excels in them simultaneously.

Having your cake and eating it too…

Apple is clearly a product-based business…no argument there. Simplicity, functionality, user commitment, and advocacy … the list goes on. When people buy an Apple product, loyalty and advocacy are an integral part of each transaction, and this despite the fact that customers are sometimes even paying a premium price versus competing products. They are immediately reinforced by their “buy decision”. One of our clients calls this “smart value”–the ability of a company, through its product experience,  to continuously remind each customer of how smart their purchase decision was. Worth noting also is the fact that, while Apple sells many premium-priced products, they offer, as well, a range of affordable ones that, despite their competitive prices, still feature the design and functionality excellence that customers have come to expect from the company. That their manufacturing and operational processes are sufficiently well-thought-through to allow such products to be offered is a testament to their emphasis on the operational side of the business.

On the customer-care side of things, they are equally credible, if not downright superior, for example, in the way their service channels are so perfectly aligned with customer convenience, the way they make and manage commitments and appointments, the almost cult-like enthusiasm of their staff, the customer-centric culture of their work environments. Even tasks that are traditionally frustrating to customers–warranty issues, software updates, etc.–are so smoothly handled that customers walk away having appreciated the experience.

Separate and apart from the fact that these stores generate more revenue per square foot than any company in history , what is more amazing is the customer-centric focus and attitude that are constantly on display. Whether it is the simplicity of making an appointment at the genius bar , the excellent service you receive, or nice little touches like bypassing the line and having an employee execute the transaction by hand-held device and email you the receipt, it’s all there. When was the last time you heard customers raving about an extra warranty plan for a product that rarely fails?

Product Innovation, Operational Excellence, Customer Advocacy … Walk into any Apple store and you’ll see all three in abundance.

Creating and multiplying your base of “engaged advocates”…

Recently, we’ve shared some views on the need to excel at both product and service experiences. (“Customer Nirvana”) Failure to achieve both means you are only creating temporary success, i.e., until customers have a better choice or option. The path to engaged advocacy requires both. And to achieve product and service excellence simultaneously, as well as profitably, requires operational excellence.

Strategic models that ask you to focus time and money on a single discipline certainly have their place. For example, if your company finds itself in the unfortunate position at being sub-par in all dimensions, then more often than not it will make sense to focus on fixing one area at a time. But as a long-term aspiration, maximizing all dimensions of performance remains the path to being  recognized as world class.

There are many football teams that have either awesome offensive or defensive capabilities, but you rarely see any of them playing in the Super Bowl. It’s the team that has managed to strike a proper balance between the groups — offense, defense, special teams — that usually walks away with the trophy.

-b/b

About the Authors:

Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience with primary emphasis on Customer Operations in the global energy and utilities sector. Bob has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

Brian Kenneth Swain is a Principal with onVector Consulting Group.  Brian has over 25 years of experience in Marketing, Product Management, and Customer Operations. He has managed organizations in highly competitive product environments,  and has consulted for numerous companies across the globe. Brian is an alumnus of McKinsey & Company, Bell Laboratories, and Reliant Energy, and is a graduate of Columbia University and the Wharton Business School. He can be contacted at brian.swain@onvectorconsulting.com.

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Customer Nirvana -When great products meet awesome service…

Improving service — it’s a start…

Most of my posts on this blog are focused on how to improve business processes, especially those that influence customers directly. We  talk extensively here about the importance of tracking the right KPIs, effective measurement and analysis of  performance results, and how these insights can catalyze creative and innovative solutions to improve the efficiency and cost-effectiveness of our business and operational activities. Done right, these can lead to dramatic improvements through streamlining workflows and rethinking the very nature of of our operating processes. And the value that derives from this can be enormous.

But without great products, you’re swimming upstream…

Truth be told, most of the time we are focused on improving our existing business processes  (i.e., the way we currently interact and transact with customers, suppliers, and other stakeholders). In fact, the very core of process change — be it the Michael Hammer approach to re-engineering, or the latest in Six Sigma and Lean strategies — is based on understanding the world as it exists today and then systematically reinventing delivery processes to better meet the underlying objectives of the process. That, of course, is an oversimplification of what these disciplines offer, but when you look at the intricacies of concepts like D-M-A-I-C,  which is at the core of many process improvement methodologies, they invariably begin with an assessment of current state and a progression though the systematic steps of business improvement.

But there is another side to business improvement that often gets lost when we explore current operational and delivery processes. As we’ve discussed here before, true customer satisfaction is a function of both product excellence AND delivery excellence. Have a great product and screw up the delivery, and you’ve got a recipe for captive customers itching to defect the moment someone else offers anything close to your innovative solution. Conversely, providing great service in support of a mediocre product only delays the inevitable. Great products and great service, taken together, are the winning recipe for success. Pretty intuitive right? Well, if it’s so intuitive, ask yourself why so many of our improvement efforts focus only on downstream delivery versus upstream innovation?

I am a big fan of systematic business improvement of our delivery processes. And goodness knows, there is no shortage of broken delivery and service processes. There are some pretty good products and solutions out there that are only achieving a fraction of their market potential because of the service environment in which they operate. But at the same time, there are some pretty good service organizations out there that are severely handicapped by their company’s lack of any significant product innovation.


More Jobs anyone?

Myth Busted: Product Innovation DOES NOT start with better research 

There is no better example of a company that has achieved both Product and Service excellence than Apple. In all of the Steve Job’s eulogizing that is occurring out there, there is one characteristic that I find particularly noteworthy and relevant to this discussion. It was mentioned by the Wall Street Journal a few days before his death, discussed in  a number of interviews, and is a theme that has re-emerged in Isaacson’s biography that hit the shelves yesterday.

A bold ‘call-out’ in an article that accompanied the iPhone 4S release stated simply: Apple doesn’t ask customers what they want.” I must admit,  what I heard at first didn’t match what was written. What my ears “heard” was that “Apple doesn’t care what its customers think”. Incidentally, I showed the article to three people and when I heard them share the story with colleagues later in the day, it was evident that they had heard the same thing. Yet clearly the article wasn’t saying anything close to that. The call-out said they don’t  ASK customers what they WANT, not that they don’t care what they need.

What they ARE saying is that the key to innovation is not gobs and gobs of market research and consulting fees to ask customers what they want, but a recognition that customers don’t typically know what they want. I realize this sounds a little condescending, but try this interpretation on for size — “It’s not the customer’s JOB to figure out what the product should be, how it should be designed, and what value it should deliver”. In fact, that’s from Steve Job’s own mouth. When you look at it like that, it shows up as a deep, intense respect for customers and their time, as well as a declaration of what the accountability of innovators should be!

When our companies design products, most of us don’t live in that same universe. Rather, we spend lots of time and money asking customers for opinions about things they have no idea about, and which opinions is it not their responsibility to provide in the fist place. Great product developers, on the other hand, inspire customers by giving them something they didn’t know they wanted but which, once they have it, they can’t imagine having lived without.

Redesigning the product aspect of our offers is critical to providing high levels of sustainable satisfaction, yet improving the product design process is altogether different from what we do on the operational side of things. In operations we must start with the “as is”. In the product space, we must frequently ignore the “as is” insofar as creating new solutions are concerned. In operations, we strive to avoid waste and unnecessary mistakes. On the product side, we want to encourage mistakes and perhaps even encourage failures. In operations, we base our solutions on in-depth analysis of past problems. In the product space, we base our solutions on a vision of an inspired customer at some point in the future.

Getting the Product Right 

If we look at what companies like Apple do right when it comes to product development, is boils down to both WHAT they do, and the ORDER in which they do it. Let’s look at these one by one.

1. Innovate — Most companies start with research that tells them what customers want — focus groups, surveys, etc. That’s essentially a recipe for a better mouse-trap, but not one one that will create visionary leadership and reveal new market opportunities that will inspire and rally your end users. The first step in product development is to push your team to challenge existing market parameters, barriers, and paradigms, rather than passively accepting them as necessary constraints to their thinking. Are we developing around the boundary of our existing offers (yawn!) or are we redefining what the boundaries are?

2. Integrate — As you begin to define new boundaries and push yourself toward innovation, remember that great products not only exist independently, but also demonstrate their innovation through the offer it is positioned within. Great product companies put as much effort into the paradigm and business model in which their products exist as they do the products themselves. For example, Apple once had dozens of products from Printers to a wide variety of peripherals and product models. One of the first things Jobs did was draw the infamous 2 by 2 matrices- Professional/Personal; Laptop/Desktop. The vision was for each quadrant to have one product, effectively driving the product portfolio from 50 down to 4. Sure, there ultimately evolved more than a handful of products, but the final number was a heck of a lot closer to 4 than to 50. And it’s not hard to figure out which product (iPad, iPhone, iPod, iMac, etc…) fits where, is it?

3. Assimilate — The third step is assimilating it into the market. If you are bold enough to innovate rather than respond, then it will be necessary to help educate and perhaps even overcome the skepticism of customers. It’s a necessary investment when you aspire to redefine a market. But by the same token, this education and informational value can actually be part of the customer experience, and sometimes even drive further levels of delight. Apple storefronts, for example, are as much of an experience in and of themselves as they are outlets for education and assimilation. And at +$40k of sales per square foot of retail space, it’s a pretty cost-effective sales channel!

4. Evaluate — Earlier, I said Apple doesn’t  focus on Market Research like other organizations. But that doesn’t mean they don’t do it. They spend money just like every other company does on research, but it’s usually after the fact and not designed to tell them what the customer needs but rather if Apple has hit the mark in its innovative journey. And while some would say it helps validate their success, those inside Apple would say it helps accelerate things, both in terms of further successes, and miscues. Great innovators find ways to accelerate and learn from failures.

So where are your strengths today?

Is it the creativity of your product portfolio? Or is it your ability to overcome product weaknesses and failures through stellar customer service?

If we get the product mix right, then service becomes not a means of correcting or recovering, but rather a way of enhancing and augmenting the customer experience so that the total package does not ask the customer to trade off one dimension of the experience versus another, but, rather, allows them to enjoy the rare combination of exemplary performance in both dimensions.

-b

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

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Service In the Eye of the Storm…

Stuff Happens…

We’ve all been there.  The cancelled flight. The lengthy power outage. The inconvenient disruption in internet communications. Higher than normal dropped cell calls. You’d think that whoever is calling the shots on the weather patterns lately would know the magnitude of  chaos they are creating in our lives. It’s enough to drive you nuts!

God grant me the serenity to accept the things I cannot change…

Hurricane Irene, though relatively tame to a gulf coast native like myself, once again forced me to reflect on how storms like this can disrupt life’s little conveniences. On the one hand, it’s quite amazing how stressed and freaked out we (including yours truly) get with what are, in the end, minor inconveniences–many of which would be regarded as luxuries elsewhere on the planet.

Let’s face it, we’re all human, and while we get as frustrated as the next person when inconvenienced, we all are capable of realizing and accepting that certain events simply fall into the category of “S**T HAPPENS”. While nobody likes to wait on hold for two hours to talk to an airline, most of us “bite our tongue” when talking to the agent because we know they are probably as stressed, if not more so, than we are because of what they’ve had to endure during the time we were on hold.

…and the wisdom to identify idiocy!

On the other hand, it is equally amazing, given the advances in service capabilities and technology, that we are unable to avoid, or at least help customers to tolerate, the downstream impact of these events. Consider the following examples from last weekend’s flight mess caused by multiple airport closures in the Northeast.

  • Text message informing a passenger of a canceled flight fifteen minutes after the last alternate departure
  • Text message instructing the passenger to CALL the airline for additional information, exponentially amplifying an already uncontrollable workload/call volume
  • Call-in number with an automatic message that says essentially, “we have too many incoming calls, call back later.” Really? A six-billion-dollar Fortune 100 company in 2011 with a message like THIS?
  • Call queues (for airlines who, under normal circumstances, pride themselves on differentiating between “tiers” of frequent fliers”) that suddenly lose all such distinctions in the midst of a crisis–with hold times from two to three hours throughout the weekend
  • A website containing little if any useful information on the situation at hand, self-help suggestions for what I could do in the meantime, or anything else that might have alleviated the stress
  • Complete absence of any visible “behind the scenes” or back office process to re-book flights automatically (my reservation was essentially cancelled leaving me to re-book myself with no apparent prioritization for my loyalty status
  • A workforce that, despite all their effort and hard work, (and I do mean hard work because they had 200 reps working what I estimate to be at least 300,000-500,000 displaced passengers), did what???

Crises are the real MOTs…

There has been a lot of talk in recent years about “Moments of Truth” (“MOTs”) when it comes to service interactions. We often think about MOTs from a transaction standpoint, e.g.,when a customer calls to connect service, ask a billing question, get updated about a service interruption, or simply to complain about an inconvenience. For me, though, the real MOT is what happens in a true moment of chaos or crisis–when the customer’s daily life is truly interrupted, i.e., when they actually expect things to suck. It’s at that moment, when natural optimists become pessimists, that one of three things happens:

  • Customers’ bad expectations are realized, either creating or reinforcing a perception that when unforeseen events occur, things will inevitably become hopeless, i.e., a feeling of general resignation.
  • Lowered expectations become their worst fears…and you become recognized as the company that falls apart rather than shining in the face of adversity.
  • They are completely “WOWED” by the significant, yet counter-intuitive, responses they see from you at a moment when they have every expectation in the book for not doing so.

For most of us, it’s typically the first experience, and we move on with our lives, disappointed but not surprised. We remain only marginally engaged, and perhaps, when the next opportunity presents itself to switch to another supplier, that new supplier may have the proverbial “edge”. But for companies who really understand these dynamics and strive for true loyalty, they know the power of the third outcome above, and the value that small, but memorable, responses can have in these real MOTs.

What if…

…I had received a text message telling me that an adverse weather situation was unfolding and that by responding “helpme” to their text, they would search for available options and contact me to see if I wanted to initiate any of these two or three alternative plans? What if the message I heard when I called (instead of  “We’re busy. Call back later.”) had directed me to a website that contained actual useful information (even if nothing more than “We’re at the mercy of the weather and the airport, and we won’t know anything until tomorrow at 2 p.m.”)? What if instead of my reservation being cancelled, they had proactively re-booked me on another flight? And what if (perhaps for only their million-mile customers) they had actually offered me some REAL solutions, like, for example, flying on a different airline or going through an unconventional (perhaps even inconvenient and uneconomic) routing.

Insanity=

Doing the same thing over and over again, and expecting a different result…

We all understand crises and uncontrollable events. We all know that we cannot blame an airline or a power company for things like earthquakes, weather, some mechanical failures, and the like. And we know, as well, how inappropriate it is to blame the people who are doing their best in a bad situation. But I would argue that in a time and era where margins are thin and everyone is looking for new ways to differentiate themselves…and particularly in a time when customers have been conditioned to expect the WORST from us…that is the perfect time to step up and offer creative and inspiring solutions.

Some of these may be BIG things–the kind of heroics you hear about in commercials, performances that border on the uneconomic and, perhaps, unrealistic–solutions that would drive a company to the poorhouse if they were truly institutionalized (Can anyone forget the FEDEX driver who couldn’t get the drop box open, so he lifted the entire multi-hundred-pound box into the back of his truck?). But I would contend that it’s the little things that mean the most–the things that show you’ve had the FORESIGHT to understand how a customer is truly affected in a crisis. ANTICIPATE your customers’ most likely state of mind in these situations, and develop small solutions that can, in fact, be INSTITUTIONALIZED.

-b

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

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A CPO’s Declaration of Independence

At its core, the word “independence” means being free of outside control or influence.

We celebrate independence from many things: from the oppressive control of people and governments, to simply becoming independent from our once protective or “controlling” environments.  Every 4th of July, we in the United States celebrate our national independence from prior years of British control, and its declaration of that freedom in a charter that would  define the very freedoms and liberties we in the US enjoy today. Most often, when we celebrate “independence,” whether it is as a nation or as individuals, we are celebrating a moment in time, or a phase when that independence is either declared, demonstrated or both.

But there is another type of independence we should also celebrate, i.e., the act of distancing oneself from the (isolated, blind, and often inappropriate) influence of another person or organization’s actions. It is more of a “state” that an organization exists within, and one that defines the boundaries of its existence, than it is a single event or moment in time. Such is the case with most corporate oversight and regulatory functions that have emerged in recent years.

As an aspiring young auditor over 20 years ago, I remember this type of independence being drilled into my head more than any other directive in my early career. It’s  a principle that has shaped both external auditing as a discipline since its inception over a century ago, and one that has defined internal auditing now for decades. It is also a principle that today defines most common forms of regulatory and oversight functions, particularly when issues like safety and security are involved. But these functions, while sometimes viewed as oppressive in their own right, were initially set up to prevent inherent conflicts of interest that arise in the absence of “common sense” checks and balances.

While many would call these functions a “necessary evil,” their independence and objectivity gives us comfort that someone else is watching–someone who does not necessarily have an “axe to grind” or a “dog in the race.” And if positioned correctly, this independence can also be a powerful enabler for the business by providing outside and unfiltered information and perspectives that are not easily observed by day-to-day operating management. Learning how to create that balance is critical to any function performing in that type of advisory or oversight capacity.

Today, the role of the Corporate Performance Manager, or Chief Performance Officer (CPO) as some companies have positioned it, is one in which the concept of independence and objectivity is becoming increasingly critical. Just as auditors have had to weather the perception of being the “bad guy,” so it is as well for the CPO. In fact, many companies that have deferred making the decision to have a Corporate PM function, have done so to avoid creating another oppressive layer of control, and avoid the animosity that might get created between operating and corporate management. But it is these organizations who sacrifice a very significant benefit that a Corporate PM function can deliver. I would submit that it is not the presence of independent advisory or oversight functions that create these problems, but rather the way they are set up, chartered and managed that does so.

So how does this sense of “balance” get created?

Here are some common traits of successful Corporate Performance Management functions that have been able to use the principles of independence and objectivity in a way that enables more collaborative success, while providing the healthy oversight and control that is desired by the firm’s Board, Officers and Shareholders:

  • Organizational Independence and Visibility- Just as most Audit functions have a corporate responsibility to the CEO and Board of Directors, so it is the case with most successful corporate PM organizations. By the very nature of their reporting relationship to the CEO (or equivalent), they eliminate the very conflict of interest with specific business functions that can compromise more integrated and synergistic solutions from occurring.
  • Strategically Balanced– Their charter is driven by the Firm’s Balanced Scorecard, rather than limited subsets of operating metrics that may yield more limited operational successes at the expense of the more balanced set of business outcomes desired by shareholders
  • Non-Threatening- While their ultimate customer is the CEO, they view operating executives as a key enabler of, and partners in, their collective success. They do this by addressing issues and performance gaps in a way that makes the operating unit become successful in the eyes of the Firm’s C-Suite and Board, rather than their own visible value add.
  • Removing Barriers- One way they become viewed as genuine partners with operating management is that they use their corporate visibility and influence to break down barriers (like corporate politics, access to information, and cultural roadblocks) and unlock value that has often eluded operating management.
  • Inclusive and collaborative– Good PM functions are inclusive, not only with respect to their approach, but also in their delivery tactics. They often staff their departments with people from the operating units themselves (using short term and rotational assignments), increasing their operating credibility and ultimately developing real PM champions across the business.
  • Facilitative– These functions are far more facilitative in their approach, rarely performing direct roles in developing conclusions and implementation. While results are often the same as those they might have developed themselves, playing a background role and “leading” the operating staff to the right answers ultimately strengthens operating ownership for the conclusions and changes that ultimately emerge.
  • Share the Joy– Good PM organizations are often generous in giving credit for operating changes directly to operating executives. While they are successful at tracking corporate value delivered by the PM process, the credit for the implemented changes is often given directly to those who implement it.

The "bad cop" perception that is often ascribed to corporate oversight functions will never get eliminated completely, and will continue to be a factor as Corporate PM groups proliferate across the industry.  By its very nature, there will always be times where their responsibility to the CEO and Board will result in the development of recommendations or the presentation of information that benefits the collective whole, rather than the specific interests of a particular business unit. But more often than not, the type of synergistic value we are looking for can make heroes out of operating executives while still benefiting the collective Enterprise.

So on this Independence Day, let’s remember that we can still preserve the independence and objectivity our profession requires, while being a strong force that liberates and frees our operating executives to reach their goals and ultimate potential.

Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

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When Benchmarking Gets “In the Way” of Good Performance Management…

Nearly three decades after benchmarking came on the scene, companies still claim it to be an integral part of their internal performance improvement processes. But few would argue that its value to the business is now well below where it once was. And sometimes, it actually gets in the way of identifying improvements and driving change.

There is not a client I work with who doesn’t have their shelves lined with volumes of benchmarking studies and reports. Nearly every industry group produces some kind of comparative metrics report for its members. And every industry has those companies that we might consider to be “benchmarking addicts” — those who participate in nearly every study they can in the spirit of demonstrating their performance improvement “commitment” and “prowess” around driving change. Ironically though, it is rarely these companies that define the top tier of their respective industries in terms of real performance.

Here are some inherent flaws with benchmarking today:

  • Benchmarking is largely “point-in-time” driven and retrospective in nature. While this can be useful in “stress testing” targets and defining high-level gaps (“low-hanging fruit” or “quick wins”), it largely ignores the trends or shifts in metrics that are far more critical to identifying and driving course corrections.
  • Comparative studies almost always focus on lagging versus leading indicators. This often leads to a culture of “managing through the rear-view mirror”. It also fixates the organization on measuring things for the sake of comparisons, when some of those metrics may have have  become irrelevant or even obsolete.
  • Benchmarking focuses on “common metrics” versus those that may be critical to you, but perhaps not everyone. It’s okay to have a few metrics you routinely measure for the sake of comparison, but when these metrics begin to define your scorecard, it’s time to recognize when the “tail is actually wagging the dog”.
  • Comparisons are done for many reasons, not all of which are performance driven. More often than not, benchmarks are used to identify strengths for the sake of communicating to shareholders, regulators, or sometimes even internal Executives. They’re sometimes even a vehicle for rationalizing and justifying poor performance, often confusing the organization and sending all the wrong messages.
  • Benchmarking often leads to “group think”. We look for commonalities and like to follow the “herd”. Let’s face it — It lowers our risk to say, “if company x is doing such and such, then we should be doing it too.” But it’s sometimes the anomalies in the data that can show us where real innovation is happening. And in the benchmarking world, anomalies are often dismissed as outliers and suggestive of data problems rather than solutions.
These are just a few of the many ways that benchmarking “gets in the way” of real change, and there are many more where these came from.
As with anything we do long enough, it’s easy to get into a corporate habit of doing something and forget WHY we are doing it in the first place. So if you want benchmarking to be a value-adding component of your performance management process, here are a few things you can do:
  1. Realize that benchmarking is about you, and not about others. It’s fine to use comparisons to help you better understand yourself and your performance weaknesses and perhaps “stress test” your targets, but when you start using benchmarks to rationalize and justify existing performance and actions, it’s time to refocus your thinking on you and your company’s improvement goals and the learning benchmarking can provide.
  2. Determine where benchmarking fits into your overall performance management process, and use it that way. In cases where benchmarking is done for some other reason, like communicating to stakeholders or regulators, call it what it is and keep it at arms length from the game of real performance improvement.
  3. Focus your benchmarking on the measures that matter to YOU rather than a consultant’s peer group or client base. More often than not, it may be better to do a small internal project to gather that competitive intelligence, than it would to consume resources to force-fit yourself into a large peer group.
  4. Orient your benchmarking around learning and innovation, rather than simply “following the herd.” This will sometimes cause you to look at different metrics, and look at them differently. Anomalies will become a source of new innovation rather than simply a data problem to discount.
Benchmarking can be a great tool for defining, catalyzing and inspiring change in your organization. Take a hard look at how your organization uses these comparisons today and be honest with yourself about where this supports or hinders your performance management process. Make benchmarking part of your performance management process rather than an end in and of itself.
Author: Bob Champagne is Managing Partner of onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Bob has over 25 years of Performance Management experience and has consulted with hundreds of companies across numerous industries and geographies. Bob can be contacted at bob.champagne@onvectorconsulting.com

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The “Low Bar” Mentality- Recognizing and overcoming mediocrity in customer service experience…

  • An appliance repairman or cable television technician shows up with just ten minutes remaining in his four-hour schedule window and we’re relieved.
  • A waitress makes no mistakes in our dinner order and we reward her exemplary service with an above-average tip.
  • We laboriously type our social security number and credit card information into an automated IVR system and then are unsurprised when asked to repeat it all again to the agent who answers the phone.
  • We stand in line at the grocery store, watching as the cashier leaves her station and walks back into the store to check a price.
  • We wait patiently at the hotel registration desk as the clerk takes a phone call even though she’s in the middle of checking us in.

What do all of these mind-numbingly familiar scenarios have in common? Several things actually. First, they are all examples of stunningly poor customer service, so commonplace that we scarcely bother to even remark about them to friends and families. Second, we, for the most part, allow them to happen without comment, recourse, or even recognition. We don’t get upset, switch away from the offending service providers, or even suggest alternatives. More insidiously, though, it has come to be what we expect. We have reached a point where we’ve concluded that nothing better is possible. We have lowered the bar so far on service providers that we frequently find ourselves in the ironic position of rewarding mediocrity.

Exhibit A for these diminished expectations is restaurant service. Our culture is one in which we expect to pay a fifteen-percent gratuity to wait staff who simply show up for work. The server who actually gets our order correct (i.e., who does their job) is thought to be astonishing and expects to receive more than this nominal amount. And we happily pay it.

Companies, almost without exception, will tell you that the reason for diminished customer service is cost containment. You can’t get an agent on the phone quickly because agents are expensive. You have to sit at home all day waiting on the technician because gas and trucks are expensive. Sorry, that’s just how things are these days.

But it isn’t really about cost at all. It’s about managing to the level of service that customers expect, and going no further. As a consequence, our expectations today are so minimal that on those rare occasions when we phone a business and a person answers instead of a machine, we’re momentarily stunned into silence while thinking of what to say. We feel guilty giving only ten percent to the waitress who gave us surly, inaccurate service at lunch.

It is not the purpose of this brief treatise to propose service solutions; these are addressed in plenty of other places. Rather, the point here is to simply acknowledge and make explicit the low (and falling) expectations we’ve all come to accept, the hope being that recognition of this fundamental state of affairs will, as consumers, make us just a little more willing to demand something better from those who provide us with service, or, as service providers, to rise to these heightened expectations. In a society where everyone settles, there is no incentive to improve.

But what are we, as service providers, to do? Most importantly, expect customers to expect more. Rather than benchmark our service performance against what the competition offers, evaluate it against what’s possible. This, in turn, requires an aspirational mindset that is not terribly common in American business.

On the flip side, we are all not only business people but consumers as well. Adopt the mindset that you deserve more than you’re currently getting from your service providers. The worst that can happen is that you get a reputation as someone who doesn’t settle. That certainly can’t be a bad thing.

Ultimately it becomes a virtuous circle. Heightened service expectations beget improved service. This, in turn, makes us expect even more. Heck, before you know it, that technician might show up at your house at exactly the time you want him there!

BKS

Guest Author: Brian Kenneth Swain is a Consultant with onVector Consulting Group, a privately held international management consulting organization specializing in the design and deployment of Performance Management tools, systems, and solutions. Brian has over 25 years of Performance Management experience and has consulted for numerous companies across a wide range of industries and geographies. Brian can be contacted at bswain2000@yahoo.com.

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