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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Metrics that make you go…YAWN…

Inspiring or Uninspiring?                                                                                                       -It all starts with the strategy…

On each client engagement, regardless of type (Business Planning, Assessments, Turnarounds, Process Improvement, etc.), we invariably find ourselves working extensively with what I call the company’s or business unit’s Strategic Performance Framework (i.e., the specific goals, objectives, and KPIs of the area in focus). That is because these three critical elements serve as the foundation for everything that follows. It essentially answers the proverbial  question “For the sake of what? (FSOW?). FSOW are we making this or that investment? FSOW are we developing a new product? FSOW are we consuming resources to improve a specific business process?  FSOW are we changing our organization chart (again…)?

Without a thorough analysis and understanding of  goals, objectives, and KPIs, any plan that is developed will simply be a formalized road map for throwing darts at a wall. Goals and objectives tell us the destination. KPIs give us continuous feedback as to whether or not we’re on course for our journey, or if deviations from plan are occurring.

This shouldn’t be new to many of us, as any manager worth his salt understands the basics of strategic thinking and performance management. Yet, when we step back and look at the organization or business unit in total, it’s not unusual to observe some big “cracks” in the foundation. And often it is often the KPI’s and metrics that are the first indication that the strategic underpinnings of the business unit are starting to get shaky.

Strategies vary…and so should KPIs…

Working with as many organizations as I do, you would naturally expect the destinations of each client to be different. Take “customer contact” organizations, for example, where there are clearly a myriad of contributions that the organization can be set up to achieve — providing purely reactive service, converting leads, driving participation in customer programs, increasing market share, retaining customers, building loyalty… the list goes on. And most often, these goals and objectives do, in fact, differ from company to company (although there is a growing tendency among managers to “follow the pack” where  goals and objectives are becoming more about “maintaining the course” than about providing new and inspiring destinations — a subject for another day!)

But despite the wide array of strategies we expect, and often see, we still find that nearly every customer service organization focuses on the same operating metrics. Back to the Call Center for a moment, here’s a list I can almost guarantee that EVERY company focuses on.

  • Speed of Answer/Service Level
  • Abandon Rate
  • Call Queue Length
  • Average Handle Time
  • Agent Satisfaction
  • Agent Availability/Productivity

 The list goes on…

No matter how different the objectives are for the Customer Service channels, the measurements (the things the reps care most about since they influence everything from raises to career progression) remain the same. Don’t believe it? Next time you see your call center manager at the coffee machine, ask them what the top three measures of success are for their group. Try the same question with the reps themselves.

How can that be? Dramatically different destinations, yet metrics that tell you little about progress toward the destination, assuming your mission is something other than churning calls, tasks, and shifts.

Are you “de-motivating” your workforce?

This is clearly a sad state of affairs, because it not only tells us how disconnected our day-to-day activities are from our strategy (read PURPOSE), but really exemplifies how intellectually lazy our strategic planning processes have become. Assuming the organization has developed a compelling and inspiring purpose (which many have, but most still lack), very few have a set of KPIs that track with it. Worse yet, most of these KPIs (the ones above that have been measured for decades) scream for more clarity, consistency, and targets based on something other than “finger in the wind” aspirations or the “annual 5% improvement.”

And as these KPIs trickle down into the organization, their relevancy begins to wane exponentially. What can a call center manager or rep do from one day to the next to drive an outcome like average service level? Sure, there are long term strategies to “course correct” when negative trends emerge (better forecasting of workload, more flexible staffing strategies, etc.), but what about day-to-day behavior? Most often, this is left to the intuitive feel of the operating manager and their motivational style, which can affect consistency and effectiveness over time. Even if you end up measuring things that are “conventional” or somewhat dated, failing to link these in some coherent and causal manner to the organization’s broader goals will undoubtedly elicit the proverbial yawn…that is assuming they haven’t already dismissed the metrics as irrelevant.

Waking up your strategies and KPIs…

So here are my five tips for “waking up” your customer metrics:

  • Make sure they are built on the foundation of a compelling and clearly articulated strategy. If your strategy doesn’t get you out of bed energized every morning, you’ve got more work to do. Resist the temptation for that “follow the pack” 3-5% improvement gain from last year. What is it your business unit is really there to accomplish? Think business outcomes (sales, leads, changes in customer disposition, etc…) rather than operational activities (calls answered, transaction speed, etc…)
  • Line up your tactical objectives to your strategic purpose. If your goal is, say, to improve customer loyalty, then your objectives should revolve around the known drivers of loyalty. And avoid the “circular answer” to these questions. An objective for attaining loyalty is NOT to improve transaction satisfaction, but more likely, to eliminate the need for the transaction in the first place.
  • Develop relevant, clearly understood, customer-centric KPIs. Should you really be measuring, “average service level”, or should you be measuring the number of times a call exceeds 20 minutes, or the number/percent of calls that get dropped prior to resolution, etc. I’d submit these are bigger drivers of loyalty and dissatisfaction than, say, average queue lengths or duration of after-call work. Think one or two levels beyond what you’re currently measuring. Think drivers versus macro results. If you’re on a journey from New York to California, a measure like service level is akin to telling you what state you’re in when it would be more helpful to know when you go off course by x%.
  • Make metrics relevant at the department level AND the work face — the best metrics are those that can be discussed and improved at any level in the organization. If your objective is to eliminate a particular source of dissatisfaction, then declare what that driver is and measure it at every level across the business. Get the organization talking in the same language and counting things the same way, and you’ll be tracking a lot closer to your desired outcome.

Having a set of metrics for the sake of measuring things is not only a waste of time, but can be a real distraction to achieving your desired outcomes as a business. If your mission, goals and objectives have been declared in a clear and compelling manner, then do yourself a favor and spend some time making sure your metrics will guide you toward that outcome.

-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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Beyond KPI’s : Measuring the “execution” of your plan…

Simple scorekeeping isn’t enough…

I am always amazed at the number of organizations that equate Performance Management with measuring only business results and a handful of supporting KPI’s, and calling it quits. Performance Management is much more than that, and I would argue that if that is the extent of your PM program, you have a pretty good chance of doing more harm than good.

I guess we’ve all gotten caught up with the notion of keeping things simple–seeing the “forest through the trees” if you will. And there is some merit to that type of thinking. After all, it’s difficult to manage at the strategic level when the organization measures too many seemingly irrelevant things. And there is no shortage of “experts” in the field preaching about the importance of limiting the number of KPI’s and “optimal” numbers of business metrics. To some extent, I agree with their argument that a highly focused set of KPI’s is essential to a good PM program. But it doesn’t stop there.

If you’re a regular golfer like me, you certainly track your scores over time. After all, you can’t get better if you don’t track your results. This is the business equivalent of your annual P&L and quarterly earnings trends.

Good KPI’s also tell us about the “drivers” of your success…

But if you play often enough, and aspire to get better, you’ll undoubtedly do more than that. You’ll begin to track things like “% of fairways hit”, “number of greens in regulation”, “average putts per hole”, “up and downs”, etc. Every sport has its key statistics, just like every business has its Key Performance Indicators (KPI’s). In fact, many golfers now track these statistics on their “Sky Caddies” or mobile phones in real time, just like most businesses now track their KPI’s on a myriad of desktop and mobile applications that are available for that purpose.

But for most golfers, and for many businesses, that is where their PM stops. Sure, we all do things to get better and “manage our performance” over time. In golf, we practice and practice more. We spend hours at the driving range hitting balls. We read countless magazines, watch instructional videos, and pay others to “fix” our swings. In business, we train and coach our staffs, improve our work environments, redesign our processes, and invest in new equipment and technology in pursuit of getting better. But in terms of tracking our progress, many of us still revert to the same limited suite of KPI’s to tell us whether we’re improving or not.

Are good KPI’s enough?

A few weeks back, I read Bob Rotella’s new book called “the 15th club”. Bob is a renowned sports psychologist who has coached many of today’s tour professionals–not on the mechanical elements of their game, but on the mental aspect required for peak performance. I’ve referenced his work in some of my past posts, like “progress over perfection,” because of the strong parallels I see between his teachings and corporate performance management.

One of the key points Bob makes in his latest book is the difference between how good golfers and bad golfers think about their shots, and what they spend their time measuring and tracking. As any golfer (beginner or professional) knows, “thinking” about a shot, both before and after its execution is inevitable. It’s WHAT you focus on that’s important.

When most of us hit a good or bad shot, we think about its impact on our round. Maybe we ponder the effect the shot will have on our statistics. We “shank” a ball into the trees and translate that into hitting one fewer fairway. We miss a long putt and worry about the impact it will have on our putting average. It’s hard not to look at each failure through the lens of the impact it will have on our overall results. It’s only natural. People around us will tell us to “shake it off” and stay positive. Well, the fact is that human emotions don’t easily allow for that. More often than not, we retain that thinking, allowing it to work itself into future shots and future rounds. One bad shot leads to more. It’s how good golfers get into slumps. Most golfers who play regularly know how to strike a golf ball (they’ve done it hundreds of times), yet it’s not uncommon to see some really ugly shots repeat themselves several times during a round, and for that ugliness to then continue into future rounds.

Measuring HOW you execute is often just as important as the results…

Rotella doesn’t preach the mantra of just “shaking it off”. Instead, he proposes new things to focus on and measure. His premise is that even the pros only hit a few “perfect shots” per round. After all, golf (and life) is not a game of perfection. The key is recovering after a bad shot and finding creative ways to score amidst the imperfection. After a bad shot, he suggests exploring the things that are essential to a good shot. Did I go though my pre-shot routine? Did I choose my target well? Did I visualize the trajectory I wanted? Did I finish my swing? If I did, and the shot did not execute well, then accept it and move on. Sure, there are times where the fundamentals may be broken, but that’s for your practice time, not in the middle of a round. In competition, you work with what you have, the strategy you select, and focus on whether you executed that strategy or not.

More often than not, measuring the things that are essential to good execution is as important as measuring the execution itself. In fact, thinking about the outcome DURING execution can actually be counter productive. It’s why most pro golfers try to not spend too much time looking at their stats or even the leader-board during the round.

Measuring critical behaviors and practices…

In business, it’s just as important to measure the parts of a process or activity as it is to measure the outcomes. In fact, good companies often measure the presence or absence of specific instances of certain behaviors essential to success.

When it comes to safety performance, good companies have gone beyond simple reporting of lost time and “recordable” events, and even beyond things like “near misses” (all valuable KPI’s). In addition, they look at the presence or absence of safe behaviors and practices. Good call centers go beyond measuring transaction times and satisfaction levels and now look at whether the rep demonstrated certain behaviors that are linked to a successful resolution of an inquiry. If your plan is a good one, and you understand how specific practices and behaviors drive your results, then measuring those behaviors is often as important than the result itself.

Good companies trust their strategies, processes and policies to produce the outcomes they desire and measure their effectiveness at adhering to those activities. If they don’t produce the specific business outcome, then they will undoubtedly go back to the drawing board and evaluate whether the plan was a good one and redesign if necessary. But they won’t do this in the middle of execution just as good golfers don’t do it in the middle of competition.

This may sound  a little like I am opposing the very flexibility that is needed for managing in real time, and enabling in-situ course corrections. But that’s not my intent. In fact, what I’m saying is that you should have a set of execution measures and ways of thinking that will help you focus on the right things during execution rather than doing that by the “seat of your pants” and relying on  a distant set of KPI’s to navigate that process.

A good performance management system starts with the right goals, objectives, and KPI’s. But these KPI’s will not help you manage the execution of your strategy and focusing on them DURING execution will often cause more harm than good. Instead, measure the behaviors and actions that were part of your strategy even if specific day-to-day outcomes don’t pan out exactly like you envisioned. Only then will you be able to consistently execute and determine if your plan is working, and whether or not it needs retooling.

-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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Data, Dashboards, and Debt Deals…

Bear with me, folks! Today I’m going to take a little departure from my regular discussion of business performance, and talk a little bit about the manner in which data and indicators are used (or misused)  in the debate we are having now with respect to US economic policy and direction. As is often the case, the same principles that are critical to business performance management can be just as valuable in our public policy debates. So I think the departure is both timely and relevant.

Today, the President and Speaker of the House Boehner…   Blah…Blah…Blah….(Yawn!)”

If you’re anything like me, these “debt talks” of late have become nauseatingly irritating. No matter which side of the political aisle you occupy or favor, it’s hard for anyone to see this as more than a glorified adult schoolyard brawl. It is certainly not rare these days for our elected officials to engage in such a political circus, but this one has taken on a new level of insanity.

What we have here is a public debate about financial and economic policy that is occurring devoid of any meaningful facts or analysis. I’m not saying that the facts are not there, but they have most certainly been kept out of the public debate, only to be replaced by the rhetoric and soundbites of political hacks. And that’s  a recipe for a solution that will at best be a meaningless and impotent compromise , and at worst, a precipitator of  market panic and economic chaos.

Needed: Basic Facts (AND a Common Language)…

Many of the conversations I witness on this topic, regardless of whether it’s at the family barbecue, the water cooler, or various financial and academic circles, seem to turn a blind eye to the basic facts necessary to contribute in any meaningful way to the debate. Ignorance? Perhaps. Intellectual laziness? Maybe. Pure emotional politics? Probably.

Sure, we see lots of numbers thrown around, but most of them either lack sufficient context, or are deliberately telling only a fraction of the story. And even those facts need a translation guide to determine what they really mean. Does a tax increase mean a raise in the tax rate, or simply continuing with a previous tax cut? Does spending mean decreasing a future forecast, or a cut to the actual baseline? Without  some real digging and filtering of the noise, it’s virtually impossible for the average person to have an educated opinion about any of this. Given how “muddy” the information has become, it shouldn’t surprise anyone that this has taken on a purely emotional level of debate.

Any good debate that has a prayer of resolution, whether in business or public policy, starts with a basic understanding by all parties of a key set of “accepted” facts, understood in the same basic context. That type of “common language” allows the debate to hinge on differences in principle and philosophy, which can be argued toward some resolution (or acceptance of a path forward). Without that common language, the vast majority of the dialogue becomes noise, tied up in debates about the validity and relevance of the data amidst the corresponding rhetoric that accompanies both.

Creating a Common Starting Point…

Years ago, and for a brief moment, an eccentric presidential candidate with an irritatingly noisy voice attempted to change the debate by introducing some semblance of simple, fact-based information into the political debase using very basic illustrations. It came in the form of hand-drawn posters that were later imitated by nearly all Sunday morning talk show hosts and other political commentators. Who can forget those “white boards” presenting analysis of  the conflicting vote counts in subsequent election results?

Lately, however, the attractiveness of utilizing SIMPLE factual information to inform these debates has clearly waned. I’m not sure what the main culprit of this is–whether it’s pure information overload, or the shortening of our collective attention spans to be able to process it, but the truth is that simple facts themselves are no longer informing our public debate.

Sure, there have been some attempts to inform the debate through unbiased factual information. For example, the national debt clock presents many key statistics that are pertinent to the debate. And back in 2008, David Walker, former head of the GAO presented, as part of his ” Fiscal Wake Up Tour “ one of the best unbiased visualizations of our collective financial health I’ve ever seen.

Much of what Mr. Walker presented in this undisputed picture of our economic health in 2008 (most of which is still relevant today) would be invaluable as a context and starting point for the conversations our politicians are having at the moment. Instead, we now operate in a world where we launch straight into policy debates without any shared or accepted fact base and no common language.

Stepping up the quality of our debate (in government and business)

Here are 5 suggestions for getting our debates better informed and more relevant:

  • Respect the audience– Too many of our leaders refrain from using unfiltered data to drive dialogue within their organizations, largely because they view it as too complex or advanced for the audience to effectively process or comprehend. While your audience may not operate in the same business or intellectual circles as you, most have a capacity to detect BS and see through overtly biased narratives.
  • Keep it simple– In some cases, the data needed to inform the debate is in fact complex (particularly in areas like the current debt discussions). In such cases, it’s the leader’s responsibility to simplify it. The above presentation from David Walker is an excellent example.
  • Make it visible– Make the information easily accessible and visible. Repetition and visualization are usually the keys.
  • Create a common language– be clear on what the information you present means, and the context within which it operates. Context is as critical as the validity of the data itself. Creating understanding and alignment around both are essential in focusing the dialogue toward a productive end.
  • Limit the “noise”/ rhetoric-  Commentary is ok, and often valuable. But when the narrative departs from the factual information presented, and becomes visibly biased, it becomes mere rhetoric and quickly begins losing credibility.
Maybe I’m being a bit of a Pollyanna, but I believe we could have avoided much of this political mess if those at the core of the debate were aware of the basic facts and context surrounding it, and transparent enough with the data to allow them to defend their REAL positions.
These lessons are as critical in managing the performance of a business as they are in managing the performance and direction of our public policy. Hopefully, we can all learn from this current debacle, and start our future debates on more solid footing.
-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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