2011- Year of the Squirrel

Posted on December 20, 2011 by Bob Champagne

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?

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.
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.
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.
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.
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.

Balancing Operational, Product and Customer Priorities…

Posted on November 16, 2011 by Bob Champagne

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:

Deafening Silence — Failing to communicate in times of chaos…

Posted on November 9, 2011 by Bob Champagne

Climate chaos wreaks havoc again…

Once again, the Champagne family has fallen victim to climate change in the Northeast, or at least two unfortunate weather incidents, whichever your personal/political inclinations require. First came hurricane Irene, and then, last week, the early fall snowstorm. Fortunately for me, I only suffered two days without power, as I was traveling on business for the week. Unfortunately for my family, they were asked to endure almost a week without power, as the outages in the Northeast lingered and local utilities struggled to get customers back in service. But, as of last night, the lights have come back on and life has gotten more or less back to normal.

As I wrote a few weeks back in my “Eye of the Storm” post, nearly every customer understands the nature of uncertainty and can recognize what are, and what are not, predictable/preventable and unpredictable/unpreventable circumstances. Hurricanes and early-season blizzards certainly fall into the latter category. But let’s face it, while we all get angry and frustrated, we are also able to temper, at least somewhat, our emotional responses when we recognize that such events are beyond anyone’s control. There are, however, aspects of such situations that ARE within our control. And failing to deal with these in the face of unfortunate events…no matter how controllable or predictable…can leave us with a feeling of legitimate anger and frustration. Such was the case with the extended power outages this past week.

Crisis management — it’s all about eliminating uncertainty…

I’ve talked a lot in recent months about sources of satisfaction, and, perhaps more importantly, dissatisfaction. But I keep coming back to “fear and uncertainty” as the biggest driver in today’s world, and perhaps the most critical in times of crisis, whether it be natural disasters, political upheaval, or simple technological failure (three whole days of no Blackberry service?). And while we may view much of this as being “out of our control,” as CCO’s, our response in terms of customer communication is ALL within our control.

How to #FAIL

So imagine the frustration of customers when they experience the following (all of which are real examples my family encountered during the recent storm event):

– A website with detailed outage map showing the number of affected customers in each town, and a link (which turned out to be just “bait”) to outage status updates. The status update reported that 95% of customers would be restored within five days. It wasn’t until you clicked a few more towns on the map (assuming you did) that you realized this was a “general” update and not specific to anything. Moral of the story — if you know nothing definitive about the situation (which they clearly didn’t because they were still assessing damage), then admit as much and state, instead, when you DO expect to have meaningful information to share. Lame (and possibly misleading) attempts to suggest that you’re providing legitimate and specific updates when you are not is easily seen through.

– The company’s use of social media during the peak parts of the outage was virtually non-existent. Less than ten Twitter messages during the first 24 hours of the outage, conveying insightful information like “We know there’s an outage”, “This was a really big storm”, and “Stay away from live power lines” could have been administered by my 95 year old grandmother, in terms of content provided (she apparently knew as much as they did) and technological savvy (she may very well know more than they do about how to leverage social media). IRONICALLY, my wife learned that our power was restored by a FRIEND via FACEBOOK!!! And when the information from the company did start coming out, it was hitting their feed well after the updates had already unfolded. And instead of displaying the feed prominently on their website, they buried it behind the “Follow us on Twitter” button (if you personally didn’t go track their Twitter page, you were “SOL,” as they say). In their defense, I suspect there may have been just one single employee responsible for managing all of these updates, but that’s a subject for another post. The company clearly spent tens of millions on the recovery effort. How much effort did they expend on communications and messaging throughout the crisis? Feels like very little.

Now THIS was a useful message!!!!

– A 500+ word letter from the CEO of the company explaining to us in lengthy, florid prose pretty much the same thing — This was a big storm, it was unprecedented, we are trying our best, and reasserting the general commitment of 95% by x date…which means NOTHING to an individual customer. To add insult to injury, we had to listen to the CEO pontificate about how this was the most challenging thing he’s experienced in his career, and how proud he is of his staff, and how concerned he is about his puppy who is out in the cold (OK, the latter is an embellishment of what was really said, but you get the idea). Spare me the lecture on what you can’t do and tell me what you can!!!

– An outage center (automated phone line) that asks (begs) you to report the outage and risky situations, but offers NOTHING else during the automated call, not even the most general, non-specific, non-committal statements, which, admittedly, would have frustrated me…but let’s at least be consistent. All that told me was that they cared a lot about what I could do for them in terms of providing information, but very little about what they could do for me. Heck, it would have been nice if they’d at least asked me to tell them if I’d seen repair work in my area. This might have suggested that they had some interest in learning about the status of restoration (even if they didn’t know themselves).

This entire ordeal, which plays out every time there’s a natural disaster or big crisis event (be it flight delays, hurricanes, or war zones), is becoming an interesting one. We are witnessing a sea change (or maybe it’s a teachable moment) in how we can and should deal with such situations. And it’s becoming clearer that customers (not companies) will probably be the best sources of information during these events. Social media offers a great conduit into that feedback and has proven time and again to be the best medium to solicit and report real-time feedback. The process has clearly changed, perhaps unbeknownst to the company. That, to me, is not only the emerging solution given today’s technology, but the most obvious.

How about we beat the incumbent at his own game?

What is not so obvious is the degree to which companies that we have entrusted to be the “custodians” of information — companies whose primary role is to service customers — remain so clueless as to the most effective ways of providing that service. They appear to be, at best, blind to, and, at worst, simply resistant to using these new channels and changing their internal processes to accommodate them. They are in the best position to aggregate customer information from the variety of channels available, merge it with what they know operationally, and report relevant and meaningful information in real time. Oh and, by the way, imagine the customer engagement you’ll achieve along the way!!! — the ultimate in crowd-sourcing for customer service. But, sadly, this doesn’t happen, and probably isn’t even on the radar screens of most firms. Instead, the more likely scenario is that they will be bypassed completely by some more agile and responsive third party (or perhaps an unseen competitor) that sees in this challenge an opportunity to leverage information and create a unique and refreshing new solution to an age-old problem.

COULDN'T SOMEONE PLAY THE ROLE OF AGGREGATOR OF UPDATE AND STATUS INFO, AND THEN DISTRIBUTE IT TO THE MASSES USING BOTH SOCMEDIA AND CONVENTIONAL CHANNELS????

History has shown us that customers react favorably and swiftly to this sort of innovation, by shifting their loyalty and their dollars to those who demonstrate a willingness and ability to solve problems. All of which leaves me wondering how it is that the company I’ve entrusted to solve these problems for years could be so utterly incapable of recognizing the possibilities and seizing upon the solutions that have been staring them in the face all along.

I recognize that this is a tough assessment and a somewhat emotion-driven “rant” at an industry I’ve spent considerable time advising over the years. And, make no mistake, there are some awesome utilities out there that will step up to the challenge with these and other creative solutions. But, at the same time, there are many who prefer not to rock the boat, to play by the old rules rather than invent new ones. And it’s these organizations I would like to see upstaged quickly by a more innovative and competitive force. Not to wax too lyrical here, but in the stormy waters of competition, your boat is rocking whether you want it to or not!

Fear and uncertainty — Make it go away with clearer, more relevant, and timely communication. You’ll overcome the barriers that stand between you and a base of engaged, satisfied, and loyal customers.

-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

Customer Nirvana -When great products meet awesome service…

Posted on November 1, 2011 by Bob Champagne

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

Metrics that make you go…YAWN…

Posted on October 28, 2011 by Bob Champagne

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