Performance Perspectives

Category Archives: Corporate Performance Management

Governing Cx through Line-of-Sight

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line of sight gearsAn end-to-end approach for managing customer experience strategy and delivering on its promises...

Over the past 24 months, Customer Experience Initiatives (Cx programs, as they have come to be called) have climbed to the top of the radar screens of most leadership teams. Organizations are abuzz with projects to identify “touchpoints,” map “customer journeys,” and strengthen their customer-facing business processes. Alongside these initiatives are even larger investments in acquiring the data and analytics required to feed and sustain these service improvement strategies. >>Next>>

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Hitting Your Numbers in 2013

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As we said goodbye to 2012 last Monday night, many of us were already thinking about the year ahead. For some, thinking about the future and setting goals for the year ahead is just a natural part of their “wiring”—an annual renewal process, if you will. But for many, it’s a way to declare a fresh start—basking in the glory of the things we achieved last year, saying good riddance to things we didn’t achieve, and making those proverbial “resolutions” on the things we want to improve and our forward looking goals and targets.

Doing the same thing…and expecting a different result

As we all know, no matter what our new year’s declaration of improvement may be, whether it’s breaking a bad habit, adopting a good one, or just improving on something that’s important to us, many would concede that their success rates are fairly modest, with only a scarce few of these resolutions ever making it past the first couple of weeks.

But despite the fact that most achieve far less than what they set out to, we, nonetheless, go mind-numbingly through the same process year after year after year. You could say that the end of the year, and the state of mind that accompanies it (induced or otherwise), makes us a bit Pollyannaish about the future, which, in turn, causes us to overreach somewhat.

Reasonable behavior for a typical human, granted, but is it as reasonable to expect the same apparently irrational behavior pattern from a corporation, whose goals are presumably established in a more thoughtful (and usually sober :) manner. Is it surprising that these goals often realize the same miserable success rates.?

Underachievement breeds underachievement

On a flight home last week I sat next to an individual who works as a planner/scheduler in a petrochemical plant in charge of maintenance practices. For him, one of the key measures of success is simply the percentage of PM’s and CM’s (preventive and corrective maintenance work orders) that are completed as scheduled. For most of us that don’t work in that industry, we would assume the goal to be fairly high, say north of 90%. But as it turns out, the industry average appears to be in the 80% range and at this particular facility, they were struggling to hit 40%!

I see this a lot with my clients, across multiple business processes. In fact, I’d say it’s more of an epidemic than a random set of occurrences. Call centers that plan for particular service levels, but end up in a huge “recovery” mode in the middle of the year based on changes to a handful of base assumptions. Sales targets that need to be dramatically adjusted based on lower than expected conversion rates. Employee churn that seemingly appears out of nowhere.  Not to mention runaway costs and budget overruns in capital projects and initiatives.

Yes, of course, these are business realities that will always occur. Many are unpredictable but can be reasonably well contained with good contingency planning and risk management practices, or by adjusting the portfolio to have an overperforming area compensate for an underperforming one. Either way, we have accepted the fact that there will always be some level of error or slippage in our planning. The key, of course, is to minimize it.

Strengthening your performance plan

It all starts with understanding how poor target setting occurs. Here are a few of the most common breakdowns:

  1. Failure to specify and declare accountability—Many mid- to upper-level managers have a tendency to set goals at only a high level, consistent with what they must accomplish for compensation metrics and bonus payouts. For example, we might set productivity and quality goals for a regional operating group, or a customer contact center, or a production facility, but not “cascade” the measures to the discrete parts of the operation. That causes two problems: 1) accountability remains with the senior manager/executive and never flows down to the level where it can be most directly affected, and 2) the goals themselves are often misinformed, or at least not crafted with the best insight available.  The result—all sorts of end-of-year juggling and balancing to make the sum of the parts hit the target number, which only works as long as there is enough slack to make up for one or more component shortfalls.  It also creates difficulty in terms of understanding and diagnosing downstream problems and trends.
  2. Weak basis/grounding for forecasts—One of the biggest frustrations I hear from executives is their organizations’ ability to produce valid and reliable forecasts. Without a good forecast, it is virtually impossible to set useful and achievable targets. Part of good forecasting is understanding the component parts of the forecast, which we already discussed above. But more important still is the ability to define and understand the drivers of what you are trying to forecast. For example, if we our goal is to forecast service responsiveness in the call center (say, % of calls within an acceptable hold time), we need to be able to understand call volume, staffing capacity, and assumptions about productivity (current levels, expected gains, etc.) at a minimum. Understanding those factors a level or two down the cause-and-effect chain (say at a call type level) would certainly increase the confidence in the forecast. But creating a really robust forecast requires that we go well beyond that and understand the “drivers” of the components themselves—what factors are correlated with the attributes we are trying to forecast and by how much? So what does this look like in practice? Instead of looking at total volume assumptions from the year prior, we actually create a zero-based (bottom-up) forecast based on predictive variables and leading indicators (e.g., change in the volume of local/regional building permits might be used to tweak our assumptions about the volume of new connection call types).
  3. Alignment gaps –-Even with the best planning assumptions and accountabilities in place, there must be strong alignment across the various stakeholders who make up the forecast. That may sound like “motherhood and apple pie” for some of you, but I’ve seen too many cases where Department A makes a change to a business process to affect a certain operating metric without a clue of how that metric might be relied upon in other downstream forecasts. A good example of this is the impact that operational or product changes have on customer service and support requirements. Sure, if we do well in defining the forecast attributes, and cascading accountability, we should be able to minimize some of this risk. But unless we take the time to help our cross-functional managers and peers understand the interrelationships and dependencies between operating metrics and forecasts, there will always exist significant room for surprises.
  4. Weakness in measurement and reporting—Last but not least, is the importance of good measurement and reporting practices that will help identify issues before they become problems that affect the performance of the portfolio or the business as a whole. We should measure not only the operating results, but also the performance against each variable that contributes materially to that outcome, as well as how effectively we predicted and forecasted the nature and impact that each has on our business performance.

At the end of the year, or any reporting period for that matter, we all want to be in a position to declare success on our initial goals for the year. And where we haven’t been successful, we want to at least have had ample opportunity to course-correct to get back on track, or deliberately declare a different target. What we don’t want is to miss the numbers and not know why. Again, sounds like a no brainer, but those kind of questions and blank stares still plague many business and operating executives when it comes to missed performance goals.

Looking at how we performed as an enterprise, business unit, or function is an essential part of managing. But it is equally important to study the effectiveness and consistency with which we set our goals, targets, and forecasts throughout the business, as this will lead to more sustainable performance over the long run.

Let’s make that a goal for 2013.

-b

 

Bubba Golf

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Not letting your goals get in the way of execution

Most professional athletes live their lives in pursuit of some pretty bold career goals–goals which they then translate into objectives for the upcoming season. If they’re really organized and efficient, they then manage to these goals in their daily preparation, execution, and ongoing improvement efforts.

In his post-round press conference, it was clear to anyone listening, that this guy has some pretty bold competitive goals for his career, and for the 2012 season. He knows how many “wins” he wants over the next several years, and you can bet, like most golfers, he pays attention to the numbers and performance statistics week in and week out. But at the same time, it was also clear that these goals, and his progress toward them, were not going to affect his approach to this one tournament. He’d prepared the best way he knew how, and on that Sunday, he would follow his gut and compete the way he does in any tournament.

Conversely, most weekend golfers, like myself, will react very differently when we notice a change in our execution. Think about the last time you double-bogeyed a hole you routinely par, or caused yourself heartache by missing a fairway or green in the exact spot you were trying to avoid. For most of us, and even some professionals, a mid-round “speed bump” will at best create a momentary panic, and a worst send the train completely off the rails. We begin reverting to “mechanical thoughts” and in the process of “screwing our head back on” to its proverbial shoulders, lose the focus on what, in the end, truly matters–that little white ball in that little round hole.

I thought a lot about this last week as I watched the back nine on Sunday afternoon. I noticed the distinct difference between some players’ demeanors (like Tiger and Sergio) versus those of Bubba and Louis. One by one, we saw each player’s bad shot or series of mis-hits take their toll and remove them from contention, while Bubba, in his typical unorthodox fashion, played his own game. Win or lose, he wasn’t going to change strategy or direction. Even when faced with the improbably deep shot into the right pinestraw, he stuck to the strategy that had landed him there.

The key message in all of this for me is that there is a time and place for planning and assessing, and a separate time and place for execution. Occasionally the two will overlap, but rarely do managing and executing co-exist nicely together, and when they do clash, it frequently causes bad results. Think of the customer service rep who gets so preoccupied with adhering to a script or striving to achieve an average call handle time that they completely lose sight of the customer’s issue. Or the manager who is so focused on meeting a reporting deadline that a serious operational problem identified by the data goes unnoticed.

In his press conference, there was a lot of talk about the unorthodoxy of Bubba’s swing. How he stood cool in the face of adversity. How his attitude looked more like that of a kid having fun than a professional golfer. All these questions were the media’s way of saying “Nice job focusing on your execution and sticking to your game” even in the midst of competitive pressure and a competitor who was so close to him in the final holes that his unorthodox strategy may have looked all the more improbable.

But just as he began to appear aloof and perhaps even a bit stubborn in his unorthodox approach to the game, he returned again to speaking about his goals–a key one of which is to achieve 10 wins on tour. And he is nearly halfway there at age 34.  His goals clearly guided his preparation and play, but his progress toward those goals was not about to distract his focus from the execution that was required. Not on that Sunday afternoon.

How often do we let our goals, strategies, and operating metrics distract and sometimes prevent us from executing the way that we do best?

-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

 

2011- Year of the Squirrel

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

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

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

Some “squirrel moments” have far reaching impacts…

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

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

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

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

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

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

 Great strategy management is about the WHAT and the HOW…

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

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

 History doesn’t have to repeat itself…

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

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

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

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

-b/b

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

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

Balancing Operational, Product and Customer Priorities…

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Choosing your “strategic bias”…

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

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

When a “bias” becomes “THE end game”…

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

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

Having your cake and eating it too…

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

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

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

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

Creating and multiplying your base of “engaged advocates”…

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

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

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

-b/b

About the Authors:

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

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