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Part 1 of 4: There are four distinctly Outside-In ways that you can rethink
process and in doing so achieve Triple Crown benefits.
Let’s take them in bite sized chunks.
Earlier we have mentioned Moments of Truth, those all important interactions
with customers. Let¹s take that discussion further and include other closely
related techniques for uncovering the real nature of process breakpoints
and business rules.
Firstly Moments of Truth (MOT) were first identified by Swedish management
guru Richard Normann (1946-2003) in his doctoral thesis ³ Management and
Statesmanship² (1975).
In 1989 Jan Carlson, the CEO of Scandinavian Airlines (SAS) immortalized the
phrase with his book Moments of Truth¹. He clearly linked all customer
interaction as the Causes of Work for the airline and set about eradicating
non value added MOT¹s and then improving those he couldn¹t remove.
a) Moments of Truth are a Process Diagnostic
b) They occur ANYWHERE a customer ³touches² a process
c) They can be people-to-people, people-to-system, systems-to-people,
system-to-system, and people-to-product
d) ANY interaction with a customer is a Moment of Truth
e) Moments of Truth are both process Points of Failure and Causes of Work
Carlson transformed the fortunes of SAS with this straightforward insight
all work in our organizations is ultimately caused by the Moment of Truth.
Fix them and you fix everything else.
All Moments of Truth should be eradicated and those remaining improved. In
doing so the customer experience is improved, costs are reduced and
productivity maximized.
Next let¹s review Breakpoints. Breakpoints (BP¹s) are the direct consequence
of MOT¹s and are all the internal interactions that take place as we manage
the processes caused by the customer interactions.
a) Any place that a hand-off occurs in the process is a Break Point
b) Break Points can be person to person, person to system, system to person
or system to system
c) Break Points are both process Points of Failure and Causes of Work
By identifying BP¹s we can set about uncovering actions that would in turn
remove them, or if not improve them. BP¹s are especially evident were
internal customer supplier relationships have been established say between
Information Systems departments and Operations. Empirical research suggests
that for every Moment of Truth there are an average of 3 to 4 Breakpoints.
In other words a process with ten MOT¹s will typically yield 30-40
Breakpoints.
All Breakpoints should be eradicated and if not at the very least improved.
In doing so we get more done with less, red tape is reduced, control
improves and the cost of work comes down.
The third in our triad of useful Outside-In techniques is Business Rules.
Business Rules are points within a process where decisions are made.
a) Some Business Rules are obvious while others must be ³found²
b) Business Rules can be operational, strategic or regulatory and they
can be system-based or manual
c) Business Rules control the ³behavior² of the process and shape the
³experience² of those who touch it
d) Business Rules are highly prone to obsolescence
e) We must find and make explicit the Business Rules in the process
Business Rules (BR¹s) are especially pernicious in that they are created for
specific reasons however over time their origin is forgotten but their
effect remains. For instance one Life insurance company had a delay of eight
days before issuing a policy once all the initial underwriting work was
complete. This has a serious impact on competitiveness as newcomers were
able to issue policies in days rather than weeks. After some investigation
it was discovered that the 8 day storage¹ rule was related to the length of
time it takes ink to dry on parchment paper. This rule hadn¹t surfaced until
the customer expectations changed. There are many examples of previously
useful rules evading 21st century logic and blocking the achievement of
successful customer outcomes. All Business Rules should be made explicit and
challenged in todays context.
Next time we’ll take a look at the second way to radically redefine process:
Identify and aligning to Successful Customer Outcomes
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Companies with a worldwide presence face many challenges such as globalization, regional trading agreements and the uncertainty of the economic markets. These challenges require a coordinated approach which maximizes the benefits of a world-wide presence and at the same time provide a local focus. Global processes are the way to achieve this balance and include front end activities like customer acquisition or new business processing, support processes like information systems right the way through
to back end customer retention and financial management.
How does a company create, implement, and manage global processes?
Co-ordination. Teams need to develop a common process approach which regardless of culture speaks the same language i.e. what is the successful customer outcome (SCO)? Figuring out how work gets done and achieves the SCO is key to global process success. Implementation needs a pragmatic approach which acknowledges cultural perspectives.
Bringing a strategic multi disciplinary team together led by qualified process leaders familiar with cultural and economic challenge is a starting point.
Rolling out that discipline and process approach through geographic teams provides a means to learn and exchange and grow key processes to maturity.
What are the most common challenges associated with global processes?
Getting everyone on the same page. Even the way we think and speak of processes is different and so developing a common way of looking at work is critical to a successful operation. For instance the collecting the money process¹ has a very specific objective however each location may have different custom and practice how do you ensure a uniform and yet different approach? The underpinning technology that supports a global
process can be common, however the business rules that we operate to make sure our endeavor is successful often need to be different.
What is the relationship between global processes and performance
improvement?
The relationship is absolute. In the 20th century we may have talked about standardization and conformity. Performance is now much more driven by the capability to act in the moment e.g. a US insurance company has the slogan think global, act local¹ which provides both a degree of uniformity and empowers the people locally to act in the best interests of the business there and then.
Why should the average employee care about global processes?
It is the understanding that there is a framework and common structure torunning the business successfully that provides assurance that senior management knows what they are doing and are operating as a team. Process is the way we get work done. It is the way we deliver value to our customers.
It¹s the way we create profits for our shareholders. This can then be encapsulated in our rewards systems and provide a framework for success, both in process, people, systems and global strategy.
(From the desk of James Dodkins)
This is gentle reminder about our upcoming 2014 CPP Professional Global Training. Classes book quickly so please reserve soon.
http://www.bpgroup.org/certification-by-city.html
Course Overview:
The CPP Professional qualification is an acknowledgement of the understanding and practical skill set associated with Outside In, Enterprise BPM and the effective implementation of the CEMMethod. The CPP Professional role is to guide and maximize the organization’s efforts toward its operational and strategic goals while removing the impediments the industrial age artefacts that stand in their way.
CEMMethod is an advanced approach for undertaking process change and transformation. In traditional approaches the emphasis has often been exclusively on efficiency and effectiveness and as a consequence businesses were struggling in terms of cost, quality and customer’s satisfaction. The BP Groups CEMMethod is a process framework, which is now replacing traditional industrial age approaches of process change and transformation in order to deliver first and foremost Successful Customer Outcomes. Introduced in 2006 in the book Customer Expectation Management, the CEMMethod is the process industry’s standard in designing, developing and delivering Outside In process transformation, as it overcomes the many shortcomings of traditional inside out thinking.
Benefits of Training & Certification:
Caters to high demand in industry for Managers and Senior Executives with Certified Process Professional qualifications and Experience.
All our Instructors are practical proven experienced professionals working with the BP Group which has over 20 years of direct hands-on experience with real world companies in Process and Business Transformation and Change consulting and training
You will learn what it feels like to access some of the most advanced toolkits from the worlds leading organisations experiencing many of the challenges you’re likely to face–while being coached by world leading Gurus actively involved with the application of CEMMethod at many organizations. This “learning by doing” style of instruction demands your open mind and active participation.
For more details please log on to:
http://www.bpgroup.org/certification-by-city.html
*******************************************************************************************************
Thanks & Warm Regards,
Rachel Smith | Business Development Manager | BP Group
Email: rachel.smith@bpgroup.org
Tel No: 00 44 20 3286 4248
************************************************************************************************************
BP Group, New Bond House, 124 New Bond Street, London W1S 1DX
Offices in London – Houston – Denver – Bangalore – Sydney – Associates in 118 countries
Office: US: +1 303 800-0924 | UK: +44 20 3286 4248 | Fax: +44 20 7691 7664
I also want to touch on the hurdles these companies using OI as their route to customer-centricity faced or are facing. While achieving customer-centricity is a noble goal even a necessity for many companiesit’s not easy. It requires transformational change.
On the flip side, sticking to incremental change doesn’t get you there. Not even close.
Amazon.com may have achieved Jeff Bezos’s dream of becoming the world’s most
customer-centric company. And Amazon had the advantage of starting from
scratch with nothing preexisting in the way, except for a pervasive business
culture that believes companies went broke by trying to be too nice to
customers and became successful by rigorous cost control and a laser-like
focus. But Bezos understood the comfort level customers would feel with
Amazon sourcing whatever they need to buy (almost) instead of dealing with
scores of online merchants, including some not trustworthy. He also
understood that the best way to keep customers is by continually finding new
ways to offer them value. These were hardly popular concepts when he started
Amazon. And for straying from conventional “wisdom,” Bezos and Amazon took a
pounding from pundits and analysts before proving them wrong.
Best Buy senior execs banked on their understanding of how customers really
wanted to buy electronics.
Best Buy made a major shift from a “cash and carry” electronics discounter
to a combined product/service provider that supports every facet of
customers enjoying high-tech electronics, with some appliances thrown in for
good measure. To get there, Best Buy had to re-staff the stores with better
trained, higher paid employees; bring in substantial new management
expertise, redesign stores from the ground up, go to store plans that flexed
with local demographics and take a huge financial risk on a then untested
concept of “higher touch” electronics retailing. Best Buy senior execs
banked on their understanding of how customers really wanted to buy
electronics. Customers rewarded them by leaving competitors in droves, until
the two primary U.S. competitors collapsed.
Fed-X has been an Outside-In company from the day the first Dassault Falcon
flew off from Memphis back in 1971, and it has reaped the rewards. But in
1998 Fed-X chose to break its own air courier business model by acquiring
the parent of both Roadway trucking and RPS (Roadway Parcel Express, formed
to compete against UPS). The customer problem the acquisition solved was
visible every day at hundreds of thousands of shipping docksone pile of
small parcels for priority air shipping by Fed-X; a 2nd pile of small
parcels for routine ground shipping by UPS; and a 3rd pile of larger
shipments, including single packages over 60lbs., to be picked up by various
LTL (less-than-truckload) carriers that serviced varying city pairs.
For logistics managers this meant: multiple types of waybills and manifests
to complete; multiple tracking systems (or no tracking); angst and errors
from trying to price shipments to attach shipping charges to invoices; and
three different pick-up vans, often jockeying for space at a single loading
dock at the same time. But once Fed-X melded the three service into one,
logistics could have just one pile of shipments for ground and air,
including packages up to 150lbs.
UPS, a totally inside-out company at the time, never saw the opportunity,
despite seeing the three piles every day, because they were seeing the piles
from their point of view, not the customer’s.
All these cases represent achieving customer-centricity through
transformational change from inside-out business practicesplus, overcoming
inertia and defying yet more conventional “wisdom.” In the CRM space,
there’s a pejorative term, “boiling the ocean,” to describe asking companies
to change too much. Supposedly, attempting “excessive” change leads to
certain failure and death by firing squad. Yet any company striving to
achieve customer-centricity has to switch from the inside-out perspective to
Outside-In. And that takes “boiling the ocean.”
Feeling the urgency for change will help some companies clear the hurdles.
Not feeling the urgency for change will cause others to take face plants on
the trackor wither away at the starting blocks.
Reactive cases
UPS was forced Outside-In (or else it would have gone upside down) by
Fed-X’s ground transportation acquisition. For an extraordinarily routinized
and standardized company, that meant adopting a new business model requiring
disruptive process change.
More recently, Sprint was on the slippery slope, put there by inside-out
thinking, including deplorable customer service. Its new CEO is taking an
Outside-In view of the business to try to dig out of the hole. Too late?
Maybe, maybe not. Forgiveness doesn’t always come easy. Sometimes it doesn’t
come at all.
And speaking of forgiveness, General Motors is struggling for life after
bankruptcyand trying to overcome an almost impermeable inside-out culture.
Getting to Outside-In is a prerequisite for winning back customer trust. So
far, reports coming out of GM have been mixed.
What are you waiting for?
Sure Outside-In takes work. But don’t wait for an industry competitor to go
there first. Forced change is so much harder than proactive change. And
don’t wait until it’s too late and suffer the ultimate change. The
Outside-In train is leaving the station, likely populated by a competitor or
two or four. It’s time you hopped on board for the journey to Outside-In.
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| James Dodkins, CCO BP Group |
In 1996, Gilead introduced a “next phase” AIDS medication patients could
take in a single daily dose. The new drug, Atripla, vastly improved patient
quality of life. It vastly improved compliance. And it has given Gilead an
80% market share of medication prescribed to newly identified AIDS and HIV
positive patients, despite introduction of directly competing, single dose
products from larger competitors.
Atripla has dramatically grown Gilead’s revenue, along with producing near
40% profit margins. Plus, manufacturing one medication is far less expensive
than making 17, matching revenue gains with cost reduction. But Gilead was
not finished. Since 2006, Gilead has introduced single dosage treatment for
hepatitis-B patients, who had to follow a similarly complex medication
schedule, and has initiated development of a similar medication for
hepatitis-C.
Achieving Customer-Centricity
Through Outside-In, Gilead has become a customer-centric company
specializing in quality of life and compliance as well as quality
efficacious treatments. However, a common first reaction might be, “How
obvious.” And a second might be, “Nothing much to it.”
Gilead did experience a blinding flash of the obvious. But untold numbers of
“obvious” solutions to major customer problems go unnoticed because
companies can’t see through customer eyes or are afraid to do so.
Outside-In forces the issue by starting with the customer not the product or the
company or sales goals or profits.
“Nothing much to it?” Au contraire, there was a whole lot to it. Having
helped many a company through this type of transformative change, I can reel
off a list of likely barriers Gilead faced: reorganizing R&D to focus on
drug delivery, a very different discipline than traditional pharmaceutical
research; changing support staff roles; laying off manufacturing staff and
management; repositioning the company; and that’s just for starters. What
Gilead achieved required transformational change, which stresses
organizations and often tests their resiliency? No surprise that so many
organizations limit themselves to incremental change.
What’s new here?
As you’ve almost certainly recognized, some organizations have employed
Outside-In thinking since their inception, as has U.S. department store
chain Nordstrom’s, or at least for many years. But two things have changed.
First, Outside-In today extends far beyond identifying opportunities. While
full scale OI starts by aligning strategy with customers,it continues by
next aligning process with strategies and then technology with process. In
that order. More specifically, following opportunity identification OI
determines “what” work has to be done by “who” in order to turn opportunity
into reality. This strategic step defines organizational change as well as
changes to workflow and information flow. Then OI defines “how” the work
should be done and the technology enablement required, the tactical side.
Not only does Outside-In expand the scope of customer-centric thinking to
include implementation; but it also stretches traditional boundaries of
process to include the “what” and the “who” plus technology support beyond
just addressing the “how.” And that’s why we call it “Outside-In Process.”
The second change is the volume of Outside-In occurring. A number of
organizations have already completed the migration from “inside-out”
(company-centric) to Outside-In (customer-centric). Others are
opportunistically starting to migrate. And some laggards within their own
industries have moved or are moving defensively, to avoid the fate of
Circuit City, CompUSA, WAMU (Washington Mutual Bank), General Motors and
Northwest Airlines all notoriously inside-out companies insensitive to
customer needs.
More next week…
http://www.successfulcustomeroutcomes.net – 283 articles on Advanced BPM
http://bpcommunity.blogspot.co.uk/ – 200+ articles on business process transformation
https://www.youtube.com/user/snoozers69 – Over 50 videos on the theme
http://www.slideshare.net/stowers/ – More than 70 presentations (downloadable)
http://www.bpgroup.org/ – 80+ courses leading to the Certified Process Professional qualification (CPP) all over the globe through 2013/14
http://www.oibpm.com/ – for all things and links Outside In
http://www.certifiedprocessprofessional.com/ – Professional qualifications since 1992
http://www.processmiracle.com/ – FREE course featuring the Secret Sauce
http://www.bpgroup.org/their-opinion.html – Testimonials about us
http://bit.ly/joinbpgroup – 11,000 members networking with ideas
