The customer can’t be king at the expense of your business

Goutam Das       Last Updated: February 15, 2013  | 15:37 IST
Steve Towers
Steve Towers

Steve Towers is a business process and customer satisfaction expert and the author of “Outside In – The Secret of the 21st Century Leading Companies”. In India, he advises the Tata group, Wipro and other BPOs on ways to organise their processes and people better to deliver customer outcomes successfully. Towers, a keynote speaker at the Nasscom India Leadership Forum , took time off for a conversation with Goutam Das.
Edited excerpts:

Q. Have organisations started to worry more about customer centricity these days?
A
. It is top of the pile in terms of themes. Customer centricity, however, is not always understood. We tend to talk about it from a technology-centric point of view – we tend to think of information technology and front-end systems. We talk about CRM (customer relationship management) systems and things like that. Organisations need to move beyond what we refer to as ‘inside out’ thinking. One of the reasons to move forward is that customers themselves has changed. They have become promiscuous – they are not as loyal as they used to be. They have also become very rebellious – highly choosy in terms of who they want a product from. This causes them to move very quickly versus the longer-term relationships of the past. All our organisations are collections of customers and their expectations have risen with the availability of technology, which gives them access to a lot more information. Those organisations that understand that have been able to look at customer centricity in a different way. We refer to that way as “outside in”.

Q. Explain your philosophy of ‘outside in’ and how companies have benefited from this.
A.
It means identifying what customer needs are and then working backwards to organise the company accordingly. Those organisations that are struggling – the Kodaks, the Nokias, RIM – they are still looking at the world inside out. Those who have been successful have seen the world outside in. They are aligning their business to deliver against customer needs, which can be created. Emirates Airlines creates that need by talking about the experience that they are going to give you once you arrive at the destination. Disney tells a very good story on the difference between wants and needs. They often say the customer does not know what they want. When you arrive at a Disney park, the first question a customer may ask is: “Where’s the toilet?”

The second most asked question is “What time is the Three O’clock Parade?” Customers are articulating a need within that question and the answer is in the context of that question. A woman with two small kids is not asking what time the parade is – she already knows the time – what she really needs to know is a place where she can go and stand with the kids, where there is a water fountain, an ice-cream vendor. She wants to be away from the hot sun. She hasn’t articulated that but the organization understands that need. Disney works on the basis of needs, not wants. Similarly, Nokia was very successful 10 years back and went on building devices that customers wanted. Other organizations thought differently. Apple made an observation on how many interactions one needs to pull up a telephone number. In an inside out phone, that will be seven-eight key presses. Everyone of those key presses is a moment of truth. And you have to build functionality to support that moment of truth. More functionality means a more complex system. Apple redesigned the interface and there are three moments of truth instead of seven-eight. It is less expensive to do that and offers a better customer experience. That is a principle Nokia has missed.

Q. Do Indian companies have an outside in perspective?
A.
There are two kinds of organisations. One: those who are carrying on building efficiencies and effectiveness and use things like Lean (a methodology of eliminating waste in a company) and Six Sigma to remove waste. Eventually, you get to a point where you optimise processes and can’t go any further. Other organisations say Lean and Six Sigma are fine but we want to challenge if a process actually deserves to exist. In India, there is a clear distinction between those organisations that are getting it and those that don’t.

Q. How do you measure who is getting it right?
A.
It is winning the triple crown, which is simultaneously growing revenues, reducing costs and enhancing service. The triple crown can be directly linked to customer success. Instead of starting with resources a company has, then going to market strategy and then finding customers, you start with customers and their needs and then align everything in the organisation to deliver that. In India, IndiGo (Airlines) is a prime example of looking at the world in a different way. Contrast IndiGo with Kingfisher – they talk about the customer being the king but the customer can’t be king at the expense of your business. The reason customer is king is that we can grow shareholder value, can create profits and deliver service. Other examples of companies looking outside in are Tata Motors and the transformation of Jaguar.

Was 2009 the year BPM really died?

Thomas Olbrich

Thomas Olbrich
Co-founder and Managing Director at taraneon Process TestL
Saarbrücken Area, Germany

Downsizing, cost cutting, re-aligning to new realities, survival, new business models … 2009 has offered so many challenges to which process owners might have provided not only answers but solutions. And on the whole they have failed:

Failed in that we’re still spending an unacceptable amount of time on process discovery

Failed in that we’re still insisting that automation is a type of management

Failed in that we’ve still not understood that processes either create or destroy value

Failed in that we’re still thinking that any improvement of our internal processes will automatically lead to improved customer processes

Failed in that we’ve still not understood the difference between process projects and process operations

Failed in that we’ve not linked processes to business strategy

Failed in that still we’re using the term ‘process’ as a figleaf to cover functional orientation

Failed in that we’re ignorant of how changing circumstances affect processes

Failed in that we’ve refused to hold process owners accountable for the mess they are administering

Failed in that 20 years after the first big reengineering wave and 10 years after BPM became fashionable to talk about, we have still not managed to create a process mindset

And we’re still wondering why senior management refuses to believe in the value of processes – other than as a theoretical concept? I dare anyone to explain how all the nice sounding process predictions for 2010 a la cloud, SaaS, green processes, BPM 3.0 etc. will make things any better if we first don’t adress the basic issues we’re facing. Looking to the future is one thing but without learning the lessons from the past (http://bit.ly/7fMaAY) the future will just pass us by.

(Sorry about this rant, it’s been a good year from a business and personal perspective, so no complaints there, but I really thought that 2009 would have pushed BPM to a new/higher level of contributing to business excellence)

Thomas

Recap on the discussioon at: Ongoing – Join the debate here

BP GROUP SOAPBOX 3: Do We Need another Process Methodology?

The Soapbox series is designed to be provactive and let people air their views in a mutually respectful place. You may not agree, and all the better for it, so explain your perspective and share your commitment to transforming the planet!

BPGroup Soapbox – Process is an Effect

In a slight digression we have unearthed some very emotive discussions. Has the agenda really shifted this much?

BP GROUP SOAPBOX 1: Process is an Effect

The Soapbox series is designed to be provactive and let people air their views in a mutually respectful place. You may not agree, and all the better for it, so explain your perspective and share your commitment to transforming the planet!

The Focus has shifted from Inside-Out to Outside-In

I am frequently asked to summarise the difference between the inside-out industrial/information age mindset, and that of Outside-In (think Apple, Google, Zara, Zappos, Emirates etc.) thinking and practice. So here to answer that request (and from a section in my upcoming new book) is the overview.

Over the following weeks we will delve into each area and I will provide examples and case studies of each aspect of this Copernican shift.

The Focus has shifted from Inside-Out to Outside-In

Industrial/Information Age Customer Age

People Silo’s Multi functional
Specialist Multi skilled
Isolated Relationships
Awards – Time served Awards – Value Created
Autocratic Dynamic (to suit the needs)
Processes Doing things right Doing the right things and doing things right
Manufacturing mindset Customer Experience
Tasks/Activities and Outputs Outcomes and SCO’s
Stocks Flows
Products Services
Left to Right, Top to Bottom Customer Centric
IT Algorithmic Heuristic
Hierarchical Hyperlinked
Analytical Understanding
Ownership Access
Strategy Top Down Inclusive
Structured and Rigid eg 5 yr plans Agile and Adaptive
Tablets of stone Continual Alignment to SCO’s
Market/product focus Customer/expectation focus
Customers Uninformed Prosumer
Loyal Promiscuous
Forgiving Rebellious
Locked-In Demand Flexibility
Compliant and managed High Expectations and fickle
Single channel Multi channel
(c) 2012 Steve Towers

Next week we’ll start by reviewing the Customer Aspect
 

Join us at IT Web South Africa http://bit.ly/AfricaSixSigmaOnSteroids
Join us at PEX Week London http://bit.ly/PEXLondon2012

Join us at the CPP Master Class London http://londonmasters2012-estw.eventbrite.com 

Looking Outside-In

The BP Group is 20 years old in September. Over the last two decades people who have participated in our training and consultancy and have captured some of my comments. There are over 200, many clearly inspired by my heroes ‘giants’ in business and life. The list here are the ones most often referred back to me 🙂

How much do you need to know, to know you know, you know enough?

The Customer Experience is the process (Steve Jobs)

If things are changing faster outside than in, you will fail.

You don’t have a choice about where to start. You can only start where you are now!

Are you aligned to Successful Customer Outcomes (SCO’s)? Or are you just moving the chairs on the deck of the Titanic?

If you do not know who your customer is you do not know what you are doing.

Stop managing and measuring outputs. Start managing Customer Expectations and measuring the SCO.

Can your people clearly articulate their contribution to the SCO?

This is a once in a 600 year thing. The invention of the printing press (1436) and now Outside-In (1997).

Does your technology help with the SCO? If it doesn’t scrap it!

Technology is the emans to the end, not the end in itself. It is just the same with pen and paper.

To link process with performance we need to rethink what we mean by performance.

We shouldn’t keep looking back at the past to define the possibilities for the future.

Does your process start and end with the customer? If it doesn’t you are fixing the wrong thing.

Someone said the Chinese are coming. They are wrong. The Chinese have been and gone. This is what you are left with as a consequence!

Moving Outside-In isn’t a choice. It is a pre-requisite for success in the 21st century.

Are you measuring Activities and Tasks (Inside-Out), or Outputs and SCO’s (Outside-In)?

The only reason a process exists to is to help achieve a Successful Customer Outcome.

Can you connect every single task with the Successful Customer Outcome?

Who pays your salary? Yes it is the Customer.

Check your companys reports. How often is the customer mentioned? If they are not it shouldn’t surprise you that the business is failing.

If you aren’t managing Customer Outcomes you aren’t managing the most aspect of your business.

Look beyond the Output. How does it contribute to the Customer Outcome? If it doesn’t stop producing it.

The customer is not my job? Get Real. The customer is everyones job!

Evolving Outside-In is not a destination. It is a journey.

The process map is not real. It is a collective hallucination.

How can you sell process to everyone?

A terrific introduction to process featured at the PEX US 2012 process conference. Check this video out and point your colleagues to its use. It will make the job of demonstrating the value of process much easier. Thanks to Diana at the PEX network.

Gaining Customer Insight

(Whether they are the primary customer who pays your salary or the one in the department next door!)
  1. Identify the Issue/Opportunity and determine the Process to Review. 
  2. Decide who is the Customer.
  3. Understand the Customers current expectations.
  4. Clarify the customers view of what is a successful outcome.
  5. Identify what it is the process currently does that impacts customer success (negatives and postives).
  6. Develop SMART Successful Customer Outcome Statements of Intent.

The Future of Business Process Part 2: Outside-In, Lean Six Sigma, BPM and all that….

“Not everything old is bad and antiquated and not everything new is shiny and good. The real secret to success is to combine the best of both.”
Rene Carayol (left),  Senior Executive & Former Board Member for Pepsi, Marks & Spencer, IPC Media & The Inland Revenue

The world’s leading companies have come to realize that only when their customers are successful, will they be successful. In pursuit of their market leadership not only they need to spend time to look inside their business to know how things are getting done but also look outward to get deep understanding of their customers.

Process has indeed come a long way from it humble routes amidst the early industrial revolution and Adam Smiths ‘Wealth of Nations’.

Although many in Western
economies are (still) in a state of denial, we are undergoing the greatest reorganization in the business world since the Industrial Revolution.

No matter what industry you are in, no matter how successful you are, it’s time to get ready for the world as it will be –a world where your customers have new choices
from a sea of suppliers from
across the globe.

Peter Fingar
  Author of Extreme Competition: Innovation and the Great 21st Century Business Reformation
 

One of the first people to describe process was Smith who in 1776 describes a new way for process in a Scottish pin factory. He outlines the production methods and created one of the first objective and measureable enterprise process designs. The consequence of ‘labour division’ in Smith’s example resulted in the same number of workers making 240 times as many pins as they had been before the introduction of his innovation.

Adam Smith participated in a revolution that transformed the planet. He lived at a time when the confluence of factors, political change, emergence of the New World, industrialization and a new optimism that the world could move from the shackles of the past.

In heralding a movement that developed into Scientific Management the foundation was laid that established a way of working that has survived and thrived for 200 years.

And yet now, more than ever, is a time to perhaps take a careful glance back to the past to guide the way for not only surviving the current economic turmoil but to also prepare us to thrive in the seismic shifts of the 21st century ‘new world’ order where the customer has become central to everything we do.

Leading global corporations are now evolving their tried and tested approaches into methods suited to the changed challenges of customer promiscuity, globalisation, IT innovation and the Prosumer. That is the essence of what we call Outside-In.

“The Customer Experience is the Process”
Outside-In can really be summarised in the statement that “the customer experience is the process”.  We can no longer just look within our organisation boundary to create a sustainable competitive advantage. We have to extend our scope and embrace a broader view of optimising process by understanding, managing and developing customer expectations and the associated experience. We need to articulate Successful Customer Outcomes and let those guide our product and service development as we move beyond the limiting scope of silo pyramidal based left to right thinking.

In 2006 BP Group Research identified the ‘Evolution of Approaches’ and how steps can be taken to grow Lean Six Sigma’s influence and success into a strategic Outside-In toolkit. In fact the last 4 years are seeing the fruition of these advances with Best in Class 2009 & 2010 Award winners PolyOne, a dyed in the wool Lean outfit, advancing their stock price six fold in 18 months on the back of radical and innovative changes across its customer experience.

Some see Outside-In as the death knell for approaches such as for old style BPM, BPR, TQM and Lean Six Sigma. This is not so. This narrow and simplistic view does not acknowledge the stepping stones available to embrace the new customer centric order. In fact the foundations of our futures are always laid on the learnings of the past with those innovators who recognise the need to evolve leading that charge.

Victory will go to the brave who seize the moment and push forward their approaches into the brave new world of Outside-In. The sector leaders have set a precedent – can you embrace the challenge?

All the Best, Steve

* * *

If you wish to read and listen more on this theme the following references are useful.
Join the community discussing these issues, challenges and opportunities.

Community and social networking – Join the BP Group
LinkedIn
Outside-In The Secret of the 21st Centuries leading companies
Book


Interview Harvard Business Review with HBS
Professor Ranjay Gullati
Video


http://bit.ly/RanjayOutside-In
Interview Wharton Business School with WBS Professor George Day
Video


http://bit.ly/WhartonGeorgeDay
Interview Affecto University with Steve Towers
Video


http://bit.ly/SteveTowersOutside-In
Interview by Megan James (IQPC)
Video


http://bit.ly/MeganJamesOutside-In
Downloadable keynotes and slide shows
Presentations
http://www.slideshare.net/stowers/
Professional – Certified Process Professional program
Qualifications
Don’t give customers what they think they want – Steve Towers
 Article
Evolution of Process Excellence Approaches – BP Group
Research
Outside-In – Interview with Blog Radio’s Gienn Weiss
Podcast
The Best Performing companies Millward Optimoor
Research
UPCOMING CONFERENCES ON THE THEME OF PROCESS EXCELLENCE, ENTERPRISE BPM AND OUTSIDE-IN
Resources

Are you in the shadow of a Scottish Pin Factory?

What is this?
Yes it is YOUR organization chart.

It is also a legacy from the Industrial Revolution and notably Adam Smith’s book “The Wealth of Nations” (1776). Are you organizing yourself like a Scottish pin factory or more realistically for the second decade of the 21st century?

Someone who takes a sideways swipe at the ‘sub division of labor’ is Seth Godin.

Have a glance at his most excellent blog:
http://bit.ly/BPM_Org_Charts