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Outside-In is clearly the way for the worlds top companies and reflecting on the commentary by Hank Barnes in “Customer Experience Challenges: Why Maintaining an Outside-in Approach is Tougher than it Seems” the answer as to why the masses don’t get it is probably very simply the herd instinct.
For instance in 1969 astronomer J. Donal Fernie made an observation many of us will understand. In writing about the decades it took his fellow
professionals to spot a fundamental error.. “the definitive study of the herd instincts of astronomers has yet to be written, but there are times when we resemble nothing so much as a herd of antelope, heads down in tight formation, thundering with firm determination in a particular direction
across the plain. At a given signal from the leader we whirl about, and, with equally firm determination, thunder off in quite a different direction, still in tight parallel formation”
We of course have our own immediate examples. What about the world leading
Insurance Company waiting eight days for ink to dry on parchment paper
before sending out a new policy? Or the removal business that stuck with a
35 mile rule limit just in case the horse died? What about suggesting people
visiting the UK from ‘abroad’ should practice driving on the left before
they came if they weren’t used to it (to reduce the accidents on UK roads).
Yup there are lots of antelopes out there.
Will you meet any tomorrow? And will you be running with the herd?
We start with what is now a classic denial strategy and will progress over the coming weeks to review misconceptions that seek to stop you on yourjourney to Successful Customer Outcomes.
‘The company has to get its own processes right first’.
In the context of Outside-In this is clearly a major mistake. As the
Southwest Airlines and Apple examples demonstrate you fix the internal processes by understanding and acting on “the Customer Experience is the process”. In doing so everything changes internally to better align to successful customer outcomes. That reduces complexity, removes costs, improves service and grows revenue.
Now if you brief is ‘in the box’ and does not yet extend to the Customer Experience the approach should be around optimization through understanding the causes of work Ā moments of truth, breakpoints and business rules. Even though this is at best sub optimization (recall the US banks Customer query process) it will take you to a much better place with significant performance improvements as you highlight and eradicate the ‘dumb stuff’.
Often times this has to be the starting point as, by definition, the way inside-out works is by the sub division of labor. You can only see theimmediate walls around you and looking beyond maybe beyond your brief. Do not lose heart. Go with Optimization (and if necessary stealth) as you
introduce through existing projects the concepts of moments of truth, breakpoints and business rules. You will catch the eye of those responsible for the numbers as the changes you introduce go way beyond the traditional expectations.
From the desk of James Dodkins.
āNot 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.ā Rene Carayol, 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 āWealth of Nationsā.
One of the first people to describe process was Smith who in 1776 describes a new way for process in an English pin factory. He outlines the production methods and created one of the first objective and measurable enterprise process designs. The consequence of ‘labour division’ in Smithās 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 ānew worldā 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, globalization, 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 summarized in the statement that āthe customer experience is the processā. We can no longer just look within our organization boundary to create a sustainable competitive advantage. We have to extend our scope and embrace a broader view of optimizing 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 āEvolution of Approachesā and how steps can be taken to grow Lean Six Sigmaās influence and success into a strategic Outside-In toolkit. In fact the last 4 years are seeing the fruition of these advances with recent Best in Class 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.
The Death knell for BPR, TQM, Lean and Six Sigma?
Some see Outside-In as the death knell for approaches developed during the late 20th century. Not so as that 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 recognize 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?
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| James Dodkins (far right) is the BP Groups Chief Customer Officer |
From the desk of James Dodkins
If I scan the fifteen or so new OI initiatives in large corporations I have worked closely with (in the last three years) I would say 80% of that work is through what you can think of is a 1-2-3 project cycle.
1. Start where you are – deploy, for instance the CEMMethod techniques, especially the Moments of Truth, Breakpoints and Business Rules, in whatever is your remit. Just get going.
2. On the back of that success move upstream and downstream in the particular process. You will have internal advocates at this stage who understand how to do this stuff. At this point the fun and the wildfire starts š
3. Take the ‘boil the ocean’ proposition to the top team. Ask for the biggest current organization wide challenge and relate the internal benefits (Project 1&2, the external case studies, the videos of the CEO’s, the HBR articles, the Business week case studies blah blah) They will love the talk of results – reducing costs, improving revenue, enhancing service.
Whenever have you talked to a top team and somebody has turned round and said those elements were not part of this years agenda eh?
Bingo – six months in and you’re on the organization wide Outside-In transformation.
The annual event in the USA (now in its 15 year) attracts the very best of the community and this year was no exception.
With stimulating speakers and a awesome Awards program* the IQPC team lifted the bar a notch or two higher. http://www.pexweek.com/ which also includes the PEX BP Group Certified Process Professional two day program.
This year more than 40+ people from across the globe qualified as Certified Process Professionals to join the 25,000 in the least 4 years.
You can already review and sign-up for the next years – which on behalf of the BP Group – I highly recommend at http://www.pexweek.com
Note: For those of you in South East Asia I will be chairing that event http://bit.ly/PEXAsia2014 in February.
The two day CPP workshop is featured on Monday/Tuesday 24-25 February is a most have for the aspirant business process specialist.
*we are running a feature on the PEX 2014 Awards program later this week.
Part 4 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.
The previous three articles in this four part theme we reviewed ‘Understand and applying Process diagnostics’ , the ‘Successful Customer Outcome’ and ‘Reframing Process for an Outside-In world’.
Now finally we move our attention to the fourth way we can rethink process forever.
Rethinking the Business you are in.
In the Southwest airlines example reviewed earlier we referred to the different viewpoints of the ĀbusinessĀ¹ you are in. The two views Ā one the organizations, regarded as inside-out reflect the activities and functions undertaken. So British Airways see themselves in the business of flying airplanes and approach the customer with that product/service in mind. They set about marketing and selling the flights and hope to pull the customers to the product through pricing, availability and placement. In a slowly changing world where customers have little choice this strategy can provide a route to success.
As we have already seen the tables have turned and the enlightened customer demands so much more. Southwest and other Outside-In companies understand this challenge and take a customer viewpoint.
What business would you say these six companies are in: Hallmark Cards, Disney, Zara, AOL, OTIS elevators, China Mobile? Try it from the customers perspective and youĀ¹ll arrive at a very different answer Ā try these, expression, joy, style and comfort, community, moving people, connectivity.
Yes they are very different and will reframe the way you think of the service and products you provide. Go further and look inside your existing company.
Are you still separated into functional specialist areas providing specific outputs to other departments in the so called Āvalue chainĀ¹? Do you have internal Āservice level agreementsĀ¹ that specify what youĀ¹ll deliver and when? How much of our internal interaction adds ultimate value for the customer?
This way of organizing work imposes limitations on our ability to truly deliver successful customer outcomes. The Inside-out viewpoint is inefficient, prone to red tape, is extremely risk adverse (checkers checking checkers) and slow in delivering product and service.
Many inside-out organizations actually regard customers as an inconvenience rather than the reason why they exist.
What business are you REALLY in?
From the desk of James Dodkins, CCO BP Group.
In the first two articles in this four part theme we reviewed ‘Understand and applying Process diagnostics’ and the ‘Successful Customer Outcome’ map. We now move our attention to the third way we can rethink process forever
Re-framing process for an Outside-In world
A fundamental principle of Outside-In is the understanding of where your process starts and ends.
In the 20th century many techniques and approaches developed to better understand and create processes. In its earliest form pioneering work undertaken by the United States Airforce created modelling approaches based on the Structured Analysis and Design Technique (SADT) that produced iDEF (Integrate DEFinition Methods).
iDEF became recognised as a global standard as a method designed to model the decisions, actions, and activities of an organization or system[1]. iDEF as a method has now reached iDEF14 [i] and embraces a wide range of process based modelling ideas. Concurrent with the development of iDEF technology providers created proprietary modelling approaches, and subsequently developed into modelling language standards, used by many organisations to represent their systems and ways of working.
The convergence of business process modelling and business process management (BPM) has now produced a rich set of tools and techniques able to model and ideally manage an organisation. In fact one of the more accepted definitions of BPM (based on the British Journal of Management): “Business process management (BPM) is a management approach focused on aligning all aspects of an organisation with the wants and needs of clients. It is a holistic management approach”
Until a few years ago process management approaches looked within the boundaries of the organisation and the combination of modelling and management approaches were adequate to understand the enterprise. The impact of process management in improving organisation performance has been profound however we now face a different reality driven by the customer.
As a consequence both disciplines now present a series of problems that include
(a) understanding the beginning and end of the process,
(b) the techniques used to model process are inadequate and focused on the wrong things
Strangely customer involvement in a process often appears as an afterthought and the actual representation systems (left to right, top to bottom) create an illusion that fosters the belief that āthe customer isnāt my jobā.
Letās deal with each in turn by example:
a. The beginning and end of process
To aid the discussion letās look at two airlines, British Airways and Southwest, and weāll review how they āthinkā about their business through the eyes of process. If you sit down with British Airways executives and asked the question āwhere does your process start and end?ā the response reflects the main source of revenue, seat sales.
So the answer āthe process is from the ticket purchase to the collecting the bags off the carouselā is no great surprise. In fact that is the way we have mostly thought about process in that it starts when it crosses into organisation, and finishes when it leaves. We can easily model that, identify efficiency improvements, improve throughput and optimise apparent value add.
As far as British Airways is concerned what you do outside of that process is no concern of theirs, after all they are an airline and thatās what they do. Now letās change our perspective and visit Love Field in Texas and meet the executive team of Southwest. Ask the guys the same question āwhere does your process start and end?ā and the answer is a whole different viewpoint.
The process begins when the potential customer thinks of the need for a flight, and only ends when they are back at home following the journey. The scope of this process is defined by the phrase āthe customer experience is the processā. Thatās an Outside-In perspective and creates opportunities across the whole customer experience.
More than that it raises the prospect of additional revenue streams, spreads the risk associated with a dependency on seat sales, reinforces the customer relationship and develops an entirely different way of doing business. So letās ask another question of our friends at Southwest āguys, what business are you in?ā, and the answer changes everything you ever thought about airlines forever āweāre in the business of moving peopleā.
Downstream Southwest may well turn the industry further on its head as they move from being the low cost airline to the āno cost airlineā and give their seats free of charge. What would that do to your business model if 95% of your revenues, as with British Airways, comes from seat sales?
The business challenge for Southwest becomes one of controlling the process to benefit and maximise the customer experience. That involves partnering, sharing information and doing all necessary to make customers lives easier, simpler and more successful.
Now how do you model that?
b. The techniques used to model process are inadequate and focused on the wrong things
We have reviewed the ultimate cause of work for all organisations is the customer. Organisations exist to serve the customer though the provision of products and services and in this way develops revenue that goes to the profit and onward distribution to the stockholders.
In other organisations without the profit motivation, for instance the public sector, then the effective delivery of services is measured by citizens and stakeholders. Accordingly it stands to reason that everything happening within the organisation should be organised and aligned to deliver customer success and anything that isnāt is potentially ādumb stuffā. The techniques we use to ācaptureā process are however not suitable to understanding the causes of work and focus attention instead on the visible tasks and activities that are perceived to create value for customers. In the context of the enlightened customer this is at best misleading and at its worst actually part of the broader problem. In Outside-In companies the focus has shifted to understanding the causes of work, and then engineering those causes to minimize negative effects.
Once more to go Outside-In we need a perspective shift and we can achieve this by identifying those three causes of work and then set out to reveal them and their negative impact.
How big is the size of the prize? Efficiency and productivity gains of 30% to 60% are common. Cost reduction of services by 50% is not unusual.
Cause elimination is a seek and destroy mission. Itās the challenge to weed out the ādumb stuffā in our organizations.
By truly fixing the Causes of Work, rather than messing around with the Effects (a bit like moving the chairs on the deck of the Titanic) we will all find our customers and employees life simpler, easier and more successful. Are you ready to challenge your assumptions and start eliminating those causes of work? Fix the Cause, remove the effect.
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. LetĀ¹s take that discussion further and include other closely
related techniques for uncovering the real nature of process Ā breakpoints
and business rules.
Firstly Moments of Truth (MOT) were first identified by Swedish management
guru Richard Normann (1946-2003) in his doctoral thesis Ā³ Management and
StatesmanshipĀ² (1975).
In 1989 Jan Carlson, the CEO of Scandinavian Airlines (SAS) immortalized the
phrase with his book ĀMoments of TruthĀ¹. He clearly linked all customer
interaction as the Causes of Work for the airline and set about eradicating
non value added MOTĀ¹s and then improving those he couldnĀ¹t remove.
a) Moments of Truth are a Process Diagnostic
b) They occur ANYWHERE a customer Ā³touchesĀ² 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 Ā
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 letĀ¹s review Breakpoints. Breakpoints (BPĀ¹s) are the direct consequence
of MOTĀ¹s 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 BPĀ¹s we can set about uncovering actions that would in turn
remove them, or if not improve them. BPĀ¹s 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 MOTĀ¹s 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 Ā³foundĀ²
b) Business Rules can be operational, strategic or regulatory and they
can be system-based or manual
c) Business Rules control the Ā³behaviorĀ² of the process and shape the
Ā³experienceĀ² 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 (BRĀ¹s) 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 Ā8 day storageĀ¹ rule was related to the length of
time it takes ink to dry on parchment paper. This rule hadnĀ¹t 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
This week I’m going to pass the baton over to Ranjay Gulati.
He is the Professor of Business Administration at Harvard Business School,
and talks about ‘Outside-In’ in great detail.
Read this fantastic article here http://hbswk.hbs.edu/item/6201.html
