Category: Triple Crown

Great illustraton of Outside-In thinking and practice. Jeff Bezos provides his viewpoint..

“I would hope people would say that Amazon is earth’s most customer-centric company, and that we work backwards from customers. Many companies sort of look at what their skills are and they work forward from their skills. They say this is what we’re good at, and this is what we’ll do. It’s a very different approach from saying here is what our customers need, and we will learn whatever skills we need.”

That really describes the dfference between inside-out thnking (examine your capabilities and figure out how to optimise them) to Outside-In – figure out the Customer needs and align everthing to deliver the Successful Customer Outcome.
http://bit.ly/AmazonOutsideIn

Part 4 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits – Rethinking the Business you are In

The previous three articles in this four part theme we reviewed Part 3: ‘Reframing process for an Outside-In world‘,  Part 1: ‘Understand and applying Process diagnostics‘ and the Part 2: ‘Successful Customer Outcome‘ map. 
We now 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 ‘business’ you are in. The two views – one the organisations, 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, BMW, Disney, Zara, AOL, OTIS elevators, China Mobile?  Try it from the customers perspective and you’ll arrive at a very different answer – try these, expression, joy, magic, 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 ‘value chain’? Do you have internal ‘service level agreements’ that specify what you’ll deliver and when? How much of our internal interaction adds ultimate value for the customer? This way of organising 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 organisations actually regard customers as an inconvenience rather than the reason why they exist.


What business are you in? Past, present, future?


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Part 3 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.

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

Reframing 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[ii]): “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 “the customer isn’t my job”.

Let’s deal with each in turn by example:
a.     The beginning and end of process

To aid the discussion let’s look at two airlines, British Airways and Southwest, and we’ll review how they ‘think’ about their business through the eyes of process. If you sit down with British Airways executives and asked the question “where does your process start and end?” the response reflects the main source of revenue, seat sales.

So the answer “the process is from the ticket purchase to the collecting the bags off the carousel” 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 that’s what they do. Now let’s change our perspective and visit Love Field in Texas and meet the executive team of Southwest. Ask the guys the same question “where does your process start and end?” 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 “the customer experience is the process”. That’s 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 let’s ask another question of our friends at Southwest “guys, what business are you in?”, and the answer changes everything you ever thought about airlines forever “we’re in the business of moving people”.

Downstream Southwest may well turn the industry further on its head as they move from being the low cost airline to the ‘no cost airline’ 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 isn’t is potentially ‘dumb stuff’. The techniques we use to ‘capture’ 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[iii] 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. It’s the challenge to weed out the “dumb stuff” 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.

[1] http://www.idef.com/IDEF0.htm

[i] http://en.wikipedia.org/wiki/IDEF

[ii] Understanding Business Process Management: implications for theory and practice, British Journal of Management (2008) (Smart, P.A, Maddern, H. & Maull, R. S.)

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Visit additional resources www.oibpm.com
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Part 2 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.

In the first article in this four part theme we reviewed ‘Understand and applying Process diagnostics’. We now move our attention to the second  way we can rethink process forever –
Identify and aligning to Successful Customer Outcomes

“Businesses can be very sloppy about deciding which customers to seek out and acquire” Frederick F. Reichheld

The six questions we ask ourselves in this iterative process are:
I.    Who is the customer?
At first glance should be an easy answer however it is not as obvious as it seems. The ultimate customer for any profit making enterprise is the person, or company who provides the revenue by purchasing the products or services we produce. It is a matter of fact that in our inside-out legacy world we have created multiple customer-supplier relationships which include internal ‘service’ providers such as Information Services, Human Resources and so on. In mature Outside-In organisations the internal customer ceases to exist as we progressively partner to align to Successful Customer Outcomes and artefacts such as Service Level Agreements become a thing of the past.


II.    What is the Customers current expectation?
The 2006 book “Customer Expectation Management “ Schurter/Towers reviewed in detail the of creating and managing customer expectations and how through clear articulation companies such as Virgin Mobile in the US redefine their market place. In the context of the SCO map we need to understand the customers (as identified in the answer to question 1) current expectation. This often reveals both a challenge and opportunity. Customers will tell it as it is, for instance in an insurance claim process “I expect it is going to take weeks, with lots of paperwork and many phone calls”. That should tell you the current service is most likely poor and fraught with problems, delays and expensive to manage however this presents the opportunity. If that is a market condition (all insurance claims are like this) then moving to a new service proposition will be a potential competitive differentiator.  


III.     What process does the customer think they are involved with?
In the inside-out world we see process in a functional context. Therefore insurance claims are dealt with by an insurance claims department. Customer Retention is the baby of you guessed it, the Customer retention department and marketing is done by the marketing people. This split of responsibility is a legacy of functional specialisation created by relating to business as a production line. Adam Smith wrote in ‘The Wealth of Nations’ (1776) of an English pin factory.  He described the production of a pin in the following way: ”One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a particular business, to whiten the pins is another … and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories are all performed by distinct hands, though in others the same man will sometime perform two or three of them”. The result of labor division in Smith’s example resulted in productivity increasing by 240 fold. i.e. that the same number of workers made 240 times as many pins as they had been producing before the introduction of labor division. The insights form Smith underpinned the industrial revolution however using this principle to organise ourselves in the 21st century is to a very large part the wrong approach. That is precisely what the answer to the question will tell us – “sorry sir you are talking to the wrong department, let me transfer you”. Or even getting stuck in automated response system hell “press 1 for this, 2 for that, 3 for the other and 4 if you have missed the first three options.” These are features of the labor division mindset. Ask a customer what process they think they are and you will frequently be surprised by the answer.


IV.    What do we do that Impacts customer success?
Often we ask customers to do numerous many activities which appear sensible  to receive service or indeed buy products. Relating back to the insurance claim we can see rules and procedure around how to make claims, the correct way to complete forms, the process of collating the information, the timeframes within which to claim, the way we can reimburse you and more.  Often times these restrictions that we impose made sense at some time in the past however they may no longer be relevant.

The situation is compounded by the way internal functional specialism focus on project objectives. Richard Prebble, a respected New Zealand politician writes in his 1996 book “I’ve been thinking” of the inability of organisations to think clearly of the amount of work they create and in fact “they spend a million to save a thousand every time”.
His story of the challenge within large organisations is typical “The Post Office told me they were having terrible problems tracking telephone lines … They found an excellent program in Sweden which the Swedes were prepared to sell them for $2m …. So the managers decided to budget $1m for translating into English and another $1m for contingencies. But, as the general manager explained, it had turned out to be more expensive than the contingency budget allowed and they needed another $7m. “How much”, I asked, “have you spent on it so far?” “Thirty-seven million dollars” was the reply. “Why don’t we cancel the programme?” I asked “How can we cancel a programme that has cost $37m?” they asked   “Do you believe the programme will ever work?” I asked “No, not properly” “Then write me a letter recommending its cancellation and I will sign it” The relief was visible. I signed the letter, but I knew I needed new managers.”

This type of inside-out thinking causes companies to create apparently sensible checks and controls within processes that actually manifest as customer inconvenience, cost and delay. Are you making the customers lives easier, simpler and more successful?


V.    The Successful Customer Outcome – what does the customer really need from us?
At this point we should have enough information to objectively create several statements that articulate the SCO. These statements should be specific, measureable, attainable, relevant and time-bound (SMART). Usually there will 6-10 such statements which become the actual key performance measures as move the process Outside-In. For example a North American business school completed the SCO map and created these statements from the customer perspective for an ‘Education loan application’ process:
a.    I need to receive my financial assistance
b.    I need to receive aid  before the semester starts
c.    I need to attend the classes I have chosen
d.    I do not want to call to chase progress
e.    I need to receive the correct amount
f.    I do not want to have to fix your mistakes

There is no ambiguity here and we avoid a common mistake of using management weasel words such as ‘efficient, effective, timely’ which may mean things internally but to a customer are of little help. Creating SCO statements that may be used as measures for process success is a key aid on the journey to Outside-In.


VI.    And now we reach the core of the onion. What is the one line statement that best articulates our Successful Customer Outcome? This one-liner embodies the very nature of the process and sometimes the business we are in. In ‘Thrive- how to succeed in the Age of the Customer’ McGregor/Towers (2005), Easyjet (Europe’s second largest airline) is used as an example in this quest. Their simple “Bums on Seats” SCO sentence works both from a company perspective (we must maximise utilisation, offer inexpensive seats, get people comfortably and safely to their destinations) and the customers needs  “I need a cheap safe seat to get me to the sunshine quickly without a fuss”.  

The company one liner will become part of a series which are measureable through the SCO statements and can be tested and revised depending on evolving customer expectations and needs. It may in fact ultimately replace the inside-out strategic process and provide the organisation with its Raison d’être.

Of course when we start the journey it is often sufficient to create SCO maps to help grow understanding and even if the actual SCO Map is subsequently replaced (as we take a broader view) the improvement in understanding around the customer is invaluable.

In the third part of this four part series we will review “Reframe where the process starts and ends”

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Global leading companies compete head to head in London in April

What do these 30 companies have in common?

They are all shortlisted finalists for this years Annual Process Excellence Awards. The team of judges has evaluated more than 200 submissions to produce the finalists who will now compete head to head at the BPGroup and Process Excellence 18th Annual Conference in London during April – http://bit.ly/BPG18_UK –

Atlantic Industries Ltd | BAA | Betfair | BP Lubricants | BSkyB | Cable & Wireless | Capgemini Polska Sp.z o.o. | Carphone Warehouse / Best Buy Europe | Citi | Computershare | DSM | Firstsource | Intelenet Global Services Pvt. Ltd | Irish Life Corporate Business | KuwaitPetroleum International | Lloyd’s Register | Motilal Oswal Securities Ltd | Network Rail | Procter & Gamble | RBS Insurance | RoyalBolton HospitalNHS Foundation Trust | RS Components UK | Schenker Arkas Transport & Trading | ScottishPower | Sellafield Ltd | Serco plc | Sutherland Global Services | Tesco | Virgin Media |

There are 8 Categories for the finalists including:
Best BPM Program | Best BPM Project | Best BPO Program | Best Lean Transformation | Best Process Improvement Program | Best Process Improvement Project in Service & Transaction | Best Project Contributing to Innovation | Best Start Up Process Improvement Program

This years entries demonstrate the rapid evolution of process excellence and BPM towards Outside-In.

If you would like to review the conference, download the brochure and attend the event please visit http://bit.ly/BPG18_UK for the latest information.

If you are not in Europe and wish to attend the other 18th Annual Conferences we are live in:

Stockholm, Sweden – June: http://bit.ly/BPG18_Nordic

Sydney, Australia, June: http://bit.ly/BPG18_Australia 

Are you in control of your processes (or is someone else?)

We are considering these questions:
Are your processes reactive or proactive? Do you exercise control through process, or is the process managing you? What role does the customer play in your processes – passive onlooker or active participant? Do you have a plan for maturing your processes in order to significantly reduce costs, enhance service and grow revenues?
In the ground-breaking book “The principles of Scientific Management” (published in 1911) Frederick Winslow Taylor observed “The first step in gaining control over an Organisation is to know and understand the basic processes.” One hundred years later this has never been more important and is a central theme for progressive organisations i.e. getting and maintaining control of all activities and tasks that contribute to the delivery of a Successful Outcome. 
1.    Are your processes reactive or proactive?
For those familiar with the ‘Moments of Truth’ concept (see here) we understand that all work is ultimately caused by customer interactions. Frequently negative and often unsatisfactory interactions create the work we see every day within our companies. If we examine the Moments of Truth we understand the very nature and shape of work that will result. Will the process be simple and create positive outcomes? Does the process appear convoluted with many checkpoints and possible errors? There is a secret known to leading companies such as Apple, Bestbuy and Google.
2.    Who is in control – or is the process managing you?
With all the talk in the process world of ‘process owner’ you could believe there was a science to identifying, managing and maturing processes. Is this so? Some would claim to have process repositories with well documented and indexed processes accessible at the touch of a button. Process ownership and records do not mean control. Consider this as an example. Customer Call Centre processes are to a very great extent initiated and pushed by customer interactions. We track calls, measure cycle times, identify waits, reduce talk time, optimise scripts and try to answer queries. All this activity is driven by customer behaviour. There is an illusion of control because we measure, some would say excessively, everything that moves. Gaining control of a process involves more that measures acted on retrospectively. True process control involves a series of specific and easy to apply techniques that transform and redefine the process landscape.
3.    What role does the customer play in your process (and is it important)?
“My job isn’t the customer. That is for the guys in sales and marketing and customer service and collections. I do the accounts/program/manage people/motivate/create strategy…” This is an accepted reality for many. It appears to be true that the customers do not figure directly in their work. However the only reason the job exists is to contribute to product or service bought by customers. Through that we collect revenue that ultimately results in profit for the share-holder. It is therefore logical to suggest that everything the organisation does should be explicitly linked to a Successful Customer Outcome.  Accordingly you should be able to articulate what contribution any activity or task makes to the ultimate outcome. If you can understand the role of the customer in every process you can eradicate all that stuff that doesn’t contribute positively. There is a systematic way to do this with immediate positive results for the people, process, enterprise and customer.
4.    Do you need to improve your processes and if so how do you?
All work is process. Whether we have a structure or means of capturing activities and tasks it comes down to the same thing. Creating a picture of what is happening and then managing that picture to a better place than now. Is that part of your process world, and how do you approach it? Are all processes viewed as virtual productions lines trapped inside functional specialist silo’s. How many processes cut across the organisation and extend to the customer experience? Where does the process start and end? When the phone rings (reactive) or at your initiation (pro-active?). Developing a process maturity model aligned to your business can deliver quantifiable results quickly. After all you don’t want to leave it to chance.

We’ll discuss the ‘solutions’ in the next update.
Meanwhile what is your view?See the latest at http://linkd.in/ProcessControl

The Secret of the 21st century leading companies
The title of the book[i] last year suggested that the ‘secret’ was a relentless focus on Outside-In thinking and practice. Let’s dig deeper and understand the essence of Outside-In, in other words let’s unfold what makes the secret so profound, practical and accessible by anyone who wishes to progress their roles and organisations to new levels of achievement.

1.     Seek – Focus on what you do want, rather than on what you don’t
Outside-In approaches such as the CEMMethod® emphasize applying attention on what you need to be doing to deliver Successful Customer Outcomes (SCO).
Clearly articulating the customer’s needs and aligning processes to achieving them delivers the Triple Crown – reduced costs, enhanced service and revenue growth. It is radically different compared to traditional improvement approaches that concentrate effort and resources to figuring out what you don’t want to be doing. There is also often the assumption with traditional approaches that the process is a given – it is there and should be fixed. Not so with Outside-In companies. If the process and all the associated activities and tasks do not contribute to the SCO then stop doing them. There is no need to optimise something that can be eradicated.
·         How are you approaching performance improvement?
·         Do you continue to search for things to stop doing?
·         Can you refocus and identify the things you should be doing? 

2.     Shape – Identify the customers and staff you require and trust them
This is a big ask for many. “How on earth can we trust our customers?” “We could never trust our staff”. Ask yourself a more pertinent question – who on earth recruited those customers and staff in the first place? What was the criteria for that and what were you thinking about?

Making customer service key to your organisation will keep your employees motivated and your customers happy.
Richard Branson


Outside-In companies believe in their people and the customer. They actively recruit customers by creating and managing customer expectations[ii]. In doing so less desirable customers can be actively managed away. Naturally you need the people within the organisation to deliver the means to the SCO and that is through the processes. If you develop trust and competency within your people they will shape the customer experience to deliver success. On the other hand if you assume your people are untrustworthy you establish a ‘checkers checking checkers’ mindset which is expensive, slow and ultimately provides a sub-optimal customer experience.
What steps could you immediately take to:
·         recruit the customers you desire, and
·         ensure your staff are motivated, engaged and trusted?
3.     Execute – Progressively align everything to Successful Customer Outcomes
If you have a choice go for the biggest current challenge within the organisation.
Within 45 days the process can be transformed to significantly reduce costs (typically 40-50%) and simultaneously improve service. In revenue generating processes turnover will begin to grow as service improves and turnaround times reduce. Train all your people in basic techniques so they can contribute directly from the ‘get-go’ (rather than exclusively rely on a cadre of colored belted statisticians). 

Faith is taking the first step even when you don’t see the whole staircase..
Martin Luther King Jr.

If your choice of starting point and actions are limited in scope do not be disheartened. Know that it is sufficient to take the first step and the staircase will unfold as you move forward. Fix the stuff you can as you do you will achieve results significantly better that traditional inside-out techniques. Within weeks you will produce the justification to move upstream and downstream from your starting point to eventually connect all processes.
Ultimately mature Outside-In companies embrace “the customer experience is the process” and the activities move beyond the boundaries of the organisation into the relationships and partnerships that deliver customer success. Working those relationships and building value through partners creates a differentiation way beyond the capabilities of traditional organisations.
As you start the journey:
·         How could you grow your capability immediately?
·         What steps can you take to begin the journey?
·         Where should you focus those immediate resources?
·         Can you take a half day for everyone to learn three simple techniques that will produce a tangible measureable deliverable immediately?
Outside-In Next Steps
Training – www.bp2010.com
Consultancy – www.towersassociates.com
Community – www.bpgroup.org and http://bit.ly/joinbpgroup (LinkedIn)
Resources – www.oibpm.com
References:

[i] Outside-In The Secret of the 21st century leading companies –
[ii] Customer Expectation Management – Success without Exception –
http://www.amazon.com/exec/obidos/ASIN/092965207X/httpwwwstevet-20

The quest for the Triple Crown – Four ways to transform process for success forever

The quest for the Triple Crown – Four ways to transform process for success forever
There’s been much discussion about the Successful Customer Outcome across several LinkedIn threads recently
(see http://linkd.in/DanielaProcess, http://linkd.in/ProcessDick, http://linkd.in/ProcessGeoff, and http://linkd.in/ProcessNic)
however that isn’t the only way to move processes Outside-In. In fact there are FOUR tried, tested and proven approaches to simultaneously reduce costs, improve revenues and enhance customer service (winning the Triple Crown).
You can explore this territory by visiting the following mini articles. Next week we’ll feature several recent webcasts.
Articles:
Part 1: Understand and apply process diagnostics
| http://bit.ly/ProcessDiagnostics |
Part 2: Successful Customer Outcomes
| http://bit.ly/SuccessfulCustomer |
Part 3: Reframing process for an Outside-In world
| http://bit.ly/ReframingProcess |
Part 4: Rethinking the business you are in
| http://bit.ly/WhatBusinessRUin |
 
If you are already qualified as a Certified Process Professional you should already have completed the Outside-In Strategic Matrix® (OI-SM) which complements the articles. Try it out for yourself and see how Outside-In you actually are.
Next week THREE webcasts to as we travel deeper into Outside-In.