Despite all the issues documented in Part 1, there have been companies who have regularly ‘bucked’ the trend and posted great business results, grown significantly and sustained that growth.
Outside-In has been built on the approaches and lessons learnt from those companies who have managed to beat the competition and moreover delivered market beating results on a sustained basis. The approaches and techniques have been developed to be easily applied even to those organisations that have already been through numerous change iterations and believe they are as efficient as they could expect to get.
For example SouthWest Airlines posts 58 consecutive quarters of profit when most of their competition made huge losses – in the case of Delta this has been billions AND more than once ‘achieved’ in just a quarter! Apple have introduced innovative new products and regularly posted impressive results and increasing market share when organisations like Motorola who used to be one of the main players in the mobile handset market have dramatically suffered despite having gone through numerous iterations of business improvement.
First published by the BP Group 3 years ago here’s some of the mindset behind Outside In.
If we consider the challenges of succeeding in business in the 21st century, most major companies would come up with a similar list: When they talk about their customers > Competition is fierce, global and increasing. > Customers have become rebellious, they realise they have the right to alternatives and they frequently exercise that right. > Customers have high expectations, they demand more and unless that demand is met they will go elsewhere. > Customers demand choice, comprehensive information and the best price.
When they talk about their operations > Operations, structures and business flows are becoming ever more complex > The process of change is becoming ever more complex as the obvious improvements are delivered and the focus is on looking for new improvements often with diminishing returns > A significant proportion of change projects under-perform and do not achieve the desired outcome > There are so many alternative methods to effecting change out there it is difficult to select which one makes most sense for my business When they talk about their overall business performance > I fundamentally believe I offer a superior product and/or service but I’m still struggling to make the returns I believe possible > I strive to be a market leader, I believe we have the capability to be a market leader but the issues above prevent me from getting there > It is difficult to markedly cut my costs without impacting my service levels > The impact of the global recession has affected my business and our fortunes won’t markedly improve until the business environment improves.
There may be additional comments however this is typical of observations from companies all over the world. And it is getting worse.
It isn’t though we don’t have choice in improvement approaches. As of 2010 there were over 6000 improvement methodologies all geared to helping organisations improve performance. How do you decide which one works best? How do you ensure sustained business improvement when the average CEO in the 21st century lasts 3 years and each new regime brings fresh ideas but a lot of the same issues?
See more of the thinking, practice and qualify as a Certified Process Professional (CPP) www.bpgroup.org
Great question posed in Lean Six Sigma and Process Excellence by Vijay Bajaj. There are several indicators and one of the leading is the amount of internet interest. So let’s look at some stats courtesy of Google.
(Blue BPM, Red SixSigma)
So at first glance BPM is in the ascendency, SIx Sigma declining, however let’s factor in Lean for the same period against BPM.
This time we see BPM flat against a more volatile Lean, however Lean had its greatest interest back in 2007.
A much more interesting trend, which impacts all three aspects of Process Excellence is the recent emergence of Customer Experience Management. WIth progressive PEX types pushing the boundaries of process Outside-In rapidly, the migration to “the customer experience is the process” seems well established.
Is CEM the natural evolution of PEX? It certainly seems so.
ITWebBPM is South Africa’s premier event featuring the latest and most incisive business process management learning and next practice.
It was a pleasure meeting so many people from the African continent (and further afield including Finland, Germany and the USA!). Watch the overview video, and if you would like a copy of my keynote, panel sessions or workshop do let me know (steve.towers@bpgroup.org).
Linked-In http://bit.ly/joinbpgroup helps us all exchange information and is a very useful resource as part of being a successful business professional.
BPM is all about simultaneously reducing costs, growing revenues and improving customer service, says BP Group’s Steve Towers.
According to Towers, strategy means many things to many people. However, from a BPM context, it means to create a high-performance organization. “In BPM, strategy is the ability to connect the dots from the front line to the boardroom, and demonstrate how every single activity contributes to the strategy of the organisation.”
He also pointed out that BPM is about simultaneously reducing costs, growing revenues and improving customer service.
On improving customer service, Towers noted that customer needs have changed drastically, thanks to digitisation, which means everyone is connected intimately all the time. “The customer experience is the process and we have to get scientific about the customer experience.” He also noted that the customer should be at the centre of everything the organisation does and that organisations should work to identify factors that will not contribute to the overall success of the enterprise.
He revealed that many organisations do not understand their business processes or their customers’ needs, which is why they fail in the end. “If you don’t understand your customers, you’ll end up failing like Kodak and Nokia.”
He, therefore, urged organisations to go out of their way and be innovative in order to determine their customers’ needs.
On the other hand, he pointed out that organisations should not make promises to their customers that they will not be able to keep. “I like it when people say you have to go beyond customer expectations. That is impossible because people will always have their own standards. Rather, promise them the best service you can manage.”
Towers also urged organisations to understand and develop successful customer outcomes, create process activity lists, identify moments of truth, identify breakpoints, identify business rules, perform risk assessments, and develop action plans before managing delivery. “The starting point will be determined by the nature of the challenge. It is, however, essential that a clear and objective understanding of customer needs is articulated. This specifically involves the needs of the customer and goes way beyond traditional voice-of-customer insights.”
Revealing a successful customer outcome project, Towers said organisations must ask: ‘Who is my customer? What is the customer’s current expectation? What is the process the customer thinks they are involved in? How does what we do impact customer success? What does the customer really need from us?’
He added that the primary purpose of crafting successful customer outcomes is creating a fundamental focus for a process or set of processes, or a complete enterprise strategy. “Advanced BPM aka Outside-In extends way beyond the legacy inside-out thinking to create an actionable strategic and operational objective for the entire organisation.”
International process improvement expert, Steve Towers, advocates an ‘outside-in’ approach.
How business process management (BPM) is applied in the organisation is what makes the difference between ordinary businesses and high-performance organisations (HPOs), says international process improvement expert, Steve Towers.
Towers, who is preparing to release his eighth book, says his research into the characteristics of HPOs has resulted in the book and a new set of tools aimed at maximising BPM to enhance business performance. “In BPM, there is a lot of focus on Lean Six Sigma, the technologies and the processes. Basically, companies are doing things right, but they are not doing the right things,” says Towers.
Their metrics may tell them they are managing their processes correctly; they may be showing high levels of performance and efficiency in line with their traditional metrics, but despite this, they may still be going bankrupt. This is because they are measuring the wrong things,” he says. “They may be very busy – but are they doing the right things in the 21st century context?”
Towers says the most critical measure is that of total customer experience. “Companies cannot focus internally,” he says. “HPOs focus on the customer experience. It’s not just about what happens internally; it is also about what happens before that process and what happens after.” Towers has long advocated an ‘outside-in’ approach, rather than an ‘inside-out’ one. This way of thinking is customer-centric, something organisations have to be in an increasingly competitive business environment.
To align processes with HPO best practice, says Towers, organisations need to ask ‘who are our customers and what are their needs?’ “Don’t start with the technology or the process,” he says. “By focusing on the customer first, you may discover you have been focusing too much on unprofitable customers, for example. Once the target customers are identified, you have to define what it is they need. This is often not articulated well – they may not know what they need before it exists, and often the focus is mistakenly placed on what customers think they want – not what they actually need. HPOs actually produce products and services in advance of customer needs.”
Towers highlights revolutionary technologies, such as the Apple iPod, which met customer needs at a time when customers themselves did not realise all-in-one digital music management was something they wanted and needed. “HPOs use systematic approaches to this,” says Towers. “They are scientific about assessing customer needs, and measuring what customer success looks like. Classically, companies use subjective approaches like net promoter scores to assess customer satisfaction. But this is not necessarily good enough. This is a very subjective way to measure customer experience.” Towers says: “Companies need to get scientific about customer experience – they need to measure the right things, using the customer experience ratios used by HPOs.”
ITWeb BPM Summit 2013
Now in its fifth year, ITWeb’s BPM Summit reveals how to drive breakthrough business performance by focusing on practical advice, technology updates and case studies. The summit will help BPM practitioners to improve their skills, advance their BPM projects, and deliver truly transformational BPM to their organisations. For more information, click here.
Towers notes that assessing customer experience by asking ‘how do you feel?’ is subjective and reactive – it takes place after the event. “HPOs know that evaluation of customer experience has to take place at the time of the action, delivering immediate feedback that allows enterprises to manage and control the interactions as they happen.”
This new approach to measuring customer experience to deliver business benefits could help fast-track organisations’ growth in SA, Towers believes. “In BRICS nations, companies are now setting new benchmarks on what performance looks like. They have the potential to take these concepts, run with them and become world-class performers. In line with this, South African companies stand to play in the big league if they adopt more effective process management,” he says.
Towers will deliver a keynote presentation at the upcoming ITWeb BPM Summit on market-focused approaches to strategic business improvement. He will also elaborate on these approaches in a workshop aligned with the event, when he will outline his findings on HPO differentiators. The tactics of HPOs, to be revealed in his soon-to-be-released book, will be shared with SA ahead of world audiences. Towers will also give insights into the metrics behind customer experience ratios – the new measure for customer experience.
For more information about this event, click here.
At a recent performance appraisal this comment was made seriously, “If you pay me for doing dumb things, I will get really smart at doing dumb things”.
Do you measure people with ‘dumb’ metrics – activities and outputs, or with Outside In measures of results and outcomes? If Balanced Scorecards (BSC) and Strategy Maps fail it is largely as a consequence of having dumb metrics in there – activities and outputs.
So how can we measure the right things and encourage success? Instead of people rushing to deal with a call (because all calls must be less than 2 minutes) how do we measure the meeting of a customer need – effective resolution of a query? Using the appropriate process and performance metrics within an articulated Enterprise Architecture is a good starting point. This presentation leads us to the how of that. Enjoy.
The Customer Experience is the Process. What does that really mean and how can that help us reduce costs, grow revenues and improve the customer delivery (at the same time). In this first short presentation James Dodkins (BP Groups Chief Customer Officer) provides us with an understanding.
Best Practice Tip: As you name your breakpoints try using the syntax – do something, to something to get something.
An example might be “openthe emailto action the request”
Make sure you follow the instructions we’ve provided in identifying the Break Points in the target area. Getting this right will play a very big part in determining the degree of benefit achieved.
Also, make sure you write them in a descriptive enough way that you can come back a day, a week or a month later and know what each Break Point is…
Enter this information into your template.
Step 3 – Describe your Actions
You are now ready to describe Actions that can be taken to eliminate Break Points. You have the Break Points documented, now what would it take to eliminate some of them from your target area?
For each Action you identify you need to know what the Action is (describe it) and what Break Points it eliminates. Most often Actions will eliminate multiple Break Points.
The number of Actions you identify and describe will depend on many factors. Try and get as many good Actions as you can, doing so will help you create the most beneficial cost reduction plan.
Enter this information into your template.
Step 4 – Do the Cost and Benefit Assessment
What else do we need to know? We need to place our Actions into perspective, which we do by answering three questions:
How Much? How Long? How Beneficial?
“How Much” is the cost (time, expense) of taking the Action? It’s best to judge cost by using the three categories of High, Medium and Low*.
“How Long” should be expressed in days, weeks or possibly months – but never years. Because eliminating causes of work is actually much easier (and less complicated) than fixing effects, most Actions will take 90 days or less*
(*many Actions will take less than 30 days to complete).
“How Beneficial” is the number of Break Points that would be eliminated combined with our judgment of the overall benefit of the Action. It’s also best to judge benefit as High, Medium or Low.
* The use of the High, Medium and Low scale plays an important psychological role in this technique. We really don’t need more detail than this to know which Actions we should take. By choosing to do a more detailed cost/benefit analysis we will create more work and distract ourselves from the goal – which is eliminating costs!
Enter this information into your template.
Step 5 – Build your Cost Reduction Plan
Choosing which Actions are to be taken should be pretty obvious at this point. From the information already gathered we can see which Actions have the most “bang for the buck.” But for the order of the Actions it’s important to create a mix that makes it easy for us to be successful on a regular basis.
Try starting with a “quick win” to get people enthused about the plan. Mix other “quick wins” into the plan to create “breathers.”
Also consider prioritizing an Action that addresses glaring issues – those we all know are “not right.” Doing this communicates your understanding of the people in your organization and your empathy with their concerns.
Number your Actions in the order in which you want them to be taken. Use the same number for Actions that should be taken simultaneously.
