Part 2 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.
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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Part 1 of 4: There are four distinctly Outside-In ways that you can rethink process and in doing so achieve Triple Crown benefits.
• Understand and applying Process diagnostics
• Identify and aligning to Successful Customer Outcomes
• Reframe where the process starts and ends
• Rethink the business you are in
Let’s start with…
1. Understand and applying Process diagnostics:
(These will be familiar to CPP people however a refresher is always nice)
Earlier we have mentioned Moments of Truth, those all important interactions with customers. Let’s 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 “Management and Statesmanship” (1975).
In 1989 Jan Carlson, the CEO of Scandinavian Airlines (SAS) immortalized the phrase with his book ‘Moments of Truth’. He clearly linked all customer interaction as the Causes of Work for the airline and set about eradicating non value added MOT’s and then improving those he couldn’t remove.
a) Moments of Truth are a Process Diagnostic
b) They occur ANYWHERE a customer “touches” 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 organisations 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 maximised.
Next let’s review Breakpoints. Breakpoints (BP’s) are the direct consequence of MOT’s 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 BP’s we can set about uncovering actions that would in turn remove them, or if not improve them. BP’s 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 MOT’s 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 “found”
b) Business Rules can be operational, strategic or regulatory and they can be system-based or manual
c) Business Rules control the “behavior” of the process and shape the “experience” 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 (BR’s) 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 storage’ rule was related to the length of time it takes ink to dry on parchment paper. This rule hadn’t 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
Global leading companies compete head to head in London in April
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
Apple v.Amazon – Two Outside-In behemoths slug it out
Steve Jobs “the Customer Experience is the process”, and
Jeff Bezos “..rather than ask what are we good at and what else we can do with that skill, you ask who are our customers? What do they really need? And then you say we’re going to give them that..”
In the light of recent product launches from Apple e.g. iPad2. So how do their business models compare?
Here is an excellent review of the difference and an indicator of who is going to win the race…
Outside-In Sales – by James Dodkins
This article explores the shift in perspective and how organisations and sales teams can rethink their role.
The main goal of many sales agents was to get the sale at any cost. Sales agents were able to say what they wanted in order to close the sale and the customer, none the wiser, would invariably believe what they were being fed and hand over their money.
Taking all into account there are many ways to become more effective. To name a few, firstly you need to make sure your product knowledge is faultless; if a customer knows more about the product than the staff, how much confidence will they have in you or the company for that matter? Use their knowledge of the product to support them as they buy.
Never be annoyed that they know as much about your product as you, show that you are impressed and complement them on this, be happy that they have practically done your job for you and given you something in common straight away. Use this to build rapport, get them involved with the product, don’t sell to them; ask them the questions that will make them sell to them self. Focus on making the customer experience a great one and you will outperform any agent stuck in the ‘hard sell’ mentality.James has a proven track record of success working with over 700 business professionals across the UK within award winning FTSE 100 companies.
He has been largely involved with high priority contracts with approximate contributions of £10.4 million a year, while continually demonstrating a high level of performance motivation.
James is currently looking to work with individuals interested in goal realisation and implementation to bring about immediate changes and long-term results towards business and life success.
As a field innovator, James has contributed regular development of coaching methodology aids to enhance
effectiveness for positive client results.
James is in the process of creating ‘Begin to Win: The Flip-it Guide to Sales and Success©’
Specialties:
- Sales Performance
- One to one and Group Coaching
- Motivational Coaching
- Goal realisation
- Goal implementation
Are you in control of your processes (or is someone else?)
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.
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.
“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.
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
Recommended Conferences and Annual Awards for Process Success
Sydney, Australia, June: http://bit.ly/BPG18_Australia

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.
Making customer service key to your organisation will keep your employees motivated and your customers happy.
Richard Branson
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.
http://www.amazon.com/exec/obidos/ASIN/092965207X/httpwwwstevet-20