Historically process improvement efforts centered on improving quality, reducing costs, or increasing throughput. The success of these efforts elevated the process discipline to become a standard approach to improve the operations of companies around the world. But there are other targets of process improvement beyond simply efficiency gains.
By: David Hamme, [email protected] | Author of Customer Focused Process Innovation: Linking Strategic Intent to Everyday Execution
Arguably the facet of process-based improvement that has been least utilized is its use as a tool for understanding strategy. As companies seek to implement new strategies they often struggle to align their resources to the new direction. A common complaint from leadership teams is that their organization lacks the ability to execute. Here is the next frontier of process improvement – as a tool to strategically recalibrate a company.
A process is the way a business or other type of organization repeatedly delivers value for its customers or stakeholders. The execution of the primary processes of any organization is the unique way it creates products/services and delivers them to customers. It is at the process level where customers interact with an enterprise and either become fans or opt to take their business elsewhere. In this way, processes are the actualization of an enterprise’s strategy regardless of whether that strategy was put in play by intention or accident.
It follows that by adjusting key processes an enterprise’s market presentation can be adjusted. This is accomplished via two means – substituting new inputs into the process or by altering the steps in the process itself. The use of process improvement to adjust strategy leads us to two questions.
- How do we know which processes to adjust?
- How should these processes be adjusted?
Arguably the first thought leader to address these questions was Peter Keen in his book The Process Edge. Mr Keen proposed an approach called the Salience/Worth matrix. As a short description, his theory was that resources should be funneled to processes that are highly visible to customers and generate the greatest value. Many corporations today follow Keen’s counsel, although often unknowingly. They budget resources to the largest areas of their enterprise and expect them to generate the greatest return. There is a fatal flaw to this approach. What if the customer’s preferences change? What if a competitor delivers a better mousetrap? Your customers may well flee your offerings despite the fact you are zeroed in on the biggest processes. Quite frankly, these processes may not be providing the differentiators that matter to the consumer. The focus of resources is on the wrong area! The customer was ignored!
All good strategic innovation begins with the customer – and not always your existing customer base. Customers are fickle. They will desert you in a flash if something better bounces along. If you want to expand market share, you need to open a dialogue with them – and do so immediately. In most cases, that entails leaving the corporate headquarters and reintroducing yourself to your customers. Customer focused processes are calibrated to the customer. What this means is that the attributes of a process’s outputs (e.g. products and services) are based on information gleaned from intently listening to the customer, analyzing what is heard, and delivering products and services attuned to the customer’s ever changing wants and needs. The approach is not erratic and impulsive, but rather methodical and specific. Remember, to compete efficiently a company does not have to deliver the perfect product; it only needs one that is superior to the competition.
To map customer preferences, one useful tool is Kano Analysis. This approach identifies the attributes of a product/service that matter to the customer and influence their purchasing decision. The benefit of this model resides in its ability to identify the factors important to the customer and provide actionable insights. Kano Analysis segments the factors into four categories.
- Performance – the primary gauge of a product’s effectiveness such as quality, durability, and other measurements.
- Satisfiers – attributes that are a necessity and without them the customer will not buy the product/service.
- Dissatisifiers – attributes that frustrate the customer and may drive them to look elsewhere.
- Delighters – unexpected but highly appreciated attributes that build customer loyalty.
The key to becoming customer focused is to actively seek information about the customer. This can be accomplished via research, direct observation, customer analytics, and a host of other techniques. In my view, the most beneficial approach is to engage the customer in a conversation either directly or through customer facing associates. The individuals who work on the front lines are the collection point for all the compliments and complaints voiced by the customer. They know what the customer loves and what they hate. Yet rarely is their input solicited. Change this practice. Listen to them and hear their voice. Learn what the customer values. And once the desired product/service attributes are known, measure the cost and benefits of making a change. If by making a change an advantage is gained, allocate the resources and make it happen.
Through active listening to the customer, an enterprise learns what the customer wants. The next step is execution. This means tracing those outputs to the processes that deliver them and making the necessary adjustments. Again, the intent is not perfection, but delivering a product/service more aligned to the customer’s wants and needs than is available elsewhere. Often times this requires multiple iterations. To jumpstart your organizations progress to becoming customer focused, consider these four quick hits.
- Build natural feedback capture points in your customer facing teams. If you make capturing customer information an unnatural activity, it will be abandoned. Include it into routine processes by including small steps like recording why the customer passed on a sale.
- Map your customer’s processes. To truly understand the customer, you need to walk in their shoes. Map their activities for shopping, buying, using, resupplying, and disposing of your product. By doing so you will vastly increase awareness of your customer.
- Improve the flow of customer information to the strategic deliberators in your enterprise. For information and insights to be actionable, they have to arrive in the hands of the decision makers. Appoint an owner of the customer feedback channels and task them with consolidating the information and getting it in the hands of the enterprise’s strategists and planners. The most insightful information is garbage if it is not shared.
- Build attentiveness to the customer into innovation endeavors of all types. As mentioned previously in my analysis of Peter Keen’s approach, many companies invest resources in areas that are not strategic differentiators. Don’t break what works fine and doesn’t matter to the customer. Talk to the customer, find out what is important to them and focus attention and resources on what matters.
Customers are the supreme arbiters who determine the success or failure of your organization. Without an approach to ensure their voice is heard, their perspective often gets lost amongst the clamor of activity in corporations. If you ignore them, eventually someone will come along who won’t.
David Hamme is the Managing Director of Ephesus Consulting, a boutique-consulting firm that focuses on driving game-changing initiatives for its clients. David is the author of ‘Customer Focused Process Innovation: Linking Strategic Intent to Everyday Execution’ (McGraw Hill, 2014) – a pioneering approach to embed innovation practices into enterprises of all forms.
Prior to founding Ephesus, he worked as a management consultant for Ernst & Young, The North Highland Company, and as an executive in Lowe’s Home Improvement’s $3 Billion Installation business unit. As a leader in this division at Lowe’s, Hamme oversaw the strategic planning, marketing, product management, pricing, new product development, and sales functions. David earned a BS in Industrial Management and Electrical Engineering from Purdue University, and an MBA in Finance from Indiana University’s Kelley School of Business. Follow David on Twitter: @davehamme .
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