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Experience-based Operational Excellence

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The Customer Experience

Experience means many things.  An experience is a direct observation of or participation in events as a basis of knowledge.  In other words, the customer experiences something through observation or participation.  Experience also relates to a customer as the fact or state of having been affected by or gained knowledge through direct observation or participation.  In other words, the customer has experienced things with the company that they base opinion on.  Also, experience is related to an individual based on their practical knowledge, skill, or practice derived from direct observation of or participation in events or in a particular activity.  Customers all have different experiences that make up their background.  Individual experience is often related in the terms of degrees, certifications, and/or years of involvement in a particular thing.

In a nutshell, customer experience (CX) is something personally encountered, undergone, or lived through by a customer with a certain company.  It is the product of an interaction between a company and a customer over the duration of their relationship.  This interaction includes their attraction, awareness, discovery, cultivation, advocacy, and purchase and use of a service.

CX is simply the result of everything that makes up the company’s product or service delivery, visible or not.

Problems with Customer Experience Today

Many companies today only focus on the ‘touchpoints’–the critical moments when customers interact with the company and its offerings to establish the customer experience.  This is often depicted in marketing as an experience map.  Often, this is a narrow focus on what is important to the customer’s satisfaction at specific moments and often creates a distorted picture of the overall experience.  This can lead a company to believe customers are happier with the company’s products and services than they actually are.  This approach also diverts attention from the bigger and more important picture–the customer’s end-to-end journey.[i]

An emphasis on Operational Excellence within an company as the driver of the CX is important to carefully consider.

Experience-based Operational Excellence

Operational Excellence (OpX), as an official business concept, has not been around very long and is often misconstrued.  The best way to look at OpX is to think of it as an end-to-end enterprise-wide management practice that aligns everything in the organization toward driving excellence.[ii]  From a perspective of the CX, OpX essentially represents an organization’s focus on all things that affect the customer’s experience (see Figure 1).

 X-Based OpX

Figure 1: Experience-based Operational Excellence

     Normally, companies view CX as a result of the product itself.  Some broaden the view into the processes that impact the product delivery and many companies see OpX as nothing more than the application of process management and Lean Six Sigma improvement processes.[iii]  In reality, true OpX represents the end-to-end enterprise-wise business management.  The ‘experience’ is at the very center of where the product, process, and employee intersect–this is what the customer sees and feels.  The entire experience is influenced by high-level company strategies, internal and external communication, and employee development.  Everything within the company is supported by an innovative layer that includes technology and information.

Thus, everything in the organization is important in the CX equation and focusing simply on touchpoints will represent a lack of true focus on the CX.  From a company’s perspective, there are several representative performance metrics that are important to the overall CX.  A company cannot simply look at metrics like sales and net promoter score, but must consider all company performance as critical to the CX.  There are many things that measure the experience, but can generally be referred to as satisfaction, sentiment, and relationship.

Summary

In summary, the traditional view of CX as a stand-alone activity represents a shortsighted view of what is important to the customer.  Although much of what makes up OpX is out of the customer’s view, it all leads to the CX and must be considered and aligned.

[i] Rawson, A., Duncan, E., & Jones, C. (2013). The Truth About Customer Experience. Harvard Business Review.

[ii] Boothe, W., & Lindborg, S. (2014). Handbook to achieve operational excellence: A realistic guide including all tools needed. Ft Myers FL: Reliabilityweb.com.

[iii] Crabtree, R. (2010). Driving operational excellence: Successful lean six sigma secrets to improve the bottom line. Livonia MI: MetaOps Publishing.

Four Types of Companies

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When dealing with any organization, it is important to understand the things that are important to it and the employees. For instance, they may be focused on improving compliance or increasing revenue, but each company focuses on things that are important to it.

Knowing this when dealing with the company or their employees helps understand how they behave.

One way to examine any organization is through the lens of purpose versus process. When looking at organizations from this lens, there are four possibilities. The organization can be purposed-based, process-based, blended, or neither. How they are says a lot about how they operate.

Let me define what I mean by each of these types of organizations:

1. Purpose-based. A Purpose-based organization relies on a strong organizational purpose and reason for being. At the heart of what they do everyday is a greater reason everyone works there. Sometimes the organization defines this in their mission and vision statements and sometimes it is just known. Making money is NOT a greater purpose. A good example of a Purpose-based organization would be a philanthropic nonprofit or military organization. Their reasons for existence, even if not written down, are usually quite clear.

2. Process-based. Organizations that focus on perfecting processes to run an effective and efficient organization, are process-based. Strictly process-based organizations are focused on exceptional product or service delivery and not their reason for being. Money is normally very important to them.  Many commercial companies fall into this categor, more so in manufacturing.

3. Blended. A blended organization has a strong purpose or reason for being and operates with strong processes. Organizations with both are difficult to find, but can come from anywhere.

4. Neither. Many companies and organizations have neither a strong defined purpose nor effective and efficient processes. These organizations are quite easy to find because they are everywhere.

Mentor or Coach

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Over lunch a couple of days ago, we were discussing the subject of mentors and coaches and started to highlight the difference in the roles. Sometimes people can seemlessly operate in both roles at once, so the roles do not seem distinctly different, but they are.

We discussed a few items that seem to differentiate the two roles:

One of the items was Blind Spots. Coaching is designed to identify blind spots, where mentorship is more designed to overcome blind spots once identified. Sometimes the coach can guide the coachee in ways to overcome the blind spot, while in other situations they might recommend they obtain training or a mentor.

Another item was Proximity. Coaches are generally involved with what they are coaching you on, whereas a mentor is someone you mostly meet with to discuss things with. Coaches tend to actively participate in the thing they are coaching you on so they can witness your actions and provide advice and direction if improvement is needed.

Another item was Selection and Appointment. Although some organizations have more formal mentorship programs, generally coaching relationships are formal and assigned for a specific reason. Mentors are normally sought out to discuss and close a gap.

When we were discussing the subject, we discussed two different types of coaches–Lean Six Sigma and Executive. Both of these are very specific roles where an individual is involved with what is going on in a coachee’s life. In Lean Six Sigma, for example, the coach is engaged with every step of a coachee’s project,  guiding them in the application of the skills they should have learned already. If the coach recognizes that the coachee has difficulty in running meetings or presentations, they might suggest that the coachee obtain additional training in those areas. If the coach notices that the coachee has trouble with time management, they might suggest establishing a mentorship relationship with someone that they know is particularly good at time management. If the coach is good at time management, they might quickly switch into that mentor role, but this is outside of the original coaching arrangement.

This is why people often see coaches and mentors as the same thing–they can cover more areas than what they are specifically coaching for. In the case of an executive coach, the coach might be able to provide all kinds of advice and assistance on leadership and employee motivation. However, they probably would suggest the executive have a mentor if the coachee is trying to learn how to navigate the company’s culture toward promotion.

When you think about the roles, this should help you better delineate what each does and which you need.

Being Agile

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Agile…

This is quickly becoming the management buzzword of 2015. Just another magic pill for industry to improve what they do with what they believe is little work.

Agile, as a process (yes folks, it is normally a process), usually starts in an organization with IT in software development. Soon after companies get the “agile bug” and they want everything to be agile. Lean quickly becomes the Agile way to be.

Agile, by itself, is just a word describing a state of being. I’m sure there are many definitions, but in its basic sense, Agile is being able to adjust, change, or respond quickly. It’s being resilient and flexible. Agile approaches are based on quick incrimental iterations. Agile, at its core, is organic and a state of being, not a program.

How do you become Agile?

Look at how you are organized and how you make decisions in your company. Is your company fairly flat and accepting of risk or do decisions need to be collaborated up through many levels and do they take a long time to obtain approvals?

Does your system, to get things done, have to go through annual processes with multiple approvals and significant roadblocks, or are employees empowered at the lowest levels to embark on projects when needed to make things happen?

Do you focus on managing change (I e., reactive) or are your employees ready and actively looking for change opportunities and making them happen?

Agile cannot become the way you are without significantly addressing your culture and operating models. If you are slow to make decisions and change as a company and if you are reactive to changes after they occur, then you are not Agile.

Employing Agile methodologies like Agile Software Development or Lean are only programs…they do not make you Agile as a company.

Being Agile means fundamentally changing everything about your company…

Will that work for your company’s culture?

Internal Service Providers vs External Service Providers

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Here is a situation that keeps repeating itself everywhere I turn: internal vs external services.

When I am talking about service providers, I mean the activities that help the company run, but add no value to the product the customer buys. Things like HR, IT, Facilities Management, Finance, etc. There is a specific situation that plays itself out over-and-over again with these internal organizations.

A service–let’s use the example of payroll–is needed to pay employees of the company. When the company is starting out, employees are simply paid by the president or another random person working in the company. As the company grows, the workload increases and an office manager is hired to take care of these things. Over time an HR department is stood up with several related functions, payroll just being one of them.

Then, the company really starts to focus on their margin. Competition has stood up and offering the same cool ideas and the company needs to figure out how to cut costs to keep their prices down. The days of being the fat, dumb, and happy big kid on the block are gone. Normally cuts come from the services that support the company–places like HR. After all, they are non-value added in a lean environment, right and these people have been with the company for several years and now make pretty good salaries. Basically, they are a drain, and we need to keep them to a minimum.

Oh, the plight of the service organization…can’t live without em, but don’t want to pay them.

Because they are lean and mean (and maybe mad), the services that they always provided to the company start to get harder to accomplish. The company is growing, but their office is not. The results of their work suffer and it takes longer for them to do stuff. The company (internal customers) starts to get frustrated with the poor service. In some cases the company has become so big that no one even knows how this service is even done or who does it.

In order to keep up, the payroll service starts creating self-service capabilities to ease their workload. Essentially they start outsourcing what they do to the customer. They sell this as a positive thing, but it adds time and complexity to the employee and removes the level of expertise that the service was hired for. Imagine the frustration that is setting in.

Next, the internal customer, frustrated with long waits, lack of and poor service, and having to do many things themselves, decides to take matters in its own hands. The thing is, now the company is so big, that everyone has their own budget and can do what they want. So, factions of the company hire their own payroll person or even department. Of course this person doesn’t do everything but they start taking on the roles that the official department should be doing, but isn’t being very effective at. At first, the original payroll department doesn’t have a problem with this…good for them. But then people start questioning what they do, versus what this new person is doing and why are they even needed?

Next step, the payroll department figures out that payroll is their job and demand that the people doing the work in the company all work under the same department. There is a big effort to consolidate all these new positions paid for by the internal customers and the payroll department becomes big enough to handle the workload again. The problem is, these employees are now part of the payroll department and service everyone under the same flawed systems that was causing the problem in the first place. Internal customers quickly get upset because they lost their personalized service and the company decides, in its annual planning activity, that the payroll department is a good place to cut staff because it has become “too big.”

Again, the frustration sets in, and the next thing you know ABC Payroll Services, an outsourced payroll service, finds its way into the company. It might be a small engagement at first. In some cases, the payroll department itself might outsource non-core, busy-work functions to them. The thing is, they specialize in payroll, do it for many companies, and have cheaper labor that less benefits. Suddenly everyone is questioning the value (i.e., cost and ROI) the payroll department brings when this new and very efficient and effective service provider is doing such a good job for very little money.

To save money, the payroll executive decides to quietly outsource their whole department, saving a job for themselves to “oversee” the activity.

Are you an internal service provider to a company? What value do you bring to your company? Have you outsourced yourselves through customer self service? Are you already challenged by someone else doing part of your work?

This story is played out over-and-over again with every type of service in companies. There are ways to combat this, but many do not see them. Consider the situation above and what the service provider could do to make sure this doesn’t happen.

The Employee Engagement Discussion

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For the last ten years, businesses have focused on employee engagement and its cost to businesses. Pretty much any report or study on engagement points out that about 70% of employees in the U.S. are not engaged at work and it is costing businesses approximately $500 billion a year.

Unfortunately, this employee-focused issue has not changed since before the 1950s when the emphasis was on employee satisfaction.  In the 1980s, the emphasis turned to organizational commitment.  The business issue; however, has not changed since researchers started studying and quantifying the situation more than 70 years ago.

There are a few major companies out there that have found some success in this arena and have become the poster childs for how they treat their employees.  Like in everything else, many companies think if they simply do the same visible things that they will be successful and their survey results will go up.

Speaking of survey results; when it comes to this topic, this is another important aspect. The purpose of surveying employees on their engagement (or whatever employee-focused thing) is to quantify how employees feel about the organization. Many companies do not even measure this, which tells someone a lot about how much they care about the issue. A good deal others use the survey results to target specific things in the organization to raise the score. This is a failed approach to employee improvement.  Surveys are for the purpose of providing a gauge of how engaged your employees are, not specifically a roadmap to improvement.

When you look at this issue from the business’ point of view, they do not really care if the employee is satisfied or engaged at work. They just know that if the employee is not, they are not operating as well as they should. What organizations want is employees committed to the organization–organizational commitment.

Employees, on the other hand, do not care about being committed. What they want is to be satisfied with their job–employee satisfaction.

The concept of “being engaged” is a deeper subject that most companies and employees simply do not understand. Employee satisfaction represents how employees feel about the things they can measure in their job. Organizational commitment is a result of satisfied and engaged employees and is measured from the business’ point of view.  But engagement is something entirely different.

Each of these three terms: satisfaction, commitment, and engagement, work together in business. Each one is important and should be the focus of employee and organizational wellbeing.

From a satisfaction point of view, employees are focused on the tangible things that they can measure at work.  Things such as the security of their position, comusurate pay and benefits with their role in comparison to others, recognition and rewards, opportunity for advancement, the company dress code, etc.

From an organizational commitment perspective, there are three factors that exist: employee, leadership, and organization. Employees must be present and they must be dedicated to work. If the company does not have any employees, then who will be committed to the organization? If the employees are lazy and not interested in working hard–just want to get paid–then they will not be committed. If there is no effective leadership to provide a vision and goals, or reward and recognize employees, then commitment cannot occur. The organization might have people in leadership positions, but they might not be leaders. Lastly, the organization must not just exist, but it needs to be an organization worth being committed to. If your organization does not have a strong purpose, vision, and culture, employees find difficulty being committed to it.

Engagement is the term that confuses managers the most. The reason is, because it is really based on how employees feel about their job.  This is difficult for companies to manage to, so most resort to single items scored low on a survey. Employee satisfaction was easy to manage to because, like the employee, the company could see, touch, and measure it. What confuses engagement even further is that many of the surveys out there include questions related to commitment and satisfaction as part of the engagement equation.

Employees are engaged by three things at work. These three things are communication, development, and quality. These things are not obvious to organizations and usually are some of the major problem areas many companies have. Open and honest communication builds relationships and trust with leadership and between employees. Most organizations stuggle with communication (internal and external).  Development is more than having classes available or a training budget that no one uses. Development is about actively challenging employees to grow and helping them with the challenge. It is about assisting them to become something better and stronger then they were when they started with the company. Quality is a recognition of doing good work, that employees around you are doing good work, and that the management focuses on quality work.  If the company does not care, cuts corners, and puts out a shoddy product just to make more money, the employees will be the first to know it.

So, the discussion needs to turn from one of engagement to one of organizational and employee wellbeing. All things, satisfaction, commitment, and engagement should be evaluated to establish a baseline and then to measure effective improvement. For each category, the right things need to occur versus focusing only on statements and scores on a survey. Only then will wellbeing occur.

Kickstarter Project: Overcoming Organizational Myopia

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Overcoming Organizational Myopia, stovepipes, sandboxes, short sightedness

At 2:30 pm, Central Time, on June 27, 2015, KS Project, Overcoming Organizational Myopia lifted off.  Overcoming Organizational Myopia will be a new nonfiction book about successfully breaking through stovepiped organizations to obtain organizational effectiveness.

https://www.kickstarter.com/projects/1551087231/overcoming-organizational-mypoia

The Short Story: I discovered that it really does not matter what company or organization I work with, they all have stovepipes.  What I learned is that they are a product of human nature.  The problem is that everyone wants to “break down the silos” as the typical management response. Unfortunately, this NEVER works! All you do is cause confusion and drive unproductivity as the people in your business seek to rebuild the stovepipes that make them feel secure.  This book is about breaking through the stovepipes to become an effective and efficient organization.  It respects the stovepipes and teaches you how to navigate through them using a consistent and systematic application of full-spectrum strategic and organizational methods.  The book is designed to provide you with situational examples so you can self-diagnose your organization.  Across nine areas, the book helps you identify problem areas and, like a business doctor, treat the root causes with solid business solutions.

Fix Your Roof When the Sun is Shining

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Lisa Hershman, Denovo Group, has a phrase, “We never fix the roof when the sun is shining.”

I don’t know if I really need to explain the saying, but often businesses wait until stuff goes wrong to try to fix it. Then, it becomes an emergency break fix and it is done poorly because they lack sufficient time to really solve the problem.

The thing is, in business, fixing things when the sun is shining applies to everything. This basically means fixing things that really are not broken.

Off the top of my head, here are a few items that we neglect until it is too late and then do wrong because we are hard-pressed to simply get it done.

Planning. Strategic, operational, and even tactical planning, we are tremendously poor at in business, but specifically strategic planning is often overlooked. All too often, businesses look to strategic planning when they are having significant problems and they think it will solve their problems (the proverbial silver bullet). The problem is that strategic planning is a long range effort (hence strategic) and not designed to solve tactical problems.

Process improvement. All too often businesses let shoddy processes continue as the company grows and they ignore things like defects, poor customer service, and excessive process variance until too late. Then, when everything related to the process is falling apart, suddenly the business tries to solve the problems that took years to manifest in the process. What is worse, all too often all of the business processes are in the same state of disrepair and instead of just fixing one process, the business tries to create a full blown process organization and expect it to happen overnight.

Development. Businesses often look to training to solve a problem, but do not look at development when there isn’t a problem. If you are considering going into a leadership position, this is when you start learning about leadership, not six years after becoming a leader and you suck at it. However, we get very tactical when it comes to solving problems with training as the solution.

These are just a few examples of how businesses become very reactive to things and treat everything as a fire fighter versus a fire marshal. Living the advice of Lisa Hershman is very important for all of us.

Bad Leadership is Becoming an Epidemic

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It might be me, but the more I look around, the more I am finding bad leadership. Specifically leadership apathy and leaders that lack accountability. “It’s good enough” leaders and leaders who are “just getting by.”

“Why are we seeing this,” I ask myself?

Bad leaders hire and promote bad people. Bad Leadership isn’t just destroying corporate America, but they are doing it at a record pace and doing it way into the future.

These leadership charlatans are building armies of apathy to follow in their footsteps. If you are someone that gets things done, you are kept in a position to get things done because bad leaders don’t want you–you threaten them.

No wonder more than 70% of employees are disengaged at work. Who wouldn’t be with such a sorry leadership outlook.

Often, we talk about the qualities and actions of good leadership, but I think it is important that we learn to spot bad leadership. Here are the top ten results of bad leadership:

1. The realm under the leader has little if no strategy or plan to inspire and drive people. Literally there is no vision, the purpose of the business is primarily focused on making money, becoming bigger, and taking care of itself. Any goals are developed to ensure each subordinate leader can justify their position in the strategic plan and do little to overcome barriers to a future vision. Any vision and goals are such low targets that they in most cases have already been attained.

2.  Program accountability is slowly eroding and nothing is done about it (i.e., deadlines are missed, people not qualified are in positions, reports are misleading, etc.). Expectation barely exists in the organization because targets, rules, and requirements are ignored. Organizations like audit, risk, and compliance are seen as the enemy and kept away from the organization. When there is a finding from one of these organizations, the leaders spends all resources to make it go away and cover it up, but does little to nothing to solve the root causes that created the issue in the first place.

3.  There is a complete lack of organizational performance and process management and accountability. No one knows deeper than monthly what they are doing from a measurement perspective and there is a complete lack of process focus. Everyone simply does their own thing and what little process documentation is lodged tightly in the heads of the employees and passed down like tribal knowledge. Knowledge systems are busting at the seems with senseless information without any organization. Variance across processes run rampant and unchecked.

4.  There is a significant lack of communication both internally and externally. What communication that is occuring lacks any direction or strategic intent. The leadership doesn’t even know who their stakeholders are to communicate to. The term customer is used, but they are a faceless entity that nothing is really known about. Specifications for work are all internally created and bear no resemblance to competition or what customers actually want. In some cases, the customer is seen and portrayed as the enemy.

5.  The organizational structure looks like a Christmas tree and is broken into functional and operational departments that are so siloed that the company looks like an island chain. There is little communication and less cooperation across departments. Each silo is only focused on what they do for themselves, they see everyone else as a competitor for money and manpower, and they simply throw work over the wall versus work in an end-to-end process.

6.  Education and training opportunities might exist, but there is no plan or strategy to develop employees and leaders. The activity, if it happens at all, is chaotic and clearly broken. Employees mainly spend resources to gain skill through training so they can leave the company.

7.  Operational effectiveness, based in things like defect counting, process timing, first pass yield, on time delivery, customer satisfaction, etc. is barely looked at (if at all) and nothing of substance is done about it.

8.  Leaders across the organization focus on tactical operations, ignore problems, lack methodical problem solving, micromanage work, and have little vision at work.

9.  Good, hard working employees are consistently overlooked for promotion opportunities and are kept “getting the work done.”  The great employees have either turned apathetic in the workplace, are looking for other opportunities, or have already left.

10.  Almost all the leadership and management below a bad leader looks the same. The problems above spread to every corner what that leader controls. Bad leaders conspire with other bad leaders to corrupt the entire organization because this eliminates the need for accountability. Soon, the disease has spread to the highest level executives and even possibly the president or CEO. The leadership ranks become bloated with high-paid executives who do little and hold no one accountable to organizational values.

These companies are like the undead. The disease has corrupted the body so badly that it doesn’t even realize it’s dead. It just keeps operating and destroying everything in its path. This mindless company lumber on making money in spite of itself and it decays and starts to collapse. Yet, the bad leadership are so unaware of the situation that they can’t even fathom there is a problem.

Bad leadership is running rampant in corporate America and the undead companies are lumbering across the landscape. Is there nothing that can be done?

Finding Process Improvement in Service Functions

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Is your business internal service related? As in things like Human Resources, Information Technology, Facilities Management, Contracting, etc?

If it is, then you probably are having difficulty identifying process improvement benefits within your own area. Sure, you probably have some waste in your processes that require trimming, but more than likely you already operate with a pretty lean staff. This is because you are a 100% cost to the business–you are not a revenue generator.

If this describes you, then this blog was meant for you. You might already know what I am about to say, but if you don’t then I hope this information helps. If you already know this information, then please share your experiences.

As a service provider to internal customers, the benefit you provide is to the customers themselves. Yes, you want to focus on eliminating as much waste in your processes as possible and get to standard work, but you should be focusing on eliminating waste and improving processes that reduce work on the part of the customer.

Let me provide an example using a medical office–they are always ripe targets for this discussion.

My wife recently went to a medical imaging center to get an MRI done on her ankle. Her doctor set it up, she had to provide information online before going, and then they required her to be there 15 minutes early to fill out paperwork. This paperwork was the exact same information her doctor could have provided and that she filled out on line.

She was called upon only a few minutes past the appointment time, so that was good. However, the put her in a room and she waited for several minutes doing nothing. Normally this type of activity allows the function to believe they are meeting their set appointment time by shifting you to an internal waiting room.

Obviously this was for an MRI, but if it is a normal doctor’s appointment, she probably would have some tests run, like blood pressure and temperature and someone would ask her what was going on and write it all down.

For her, she didn’t really see a doctor, they just took her in and did the MRI when the space was available. If this were a doctor’s office, there is a good chance that the doctor would come in and ask the same questions all over again and then leave for a good 30 to 45 minutes to see other paitients.

The operation probably has specific process reasons for everything they do. There is a good chance they are trying to meet some internal metrics that they feel are important to the business–just like you.

The problem is that their processes are wasting the customer’s time.  Think of the time my wife spent filling out paperwork twice, when the doctor could have sent over the information and all she would have to do is validate it. Think of the time she spent waiting around for the open waiting room and then to get the MRI done. This is a waste to the customer,  but often invisible to the service.

Remember, the customer’s job is not to do your job. The more time they spend in your process, is time they are not doing their job. Consider an average employee that has a burdened (all-in) hourly rate of $50 and you consume an average of 30 minutes of their time in your process every time they deal with you. Consider that you deal with 100 internal customers a day. Every day you are costing the business and average of $5,000 on processes that have no value to the business. That’s approximately $1.3M a year your process is costing your business!

This is how internal service providers find value. Remove waste and make processes easier and more effective form the customer’s point of view. Reduce the amount of time they spend in your process and make it a “one and done” experience. Obviously they are not going to cut manpower as a result, but they now have more time to spend in their core competency than in yours and that means they can earn more revenue for the business than waste on a process that just costs money.