In Part 1, 2 & 3 of this six part article we reviewed the factors driving transformational change and how the old ‘inside-out’ approaches to business is about as useful as a steam engine in getting to the moon.
In this part we’ll look at how some of the world leading trend setter companies are embracing the new outside-in challenge and creating new powerful business models driven by advanced forms of Business Process Management.
This fourth of a six part article describes the size of the challenge and how some world leading trend setter companies are achieving dramatic success in this new order.
Velocity of Business
Zara, the high street largest fashion retailer, have contributed to a sea change in the fashion business. With a dynamic, agile enterprise they have grown from a Spanish family owned business in the 1970’s to be the worlds largest and most successful fashion retailer.
A major contributor to this success has been their understanding of customers needs as opposed to customer wants. In a different industry in a different century Henry Ford stated “if we’d have asked the customers what they want they would have said faster horses” and so it is with Zara. Their insight to customer needs has developed a set of processes that can deliver concept to wear in less than 10 days. Compared with an industry average of over 12 months this is a major competitive advantage which brings with it many attributes that make outside-in thinking and practice so compelling.
Those companies that take 12 months to bring clothes to market share a mindset developed in the Victorian era which says that successful business is complicated, requires sophisticated management approaches, needs logistics and supply chain management, enterprise systems (thank you SAP and Oracle) and reward remuneration systems requiring a degree in Rocket Science to navigate them. All this ‘stuff’ slows things down and causes problems –ask yourself the question of how many things can go wrong in 12 months? and more so how long does it take to fix them? The cost of putting things right causes these companies to become more risk averse and we now witness the consequences – they are going broke.
Zara on the other hand takes 10 days to achieve a new fashion line. What’s the consequence when things go wrong in that time scale? How long does it take to fix it? Accordingly learning and experimentation is a highly prized skillset and with a process velocity of this speed the organization can change direction overnight to capitalize on emergent trends. In fact Zara have moved them to a place where they are actively managing Customer Expectations and in doing so continue to raise the competitive bar even further. This dominance has changed another industry forever and everyone of us has a whole new bunch of expectations when it comes to buying clothing – we can thank Zara’s innovation for that.
There are enough hackneyed phrases littering the world of management and business to last us an eternity. Customer Centricity as a term first saw the light of day in the header 80’s in another management brainstorm – Customer Relationship Management (CRM). A software industry developed to automate front-ends and create the automated customer interface (I really hate those Automated Voice Response Systems and actively choose to do business with companies who use human beings instead – much smarter and nicer).
These CRM systems promised to change the way we deal with customers (and they have unfortunately with bad side effects) and along the way become customer centric. It never happened, another promise made of the snake-oil software purveyors which cost lots of money, led to the abortion of Cost based outsourcing and moved organizations away from the very people they needed to develop intimacy with – you and me.
So when we talk of customer centricity we do not mean those isolated islands of automation linked to those intensive call centres fill of clucking chickens. The good news is we mean Customer Centricity as pushed by companies such as Best Buy, Americas leading electronics retailer. The philosophy and practice of putting the customer at the center of your Universe and making sure that everything is aligned with achieving Successful Customer Outcomes. Every Moment of Truth.
Zen and Processes
This is where we go real freaky. The organizations that are most successful consistently use processes to effectively remove processes. Stay with me… If we acknowledge that much of what we have been doing for the greater part of the last 100 years is fixing effects, and these effects in turn are actually the aggregate of numerous activities that we mostly call processes then applying an outside-in perspective to these ‘processes’ achieves something remarkable – the effects disappear as we deal directly with the Causes of Work and what remains is radically simplified. In reality our research and findings suggest that more than 60-70% of current work, in traditional organizations is effect based. This opens a massive potential to both remove unnecessary activities, speed processes and enhance customer service.
To fully understand process you need to see beyond to the place that proposes architectures, taxonomies, and process languages. The world really isn’t that complicated, albeit we often seem to make it appear that way.
The former CEO of Citibank, John Reid put this concept very well when articulating what his banking business actually does “We get money in, move it around, and give it out. How difficult do you want to make that?”.
Applying our focus to Cause, rather than Effect eliminates much of what we think of as process. The golden nugget that remains is indeed our ability to create the Successful Customer Outcome, and as we do so progressively eliminate unnecessary time consuming and costly work.
FedEx applied this thinking to their newly acquired printing operation Kinko and in doing have changed the business model in their sector forever. By looking at the SCO and seeking to align everything with Causes of Work have been removed and Points of Failure eradicated. The resulting process bears very little resemblance to the starting point and as a consequence FedExKinko, now FedExOffice now lead their sector in terms of volume, customer service and profitability.
In the fifth part of this six part series we will review how you can embrace these ideas and make them your own to help transform and realign your organization towards Successful Customer Outcomes. In doing so creating a sustainable, agile and responsive enterprise where everyone explicitly contributes to individual, team and corporate success.