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Manifesto of The Process Revolution: #1 Measure for Profit

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Why measure when you know a process is broken?

Why measure when it’s already caused a catastrophe?

One day someone will come along and say, “How can we justify all this spend on process?” and if they haven’t measured anything they will have nothing to disprove them. They’ll pack up the little process shop and go back to counting their beans, happy in the knowledge that they’ve saved money – even though they’ve cost the organisation more money in the long run.

So here’s what your organisation must do – measure everything. Measure before the start, measure during and keep measuring when they’re done. After that, start measuring again. Organisations must always be constantly aware of where they are – that way when they make a change they can measure exactly how much they’ve achieved and thereby prove the power of process. Process is a compass, but if you’re in the dark you’ll never see where you’ve come from or where you need to go.

 

TALES FROM THE REVOLUTION

 

A contact centre wanted to improve their process around identification of customers. They were going through a manual process of asking security questions. By using pincode technology they discovered that they could cut 30 seconds off the process. That doesn’t sound much until you consider that they had over 1 million calls a year which resulted in a $1.2m saving per annum.

 

The number one reason for doing process improvement projects is still cost reduction* and there is still plenty of fat in most organisations to be able to extract great savings to boost profitability. But what are the key criteria you should look to measure to demonstrate the value process improvement is providing to your organisation?

 

START YOUR REVOLUTION

 

Firstly, let’s understand one thing: organisations are fascinated by pinning a percentage on each process so that they can show this to senior managers and say, “We’ve reduced the process time by 30%!” It’s impressive rhetoric but is ultimately meaningless unless provided in the context of other criteria …

Secondly, what time is being measured? Is it effort time or elapsed time?

Elapsed time refers to the total time from start to finish of the process from the customer’s point of view.

Effort time means the actual amount of time your staff take to do work in the process.

A classic example is that it may take 2 minutes for your staff to write an email (effort time), but if the email sits in an inbox for 2 hours it is adding to the time of the overall process (elapsed time).

Both types of timings are important depending on the goal: elapsed time has a greater customer impact (“Why is it taking so long!?”) whereas effort time is a more telling diagnostic for efficiency. Of course a reduction in effort time also decreases elapsed time, and it is still possible to have a process which is efficient in terms of effort time but a laggard in elapsed time (watch out for those sneaky ones). Thus, it’s vitally important to measure both for every process you analyse.

So what is a “good” level of improvement? Well it’s not quite that simple. A 0.5% elimination of effort time can be a fantastic improvement. It all depends upon one very crucial ingredient: volume.

A small time improvement on a high-volume process can result in huge savings. Conversely, if you can save 75% of effort time off a process that is only conducted 200 times a year, the costs of implementing the process change may outweigh the benefits.

Take the time to measure both effort and elapsed time, but remember that the most important measurement is the experience of your customers – so don’t reduce process time if there is likely to be any negative impact upon their experience.

* Source, PEX Network

The PAIN Points of Today’s Large Organisations: #8 Broken Processes

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Within every organisation there are problem processes and they aren’t hard to find. Staff chuckle about them in private and point fingers when others aren’t looking. They’re typically associated with teams that are underperforming and which have a poor reputation for productivity.

But what characterises these processes? Typically staff will have been performing work the same way for several years without change and the processes are characterised by a lack of technology, paper-based systems, spreadsheets and over-exuberant levels of work tracking. Other staff will point out that the teams performing work in the process are difficult to deal with and highly resistant to change.

Often customer feedback will point the finger in the direction of these areas through customer complaints and customer satisfaction surveys. These broken processes are an open wound for organisations, bleeding costs and killing profits.

But where there is pain there is hope. These processes are like gold nuggets waiting to be discovered. By fixing them, organisations can build a business case for process improvement which will cascade through the organisation. These nuggets can provide impressive cost savings and significant improvements – the first find that will inspire them to mine further veins of customer gold.

The following section will help to identify your organisation’s issues and will pinpoint actions that can be undertaken to start a process revolution …

The PAIN Points of Today’s Large Organisations: #7 Poor Staff Performance

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

In many organisations, staff feel like they are simply a number. It’s difficult to make people feel loved in organisations of thousands of people, but it’s the duty of organisations to try. Engaged and motivated staff treat customers accordingly, so before asking customers to fall in love with an organisation, it’s their obligation to start with employees and in particular the staff that assist customers on a day-to-day basis.

Sadly frontline staff are often the victims of poor organisational design that does not support the customer experience. By the time a customer reaches a “real person” they have already been subjected to a gruelling assault course of phone systems, identity checks and queues. When they do finally get through, chances are the slightest deviation of their problem will land the customer transferred to another specialised team where they will repeat their identity check and story all over again. Is it any wonder that a long line of already disgruntled customers ensures that these jobs are seen as the most undesirable and have the highest rate of turnover?

It’s up to organisations to empower frontline staff and build staff capability that will provide an exemplary customer experience. Business process helps tame poor staff performance not only by supporting the staff with the tools that they need to really do their jobs effectively, but to have the visibility to support those staff.

Many frontline staff don’t have the technological capabilities to be able to do their jobs properly and management don’t have the visibility of what their staff are doing to be able to improve business processes to provide a better customer experience. By having visibility of the entire end-to-end process, they can implement a culture of continuous improvement that can take organisations to a higher level of process maturity and customer experience excellence.

Frontline staff are the key to great customer experiences, but in many organisations they are challenged by a lack of support. To solve this problem, conventional organisational structures can be re-designed to build new customer-focused structures that see employees empowered to use freedom within boundaries.

The PAIN Points of Today’s Large Organisations: #6 Complexity

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Today, the structure of all large organisations looks the same. They’re a hierarchical pyramid with the top level staff cascading information down through layers of management to back-office and frontline staff.

Staff at the bottom of the pyramid deliver the most important service to the most important people: customers. Information and strategy is cascaded down through multiple layers to get to the staff at the bottom who are so busy looking after customers they barely have time to digest the information. How will the vision and the goals from the top filter down through so many layers? Chinese whispers mean that the message is often muddled, confused and misheard by the customer-facing staff – or simply not deemed a priority above their day-to-day work.

Business today is complex and organisations respond to that complexity in the manner that they’ve responded to it over the last 100 years. Whenever work starts to overwhelm a particular job role, the role is split into two and a deeper level of specialisation is created. As a result, the pyramid expands. As the number of roles expand so do the number of departments with their own responsibilities, objectives and Key Performance Indicators (KPIs). These departments are conditioned to focus on their own KPIs typically with minimal consideration as to the impact on those within other stages of the process. These are typically referred to as “organisational silos”.

This creates a situation where teams focus on meeting their KPIs but to the detriment to the overall process and the outcomes for the customer. Complexity slows down the throughput of processes and the delivery of value to the customer.

During Improvement workshops many of the people in the room understand their own section of the process and they’re very good at it. But when they are all brought together to document the process the result is always the same – amazement. The most common comment is always “I never realised it was so complicated” – the next being “I didn’t know you did that. We do that too”. Finally comes the daunting realisation, “If this is so complicated for us, what is it like for the customer?” 

There’s another important effect of complexity. It’s both draining for staff and management. Every time organisations introduce additional complexity, they’re creating more hoops for staff to jump through which increases the level of frustration and decreases job satisfaction. Every day organisations make their staff solve the same puzzles over and over again. These puzzles are created by the complexity that has been introduced to organisations in a vain attempt to solve business problems.

Staff want to do their jobs, enjoy them and produce a result which provides satisfaction. Anything that takes away from that end result is an annoyance and an irritation. When complexity is created staff are taken away from the tasks that they really need to be doing.

Process improvement is the tool that can smash down the barriers that complexity builds to create leaner, more customer-focused organisations.

The PAIN Points of Today’s Large Organisations: #5 Losing/Not Attracting Customers

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Smaller upstarts are stealing customers through better customer experience and being quicker to market with products and services that customers not only want, but love. Fortunately organisations can design superior customer experiences that create loyal fans that not only won’t want to end their patronage, but who will recommend the company readily to others.

Companies today work incredibly hard to acquire new customers and they spend enormous amounts of money to get them. Traditional marketing, digital marketing, social media – there are now more ways to spend on marketing than ever before. Throw into the mix complex joint ventures with other companies and they are fighting tooth and nail to take customers away from their competitors. Then, what do they do when they finally get them to come on board as a customer? They feel like the hard work has been done: they’ve agreed to marry them and as soon as they carry their customer across the threshold into their organisation, they dump them on the floor and ask them to wash the dishes.

Companies today have to understand that the effort is not just in getting the customer but it’s in keeping the customer, and building the relationship with that customer through the experience of every single part of the organisation. Each interaction with the company is an opportunity where the positive result will build the relationship or negatively, knock it down. Interactions with the customer and the company happen over the entire customer lifecycle, and can contribute to a growing feeling of dissatisfaction or satisfaction with the company. Every interaction (including using the product or service) affects this delicate equilibrium.

Judgment of customer experience is like an emotional bank account. Organisations can deplete the customer’s balance through negative experiences or deposit positive experiences into the account. Of course organisations should always try to prevent negative experiences from occurring; but in the event they do occur positive experiences can help to refill the account.

Overall, the emotional balance has to be a positive one, and the balance has to be consistently high if they wish their customers to be recommending their products and services to others. How they handle each of those interaction points 45 is critical. It doesn’t matter whether the interaction is via web, phone, in person or simply using the product. Every single interaction must be designed, analysed and optimised. In the rare event that something does go wrong, there must be a strategy to manage those situations to create a positive experience out of a negative one.

Not only can they keep their customers happy and increase their uptake of other products, but if they prevent dissatisfaction from occurring, they eliminate the negative PR that will stop customers from even considering doing business with them. Dissatisfied customers have more opportunity to tell the world than ever before via forums, Facebook, Twitter and online reviews. One negative review and a customer who is determined enough to tell the world can cause significant damage to an organisation.

Take the example of “United Breaks Guitars” where a dissatisfied customer of United Airlines wrote a song to tell the world about how the airline broke his guitars. The song went viral and had such an impact that United’s shares dropped 10%*.

So the next time there is a customer who complains, put every effort into that complaint to avoid further damage because every complaint is bigger than just one customer.

*Did Dave Carroll lose United Airlines $180m? http://www.economist.com/blogs/gulliver/2009/07/did_dave_carroll_cost_united_1

The PAIN Points of Today’s Large Organisations: #4 Project Failure

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Today’s organisations are entrenched in cycles of project delivery. You’ll find program managers, project managers, teams of people, business analysts, process analysts and project co-ordinators. Everything of importance is run as a project.

Just as they rush to embrace transformation when they require major surgery, when they require a major project, they scramble to put together project teams, build business cases, and go on the slow arduous journey of implementing change. But that’s just the start. Projects have become so large that they’ve evolved a whole new set of roles and categories by which to manage them. No longer do organisations have only project managers. There are program and portfolio managers too! There are new hierarchies created to manage the increasing complexity of large programs of work. There are complex sets of processes simply to run projects and programs to allow them to implement even more complex processes! Despite new hierarchies and roles many projects still fail or miss their required deadlines resulting in great cost to the organisation both financially and in opportunity cost.

Why, after several decades, are projects still failing to meet their goals so regularly? The first reason is that organisations are still ignoring the customer experience (which is always much broader than organisations initially think). This creates a myopia that leads to both missed opportunities and costly errors.

The second issue is that out-of-date methodologies are hamstringing project delivery. For the last 50 years organisations have stringently followed linear delivery processes that evangelise the need to complete one step after the other in a regimented order. Organisations have been using linear “waterfall” methodologies for decades, and the penny is now starting to drop – they’re slow, lack business and customer involvement and as a result produce output that is often a disappointment.

Thankfully many today are adapting to create more agile methods of delivering software and services that customers need. But they still have the same issues with project management. Projects take too long and are too costly. Often by the time they’ve implemented projects, their competitors are ahead of them. They’ve failed to get to market fast enough to get the competitive advantage.

So what is the answer to these project problems? Part of the answer lies in the use of project delivery methodologies. Current methodologies have created levels of bureaucracy and command and control that are as complex as the organisations themselves. Projects create false structures that shouldn’t exist in the first place. By managing business processes effectively day to day and implementing continuous improvement, the need for large projects is significantly reduced and as such the high inherent risk of complex projects is also reduced. The bureaucracy, approvals and expenditure that go hand in hand with projects can be significantly reduced if organisations are adaptive and adopt continuous improvement as part of their organisational DNA.

The PAIN Points of Today’s Large Organisations: #3 Decreasing Profitability

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

In the business world, profit is king. Jobs depend on it. Boards are changed because of it. Many large organisations have reached stagnation in their level of market share, therefore profitability by reducing costs becomes a key focus.

This is because attracting new customers is both difficult and costly, particularly in a highly competitive marketplace. Reducing costs is not so hard to do. However many put barriers in place that trip themselves up when trying to reduce costs. A key problem is a lack of visibility of the work that is performed across their business. They don’t know what particular roles do and they don’t understand the end-to-end process. They don’t look at the process to understand what’s happening and as a result they end up creating processes where there’s duplication of effort and unnecessary manual work.

Organisations are often so busy producing the same old output that they don’t question whether they are doing the right things, not just doing things right. By examining their business processes and understanding every task that each role does within a process, they can identify where costs are hidden.

But why do organisations get to this state in the first place?

When processes are initially put in place their level of quality varies greatly. Projects are rushed in and “temporary measures” are put in place. These often become entrenched and difficult to change. Even if processes that are established are of high quality, over time a particular department might add a piece of work to the process to make things better for themselves. Maybe they notice that errors are occurring, so they include an extra check point in the process to stop those errors occurring. Other departments then add their own steps into the process to make things better for themselves. Maybe they don’t realise that the same checks have been performed earlier on in the process. By the best of intentions staff try to make things better but they fail to look at the entire end-to-end process to see the impacts.

Over time, processes change, and mutate from their original intent. Steps are added and each piece increases the cost, slows the process down and introduces increased risk of failure. This results in bloated processes that are complex, irritating for the customer and which reduce profitability.

To boost profits, organisations need to challenge entrenched business rules and processes to eliminate work that is adding no value.

The PAIN Points of Today’s Large Organisations: #2 – Too Slow To Change

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Today’s organisations are being increasingly challenged by smaller, more nimble competitors. Large, complex organisations are often too conservative and risk averse to be able to change to compete as rapidly as they require. However, organisations can turn this around by adopting agile methods combined with greater risk-taking in order to compete with these upstarts.

There are now so many specialist roles and teams that completing work is a slow and costly process. Moreover, when leaders get great ideas and want to execute on their strategy they’re frustrated by the time that it takes to change.

Frequently organisations get to a tumultuous point where they realise that they not only need to change, but they need to radically transform. When the organisation has recognised that it’s time to transform, it means that the leaders have recognised that there is a “burning platform” – a real need for significant change that they must ensure happens for the sustainability of the organisation. The incremental changes to process and the business model should have been occurring over time, but have not materialised, resulting in the need to run rather than to walk.

Often organisations throwing themselves into transformation initiatives are taking a huge risk. However it’s a risk that they feel they have to take because they’ve fallen so far behind their competitors that radical action is required. Instead of making incremental changes over time, looking at the customer experience and looking at the way their business processes are organised and aligned, they delay the necessary steps.

Many of those organisations have hit the panic button and need to change and change rapidly. This is because their market share has been declining, competitors are increasing and their products and services no longer have the bang for buck with customers that they used to have. In effect, they panic and scramble to change as quickly as they can.

The PAIN Points of Today’s Complex Organisations: #1 Poor Customer Experience

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

Everyone today is talking about customer experience, but why has this chatter only grown louder in the last few years?

Today, organisations are experiencing a completely different mindset. Customers don’t want what customers of yesterday had. They want something bigger and better and broader. They don’t want to use a product or service; they want an experience. But, what’s the difference?

Many remember as a child the excitement of going to the airport and getting on an airplane and getting off at the other end. This has been the approach that many airlines have taken over the past 30 years. But customers of today want an experience. They want it to be easy and enjoyable and it’s not just about getting to the other end on time.

They also have different levels of expectation regarding the experience they want. Some want a no-frills experience. A cheap flight with no food is enough; it’s as good as getting on a bus. Some other customers may want a higher level of experience – the food, movies, faster boarding and a comfy seat – and they’ll pay for it.

Airlines such as Ryanair (Europe) and Southwest Airlines (US) have used this strategy to build some of the most profitable airlines in the world. Passengers can have a better customer experience, they just have to pay extra for it. The key is that they have the choice.

The customer experience starts even before the seed of need is planted in the customer’s mind. Before a customer chooses to even take a flight, they look at all the permutations and the options. Often, the flight is just a small part of the process.

Before they get on the plane, they want to know what they can do; whether there are movies, games for the kids and what they will get to eat. When they get off the plane, they want to know that it’s easy to get to the hotel and that their bags will arrive in time and that they’re not left without the things that they really need to start enjoying their trip.

Business process helps organisations to understand, analyse and improve the entire customer experience. A key part of this is understanding that the customer experience does not start and end within the doors of an organisation. It’s about standing in the shoes of the customer and looking at the organisation from the outside in and seeing broader opportunities that they can provide. Some organisations call it customer-centricity. Some call it putting the customer at the centre of everything. Disney calls it True North. It doesn’t matter what it’s called as long as they can stand in the customer’s shoes and give them not just what they need or want, but a little bit more than what they expect.

But looking at the customer experience in isolation isn’t enough. How organisations react when things go wrong is a critical part of ensuring that their customers not only stay loyal but they readily recommend. Customers today are more vocal than ever before and they have more ways to express their opinions and organisations must embrace this. Customers are a ready-made research and development team. There’s so much information available that it makes no sense to keep ignoring the feedback from your customers. After all, they know best, right?

Those organisations that are the best at improving the customer experience are those that not only respond to feedback from customers, whether negative or otherwise, but they actually contact those customers and they proactively implement changes that customers suggest.

Today’s research shows that those organisations which adopt a customer experience approach have customers that exhibit three key elements of loyal behaviour: they buy more, are more reluctant to switch to a competitor, and are more likely to recommend the company to others*.

Often organisations say that their customer satisfaction scores are great, so they must be doing a great job providing an exceptional customer experience. Sadly, that’s not always the case. Customer experience and customer satisfaction are very different. Take the airline example. If the airline commissions a survey which asks about the flight itself, the customers may say that they had a wonderful, smooth 34 flight with great service but if they haven’t considered the passenger’s perceptions of getting to the airport, recreation facilities at the airport, ease of getting around, the check-in process and how well the queue for the gate is managed then the small survey of in-flight satisfaction misses huge opportunities for optimising the customer experience. It’s like taking a test where you pick only the questions that you think you can answer.

Firms today are often focused too inwardly and need to look at the entire experience of their customers, both inside and outside the organisation. To solve this, they must try to throw off the shackles of industrial revolution thinking to create structures that are simpler, closer to their customers, and where staff are empowered and supported.

The logic is simple. A customer experience approach improves revenues, profitability and creates happier, more loyal customers.

The PAIN Points of Today’s Large Organisations: Is Your Organisation Ready for “Those Young Whippersnappers”?

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The following article is a section from my book, The Process Revolution – Transforming Your Organisation with Business Process Improvement. You can obtain a free paperback, kindle or PDF version simply by clicking here.

The growing impact that technology has today is obvious, but depending on when you were born your relationship with technology will be different. Generation Y are now at an age where they are exerting a powerful influence on the expectations of the customer experience.

This much-maligned group of people are moving up the ladder into positions of power. They’re also getting to the stage in their lives where they’re starting to settle down and have children. They’re entering new phases of their lives where they have substantial purchasing needs and the ability to fulfill those needs!

Because of this, organisations are now undergoing a substantial shift in terms of meeting customer expectations. Generation X, with one foot in the past and one in the present are being slowly dragged into the future. They are still attuned to the “old ways” of doing business: phone calls, letters, appointments and that old technology, email! As a result their expectations are more easily met.

Not so with Generation Y. Gen Y are immersed in technology. There is no foot in the past and as a result their level of expectation of how they wish to do business with your organisation is radically different.

So if the aim is to attract and retain the Gen Y market as customers, your organisation better get things moving fast. Gen Y does not want to live and do business in the world of Gen X. They won’t put up with waiting and they won’t put up with having to pick up the phone or email. They want everything available how it suits them and they want it now.

The challenge for organisations is to cater for the next generations as well as the current ones. That means investing in technology and continuous improvement. Standing still is not an option. The market is like a treadmill, if organisations stop running and get off they may never get back on again.