Follow the Money

Organizations today come in many forms and structures. They can be created along geographic lines, product lines, markets and even customers. In most major corporations today there are usually aspects of each of these organizational structures present. This has given rise to the organizational “Matrix”. While this structure probably was not the basis for the popular movie trilogy, it can be comparably confusing.

The drives to specialize and push repetitive labor intensive functions into low cost labor environments and to take advantage of low cost manufacturing while streamlining supply chain operations have resulted in an organization structure where ownership for the business and its associated processes is fragmented, while the responsibility for the overall solution usually remains centrally vested. Despite all of this diversification and fragmentation of the business structure, there is one thread running through the business that enables the business leader to draw it all together and drive the solution.

Follow the money.

No organization within the corporation does anything for free. They have people, equipment and overhead that they need to pay for. The way they sustain and pay for these items is to provide or “sell” their particular service to you as the business owner. In this corporate structure, certain specific functions may not report to the business unit (Matrix) but they are funded by it.

Over time it is possible for these business funded functional groups to assume and believe that they are in fact entitled to the ongoing funding of the business group. They normally have multiple businesses providing funding to them in addition to delivering on their own organizational commitments. It is possible for them to lose their focus and begin to deliver what they chose and prioritize to provide, not what the business has chosen and required of them.

This should not the case.

As the business owner it is your responsibility to require performance from all aspects of the business, whether they are internal or external to the business or corporation. And just as is the case with external suppliers, the way this is accomplished with Matrix reporting internal providers is with money. Setting clear expectations of deliverables, requiring year over year efficiencies and business improvements, and yes in some instances refusing to pay (fund) unacceptable performance are some of the tools that can be used to assure desired performance of the Matrix group.

In today’s Matrix based organizational environment the business owner may not and probably does not own all of the aspects and functions that go into running the business, but more often than not they still own the checkbook. And while they may not have direct reporting control over the prioritization and performance of those Matrix organizations, no group (internal or external) is “entitled” to their funding. Today’s business owner needs to understand and remember that they can no longer simply direct other organizations on what needs to be done. They also need to understand that they are not at the mercy of internal organizations and must pay whatever is required by the functional group. They can and must remind the Matrix organizations that if the desired work is not performed, that the business will in return stop paying (for) them, just as they would any other under-performing supplier. The health and performance of the business should always more important than any of the functions that supply and support it.

Great Expectations

A colleague of mine had been working with a difficult customer for some time. He was making good progress with the customer and their issues. Late on a Thursday he sent me a request for support with a customer deliverable for the following Monday morning at 7:00 AM. This request would require essentially a one business day turnaround, or the team to work over the weekend.

Now sometimes a customer request should and does require the weekend work. After a little discussion with my friend it was determined that his request was a “nice to have” not a “have to have” capability for the customer. I then asked why we wanted a “nice to have” deliverable in a “have to have” time frame. He responded by saying he was trying to show our responsiveness to the customer.

I explained that my concerns were multiple: I didn’t know if we could scope the work (estimate the time effort and complexity of the request), and implement properly it within the time frames he was trying to set. I also told him I thought that there was a significant risk that our demonstration of responsiveness could backfire on him. He asked how.

Customer satisfaction is based (in my opinion) on economic expectation theory. Simply stated that means if you set your customer’s expectations at a specific level, and then meet those expectations, your customer will be satisfied with your performance. In this instance I pointed out that if he set the customers expectations for receiving this incremental functionality (nice to have) in an achievable time frame, and we in fact were not able to deliver it in the desired interval, we would not have met the customers expectations. This would have turned a potential opportunity to build customer trust and relationship into a negative experience for the customer.

It would not have mattered that we were trying to do something for the customer that might have been above and beyond the requirements of the contract. What would have mattered is that we would have committed to providing something to the customer within a certain time frame and then not delivered on it. The point here was that when you commit to providing something, even something you are not contractually required to provide, it becomes an expected deliverable and is viewed as such by the customer.

What we instead did in this instance was commit to providing the desired incremental functionality for the Monday a week later than my friend wanted. This provided us with the time required to properly scope and perform the desired tasks. We ended up providing it on the Thursday of the week that my friend wanted (not the Monday) and were able to be perceived by the customer as both providing incremental functionality and providing it ahead of our commitment – a two for one on the customer satisfaction score card. More over we were able to set a reasonable expectation by the customer and then meet it.

Don’t Ask – Do Tell

I think we have all be in organizations that have implemented reorganizations. Some of us have been through it several times. We have seen some good ones and we have seen some not so good ones. In most instances difference between a good reorganization and a bad one depends on the first steps taken by the new leader. Those first few statements and actions by the new leader set the tone for the new organization.

Those leaders that took a little time to meet and understand their new team showed they were taking the time and interest to understand what the team faced. A team will normally respect this approach. Those that took immediate actions showed they had a plan and were going to be decisive. The team will again normally react positively to this approach as well and look for the logic and goal associated with the changes.

Then there are those leaders whose first action is to question their team.

They will ask if the team has the competitive drive, the talent, the training, the spirit, the desire, etc (pick one or more) to accomplish the task or challenge that is in front of them. This is not what a team needs to hear from its new leader. The team does not want to hear the leader questioning their capabilities or mind sets.

A team wants to see those attributes in question, in their leaders. They want to see it in statement, action and deed by the leader. The members of the team don’t want to be questioned about their own commitment or attributes. An organization is a reflection of the leader. A new leader needs to be dynamic in setting both the new structure and clearly annunciating the organizational goals and expectations.

A new leader needs to step in, and up and clearly state what the needs and goals of the new organization are. The leader should not ask the team if they have the requisite attributes. The leader should tell the team they have the attributes needed to achieve the desired goals.

It is a small but very important difference in getting a new organization going.

Are They Really Buying?

In a previous post I noted that customers associate value with that which they pay for. That means, in my opinion, that if you give a customer something for free, the customer will not really recognize it as valued. I would like to address the concept of customer value, when it comes to sales. I will relate a story to illustrate my point.

Several years ago I was dealing with a customer users group. As with every good users group they were in the habit of prioritizing their product enhancement desires and requests and presenting those requests to us at our joint user’s group meetings (which actually occurred twice a year). A specific request for a specific enhancement started to appear regularly at these meetings.


As time passed and other issues were dealt with, this request continued to rise in priority on the request list.

Soon it became a point of contention. The customers wanted to know why the feature was not being made available (despite the availability of “work arounds”), and the sales teams wanted to know when they would be able to sell the capability to the obviously pent up demand.

It became time to deal with this topic directly. During an open forum meeting with the users group, they were asked how many of them wanted this capability, even though there was a work around. All hands were raised. They were then asked how many of them would be willing to pay for this capability, since incremental development and work would need to be expended by the manufacturer to create it.

Despite the popular concept to the contrary, we were in fact a “For Profit” institution.

Several hands went down. When it was shared with them what the actual price of the capability would be, to cover costs and provide profit and on going support, almost every hand dropped.

There are always those things that are “nice to have”. Those are normal items that customers do not associate value with. If they did, they would probably be categorized as “need to have” instead of “nice to have”. Need to have items can, should and normally will be paid for by the customer in association with the value they bring the customer. Items that are classified more as “wants” instead of “needs” may not.

The quickest way to separate the “wants” from the “needs” is to associate a price with the request. If the customer recognizes the value, there will be a negotiation / agreement. If the customer doesn’t recognize value, you will know very quickly and can then move on to the next topic.