Category Archives: Alignment

Customer Wants

Sometimes, events in the universe just conspire to align themselves in such a way that a topic to write about becomes painfully self-evident. Such is what has happened over the last little period of time for me. I was the recipient of several surveys asking me as a customer, what I wanted. I also had the opportunity to read several surveys that had asked other types of customers what they wanted. These current events brought back recollections of past events that had already conveyed this topic into such clarity some time ago for me. I am of course talking about talking to customers, and more specifically what customers want.

What customers want is usually viewed as the holy grail of business conduct. If you can figure out what they want, you can create a product or service that will satisfy their desire. You can become famous and respected as a scion of business. You can be somebody.

One of the most popular methods for finding out what customers want is through the afore mentioned surveys. Another is industry forums and workshops. Yet another is actually talking to them face to face and just asking them. As I mentioned, I have recently had the opportunity to both read about and to some extent participate in these types of customer interactions. People had gone out, identified the customers, and asked them what they wanted. And lo and behold, they told us.

We now knew what they wanted. We could design and build the future around these responses. We had the information. We had the answers. We were off and running.

Not so fast.

Long ago in a galaxy far, far away, I was once responsible for a business unit within a company. I had taken the adage to heart. I had created a users’ group so that I could talk directly to my customers and understand what they wanted as well as what was dissatisfying them. It worked great, for a while.

Most of the time the problems, issues and requests that we discussed were well known to both groups, the company as well as the users. We prioritized them, focused our abilities, and instead of trying to solve them all at once, we solved a few at a time and made measurable progress. As we took the major issues and dissatisfiers off the list, they were eventually replaced with more and more arcane topics. They were still dissatisfiers, but not on the same level as those that we had already dealt with. Soon we found ourselves starting to try and prioritize and work on the arcane as opposed to the well-defined issues.

We surveyed the customers to try and understand “what they wanted”. They were not shy. We hadn’t put any limitations on what their responses could be, so they told us what they wanted. They had gone through a prolonged period of getting many of the products and issue resolutions that they were looking for, so their expectations were high regarding what our responses would be.

The subtle change that had occurred was that we were now specifically discussing things that they wanted, where in the past we had been working on topics that needed to be worked or corrected. These were now “want” to haves, as opposed to “have” to have topics. There is a different commercial model when it comes to correcting issues or providing already committed functionalities, then there is when it comes to fulfilling customer wants and desires.

We started discussing the parameters for the commercial model associated with fulfilling their desires. We started to ask them for money in order for us to deliver what they wanted. What they wanted was so arcane, and technically complicated, they we started asking for a lot of money.

The next users group meeting came along, and naturally, this issue was a major topic of discussion. The customers were unhappy. They were dissatisfied. They were not getting what they wanted. It came time to have “the talk” with them individually, and as a user group in general.

We set up the session and cleared the agenda. We started off by making sure that we had in fact properly scoped and defined the specific desired capability that they said they wanted. We wanted to make sure that we were answering and addressing the proper topic. We had.

We then asked the question that hence forth has always accompanied any time in the future that that I have asked a customer what they wanted. We asked:

“Are you willing to pay for what you want?”

It is easy for anyone, customers included, to come up with a list of things that they want. The issue here is always two-fold: Are you willing to pay for it? And, do you have enough money to pay for it?

Usually when customers are surveyed about needs, wants, desires, there is little in the way of a perceived economic model accompanying these questions. Wants invariably well exceed available budgets and the ability to purchase these wants. The different relative costs associated with the various desires can have a significant effect on the priority with which the customer views them.

A good example would be a survey about cars. You can be asked what kind of car you would want. You may “want” an exotic super-car. They are nice cars. You may not have enough money on hand, nor the desire to re-mortgage your house in order to buy an exotic super-car. Even though you may want one, you may not be willing to pay what it costs to buy one.

Such is the issue we ran into way back when. We asked only about “wants”. Such is the issue that seems to continue to plague more recent industry survey and customer communications.

Getting back to my historical lesson, most of the customers agreed that they would be willing to pay something for their desired functionality. It is interesting to note here that I said “most”. There were some that were not. I think by now you know where I will be going with this.

I then shared what the order of magnitude estimate was for the company to develop the desired capability and explained that even though it might be contrary to common opinion, we were a “for profit” organization. The stockholders were funny that way, and sort of insisted on it. Based on the business case and the relative number of interested customers, we then shared an order of magnitude individual customer price for the desired capability, based on the assumption that all interested customers would purchase it at the estimated price.

The majority of the customers indicated that they were not interested in the capability at the estimated price. We then looked at the remaining customers and indicated that their price would go up in proportion to the number of customers that were no longer interested in purchasing the capability.

The result of the discussion was that we publicly addressed the dissatisfier and quantified to the customer what it would cost them to be satisfied, and then mutually decided that we would not develop and supply the customer desired functionality. We would instead work with them to see if there were work-arounds or other methods of addressing the desired functionality.

During the course of this interaction it became clear that what customers want is indeed an important aspect of the process of creating customer satisfaction. You have to know what they want. Many times, it is within your ability to provide it, and to provide in such a way or at such a price point that it makes sense for all involved. However, as technology has evolved, and as budgets continue to tighten, sometimes the usual economic model will not work.

In today’s business climate, any time that you are looking to have interactions with customers regarding “what they want” as a method of gaging which products to create or which strategic directions to pursue, it will probably be in everyone’s best interest to include questions regarding if  that customer would be willing to purchase that desired product or functionality, and what specifically (at lease to a rounded order of magnitude) what they would be willing to pay for it.

All customers have a list of wants and desires. If you only ask them about those wants and desires you may find yourself trying to design and build products, services and functionalities that customers may be unwilling to purchase, even though they may want them. I think the number of people that may want an exotic super-car is far greater than the number of people that are actually willing to pay what it costs to buy one. I’m pretty sure about this because as I drive around in my distinctly non-exotic super-car, I see so many others driving around in their non-exotic super-cars.

As an aside I can’t believe that so many other people actually wanted all those minivans that they are driving around in. Perhaps that will be something to analyze in a future edition.

I think that we all need to be aware of what customers want. I also think that unless we normalize these wants with information regarding which wants they are willing to pay for, and how much they might be willing to pay for each one, we can lead ourselves into some difficult business situations.

Process Purpose

With the continued increase of the process-oriented approach to all facets of business, a new phrase has found its way into almost every business conversation and lexicon: “How do we fix the process?”. Immediately upon hearing this, it is not uncommon for multiple teams to set up multiple cross functional calls, across multiple geographies and time zones to discuss the problems. Multiple issues will be defined with the process, and multiple action items will be assigned.

We are no longer fixing business problems or issues. We are fixing processes. Much of the generated activity and churn associated with fixing the process might be avoided with the simple act of stepping back and first correctly understanding what the purpose of the process is.

Many times, we all take it for granted that the process is there to help employees perform their required tasks. We associate processes with making things go faster. Making tasks easier to complete. Sometimes this is the case. Many times, however, maybe not. I’ll provide a few generic examples.

Long ago, in a galaxy far, far away, back when I was relatively new to business, I remember there used to be a very special place where companies, business units, groups, teams, etc., kept a very special resource known as supplies. Supplies usually consisted of the little things that made it easier for employees to do their jobs, such as pens, pencils, paper, notebooks, staplers, tape and tape dispensers, highlighters and the like. When people needed these supplies, they would go find the person that had the key to the supply location, get access to it and select the supplies that they needed to continue efficiently performing their job.

As time passed and costs and cash flows continued to draw greater and greater attention from the company’s financial community, it was decided that this anachronistic way of providing employees supplies was not in the company’s best interest. It may have been efficient for the employee, but not for the company. Seemingly random and untracked amounts of money were being spent on supplies, and then these supplies would just sit idle (reference to the utility of money and cash flow) somewhere, waiting for someone to come by and use them. And then there was no specific process or methodology to be able to track who was actually using these supplies.

Unaccounted for money and expense was sitting in supply cabinets everywhere.

The result was that associated support teams and their supply budgets were reduced. And usually in their place a new process was created where individual employees would then have to access the on-line purchasing systems themselves where they could then order their required supplies.

Now admittedly the preceding topic has created an exacerbated issue in that it does require a change in employee behaviors. In the past, an employee would wait until their pen ran out of ink, or they used their last piece of paper before going to the supply location and getting more. Now they had to take into account the added time and complication of gaining access to the supply ordering system, and the delay associated with the supply provider delivering the desired supplies, and the internal delivery system to get desired supplies from the loading dock to their office.

What used to be a simple walk to the supply location to get any required supplies, had now become a multi-day, multi-system, multi-approval ordering process.

Now a days, if you need supplies, you had better plan ahead. Or you can just run by the office supply store yourself, and buy your own supplies. Either way, the corporate goal of the new office supplies process has been achieved: the amount of money the company spends on supplies has been reduced.

The point I am making here is that the supply ordering process was not implemented to make it easier to order supplies. It was put in place to reduce the amount spent on supplies. It was put in place to reduce the amount of money the company has tied up in supplies, sitting in some supply cabinet, waiting for someone to come by and get them.

The same can now be said just about any process that involves the expenditure of company funds. Travel approval policies are not there to make it easier for people to travel. Hiring processes are not there to make it easier to hire people. These processes are not put in place not to make it easier, or faster to perform these functions. They are in place for corporate tracking and control.

Just because they take extra time and require multiple approvals does not mean they are broken processes. In many instances it means that they are working as planned.

On the other side of the coin, we can look at those processes that are associated with the provision of the product or service that the company sells in its selected markets.

Sales people inherently understand that the relatively cheaper a product is versus its competition, the easier it is to sell and the greater the probability for a successful sale. Companies that vest too much uncontrolled authority in the sales arm have a tendency to experience lower margins and profitability, as sales tries to press for lower prices.

As proof of this point, would you be willing to go to the gas station across the street to buy their gasoline if it was five cents a gallon cheaper? How about two cents a gallon? There is always a point where convenience and timing can outweigh price differential, but in today’s cost intensive world price always plays a key role in everyone’s purchase decisions.

Sales and pricing processes are then normally put in place to enable business management to have greater influence on pricing in an effort to achieve desired profit levels. These are not processes designed to make it easier to create quotes and provide lower prices. These are processes designed to put checks and balances in place that protect the company’s profitability.

If you are a sales person attempting to compete for a customer’s order, they are an impediment and hindrance to your potential success. They are a broken process that is making it more difficult for you to obtain the order.

They are also probably the result of someone (or multiple someone’s) demonstrating bad judgement. Somewhere, sometime, someone probably knew that a price that was supplied to a customer was probably not in the best interest of the company as a whole, but did it anyway in order to get an order. The individual goal was achieved, but the corporate profitability suffered.

I have said many times that process is implemented as a substitute for judgement. In this case, bad judgement.

Sales people inherently know that the company must be profitable, if it is to continue in business. Margins must be at sufficient levels to meet the numerous business objectives such as paying for expenses, investing in new product development, paying sales commissions and providing a reasonable return to its investors.

Unfortunately, most sales incentive plans are focused solely on obtaining a top line order level. This is the objective that drives sales people to try and drive prices down, thereby making it easier for them to sell. It is also contrary to business objectives listed above.

In this situation there would be two key aspects of the business structure creating friction. The physics definition of friction is:

“… the resistance to motion of one object moving relative to another.” https://www.livescience.com/37161-what-is-friction.html

One trying to move price down, and one trying to increase prices. Process or not, this is inefficient for the company and creates waste.

Instead of creating a process to govern a function that generates corporate friction, which I would liken to the “stick” approach to problem resolution, (removing independent thought and decision making capability from those closest to the customer) I would suggest that It might be better to implement incentives that encourage the desired behaviors, or the “carrot” approach.

What might happen if the company offered the incentive of increased commissions to sales with higher margins, and at the same time offered the deterrent of significantly reduced commissions on sales with lower margins?

Instead of creating a process that can become an obstacle to the desired event (getting office supplies, or generating competitive customer offers and proposals…) which must be dealt with, or in some instances overcome, why not reexamine the event (and judgement point) that is driving the creation of the proposed process? Aligning individual, business unit and corporate goals, with appropriate incentives and deterrents for specific behaviors could be a much more efficient way of dealing with the issue.

With this approach in mind, it might be found that much of the effort that may be currently spent on “fixing the process” can be refocused on solving the underlying business issue and need. This is because, as has just been demonstrated, just because a process is not helping the individual be more effective and efficient at doing their job, does not mean that it is a broken process.

When Metrics Fail

It has long been known in business that you should “Inspect what you expect”. This basically means that if you want to achieve a certain goal, or engender a specific behavior, you need to establish metrics associated with that objective. Then you need to monitor and measure the progress toward that objective.

After all, it has also been known in business that “Data is your friend”. The idea of gathering unbiased information regarding the progress toward the business goals and objectives has also been acknowledged as a path to success.

So, if you have the metrics, and you have the data, everything should be great, right?

Not so fast.

In these days of quantifiable objectives and unbiased measurements, with customer service taking an ever-higher pedestal in the pantheon of business goals, why is it that service satisfaction seems to be taking a nose dive instead of soaring to new heights?

I think the answer is simple, and it directly relates to the first item above: Inspect what you expect. Unless businesses are very careful when they set their goals and objectives, they will incite an employee behavior to manage to the metrics, instead of the business objectives. To illustrate this behavior and resulting customer satisfaction failure, I will regale you with my own personal travails though the metrics mess.

Since the advent of mobile phones, I think it is safe to say that just about every business person has had a business mobile phone. Across this mobile communications time-scape I have had the bad fortune to break exactly one of my business phones, to the point of requiring a replacement phone.

Personally, I think this is a pretty good record. I know of several of my colleagues across this period that are well into double digits on the number of phones they have broken and replaced.

In any event once broken, I then started the process of trying to get a replacement phone.

As with most organizations, there was a corporate “Help” line available to call should there be a connectivity issue. I called it. They answered right away. I asked my questions regarding where to go to start the replacement phone process. They directed me to the appropriate organizational web site.

Up to this point, this has been a really good service experience.

Time passed and I then accessed the replacement program and filled out the then required information and submitted it. I got an error message. It didn’t tell me what was wrong with my phone replacement application, only that it was wrong. I searched the rest of the page and found a help number (different from the first help number) and called.

They took my information and opened a trouble ticket, and told me they would get back to me.

Fifteen minutes later I received an email providing another URL directing me to another tool for phone replacements, and that since they could not do anything else, they had closed my trouble ticket.

Time passed and I then went to the new location, filled out another form and requested a replacement phone. Now I received a different error message, but again, no information on how to resolve the error. I again searched the rest of the page and found a help number (different from the first help number, and the second help number) and called.

They too took my information and opened a trouble ticket, and told me they would get back to me.

Another short time later I received another email providing the URL of the original Help line directing me to talk with them since they were actually in mid-conversion of the on-line business phone procurement tool and that since they could not do anything else, they had closed my trouble ticket.

As you might guess, my opinion of the quality of the service experience was eroding quickly.

Time continued to pass and I then re-called the original Help number and informed them of the circular cycle I had just been through, and again asked for their help. They said that they would look into it and then opened yet another trouble ticket.

Again as you might guess, I soon received another email confirming that there was indeed a conversion going on within the systems and that I would have to wait until it was over to order a replacement telephone, and that since they could not do anything else, they had closed my trouble ticket.

Now, I will get to the resolution of this phone replacement story in a little bit, but I am using it here to illustrate the issue that metrics can create. It was quite obvious that the metric that mattered most to the “Help” entities was how quickly they closed the trouble ticket once it was opened.

This metric mattered so much in their requirement set that it was all they focused on. I had opened multiple trouble tickets for the exact same issue, with multiple entities, some of them multiple times. They had closed every one of the tickets that I had opened quickly and efficiently.

And after all that time and effort, I still didn’t have a replacement phone. They had not solved my problem. Their metrics probably looked great. Their customer satisfaction, at least in my particular instance was close to non-existent.

Someone had obviously associated rapid closure of trouble tickets with increased customer satisfaction. In light of this correlation, they created a set of objectives and accompanying metrics around this topic. Goals were set. And associated behaviors were adjusted to this new arrangement. The tickets were indeed closed quickly.

And it was obvious that they learned that “usually” closing a trouble ticket quickly resulted in increased customer satisfaction. Closing multiple trouble tickets for the same issue quickly, but not solving the underlying issue resulted in the exact opposite. I was not anywhere close to satisfied.

By the way, I could not make this story up. This actually did happen to me some time back. It is kind of humorous in retrospect, however at the time I was not especially amused.

Getting back the resolution about how I eventually got a replacement phone, when everyone thought that they had done their job, yet there was no method for me to get a phone.

Most companies when they think they have done a good job like to issue customer surveys, just to make sure that they have done a good job. This sort of customer feedback looks good when it comes time to report on the group’s performance at the end of the year.

They sent me a customer satisfaction survey.

They asked that since all my tickets were closed so quickly if I was nearly as delighted as they thought I should be.

I told them “no”, and graded them “Zero” out of five on every metric, and submitted it. I in effect told them they stunk.

I like to think that once my survey hit their inbox with such low scores, that something akin to the “red button” was hit (along the lines of the one in the movie “Ghostbusters” – the first one, not the sequel) where the alarm rings and everyone comes running.

Within a couple of hours of sending it in, I received a call from the help group manager. He asked if he could set up a call to understand what my issues were. I agreed, but only if he brought in the other two help groups I had unsuccessfully interfaced with as well. He said he would.

Believe it or not, weeks had passed since I started the process of trying to replace my phone. What should have been a relatively simple exercise had now stretched out to the point where I was have a conference call with more than a dozen people who were trying to understand how I could be so wrong about the quality of their support services.

During the call I did agree with all of them that they had indeed closed all the trouble tickets I had opened quite promptly. I commended them for this obviously herculean effort.

I then informed them that the objective here was for me to get a new mobile phone, not to get my trouble tickets closed so quickly. I wouldn’t have minded that they were closed so quickly, if I had in fact achieved my objective, which was to get a new phone. And at this point, as of this conference call, I still didn’t have one.

There was what I could only have described as stunned silence on the call.

The actual final solution to the issue was to have the director responsible for the company phone services, who was on the call trying to understand what went wrong with the process, to personally order a phone for me. He did, and I received it two days later.

I think I should have called him directly in the first place.

Aligning goals and the accompanying metrics can be a tricky business. Leaders need to understand that just because all of the so-called metrics have been met, doesn’t necessarily mean that all is well in the business. Metrics tend to replace the actual business goals and objectives, since it is the metrics that people usually get measured against.

Understanding the metric alignment with the organizational objectives will be crucial in avoiding those instances where the metrics indicate one thing, while reality demonstrates something entirely different. It is always good to remember that having data is good, but that metrics, if not properly understood, can fail.

Globalization and Regionalization

I have had the opportunity to work for several different organizations in both global roles and regional roles. They are as diverse in their approaches to business as they are different in their drivers. As Captain Obvious might say “Well, duh”. However, I thought I might spend a little time looking at why they are so different. What factors contribute to what appears to be an ongoing, never ending conflict of business imperatives between the global business and the regional business unit.

Global businesses are driven to try and do everything only once. That means they try to create single products that can be sold and implemented in multiple regions. The same would also be true of their services. Global businesses try to create single business processes and business structures. They then try to make the regional business units fit this ideal as closely as possible.

This is all based on the global business’ desire to minimize costs and associated overheads.

If you can do things only once, you don’t have to put multiple products, or redundant business support infrastructures in place. This keeps your costs down.

It is also a very internally focused approach to doing business. As we have all seen, when your internal drivers outpace your customer focus, you are probably in for some difficult times in the very near future as your competition outplays you in the customer environment.

Regional business units are usually put in place to deal with a specific (regional) customer set. This can usually be due to language, regulatory, cultural, or any number of other factors associated with and specific to that region. By their very nature, and the limited customer set that the regional organization focuses on, they are primarily externally focused. They want products and services that have been specifically modified and adapted to their specific customers’ desires.

As we have all seen, when your customer focus overwhelms your internal cost concerns you are also probably in for some difficult times as your costs and support issues drive your profitability down.

I think herein lies the root of the “push-me, pull-you” issue between global and regional organizations. Global organizations want minimal diversification of their products, services and processes in order to keep the associated costs at a minimum, while regional organizations want multiple, specific customer and cultural variations that directly relate to their specific customers.

So, what can be done?

Sometimes one of the regions emerges as the “lead” region for the organization. Again, usually, but not always the lead region is the region where the global organization is located. This is the region where the provided product or service gets the most traction, or generates the most revenue. This “lead region” has a tendency to create a resonant “do loop”.

The lead region provides its input to the global organization as to the customer specific variations that they need or want, and the global organization responds to them first since they are generating the most return for the organization’s investment expense. Since the global organization wants to minimize the total number of variations that they must support, the other regions are usually left to try and adapt to the lead region requirements.

Customers within in the dominant region get their requests responded to first and hence maintain their lead position by then making the purchase decision, where the other regions’ and their customer specific requests are forced to wait, if they receive their requests at all. Since there is always competition in every region, those customers within the secondary regions tend to remain smaller since their product and service requests are not met as well or as quickly as those of customers in the dominant region. The secondary region customers have a tendency to utilize other suppliers if they wish to have their needs met on a level that more closely meets their needs.

This phenomenon is equally applicable to both the customer product (external and customer requirements) and business process (internal and cost directives) associated with both the regional and global organizations.

While Darwin was a champion of the survival of the fittest, that is little consolation to the secondary region within a global organization, when it is simultaneously told to grow, but cannot get the regional specific needs of their customers, or business processes quickly or adequately addressed.

As an example, there are few things more ubiquitous in the business world today than the laptop or personal computer. Everybody has one. And size matters. But not how you might at first suspect. In the business world, the smaller the laptop computer an executive has, the more important they are. The really important people do not carry a laptop at all. They have someone who carries it for them.

But I digress….

Instead of making country specific laptops and computers, vendors make a generic computer with country specific plugs and charger cords, since very few countries enjoy using the same wall outlets or power structures. They have a global product with specific regional, or country adapters. It works great.

Unless you take your laptop to another country. Then you need another adapter.

What I’m getting at here is that even something as ubiquitous as the laptop needs to be adapted to almost every region and country. And when a laptop that was designed for one region is taken into a different region, it needs another adapter.

I think that sort of implies that almost every other product, service or process will probably need the same type of adaptation treatment for each of its targeted regions.

On the other side of this argument, it can be said that not every country has a market opportunity sufficient to support its own specific product or process set. It is in these types of instances that again as Captain Obvious would again say “well, duh”. Hence, relatively similar countries get grouped into regions where similar market characteristics can be addressed.

This doesn’t mean that they are all the same. Just similar. We all know the basic beak-downs, North America, Latin / South America, Europe, etc. Within these regions we might see some further specification such as Caribbean or Southern Cone in the Latin American region, or Benelux and Scandinavia in Europe.

So why all this grouping and sub-grouping of regions and their respective organizations? Partly to reduce redundancy and overlap of cost structures, but also to more clearly enable what should be that bastion of business, the business case.

By accreting organizations upwards, (hopefully) business cases can be made for the appropriate level of diversification / specification of the products, services and processes to specifically service that region. Or at least one would hope that this is the case.

Again, the problem here will be that the business cases of the lead region / country will almost always be stronger than even those of the secondary regions. So, what can be done?

The solution will lie with the business focus.

If the business focus is on cost containment, increased profitability and process unification, the needs and desires of the regions will be deprioritized in favor of global approaches and processes in the name of cost containment and simplification. This will normally be the case with both “cash cow” and lower margin businesses. Businesses associated with older technology products as well as businesses associated with services will usually try to drive to this one size / one process fits all reduced investment and increased earnings optimal state.

In this case, the desires and needs of the lead region will probably drive the directions and processes of the entire global business.

If the business focus is on revenue growth, that means specific customer requests and requirements must be responded to in order to obtain the desired customer commitments. This means the specific needs of each region will need to be addressed within the global organization plan. Prioritizations regarding which customer demands are responded to first will still be made, but there will be an extensive set of delivery plans to make sure as many specific regional requests as possible are met within the desired time frames.

The net result of globalization versus regionalization is that neither organization will ever be entirely happy. Regional business units will never get all that they want in the way of customized products, services and processes that are adapted to their specific needs. Global businesses will never be able to get their one size fits all cost utopia. There will always be a spectrum along which these items will lie.

The more internal the focus of the topic or the business, the more globalized the approach. This seems to particularly be the direction for anything associated with internal organizational systems and processes.

Businesses associated with older technology will probably also find themselves with less R&D funding available for region specific developments, as that funding will probably be utilized on newer products.

Services businesses, which normally also operate on a lower margin business case will also probably find themselves trying to regionally find a way to adapt as closely the one size fits all approach of the global structure as possible.

It will probably be only those high growth or high margin businesses that will enjoy the opportunity to access full customer responsive regionalization. This will normally be because they are the only types of products (and services) that can afford the investments that regionalization requires.

This further supports the golden rule of business: Those regions that deliver the gold, get to make the global rules.

Détente in the Organization

As the matrix organizational structure continues to flourish, where organizations are structured according to business disciplines and processes rule on how these organizations interact, tension is bound to build between these organizational states. Product groups will always believe that they know how best a product should be sold. Finance teams will always think that they are the only ones who will care about the profitability of a deal. Sales will always have to deal with ever more aggressive competitors, and ever more demanding customers, as they try to translate these requirements into something the product and finance groups (and others) can act on and agree with. Trust between these groups when associated with the new business process will be key to the success of the organization going forward.

So, how do you deal with the tension between these organizational groups? History has shown that détente, as practiced between the United States and the USSR during the cold war has probably found its way into the organizational environment.

Détente (a French word meaning release from tension) is the name given to a period of improved relations between the United States and the Soviet Union that began tentatively in 1971 …https://www.history.com/topics/cold-war/detente

The relaxation of strained relations or tensions https://www.merriam-webster.com/dictionary/d%C3%A9tente

While the Soviet Union (in that manifestation) no longer exists, it would appear that Détente still has a place in the current organizational discussions, at least when it comes to discussions associated with matrix organizations and how they interact. That being in how these organizations can decrease the tensions that invariably arise when they are working with each other, sometimes at cross purposes, in the pursuit of their business objectives.

This is just a nice way of introducing the idea of how do you get disparate organizations to work together towards the overall business goals. In the perfect world these organizations would all be altruistic, focus on the business’ greater good and trust each other as they worked together according the latest management process. Unfortunately, none of us resides in a perfect world.

To continue the political allegory a little farther (to possibly foolish extremes, but since I am already in this deep…) this can result in inter-organizational relationships (as noted above) that can be best described as resembling those of the participants of the “cold war”. That being somewhat distrusting and antagonistic, but not so openly as to flare into open warfare.

Although the start of détente has been attributed to President Nixon in the 1970’s, it arguably hit its peak in the 1980’s with president Reagan. As the two world powers searched for a way to work together toward nuclear arms reductions, Reagan is credited with the immortal phrase:

“Trust, but verify”

Suzanne Massie, a writer in Russia, met with President Ronald Reagan many times between 1984 and 1987. She taught him the Russian proverb, “Доверяй, но проверяй” {Doveryai, no proveryai} (trust, but verify) advising him that “The Russians like to talk in proverbs. It would be nice of you to know a few.” The proverb was adopted as a signature phrase by Reagan, who subsequently used it frequently when discussing U.S. relations with the Soviet Union. Using proverbs that the Russians could relate to may have helped relations between the two leaders.

Reagan used the phrase to emphasize “the extensive verification procedures that would enable both sides to monitor compliance with the treaty”, at the signing of the INF Treaty, on 8 December 1987.  https://en.wikipedia.org/wiki/Trust,_but_verify

The Intermediate-Range Nuclear Forces Treaty (INF Treaty) is the abbreviated name of the Treaty Between the United States of America and the Union of Soviet Socialist Republics on the Elimination of Their Intermediate-Range and Shorter-Range Missiles. https://en.wikipedia.org/wiki/Intermediate-Range_Nuclear_Forces_Treaty

Now, “extensive verification procedures…” are very good if you are talking about global nuclear weapons reductions. I for one, am all in favor of it in this instance. The easing of tensions and the reduction in nuclear arms are “good things” as Martha Stewart is apt to say. The significant cost of these verifications when measured against the global good generated by the agreements and conduct of the participants would seem to be a significant value.

However, when we are talking about inter-organizational tensions in business, how do you trust but verify?

Matrix organizational structures, and their accompanying processes were put in place to reduce costs and increase efficiencies. Each group was to be responsible for the application of their discipline specific expertise, and then hand off the process to the next organization. An almost production line capability was envisioned where efficiency would rule. These inter-organizational tensions were never taken into account. So, what has occurred?

As I noted earlier, each business organization associated with a process has relinquished ownership and control for all associated activities outside of their specific disciplines. This means that the product group that feels that it knows best how to make sure the product is properly sold, has no real direct responsibility or authority for the sale of its product. This obviously creates tension between the sales group and the product group.

How do they create detente out of this situation?

The answer that seems to have evolved with the “trust, but verify” aspect of the relationship. Most product group organizations have responded to the trust issue by creating a product group owned organization that is responsible for “helping” or supporting the sales group in the proper sale of the product. They bring aspects of the product group to the sales team, and provide communication from the sales team to the product group. They in essence handle the process hand-off from the product team to the sales team.

The other actual function of these sub-group organizations is to trust the sales group in the sale of the product, but also to verify that they are in fact selling the product, and selling the product properly (at appropriate margins, with accurate and deliverable functionality, etc.), in the manner the product group might prefer.

The product group (in this example) is not the only discipline to have created an inter-discipline “support” team. These inter-organization hand-off groups have a tendency to spring up at almost every inter-organization interface in the matrix business process. A structure and process that was thought of and designed to increase efficiency and reduce costs has now given way to a whole new set of incremental organizational structures designed to make sure that those “other” groups are in fact doing the job that they were envisioned and supposed to do when the matrix structure was adopted.

Inter-organizational détente has been achieved, but at what cost?

Have the efficiencies that were to be gained by going to a discipline structured matrix organization with defined processes and hand-offs been lost due to the proliferation of these inter-organizational “support” groups? Has the “Trust, but Verify” doctrine created the need for every business organization to create groups that are designed to understand and interface into every other business organization, for the purpose of verifying that the other groups are in fact doing what they are responsible for doing? Doesn’t all this seem to violate the idea of efficiency and cost reduction that drove the matrix structure in the first place.

The cold war, and détente ended when one of the powers involved started to crumble under the weight of the structure that they had imposed. In the 1980’s the Soviet leadership tried to introduce reforms that would allow their system and structure to adapt to the new realities of the fast-changing world. These new structures and adaptations did not enable the soviet system to adapt, but instead ended up further precipitating its downfall.

… In November of that year (1989), the Berlin Wall–the most visible symbol of the decades-long Cold War–was finally destroyed, just over two years after Reagan had challenged the Soviet premier in a speech at Brandenburg Gate in Berlin: “Mr. Gorbachev, tear down this wall.” By 1991, the Soviet Union itself had fallen apart. The Cold War was over.  https://www.history.com/topics/cold-war/cold-war-history

It appears that sometimes the idea of an organizational structure can be much better than the reality of it application. When the concept and reality don’t quite mesh, the first impulse seems to be to try to increment and adapt the structure to get closer to what is called for. This seems to be something of a delaying tactic for what is usually the inevitable outcome.

A structure can be imposed by management with the idea of better progress and efficiency for all. As incremental structures are added to deal with the true business environment, the entire “weight” of the organizational structure begins to be strained. Many of the expected efficiencies associated with the matrix structure organization would appear to have been lost due to the growth of the many hand-off and verification groups that have sprung up to deal with both the process, and human nature.

Détente, and trust, but verify, are excellent historical applications associated with the difficult relationship between global nuclear powers. I think when you can start seeing the parallels associated with these concepts within the difficult relationships between business organizations, that there may be some inherent challenges associated with the organizational structure. After all, the result of the application of these ideas was the verifiable dissolution of one of the global participants and the changing of their organizational model completely.

Transformation

Oh, how I long for the days when all we had to worry about was change. We didn’t know or worry about what it was we were changing into. We just knew it was going to be new and different, and hence better than what we currently were. Somewhere along the way, the way we changed, changed on us. Soon we had a changing rate of change in the way we changed. Eventually it was all just considered small change.

Now a days, no one changes. Change is so last century. Change is so passé. Change has changed, yet again. Today, changing is no longer good enough.

Instead of changing, you must now transform.

I think this is now the appropriate time to understand the vast difference in the definitions of these business terms. To the dictionary:

change
CHānj/

Verb: change;
1. make or become different.
“a proposal to change the law”
2. take or use another instead of.
“she decided to change her name”

Noun: change;
1. the act or instance of making or becoming different.
“the change from a nomadic to an agricultural society”
2. coins as opposed to paper currency.
“a handful of loose change”

In case you were wondering, I think I was able to use every one of those change definitions in some way, in the first paragraph. On the other hand:

trans·form
tran(t)sˈfôrm/

Verb: transform;
1. make a thorough or dramatic change in the form, appearance, or character of.
“lasers have transformed cardiac surgery”

Mathematics Linguistics
Noun: transform;
1. the product of a transformation.
a rule for making a transformation.

(In case any of you are wondering about this mathematic definition for transform, in physics, the Lorentz transforms are coordinate transformations between two coordinate frames that move at constant velocity relative to each other. This is the kind of stuff you learn in any basic mechanics class in physics.)

There you have it.

A change is just a change, but a transformation is a thorough and dramatic change.

I’m glad I was able to clear that up. I like to leave my readers enriched for having read my posts, and this little nugget alone is probably worth the time spent reading, at least up to this point.

Below are a pair of Google based graphs of the use of the words “Change” and “Transform” over time. (I didn’t realize that Google had a function like this, but I think it is pretty neat, and will probably use it again in the future.) As you can see, the use and popularity of “Transform” has grown rapidly in recent times. I attribute this (although I have no way to directly measure it, but based on the nominal usage that of “transform” that I hear, I would believe it to be true) to the vast increase in the use of the word “Transform” in all written documents, articles, presentations, etc., etc., etc. associated with business in the last few years.

And as you can also see “Change” has been a generally more widely used term (with some recent growth – probably due to the number of people looking up and defining the difference between “Change” and “Transform”) until recently, where “Transform” appears to now be the more preferred descriptor (at least when it comes to business).

Change

Transform

One thing that can said about business: When it finds a new term that it likes, it will definitely over-use it.

Despite the similarity of the definitions, I do think that there may be some subtle differences in the connotations that each word evokes. Change, at least to me, speaks of moving from what you are, into some as yet undefined state. As I noted earlier, you may not know exactly what the change will entail, or what the end state of the change is, but you do know it will be different.

Transformation, again at least to me, speaks of moving to a little more defined end state. There is a target and a method to the change, or at least there should be. It implies that the target result of the thorough change is known and the while the required steps to get there may not be fully defined, at least the end state is.

Or at least it should be. The key is always going to be trying to convince those that you want to transform that you really do have an idea of what you want them to transform into, as well as plans for the steps to get there.

Knowing what you want to transform to, but not knowing how to get there, would seem to be only slightly better, if at all, than knowing and expecting to change, but not knowing what it is you will become.

Wow, I think I may have just propellered off into existentialism on that last discussion of change and transformation.

However, this discussion could help answer the question: When do you Transform, and when do you merely Change? I think the answer lies closer to the idea that you transform when you have an idea about what you want to become. You transform from an analog to a digital company. You transform to a cloud based solution.

It just doesn’t have the same ring, or gravitas to say you are changing to a digital company, or you are changing to a cloud based solution.

You change in response to a stimulus acting on a business. You transform in anticipation of the stimulus acting on the business.

I went and searched on the keys to changing. Aside from a lot of musical notation associated with when to use the tonic and how to change keys, most of the statements associated with change centered on two words: Courage and Fear. The courage to change and the conquering of the fear of change.

Perhaps that is the reason for the current popularity associated with Transform instead of change. People seem to need Courage to change, while I don’t nearly so associate Transformation as a courage requiring activity. People need to conquer their fear of change as a prerequisite to a successful change. Again, it would seem that the connotation of transformation does not invoke nearly as much fear in the participants.

It would seem that Transform is now the public relations equivalent of Change. More of a kinder, gentler version of change. It has all of the good aspects of change and not nearly so much of the bad. It would seem that changing (or transforming, if you prefer) “Change” to “Transform” is much along the same lines as when the United States Federal government changed (or transformed) the Department of War into the Department of Defense in 1949.

It functions much the same, but it just sounds better.

Again, perhaps because transformation implies a more directed process and end result, where change appears to be a little more undefined and open ended. And few in business like to be the one that is the first to venture into an as yet open ended and undefined future.

Good, Cheap, Fast – Pick Two

This has been a well-known conundrum in business for quite some time. There are always three variables associated with getting the product or service that you want. The variables are Quality, Price and Speed. They are normally associated with the words Good, Cheap and Fast. The conventional question has always been that you cannot get all three variables at high levels at any specific time. If that indeed is a limitation, the question arises: If you are a vendor or supplier dealing with your customers, which two of the Good, Cheap and Fast variables do you choose when delivering your products and services?

As a customer, the simplest answer has always been to demand all three variables, and to demand them immediately. They want the lowest price, the fastest delivery and the best quality. They want it now and please don’t argue. We have all been there. However, even the most demanding of customers recognize that this is usually only an opening gambit and that there will always be negotiations associated with what is actually obtained and when it is to be delivered.

In the past customer hierarchy of desirable product attributes, Quality has ruled as king. The higher the quality, the more reliable the product, the better the customer liked it. They would possibly make concessions to either Cheap and Fast, if they got the best Good there was.

If Quality, or Good, was the given, then the customer (and vendor) needed to decide which other variable, Price or Speed was going to be sacrificed. I think that history will show that for the most part it was speed. (In support of this position I will submit that almost all product and productivity focus in the last few generations of products have been on how to take time out of the equation). Even the axiomatic statements associated with business in general refer to the fact that the pace of change within business has been accelerating.

That meant that a good customer would wait for a good product, and that they would get at a good price.

Those were the days. That does not seem to be the case anymore.

As I just noted, everything about business has accelerated. Cycle times for everything from product development to customer billing have been reduced. No one wants to wait for anything anymore. What was once fast or accelerated is now the new normal. Full speed is now the minimum accepted and if you expect to get ahead you had better figure out how to go even faster. They want it all now.

We have become an immediate gratification society.

What was once saved for, and purchased later, is now purchased today on credit, and paid for later.

So, if this increased focus on Speed, or Fast, is the new primary given requirement (instead of Quality, or Good) for driving customer satisfaction, then which of the two, Good and Cheap, will be the second factor chosen in the customer purchase decision? (remember, the axiom of you can only have two of the three variables at any time still pretty much holds in reality – or does it….) One would suspect that since Quality was so important in the past that it would also be of high importance today. That would leave cheap as the odd variable out.

That would also mean that customers want their products and services Fast and Good, and would hence be willing to pay the requisite higher price associated with this variable selection.

I do not know about you, but it has been a very long time since I have dealt with a customer that is willing to pay more for anything, regardless of speed and quality.

I think the reality is that price is still king. It is very difficult to sell a higher price versus a competitive product regardless of the speed and quality delivered. It can be done, but you are starting out at a significant competitive disadvantage if you start with a higher price than your competition.

As I have noted in the past Good in the business vernacular has been replaced by “Good Enough”. As product life cycles have become shorter (there’s “Fast” again) and prices have come down as components, support, warranties and service have been reduced (there’s “Cheap” again), Good has been reduced down to Good Enough to compensate.

The answer to the Good, Fast and Cheap, pick two conundrum in today’s business environment is now Fast and Cheap.

How quickly can the product be in the market? It has to be fast because there will be another, better competing product put out by a competitor soon enough. It better be cheap because customers most likely won’t buy a more expensive product, regardless of any (temporary) advantages. As for quality? That’s now a given. It is almost impossible to differentiate in the market based on a quality variable. Almost all manufacturers in just about any given market can be viewed as having a high-quality parity.

Today, if a company is not viewed as having a high / acceptable quality level in its products, they won’t be surviving for very long.

As an example, look at automobiles. Manufacturers have tiered the market into sub-markets based on car size (e.g. Sub-compact, compact, mid-size, etc.). Many manufacturers have created specific models to address and compete in each specific market tier.

The model for buying a car has “Fast” as a given, since I don’t know anyone willing to wait for a specific car to be manufactured for them – they want to drive off the lot in their new car when they buy it, not at some later time. That leaves Price and Quality as the final negotiation variables. I think Quality for the most part is also a given since now almost all cars come with similar warranties, usually somewhere between six and ten years. If you don’t believe Quality is a given in cars, try negotiating a longer warranty for your car as a term of the purchase agreement.

Let me know how that works out for you.

That essentially leaves Price as the next (only) selected variable in your car purchase decision. The starting price can vary a little, based on the feature set that the car is equipped with (X, SX, LX, etc.), but even that is limited. Fast (you want to drive off in it) and Cheap (you don’t want to pay anything more than you absolutely have to), are the criteria.

Fast and Cheap. That’s it. That’s where we are in business.

Now there may be other variables that you input into the decision criteria such as the car must have an appealing design. This is a matter of personal taste. Car companies spend incredible amounts of money in creating appealing designs for each of their cars. Car companies also spend incredible amounts of money advertising these appealing designs with the objective of convincing you that theirs is the most appealing, (Mazda has gone so far as to create a commercial showing what I suppose is a sculptor, sculpting the latest appealing design of their latest car model) and hence getting you to come to their dealership where you can negotiate the price and then drive off in that appealing (work of art) car.

There are always exceptions to every rule in business. That is also probably also a rule of business as well. However, when putting together a strategy on how to attack a market in general, and to pursue specific customers on an individual basis, with quality now thought of as a given in the market where “Good Enough” is now good enough, focusing on speed and price will most likely provide the best competitive advantage.

Answering questions as to how quickly the solution can be acquired and more importantly implemented will be a differentiator. Price, more so than almost ever before will be a decision driver. With almost all products now being viewed as easily interchangeable, why would a customer pay more for anything?

I remember the good old days where management would blithely tell the sales team to sell “quality” when their market price was higher than the competition. Management would say reference the product’s “quality” when there was a delay in product availability.

Now if a product takes too long to arrive in the market, or the price is too high, the opportunity is most likely lost. It doesn’t matter what management will want to tell the sales team. A competitor will have a substitutable product available when the customer wants it at a price they can afford.

Times have changed. Quality was once a product differentiator. It is probably not anymore. Of all the resources available to everyone, time is the only one that we cannot readily get any more of. Hence Speed has become the new prime differentiator. With Quality a given, and speed a differentiator, that leaves Price as a decision driver.

Customers might pay a little more for a preferred product, but that differential is closing fast. The more expensive you are versus the competition, the more disadvantaged you are. There will always come a point where the Price differential will always outweigh any Speed or Quality advantages. That Price differential point is always moving closer and closer to the Cheapest solution.

What is a “Plug”?

For some reason, I have been reading and thinking about forecasting for the last little while. One of the words that seems to be popping up more and more frequently in the business literature with respect to forecasting is the word “plug”. I have actually heard this word in past forecasting meetings that I have attended. I thought I might delve in a level deeper than just understanding forecasting, and look into one of the more favored words in the forecasting vernacular: “plug”.

Plug is an interesting word. The dictionary defines it as both a noun (a thing) and a verb (an action). I’ve also talked about words like this before. You used to go to a party, and now you can also go and party. I think that plug is a much earlier iteration of this particular phenomena. Usually a word is used as either a noun or a verb. I am not so sure that this is the case with the word plug when it comes to its business usage. I think that when you hear the word “plug” in business, it is both a thing and an action at the same time.

As a noun plug can usually mean either:

“an obstruction blocking a hole, pipe, etc.” or “a device for making an electrical connection, especially between an appliance and a power supply…”.

As a verb Plug can usually mean either:

“block or fill in (a hole or cavity)” or “mention (a product, event, or establishment) publicly in order to promote it.”

For now, I think I’ll ignore the appliance power cord and product promotion definitions for obvious reasons, and focus on the other two.

As the ends of various months, quarters, and years come into view, forecasting takes on a role of increased importance. Depending on the business performance, as these end of period times roll around forecasting can take on both a greater frequency and intensity, especially if the numbers are not in management’s desired range. As I have noted, forecasting is essentially the comparing of what you think the numbers are going to be with what you want the numbers to be.

I have also noted the “volumetric force” associated with forecasts. This is the management drive and desire for all forecasts to be either at or exceeding the desired targets. This desire to respond to or please management has a tendency to render forecasts possibly slightly more optimistic than what they might normally be, so that management can smile. But what do you do when the forecast obviously does not meet the desired levels?

You insert what is called a plug into the forecast.

You find a way to provide the management desired levels in the forecast numbers. You forecast the performance that is defined, and then you add in an amount equal to the difference between the goal and the defined forecast, which is undefined. This undefined amount is known as the “plug”.

You are in effect using the verb definition of the word “plug” as a noun. You are essentially filling a hole (a verb) in the forecast with a plug (a thing). It is normally the noun function that is turned into a verb, but here we have the verb function that is turned into a noun.

I guess it is a little thing (a very little thing) but it amuses me, so I have included it.

I have also noted in the past that if a forecast is knowingly presented to management, and it does not at least meet the desired targets, that whoever submits such a lacking forecast could be subject to a significant amount of incremental management attention and assistance. As I also noted this attention and assistance will usually continue until the forecast realigns with the desired targets.

The quicker the plug is inserted into the forecast; the faster management can feel better about the forecast.

I think this may somehow be related to the genesis of the saying “The beatings will continue until morale improves.” This quote is attributed to Captain Bligh, or the HMS Bounty, when told of the forecast associated with how the crew felt about reaching Pitcairn’s Island. It is also apparently quite applicable to a multitude of other management groups.

Plugs were developed in forecasts as a way to create a real and accurate forecast (that potentially does not meet management expectations), yet also provide an acknowledgement of the expectations of management in order to avoid the incremental assistance of management. Plugs are the as yet unidentified portion of a forecast, that will (hopefully) be defined in the future, and will result in the meeting of the desired targets.

This results in the equation:

Actual Forecast + Unidentified Forecast (Plug) = Presented Forecast

Plugs are an acknowledgement that the actual forecast doesn’t meet the desired levels, but the miss to forecast has been identified and is being worked, so that extra management reviews of the forecast (or beatings, as the case may be) are not going to be necessary.

On the surface, this type of forecasting technique sounds great. The actual forecast can be presented to management, as well as the desired number that management wants to see. They get both reality and what they want.

However, if you are going to use the Plug Gambit in a forecast, you need to understand that it is a double-edged sword, and it has a limited shelf life. It is a double-edged sword in that a forecast is being presented to management that is in essence telling them that their desired number is going to be achieved. If it is not, then there will be significant, and now merited management attention visited upon those that delivered such a faulty forecast.

The plug in a forecast also has a limited shelf life in that it is expected to reduce as time passes, and the measurement period draws to a close. An example is that a plug in a forecast during the first month of a three-month quarter might be acceptable. However, the same plug in the third month of a quarter should definitely garner incremental management attention.

So, there you have it. A plug is an artifice, inserted into a forecast in order to avoid (at least temporarily) unwanted incremental management attention associated with the forecast. It is an identified amount, but from an unidentified source. It can be sales to unidentified customers, or cost reduction from unidentified actions.

Once a plug has been inserted into a forecast, it is almost impossible to improve the level of the forecast. This is because as new opportunities are identified, they reduce the amount of the plug, as opposed to actually improving the forecast.

With this in mind, it is my understanding that the latest management approach to limiting the use of plugs in forecast is to in fact request and drive for improvements to any forecast that does contain a plug. This has the effect of requiring double the desired growth as the plug must first be filled before the forecast can be increased. This move by management will no doubt engender some as yet unknown, new methodology for forecasting, as the ongoing escalation associated with business forecasting continues.

This is very similar to the idea that the fastest cheetahs only caught the slowest gazelles. This natural selection meant that only the fastest gazelles (and cheetahs) survived. The ongoing evolutionary race is forecasted to continue going forward on the African Savannah.

However, I think it is pretty obvious that in this example, gazelles do not get to insert plugs into their speed forecast.

Self Help

“I love those automated attendants, recorded voice answering machines and the endless opportunities I get to push my own buttons whenever I make a call looking for someone to help me.”

Said no one, ever.

It has been well documented for some time that customer satisfaction is adversely affected whenever a customer has to deal with or must navigate through one of those automated phone answering systems. Normally when they call, they have a question, or need help with an issue. They want to talk to someone. Otherwise they would have just sent a text. Or accessed the company web page and sent an email. But no, they had hit a threshold where this type of technological linking was not good enough. They wanted to ask another human being to help them. And yet despite their need for support and desire for human interaction, they are denied.

The problem is so rampant that there are now commercials by certain companies appearing on network television espousing the point that when you call them, you actually get to speak to “a real human being”. Some companies now feel that it is now a competitive differentiator that they will have a real live human being answer your call and that you actually get to talk to them when you call them. It is interesting how quickly times changed initially to the automated systems, and then just how quickly they are changing back. There can only be one reason for this service technology whiplash.

Money.

Companies originally saw these systems as opportunities to reduce the cost of support by in effect making the customer responsible for some of their own issue or support request. They would need fewer support people if they could make customers work a little bit in the identification of the type of issue they were calling about. Fewer people needed for support equated to reducing the cost of support. This is always thought of as a good idea for the bottom line.

What they learned was that for the most part customers didn’t really like this type of automated system. It may have saved the company money in their support costs, but it made their customers unhappy. And unhappy customers were not as likely to buy more equipment or products from the vendor that made them use an automated attendant system when they needed support. This is normally thought of as a bad thing for both the top and bottom lines.

Companies learned, or actually relearned the old adage:
“Penny wise and Dollar foolish”. (It is actually “Penny wise and Pound Foolish”, but, I live in Texas, USA, so I have taken a foreign exchange liberty here.)

They may have saved a few pennies with the automated systems which enabled them to reduce the number of people required to deliver customer support, but it ended up costing them many dollars in lost sales from their customers who were not particularly impressed or happy with the support that they got.

Now we have companies advertising that they are using people to answer their service calls, just like everyone used to do thirty plus years ago. Go figure.

While it is interesting to discuss the migratory aspects of the types of customer service and support, I think it might be time to discuss a group that may not have fared so well in the evolution of support: The Employee.

It is no secret that companies must spend significant amounts of money, time and effort supporting their own communications and networking needs. Every company has a corporate network. Every employee has a Personal Computer. The employee productivity gains that have been created are enormous and well documented.

It has also put an enormous strain on and demand for corporate Information Technologies (IT) teams for support by these employees. Security and the ability to keep hackers out has almost become an industry unto itself. Requests for networking, applications, upgrades and support continue to grow as the complexity of what is required by the corporate knowledge worker increases. In the age of Virtual Offices (VOs) the demand to deliver these services to locations outside the classic organization structure or office has boomed.

And what is the diametrically opposed force that companies must deal with in this time of burgeoning employee technology demands?

The desire to reduce, or at least limit the growth of Information Technology support costs.

Companies are facing explosive demand for new and innovative Information Technologies applications and services by their own people in order to continue to generate ever better productivity, but are having to temper responding to this demand due to a desire to keep their IT costs in check. There are many innovative ways that companies are dealing with this issue, and unfortunately there are also several ways that may not be considered quite so innovative.

When I was in college, I once had a physics professor who was preparing us for a rather extensive round of midterm exams. He informed us that once the test was passed out that there would be no talking. He also said that if we had any questions we would be encouraged to raise our hands. He noted that by raising our hands above our heads, blood would obey the laws of gravity and flow out of our arms. This would in turn increase blood flow to our brains. This in turn would cause an increase our brain activities in the firing of synapses and neuron transmission, which in turn should enable us to solve the problem on our own.

I am not sure, but I think the gist of his comments were that we were not to ask him questions, because it was a test.

I am concerned that many of the IT leadership of many businesses today seem to ascribe to the same school of thought when it comes to staff support. If you don’t believe me, try and find the internal organizational phone number to call and actually talk to someone real time if you need IT help with you technology based connections. Emails and instant messaging are by far the preferred mode of communication if you need help. And if by some chance you do locate the telephone number for IT support, I think you have guessed it: You get to deal with the corporate IT automated attendant.

It seems that what was once done for you as a valued productivity asset of the company, when it comes to new applications and upgrades, are now being pushed down to you to try and do on your own. The new definition for employee service seems to include unlimited numbers of IT based emails with directions on how to update, upload and upscope the many new, mandatory or desirable IT capabilities.

Sort of a raise your hand and hope for increased blood flow to the brain when it comes to IT support.

I think part of the reason for this internal support shift is that the cost of IT and support is a very identifiable amount. There are direct numbers, budgets and staff associated with it. In budgeting and costing terms, it has become a very identifiable target. There is a defined amount being spent and as such becomes a prime candidate for cost reduction.

The issue that arises is that for every identified and quantified dollar that is saved from the IT budget, there is not a specific quantifiable amount of incremental time or lost productivity that can be identified or captured by the employees, as they are forced to pick up the slack. The measurable IT budget is reduced and a real dollar cost reduction is recognized. But it is far more difficult to measure how much is “spent” when all the additional hours that all the individual employees must now spend completing these IT tasks are totaled up.

An extra hour or two, here and there spent by each employee doing what was once an IT task gets lost in the count. The employee’s work load doesn’t decrease to accommodate this new additional effort. The deadlines aren’t extended because there is now more to do. It’s just another issue to deal with.

Just like happy customers are known to buy more products, happy employees are known to be more productive. However, employee productivity is something of a subjective measurement where IT budgets are very quantitative. This leaves the decision in the realm of reducing a measurable budget, known quantity at the risk of reducing an unmeasurable, unknown employee satisfaction and productivity quantity.

When the cost of cost reductions is reviewed in such a manner, it is best to expect continued pressure on corporate IT budgets for the foreseeable future.

I think it is probably safe to assume that there will be a point where there is a recognition of the value of supporting employee satisfaction and productivity via increased, direct tool and technology support. My guess is that corporations are probably getting close to that tipping point.

When bellwether companies such as Yahoo! and IBM have already decided that there is in fact greater value to the company when employees interact with each other in the office as opposed to the convenience of working via Virtual Offices, it probably isn’t too far a leap to think that they will also recognize that the small, but highly visible investment in the IT resources to support them is also probably money very well spent.

Why Do It

There is a brand out there that struck advertising gold with their catch phrase “Just do it”. We all know who they are, so I will not go there. For sneakers, exercising and sports it was brilliant. How incredibly “Zen”. It truly tapped into the psyche of every would-be athlete on the planet. Like so many other marketing trends in society it seems to have also found its way into our business vernacular. I am not so sure this is a good thing. Like process for process sake, just doing something for the sake of doing it, without examining the value or reason for doing it in business can be a waste.

I think we need to remember what drives organizations and what should cause them to take actions. Organizations exist primarily to bring value to its share holders. It does this by providing value to its customers. It seems that too many times they have a tendency to confuse activity with progress, much the same way that process can be confused with control.

I am convinced that there are three simple driving forces for actions in business. I am sure there are many that would potentially argue this point and say that there are actually a myriad of driving forces for action in business, but stick with me for a moment. When I look at the root cause analyses of all types of actions in business, and boil them down to the basics, I still keep coming back to these three:

Actions can be customer driven.
Actions can be revenue driven.
Actions can be cost driven.

If there are business decisions that result in activities that when analyzed cannot be attributed to one of these categories, I would probably challenge that it is an action or activity whose relevance should be called into question.

In other words, if an organization is doing something that cannot be attributed to one of these causes, I would ask why they are doing it.

Customer driven actions are just that, actions that benefit the customer primarily without regard to any other considerations. This means that they can be actions that are not in the current financial best interests of the business at that time. They are “investments” in the customer relationship which will hopefully produce greater returns to the business at a later date.

These are actions that are the result of externally focused decisions. They are actions designed to further the relationship or build incremental trust with that specific customer. They are usually strategic in nature and are focused on the longer term view of the business, not its immediate profitability.

Revenue driven actions are actions designed to grow the business, either through the acquisition of new customers or the expansion of business with existing customers. Since they don’t specifically focus on business profits or margins (they are looking at the top line, not the bottom line) they can be mixed between external and internal in their business focus.

These actions tend to be shorter term focused than the long term customer driven actions in that there is some consideration to the business results that are input into the decision and action process.

Cost driven actions are specifically internally focused and are used to target shorter term results. They are the result of decisions that are usually focused on the business performance and are designed to directly affect profitability and margins.

Cost driven actions are not solely defined by infrastructure or staff reduction types of actions. Some cost driven actions can be taken as a method of avoiding or reducing known costs. For example, business actions such as corporate wellness activities can also be considered cost driven actions. They are solely internally focused. They are designed to help improve employee productivity by reducing stress and resulting sick days. They also help reduce corporate healthcare costs and insurance premiums by reducing the claims and medical costs of employees who are in general healthier because of them. All of these improvements directly affect the corporate bottom line.

There may be some that believe that some actions are based on meeting legal or regulatory requirements, and should be categorized separately. I would argue that these too are cost based actions based on the argument that they are internal in nature (not affecting customers or revenue) and only affect costs in the form of what it costs to adhere to them, as well as what it will cost if they are not adhered to.

The tradeoffs between these decision drivers and actions are reasonably clear. There are the primarily short term affects of internally focused actions (such as cost cutting), the midterm effects of revenue growth actions (such as sales programs and discounts), and the long term aspects of customer relationship investments (such as faulty product replacements and customer satisfaction actions) and their effects and values to the business. There is the tradeoff between an external (customer needs) focus and an internal (primarily profitability) focus that must be balanced.

It is the business leader’s responsibility to continually monitor and balance the internal and external decision focus, and the short term – long term effects on the business. If they become too focused on the short term business performance, future revenue streams and customer relationships can be negatively affected. If they focus on the longer term and customer relationships, shorter term business performance may suffer due to the increased investments that are required.

Sometimes these decisions and actions can align and be complementary to each other. This alignment between short and long term decision and action, between internal and external focus then becomes relatively simple. Other times they will not be complementary in nature and tradeoffs will have to be made between the performance of the business today and the investment needed for the business to perform tomorrow. Cost actions will need to be balanced against investments in revenue growth and customer relationships.

I think the bottom line here (if you pardon the pun) is that customer focused decisions and actions are what keep any business or organization in business and should be prioritized above the others. After all, it is the customer that supplies the order that gets turned into revenue that ultimately drives profit. Forgetting, or re-prioritizing this axiom can in some instances occur briefly, but probably at the long term peril of the business. There are always other competitors in the market that regardless of their situation who will be willing to make the incremental investment in a customer.

I realize that I have greatly simplified the decision and action criteria here for an organization. However I do think that it is somewhat justified. We do have a tendency to make business as complicated as we want. I seem to have reached the point where I prefer a simpler approach as opposed to a cross functional team creating a new process and program to document the approach.

As I noted at the opening, it seems that too many times organizations undertake actions that don’t seem to support any of these key reasons for taking them. If there was a check and balance arrangement where processes or programs were reviewed with an understanding toward these criteria, they might be modified or removed all together.

Since this would be for all intents and purposes an internal only review, it would probably be classified as a cost base decision criteria and action.

Organizations have a limited number of resources. It seems in many instances they have an almost unlimited number of objectives and desires, many of which are somewhat conflicting. The business’s resources need to be spent or invested on those objectives that keep the customer in the forefront of the decision criteria and can best be aligned to provide the greatest return to the organization. These returns need to be balanced between the short and long terms.