I was thinking back to some of the sales and revenue meetings that I had attended. These are normally meetings where the top line is the focus of management’s attention. This is arguably step one in any business process. One of my favorite phases is to state that in order to have a good bottom line you need to start with a good top line. This sounds pretty logical, but you might be surprised by some of the directions that some of these meetings have taken. Top line review meetings invariably go in one of two directions; if the top line is below the objective, you stay focused on sales and revenue and what steps must be taken to achieve the targets. If the top line is at or above the targets, the meeting will almost immediately begin to focus on the margins that the sales are contributing. The focus of the sales meeting then becomes margins. You are inspecting sales, but are expecting margins. This got me thinking further about some of the operations reviews that I have attended. The idea of these reviews is to see if the operations and service level objectives are being met. Again I recalled that these meetings invariably went in one of two directions, depending on the measurement attainment. If the operational and service objectives were not met, they stayed focused on service. If the operational and service levels were met, the meeting changed focus to profitability. They were inspecting service levels, but expecting profitability. The point I am making here is that you should only expect what you inspect. If you are only inspecting sales, then sales are all you should expect. Too many times we have seen the volume of sales go up in accordance with the attention it has received, only to see a change or reversal of course when the lower margins associated with those increased sales come to light. The same sort of events seems to occur when the incremental expenses associated with increased service levels come to light. Again too many times we have seen the service levels go up in accordance with management attention, only to pull back when the costs associated with those higher service levels come to light. If you are going to inspect both the volume and margins on sales, you will need to make the sales team responsible for both sales volumes and margins. If you have a sales team that is only responsible for, and compensated on volumes, then margins will continually be an issue associated with sales. If you are going to inspect both the operational levels and profitability then the operations team needs to have responsibility for both the service capabilities and the associated profitability. If the operations team is only measured on their operational performance levels, then the costs and profitability associated with those functions will continually be an issue. When metrics are provided to any team as a means of inspecting their performance, expect that team to focus on the actions required to attain the goals associated with the metrics. There are always tradeoffs in business. Lower margins may be required in order to increase sales. If the sales teams do not have the responsibility to evaluate those sales volumes to lower margin tradeoffs, they won’t. You can continue to have sales inspections with the sales team, but you will need to have a margin inspection with some other team. The same goes for operations. If service levels are the only focus that the operations team is to be measured on, they will do whatever is necessary to meet those service levels. If they are not required to evaluate the tradeoffs between desired service levels and profitability, they won’t. It will be left to someone else. Individual, team and business unit inspections need to be aligned with overall business expectations and requirements. If you only inspect one aspect of a desired performance, then that will be the only aspect that receives focus. If you only inspect the volume of sales, expect good volumes. If you do not inspect the margins associated with those sale, do not expect good margins. The same goes for operational goals and profitability. I suppose the same could be said for just about any function within the organization. If you are going to expect multiple facets of behavior and performance, you will need to measure and inspect each of the facets and behaviors collectively. If you inspect them individually, don’t expect them all to be met.
Survey Says…..
I got another survey today. That’s not too unusual. We all seem to be getting them more frequently. We get them from various political entities, consumer product manufacturers, software application manufactures and just about anybody that you have bought something from that requires some sort of product registration. We get them at the office from our various suppliers and vendors, other groups from within our own organization that provide us support or a service and even our own companies will periodically survey the employees for their opinions. In short, we seem to be asking each other a lot of questions. We need to remember this the next time we have the urge to send out a survey to anybody. If we want to survey our customers, understand that they are also customers of other companies who also want to send out surveys. If we want to send out a survey, we need to have a very clear set of goals for both the survey itself and the use of the information we are to gather. Like anything else in the organization, we need to have a very clear set of objectives for a survey for it to be of any use. We also need to demonstrate to the surveyed entity that we will do something with the information we gather that will be beneficial to them. What is it that we want to know (that we don’t already know). Why do we want to know it. What are we going to do with it after we know it. Too many times I have been surveyed, and then never heard another word from the surveyor. I answered the questions but in return got no value for my time. My information went somewhere, but no outward manifestation of a response was provided. Eventually I have gotten to the point where I respond to fewer and fewer surveys. Maybe that is why I seem to be getting more and more of them. Too many times surveys become isolated onetime events where a great deal of attention seems to be showered on the entity being surveyed, and then just as quickly disappears with no specific results communicated or acted upon. If the surveyed entity recognizes that characteristic, then the survey becomes just another time consuming event for them, with no recognized or expected value. Surveys will only have value if the surveyed entity believes that there will in fact be action taken that is hopefully beneficial to them as a result of the survey. If you are going to survey the employees of your business (again), explain to them what the results were of the last employee survey, and what actions were taken as a result of their previous input. If you are going to survey your customers, explain what actions were taken as a result of the last survey, or if it is the first time the customer is being surveyed, explain what you have found from other customers surveys and what actions you took as a result of that information. Without this closure of the feedback loop before each new survey, and the demonstration of a response to the input, all the survey becomes is an academic fact finding activity that provided the respondent no value. Surveys need to quantifiably provide some sort of meaningful value to those people who respond to them. That may be why we now see so many market survey requests accompanied by some sort of product discount or payment offer. If the surveying entity isn’t going to somehow remunerate me for both my time and opinions associated with their survey, I am not going to waste my time by answering it. I think the same is true for both employee and customer surveys. If you are not, or cannot demonstrate to the surveyed entity that you place a high enough value on their opinion to act upon it by changing your business or method of interaction with them, then it will be very difficult to get them to respond in any meaningful way, if at all. Business relationships with customers and employees are the result of ongoing dialogs and activities. It seems that too often we take this daily interaction and feedback for granted and want to rely on the survey for our management answers. It also appears that all too often our customers and employees provide us daily feedback and opinions that we do not act upon in a timely manner. We then survey them for information, but neglect to close the loop back with them to verify what we “heard” and then explain what we did as a result of this information, even if we did take measurable action. When no feedback is provided or visible action is taken as a result of a survey, each successive survey increasingly loses its value. The willingness of the surveyed entity, be it a customer or an employee, to respond goes down and eventually all value associated with the survey is lost. You then become just another survey amongst the numerous surveys that we all seem to get, and don’t bother to respond to.
Metrics
We are a numbers driven world. Look at the way we all watch the weather reports for tomorrow’s temperature. We watch the stock market to see where the market is today and what the change is from yesterday. We are constantly being told of unemployment rates, interest rates, price changes and approval ratings. Look also at the way we watch our own key performance indicators to help us keep track of the health of our businesses. Metrics are an important aspect of what we do. They shape our opinion of our world and of how things are going. We need to remember that good metrics do not cause good performance. Good metrics measure performance, good or bad. Metrics provide you guidance on how to look at the various aspects of the business. Metrics also take time and effort. They require business leaders to continually make judgments as to whether the effort required to generate different or more detailed tools and systems will result in better visibility and detail of the performance of the various aspects of the business, and if this better visibility can provide better guidance as to what potential changes need to be made to the organization. The other side of this business discussion is could the effort required to generate better the better tools and systems be invested in the elsewhere in the business and provide a better return (more sales, cost reductions, etc.). More detailed or complex metrics will not improve your business’ performance. Good planning, implementation, competitive capabilities and commitment to cost control will help improve your business’ performance. It is not the metric that improves your business. It is what you do with the metric that can improve your business. Metrics are a ways to a means. In many instances they seem to have become the means unto themselves. The objective is not to have good metrics. The objective is to have a good business, where the metrics will reflect this performance. Businesses in some instances have a tendency to believe that it is the metrics fault that poor business performance is being reflected. This phenomenon can be seen in the periodic revamping of report and review materials to provide more and greater detail. Real information has a tendency to be subjected to ever more complex statistical analysis in order to provide more detailed views of performance. I have found that metrics, like objectives are best when they are very simple, and focused. They need to focus only on those attributes that directly affect your ability to achieve your goals. If they require incremental or additional explanation, then they are not appropriate to the business. They should almost be intuitive in the nature of the information that they are conveying. Good metrics should guide you both on performance and what type of changes, if any need to be made to the business. Metrics should provide facts and real event based information, not statistical means or averages. Remember what Mark Twain said about statistics. “There are lies, damn lies, and then there are statistics.” Keep the metrics simple, focused and fact / event based. It’s not the metric; it’s what is done with the information the metric provides that is important.
Substantive Changes
I think we have all either been part of a business that was in a troubled condition, or been asked to work in a business that was in a troubled condition. Either way the objective was to improve the performance of the business so that it would no longer be considered a troubled business. Left to themselves troubled businesses will tend to continue to be troubled businesses. They won’t fix themselves. That being said, I have found that the only way to improve a troubled business is to make substantive changes. I want to take a moment here to clarify the difference between substantial changes and substantive changes. Substantial changes are big, visible changes. They attract attention and provide the illusion of progress. Substantive changes are those that change the way the business operates. They are usually not nearly as big or seemingly apparent as the substantial ones. Substantial changes tend to come in the form of reorganizations – groups are combined or divided in the hopes that the leader will be able to make substantive changes to the new combined or divided organization, executive programs – programs where new metrics or measurement methodologies for example are put in place to help better quantify the issues are put in place, or new processes and reviews – teams and meetings to help try and reduce poor business decisions or behaviors. As I have said these types of changes tend to be showy. They tend to get a lot of internal corporate “press” and extol the business virtues that are trying to be maximized. They are usually accompanied by catch phrases such as “change our corporate DNA” and “improve our customer satisfaction”. And in the longer run, it has been my experience that they usually don’t work. Substantial changes also tend to communicate to the business that you have not identified what the real issues are with your business. For example, how can your “corporate DNA” be the root cause of your issue? Certain business behaviors possibly, but I don’t think the DNA is the issue. The best business performance improvements that I have seen have been as the result of a careful analysis of what the desired business state or goal is, an understanding of what is currently being done, and even more importantly, why things are currently being done the way they are. By understanding the “why” of things you can get to the underlying reason for the improper behavior or performance. Some of examples of this phenomenon from my experience include a business performance issue where inventory was deemed to be too high for the business. This tied up cash and affected both the balance sheet and the P&L. It was decided that greater efficiencies could be gained by putting the entire inventory function in one location. There were many reorganization announcements and a great deal of senior management attention was paid to the issue, but it didn’t seem to improve the inventory levels. When a deeper analysis of the inventory was done it was found that the inventory levels were in fact at the appropriate levels for the products being supported. The real issue was that there were too many old products being supported. The issue was not really an inventory one; it was a product management one. Products were not being retired or discontinued in an appropriate or timely manner. Once that was resolved, inventory levels came down to a more acceptable level. Another example was where the profitability of the entire business, not just the individual customer projects within it was called into question. An entire new system of reports was called for to help identify where the failings occurred. The frequency of reviews and the number of attendees was increased to catch the issues before they adversely affected profitability. A significant amount of management time and effort was expended but the profitability did not improve. A deeper analysis here showed that the sales team got the same commission for the sale of an unprofitable project as they did for a profitable one. The real issue was not one of being unable to implement a project efficiently, effectively and profitably; the issue turned out to be the price for the deals that sales was quoting. They were simply reducing the price for “strategic” opportunities and making up for the reduced value of each by increasing the volume of sales. When the sales compensation plan was modified to include margin targets and incentives, the overall profitability of each deal and the business improved. It is very tempting to make big, sweeping changes to a business to try and improve its performance. They tend to make a big splash but not much progress. It is much more difficult to try and understand why business is being conducted in its current manner, and then to make the substantive, but usually subtle changes that are required to correct business performance issues. It may take a little more effort and time, but it is much better for the business.
Followers
I think we have all heard the old saying “Not everyone can be a leader.” I don’t know if I fully agree with that or not. I do however think that everyone can be, and to some extent is a follower. It seems recently that being a follower has acquired some negative connotation to it. But think about it. Unless you are the CEO of your own (private) company, you have to follow someone else. If you don’t chances are that you probably won’t be around there for too long. Being a follower doesn’t make anyone any less of a leader. In fact if you are able to follow in an open an honest way, it probably makes you a better leader. Leaders need to lead by example. If you can take an order or a directive whether you fully agree with it or not, and follow it and complete the task, you are demonstrating the type of behavior that you will expect from your team. You may have disagreed with the decision, but that does not relieve you of the responsibility of accomplishing the assigned objective. Being a follower doesn’t mean that you have to agree with every order or that you may not have a different opinion from your leader. A healthy organization has diverse opinions and views. It helps prevent mistakes. No one person has all the answers. Because of this a good leader cannot be afraid to learn a new answer from one of their followers. Good leaders need to expect and encourage differing points of view. Good followers need to present them for consideration. It is how good followers in turn become good leaders. Good leaders and good followers need to understand that differing opinions before decisions are good for the organization. This type of healthy friction needs to occur throughout the organization. As the decisions are made, and handed down from leaders to followers, who in turn become their teams’ leaders, directional alignment needs to happen. If you have had your input and say on an issue, but a different course of action from your proposed one was decided on, it is now time to be a good follower. You will now in turn need to work with your team, align them in the creation and implementation of a plan to achieve the assigned goal. To do anything else would be dissention, and that will be harmful to the organization. You can have multiple opinions from followers in a healthy organization, but you can’t have multiple directions emanating from each leader in the organization.
Strategy
Every company I have been associated with has had a strategy. In just about every company I have been associated with I have been able to identify and understand the strategy. This is usually a good thing. The more people who understand the strategy, the more people will get aligned to it and the more people who can execute it. In business as in competition as in war for that matter, no plan of attack or “strategy” survives contact with reality intact. They must be continually modified and updated as the environment, risks and opportunities change. It may not be the entity with the best strategy that wins. It is usually the one that best executes their strategy that wins. There are two basic aspects of the strategy process: The setting of the strategy and the implementing of the strategy. Setting a strategy entails understanding the current environment, the desired end state and then putting together the steps on how to get there. Too often it is easy to confuse the desired end state, or goal with the strategy. The goal is “what” you want. The strategy is “How” you get there. I continue to be a little surprised by the number of people that want to be involved in the strategy aspect of business. As I noted above, every business already has a strategy. As I also noted above the strategy must continue to evolve as it is executed because the execution of a strategy changes the environment, which in turn requires a change to the strategy. It seems that there is no shortage of people who want to say how things should be done. Let’s now address accountability here. I have heard it put very simply, so I will relate it the same way here: Saying is not doing. Doing is doing. Doing is much harder than saying. The setting of a strategy is good, but the executing of a strategy is much more valuable. One is “saying”, the other is “doing”. In today’s business world there is a get it done approach to things. If faced with a choice between someone who will say how to get things done, and someone who will do it, almost every leader will choose the person who can get things done. Strategy is an important aspect of business. It just shouldn’t be separated from the accountability associated with getting it executed. It is difficult to measure a strategy, but much easier to measure its execution. I remember seeing a post game interview with John McKay, when he was the coach of the Tampa Bay Buccaneers. They had just lost something like their sixteenth game in a row. They were discussing his game plan for that game. They didn’t ask him if it was a good game plan or strategy. They asked him what he thought of his team’s execution that day. He answered simply. He said he was in favor of it.
Travel, Productivity, Cost Savings and Golf
As we continue to look for ways to keep our business’ costs down, one of the first things that get looked at is travel. Travel limitations, restrictions and freezes are all well known approaches to trying to reduce costs. I guess the success of these approaches depends on the goals that you are setting. If the idea is to bring down the hard dollar costs associated with your budget, then a true travel freeze can work, up to a point. However, there are not many businesses that can function properly or continue to grow without some amount of travel. That leads us to travel limitations, restrictions and of course lowest cost airfare routing. This is where business and job productivity come into the travel and cost savings equation. I am going to use a hypothetical, if somewhat tongue in cheek example to help illustrate my point. If I live in Dallas and I am asked to attend a meeting in Boston, I have several decisions to make. The first question is; do I need to go? If my boss has asked me to go, then the answer is easy; yes. If somebody else has asked, then I probably need to do a little more work to truly identify the need for my travel. Let’s assume my boss has asked me to go. For those of you that know me, the second question I always ask is; can I play golf there? Boston, March, probably not high on the golfing opportunity list. Boston is approximately a four hour direct flight from Dallas. However, direct flights are usually more expensive. Most companies now require you to take a less expensive set of flight arrangements if available. I am now faced with the decision of either explaining why I have chosen the more expensive direct flight, or taking the less expensive connecting flight arrangements. Let’s assume that the president of the company is not currently available to authorize my more expensive direct flight travel arrangements, so I take the connecting flights. This now brings up a couple more important points. The first is that in my 25-plus years of travel, I have never heard of an airline actually successfully keeping a traveler and their golf clubs together on connecting flights. They always get lost. Golf is definitely out in Boston. Unless I decide to rent clubs. The second point is that due to airline connecting schedules, what was initially a four hour flight is now a seven-plus hour set of flights. By selecting the connecting flights I have added 3-plus hours of travel time to each direction of my trip. That is the equivalent to adding almost the time of an entire round of golf each way. I have essentially added an entire day (two rounds of golf) to my trip. I will now also have one incremental day worth of meals associated with this trip, as well as potentially depending on connections, another night worth of lodging expenses. This entire extra day of travel associated with going to this meeting is not spent being productive at my job, or playing golf. It is spent in airplanes and in airports. I am not going to get into the actual loaded hourly rate that is being paid or absorbed by the company while an extra day is spent traveling. What I am going to say is that it is my belief that the productivity value lost to the company by my (or anyone else) not being able to do productive work, as well as the incremental attracted costs (meals and lodging) for an incremental day due to travel are probably greater than the perceived savings difference between the cheaper connecting flights and the more expensive direct flights. I am sure there will be instances where this lost productivity / airfare analysis will swing the other way and it will not make sense to fly direct. I do believe that in most instances it will be in the company’s best interest to get me or any other employee to our business destination and back home again, as quickly as possible in order to maximize the time where we can be productively working, and not sitting on airplanes and in airports. Besides, it’s hard to work on your putting in the airport. My putter has a tendency to set off the metal detectors, and people in the terminal don’t seem to pay attention and keep kicking my golf ball.
Process, People and Tools
Many companies today continue to look for efficiencies and business improvements by trying to create better processes. The idea seems to be that if the process is perfected, employees will be able to follow it, speed will be increased and mistakes will be eliminated. I understand the concept and the idea, but I don’t know if I agree that improving the process alone will actually deliver all the improvements that are being sought, or promised. Processes are based on the idea of repeatable events. If functions or events are similar enough, then you can create a process to make sure that similar events are handled in a similar manner. The idea is to assure consistent performance. Manufacturing products, paying bills, inputting orders and the like were some of the first and most successful beneficiaries of good process creation. The concept has also been extended, at higher levels to other business functions such as sales, marketing and service as well. The issue with process seems to arise when a good general approach is taken too far. If a good high level process works well, shouldn’t it be extended to more specific applications to make them work even better? My view is probably not. My view is that Simple is Better. By necessity the more specific you make a process to enable it to handle more and more variations in inputs and desired outputs, the more complex you make it. I have commented in the past that if your Sales compensation plan is longer than one or two pages, that it is most likely too complex and you are probably not inciting the desired focus from your sales force that you are looking for. I think the same can be said of your processes. There needs to be a relative parity between your processes and your goals. If we can maintain a focus on relatively fewer and simpler goals, then we should also maintain a focus on relatively fewer and simpler processes. The question then becomes do you run the risk of decomposing your business goals and processes into progressively smaller and simpler levels to the point where you lose the ability to manage the overall business with any continuity. It becomes the equivalent of trying to manage the growth of each individual wheat stalk in the field, instead of trying to manage the growth of the wheat field. There will always be a human factor associated with our business process. People make decisions based on the information they have and the goals that they are pursuing. Instead of trying to reduce the impact of the human factor by trying to create processes that prescribe decisions for them; we might do better to focus on the information and the tools that provide it to them, as well as the actual decision makers that we are asking to act on it. Pilots spend multiples of hours in simulators facing manifold situations honing their decision skills so that when they are placed in similar real life situations they can follow some relatively simple processes to quickly arrive at the right decisions and take the correct actions. The average business leader does this while on the job. The business leader must base his decisions on situations that he has seen in the past and adapt them with the new information (or lack of new information) to the current situation. Hopefully either the leader’s experience translates well to the new situation, or the information supplied is sufficiently available and accurate to enable a good decision. The pilot has multiple tools and gauges on his dashboard that immediately provide him the information that he needs as a basis for his decisions. While we have seen significant gains in the tools and gauges area for the business leader, it has been my experience that these capabilities have grown up over time as more of a happen stance instead of a cogent and integrated plan for providing needed gauges for management information. It takes good people, good tools and simple processes to get good decisions and actions. Focusing on more detailed processes without paying attention to the people or the tools that they are using seems to be an activity that will only provide decreasing relative value returns for the investment. Spending more time on preparing business leaders to be ready and capable of making the types of decisions that they will be asked to make, and investing in the informational tools that will provide the accurate and timely information that they will need to make those decisions will probably provide greater benefits to the business.
Sales, Operations and Support
Sales and Operations. It seems pretty simple to me. One group is responsible for selling the product or service, and the other group is responsible for delivering and implementing it. Again, it seems pretty black and white. Dogs and cats, men and women, etc. etc. If you are not one, then you should be the other. I have often said that there are two types of people in the world. Those that divide people into two types, and those that don’t. However, I have digressed a little here. What I am getting at here is that in business, in today’s world, you need to look at your role and understand on which side of the Sales and Operations divide you are on. You need to understand if your focus is on the top line – Sales, or on the bottom line – Operations. I suppose that this division can be extended into the support functions as well. Financial teams can be keeping score of the sales and the gross margins associated with those sales, or they can be keeping score of the costs of the product, delivery and implementation, and the earnings that are generated. Marketing is primarily a Sales related function since its primary role is to position and enable sales to customers. I think you can look at just about every role within an organization and understand where it sits within the Sales and Operations split. A major difference between Sales and Operations is that at least part of the Sales team’s compensation is based on how much they sell. This is called commission. (They also usually have a base salary, which will again be dependent on the type products, services and customers they are serving.) The Sales team has sales targets (quotas) and can quantifiably demonstrate how they have performed. Again, it is a step function. They either sold something, or they didn’t. The more they sell, the more commission they get, and the greater their total compensation. Operations on the other hand are not compensated based on “how much” they deliver or implement. Operations job is to deliver and implement all that Sales sells. This is a given. Operations may have incentives and bonuses based on “how well” they deliver and implement. How well operations delivers is also quantifiable and can be measured in several ways, including time (is it implemented on time or early), financially (is it implemented on or under budget) or the most important metric, was the customer satisfied when the implementation was complete. Again we have some fairly quantifiable metrics here. Time, budgets and customers satisfaction can all be measured. My purpose in attempting to pre-define in simple terms the Sales and Operations roles is to point out and think about all the other roles that seem to have evolved, or devolved in companies from these two required business functions. It appears that many businesses have created or acquired roles that can best be described as either “Sales Support” of “Operations Support”. That means these roles are associated with either the Sales or Operations functions, but do not have either the responsibility or control to accomplish the tasks of selling or implementing. It also seems that by not having the direct responsibility of the line function, that these groups also do not have the direct risk associated with the defined business performance that is required. When a Sales person does not make quota, or an Operations person does not implement the project on time, which specific support person has responsibility for those failures? I understand the ideas of team and how people as an organized group are more powerful than that as individuals, but where can the line be drawn here? Personally I look in a couple of specific areas. In Sales I like to look at how many people get compensated or commission for each individual sales success. How many commissions are being paid for each single sale? How many different forecasts and how many different sales reports is it showing up in? If individuals or groups are truly in or associated with the sales function, then their expenses should be associated with the sales function, they should carry quotas (remember, the more people in the sales group, the greater the quota that the group will need to carry in order to sustain the headcount) and their compensation should reflect a commission oriented structure. In Operations I like to look at how many times each Delivery / Implementation opportunity must be presented for review, and to which audiences. I have been in roles where it was not uncommon to present the same information four to five times including “Dry Run” preparation, so that when you actually did present the information to the policy and decision senior management, it had the proper format and appearance. Operations are about efficiency, accuracy and speed. Do the job once, get it right and move on to the next one. The number of programs for efficiency and process improvement currently in vogue today would lead us to believe that it was amazing that any company was ever profitable or efficient in their operation. Please do not get me wrong. I am fully in favor of providing any desired support to both Sales and Operations. I believe that the decision for requesting that support, and paying for that support should rest with the Sales and Operations teams. If Sales feels that it needs more sales support, then that support needs to be funded by sales in the form of increased sales targets and quotas. Most sales teams have a Sales per Staff metric. If Sales feels it needs more staff, then they need to generate more sales to support them. If Sales feels it can accomplish its goals with fewer staff, then they should be more richly compensated and commissioned for that as well. Sales is a Risk-Return role. If they are willing to take the risk associated with not attaining their goals, then they should also receive the associated and promised compensation when they achieve them. On the other side of the divide, if operations feels that it needs more operations support, then that support needs to be funded by operations in the form of increased efficiencies and improved earnings associated with deliveries and implementations. If Operations is looking at an operating profit per staff metric, then more staff would need to generate greater efficiencies that would in turn generate better operating profits. If Operations feels it can accomplish its goals with fewer staff, then they too should be incited and provided bonuses for that as well. It appears that as time has passed many of these supporting and enabling positions have migrated outside the control of the business function they were created to serve and have taken on lives and purposes of their own. Roles that were once viewed as specific ways to specific means seem to have become a means all unto their own. It has been said that “When you are a hammer, everything looks like a nail.” I guess the business equivalent is that when you are in support, everything looks like it needs support. Too many times the “support” decision seems to have been removed from the business line functions of Sales and Operations and put in the hands of some other management function. With this type of structure in place the support team loses its responsibility relationship with the line organization and becomes more of a corporate tax on those line organizations for programs that they may or may not agree with or support. How can the value of the support be quantified when it is no longer within the purview of the line function being supported. If there is work that needs to be done within the business, but is outside the line functions of Sales and Operations, that is understandable. Don’t try and put it within those structures. Leave it within the management “support” structure where it too can be visible, monitored and hopefully quantified. Leave the support of both Sales and Operations to those functions where they can decide and implement the levels and types of support structures, if any, that they desire or need. By assuring that those functions have clear objectives, financial and otherwise, you can be reasonably assured that any support that they request and fund will be valuable to the business.
Work Backwards
Process Reengineering and Process Transformation seem to be the new popular catch phrases for business these days. We continue to evolve and place more emphasis on the “process”. We like to define them, and map them, and engineer them, and reengineer them, and transform them. We even now have global “Process Owners”. The goal of all this additional and incremental work that is being applied to the process is to make the process more efficient. I understand the almost obsessive approach to processes that businesses are exhibiting these days. I am just not quite sure yet whether or not I agree with it. This approach seems to be consistent with the idea that the most efficient process to build a staircase is to gather a number of previously defined and constructed steps and start to assemble them until you reach your goal, whether it is the second floor of a house or the top floor of a high rise building. To me the simple definition of a process is a way to get something done. We used to want to standardize the way we got things done in order to be as efficient as possible. This was particularly effective when we were primarily a manufacturing / production oriented economy. We have continued to change from a production based economy to a product / services / knowledge based economy for quite some time as the production function has been moved to lower cost environments. We are now trying to standardize the process – the way we get things done – for this new service / knowledge based business environment in much the same way we did for the manufacturing and production based structure. The new catch phrase for standardizing Service and Knowledge based processes is to “Industrialize” them. Here is where I think we may start to run into trouble with this industrialization approach to processes. For quite a while we have strived for a diverse workforce. This diversity is a very good thing. Different people think differently. The diversity of thought and approach that results from having a diverse workforce helps prevent the group think phenomenon from happening, where similar people all see things the same way. If everyone saw and did things the same way there would never be any way to improve the process because everyone would see it the same way. So now we are looking at trying to industrialize a process in order to make it more efficient, which if we are fully successful at will make it difficult to ever modify or improve in the future because we will all be doing it the same way. To go back to our steps and staircase example, if you are going to standardize on only one set of steps, you will only be able to make one type of staircase. A further complication to the industrialization drive occurs when we look at the variations in service and knowledge that are to be applied either internally to the business, or externally to the customer. Manufacturing efficiency was driven based on a relatively few sets of variations to the end product. You used to be able to custom order your car with the specific sets of options that you wanted. Can you do that anymore? The last time I looked most car models came in approximately three option package variations: Standard, Enhanced and Luxury versions. Because the knowledge and service needs of each specific customer will be unique to that specific customer, it may be difficult to fully industrialize the process of satisfying their wants and needs. I have always been a goal driven individual, even when it comes to the processes that I must use. I have found that if I know the goal, I can begin the process of decomposing it into sub-goals or milestones and from there into logical tasks and steps. You can use this approach differently for different goals and that will result in a somewhat different process, and in different tasks. If we have a goal and know what we need to get done, then we can work backwards from it to break it down into the steps that need to be taken to achieve it. This method of work definition provides a general framework or process to work from, but also enables individuals to see and do things somewhat differently in the pursuit of the goal. As long as there are guidelines that are known (example: Bank robbery is not an acceptable solution to increasing the profitability of a customer engagement….) and responsibilities and ownerships (approval levels, etc.) are defined this generic process of working backwards from the end goal can provide a flexible framework that will enable the multiple variations of deliverables that customers require, while also enabling the business to efficiently and effectively adapt to each customer engagement. The current push to industrialize and define each step of a process can be very useful if all you are going to do is provide straight staircases. This approach will work very well if all every customer wanted was a straight staircase. It starts to have real problems when you try to apply it to circular, elliptical and spiral staircases. These types of customer engagements while having the potential to utilize some industializable aspects of the process normally need to be customized to each specific engagement. The final ingredient to a successful process is ultimately going to be the people using. We need to work at creating the ability within our people to recognize and adapt to each new engagement, to build the appropriate stairs and staircases that our customers want and our businesses need, instead of trying to industrialize a process to the point where all they can do is to try an assemble a predefined set of steps, in the hopes that it will more efficiently meet each new set of business and customer needs.