Tag Archives: corporate cost reductions

Trust – Your Obstacle to Increased Revenue and Lower Costs

I have often talked about the zero-sum game in my articles and blog.  The belief that good service costs more and cancels out any benefit.  “Customers”, they say, “should not be trusted or they will screw us out of every penny.”  If your organization thinks this way it can become a self-fulfilling prophecy.

In fact, service organizations strike the first blow with poor and cumbersome service.  A customer having to wait on hold, navigate an IVR, and gets transferred around to different agents is bad enough.  If it only ended there, customers have to arm wrestle with technologically hand-cuffed agents that are scripted like robots.  All this costs money but management thinks it less costly then giving customers “what matters” to them.

Trust has to be built into what we do.  Starting with enabled agent that can actually help the customer.  How absurd would that be?  Customers that get good service not only cost less, but they bring more customers.  Good service is a diamond in the rough and giving it to customers attracts more customers.

Customers already trust you by giving you their business.  It just costs less to deliver it when trust us present.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Read his column at Quality Digest and his articles for CustomermanagementIQ.com. Reach him on Twitter atwww.twitter.com/TriBabbittor LinkedIn atwww.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin

The New Shell Game in Service

The advent of technology has enabled work to be spread around the world.  Try finding who actually does the work once it reaches an electronic mailbox and you are sure to need to hire a detective.

Service organizations have designed front offices that actually can’t do anything but pass the work to the back office.  And some times either the front office and/or back office are outsourced to a country with cheaper labor.  This is allowed only because we have technology to pass things around the world.

As a customer, I get frustrated with talking to contact centers that have been outsourced and off-shored.  Yes, sometimes I can’t understand the agent, but that isn’t the reason for my ire.  The problem is they can’t help me when I get to them.  They read scripts and are polite, but they can’t help me.

The sad thing is I run into the problem when the agent hasn’t been off-shored.  This has long led me to believe that the design is the problem whether outsourced or not.  Consumers are frustrated with IVRs to navigate, scripts to overcome, and back offices hidden away with the people that can actually help me buy or solve my problem.

Many companies have programs for off-shored companies to teach language skills to their employees.  But no one is addressing the real problem of the design of the work.  The result is predictable demand from customers that are caused by a failure to do something or do something right for a customer (failure demand).  Or worse, the customer never calls back . . . and you can’t measure loss of business.  The reality is that if you have large amounts of failure demand, you have a large loss of potential and existing business – word gets around.

Too many service organizations take the attitude that it is costly to actually answer a phone call with a human that can absorb the variety service customers bring.  And to design work that actually allows a customer to get an answer one-stop would have the organization drowning in red ink.

The management paradox is that nothing could be further from the truth.  Good service always costs less than bad service . . . by a lot!  Designing out failure demand and creating value for customers is what creates profit.  There is no profit without customers.

Service organizations have created a maze for customers to navigate thinking that this is good business.  For customers, it is a shell game from an unscrupulous street vendor determined on hiding the pea.  This is a lose-lose for both service provider and customer.

Join me for the International Deming Conference in New York City on March 21 – 22.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Read his articles at Quality Digest and his column for CustomermanagementIQ.com  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin

Technology Overload – When Common Sense Fails Us

I love it when talking to groups when someone says “well, this just common sense.”  I often wonder about the paradox this presents because if it (what ever “it” is) was so logical why aren’t we already doing it?  Does this mean that we were then doing some activity we knew wasn’t common sense on purpose?

Cost overruns in technology projects have led information technology departments and companies to add to costs to implementing technology and somehow manage to charge customers for the privilege.  When IT projects first started to miss target dates and budgets we got project managers, business analysts, scoping, business requirements, etc. to help manage costs.  The reality is these things added to costs and customers get less value work done.

Customers now have the added benefit of paying for a “good IT project manager” to see a project through.  This project manager mostly harasses the developers for dates of completion, disrupts the flow, and the customer pays.  I am often shocked when an IT project is completed and the software doesn’t work, scope was managed over value, but the customer says you managed that project well.  I have to believe this is because of the face-to-face relationship between the project manager and customer, easy to blame the operations people on the customer side and the developers on the IT side.

The problem really is all the buffers we have created in IT to keep the developers (the ones who can create value) and users (the ones that understand the problem or need) separated.  We here things like we are trying to keep the costs down and have a less expensive resource interpret the requirements and the expensive resource (developer) can code.  Except for those multitude of calls back and forth for clarifications that the developer has to do to get information that will help them.

So, by developing plans with robust dates to be sure that costs and schedules aren’t missed.  The problem winds up being that IT customers get less for what they pay in information technology for all the Gantt charts and business requirements.  Common sense has left us.

Leave me a comment. . . share your opinion!  Click on comments below.

Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

Share This:
facebooktwitterlinkedin

Turning Service Information into Knowledge

The massive amounts of data that are being spewed out by IT systems has created whole fields of business analytics and business intelligence for executives to make decisions.  Better data, mined data, etc. is a call to make useful. what is not.

To turn information into knowledge we need three things:

  1. Customer Measures
  2. Context
  3. Data (and a way to interpret it)

Context is knowing what is happening in you system that gives us a clue in why our system operates the way that it does.  Getting an understanding of the “what and why” of current performance (performing “check using the 95 Method).   To do this you have to go to the work at the points of transaction and get knowledge on what the customer purpose is (or what matters to customers). 

What ever you do, don’t rely on reports or computer generated data.  They have no context to help you learn what you need to get knowledge.

Armed with customer purpose, the next step is to derive customer measures from this purpose.  A good example of this can be seen in Getting the Benefits

Measures focused on the customer get rid of all the functional measures and in-fighting that happens.  Financial measures are lagging in nature and customer measures can drive value for customers, and therefore, profit or for government management – reduced spending.  This presents a management paradox in business improvement or cost reduction.

I have long been a proponent of  using SPC (statistical process control) and have a post that is one of my most read posts – Service Metrics: What You Need to Understand.  I won’t belabor the point except to say if you are not charting data, you stand to tamper (make wrong decisions) on data.

So there you have it, a systems thinking approach to getting knowledge.  Becuase information just isn’t good enough.

Leave me a comment. . . share your opinion!  Click on comments below.

Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Tripp Babbitt is a columist (Quality Digest and IQPC), speaker, and consultant to private and public service industry.

Share This:
facebooktwitterlinkedin

The Difference of Measures in Management

Executives can tell you a lot about financial data . . . and why not they manage by these measures.  ROI, expenses, debt-equity ratios, revenue all play crucial roles in the decision-making process of command and control organizations.  However, managers saddled with these measures are limiting their ability to improve and innovate.

Financial measures are a type of results measures.  They are measures that tell us how we are doing, but not what to do to make them better. 

“Focusing on results is like driving your car by looking in the rear view mirror.” – Myron Tribus

Yet, this is the way managers manage.  Fish have to swim and birds have to fly. 

None of these measures of results will improve an organization.  Adding targets to these measures just adds more dysfunctional management behavior that spirals the organization downward.  Traditional (command and control) organizations budget and plan around these results measures hoping that they will achieve the targets set forth.

But like scoreboard in a football game it tells us little more than the result.  The blocking and tackling is what makes the result possible.  And so it is with business and governments that improvement comes from leading measures, not lagging (results) measures.

Many in management believe that they can functionally breakdown results measures by department or unit.  KPIs are born with their accompanying target.  This, however, is not reflective of measures that matter.

IN working in the systems thinking world, the only measures that I have found that matter are those associated to customer purpose (or what matters to customers).  These measures are measures to achieve business improvement and corporate cost reduction.  The only way to get these measures is to get knowledge by going to the points of transaction (where customers interact with the organization).

For service these are measures of one-stop capability, end-to-end times from a customer perspective (and not the internal functional ones), failure demand, etc.  These measures focus the organization on what drives all the other results measures as they create value in the eyes of the customer.

Knowing what these measures are helps to identify new ways to improve them by experimenting with method.  Experimentation with method leads to redesign and innovation.

The difference between measure of results and measures of customer purpose are monumental.  We could build a WalMart between them.  Keep the results measures, but build the customer measures and soon the results will take care of themselves.

Leave me a comment. . . share your opinion!  Click on comments below.

Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Tripp Babbitt is a columist (Quality Digest and IQPC), speaker, and consultant to private and public service industry.

Share This:
facebooktwitterlinkedin

The Selfish Service Organization

An argument for the ages and I have had it on Twitter, Linked-In, my seminars and many other places.  The argument starts with “what is more important revenue or serving the customer?”  It is inconceivable that an argument exists on this subject, but it does.

I want to be clear that without a customer there is no revenue (or profit for that matter).  This is not up for debate . . . the subject is moot.

How did we get here?  How could this even be argued?  We have been brain-washed by MBAs and business classes that teach us that maximizing shareholder wealth is our aim.

This is why we have such dysfunction especially in the American public and private sector.  We talk of cutting costs, increasing output, raising revenue, balancing the budgets and other financial or productivity oriented non-sense that makes service worse AND increases costs.

And so it is with service organizations (private and public).  The management paradox that productivity and financial targets and measures makes things worse.  These are lagging measures,  they are the result of creating value for a customer.

Those financial and productivity measures mean little.  The real measures are measures of things that matter to the customer.  Too bad service organizations are too busy paying attention to costs and revenue that they never get this perspective.

The customer perspective and understanding what matters to them is what we are here to do.  Creating an experience that delights customers is more important than driving looking out the rear-view mirror (W. Edwards Deming).  And believe me management needs perspective.

There is another element that a wrong focus leads to and that is selfishness.  Executives with the power to change things focus attention on lagging measures . . . this is an internal focus.  What do I get for hitting my numbers?  Bonuses, rewards something for me me me. 

So if you want to be selfless how about serving the customer for a change.  Focus on their needs, what they want in service.  Not what costs to slash or revenue to chase that compromises the customer relationship where customers say “they’re just in it for the money . . . they don’t care about me.”

Here is the real paradox you need to deal with in service:

Improved service reduces costs and improves revenue.

Now that is a reward.  Doing right by the customer by designing the service system for them and not to them will increase profits.

Leave me a comment. . . share your opinion!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin

Forms of “Copying” that Lose You Money

Process and data modeling
Image via Wikipedia

I mean seriously, what organization or government wouldn’t want to copy what another is having success with in the marketplace.  It is the right thing to do and after all . . . everybody does it.  This has to be right approach.

The problem is, it is not the right approach.  Yet we are inundated with those that advocate and perpetuate things like tools, benchmarking and best practices.  All are forms of copying and can get your organization to lose grown quickly.

Systems thinking begins with understanding that no two systems are alike.  The translation is that all organizations are different.  Think about it, different people, different customer demands, different processes, different technology and the list goes on.

So why is it that consultants, technology companies and others always want to copy?  Usually because they weren’t the ones that came up with the method, but anyone can copy.  This approach doesn’t teach people in organizations how to develop new methods and what I find with tools is no one seems to be discovering new ones.

And so it goes with systems thinking, we teach that all organizations are different.  Three good questions to ask before copying: Who invented the tool? What problem were they trying to solve? Do I have that problem?  In service industry this is constantly abused by lean practitioners as they apply lean manufacturing tools to service (never a good idea to blindly apply).

As for best practices, the issue is that this is usually applied by software development firms that want to sell the standard software package.  There is no “one best way” and this approach totally discounts that there is always a better way.  I start to hear things like “everyone uses an IVR” (Interactive Voice Response) for their call center and you should have one too.

No, you shouldn’t and other blog posts will tell you why.  It is to assume that this will make things better and we know that assumptions are bad to make.  This is true especially when dealing with systems as complex as service organizations.

Organizations spend a pretty penny benchmarking against each other to compare, what a waste of resources.  It is difficult enough to compare (and expensive), but in comparing to a different organization in the same industry we ignore the fact that all organizations are different.  So save your money and invest in your own organization.  The truth is every organization has what it needs within it to improve.

Another reason for not copying is that you will never catch up.  Manufacturers for years have been trying to “catch-up” to Japanese Manufacturers.  The problem with this approach is that you never catch-up, unless of course you are Toyota that has left the door wide open.  The Toyota problem is copying the US investment community and has left Toyota with the same short-term thinking that has infected the US for so long.

For me, it is the thinkng that develops good ideas to improve systems.  To improve performance we have to change our systems (and no this is not just processes), we have to change our thinking about the design and management of work.  No copying in the form of tools and best practices, but the mindset to create the improvement.

Leave me a comment. . . share your opinion!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Enhanced by Zemanta
Share This:
facebooktwitterlinkedin

The End of Planning for a Change

Planning
By now, some plans for 2010 have been made.  Or may be in the throes of debate, conjecture or finalization. It has become a staple for service organizations to plan, and execute to the plan with milestones, schedules, cost-benefit analysis and deliverables.

Would it be so bizarre to skip this step?  How much time is eaten up by this exercise?  Does it bare fruit?

We would be much better off without the command and control, top-down style of management that planning promotes.  The plans are almost always made without knowledge of the work they are planning.  Conversations in planning meetings usually surround budgets and revenue is fore-casted with stretch goals and worse-case scenarios based on nothing more than a guess or BHAGS (Big Hairy Audacious Goals).  What a crock!

A return to sanity for those looking to get ahead of the behemoth service organizations that usually adopt this type of planning.  How about getting knowledge and taking action based on that knowledge for a change?  I have found this to be a better process for those wanting to achieve corporate cost reductions.

This planning change leads to decisions made based-on knowledge rather than opinion.  Executives and managers going to the work to understand customer demands on their service organization.  With this knowledge the service organization will develop measures related to customer purpose different than the top-down, financial-driven measures usually accumulated.

Armed with knowledge of customer purpose, demand and measures, a service organization can gain innovation leadership and new insights to improve value.  Increased value drives more business in from customers with less marketing and less expense.  The management paradox being that eliminating planning reduces all the expense associated with it (and that is quite a lot).

Things are changing rapidly in this economy and those left with old mindsets will be gone in a few years.  New thinking is upon us to bring more value for customers, profit and competitiveness.  Are you ready to change the way you plan?

Leave me a comment. . . what do you think?!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin

Lesson: Technology Couldn't Save GM and Won't Save Service

With all the advancements in US technology shouldn’t GM, Ford and Chrysler just been kicking the daylights out of all the competition? What lessons can we glean from GM, that at one point owned EDS.  GM had all the latest in software and hardware.  I am not here to dispute there were or weren’t other factors at work that caused GM to fail.  But let’s own the fact that the US technology advantage didn’t make a difference here and won’t for service either.

With regards to GM, I have read on more than one occasion how Toyota (the nemesis of the Big 3) actually saw more failures in technology and pulled them out in favor of manual processes (from The Toyota Way by Jeffrery K. Liker).  WOW . . . that’s an eye-opener try selling technology around that philosophy.  Toyota was always behind the Big 3 in technology, because they understood that it wasn’t an advantage and in most cases a waste in resources.

It’s been a long-time since I have worked in manufacturing, which seems to be dying in the US like a dinosaur.  I have learned over the years that in working with service organizations they are in a frenzy to find the latest technology to give them (gulp) . . . a competitive advantage.  It’s like the “fountain of youth” do you really want to spend millions on something that can’t deliver?

Let’s face it . . . IBM, HP and a host of other companies are making tons of money showing lots to their bottom line.  The promise of technology just doesn’t live up to the hype.  They certainly have lots of money for advertising and boondoggles (conventions, advisory board meetings, etc.). They make you feel good, but fall short of making your service organization better.

A better technology change management program is at hand, a systems thinking approach.  Let’s take a page from Toyota and first improve processes without technology or consider technology as a constraint.  Then pull technology if it will enable the work to be performed better.  Service organizations will achieve corporate cost reductions on from not trying to automate work that is better off being done manually.  Something you will not hear from your technology vendor.

Service organizations have an opportunity to learn from both GM and Toyota.  Which would you rather be right now, GM or Toyota?

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

Share This:
facebooktwitterlinkedin

Lean Manufacturing is Not for Service Organizations

One thing I have learned is that that tools of manufacturing do not transfer very well to service organizations.  Personally, I have always started with concepts and principles before tools, but command and control thinkers want the quick fix . . . so to the tool kit we go to for immediate results.  The problem is that there are differences between service and manufacturing.  With more and more lean manufacturing people moving to service they don’t distinguish the difference.

So let’s establish the one big difference and it is in variety of demand.  The lean manufacturing folks love to start with 5S.  A tool that is used to provide a standard workplace environment, establishing standard work and the removal of waste.  The philosophy is comprised of order, organization, discipline, elimination of bad habits and wasted effort.  This leads to the standardization of work, wholly the wrong place to begin in service because of the variety of demand that customers bring to service organizations.  This creates failure demand when the standard process is unable to absorb the variety of demand that customers bring.  Command and control thinking managers love standardization because this allows them (typically) to blame the worker for the non-standard events, plus this allows them to do planning and resource management unaware of the need to separate the planning and operation management.

Requirements for workers to meet standard times and work measures known as targets give us plenty of examples for this misconception.  Dr. W. Edwards Deming showed us how to deal with variation and stood against the targets promoted by lean activities.  An understanding of variation is in order to avoid tampering with the systems they work in.  Unfortunately, this leads to increased costs and a drop in customer satisfaction that is a spiral adding more costs and decreased service to customers as the system becomes more burdened with command and control decisions.

Business process improvement and corporate cost reduction in service industry is best done without the influence of Lean or Lean Six Sigma manufacturing tools.  They miss the point of variety in demand in service industry and lock in costs with their standardization activities.  There is a better way.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

Share This:
facebooktwitterlinkedin