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When collecting baggage in Brasilia airport, huge windows allow you to see what is going on outside. You can see the aircraft you just disembarked from, and the progress of your bags from plane to baggage belt. Waiting you may be, but no waiting and wondering. Too many companies hide their processes from their customers. For example, Walgreens lock their toothbrushes in a cabinet and provide a button to press so that an employee can come unlock it and you can grab what you want. The problem (apart from the fact that they lock up their toothbrushes) is that when I pressed the button, nothing happened. I waited and waited. I pressed the button again. What was going on? What did the button do? Did it ring a bell? Ring someone’s phone? Turn a light on somewhere? Did anyone hear the bell? See the light? Does the button even work? So I left and bought my toothbrush somewhere else. Exposing processes to customers is good. It helps set expectations around what is happening, and when things are not happening as expected, why that might be. And it means that customers might stick around rather than leave. Article by Paul Adams @ www.thinkoutsidein.com
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Who’s Doing this?
There are some people out there who know this, e.g. Apple, Google, IBM, McDonalds, Coca Cola, AT&T, Marlboro, China Mobile, Disney, Microsoft are starting to see the light too. In fact in 2011, 8 out of the 10 world leading companies are classed as Outside-In, Microsoft have a mixed model so we don’t count them but if we did it would be 9 out of 10. You would think that more people would take notice of this. The problem is there are some people who have made very successful careers on this old industrial age thinking and therefore are not willing to accept that everything has changed and they need to as well. Funny thing is, they will have to change sooner or later, it’s their choice how they change however. A) Go Outside-In. B) Go Bust. Don’t get hung up on the name ‘Outside-In’ lots of people call it different things, and it’s not the name that’s important, it’s the philosophy behind it. How are they doing this? So what do these guys know that I don’t? Let’s look at a few key points to start thinking Outside-In and actually drive significant business improvement even when you have already optimised using traditional techniques. 1) Everything is process. There is not a single thing that happens in a company that is not process. ‘I’m in Marketing, I don’t do process’ that’s a process. ‘I’m in Finance, I don’t do process’ It’s all process and the faster you realise this, the better. 2) The Customer Experience is the Process. Forget about departments, forget about functional specialist silos, when looking at process, treat the customer experience as the process, also redefine where the process starts and finishes, this gives you a whole load more scope than before and opens you up to a whole new world of opportunities. 3) Align all Process to a Successful Customer Outcome (SCO). If you are doing something that does not contribute to customer success most of the time there is no need to be doing it. Figure out what the customer need it and align to this. You will find there are big chunks of process that will disappear overnight. 4) Drive out Points of failure. 'Moments of Truth' happen whenever there is a customer interaction, the less of these the better, they cause work and are the places where things can go wrong, figure out how to ‘Remove or Improve’ these. 'Break Points' are the internal handoffs and interactions, again these cause more work and can start to mess up what’s going on, if the internal work isn’t directly contributing to the SCO get rid of it, why do it? 'Business rules' are the rules that have been put in place to make sure you keep things as they are these usually cause a lot of the internal handoffs and customer interactions and most of the time there is no need for them to be there, ask yourself ‘Why do I have to do it this way?’ and if there isn’t a good enough reason to back up the rule, chuck it out! Looking at things in a different way completely changes how we do business, driving out Points of Failure improves customer experience, and reduces cost, this paired with looking at the customer experience at the process (that gives you more opportunity to make money) will grow your revenue. Achieving these three things simultaneously is known as the Triple Crown and only Outside-in companies can do this because the old Industrial age way of thinking only moves the pain about and improving one (Revenue, Cost or Experience) will directly affect the others in a detrimental way. Innovation by Design In conclusion, thinking this way makes innovation a natural by-product and having an Outside-in company with every one knowing these techniques and philosophy is the only way to foster a culture of innovation throughout a whole organisation. So how do you drive significant business improvement when you have already optimised using traditional techniques? Dump the traditional industrial age ‘classical’ thinking techniques and think Outside-In. The Change
There has been a seismic shift in the world and it has changed beyond belief since 1776: The way we communicate, the way we make music, the way we make television and films, the way we travel, the places we can travel to and technology has changed with this to keep up with our ever evolving demands. The one thing that hasn’t changed is how we do process and how we organize our business. Now I can hear some of you scoffing and remarking ‘Er, yes we have changed how we do process, look at TQM, BPI, BPR, Six Sigma, Lean, BPM…you’re talking rubbish James’ and where as I agree we have changed techniques around process, we have not changed the foundation that they were based on. It’s like we have had a house for a very long time and we keep having more and more kids. We expect the house to be able to handle this so to make living conditions better we decide to keep paining the walls different colours and saying ‘Look guys, its completely different.’ We need to fundamentally evolve how we think to keep up with the massive change that’s happened and wake up to the fact that everything has changed except how to do process and organise ourselves. Lean, Six Sigma and the Glass Ceiling Now let’s look at the traditional ways to drive business improvement. Six Sigma was all the rage and still is the ‘only way to go’ for some process professionals, especially after Jack Welch’s success using this at GE. The thing is, if a big company is in a big mess then Six Sigma will make things look better. It may seem like there has been significant improvement however you will tend to find that the technique will have been applied to one process, or a process in one area and rather than fixing the cause of the problem it will fix the effect. If you fix an effect it will only happen again or move the pain elsewhere as the cause is very much still there. Also listening to ‘The Voice of the Customer’ is a waste of time, we don’t need to provide what they want, we need to provide what they need. We as customers are inept at conveying what we need, it just doesn’t happen. For example I didn’t know I needed an iPhone or an iPad before they were invented…I very much need them now. The easiest way to think about it is if you ask a child what they ‘want’ to eat, imagine the responses you will get. Rather than doing that we figure out what they ‘need’ to eat and provide that, however we don’t translate this ‘want vs. need’ thinking to business. GE’s inside-out thinking is causing them to be overtaken by the smarter Outside-In companies as are Toyota, Toyota in fact have moved from 14th in the world down to 27th in the world in brand value[i] but apparently that doesn’t matter let’s still use their techniques, that’s a smart idea. If we look at Lean we talk about ‘waste’ and how to eliminate it. This is still very much industrial age or ‘classical’thinking. If I was making a table in a factory there would physically be‘waste’ wood to eliminate however in a service, for instance a Mortgage application, the ‘waste’ that is talked about does not physically exist so we are focusing our efforts on an imaginary entity applying manufacturing process techniques to a service company. Ask yourselves now, How much of my work is manufacture? Why do I think about it all‘left to right’ like a production line? Using these techniques you will get improvements, definitely, no doubt whatsoever. However using these techniques you will quickly hit a glass ceiling where you can go no further, definitely, no doubt whatsoever. This is all Inside-Out thinking. There’s every chance you are optimising a process that doesn’t need to be there. You might be doing things right…but are you doing the right things? Part 3 Soon... [i]Millward-Brown Optimor Annual Brand Survey 2011 Part 1
Origins of Traditional Techniques Let me set the scene and take you back to the year 1776 and a small Pin Factory in Scotland and a man you will most likely have heard of: Adam Smith. Adam Smith was a social philosopher and a pioneer of political economy and on the 9th of March, 1776 published the book that has formed how we do business to this day ‘The Wealth of Nations’roughly 4 months before Mozart’s first ever performance of the Haffner Symphony. Adam Smith had gone into this Scottish pin factory and noticed some extraordinary things, one being that the pin factory’s productivity was largely dependent on what employee was in work on any given day. Smith looked deeper into the workings of the pin factory and created what is described as the ‘division of labour’ (and later the subdivision of labour) where individual tasks were clearly defined and each person was assigned and trained up to effectively complete their task. This revolutionized manufacture and production, he increased productivity by 2400% and his book was mentioned in the declaration of independence. The Effect Most of us in business now still follow what was published in ‘The Wealth of Nations’ in 1776. If you think about your organisational structure, what shape are you in? A pyramid, where the CEO is at the top and it rolls down to the guys at the front line, or in the trenches (It’s not a war by the way) This pyramid shape doesn’t physically exist it is an abstract illusion, it is however an abstract illusion that shapes and forms how we do work. Have you ever stopped to wonder where the customer is in your organisational structure? If the customer gets a mention at all they are usually shoved off to the sides and this again creates its own problems, ‘Hey! I’m in operations, look at the chart, the customer is 8 steps away from me in my value chain, I don’t deal with the customer’ The only reason that Mr Operations thinks that he doesn’t deal with the customer is because of the collective abstract illusion created by industrial age thinking being applied in today’s vastly different world. Earlier I mentioned that ‘The Wealth of Nations’ was published 4 months before Mozarts first performance of the Haffner Symphony, look at the comparison. We consider Mozart to be ‘classical’ music but do we consider the ideas born of a Scottish pin factory by Adam Smith in 1776 ‘classical’ thinking? No, not many of us do, and not many of us will for a long time. Put it this way some people didn’t accept that we lived in a Heliocentric universe (the sun being center of our solar system) until 1998. Part 2 soon... |
Outside-In
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