Category Archives: Business

Spy: Small Business Process Improvements Based on Process Benchmarks

I have to admit to being a chronic process observer and critic. Every time I sit in a restaurant, go into a store, arrive at a hotel, go to the doctor or shop online I pay attention to what staff and managers are doing and I judge. Sometimes I am deeply fond of what I see and other times I am vicious in my critique. While I am a little obsessive about all this, there is some virtue in the exercise. As a consultant, it’s important to have had exposure to tactics and process that work especially well in order to make stronger recommendations for clients. It’s also important, working across sectors to develop a mental inventory of what doesn’t work, what can be emulated and what can be tweaked to serve cross-purposes. Frankly, I would hope that anyone aspiring to build a business, product or consultancy in this domain would be doing the same kinds of things.

Spy versus Spy: Lean Innovation

Welcome to the age of transparency, reverse engineering and piracy. Watching the equivalent of So You Think You Can Dance on Indian TV broadcast by satellite last night, my Indian friend quipped: “They copy everything we do”. Reading about the new film Duplicity in the latest issue of Fast Company I am reminded that the “leanest” forms of adaptation are mimicry and emulation. It’s called “evolution” folks.It’s the 100th Monkey Theory in blazing sound and technicolor. In some cases, it’s downright criminal so be careful where you draw the line.

I’m sure by now you’ve heard that the sum total information in the world is doubling every 3-6 months or something like that. Similarly, in an open information age, we have the capacity to observe, re-engineer, implement, measure and observe again at dizzying rates. Knowing that competitors are observing and mimicking us should serve as a catalyst for greater and faster innovation (and ever more patent filings).

How About A Small Business?

Small enterprises can’t afford teams of engineers and analysts that prowl the web and deconstruct rival products the way Toyota and Honda tore into the Saturn. There is no virtue in piracy so what’s a small business to do? Give observation and emulation a try. Watch what others do and then think in terms of business process. What process can you borrow and pilot in your own shop?

Process Benchmarking

A Benchmark is a standard and, for our purposes, the Gold Standard. The Best Practice. I want to advocate for an open process exchange that enables up-and-coming enterprises to learn from the best. This idea may never take root in the private sector but it might in government and non-profit sectors. For example, what can my library learn from the Pentagon? What can a Blood Drive learn from the Census? What can the EPA learn from Green peace?

As a small business owner, I can effectively identify the leader in my market, the highest quality product or the lowest priced competitor and I can start studying how they deliver their products and services. Similarly, I can go to the leader in a totally unrelated field and observe them in action.

Benchmarking

Rivals’ and leaders’ strengths my not be in their products (engineering, materials, quality and performance) alone. You can look for benchmarks in the following areas:

  • Suppliers – supply chain, quality, ethics
  • Human Resources – recruiting, hiring and retention
  • Customer Service – walk-in, online and telephone, service responsiveness policies, dress code, etc
  • Marketing and Sales – packaging, pricing, branding, placement, promotions, sales tactics and pitches
  • Finance – pricing, financing, terms

The point is, identify some leaders, grab a pad of paper and a pen and go observe what they do and HOW they do it. Imagine how you could mimic, emulate or adopt what they do.

Keep it Simple

A final word on simple. While their algorithms are crazy complex and probably cannot ever be emulated, Google stands as the single greatest example of simplicity in customer experience. That simple one-box web page with scarcely 50 words on it – as of today – owns 64.2% of the world wide web’s search activity. They are killing their rivals with simplicity. How can you do the same?

Advertisements

The Leaning of America: How BPM Can Play A Vital Role

I’m not sure what industry you work in but my chosen field – healthcare – has been on the short-list of sectors that are under a microscope AND looking at significant investment (stimulus is such a loaded term these days!). There are others: automobile manufacturers, education, border patrol, banking and finance. I frankly love the position the President has taken. He is asking for accountability and demanding an end to wasteful practices. While it’s still way too early to judge his performance, I believe he will continue to push for efficiency and better throughput and outcomes for our money.

Lean Healthcare

I have worked on all sides of this equation. As a healthcare provider in non-profit, social service, for-profit and government agencies. As a healthcare payer (insurer) in managed care and other insurance models on both the public and private sector sides. Let me assure you, there are mountains of waste to recoup in every corner. I will not suggest that a single-payer system is the answer (though it may be) but I will assert that there are scant examples of healthcare organizations in this country who run truly efficient and high-quality shops. Our system irrefutably, immutably wastes money. Our care costs much more and produces a poorer outcome than that of our global counterparts. Now that we are in a global economy, any country that can keep its workforce healthier than ours at a lower cost has a competitive advantage.

Healthcare is the last industry to “automate the shop floor”. Frankly, it’s ironic. So much information and so many processes can be automated. This country lags far behind other industrialized nations in the adoption of electronic medical records. Today, the New England Journal of Medicine reported that only 1.9% of US hospitals use a fully functioning electronic health record, for instance.

Prior to automation, however, so much can be accomplished using BPM methodologies, particularly as they relate to Lean and aspects of Six Sigma. Anyone who has ever worked in the field can attest to the waste and now, more than ever, we need to work together to eliminate all of the waste we can no longer afford. Healthcare is rapidly approaching 20% of our GDP. That’s not only astronomical, it’s unnecessary.

Wherever you are, whatever you do, whatever your motive, please spread the word and get into action. BPM and Lean methodologies can have a profound impact on the way things are done today so that tomorrow will be cost effective. If you’re not excited about the impact you can have, you should be!

BPM Requires Will & Leadership: Part 2 – The Solution

The Solution: Leadership and Management for the 21st Century

I am suggesting a rather radical approach to the process re-engineering required to pull ourselves and our organizations out of the pits and back into the game. Frankly, it begins with leadership. We have to be led out of the dark places we now inhabit. The problem with leadership is that it is – in business, non-profits and government – totally antithetical to our political system and philosophy. Our democracy is in much better shape than our economy so perhaps there is a lesson in there for us.

Identifying and Appointing Our Leaders

Our business leaders are very rarely elected by virtue of their competence and performance. More often, they are; dictatorships (sole proprietors); family-owned monarchies where the crown is passed to heirs; pseudo meritocracies where high performers are imported by the board from outside the company; or corrupt, criminal gangs that promote the most manipulative con-men from among executive ranks only. I hate to be so cynical but make a list of the organizations you know who hold elections for executive post and share with us. I dare you!

The democratic process is our most cherished accomplishment yet we fail to recognize the irony of its absence in business leadership.

Gary Hamel challenges us in the current issue of Harvard Business Review (February, 2009) to acknowledge and develop 25 modern management practices. It’s a brilliant proposal. Most of the 25 have direct and immediate implications for the future of BPM so I urge you to read the article. Here’s my brief summary for your consideration:

  • Promote interdependence by encouraging the formation of smaller business units that participate in multiple internal as well as external networks
  • Reinvent management at the individual level and provide everyone the data they need (within their small business units) to know how they are performing in real time. Transparency will ensure that only the strong survive. There will be no hiding from the truth when you leverage information.
  • Recast the organization as a social system where leaders are social architects who provide everyone the time, space and resources to collaborate and innovate.
  • Celebrate and harness divergence of ideas and diversity of tactics.
  • Minimize the tendency to recede to the way things have always been done. Recessions are born out of retrenching.
  • Innovation and invention will provide for the variety, selection and deployment required for evolution.
  • Spread the responsibility for strategy and direction throughout the hive, herd or flock. “Buy-in” is a notion that involves a sales job. Aim for participation instead.
  • Democratize information. When leaders hoard information, they are feared instead of trusted.
  • Enable the revolutionaries and measure the number of new ideas people bring to the table. Find your renegades.
  • Promote experimentation and accept small, failed pilots as proof that people are trying to find a new and better way to make your widgets.
  • Include people of all ranks in the engineering of the work they do. Defining one’s work incites a deep sense of ownership and passion.
  • Retrain leaders and managers so they can acquire the tools and practice management in complex ecosystems.

BPM Requires Will and Leadership: Part 1- The Problem

I am writing on board a plane sitting on the tarmac in Denver. I could write a book called “Sitting on the Tarmac in Denver”. On my way East, I was delayed in Denver. On my way back West, I am delayed in Denver. What do the two delays have in common besides Denver? United Airlines. Why is this pertinent to a blog about business process? Failure to learn from the mistakes of our biggest industries dooms our small and mid-sized imitators in the same and other sectors to the same results.

BPM is a practice, discipline and set of tools that will either enhance your organizational health or reinforce your organizational disease. Making mistakes more efficiently is not noble. Automating poor quality is not a virtue.

Assessing your organization’s culture and management mind-set is fundamentally important to the consideration and effect of BPM.

Airlines, with few exceptions, are operating as though it were 1950. Airports are terribly conceived, fleets of planes are aging, personnel are out of touch, their hands tied by draconian policies, and business models are tragically flawed for the 21st century.

The Wall Street Journal has an article on the front page today (March 10, 2009) illustrating the state of the airline industry around the world. The US market is clearly suffering. However, any company that fails to fuel a plane, leaving it and its passengers (their customers) to sit on the tarmac for an extra 90 minutes deserves the terrible financial performance it is encountering. I may sound alarmist and overly cynical but I cannot find much good to say about the industry other than the good I find among its innovators. From a business standpoint, the air travel sector is presently rotten to its core and companies like Southwest and Virgin are scrambling to escape the pull of that core by innovating their way out. I sincerely hope they can outrun (out-fly?) the bloated dinosaurs who share the skies with them. Those who are unwilling to move beyond the drag of 9/11 and fuel prices. Those who cannot stir the imagination and desire of their customers.

The process-oriented problems I have encountered today have included: a plane that couldn’t get to its gate due to another blocking its way while it waited for a paper printout (30 minutes); a gate change of 25 gates’ distance (once I managed to get in the airport) 10 minutes prior to boarding; and a plane that sat unnoticed “all morning” without fuel and – once full of passengers – had to wait an additional 90 minutes for fuel. I also witnessed a flight attendant treat a Spanish-speaking customer in the most condescending manner imaginable. She should have been fired on the spot.

This is in contrast to the personable service I got from Yellow Cab in Kansas City (thanks Mohamed and the kind lady on the other end of the phone who took care of me at 1:00am) and the delightful – make that incredible – service I received in the Embassy Suites hotel in Kansas City at 1:30am (why so late? Ask United Airlines and the Denver airport).

I believe firmly that “necessity is the mother of invention” and some people understand that while others do not. Anyone watching the news knows that we are in the midst of an economic crisis of galactic proportions. How could anyone accept sub-par performance from themselves and their peers while all of this is unfolding? I am stupefied. Several questions plague me (and all of them have BPM implications):

  • What prevents a company or an organization of any stripe from understanding something as basic as their survival?
  • How can a company become so oblivious and self-centered as to NOT notice they are going down the drain (especially those who have gobs of performance data)?
  • Do they notice and just fail to act?
  • Is greed the only explanation? I don’t think so.
  • Is it stupidity? I don’t think it’s that either.
  • What would you have to have on your mind – consuming you, distracting you and deluding you – in order to fail in every aspect of critical change management or innovation?
  • What kind of dynamics have to be in place in order for complacency to set in for decades, retarding giant organizations to the extent that they can no longer be viable business interests?
  • Does it all boil down to consumer confidence, sentiment and lay-offs? I don’t buy that. This industry has been in trouble for a long time.
  • How can some organizations provide such obvious examples of innovation, profitability and customer service – in such plain sight to facilitate emulation – while others remain ignorant or thoroughly resistant to change?

I am picking on United today but it could just as easily be the banks who have taken us “over the cliff” with them, the US automakers who resisted change for 30 years (remember, the first energy crisis was in the early 1970s), and the health maintenance organizations (HMOs) who are now panicking because the President is locking up their Medicare cash-cow. The same can be said of our school systems and our healthcare institutions.

Mismanagement

Decades of stagnant management and something akin to the “collective unconscious” are wreaking havoc on us. While white-collar criminals are running our brightest and most successful companies and institutions into the ground, their shareholders, board members, suppliers, partners, employees and customers are all gleefully applauding the nose-dive, complicit in the disaster about to drop on to our own heads.

Perhaps this is the painful death of the old and the excruciating birth of the new. I hope so. I pray we’ve hit bottom. Watching the likes of Bank of America and AIG burn through billions is a lot like watching a heroin addict shoot up until he “hits bottom”.  Are we all part of the problem?

Building The Business Case For Process-Enhanced, Information-Rich Customer Service

We all need to revitalize our customer service, relationships with customers and motivate new levels of consumer confidence. That’s our job as business leaders and small business owners. Business is not a spectator sport. It is a high-speed art and science. Business Process Management offers a special opportunity to raise your customer’s experience to new heights. What I am about to suggest is not singularly going to turn things around for you but it is one thing you can do quickly. The more “mature” your organization is in its BPM development, the easier it ought to be to deploy. What I am talking about is not new. The credit probably goes to FedEx. It’s a standard in the minds of consumers and rightly so.

Take Me Through The Process

I am referring to the manner in which UPS and FedEx have incorporated tracking into every shipment. Information regarding my package can be as important to me as the package itself. Frankly, it’s common for me to feel more importantly about something arriving than is the something. For instance, the first time I used a web-based florist (flowers.com) to send my mother flowers, it was far more important that the flowers arrive on time. I was tickled to know the flowers got there and I never even saw the flowers! The same is true with my online banking. It has to perform flawlessly and reassure me that my mortgage got paid on time. I love my bank for the knowledge that my bill got paid. Every day, I get updates from my bank in my email. I am kept apprised constantly.

Information Is Service

As a customer, information concerning by business interactions is extremely important. By telling me when my dinner will be served in a restaurant, my server is allowing me to judge how long I can take discussing a proposal at the table with a client. When my Lexus dealership’s service center calls to tell me when a part will be in, I can better manage my travel schedule. When United Airlines sends email alerts that flight times have changed my kids’ flight 30 days in advance, I can rest assured that they will be safe and know where they’re supposed to be.

What’s In Your Process?

What information is embedded in your process that would add value to your customers’ lives? If a customer triggers an order, can you tell them where their order stands minutes, days and weeks later? If a decision has been made in process, how quickly and clearly do you notify them? If you must abide by certain rules in the disposition of their interaction with you, do you let them know what rule it is you are referring to? Refer to common BPM metrics (standardized in your industry) for more ideas or ask your competitors what they measure!

What Not To Do

My local hospital’s urgent outpatient unit (open for walk-in visits on weekends) treated me several months ago (May 2008). I paid the same co-pay I have for two years and went home with a prescription for an antibiotic. Very routine. HOWEVER, they failed to mention that they no longer contract with my insurer. My claim was denied by my insurer (naturally) so the hospital sent the unpaid portion of my bill to a collections agency. Said agency calls me and can’t tell me why my claim was denied. They didn’t have that information. I just owed them $113 or I could expect my credit score to take a big hit.

The story here is not the money and it is not the abysmal performance of our local hospital. The story is in the lost opportunity to manage information and contain a customer experience. I regularly refer everyone I know to their competitor.

Customer Service: Seize The Data

Look deep inside, walk through your own processes and find the valuable data. Talk to your customers (really talk to them!) and ask them what they’d like to know and why. This is basic but so few businesses actually take the time to do it. Information is relatively inexpensive so stop being so stingy! If you want my confidence, you will earn it with useful, accurate and timely information. And – by the way – I will tell you what is useful, meaningful, valuable information. I am, after all, the customer.

Economy Prods Business To Recognize Necessity Is Mother Of Invention And BPM Is Her First Born

There are some fabulous examples of companies who get it. “It” is the urgent and important need to do things differently. It’s so simple, in fact, that it trips otherwise smart people up and is sending more businesses of all shapes and sizes to the brink. Simplicity is so elusive.  We crave complexity – particularly in our work – so we can show off our unique skills and maintain our competitive advantage as individuals. That lust for complexity, individual notoriety and competition among our own ranks is what is killing us off, my friends. Striving for simple and cooperative when conditions are such as they are is what saves us. Your competition is out there, not in here. Your customer wants your product, not you. Your price comes down and your quality goes up when you get simple. You get simple when you learn to manage your business process with the right intentions, motivations and vision.

Learn From Example

The very best example I have seen this year is that of Hyundai. Not only are they making a far better product than in the past, they have applied process innovation to their marketing and sales strategy at a time when every other major car manufacturer is bailing out. The adage that you can leverage economic crisis to your advantage with marketing and sales is true. They have stepped up sales to rental agencies, launched a new advertising campaign and re-engineered their financing allowing customers to return financed cars they can no longer afford without any penalties and without any credit score blemish. I was floored when I read about it in Business Week magazine (February 23, 2009).

What If?

What Hyundai has done – and what many other companies out there are doing – is successfully asked “what if?” The rules are changing in very big ways and you need to change and innovate just as quickly (if not faster). Hanging on to old notions of how things are done (the very essence of BPM’s mission is to slay that kind of thinking) is what will drag you down. Your business cannot outlast transformed environmental conditions. These economic conditions, this climate is having the same chilling effect on Circuit City (RIP) as the last ice age had on the sabre-toothed tiger. A once feared creature that refuses to adapt will soon die. Look around and ask “what if” until you find an adaptation you can build consensus around. Then overcome your fears and resistance and act. Take the bold step Hyundai took with their financing terms. Do something “unheard of”.

Business Process Management (BPM) Core to Business Models Capable of Succeeding in this Economy

Reading the newspaper or watching TV news lately is an exercise in developing a blistering case of depression or anxiety or both. At the close of business this week we learned about record numbers of unemployment claims as well as lay-offs at Kodak, Ford, Starbucks, Caterpillar and Home Depot. Nearly twice as many people are unemployed today as were 12 months ago. The Dow dropped more than 8% this week and new home sales dropped almost 15% in December to their lowest point ever. How can anyone envision improved business prospects in this climate?

There’s Hope!

You can find examples of success if you look in the right places, folks. While the International Air Transport Association was reporting record losses for airlines this past year, they (in a January 30 USA Today story) acknowledged that “the only major carrier to report a profit in 2008 was Dallas-based discount giant Southwest Airlines.” Another story this week confirmed that while retailers continue to count the change in their pockets (and Circuit City says good-bye), this side-bar managed a small mention: “Citing its best holiday season ever, Amazon.com reported 4th quarter profits of $225M. The retailer said revenue rose 18% to $6.7 billion exceeding analysts estimates.”

This is Still an Economy After All

Those of us who remain in business must remember that we are in business. This is not family and it is not a social event. Nothing is certain in business and it is rich with risk and speculation. We are involved in developing and continuously massaging business models and business plans. If ever there was a bell weather event demanding BPM, this recession is it.  I have heard people tell me (this week!) that they do not want to “lose the art” involved in how they conduct themselves and execute their core processes. They “prefer the judgment and reflection involved in making choices as to how to proceed” and want to “preserve that unique and individualized process”…while they go out of business!

BPM is not and should not be about hard-coding anything. Rather, it enables you to design work and process that can more easily be tweaked and simulated to suit conditions assuming you stay on top of both the conditions and the process. This is active, dynamic and organic stuff.

Several people have commented that Southwest, Amazon, Wal-Mart and Costco are thriving right now because they have a different business model than their competitors. I want to suggest that that is the point. It is past time for all of us to question our business model and challenge (aggressively) our enshrined assumptions concerning the way we do business.  Each of these companies challenged their entire industry and introduced unparalleled and disruptive innovation.

When, in healthcare for instance, professionals wonder why their patients seek health education online at WebMD rather than making an appointment, someone is evidently not paying attention.  1,000,000 medical tourists will take their hard-earned money to Thailand, India and Mexico for that hip replacement. Wal-Mart sells prescriptions for $4 and Minute Clinics are popping up in malls and grocery stores by the hundreds. Times have changed so it’s best to invest in change.

Innovate or Die?

Most of us can find plenty of evidence for what it is our customers and prospects don’t want to buy. How many of us are working as hard as we can to discover what it is they do want to buy? How many of us are innovating our business processes so that we can drive a new business model in a new business and economic environment? Using BPM to bring a visual/graphic dimension to what you do and how you do it will allow you to unlock the “Special Sauce” potential in your business. Until you can look into the core of your business machinations, you lack the perspective to see how it is that you can discover quality and efficiency gains while incorporating the voice of your customer in the process.

Some people argue with the “Innovate or Die” adage. Ok. Try this: Adapt to rapidly changing conditions by changing your business model (customer value proposition, resource mix, processes, financial formula). Choose your market carefully and sell what your customers want to buy at a price they can afford.

Remember: there are still many trillions of dollars in the economy! What can you do to tap into that? How can BPM support your mission?