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?

Airlines Offer Excellent Example Of Importance Of Business Process

I’ve picked on them before and I am going to do it again. It’s just too easy. From time to time, I have to fly American Airlines and every time, my experience is abysmal. This past Sunday was no exception.  Flying out to a national healthcare conference, leaving from Southern California to arrive (with any luck) in Texas was a hopeful and optimistic experiment. Sadly, my worst fears were realized. My worst case scenario, it happens, plays itself out on a large scale for this company with great regularity. They have earned this Dunce Cap.

How Does Southwest Do It? What Makes Them So Good???

USA Today reported (Monday April 6, 2009) that most airlines performed better in the past 12 months. Consumer complaints to the Department of Transportation were down approximately 20%. Southwest Airlines had the very best performance based on consumer complaints with only 0.25 complaints per 100,000 passengers. One important measure – delays – showed, however, that American Airlines had the worst performance among 17 airlines measured with only 69.8% of flights on time.

What Role Do Employees Play?

American Airlines, in a related story, is unable to conduct talks with its unions. No agreements in the past year. USA Today reports that American Airlines’ pilots union has said its members will disrupt (delay) flights to pressure the company until they get a contract. Their bag handlers and mechanics have launched an ad campaign ridiculing American Airlines executive bonuses! Their own VP of HR states: “No one in the industry believes airlines are in a position of financial strength.” What is going on here?!

If you’re not in a position of financial strength, American Airlines, don’t pay out executive bonuses so obscene that your bag handlers(!) are provoked to run ads nationally. If you’re scoring lowest in terms of flight times, negotiate new contracts with your pilots (AA is the only airline NOT to have done so since 9/11).

Bringing all of this back around to the personal level, my flight out was delayed by 90 minutes on the tarmac at the gate. Why? “Ladies and gentlemen, we’re delayed because the crew landing this plane on the previous flight noticed a mechanical problem so we’re waiting for a mechanic and can’t find one.” They knew about the issue BEFORE loading us into the plane, had no mechanic in sight and boarded us anyway. My flight to Dallas ended with 30 minutes on the tarmac while they waited for an open gate. Arriving at my final destination (2 hours late) we waited at the gate 30 more minutes while they tried to find (!) someone who could open the door(!) and hook us up to the jet-way. No crew to be found for literally 30 minutes. This is a mockery of the way a business should be run. Is it any wonder the lead story in USA Today the following morning blasted this joke of an airline? I think not.

What does this have to do with you?

If you run a business or operational area and have anything to learn from this series of blunders, by all means, please apply the lessons. Lessons learned include:

  1. Apply BPM to produce superior customer experience
  2. Be on time – eliminate time wasting steps and take a “zero tolerance” stance
  3. Score high in consumer ratings
  4. Get good press
  5. Perform well and pay people appropriately
  6. Learn from your competitor – especially when it’s Southwest Airlines (King of Process Innovation among airlines)
  7. If a product needs mechanical work, take care of it before involving your customer
  8. If you suck, make sure you make amends with your customers
  9. Don’t pay big bonuses if your performance is in the toilet

Seriously folks, apply what you learn from others’ mistakes. Bring those lessons into your shop and apply them before you become your own achilles heel.

Business Process Re-Engineering: The Enemy of Inertia, Waste and Consensus Complacency

Working with several governmental and non-profit agencies recently, I noticed a pattern emerging that is at once counter-productive and based entirely in fear. What I used to think of as intellectual sloth is giving way to wasteful complacency and what I choose to call a “consensus trance” resulting from fear of losing one’s job and identity. Who would have ever thought the BPM field would awaken so many strange psycho-social bedfellows?

Snap out of it!

I find that the best response to this trance is a tactic long employed by carnival hypnotists: snap people out of it. As an outside consultant, I have a responsibility to identify waste and recommend alternatives and solutions. In order to pull that off in an atmosphere of fear and economic uncertainty, I am resorting to a heightened assertiveness, directness and tough love. I have to point out that it is not simply a matter of process but a matter of organizational dynamics causing my clients pain. Morale is taking a direct hit as it often does when people aren’t performing in ways they know they could (given the opportunity) however, coddling people and enabling even sicker patterns to take root is not the answer.

“Will” the change you want to see in your organization

I am encouraging (if not demanding) that mid-level people and directors seek out more definitive executive sponsorship and greater political will power to enforce change initiatives. Slowly, it’s working. I am documenting decisions like never before so that I can hold people accountable. I am measuring project status at every turn. I am amending contracts wherever possible. None of this is fun but it is all so necessary. If you haven’t already done so, push hard on your Project Charter and Executive Sponsor. Then push even harder on Project Management and then hold people accountable with actual consequences.

Failure is not the end of the world

If your project fails, your process re-engineering efforts produce the wrong outcome, or people on your team fail to meet expectations, act accordingly and appropriately and move on. Dwelling on the fall-out right now will not help anyone. What we need is will, speed, and efficacy.

Let me know what works!

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.