Tag Archives: sales

Smart Business Process: Wal-Mart Proves (Again) That Reducing Costs & Adding Customer Value Leads to Profits

Wal-Mart aired its latest performance data today and revealed that, despite the recession, they have maintained profitability. Shining a light on Wal-Mart is kind of silly given that virtually no other organization in the world (and most countries, for that matter) are in the same league.  The point is that we can all learn from their lessons. The lessons this week are absolutely central to the argument for  smarter business process management. Wal-Mart applied several elegant tactics with what appears to be precision execution. Firstly, they reduced their inventory which contributed to the goal of reducing costs by 6%. Secondly, they recognized that their customers are facing deep income cuts of their own and identified which product discounts would be perceived as most helpful. They leveraged their world-class inventory data to identify specific products and discounted prices considerably. The result was an influx of new customers who compensated for lower sales per customer thereby producing profits that exceeded everyone’s expectations.

Lessons Learned – What Small Business, Non-profits and Governmental Organizations Can Take-Away From Wal-Mart (without stealing)

In the spirit of keeping it simple, the following lessons can be brought home to your organization:

  1. Visualize, illustrate and understand your supply-chain
  2. Negotiate discounts with your suppliers
  3. Reduce your inventory and reduce inventory costs
  4. Ask your customers what they believe will add value to their lives and modify your offering to reflect that demand…now
  5. Let your prospects and customers know that you have satisfied their demands – promote yourself effectively
  6. Establish clear and specific performance expectations including those for positive financial results
  7. Measure and report results openly (even the bad news)

It doesn’t matter how big or small you are and it is frankly irrelevant which industry you hail from…you can apply all of these lessons and tactics. I have done so in commercial for-profit enterprises, governmental programs as well as in non-profit settings.

BPM – whether it is enabled by software or not – is key to each and every one of these tactics.

  • If you cannot “see” your supply chain;
  • if you cannot model how you will reduce inventory;
  • if you cannot illustrate how you will engage and interact with customers to understand where and how you can create value in your value-stream;
  • if you cannot develop a straightforward mechanism for gathering, measuring and reporting performance data, then you will find managing your business very difficult compared to those who can.

The best strategy and the best intentions will be trumped by lousy, inefficient and absent business processes. Between you and me – when I run across reasonably successful organizations that lack identifiable and manageable business process and controls, I know they are successful quite by accident. Ignorance in managing organizations and performance is not bliss.

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Business Process Data: On Dashboards and Windshields

Reading about IBM’s “Stream Computing” in Business Week magazine this week, I am reminded of a time in a meeting several years ago when I groaned: “I don’t want a better dashboard; I want a cleaner windshield. I want to know what’s coming and a dashboard can’t tell me that. Those are lagging indicators.  At best, a dashboard tells me what I have done in the recent past. I want to know what my suppliers and customers are doing as they approach…before they get here.”

On My Windshield

I never did get my Windshield. Today, we’re lucky if we have a dashboard. It would  put many of us in a small minority if we could have near-real-time indicators of what just happened  on our desk-tops. From a business process management perspective, how would life be if I could see changes in my supply chain before they affect me? If I could see my suppliers’ dashboards, would that be enough to give me an idea of what I could expect?  If, instead of relying on marketing, I relied on interoperable business data between my company and my customers, could I see their demand before they pick up the phone and place an order? That information would help me in innumerable ways.I suspect very large companies can afford supply-chain and distribution information management and reporting but what is a mid and small sized organization to do?

Is it possible that my contracts with suppliers and customers might involve strategic dashboard exchange? Of course  it is. In a business-to-business relationship, my clients might even think they were doing business with a pretty smart guy if they knew I needed to know something about their data prior to them needing to know they need me. I bet they would be happy to give me that information in small packets called “Bugs”. Throughout the day, “bugs” would hit my “windshield” and I would know what’s coming down the road. You could have a lot of fun with this metaphor. Landscape, traffic signs, intersections, accidents, traffic jams, you name it.

Operations, Finance, Marketing and Sales: Performance Metrics During the Race

Dashboards are helpful. Don’t get me wrong. I find them especially helpful once I have arrived. I can quickly look back over the course of the trip (or the day at work) and understand where I have been, what my top speed was, how many miles I covered and how much fuel I used (plug your favorite business metrics in here). A windshield, however, lets me calibrate  what is happening in the midst of a high-speed race. As a former football player, I can tell you that my stats after the game were a lot less important to me than was knowing where the line-backer was when I pulled out on a sweep. Failure to see my adversary or my teammates often caused me great pain. Successfully anticipating blows led to touchdowns.

The Importance of Anticipation: Getting Out of the Blind Spot

We are living through the negative consequences of not anticipating what lies ahead. We’ve all become so enamored with the rear-view mirror and the mounted DVD players in our SUVs that we have forgotten to simply out the window in front of us and drive defensively.

This may all seem trite and I may sound like I am beating this metaphor to death but I think we need simple reminders these days. Look outside your vehicle and assess what is happening down the road. Many companies have done this very well and managed to keep staffing levels and inventory at quite safe levels. Other companies were so busy fiddling with their dashboards and cell phones and doing their make-up while they drove that they missed their exit and went over a cliff.

What do you need to know about the road ahead and the drivers around you? What kinds of “bugs” do you want hitting your “windshield”? This is a great question for your next executive team meeting. It’s also a great question for your business analysts and your line staff.

  • what would you need to know about your customers’ “demand behavior” that would allow you to do your job better?
  • what would you need to know about your suppliers and supplies?
  • what would you need to know about the economy?
  • political changes around the state, country, world?
  • currency and credit changes?
  • social trends and patterns?
  • legal developments?

Keep in mind that as you’re driving in LA, for example, you don’t want to know what’s happening on the roads in Brussels. Keep your expectations “close” to you. There is little true and accurate value in looking “down the road” for more than 30-60 days at a time. Conditions on the roads are changing far too quickly. Pay attention to the drivers next to you where it matters most. The next bend in the road is far more important than the bridge several hundred miles away.

Give your data needs some attention, ask your suppliers and customers for data and use it effectively. Good data makes good information. Reliable information becomes intelligence and enough intelligence used appropriately over time makes one wise.

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?

BPM Must Align with the Business Model

I have witnessed several very strong process-related projects fall  flat in the wake of our economic conditions. That’s not surprising given the spate of lay-offs and bankruptcies. What is surprising is the lack of fundamental integration I bear witness to. BPM and related projects, when they stand on their own, are weak, fragmented, vulnerable and will be deemed to lack business viability  in a heart beat (especially during an economic heart attack). Failure to fully integrate and demonstrate inherent value in the business model is the surest path to obsolescence.

I believe firmly in the practice, art, science and discipline of BPM and all of its cousins (Lean, Six Sigma, workflow, etc.) however, I remain steadfastly concerned that IT is much more akin to BPM than are operations people and executives. That has to change. Unfortunately, the projects I have seen shrink and dissolve these past few weeks were mission-critical.  However, it is only reasonable to expect that executives must make the best decisions they know how with the information they have. I hope we, as a field and as a discipline, can do more to demonstrate value and weave BPM into the very fabric of our organizations. As a consultant, I hope I can find new ways to better and more fully make the case for the integration of BPM within and throughout organizations so it matures into a business fundamental and not a “project”. I sincerely hope that you and your peers can provide your executives with the most succinct case for continuous process management in order that they might make the most informed decisions.

Business Modeling – the Essence of Viability

The latest Harvard Business Review (December 2008) has a section dedicated to the development of Business Models. Bear in mind that a business model is not a business plan and it is not a business case. Somewhere in between though. A business model is akin to a logic model in that it quickly establishes the logical connections or relationships between who you are, what you do, how you do it, and the effect you want to have. A business model (in particular, the model suggested in HBR by M. Johnson and C. Christensen) is best boiled down to 4 big chunks:

  1. Customer Value Proposition
  2. Financial Formula
  3. Key Resources
  4. Key processes

Now, if you’re paying attention and you think BPM is pretty swell, you noticed #4. Let’s start at the top though.

Customer Value Proposition

  • who is your targeted customer?
  • what problem are you going to solve with your product/service?
  • what is your product/service and how does it solve the problem?
  • who else is doing anything similar (the competition)?

Financial Formula

  • how do you propose making money/generating revenue?
  • what are your costs?
  • what will your profit margins be?
  • how long will it take you to generate revenue and make a profit?

Key Resources

  • People
  • technology, systems and other tools
  • information and R&D
  • brand, reputation, relationships, allies, market data and sales channels

Key Processes

  • core processes and process owners
  • business rules
  • performance metrics
  • other norms and standards

BPM’s “Must Do”

While business modeling, planning and the like are not usually in the domain of your average analyst or IT staffer, it is imperative that support be generated for the fourth dimension of business models. This is especially true in smaller organizations…the vast majority of companies. You must make your case and educate people within your organization. The best way to do this is to become fluent in business-speak (to refine your business acumen). Approaching your peers with a business model in-hand, making the case for improved Key Processes to enhance the overall business model – complete with simple examples and data-driven ROI scenarios – is your best bet. Demonstrate the relationships and dependencies between these four moving parts and move away from fragmented and discretionary “projects” until you are firmly ensconced as an unequivocal  fundamental. A business is a 4-legged animal. You must become one-fourth of the team that will lead your organization to victory.

Can BPM and Process-Driven Marketing & Sales Help Restore Your Consumers’ Confidence?

Kapalign Tool: Promoting your BPM Accomplishments – Print Me!

Is it possible that BPM can have a positive impact on your organization’s consumers? The short answer is “yes”. I assume you watch the news and are well aware of the economic climate today. Between banks caving in and stocks spiraling downward, we have a lot to worry about and – if we’re working – a lot to be grateful for. As for worrying, keep some perspective. There are still may trillions of dollars to go around and so much of what we are experiencing is a function of “consumer confidence”. The trick is, what can you do about that level of confidence?

Process-Driven Confidence

Let’s look briefly at the benefits of BPM and BPA:

  • agility and flexibility
  • improved service levels (including self-service)
  • elimination of wasteful activities
  • greater efficiency
  • improved production and productivity
  • faster time-to-market with new products for new markets
  • enhanced quality
  • ease of automation and implementation of new product features based on customer preference

The list goes on. We know that. There are some critical questions to answer this week:

  • Do your customers know?
  • Do your sales people know?
  • Is your organization applying process improvements in marketing and sales to become more efficient there?

I assure you that your organization is not immune from consumer confidence concerns. Do these simple things beginning this week:

  1. Train your marketing staff in process management. Look for savings, eliminate waste, and generally help them become faster, stronger and above all smarter. Look into new markets now.
  2. Train your sales team. A crash course in making the journey from lead to prospect to customer a short and pleasant one is called for. There is often a lot of waste in the sales process. Jump on this.
  3. Get more leads and prospects (inputs) into the pipeline.
  4. Get more proposals (outputs) out the door
  5. Invite consumers (customers) to provide you their input now. This is the Voice of the Customer so important to Lean and frankly so important to your business. When did you last solicit your most important customer’s input, advice and feedback? If it’s been more than 6 months, take them to lunch this week.
  6. Collaborate with your marketing team to let your market know about your BPM gains. If you’re more efficient, tell prospects how much more efficient. You get the idea. Let your market know what you’re capable of but begin by letting your marketers and sales force know.

Focus on your own agility during troubled times, renew your own confidence and shore up your consumer’s confidence in you. Don’t lose sight of what gives people confidence in you. If you don’t know that, then you have more homework than you bargained for.

What are you doing to raise your customer’s confidence in your offerings?

Lean Sales at Ford and Toyota Good Reminder For Small Business: Beware of PESTs

It’s a bit ironic. Just In Time (JIT) production shaped how Henry Ford would make a car accessible for every family in America. Lean methodology enabled Toyota to compete globally with cars of enviable quality. However, both auto-makers are seeing dramatic declines in sales. Toyota’s sales are down 12% over last year and conditions are worse for Ford. America’s automakers are looking ghastly, frankly. There is nothing Lean or Just In Time about Ford and Toyota at the moment. That they are sitting on an inventory of SUVs is evidence of a complete denial of the facts swirling around them for nearly 4 decades.

Get Environmentally-Conscious…Now (keeping in mind that the environment is much more than the rivers and trees)

The environment tipped these guys off. Anyone old enough remembers that this slump began in the 70’s. Conditions are not new. Fuel inefficiency, OPEC and a recession are a cocktail we’ve had before. The fact that we didn’t do as the Brazilians did and abandon the petroleum-dependent automobile has everything to do with greed and laziness. “If it works, if people buy gas-hogs, why fix it?” Whatever the reason, our largest auto-makers are sitting on a useless inventory of large pick-ups and SUVs while an Indian automaker launches a tiny $3000 alternative and Brazil drives on sugarcane. Europeans whiz around in high-speed trains. Half the world rides bicycles and avoids the encumbrance of an obesity epidemic in the process. All of the environmental conditions around us – political, economic, ecological, trade agreements, wars, and so on – have been pointing in this direction for 30 years. We were tipped off. Some of us practiced benign neglect only now, it’s not so benign. Some of us – the competition – got truly lean and mean. Let the games begin.

PEST Analysis You Can Act On

Small business owners are reminded at a time like this to conduct basic PEST analysis every 3 to 6 months. It can be done fairly quickly but requires tremendous honesty. Is there anything in the Political, Economic, Social or Technological environment that is either a threat or an opportunity? How shall we react strategically? Now act accordingly. That’s how adaptation and survival of the fittest works.

Business Process Adaptations to PESTs

Should there be anything in the environment (PEST) that – honestly – requires us to adapt quickly, can we apply business process analysis to the situation and respond more intelligently? Of course you can.

BPM and Lean – South Beach Diet for Business Vital Signs

Much the same way you have to watch your biological vital signs and stay lean so you can adapt to your environment, your business needs to as well. Failure to do so amounts to neglect. Don’t be a business couch potato. If there is something in your immediate environment you need to adapt to, get busy. BPM and BPA make it easier.

How has your company handled lean times? How are you using BPM to adapt?