Lloyd-Parry-Logo1

Customer Value Enterprise®: manage by letting go

Typically, managers and staff expect management to exercise command and control over all aspects of a business especially it’s traditionally been the prevailing style in the organisation.

Moving to a Customer Value Enterprise® will require management to direct staff to grasp the paradigm shift, with the subsequent deconstruction of the dictatorial management style. It’s all about the creation of a organisation in which operational units take control of their activities, customer intelligence data is gathered by frontline staff; data key in shaping value-creation activities with a customer focus.

As the process takes hold, customer-facing operations focus on what matters to customers. As the staff absorb this, they innovate, and push out to the larger organisation the needs of the customers, and the capabilities that the business will require in order to meet these customer needs.

Frontline operations will gradually put in place the systems, processes, technologies, reporting and value propositions that will do that. Working in conjunction with colleagues, they will join up all the disparate functions within the organisation, coming together around the common set of customer intelligence data.

Implementing lean

This is a big responsibility, but customer-facing operations need to step up to it. Initially they may be difficult to persuade, but if staff are encouraged and supported, their experience and insights treated with respect, they will see their ideas being taken seriously and having a positive impact on the functioning of their organisation.

In many cases they will be correcting problems that they, if not their managers, have been aware of for some time. As change gathers pace, employees feel increased job satisfaction and a growing commitment to the process.

Lloyd-Parry-Logo1

In Customer Value Enterprise® staff change the system

When things go wrong in an organisation, managers in a mass-production arena usually criticise staff: “You didn’t make your quotas” or “You didn’t make your output numbers”.

Yet performance problems can have other causes, such as when demand exceeds the end-to-end capability, when an unknown and inappropriate demand enters the system, or when someone along the value chain improves performance locally and inadvertently creates a knock-on effect downstream.

System factors such as these account for over 90 per cent of the variation in service performance. Most of this variation is outside the power of the individual – individual performance can only contribute as much as the constraints of the current system will allow.

 Performance is created by the system, not individuals, so systemic changes are needed if there are to be breakthrough improvements. In the Customer Value Enterprise® model, changing the system is the responsibility of those who work in that system.

The mass-production paradigm contrasts significantly with the Customer Value Enterprise® paradigm, and there is no continuum from one to the other. Yet in practice most organisations currently work using mass production. So how can one flip from one paradigm to the other?

To make this shift takes strong leadership that allows staff to work in both ways for a short space of time while transitioning from one to the other. With a lot of courage, tenacity, honesty and clarity of purpose, staff and managers can drive the organisation from one paradigm to the other. This allows staff to experience both paradigms – and the flip, when it happens, is very quick. 

PostCTA1

Three major components are necessary.

  • First, collect data about how your organisation responds to real – not perceived – needs – of your customers.
  • Second, assess how your organisation performs end-to-end in achieving customer purpose. Once staff have collected the data, they can discuss it with managers and talk more easily about change.
  • Third, as well as gathering data, staff need to appreciate what the reality is like. As they grasp this experience, they become better able to collect the data. This process thus becomes an iterative one with these three elements.

The type of change we are advocating relies on learning the principles of all three and bringing them together. Because they are so interdependent, change will occur only when all three are addressed at the same time.

Lloyd-Parry-Logo1

Changing relationships with customers

The relationship between most organisations and their customers is typically based on the production and consumption of goods and services as gleaned from marketing intelligence. The marketing departments of those companies are then tasked with persuading customers to buy these products.

This approach is characterised as the ‘make-and-sell’ mode of operation: its all about customer push.

Manufactured products and the development of saleable services benefit if instead service organisations capture and exploit the customer demand intelligence that comes in front of them every day.

Marketing intelligence and focus-group data are not the only methods for data collection; with a transformation in staff attitudes, frontline operations can be tasked with attending to the real – not perceived – needs of customers.

Implementing lean

Using this customer intelligence, the organisation can view its products and services, and potential new ones, from the vantage point of the customers who transact with it every day.

Products and services can be specifically designed against what matters to the customer, and the business can also ensure that it operates at maximum effectiveness.

Simply by locking on to customer demand intelligence gathered by frontline operations, an organisation can continually satisfy its customers, create innovation, increase revenue, optimise costs, and provide meaningful work for those frontline staff / intelligence gatherers.

Once the organisation starts to take on the customer’s viewpoint, the way in which it sees its own products and services change, giving the organisation greater objectivity and enabling it to identify any shortcomings.

Customer Value Enterprise®: encouraging staff to promote change

In the previous blog post, I wrote about the how and whys of bringing together a cross-section of a company’s staff to educate them in a different set of principles on which to design, build and operate an organisation, specifically, the lean principles of a Customer Value Enterprise®.

The reorientation process gives this group of employees a new awareness and tools with which they can drive their company’s path to building this new organizational zeitgeist.

It also provides them the skill set to be Transformational Leaders within the organisation.

From these meetings, they return to their workplaces and begin the transformation of the organisation from within, and in the process, transform their colleagues.

Lean business consultants in Europe

What staff must do is to provide customer data and insight to their managers and then let them be instruments of change. The managers’ work is predominantly aimed at creating leaders who have a new set of principles, who begin to use these new techniques of analysis, consulting with other managers about the customer intelligence data in their hands.

It is staff themselves who will start to dismantle the structures of the old process and transform the work environment into a new mode.

And ultimately, it will be those same teams that will go further and create action plans to promote even more internal change.

Encouraging staff to see their organisation as a whole

Lean, Six Sigma, Total Quality Management (TQM) and other management tools and techniques have certainly contributed to leaner working.

Yet none of these has explicitly identified the underlying change in thinking and behaviour that actually releases the potential of the people within the organisation.

What we are arguing is this: release the potential of your employees and they, in turn, will release the potential of the organisation.

If the fundamental thinking and behaviour of staff isn’t addressed, any change will be ineffectual. Millions of pounds may be sunk into change endeavours, consuming resources, time and effort, but without a corresponding shift in employees’ thinking and behaviours, it will likely fail and need to be attempted again much sooner than later.

Here’s how it must be done:

Select strategic points across the business and from each of those points, bring staff together with a cross-section of differently-skilled staff – frontline staff, middle managers and first-line managers.

Many such staff will likely have been working in an environment steeped in mass-production principles and will need to undergo a reorientation process in which they are taught a different set of principles on which to design, build and operate an organisation, specifically, the lean principles of a Customer Value Enterprise®.

PostCTA1

For most staff involved in the process, it proves a refreshing revelation to learn of different methods of running organisations given that they are mostly familiar with their current one.

As they begin to consider it with more freedom, they will start to appreciate a different view of their organisation, and crucially, to see the organisation from their customer’s perspective.

As employees’ awareness grows, this reorientation will also provide methods and tools to assist them in considering the organisation from the outside-in perspective instead of the inside-out..

This new perspective will yield different data, this time from a customer perspective enlightening them as to how the organisation appears to the customer when engaging in an end-to-end production process.