Good management strategy and practice supported by intelligent modern systems

Let’s begin with the strategy and management practices before we start talking about systems.

In the last instalment, we talked about schizophrenic businesses. Businesses with confused outlooks, confused processes and naturally enough, confused systems, confused workforce, resigned customers, despairing shareholders.

The five cardinal sins that create schizophrenic organisations:

  1. You have a business made up of a number of recent acquisitions and you were always too busy to complete the business change aspects, so now you have one logo and 17 brains, in other words semi-organised anarchy.   This is painful and confusing for everyone and often a difficult environment to work in if you need to deliver things to a quality standard and meet targets. These problems can’t be fixed with technology alone, in fact often the technology is the one thing that got fixed, at least sufficiently to manage the finances.
  2. You bought the best systems straight off the Gartner list and now there is only one way to run the business; the Oracle, Salesforce, SAP, Microsoft way. Tough! It has it’s advantages, but the price is a very high one and the road out of this is expensive, but achievable by the very bravest and most resilient but usually worth every penny.
  3. Your CIO needs to be the first with every new fad. He gives powerful presentations and gets his own way, then yet another expensive toy sits on the racks generating heat and costs. This is a very common situation and seems to have become worse right through the last recession when one might have expected common sense to prevail and into the era of “Digital Transformation” . Fixing this needs engagement and dogged adherence to the principal of “so what?”
  4. You have had ten years of efficiencies and buy-backs to keep the earnings figures appearing to rise. Every trick that could seep past auditors was exasperated and now you are trying to stick some skin onto the skeleton and one remaining ear of the monster while trying for one more great interim report to keep the money flowing. This beast could be in trouble and making the changes you need will demand capital and commitment and a strategy rethink.
  5. You follow the right methods with systems, but you have a confused collection of people in incoherent departments with conflicting goals and your entire business is a collection of silos that resembles an over busy cluster chart.  This is even harder to put right because unlike 1, it is culture rather than circumstance and technology can’t fix this alone, at best it can help.

stakeholders triangle

 

Who are we listening to? The staff? The shareholder? Customers? Society? Anyone?

I take a simplistic view of business. In my view it serves three groups of people in society and through this it justifies it’s existence. When it ceases to serve any one of these groups it is on the slippery slope.

  1. It returns income to investors in some form. These investors are often the very same people that pop up in other stakeholder groups such as customers and employees except these stakeholders are typically saving for their retirement and relying on the business to keep their nest egg safe. The business has a legal and moral duty to these stakeholders.
  2. Employees make lifelong commitments to businesses and rely for their income, security and even their physical and mental well-being on the environment where they work, the remuneration they receive and the opportunities and stimulation it provides. In fact when you take away the employees there is no business left but a piece of paper. Again there are substantial legal commitments here as well as moral duties.
  3. In a free market, the customer is the only reason the business is able to exist. If it fails to satisfy the customer, she will walk and the business will close down with loss of capital and jobs for the other stakeholders. When customers stop buying whole economies shrink This is why the customer is number one. In theory at least.
  4. The business can’t ignore its relationship with society. The peaceful stable environment, the transport infrastructure and the healthy educated workforce all are provided by the host society and must be paid for

In practice today, the most influential stakeholder in the business is senior management in whatever form. Modern market driven business cycles give little time to deliver and rarely allow for forward thinking. Horizons can be very short term and stakeholders are frequently forced into poor decisions to satisfy very short-term demands.  Just to get this in perspective, Cost of Goods Sold COGS, the labour and material portions range from ,2 to 8% of selling price with the average below 2% and investors get 2 or 3 % if lucky, so where does all the rest go to?
Next in the order of power is the investor. The investor will take her capital elsewhere unless she receives a dividend or perceives a promise of capital appreciation through whatever means.
Typical financial tricks to keep her happy include: misreporting earnings, misappropriating funds, cutting costs though reducing service to the customer, inflation . . .  Most capital is managed by institutions and they have short term very selfish goals that don’t often reflect the actual investor they represent.

Right at the bottom of the power list comes the customer. This is not the forum for a discussion on modern free markets and the growth of the big brand, but we all buy the same stuff from the same, or similar companies and we all know that you can go through hell to cancel your broadband, mobile, gas, current account etc only to be faced with an almost identical, if not worse service when the new one finally kicks in and the price, if significantly better won’t be better for long. The majority of non cyclical sectors are tied up in oligarchy (at best) and the opportunities for start-ups continue to decline as more of the local high street or Mall is gobbled up by multinationals the ancestral home of Lernaean Hydra.

The typical budget each of these suppliers have set aside for convincing us that they love us even more than the opposition do and will be our best friend forever, is in most cases many, many times greater than the cost of booting out all the misconceived cost cutting measures and just giving us a great service.

Worst of all, most of the service calls are a result of; bad product, bad documentation, bad service, mis-selling, or untrained, demotivated, underpaid staff and there is a much more effective solution if anyone was interested.
Does my broadband provider really think I want to get up in the morning and spend a few hours on the phone to their staff? Of course I don’t, I just want a service that does what it promised and to be charged as per the agreement for it. Apart from emergencies I don’t want to hear from them.

 

Don’t get me wrong, I have seen empirical studies proving via brain scans that consumers received substantially more pleasure from Coke when they knew the brand and consumed it from familiar branding despite the fact that they preferred Pepsi when it was presented in incognito taste tests. Yes branding, when done well, not just creates illusions, but it creates real value. I do however refuse to believe that even if the monster had only one head and a very pretty one at that, I could ever be brought to feel pleasure at switching on my lights because the electricity was supplied by Gobblydegook PLC, or look forward to the next blackout so I could call them.
Dig out that business case for your “close the call centre project” and verify it a little. Now ask yourself how much you really saved net. Then ask yourself how much you will have to spend to replace the customers who left in exasperation and to counteract the low murmur of dissent on Facebook and Twitter.

Now collate a years worth of marketing communication for about a dozen customers who represent customers at different points in the customer journey (you do have one?), e.g. new customer, changing product, etc etc. Tally up the total cost of this including all the calls handled as a result and minus any new business generated from this activity and this will give you an indicator to use in your revised business case. Prepare for a shock.

Put yourself in the shoes of this customer and ask yourself; what did all this noise actually say to that customer about our business? Are you seeing 19 headed monsters again?

I have been though this exercise a few times and I could write about this all day, but you have to do it yourself to learn anything and you have to be interested enough to want to know, or this whole discussion is of no value to you. When you finally get to the point where you are ready to understand where these problems are coming from, there are tools you can use that throw light on this in remarkable ways and I will be introducing them in a later instalment.

Finally do remember, there is a time for taking the investor and the employee into account, after all, there is no point in serving a customer well if it is not profitable, and the days are gone when we are justified in enslaving people to expand the family pile, but when you are thinking customer, keep the others at bay and just focus on customer experience. Don’t have the guy who wants some branding experience on his CV decide what the customer would like to experience any more than you’d let the customer decide what final dividend to pay.

Tune in to the next instalment to see a very neat way of getting a 360 degree birds eye view of the relationship with your customer and 20:20 vision of how to bridge that gap.

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