Likely all of us have heard the expression (or something close to it), “If I was starting this company all over now, I would do it much differently.” Often such break-away thinking yields new companies, or in some cases, new divisions or subsidiaries of companies. To achieve true transformation, one must employ “trans-process” thinking. I’m not sure if anyone has coined the term yet, but if they did my credit is hereby given. If not, I will claim it now.
In the case of the former, one could look at innovative market leaders such as CNN, FedEx, Home Depot and Amazon as examples of companies that were born of a great idea that ran counter to the prevailing wisdom of the then market leaders in their respective industries.
In the case of the latter, a recent example I heard was from a case study presented at the recent Celent Innovations & Insight Day in NYC. Haven Insurance, born by a start-up team of people within Mass Mutual, who saw a need to sell Insurance differently: through the internet. In this case, the fledgling Haven was an “intrapreneur”, an entrepreneurial activity born, and initially subsidised within an existing company. Kudos for a life insurance company to break its own mold and try something truly different. As one insurance company SVP quipped, “Change at most life insurance companies takes a lifetime.” For Haven, as they began down their journey, it became apparent they needed to rely on many of the traditional functions of an insurance company to create and launch their new product. Because they viewed themselves (a team of just six people) as a separate and distinct entity, one could say they “outsourced” those critical functions related to product development as their focus was more on the “online buying experience”. Think Amazon in this context. They do not publish books, they source those. Their core competence is creating an unparalleled customer experience through online distribution). Similar to Amazon, Haven focused on the online user experience of buying insurance, not the traditional push model of selling insurance (distribution)…because in their model, there are no insurance agents involved in the process. While a subtle difference, the implications are huge. Their focus was to create a pull model rather than a push model.
As a Deming disciple, I give W. Edwards Deming large credit for transforming how businesses operate, and not just in Japan. His approach was to look at the complete end-to end-process: helping people early in the value chain of manufacturing a product or service, to see the ripple effects down the chain and the inherent exponential cost to fix is greater than the cost to create correctly. Decades later, Peter Senge in his book, The Fifth Discipline, created the paradigm which he called “Systems Thinking”: that businesses are ecosystems in and of themselves, and that companies who took this view would operate and be viewed differently by their customers. When I think of companies that appear to operate in this model companies such as Disney, Southwest Airlines, Virgin, and my former employer EDS come to mind.
To this end, we have seen businesses mature and evolve to create new, “trans-process” roles. Trans-process functions/roles have slowly emerged to fully exploit trans-process business thinking. One of the early functions was “branding”. The benefits of a strong brand are now well documented and can easily be seen in the marketplace. As the former president of ACS TradeOne Marketing (now Brandmuscle), we consulted and helped to administer the co-marketing functions for many leading, well-branded companies such as Intel, Honda, Harley-Davidson, Verizon, Tiffany, Motorola to name but a few.
These dominant brands know that branding is more than advertising, more than marketing brochures, more than their online presence, a logo, or a cartoon character. A company’s brand is the heart and soul of how people identify with your products and your company. When people hear the audible of Intel advertising, or the rumble of a Harley, it evokes more than recognition: it creates a more visceral reaction. While the role of branding is most often given a subordinate status within the larger marketing organisation, all that contributes to building a great brand is the result of contributions that span the enterprise. Conversely, for those with deep-rooted hatred of a product, the brand can have an equally negative perception. I happen to love Apple products, which puts me at odds with my son who hates them. He would rather buy an old PC, take it apart and rebuild it with an SSD drive, purchased separately, and claim his is better. But the Apple brand experience is more than just about parts. I have given up trying to explain it to him: he just turned 16 years old, which certifies him as an expert on everything. (Reminds me of the joke, “When I was 16 I could not believe how stupid my father was…but when I was 21, I was amazed how much my dad had learned in just five years”.) Check back with me in five years and I will let you know if the situation has changed for us.
Shortly after the branding revolution of the ’80s and ’90s, along came “Customer Experience”. I remember when Cadillac won the Malcolm Baldrige Award for Quality in 1990. As I recall the story from my EDS days, when EDS was given responsibility for Customer Service and Roadside Assistance at Cadillac, it was originally referred to as the “Complaint Department” – an arrogant and derogatory term that implies the customer is just whining. The function was understaffed and calls were routinely never getting through as a result. EDS, taking a “systems approach”, helped Cadillac to transform the function into a model of excellence that was replicated across the GM family of companies, and later imitated by competitors. Staffing was significantly increased, better technology was deployed, and it became a critical step in the process to earn a promotion to management within Cadillac, for any job function. Under this new model, staffed with high-GPA college professionals who were motivated to be on the phones (not banished to the role due to lack of performance elsewhere), the stage was set to transform the customer experience. Input from customer could be correlated and directly fed to engineering to modify designs when a common issue reached a certain threshold. Customers were treated as valuable, not an annoyance. Carl Sewell, termed the phrase “Customers for Life”, which epitomised the philosophy. This transformation from the “Complaint Center” to create a more holistic customer experience played a significant role in helping Cadillac to with the Malcolm Baldrige award.
Customer experience is the sum total of every point in a company that touches the customer, from marketing, advertising, sales, service, billing, dispute resolution, claims, the website, etc. It is not a “department” in the traditional sense as these functions all have other roles to play as well. To manage the functions separately is to sub-optimise and never achieve the true benefits that managing it as an ecosystem can bring. Because the all of these roles normally do not report to a “Customer Experience Officer”, true leadership is required to inspire people to do what is truly in the best interest of the company as their compensation is more often tied to the performance of their singular department. Cadillac was also astute enough to recognise that change from within can be difficult, if not impossible. They chose to outsource the function in order to achieve the needed change. As one senior EDS executive once put it, “If you can’t change the people, then you have to change the people.”
In recent years, the newest entry onto the “trans-process” scene has been in the area of sales operations. Sales operations is not the selling aspect of sales. Sales operations is the collective sum of activities, spanning the enterprise, whose sole mission is to support and motivate the distribution network, enabling them to generate more revenue at a lower overall cost through the ideal application of people, processes and technology thereby creating a preferred salesperson/agent/broker experience. Perhaps the easiest way to think of sales operations is to view it as the customer experience for salespeople. In this instance salespeople are the “customer”. This also applies to external salespeople, agents, brokers, channel partners, and anyone who is authorised to sell your company’s product or service. While sales operations is often viewed as part of sales, that would be a dangerously shortsighted perspective. The sales organisation is a player/coach/contributor/customer in this process. Other functions such as incentive compensation (for calculating and paying commissions and bonuses), training (especially important for regulated industries that requires licenses and certification), customer relationship management, sales performance management, analytics, performance appraisals, IT support for hardware, software, change requests, and integrating the related supporting and backend systems to minimise rework and errors. On a department by department basis, companies are challenged to lower or contain costs – within their department.
When one looks at sales operations as an ecosystem, greater efficiencies can be identified through the collaboration and synergy of these functions working toward a common goal. But equally as important is the ability to free up and motivate the sales force to sell more. Done correctly, managing it as an ecosystem, one can better manage costs across the enterprise while concurrently growing the top line. Anyone can lower costs in a department, but doing so may raise costs for another department. Such a sub-optimised approach does not look at things on a trans-process basis. The goal for sales operations is to lower the total cost of sales operations, while also enabling the salespeople to further increase revenue generation. Unfortunately, in most companies, there is no single person held accountable for this goal. For those who do, they know firsthand that a well supported, motivated sales force will always outsell one that is frustrated, unmotivated and spending an inordinate amount of time in “administrivia”. Done correctly, sales operations is a sales force multiplier!
As Deming put forth, “People will do what they are compensated to do”, so it is important to identify a change team that has no vested interest in the existing way of doing things (remember the Haven example earlier). The following will help you to get started to tackle trans-process change:
1. The first challenge for companies that are not exploiting the benefits of trans-process approaches, is to identify an executive sponsor: one who has unequivocal support in their task from the highest levels of the company, and whose compensation is tied to achieving the desired end state. It is also wise to affix a certain portion of the affected department management incentive compensation to this goal as well to lessen their defense of the status quo and their respective empires.
2. Next, identify all affected areas of the process in question. To ensure the end goal is always in sight, it is best to begin with the end in mind and work backwards – as seemed to be the approach that worked so well at Haven and others.
3. Obtain financials for these areas as they relate to the process in play to establish a baseline. For example if, under the new process we can reduce sales people churn by 25%…how many fewer recruiters would we need, how much less could we spend on job boards, how many fewer training people would we need or could we even outsource all related training…and so on. But be careful to identify costs that will be eliminated or redeployed for better ROI. Citing the reduction of ½ FTE that never in fact gets eliminated is not saving you money (but if you only need ½ FTE, consider contracting for it when needed rather than overpay for an underutilised resource).
4. Define the desired end-state. The goal likely will change as you go, but you need to keep your eye on the correct hole, even if you hit your drive into the wrong fairway. If you are first out on the course, the greens keeper may be changing the hole as you play it. Be flexible and adapt.
5. Map processes to determine where redundancy and manual input is occurring in the existing process. If the software systems are integrated, so you can write once, read many (WORM), you will greatly minimise errors and reduce cycle time. What processes are outdated and could be eliminated? What processes can be automated? But a note of caution: Keep the end goal as your unwavering focus. There is nothing more inefficient than doing the wrong thing exceptionally well. This is not about continuous improvement or tweaking the status quo at this stage.
6. Get started. Things will change and you need to adapt, but that is no excuse for not taking action. As a former captain in the US Marine Corps, our rule of thumb was if the plan is 70% complete, you are ready to go. In the business world, I prefer an Agile methodology over the traditional Waterfall approach. The short term successes with the Agile approach also help build support and motivation for the changes that will follow. Change will happen either way. Continuously adapting to change should be the norm.
7. Seek professional help. Know your company. If it is one that resists change, it is better to outsource the process to get to the goal. If your company readily embraces change, is cash flush and is continually reinventing itself, constantly experimenting with new things and does not mind it taking longer and costing more than needed, then feel free to engage in company self improvement. From my experience, companies that try this change internally often become fixated on the “how” and lose sight of the “why”. They inevitably end up still managing the pieces and parts, endlessly massaging multiple software packages, and seldom get to managing the results they were seeking from the change to serve as the basis for larger gains. Don’t let pride cause you to step over dollars to pick up pennies. Runner Roger Bannister broke the four-minute mile back in 1954. He did not make the watch that recorded his times, nor the sneakers in which he ran.
Whatever path you choose when attempting to implement a trans-process initiative, keep in mind that change is continuous. Creating a trans-process function that will endure is to recognise it is a journey, not a destination. It is not a one and done endeavour. Like any sustainable quality process, continuous improvement is critical. Don’t fear change… own it! In the end, the lead sled dog had the best view and always arrives first.
The Deming Management Method, by Mary Walton and W. Edwards Deming
The 7 Habits of Highly Successful People, by Stephen R. Covey
The Fifth Discipline, by Peter Senge
Customers for Life, by Carl Sewell
‘Corps Values’, by David H. Freedman, INC magazine – April 01, 1998