The New Holy Grail – In Pursuit of Customer Success

April 11, 2015

“The problem with average is that other people are better at being average than you are”. Seth Godin

As discussed previously here and here, the future of successful businesses seems to rely more and more on the organisations’ reinventing themselves and aligning their value propositions to customized customer solutions.

Even for products of little monetary value the opportunity for customization is sometimes mind boggling e.g. think of how many options one has for buying a pair of jeans or a box of cereal.

It has now become apparent that “Customer Satisfaction” is merely the beginning, the new average, what MAY allow you to begin the interaction with the customer but, very unlikely what would win you the deal. As Seth Godin very eloquently explains with his maxim above, “other people are better at being average than you are”. So, if Customer Satisfaction is no more the right target to built a successful business on, what is?

It is becoming apparent that the future of successful business will be all about pursuing Customer Success.

Screen Shot 2015-04-11 at 9.04.08 pm THE PURSUIT OF CUSTOMER SUCCESS AS THE NEW HOLY GRAIL

I first came across this idea i.e. the trend of shifting away from targeting Customer Satisfaction towards pursuing Customer Success, in the much acclaimed and highly recommended classic book from Tom Peters “Re -Imagine”. In the book, Peters views Customer Success as the necessary target of what he calls the Experience Economy.

Paraphrasing from the book:

Peters reflects on Four Different Generations (evolving as of the 1940s).

  1. 1940: The Raw-Materials economy: e.g. grandma spends about a buck to buy flour, sugar, and other raw materials. Using those raw materials, Grandma produces a birthday cake ($1)
  2. 1955: The Goods economy: e.g. Mom goes down to the local supermarket, spends a couple of bucks, and makes the cake from a packaged industrial good. Betty Crocker cake mix ($2)
  3. 1970 – The Service Economy: e.g. Bakeries are available to ordinary folks, not just the rich and super-rich. Mom heads to the bakery at birthday time and shells out $10 for a professionally baked cake ($10)
  4. 1990: The experience economy: e.g. Dad is in charge of the kid’s birthday now. And the kid lays down the law: “I am having a party, Dad. It’s going to be at XYZ venue and I’m bringing my pals.” Dad obliges and forks our a C-note for the experience. ($100)

For these four Generations the organisational measures and targets vary widely.

More specifically,

  1. In the Raw-Materials economy: The measure is the effective tangible output i.e. the Raw Quantity  (A very practical measure)
  2. In the Goods economy: this is the era of e.g. Six Sigma, process design.
  3. The Service economy: is the one where Customer Satisfaction is prevalent.
  4. The Experience economy: though moves forward to target Customer Success.

Just to make the notions of service and experience a bit clearer, think the notion of service as a transaction.

Experience though, goes further to be holistic, encompassing, transforming and emotional.

Lou Gerstner, the CEO of IBM in the 1990s, who is responsible for the complete culture change of the company declared:

“You’re headed for commodity hell if you don’t have services” Lou Gerstner

Paraphrasing Gerstner, I feel that his advice can now be updated as follows:

“You’re headed for commodity/service hell if you cannot offer memorable, emotional experiences capable of moving people enough to become your brand’s evangelists”.

Do you see this shift in your industry?

How can you translate the Pursuit of Customer Success in your business?

 

George Vrakas

 

 

Photo Courtesy of Eddi Van W.

Advertisement

Filed under Continuous Improvement, Contract Management, Effective Communication, General Tagged with , , ,

What is your Excalibur? Power Sources in organisational settings – an enhanced model!

November 21, 2014

“One of the things about powerful people is they have the ability to make it look easy” Ice-T

Which are the sources of power in an organisation setting? 

Are the previous studies’ outcomes regarding organisational sources of power still relevant? Will these be still relevant in the 21st century setting? 

Do the current organisational goals allow the same thinking about power to flourish or is there additional sources that we need to consider as more relevant in this age?

This article will argue that, as I have mentioned here and here, the skill-set of a good “questioner” i.e. someone that has a well-developed inquisitive mind, is the additional source of power that needs to be added to the existing lists. Let’s have a look why.

Excalibur

BRIEF HISTORY IN THE RECENT RESEARCH OF SOURCES OF POWER

1959: French and Raven’s Sources of Power:

In 1959, John French and Bertram Raven (American Sociologists) published an article called “The Bases of Power”. This is regarded as the basis for classifying power in organizations.

They identified five sources of power, namely: coercive, referent, legitimate, expert and reward power. These were defined as follows (reference from Paul Merchant’s article “5 Sources of Power in Organisations“):

 

1. “Coercive Power is derived from a person’s ability to influence others via threats, punishments or sanctions.

 

2. Referent power is derived from the interpersonal relationships that a person cultivates with other people in the organization.

 

3. Legitimate power is also known as positional power. It’s derived from the position a person holds in an organization’s hierarchy.

 

4. Expert power is derived from possessing knowledge or expertise in a particular area.

 

5. Reward power arises from the ability of a person to influence the allocation of incentives in an organization”.


1982: Hersley and Blanchard’s addition to the model

French and Raven’s model was expanded in 1982 by Hershey and Blanchard’s publication titled “Management of Organizational Behavior”.

In it, Hershey and Blanchard added two more sources of power namely:

6. Connection power which is derived from the ability to connect people and also from the width and breadth of one’s network (within and outside the organisation)

7. Information Power which derives from been able to gather, process and turn relevant data into information and knowledge. This source may or may not coincide with the Legitimate or Expert power source. The internet has flattened the information field and so, expertise and/or position may not be the only indicators for up to date and relevant / useful information nowadays.

 

SUMMARY OF POWER SOURCES

We can summarise and possibly simplify this list in the below broader categories i.e. Power because of:

i) Position (Coercive, Legitimate, Rewards, Referent),

ii) Relationships (Connection, Referent)

iii) Information (Expert, Information).


TODAY AND TOMORROW

We currently see that the 21st century brings along a different type of complexity. In the most dynamic and fast changing landscape we have ever experienced the skill sets for breaking down and working through complex issues based on critical thinking and good logical skills become more and more in demand.

The Customer base is becoming increasingly astute, as there are many more tools enabling it to compare and find out a highly customised solution.  This is the new norm.

Moreover, social media allows for information to spread rapidly throughout the world. It has been mentioned that, through social media, it now can take less than 20 minutes for an event to spread globally.

As I have discussed here, our ability to combine knowledge and invent solutions to the new challenges encountered can be a very strong differentiator in the marketplace.

“Thinking outside the square” becomes a skill heavily sought after.

Learning how to deal with new issues and organising your analysis, plans and actions towards effectively breaking down a situation and seeking solutions thus, becomes a critical skill.

Just think, when was it last that you had faced a “new” challenge, a more complex situation that you had not encountered before? Who did you seek advice from?

It is possible that you weren’t necessarily looking for a person with the power source described above but for someone who could guide your thinking through the maze of the problem’s elements and potential solutions towards effective mind mapping.

I firmly believe that this is a new source of power that is slowly evolving and establishing itself as a key for the future. We can call it “Effective Questioner” Power.

Organisations by default have positional power figures. The more successful organisations also have relational and informational-experts that deliver results.

How many though have implanted the critical thinking skill-set as a requirement in their Human Resources strategy? I believe that the successful ones of the future will.

Finally, the above plethora of power sources means that we now have more ways to differentiate and add value in an organisation. Like King Arthur who by searching and finding the Excalibur embraced a unique Power and privilege to rule, you now have to consider and reflect on your source of Power and answer the question:

What is your Excalibur?

OTHER RESOURCES 

Previous blog posts on critical thinking, logic and innovation.

  1. 8 must know question types for Effective Leaders (link here)
  2. Innovation: SCAMPER- A Practical Guide
  3. Top Tips – Avoiding Common Negotiation Pitfalls (link here)- First published in TheSource e-news
  4. 6 Additional Pitfalls to Avoid during a Negotiation – Cognitive Biases (link here)
  5. The Future of Learning – Are you part of the Learning Revolution? (link here)
  6. How to Conquer tomorrow? (link here)
  7. Conscious Communication – A paradigm for the 21st Century! (link here)
  8. In pursuit of Best Practice – Intrapreneurship (link here). First published in www.procurious.com
  9. The Leader’s Role is Setting and Keeping the Tune (link here) – Two inspirational Videos included.
  10. How to develop a winning organisation today! An inspiring talk (link here)
  11. “All Models Are Wrong, But Some of Them Are Useful” (link here) – First published in Procurement and Supply Australasia


 

 

 

Filed under Continuous Improvement, Future Trends, Leadership Tagged with , , , , , , , ,

How to perform a mid-year Procurement review!

July 5, 2014

Constant reviews are part of every effective system. As Peter Drucker mentioned, every so often, it is crucial to do the “Feedback Analysis” in three steps:

1. Whenever you take a key decision or action, write down what you expect to happen.
2. Review results at regular intervals and compare them with expectations.
3. Use this feedback as a guide and road to reinforce strengths and eliminate weaknesses.

                                                                                                                         Peter Drucker

The end of the Financial year (in Australia) and reaching the mid-calendar year point in other parts of the world, makes for a great opportunity to review the progress made so far, look afresh at your personal, team and/or departmental KPIs and goals for the year and review any new opportunities that may have come up.

Having an appraisal review once a year may have been effective in previous generations but not in the modern post-GFC fast paced marketspace.

Read on if you want to learn about a scheme for performing a General review and a comprehensive checklist to go through during a Procurement specific one.

 

Alexander Knight

GENERAL REVIEW

So, utilise the One-on-One meetings (or other frameworks, some of which I mentioned here and here) sit down with your staff and/or book a meeting room for a space free of distractions and revisit:

  1. Your KPIs
  2. Your team’s or department’s KPIs
  3. Opportunities that may have come up
  4. Challenges that have occurred
  5. Projects in development that may need your contribution or that you can contribute to.

 

PROCUREMENT REVIEW

Especially, for Procurement, there is a more specific list of things to do.

As Richard Waugh, VP of Corporate Development at Zycus, mentioned in his recent post titled “Spring Cleaning time in the Procurement household:A Checklist” in spendmatters.com below are some key areas every Procurement professional should look into.

Based on the article I put together a checklist which I thought I’d share. For more information please refer to Richard’s article which makes a compelling read:

CHECKLIST for EFFECTIVE PROCUREMENT REVIEWS:

Contracts

  1. Look for contracts that have expired or are due to do so soon. Update your Contract calendar.
  2. Review at least one auto-renewal of an evergreen agreement.
  3. Look for maintenance agreements on long discarded assets or not used software licenses. 
  4. Review that rebate provisions are up to date.

Spend Analysis

  1. Refresh your spend data to evaluate changes in spending patterns.
  2. Analyze for purchase price variance i.e. paying different prices for the same item.
  3. Analyze for Payment Term Rationalization – standardizing on contracted payment terms with preferred vendors.
  4. Look for Supplier Rationalization opportunities i.e. root out “supplier creep”

Supplier Management

  1. Look for duplicate and inactive vendors in your vendor database.
  2. Ensure that insurance, quality, diversity, or other certifications are up-to-date.
  3. Update the Supplier segmentation matrix (categories: strategic, critical, important or tactical).
  4. Ensure Supplier Managers are allocated to strategic, critical and important suppliers.

Category Management/Sourcing

  1. Review category strategies taking into account commodity price trends and forecasts.
  2. Look for opportunities of hedging through longer term contracts where price increases are projected.

Performance Management

  1. Refresh your scorecard including value offered by Procurement and Contract Management in recent gains in “spend under management, realized cost savings, increased user adoption, cycle time reduction, contract compliance, supplier enablement” etc.
  2. Benchmark your performance against the market. 

 

Image courtesy of Alexander Kaiser, pooliestudios.com / www.flickr.com

Filed under Category Management, Continuous Improvement, Contract Management, Procurement, Sourcing Tagged with , , , , , , , ,

Stoicism and Stephen Covey – You don’t need to worry anymore!

June 21, 2014

“What upsets people is not things themselves but their judgments about the things” The Enchiridion, Epictetus (translation by William R Connolly)

How would you feel if you did not have to worry again? Is this attainable? The Stoics certainly thought so.

More recently, Stephen Covey revisited this theme and provided a mental model to approach about such situations.

It becomes amazing how, sometimes, key tenets of Ancient Philosophy find their way into modern popular handbooks and practical how-to guides.

It is useful to occasionally revisit and embrace the transformative nature of these tenets, in combination with their modern variations, in an effort to lead more meaningful, productive and fulfilling lives (professionally and in the private sphere).

Let’s look at one of these tenets and mental schemes in action.

 

Marcus Aurelius

Marcus Aurelius

 

STOICISM

Stoicism is a movement that started with Zeno of Citium at the early 3rd BCE. Other major philosophers involved in this movement were Cicero, Seneca, Epictetus and Marcus Aurelius (you can find more information here).

The basic tenet of the movement was “apatheia” (equanimity). Stoics posit that one way to attain this state of mind is by recognizing what lies within our power or influence and what is outside. Thereafter, come to terms with this realization.

Meric Casaubon elaborated on this thought in his translation of Marcus Aurelius’ Meditations as follows:

“Two points in the Stoic system deserve special mention. One is a careful distinction between things which are in our power and things which are not. Desire and dislike, opinion and affection, are within the power of the will; whereas health, wealth, honour, and other such are generally not so. The Stoic was called upon to control his desires and affections, and to guide his opinion; to bring his whole being under the sway of the will or leading principle…..” (Meditations by Marcus Aurelius, translated by Meric Casaubon)

 

Stephen Covey

 

STEPHEN R. COVEY

Stephen Covey mentions more or less the same theme but expands on it providing a mental scheme enabling us to better visualize how to go about this basic idea.

His mental scheme consists of concentric circles that portray our circle of influence and our circle of concern (see picture below).

CIRCLE OF INFLUENCE

Stephen contends that we should first reflect on “where we focus our time and energy” and then consciously refocus our efforts to what we can influence, in an effort to increase our effectiveness.

Specifically, usually, we tend to worry or be concerned about many things such as, our health, our children, problems at work, the national debt, nuclear war. These concerns can and should be separated based on our mental and emotional involvement but also based on those for which we have some real control over and those that we cannot influence at all.

Thereafter, by focusing our time and energy in influencing those that we have some kind of control over we succeed and hence, we may also increase our circle of Influence further. We see people who embrace this behaviour being positive and empowered.

CIRCLE OF CONCERN

On the other hand, we see others that focus their time and energy on things they have no real influence over. These tend to blame and accuse circumstances or people and use reactive language. Eventually, the Circle of Influence of these people will shrink. I am sure you can think of a few people who embrace the one or the other behaviour and can possibly reflect on the consequences of their stance in life.

Like the ancient Stoics, what Stephen rightly highlighted is that we have to look at our attitude towards these situations and change our perspective so we can be “highly effective” in our lives. This happens if we do not waste time and energy on worrying about things we cannot control or influence but instead focus our energy to influence those that we can.

You can read more about this mental scheme here.

 

SCIENCE ABOUT THE HEALTH BENEFITS OF A POSITIVE ATTITUDE

Until recently this could have been described as a feel good and  useful belief. More recent scientific studies though have started to test even such esoteric beliefs.

I have written here about an insightful talk from Kelly McGonical which details a recent study that looks at the link between attitudes and cardiovascular disease.

In particular, this study links the attitude we have against stressful situations to specific responses our body has and the associated risk for development of cardiovascular disease.

 

CONCLUSION

People respond to different challenges in a different way and develop their own defense mechanisms to deal with the vicissitudes of life.

Practical philosophy such as the ideas described in this blogpost provides an extremely useful guide to think about things and be-free oneself from behaviours that damage productivity, happiness and the attainment of fulfillment in life.

A great resource to continue this journey with is Alain De Botton’s The Consolations of Philosophy (an easy to read and immensely entertaining book or DVD).

Maya Angelou who recently passed away put it succinctly when she said:

“You may not control all the events that happen to you, but you can decide not to be reduced by them”, Maya Angelou, Letter to My Daughter:

What are the tenets, beliefs or thoughts that help you to get through the day?

 

Filed under Continuous Improvement, Leadership, Philosophy, Productivity Tagged with , , ,

← Older posts

%d bloggers like this: