The New Holy Grail – In Pursuit of Customer Success

“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 PetersRe -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.

5 milestones to Sourcing Excellence

“Sourcing excellence = professional knowledge + market knowledge + product knowledge” Jonathan Dutton

As per a recent study conducted by IACCM, 88% of Contract Management professionals indicate that improvement of the quality of the Requirements was the number one factor to improve contract performance in their organisations (IACCM – Contract and Commercial Management – A Operational Guide).

I have discussed the importance of understanding and clarifying the scope with your vendor as part of the Iron Triangle (here).

As we all know, having incomplete, erroneous or unexamined specifications for a product or service category lead to confusion, rework or simply sub-optimum  results.

To be successful, you first need to fully understand the scope and alternatives yourself i.e. what the business really needs and different possible ways to achieve it.

Let’s see some practical tips on how to do so.

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The 5 milestone Road to successful Requirements’ Identification and Sourcing Excellence

1) Know your stakeholders

First of all, you need to know your own stakeholders.

Anyone, the project affects directly and indirectly is a stakeholder.

Some of them are affected more than others and some of them will have a greater influence in determining the success of the project. So, if during the procurement process, you miss out on engaging with a stakeholder, you then risk project failure.

HOW to: Brainstorming and looking at the process and usage of the product and service should reveal who you need to approach.

2) Know you business objectives

You also need to know your business objectives.

You should embrace a different approach if the business objective is a strategic one e.g. entering a different market, rather than a tactical or an operational e.g. improving a process or removing cost.

Moreover, different stakeholders will have different motives and will probably target different outcomes in order to consider the project outcome successful. These need to be identified and defined.

Hence, the stakeholders need to know and sign off on the final defined business objectives.

HOW TO: Use interviews and questionnaires to define the requirements, needs and expectations from each one. Then ask them to review and sign off on the final result.

3) Understand the Specification

This is self evident. If you cannot articulate the functional and technical specifications then you probably do not have a good grasp of the project and would not know how to evaluate the suppliers.

Try defining this using AMPP technique (Ask, Mirror, Paraphase and Prime) and see that you have a good understanding of it and its implications.

Moreover, check that the functional and technical requirement are aligned with the business objectives and that at the end of the process all stakeholders have a high level of confidence of the final defined results.

HOW TO: A number of effective communication techniques can be found in the book Crucial Conversations by Kerry Patterson et al.

Phrases like e.g. “Please let me know if you see this differently….. If I understand correctly……. Is this what you mean…… In my mind this means that ……..” can help.

Moreover, make use of a requirements checklist, questionnaires, interviews, roundtable discussions and brainstorming sessions. Research and benchmarking are tools you can also employ.

4) Agree the acceptance criteria

After the 1-3 steps are complete you can crystallise from the feedback provided the acceptance criteria. These can be categorised in three categories:

i) Hurdles (the Must Have criteria) e.g. ISO certification, Insurances’ cover, No accident record.

ii) The Essential Requirements (for which the vendors can be graded on a scale) e.g. quality, price level…

iii) The Good to Have (additional attributes that may not be immediately required but an extension of the service) e.g. operations in another state or territory that may be a target for your company in the future.

Moreover, the project team needs to have a clear idea of

A) What is the procedure of picking a bid
B) What are the quantifiable, measurable criteria and
C) How assessment and grading will be made.

5) Change Management Process

Scope creep, the process of evolving and ever-changing requirements, is a major cause that many projects fail e.g. run over-budget, over-time.

However, ignoring that there may be changes is not an option.

So, especially for complex and longer on duration projects, a clearly defined practical change management process needs to be defined in order  to have a good chance of been successful.

Based on mutual trust a clearly defined process for approaching changes identified (which can be clearly linked to the business objectives) is key.

HOW TO: An effective way to do this is to agree to change control documentation and a sign off process.

Moreover, great tips on the 5 levels of building trust can be found in the book The Speed of Trust by Stephen M.R. Covey

 

The Speed of Trust - 5 Waves

The Speed of Trust – 5 Waves

 

In essence, working on your internal and external relationships is the only way that will provide the necessary trust that is the bedrock on which any change management process can be based on.

 

RELATIONSHIP MANAGEMENT

The Requirements specification  as well as the overall Procurement and Contract Management process are heavily reliant on good relationship management skills.

Ron Larimer in his article My three issues with the Seven Step Model has made this very lucid in the Procurement model he supports:

The Sourcing Wheel

The Sourcing Wheel

 

So, in thinking about Sourcing Excellence I suggest that Jonathan’s quote needs to be modified a little to include the key element of trusting relationships.

Sourcing excellence = professional knowledge + market knowledge + product knowledge + well established trusting relationships

 

What are the successful ways you use to define requirements in your Procurement process?

 

The Leader’s role in setting and keeping the tune!

Recently, Julian Barson posted an interesting remark about the changing nature of business and the role of leadership (post can be found here).

I have posted before about Leadership (here) in the form of a jungle story. Reflecting on Julian’s remarks I believe that there may be another way to think of a leader though.

East Stroudsburg University

Leadership has been resembled by some to conducting an orchestra in terms of conducting a well tuned symphony. I think this is a good start but not the whole story. We should remember that

Excellent pre-work is what ensures the successful performance.

THE SUCCESSFUL ORCHESTRA

Imagine a very prolific conductor of an orchestra who is also the executive producer. She has the passion required, a limited budget and the whole genre of music to choose from, whilst she is operating in a rapidly-changing hypercompetitive environment.

Starting with a vision of where the orchestra should go towards (the so called, True North), putting a competent team together, setting the goals, selecting the orchestra’s target market (which involves the musical genre and particular segmentation and selection), identifying the value proposition and communication channels including frequency and style and ensuring that the “product” is differentiated enough to attract audiences as well as, ensuring that the resources available are best utilised and lobbying is performed for acquiring new resources are, only the start.

Then, the conductor/producer needs to select the orchestra instruments, the right orchestra performers, position them right, select the compositions to be performed, select the venues, the style of music, the time of the performance, keep the orchestra attuned and also get the orchestra to set its own tune.

Setting your own tune

Discussing music, the orchestra’s journey of setting its own tune is a big challenge as, unless there is some kind of familiarity the audiences may not attend.

It is thus worthwhile remembering that:

“We enjoy the familiarity of old tunes as we comfort in the security of the subsequent verse”

On the other hand though, the conductor needs to surpass this familiarity by differentiating the orchestra’s value proposition enough, to keep the audience captivated.

Perform and Delight

And as the saying goes “you are as good as your last performance”.

So, the pressure is on and the expectations need to be set high for audiences to attend. And then, expectations need to be met and hopefully exceeded, creating the much required sense of delight to the audience so that, these come back for more next time.

Continually adhering to these principles means that the conductor will lead the orchestra to success.

Examples

A great example of differentiation, as well as, transformation of a whole industry is, the paradigm of Cirque de Soleil, (you can read more in the now classic book “Blue Ocean Strategy” by Kim and Mauborgne) (a snapshot can be found here).

As Hubbard et al. detailed in another great book titled “The First XI” the “attunement” or alignment of key elements in an organisation is a key for organisational success.

Specifically,

“Alignment of External Environment, Strategy, Capabilities, Culture, Systems, People, Leadership, Structure, Communication, Perceptions” is a key to a winning organisation. – The First XI: Winning organisations in Australia. Hubbard et al.

ORCHESTRA OF ONE

A final note to consider.

Each of us can and should choose our own tune to orchestrate. A fantastic initiative from the Melbourne Symphony Orchestra highlights this point. Enjoy the video below:

Each of us can and should aim to be an orchestra of one. Remember in an orchestra the conductor is the Leader but for example, you also have a lead violin and you can have solo performances equally captivating (see Zoe Keating’s one woman cello band).

As the saying goes said:

Life is not to be spend on the spectator’s seat, get on stage.

It is important to aim to Lead something of importance to us. And if we are in such a position to enable others to become leaders themselves (see here, here and here my posts on team engagement and enablement).

I do believe that the successful companies of tomorrow will be companies of Leaders. Each employee should aim to become a leader on a particular field and will be enabled by a Leader/Conductor who will be setting the tune.

What have you Lead lately?

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George Vrakas (MBA, CMILT) is highly reputed in the fields of Services Procurement and Logistics with over 19 years experience in Procurement and Supply Chain. George is passionate about Procurement, Innovation, Continuous Improvement, exploring trends that will shape the Future, Team Development and the Modernisation and Automation of processes. George is currently serving as a Board member of CILT Australia VIC and is also a member of CIPSA and IACCM. George is the author of http://www.george-vrakas.com blog and has presented on Globalisation, Procurement and Continuous Improvement at various venues and universities in Victoria, Australia.

[Image courtesy of East Stroudsburg University / www.flickr.com]

How to conquer tomorrow?

The accelerating nature of progress in our era makes the challenges and tools required for achieving success quite different from what was relevant 10 or even 5 years ago.

Generic Core Tools for the Future

In general terms, the two core tools that will be essential to individuals and organisations, for attaining success, in the 21st century seem to be:

  1. The ability to continuously learn, connect and adapt.
  2. The ability to nurture a culture of Creativity and Innovation that keeps the value proposition ahead of the competition.

Talent, Tools and Expectations Redefined.

It is apparent that the competitive landscape is changing very fast (e.g. see what happened to Nokia among others, even Apple is starting to show weariness).

It is also becoming apparent that the Customer is not interested anymore in Customer satisfaction as, this is considered a minimum standard “everyone” delivers. As Tom Peters observed, the Customers are now interested in who can guarantee their Success instead.

As a consequence, we are witnessing the Product life cycles dwindling and companies that were thought invincible to wax and wane at a faster pace than ever before.

As the markets evolve allowing, more or less, uninterrupted access to labour and materials, the changing landscape also forces:

  1. Individuals to compete in the talent market on a global scale. Each professional is now competing to be successful in the Talent pool, competing against highly skilled and highly qualified professionals from the developed and the developing world. Furthermore, competition is also against the automation of processes that is eliminating tasks that until now were done by blue or white-collar workers.
  2. Organisations to continuously compete on three fronts: R&D / Innovation and Strategic Cost Management.

Talent

The Talent pool is expanding with ample numbers of highly skilled professionals joining it especially coming from the developing world. Moreover, due to enabling technologies, these professionals are now able to compete on global platforms (see www.elance.com and plenty of other such services).

Moreover, the outsourcing or automation of blue-collar work we have been witnessing for a while is followed fast by automation and outsourcing of white-collar work as well. Outsourcing to developing countries that have lower labour costs is only one example.

Another fast evolving trend is the development of Artificial Intelligence which in its most simplified form consists of the programs we now use and in its most complicated the conceptual models of Ray Kurzweil (now Google’s New Director of Engineering) and others, as suggested by various futurists and thinkers e.g. Juan Enriquez, Andrew McAfee, Rodney Brooks. These new models will most probably shape the paradigm in the years to come.

Moreover, it is viewed that in the future we will not be discussing about the competition between individual companies but about the competition between Supply Chains. This is a trend that in a form was employed e.g by Toyota, already. The integration of Supply Chains as a strategic competitive advantage for an Organisation will only strengthen and new alliances will be formed with focus on efficiency, effectiveness and cost management.

We also now see COO’s such as Tim Cook becoming CEOs (interestingly Tim Cook also headed Compaq’s Procurement before). It becomes apparent that the growing need to manage cost is fast developing. The Procurement sector is thriving and its tools and thinking constantly evolving.

Interestingly, the developing collaborative nature of Supply Chain partners focus on management of costs to a large extent. Furthermore, the need to continuously innovate and remove cost in becoming an element of modern RFP’s adding to the now more established demands for Sustainability  and Corporate Social Responsibility.

Porter and Distortive Technologies

The strength of the company’s supply chain will provide the Cost Leadership required for the company to compete. The other two forces from Michael Porter’s famous scheme described in his classic book Competitive Strategy: Techniques for Analysing Industries and Competitors, i.e. differentiation and market segmentation (or focus) are in the process of been redefined as well.

Differentiation and standardisation were incompatible trends until now. In the future though, the developing technologies e.g. 3-D printing, will make it possible to highly customise products and, at the same time,  achieve standardisation through materials used, versatile designs, programs used etc. This follows the markets demand for having unique products of high quality at the lowest price, instantly. Additionally, the consumption styles are evolving with the definition of success now becoming the creation of a platform e.g. Google, Apple, youtube, alibaba.com This new paradigm expands the market expectation and allows for maximum differentiation within limits e.g. smart phone technologies and apps.

Evidently we also view the rise of a growing number of SMEs that through technological advances are now empowered to compete with the status quo. The playing field has been levelled as Thomas Friedman suggested some years ago. New niches are being created every day. This century may become eventually the century of the SMEs. Considering that technology enables SMEs to enter previously capital intensive industries e.g. manufacturing, and enable individuals to become Home CEOs, the number of industries that will remain with high barriers to entry will most certainly lessen over time. Eventually, as Thomas Friedman eloquently put it:

When the world is flat, whatever can be done WILL be done.  The only question is whether it will be done BY you or TO you”.

In support of these trends we are witnessing two disruptive technologies that will again revolutionise the way we think and act. These are:

  1. IBM’s Watson which is a cognitive system that is learning through interactions and delivers evidence based responses. This development could well revolutionize the way we think about medicine, legal as well as, a variety of other specialist services which we until now thought that would be immune to the evolution of technological change.
  2. 3-D Printing which is fastly becoming accessible to a wider customer base. Actually, the news now is the concept of “4D printing, where the fourth dimension is time. This emerging technology will allow us to print objects that then reshape themselves or self-assemble over time”.

Conclusion

Nobody can accurately predict the future. I think though that Peter Drucker describe it best when he declared that:

“The best way to predict the future is to create it” – Peter Drucker

It seems that the only way to navigate the uncertainty of what is to come is to seize the opportunity of change.

Hence, through the two core tools i.e. a) constant learning and adaptation and b) creativity and innovation, to create the future as we dream of it.

In future posts, I will be discussing about specific tools that can be used to better organise learning, continuous improvement and innovation.

Below are some of my favourite quotations from visionaries contemplating the same concepts:

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” — Alvin Toffler

“The job isn’t to catch up to the status quo; the job is to invent the status quo.” – Seth Godin

“People can be divided into three groups: Those who make things happen, those who watch things happen and those who wonder what happened.” – Anonymous

What are your thoughts about what the future brings?

What additional skills have you learned or plan to learn this year?

 

[Image credit: shutterstock.com]