The Challenge
If we consider the challenges of succeeding in business in the 21st century, most major companies would come up with a similar list:
When they talk about their customers
> Competition is fierce, global and increasing.
> Customers have become rebellious, they realise they have the right to alternatives and they frequently exercise that right.
> Customers have high expectations, they demand more and unless that demand is met they will go elsewhere.
> Customers demand choice, comprehensive information and the best price.
When they talk about their operations
> Operations, structures and business flows are becoming ever more complex
> The process of change is becoming ever more complex as the obvious improvements are delivered and the focus is on looking for new improvements often with diminishing returns
> A significant proportion of change projects under-perform and do not achieve the desired outcome
> There are so many alternative methods to effecting change out there it is difficult to select which one makes most sense for my business
When they talk about their overall business performance
> I fundamentally believe I offer a superior product and/or service but I’m still struggling to make the returns I believe possible
> I strive to be a market leader, I believe we have the capability to be a market leader but the issues above prevent me from getting there
> It is difficult to markedly cut my costs without impacting my service levels
> The impact of the global recession has affected my business and our fortunes won’t markedly improve until the business environment improves.
There may be additional comments however this is typical of observations from companies all over the world. And it is getting worse.
It isn’t though we don’t have choice in improvement approaches. As of 2011 there were over 6000 improvement methodologies all geared to helping organisations improve performance. How do you decide which one works best?
How do you ensure sustained business improvement when the average CEO in the 21st century lasts 3 years and each new regime brings fresh ideas but a lot of the same issues?
Origins of Outside-In
Despite all the issues documented above there have been companies who have regularly ‘bucked’ the trend and posted great business results, grown significantly and sustained that growth. For example SouthWest Airlines posts 58 consecutive quarters of profit when most of their competition made huge losses – in the case of Delta this has been billions AND more than once ‘achieved’ in just a quarter!
Apple have introduced innovative new products and regularly posted impressive results and increasing market share when organisations like Motorola who used to be one of the main players in the mobile handset market have dramatically suffered despite having gone through numerous iterations of business improvement.
What is Outside-In in the context of the BP Group?
1. Outside-In is a philosophy and method of managing an organisation by understanding and delivering Successful Customer Outcomes.
2. Outside-In Process optimizes value-delivery to customers. By fusing customer-driven process with customer-centric strategies, O-I creates successful customer outcomes (SCOs) – the foundation for achieving sustainable growth and profitability in an increasingly buyer-driven marketplace.
(Customer ProcessOne Council, May 2010)
(http://www.bpgroup.org ).
There are four levels of recognition:
- Certified Process Practitioner (CPP-Practitioner)
- Certified Process Professional (CPP-Professional)
- Certified Process Master (CPP-Master)
- Certified Process Advanced Master (CPP-AdvMaster)
There is a rapidly developing cadre of people and organisations delivering Outside-In training, consultancy and advisory services with case studies, presentations and podcasts at http://www.oibpm.com
The 20th Annual BP Group conference will have a strong flavour of Outside-In with notable organisations who are the pioneers of Outside-In present and delivering case studies, tutorials and workshops.
Not least of which is the fifth book - Outside-In, now in its third edition (http://www.outsideinthesecret.com)
Outside-In Themes
Outside-In has been developed with a number of supporting themes designed to help the organisation apply and deliver business improvement on a sustained basis.
Exclusive focus on Successful Customer Outcome
The approach we have distilled from global leading companies, which we call Customer Expectation Management Method (CEMMethodTM), has a set of principles and philosophy that ensures everything you do is aligned to and improves the SCO. CEMM helps an organization bring their processes, systems, strategy and people into ‘outside-in’ alignment.
Every company in business today will impact Successful Customer Outcome to a degree – they have to otherwise customers would not buy. Outside-In is built on the philosophy that the better a company understands Successful Customer Outcomes the more business it will win as a result. Further applying the thinking takes you to places (i.e. business opportunities) that your competition has never been able to exploit and perhaps never thought about.
Apple are producing applications that people never thought they needed whereas Nokia who have built what they believe is a technology superior mobile phone has had to re-think their approach to business amidst falling revenues and margins. Southwest are close to the era of the free flight ticket and enjoying consistent profitability whereas British Airways are going through possibly the worst business fortunes in its history. If you think about it, an airline is a business which are made up of the same commodity components – similar aeroplanes, customers with roughly the same wants/needs, airports with the ability to offer the same services (if they choose) – yet some operators are flying high and others are sinking towards government bailout or bankruptcy. Both southwest and BA will claim customer centricity but Outside-In defines the important outcome components that are critical to business success and under this lens it becomes very clear that BA is left wanting.
Efficient delivery of the SCO
Outside-In is designed on the premise if a process or operation does NOT contribute to the Successful Customer Outcome - you don’t do it! On first analysis this may appear a difficult to rationalise in a practical sense – most organisations have non-customer facing departments – how can the principle of the SCO still apply?
Non customer facing business areas may not directly ‘touch’ the customer but they are almost always connected to customer facing areas as a support or policing function. Unless these non-facing customer departments are also aligned to the SCO then at best they carry out unnecessary tasks which increase the cost base and at worst significantly prevent the achievement of the SCO.
Examples of how non-customer facing can impact the SCO:
- An HR department for a software company might change the rewards that the sales function receive to better align with the SCO. This encourages active qualification and delivery against real customer needs rather than traditionally on revenue contracted which may cause non-customer centric behaviour (to get ‘a deal’ leaving a legacy of problems and reduced future business potential downstream).
- The finance department with a good understanding on expense run rates may have a trust based process for all expenses within a specified threshold for the sales and delivery teams. The cost of extra expenses is more than off-set by reduced manual effort and the sales/delivery functions left to focus on their core objectives.
- A printing company may decide to remove all its print shops because the customer can now define exactly how he/she wants the delivery to look via a simple downloadable print tool and the SCO says the delivery comes to a place of my choosing when I want – I no longer have to go anywhere to discuss/review/pick-up etc
- A lift manufacturer may decide to outsource the manufacture of its lift doors but not the open/closing mechanism because the door itself can be produced to the specification required and the implication on the SCO is easy to control.
- A fashion company may decide to centralise its production operations close to its operational headquarters rather than the traditional low cost production centres in China because it can facilitate high velocity in its design to shop floor objective that the customer demands.
In other words Outside-In thinking helps firstly to identify work that does not contribute to the SCO – which is removed, and secondly helps identify work that does contribute to the SCO and optimises.
Organised to sustain performance change focus
Outside-In is more than a series of tools and techniques to view and improve our business. It is designed as ‘practical thinking’ or a ‘business attitude’ to be orientated to as much of the business that the practitioner or management requires. If implemented to the greatest degree then a company may design and represent its organisation charts around the customer with the customer as the driving central theme. It may represent performance measures using Outside-In measures as its KPIs.
The thinking does not prevent other techniques from being used in analysing and improving our business but it does ensure Successful Outcome is maintained as a central theme even when CEO’s, boards and senior managers change. If focus is only maintained at a tools and techniques level they tend to be pigeon holed into a specific silo and more likely to become forgotten or ignored as the latest panacea for change raises its head.
Taking the Complexity out of how we view our business
One of the issues that change practitioners face is that of the underlying complexity of the business we are trying to improve or change. When we move from high level management representations to process detail, a much more complex picture emerges which we have defined on the basis on that’s what we do. But if we look at that process again from the customer viewpoint then the process is very different. Outside-In shows that the way we traditionally view process is an illusion and prevents us from viewing business in a way to enable significant change. Viewing what we do from the perspective of the customer enables us to think of performance change initiatives that would never been possible if we had studied our business from the traditional left to right top to bottom basis inherited from the industrial era.
How many changes to the way we do business seem obvious once we have identified what they are but somehow eluded us when we are looking at our businesses as a ‘haystack’ of processes?
Developing a methodology we can all apply
Sustained change is best effected if it can be articulated in a way the whole organisation can understand and be part of. Keep it simple.Too many people surround themselves with a jargon and levels of complexity in an attempt to create mystique around their work. This is confusing, expensive and debilitating.
The thinking, tools and techniques within Outside-In can be applied directly to our own organisations after less than a week of training. The terminology used can be adopted if necessary across an enterprise although in reality many will apply the tools and making changes without ever having to be too specific as to the techniques used. This may range from the individual improving performance to a broader remit such as influence with change programmes at the corporate level. Change which the whole organisation can relate to and understand is more likely to succeed than change prescribed by specialists using consultantese.
The world’s most successful organisations are often characterised as those where the staff are seen to be driving and feel part of the business. Giving staff a practical understanding of the techniques that enable change will turn change into an opportunity rather than a perceived threat.
Success Measures aligned to business delivery
Ultimately any change has to be judged under the measures that directly relate to the business – revenue, cost base, shareholder value, market penetration as well as softer but still important qualitative measures e.g. customer satisfaction, market reaction, analyst appraisal.
Outside-In can impact all of these measures and moreover simultaneously – this is referred to as the Triple Crown.
… more soon …
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