Peter Drucker famously said that efficiency is doing things right, whereas effectiveness is doing the right things. He asks where the resources and efforts of the business should be allocated to achieve effectiveness. Creating value through relentless customer focus seems to me to be a good place to start.
I recently wrote about the fundamentally social nature of business processes. Blog posts I read since then have triggered off further thoughts:
Beginning with the Economist blog post, two things particularly caught my attention:
“The notion of value is being redefined for the 21st century. Consumers have choice. They want personalization, and to participate in value creation, shifting the mindset to “made with me.”
“Small-scale manufacturing, including 3D printing, will reshape production. “
Why just small-scale manufacturing? Speed, responsiveness and agility have long been a source of competitive advantage for large and small manufacturers alike. Larger manufacturers will also be able to capitalise on using 3D technology and adaptations of well-established, agile working practices (customer-focus, short runs, rapid machine set-up, demand-pull, process integration, continuous improvement etc) in shifting from mass-customisation – made with me and my choices in mind – to personalised customisation – “made with me”.
Tracing a trajectory
I prefer to use the word ‘customer’ rather than ‘consumer’.
In a paper reviewing a range of value-creating process perspectives, Denison summarises Porter's value chain concept as "a linked system of interdependent activities that are the building blocks of competitive advantage." Although the value chain has been hugely influential, there is currently a claim that Porter’s model no longer applies.
In my view, the value chain, or its updating as 'value network', remains useful in making it explicit that how systems, activities and relationships are combined and managed can create competitive advantage.
Customer focus, processes (what people do together to serve customer needs) and creating value are inextricably linked. Customer orientation was at the core of the Quality movement, which extended through time into Just-In-Time, Lean and Agile Manufacturing approaches. Teams in different parts of a production process were encouraged to regard each other as internal customers.
But internal customer orientation, although vital, is not enough. Denison criticises early quality approaches for restricting value creation to waste reduction and not "re-conceptualising customer needs or new products".
Reviewing other process-based perspectives , for example Lean, Mass Customisation, Network Organisation, Learning Organisation, he categorises them by whether they manage, organise or re-design the value chain. As process approaches matured, they shifted from a predominant focus on efficiency to include effectiveness, doing the right thing for customers and the business, through re-designing value chains. He says:
"The management of the set of relationships that define a value chain becomes an important organising capability."
As well as process-based approaches being based on a philosophy of whole workforce involvement in innovation, they were also about putting people at the centre of customer-focused value creation – people viewed as solving problems rather than a source of problems.
Problem with process?
This brings me to Euan’s blog post, in which he writes about his sense that we are losing our grip on reality. Of corporate culture, he says:
“... the slow anesthetization of staff through endless obsession with process, the loss of passion and true engagement. I saw this in the well oiled machine that was my hotel in Dubai. Superbly efficient systems and impeccably professional staff but soulless and inhospitable in a deeply unsettling way. “
This sounds like submission to a Stepford Wives version of process - robotic and mechanistic with human warmth removed and lack of concern for making the customer feel cared for. It is of course possible to have efficient systems and friendly, caring staff at the front-line with the authority to challenge and adapt processes as they get feedback from customers, and having the discretion to deviate from rigid policy as situations arise. The problem is not with processes but how people are expected to engage with them.
Problem with customer focus
One of the comments to the post includes the observation that as a result of extensive re-engineering the “customer is almost always now the prisoner of the business process”. And this applies to internal customers allowing themselves to become prisoners of rigid processes.
The comment resonates with personal experiences in recent months with two banks and a solicitor. I received acceptable recompense from the solicitor but only after rejecting their efforts to implicate me in their mistake, then abject apology with no financial recompense, followed by rejection of derisory offer. This took months of effort. One bank responded admirably to address an issue, the other certainly did not. Do I have the energy to go the the Financial Ombudsman?
When did we lose customer focus as a key organising principle? On reflection, I am wrong to talk about ‘tracing a trajectory’ because a trajectory implies upward progression through time – at least it does to me. Instead what we have is widespread organising to control, minimise cost, variability and risk to the detriment of customer experience.
So will we see the beginnings of a return to relentless customer focus in 2013? Who knows? I am not holding my breath.