The last few months have seen disruptions in the deep-rooted paradigms of almost all businesses. Today we know that the future is going to be different.
Companies in all sectors face one big challenge: it´s about implementing changes with an impact in order to cope with the new normality, to be safe. Those that want to survive have to restore their business activities in an agile and efficient way, with maximum focus on customer loyalty. They must become High Performance Organizations. Leading such an organization requires continuous reinvention throughout the organization.
At ActioGlobal – based on our experience in various sectors and countries – we have developed the “FUEL” framework capturing the key drivers for an enterprise that strives for being a leader in its sector. We were using it before the pandemic in organizations that aspired to turn around their current situation. And with the Covid-19 crisis, it has become even more mandatory.
FUEL combines the four basic keys to create an organization that is agile, adaptable, fast, efficient, capable of questioning its paradigms, continuously exceeding results and winning on the market.
That’ s the way to go:
- Fit for the New World – Change your work culture and mindset in order to question all the most basic paradigms of the business.
- Understand (new) Customer Needs – Consider that they are constantly changing. Customer Experience as a starting point.
- Eliminate the Non-value Added – Focus on continuous improvement – every organization thinks in terms of added value.
- Lead the Next – Build an agile digital culture.
Fit for the New World – A change of culture and mindset
First and foremost, we have to start by breaking the inertia. We have to start by absolutely questioning all the very basic business models that have brought us to where we are now. We have to review all our beliefs and invalidate our assumptions of the past – finally, we have to change our way of thinking. Here I refer to Jeff Bezos’ (Amazon) well-known philosophy – “Day 1”.
This concept enables us to start from scratch, to challenge the status quo that does no longer permit us to achieve results in today’s environment of exponential change. In fact, at the beginning, a startup organization tends to operate with speed, agility and a risk-acceptance mentality, but as the business grows, complexity begins to increase. Startups that were once agile, inevitably fall into the trap of “big organizations” characterized by slowness, rigidity and risk aversion. So we have to deliberately turn it around.
Next to the “Day 1”- philosophy, there is another insight that we recommend to our clients – ensuring the five “rights” are in place:
The 5Rs, that are:
- 1-Right Work – Attention to differentiable work and work that does not add value.
- 2–Right Size – What should we automate, what service level can we shift, can we resize?
- 3-Right Structure – Adjusting organizational design to the right work and size.
- 4-Right People – How we ensure talent and skill-set is available at any time.
- 5–Right Measure – Measure against the aspiration the organization pursues.
Does your organization meet these 5 criteria? If you aspire to lead the future the answer to each R should be “yes”, and if it’s not you should have a solid plan on how to close the gap.
My usual question to management and CFOs is “how much time do you spend preparing the annual budget and what methodology do you follow?”. Well, I get several answers here, but each one reveals a time consuming process, based on the past performance.
And then I ask: “How precise does this budget turn out to be?” Right at this point, the conversation starts to get interesting …
Changing and adapting this new way of thinking also helps Zero Based Mindset (ZBx) which values agility over austerity, visibility over guesswork and forward thinking over the past. It helps to drive competitive agility in all aspects of the organization.
Several health metrics of business support us in adapting to this mindset. One of the most revealing for many companies is return on investment (ROI) but down to the operational level. ROI should be a strategic indicator in every area of business, including the less tangible ones such as sales and marketing campaigns.
“How much profit do we generate for every euro of expenses?” It’s this question we need to ask at every level of the organization with more people than only the CFO knowing the answer.
We should also consider another metric – the Human Capital ROI (HCROI), to analyze and create a suitable atmosphere for employees, to find out what external and internal factors influence productivity and whether there is a proper level of leadership in place for employees.
We all have metrics – certainly the % of turnover in our teams. But how many companies have calculated the true cost of this staff turnover (incl. job post, HR time, learning curve)?
Today, more than ever, organizations must be outward-looking. Let’s stop navel gazing and compare our performance and results with the “best in class”. Benchmarking is the best way to get fit for the new world.
It´s: BEAT the Benchmark!
Understand (New) Customer Needs–Customer Experience as a starting point
In this era of exponential change, it is essential that we redefine the service/product offered by your business, not only to respond to the customers needs but also to surprise them, touch their emotions and build customer loyalty.
Today, you don’t want just customers – you want fans. Not only do you expect them to recommend you, you want them to defend you if someone tries to damage your reputation.
When our clients, different businesses and organizations, feel the need of this transformation, they ask us: “And where do I start?”. We reply that the starting point is always the customer experience. Understand your Customer’s Journey to create a strategy focused on the critical points of this experience.
The entire team (and not just the front-line, customer-facing team) needs to understand that consumers have different levels of anxiety and emotion during their journey. To empathize with them and detect these “touch points” that can be impacted, customer emotional and physical journey maps can help. This is an essential exercise for all teams dealing with external customers, and as far as possible also for back-office teams dealing with internal “clients”.
Our experience during many transformation projects has shown that the key to differentiate yourself from the competition is to create a strong emotional relationship with the customer through unforgettable moments. No business deal can equal that.
The main keys to this classic Ritz-Carlton model are to turn problems into opportunities, to increase engagement through “service recovery” and the Empowerment. Empowerment is based on establishing a problem-solving process, driving accountability and empowerment. This operating principle authorizes and empowers each employee, regardless of any hierarchy level, to resolve any issue or to service customers using the company’s financial and human resources without prior approval. Sounds risky? It certainly does, but without risk there is no reward, and here the reward is definitely worth the risk.
Once we (re)discover new opportunities to create a better experience and a stronger relationship with the Customer, we have to update and collect the satisfaction of the service/product through NPS (Net Promoter Score). Analyzing customer satisfaction, implementing a permanent Voice of the Customer collecting system (pop up surveys) makes it possible to create a stronger service or product and increase sales.
NPS analysis is the first step to continuously improve value delivery. And I don’t mean building statistics and reports, but going further in “connecting the dots” and uncovering the root causes of errors in value delivery at the operational, structural or systems level.
And since technology is here to stay forever, let’s not ignore Big Data to determine which aspects of the customer experience are most likely to affect NPS and correlate them with existing solutions and preventive measures.
Eliminate the Non-value Added – Focus on continuous improvement – every organization thinks in terms of added value
Increasingly, organizations need to clean their processes of everything that does not generate value for the customer. We have to go back to basics and reactivate the primary principles of LEAN methodology. Discover and act on non-value creating activities by applying classic tools such as the “Waste Walk” – identification of waste in a process, or “5S” (sort, set in order, shine, standardize, sustain) which translates to a commitment to continuous improvement and increased productivity.
Once we have got rid of these non-value-added resources, we can focus on what will allow your organization to grow. Let’s improve operational efficiency by consolidating processes and creating value stream maps. Review team tasks – what percentage of their time do they currently spend on each task and what should be the ideal state to ensure your business growth and customer value delivery?
I would like to recommend to you the The Toyota Way, where the 14 Principles of the Toyota Way (the book by Jeff Liker) as well as the experiences of ActioGlobal are described.
To adapt your business to the new normal of the future, identify the levers to be activated.
You cannot do it all, so what generates the most impact? Prioritize activities using the ICE (Impact, Confidence, Ease) ratio or any other prioritization tool.
- (I) – Impact demonstrates the extent to which your idea will positively affect the key metric you are trying to improve.
- (C) – Confidence shows how certain you are about all your estimates, both about impact and effort (how realistic your estimates seem to be).
- (E) – Ease of implementation. An estimate of how much effort and resources are required to implement this idea.
Make sure all team members are clear about their responsibilities and roles in performing tasks and deliverables for a process or project. Do all these actions have an impact on the customer by delivering value?
Assign tasks in an organized way and enhance collaboration via one of the many digital collaboration and teamwork tools available.
Analyze and discover also all opportunities in terms of sales and costs. 1$ more on the best-selling product can generate significant revenue per year. 1$ less on the cost of the most purchased supplies can generate great savings. The most telling savings can originate from a review of your contracts with your utilities suppliers (gas, electricity, water).
Align “good” and “bad” costs. “Good costs” relate to value-added activities that directly contribute to the business value proposition, whether customer- or product-focused. “Bad costs” relate to those activities that, while potentially necessary, do not directly contribute business value.
Can you get your entire organization to think of value and avoid waste?
Lead the Next – Build an agile digital culture to lead the future
Integrate the right routines and define objectives focused on the customer’s changing needs. What is your destination? What are your victories? The most exciting change I have experienced in the last few years is to see a change in mindset that has made us think of impacts and not tasks or projects.
Define the metrics of success for the business and the initiatives that impact the pre-defined objective. Embracing OKRs and the New Way of Working with self-organized teams will deliver what is needed for business success – trust and transparency.
Many organizations, especially more traditional and customized service-focused businesses, are not eager to invest in technology, as they do not clearly see the return in the short term. You’d be surprised how many billion-dollar-companies are still using Excel (see the BCG Digital Ventures study). But let’s revise this short-term vision and embrace digital tools for objective and task management.
In one of our projects carried out, we saw that the implementation of the overall management system provided us with the opportunity to
- improve quality by resolving common deficiencies before they are experienced by the customer,
- allow redistribution of tasks and ensure timely execution,
- improve communication between operational departments,
- identify opportunities for cost efficiency.
To reduce any risk and fear of the unknown, we always recommend experimenting. There is nothing more beneficial to a business than customer-centric experimentation. However, we recommend the more classic approach – testing an innovation, making a small-scale change at the operational level (e.g., on one floor, a shift, a piece of equipment, etc.) that can be implemented in less than 30 days as a pilot test. Such an approach is quick, low-resource and immediately reversible. It lifts barriers and improves speed to market. Experiment continuously!
Leading for the future requires business innovation, and the most crucial element is your employees. So make innovation fun and an equal opportunity for all. Organize brainstorming sessions, directed ideation, using techniques such as Brainwriting, Scamper, Random Word Association, Reverse Thinking, use mind maps, where everyone could come up with a game-changing idea. Your teams, who have multiple interests, travel and speak languages, are an incredible source of ideas. You will be amazed by the potential and creativity of your teams!
The road named FUEL is long and bumpy. But if your organization is: a business that wants to emerge stronger from a disruptive situation, needs to review and/or question its operating paradigms, or strives for identifying opportunities in a crisis environment – take this road with enthusiasm.