A well-established, prestigious sports club nestled somewhere in the idyllic countryside seems like a foolproof business model. That is, until its leadership team noticed a steady decline in membership numbers and lower levels of overall engagement from its resident members. It could be safely assumed that they had rested on their laurels for some time, and its CEO, desperate to reverse the downturn, decided that the solution was to become more ‘customer-driven.’
Having finally had our proposal accepted by our client, a signature on the contract seemed like a mere formality. That’s when we were stung by the email from the clients purchasing department; to secure the Purchase Order, they would be looking for a 20% reduction in price.
We heard of this story this week – a wonderful example of over-engineering a solution (excuse the pun) when your workforce may know an easier fix all along.
A toothpaste factory had a problem. They sometimes shipped empty boxes without the tube inside. This challenged their perceived quality with the buyers and distributors. Understanding how important the relationship with them was, the CEO of the company assembled his top people. They decided to hire an external engineering company to solve their empty boxes problem. The project followed the usual process: budget and project sponsor allocated, RFP, and third-parties selected. Six months (and $8 million) later they had a fantastic solution – on time, on budget, and high quality. Everyone in the project was pleased.
They solved the problem by using a high-tech precision scale that would sound a bell and flash lights whenever a toothpaste box weighed less than it should. The line would stop, someone would walk over, remove the defective box, and then press another button to re-start the line. As a result of the new package monitoring process, no empty boxes were being shipped out of the factory.
With no more customer complaints, the CEO felt the $8 million was well spent. He then reviewed the line statistics report and discovered the number of empty boxes picked up by the scale in the first week was consistent with projections, however, the next three weeks were zero!
The estimated rate should have been at least a dozen boxes a day. He had the engineers check the equipment, they verified the report as accurate.
Puzzled, the CEO traveled down to the factory, viewed the part of the line where the precision scale was installed, and observed just ahead of the new $8 million dollar solution sat a $20 desk fan blowing the empty boxes off the belt and into a bin. He asked the line supervisor what that was about.
“Oh, that,” the supervisor replied, “Bert, the kid from maintenance, put it there because he was tired of walking over every time the bell rang.”
So the call to action is – always involve your teams in creating solutions to your customer and service issues.
Do you have similar stories to share with us? Reply to this and share your experiences….
Having Trouble With Your Partner?
“Signed, sealed, delivered – I’m yours” sang Stevie Wonder and that suggests the beginning of a beautiful relationship.
If only that were true for customer and supplier relationships, whether in projects or longer term contractual connections. The “signed and sealed” seem relatively straightforward and mostly the contract sorts those things out. “Delivered” starts to show the cracks and “I’m yours” is probably the heart of the issue.
Of course a supplier who is, quite simply, not keeping to the conditions agreed in the contract deserves to lose the customer sooner or later – particularly if there is any hint that the promises made were only to get the signature. The gradual decay of care, attention and over the period of the relationship is more insidious and can lead to shock and surprise when the customer walks.
Elizabeth Taylor said “When the marriage is on the rocks the rocks are in the bed” – now without taking the analogy too far it’s about intimacy and the parallel is it’s often the most difficult thing to talk about – and paradoxically the least talked about issues tend to be the ones causing the biggest relationship problems. They’re both the symptom and cause of the breakdown.
The issue, then, is not so much what’s in the fine print of the contract but what the expectations or implied promises are … and sometimes these are not those things which can be explained rationally, logically and in contract terms. The growing sense that a supplier isn’t that bothered about the business is not expressed in service delivery percentages but in how hard it becomes to do business with the suppliers’ staff, how sales staff only seem to call when their figures need a boost and the impression that you’re an inconvenience not a treasure. The final insult is the impersonal customer service survey which arrives in the email – conducted by a market research company. “Hello darling – I notice we haven’t been getting on too well recently so I’ve asked a relationship counsellor to send you a satisfaction survey…”
But how do you find out what’s really gnawing away at the customer’s sense of worth, value and importance before it’s too late? How do customers themselves surface and prioritise the core concerns? How do you work out what is important and urgent to fix if the relationship is to prosper and flourish?
A recent addition to the market place could help you do just that. PROMIS® (PROject Measurement and Improvement Service) is simple yet profound in its effect.
The service helps you hold meaningful conversations with your customer by finding out what’s really going on for them. To quote co-founder, Bill Fonvielle, “We bring the provider team together with the customer team (face to face!) in facilitated sessions to make the customer’s expectations of the working relationship explicit.”
Scary stuff? Not as scary as telling your boss the contract just disappeared and you don’t know why.
Sometimes, we just cant help ourselves can we?!
In an effort to gather new ideas and make things better or simpler for our organisation and customers, we put in so many checks and balances ( to make sure the change idea is worth it, we tell ourselves) that we end up crushing the life out of any innovation that is out there.
Read the following real life example of change bureaucracy gone mad … then … Be honest with yourself …
– Does it sting with the knowledge that you do some of these things in your organisation?
– Do you collect Customer Feedback or Change Ideas and then nullify its value by stifling the change process?
Go on … read it and …
The Treasury Board’s inefficient mission for efficiency
In the boardrooms of the federal government’s Treasury Board Secretariat, a “high-priority” plan was afoot.
Managers at the agency, which oversees government spending, dispatched emails marked urgent, with three, four, sometimes six people copied per message. Officials stamped documents “Confidential.”
Plans were “pre-screened,” then screened again. There were committees, meetings and “scenario notes.” Memos and templates for memos. PowerPoint presentations resembled battle plans.
The mission: To make government more efficient.
It was the summer of 2010, and the Treasury Board Secretariat (TBS) was about to launch the Employee Innovation Program — kind of like the employee suggestion drop box by the water cooler.
Except, nothing like it at all, as TBS employee Anna Bevilacqua was about to discover.
Bevilacqua’s proposal was one of 20 by TBS employees lured by the promise of up to $10,000 cash as a reward for coming up with a plan to cut government waste.
“One of the biggest problems in TBS is the booking of boardrooms,” she typed in the modestly titled Employee Innovation Program Proposal and Approval In Principle Form. “You can literally spend days booking a boardroom.”
The federal agency’s employees spend a lot of time in meetings. Evidently, in 2010, the agency’s 123 boardrooms in at least 10 Ottawa locations were not enough to easily accommodate them all.
Bevilacqua proposed a seemingly simple solution: A web-based system that used existing software to save TBS workers hours of booking per week.
Would her idea take flight? Or would the Employee Innovation Program stymie her simple proposal to make it easier to reserve a boardroom? In either event, would her bosses have difficulty booking a boardroom to decide her idea’s fate?
When then-Treasury Board President Stockwell Day launched the program, he heralded it as “a win-win.” Taxpayers would get better, more efficient service while the public servants in Prime Minister Stephen Harper’s government would be rewarded for their creativity.
The employees who answered the call for creativity had to follow several rules, including: An employee could not make a suggestion without his or her boss’ approval; and proposals that might lead to a change in TBS policy would be rejected.
Managers tracked the proposals using a spreadsheet that noted the date and exact time a proposal was received, whether an individual or team of workers made the submission and the date it was received by a committee of three TBS managers.
The program designed to cut waste was taking shape. A bloated, forbidding shape.
The federal government’s inefficient search for efficiency turned the program into a Catch-22 that would ensnare Bevilacqua.
At 2:02 pm on Sept. 30, 2010, she submitted her proposal. Twelve minutes later, her idea had been forwarded to six officials overseeing the program.
Four managers formed a “Sub-Committee for Initial Triage” to conduct a “pre-screening” of the proposals. The selection process would be guided by a flow chart with text inside parallelograms and rectangles connected by arrows.
The winnowing began.
At a special meeting Oct. 13, the Management and Infrastructure Committee, also known as MIC, decided which plans won “approval in principle.”
The MIC rejected 11 of the 20 proposals.
Bevilacqua’s plan survived Phase One. Now the real work would begin.
Bevilacqua needed to complete an “implementation framework” document. If she failed to “clearly define objectives, benefits, deliverables, exclusions, assumptions, responsibilities, estimated costs and timelines,” if her plan did not identify possible “slippage in target dates,” if it did not use a “risk log” or a “risk mapping approach,” it could die in Phase Two.
She and the other applicants were warned: “A wrong plan is worse than having no plan at all.”
Once completed, Bevilacqua’s business plan would be evaluated by the MIC for final approval.
Meanwhile, managers emailed back and forth, debating next steps, drafting and sending memos, the more important of which required an accompanying “routing form” — a piece of paper indicating which managers approved a document.
As fall approached, activity at the Treasury Board intensified. Deadlines loomed. The president of the Treasury Board was drawn into the widening need-to-know circle.
Program managers figured it would take six months for a winning proposal to demonstrate cost savings. In order for the Treasury Board president to hand out an award during the 2011 National Public Service Week to showcase the program, the approved proposals would have to be implemented no later than December. Time was running out.
On Nov. 3, in an email to nine people, a planning and project management officer wrote that Day needed to be updated, and she outlined how that would be done:
“Before we can bring it to Parliamentary Affairs we will need to have Yazmine and Daphne sign the routing slip … Mary signing it first thing tomorrow morning, and then it will be brought to Yazmine’s office.”
The routing slip shows six TBS staffers approved the memo.
Bevilacqua was one of four TBS workers still in the running for a possible $10,000 cash reward.
The vetting and revising and perfecting continued. Each surviving proposal was screened by the Treasury Board’s chief information officer, deputy chief financial officer and chief financial officer.
On Nov. 17, Bevilacqua presented her 12-page plan. Employees she surveyed said they wasted nearly four hours a week looking for and booking spaces. She estimated the online booking system could save the government more than $115,000 in its first year.
But there was a problem, maybe two.
Her proposal could meet resistance in the cut-throat world of boardroom booking. Assistant secretaries and administrators could refuse to “relinquish their control/ownership of a particular boardroom.”
The other issue: An email circulated among managers noted her business plan “could be enriched in writing style.”
Nevertheless, the committee reviewing Bevilacqua’s plan liked what it saw. A “simple concept” with “no significant IT changes … low cost … easy implementation.”
The months of meetings, memos and emails confirmed her idea was a no-brainer. Her plan would be put into action.
A congratulatory note was vetted by three people before it was sent to her.
Then, the extensive trail of TBS paper — nearly 550 pages obtained by the Star through Access to Information legislation — ends in late 2010.
Until Sept. 27, 2011, about a year after Bevilacqua made her simple proposal, when a memo to the Treasury Board president said the information management and technology directorate, not Bevilacqua, had developed and launched a new automated boardroom booking process.
Bevilacqua had retired from public service before her vision of hassle-free boardroom booking materialised. Reached at her home in Ottawa, Bevilacqua told Star reporter Joanna Smith that she did not want to be interviewed.
Eight federal departments have participated in the innovation program since it launched in the summer of 2010, including Health Canada and Veterans Affairs.
Nearly 700 employees have submitted proposals to make government more efficient.
Ten of those proposals have been approved. Program managers are still measuring whether any have generated savings.
A spokeswoman for current Treasury Board President Tony Clement emphasised that the two-year-old program “was a pilot project” and said “many things were learned as the process unfolded. We are committed to supporting employees in ongoing efforts to become more efficient and effective.”
Not one employee has received a cash award.
Hmmmm – food for thought, don’t you think?
Customer Expectations vs. Price
Latest Mori study reveals customer loyalty still outweighs price.
Consumer buying behaviour is always an interesting reflection of group think in the B2B customer relationship world. Whilst the spend and triggers may be different, the attitude towards customer relationships and loyalty tend to have many similarities across the 2 audiences, which is why I found the recent research by Ipsos Mori and The Logic Group interesting.
According to the study, the bargain online discount organisations have the highest uptake across loyalty schemes, although customer satisfaction with these types of schemes is amongst the lowest. Put simply, the bargain hunting British consumer will shop around for the best discounts, but a majority (70% of respondents) still prefer loyalty schemes where they can get better offers and services for being more loyal, and almost half (48%) expect to get better service from their loyalty scheme membership than normal shoppers.
Is this really any different in the B2B environment, I ask myself?
I think not, and more to the point, it made me re-visit a few questions about shared responsibility and the trends I see constantly in our B2B buying decisions.
In business there is much at stake if the supplier does not deliver, and in many cases a lower price is not indicative of some fantastic new streamlined supplier capability, but a trade off on some level within the offering, or at the very least is a loss leader for the supplier who consequently has trouble affording the support required for the contract.
Financial cuts mean most companies are shopping around for the best deal in the current environment (just like the consumer) and some are forced into buying on price alone due to their internal mandates
The reality is that our expectations as customer organisations are still high, and rising, but we want it all at a knock down price. The trend is becoming almost extreme, and all the calls to action put the responsibility on the doorstep of the suppliers. It truly is a buyers market.
But Is this a realistic expectation? Is it fair that suppliers should have to go to extreme lengths and massive engagement costs to jump through your hoops and tick all your boxes only to be told in the final stages that they have to cut their price by a 3rd if they want to do business with you?
Do customers not bear some of the responsibility for finding the right balance? Are we not prepared to pay a bit more, lock in for a bit longer, or simply come back more often to the company that makes our lives easier, delivers what we need and adds value without the hassle, so that we can focus on our own core business?
The long term data suggests we would! Just like the consumer, we would rather be loyal to a good supplier than hopping round from place to place every time, and yet we still can’t resist that bargain!
A sensible balance is supposed to be managed through our increasingly sophisticated purchasing practices. We give purchasing a long list of requirements and quality standards and leave them to hunt down and negotiate hard on price. Nice idea, but something seems to be getting lost in the execution.
Once the bargain solution is acquired, reality starts to dawn. We will whine about poor quality or service, complain to the supplier, get frustrated, thump the table a few times and eventually may leave when it gets to a mission critical Point.
Meanwhile – Hassle has a cost. Lack of value add has a cost. Fire fighting issues has a cost, lengthy repetitive sourcing has a cost, and yet all too often we seem to be willing to absorb this into our organisations, not counting the wastage and lost opportunity once it is hidden and dispersed amongst our daily practice. The irony is, when added up, this “hidden” cost is usually worth considerably more than the supplier discount you were fighting over.
Our suppliers are also effected. What if they could spend their money on delivering quality value and service, rather than spending it on high engagement costs, cutting their resourcing to meet low price demands and then re-working quality or delivery issues, spending hours fielding your complaints and managing your (maybe) unrealistic expectations?
The net result is that neither party is happy or able to deliver their best to their intended audience.
If customers were smarter, we would would be better at using our management and measurement systems to track this kind of wastage, and balance this against the associated prices and specs that our suppliers give us at the point of buying.
To some extent customers do this already, particularly in technical or manufacturing environments, but broadly speaking we are woeful at this type of absorbed cost measurement.
Customers would be clearer on their expectations – not the SLA demands per se (although that often needs polishing!) but the things that often don’t get voiced openly – those indicators of value and good service that will keep us or make us abandon the supplier.
If our suppliers were smarter, they would already have some of that data to demonstrate the point and be able to talk about VALUE to your business, not price, when they engage you in their sales conversations.
By return, I have to be skeptical here and ask if customers would really listen to their arguments, or would they turn it back round to a commodity type price discussion again?.
Either way, the suppliers should be clearer on their trade off points and managing a customers expectations up front – they would be able to articulate where, when and how adjustments in price would effect you, and what their honest limits are.
However, the truth is they are keen, if not desperate, to get the customers business. Their sales force and negotiators may not be technically competent to have that negotiation, or worse still may not care in pursuit of the sale, and many will agree to a bargain price or a service level, leaving their organisation to worry about how to achieve it later when they heave the responsibility over the wall to their delivery team, The ability of a supplier to say “NO” and/or “Goodbye” in the engagement cycle is a rarified thing, even when they will consequently shoot themselves in the foot.
There are countless more tactics and business practices that could be done on both sides, and with good reason.
But there comes a point when the focus become less about driving breakthroughs and efficient business practice and more about reactive tactics to navigate through an extreme set of competing demands; A set of demands, that may be unrealistic in the first place perhaps.
So for today, am reflecting on the questions that the consumer research is inadvertently highlighting –
Is it realistic to think that deep discount bargain hunting will deliver anything other than a short term fix?
Can we really expect our suppliers to deliver a miracle on a shoestring?
Shouldn’t we give them a break and enough funding/loyalty to help them meet our expectations?
…….because lets face it, we may well pay for it anyway further down the line……………..