2011: The Shift from Efficiency to Effectiveness

The last several years in U.S. and global economies have been brutally challenging and difficult.  The crisis dominoes of real estate, banking, consumer debt, and monetary policy have left companies with bewildering choices to navigate and survive.  Despite the potential negative long term consequences of the Fed’s Quantitative Easing 2, American companies are citing cautious optimism entering 2011, and are making planned adjustments to execute with greater effectiveness.

The recent emphasis within corporate America has been cost control, improved operation processes, improved cashflow & liquidity…. in a word:  Efficiency.   The drastic slowdown of consumer & corporate spending, and the frozen liquidity and investment market left senior management of companies, in nearly every sector, stressing survival and retrenchment strategies.

A New Hope

2011 is soon upon us, and there is a shift towards optimism and growth, albeit with caution.  An October 2010 McKinsey global survey of 639 senior executives suggests that the sentiment and emphasis is changing towards growth and effectiveness.  The survey indicates that executives anticipate more solid visibility and consistency in customer demand, and the new challenges in 2011 will be on 1) Customer Service – meeting increased customer expectations, 2) Talent – attracting and retaining the best, and 3) Regulation – exposure or compliance with growing regulatory oversight (Exhibit 1).

Shifting Priorities

With this apparent shift, companies are indicating an investment in improving customer service processes and solutions, improving the quality of service and products, and faster time-to-market processes for products and services.  That doesn’t mean that companies are no longer focusing on operational efficiencies; to the contrary, “reducing operating costs” remains the top priority cited at 41% of those surveyed.  But, that priority dropped by 20 percentage points compared with “improved customer service” and “faster time-to-market processes”, an increase of 15% and 13% respectively from the perspective over the past three years. (Exhibit 2).

How Prepared are Executives to Meet the Shift?

Given the past several years of managing liquidity, cost control, and ‘hunkering down’, executives in the survey indicate they are feeling exposed in preparing for the new (and welcome) challenges of 2011.  Of the top three challenges cited (global competition, customer service, complex customer demand), less than half of executives surveyed felt they were prepared.  And, there is uncertainty over the underlying cost of components and commodities, the increasing stress of increased regulation, and the ability to find and retain talent. (Exhibit 4).

What to Do Now:

Signs are pointing to a stronger 2011 business demand, and a shifted emphasis towards the effectiveness of profitable growth and customer service & processes. Bizappia’s anecdotal business activity suggests this shift is playing out as we are engaging in more customer service effectiveness, segmentation and demand analysis, and productivity improvement efforts.   The methods in which customers interact with companies are undergoing tremendous changes as well, as iPads, smartphones, social networking,and cloud computing options are introduced into the business process.  However, our prior advice remains sound on translating corporate strategy into action, and preparing for, and executing, new process and technology initiatives.

1. Determine the Value Levers. Identify and confirm the drivers affecting business value across customers, processes, contact centers, supply chains, operations, mobile and stationary workforces.
2. Don’t Rely Solely on Interviews and Assumptions – Establish an empirical Baseline of Performance to augment verbal and observed information.  The only way to establish a solid ROI projection and prove any future benefits are attained is by articulating where you accurately are now.
3. Create Models to Predict Improvement Impact. Model your processes, simulate outcomes and financial impact, and effectively communicate a story line for your planned project.
4. Laser Focus on the Business Case.  Build a clear, time sequenced, financial case identifying where enhancements in productivity efficiency and effectiveness project bottom line benefits, and the necessary Cap/Op expense.  And, socialize the business case to build consensus and sponsorship.
5. Start Small – Pilot the Proposal. Select one to two sites with representative user profile of the larger rollout to test the proposed solution.
6. Measure and Refine the Solution…Forever. Ensure that automated measurements are in place to monitor with precision how workers and the entire solution eco-system (including your customers!) are performing and responding to the change.  And, remember that business case used to justify the effort?  Make sure that you are tracking to the projected benefits and costs… and communicate it in every team meeting.
7. Don’t Skimp on Training, Encouragement, and Rewards. Inculcate the new processes and technology with training.  Reinforce to employees that the system is meant to optimize results across the entire organization.  Consider well thought through incentives to shape desired behaviors and performance goal attainment.  This is the moment of truth…. make sure everyone on the team is prepared and motivated for success.

To learn more about Bizappia, visit our website.

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