12/28/2008
Step 3: Think capability To summarize the arguments of the first two steps: The major disease of modern organizations is in their design and management. If we want to achieve a quantum leap in performance, we have to be prepared to change the way we think. In Step 1, Be prepared to change the way you think, I exposed the problems associated with designing and managing organizations as top-down functional hierarchies. In Step 2, Think outside-in, we began to look at the organization in a better way, from the outside-in. If you conducted the exercise as suggested you will have a model of the transactions with your customers at each point of transaction, and some ideas about the nature of customer demands. We will take this exercise further. But let me first introduce the idea of capability.
Figure 1 Capability and Prediction The concept of capability is equivalent to prediction. If you want to improve an organization, it helps enormously to know what is predictable about what is currently going on between your organization and its customers. The simplest way to think about capability or predictability is in terms of demand and response – what demands do customers make at the points of transaction and how does your organization respond? If you can improve your organization’s performance at each point of transaction, your profit and loss account will improve – always. So the first question you should ask is: While conducting a demand analysis in a mobile telephone service provider, it became immediately apparent that a lot of customers were calling to complain about a letter demanding they send in their direct debit authorization form. The customers’ complaint was that they had already sent it. A walk through of the work flow revealed the following: · New customers’ direct debit authorization forms arrived along with their contracts in a head office department. · The forms were then sent out to the customers’ banks for authorization. · Banks were taking time to return the form. · Meanwhile, the customer management IT system would regularly sort for those customers who were on contract but did not have automated payments arranged. · The computer system would send a standard letter to these customers. Incredibly, the organization was predictably upsetting at least a third of its new customers. This is an example of what I call ‘failure’ demand, or ‘demand we don’t want’ – you might be surprised at just how much failure demand exists in traditionally designed organizations. |