By Garrett Sheridan
A question on the minds of most organizations today—and an item that continues to be high on their agendas—is deceptively simple: “How do you drive profitable, organic growth?” Why is it that some companies tend to excel at driving growth while others struggle? What are they doing differently?
To start with, organizations successful at driving and sustaining organic growth do several key things fundamentally better than their competitors.
They use data to determine the addressable market.
Understanding which products are going to be drivers of growth is critical. But effective organizations also take a very data-driven approach to growth, investing in building a detailed understanding of sales potential for every customer and customer segment, including their existing customer base and prospects.
If an organization fails to accurately assess the addressable market, any number of issues can arise that will sidetrack its plans for growth, including a sales force that is too large or, worse still, too small.
They build sales teams aligned with growth targets.
Organizations with impressive track records when it comes to growth know that it is critical to design the sales organization appropriately to deliver on growth strategy and are adept at thinking through the technology and processes (e.g., CRM, or account planning) required to effectively manage the sales process.
They excel at determining what “footprint” is required to build the right sales organization to execute the strategy by answering the following questions:
How many “hunters” are needed to go after new customers?
How many “farmers” are needed to manage existing accounts?
What number, type and quality of people do we need and where can we get them if they don’t exist in the organization today?
How do we get the right metrics in place and the right compensation to drive the behaviors and results that lead to profitable growth?
They avoid the innovation “trap.”
Another thing high-growth companies do better is innovate. A recent Harvard Business Review article explored the four different types of innovation and how they can be successfully deployed to address specific organizational needs, concluding there was no single true route to innovation, and the chosen route must fit the problem or issue being solved.
The trap that many companies understandably fall into is assuming that innovation must be of the disruptive or breakthrough type—product overhauls, new operating models, major strategy shifts or a nebulous, “out of the box” solution to shake up the status quo. After all, innovation must be new, bold, groundbreaking and an about-face from everything we have ever done or known, right?
Not so fast—you don’t need to change the world just yet. Companies that drive incremental or “sustaining” innovation year over year have figured out that it can be very profitable, especially when it’s customer-driven and grounded in the ability to translate customer needs into products and services that deliver significant value. To do this, you will need two things: an innovation engine and a disciplined process (as well as a disposition to take a few risks).
So how does this incremental innovation actually work? Take the example of a large medical supplier with over $100 billion in annual revenues and a services line broad enough to incorporate everything from toothbrushes to large diagnostic equipment used in healthcare. Their innovation charter? To better understand how their customers were using their products and increase user efficiencies.
To do this, they spent considerable time in hospital operating rooms where they quickly sized up how typical surgeries were using their products. To their surprise, it turned out that an average surgical procedure needed upwards of sixty instruments, and nurse practitioners were selecting each one individually, essentially rebuilding the wheel each time they prepared for surgery.
How did they innovate? They bundled the instruments into procedure-appropriate packages, creating a far more efficient process for the nurse practitioner. While this may seem like an obvious solution, it created a more on-demand, as-needed inventory aligned with customer needs, reducing preparation time for surgery.
They understand which business capabilities are priorities.
One frequently seen dynamic in high-growth companies is that while leaders are adept at focusing on the revenue side of the equation, they also spend time thinking through the capabilities required to support growth. As a company grows, not all areas experience growth the same way. Highly effective companies think through the organizational-level capabilities that differentiate them and are truly critical to execution.
Consider a company like Apple. One could argue that the most valuable capabilities at Apple are product design and marketing. Consequently, organizations like Apple continue to invest in those capabilities ahead of, and then in support of, growth.
Also, to the earlier point about understanding the needs of customers and innovating around them, Apple managed the neat trick of not only understanding the current needs of customers but anticipating their future needs and, like only a handful of companies, shaping those future customer needs by creating products that addressed needs customers didn’t know they had—opening up a whole new addressable market for the business.
They get rid of walls.
All organizations—without exception—that achieve effective and sustained results have removed formerly existing barriers or silos which were preventing growth.
What happens if you don’t? Take, for example, Sony, a massive global behemoth that many agreed, during the 2001 launch of Apple’s game-changing iPod, had the requisite capabilities to come up with the next revolutionary music player.
So, why didn’t they? Because those capabilities remained locked, stuck within individual business units across the company and unable to synergize into an innovative, competitive product.
Lesson learned. Sixteen years later, many companies that have similar issues have now implemented growth and innovation “councils” to promote collaboration and help foster cultures that are better able to integrate capabilities and harness technologies across functions and business units.
It’s within reach.
Profitable growth is within reach for organizations that effectively integrate their customer needs, market dynamics and capabilities. Easier said than done, right? Yet by doing many of the same things you may currently be executing, but doing them in a more focused, integrated and customer-centric manner, you too can drive and sustain a growth engine just like your competitors.
Now you can answer the question of how to drive profitable growth—but will you?
Contact Garrett Sheridan. Learn More
By Donncha Carroll and Sean Williams
While 80% of leaders feel their company is good at crafting strategy, only 44% believe this is true for implementation. According to Harvard University, a recent survey of more than 400 global CEOs found that executional excellence was the number one challenge facing corporate leaders in Asia, Europe, and the United States, heading a list of some 80 issues.
Business intelligence (BI) solutions—in particular, dashboards developed using those tools—are often designed to support the execution of strategy. These dashboards provide a means of monitoring internal and external factors that influence success, providing insights on how execution is progressing. This information is invaluable because it enables the redeployment of resources to maintain focus on the activities and invest in the capabilities that make the biggest difference to results. These benefits are exactly why according to Gartner, global spending on BI and analytics will approach $18 billion in 2017. And yet despite all that investment in Business Intelligence, executional excellence is still the top challenge for CEOs.
During the execution phase of any strategy, it’s crucial to provide leadership with visibility to the factors that are driving or influencing success. Good measurement and reporting can highlight progress on the initiatives that influence results and provide the management team with critical insights that support more agile execution. Agility is important because it allows the team to more quickly change focus as new information comes to light. Of course, becoming more agile is not easy because it demands a higher level of comfort with change, and leaders and managers need focused, actionable and fast information to support efforts to make those changes.
Unfortunately, many companies are getting lost in the complexity of getting their arms around the big data revolution by taking a bottoms-up approach to data management and analysis. This approach results in data-related initiatives that are too large in scope, take too long, have a higher risk of failure, and deliver a lower ROI. The leaders that embark on this journey will find that prioritization pays higher dividends and delivers real value on an accelerated timeline.
In our experience, companies with good measurement and execution tie their efforts directly back to the strategy, and focus on the critical few areas where they can identify, understand and react to changes quickly. Some years ago, Jeff Bezos communicated the Amazon retail strategy to his team by sharing three very simple customer preferences: lower prices, bigger selection, and faster delivery. Each customer preference can be addressed by pulling on certain organization levers that can be readily measured—and that’s exactly where organizations like Amazon set their priorities for measurement.
This diagram, called a “value tree,” can be further developed to the right depending on how deep you want to go (e.g., local inventory on-hand requires warehousing facilities that are close to population centers, which in turn requires the efficient build-out of each facility). Unfortunately, organizations often start with the data they have or the infrastructure they think they need and not the business problem they’re trying to solve. In our experience, the five most common mistakes organizations make in building out their measurement infrastructure are:
1. Focus on too much too soon. Organizations often start by seeking to measure everything that can be measured in order to satisfy all needs. This introduces unnecessary complexity not only to the project, requiring higher levels of resourcing, but also to the dashboard itself, making it much less useful.
2. Develop the wrong measures. The infrastructure is created from the bottom up instead of starting with the essential needs of the business. Starting from the bottom almost guarantees that the process will be exploratory rather than strategic, and much less efficient.
3. Allow data quality to overly influence the approach. Data is never perfect, and few organizations have everything they need to measure with perfect accuracy. Some analytics leaders use data quality challenges to explain why dashboards don’t effectively support decision-making, or to stop measurement development altogether, rather than seeing an opportunity to identify and address what’s broken in the measurement process.
4. Emphasize technology at the expense of value and impact. Real-time data, embedded analytics and self-service enablement are incredible business intelligence technologies. But displaying data faster or better is not what dashboards are built to do. If they are not closely tied to what a user needs to make good decisions, these technologies can be expensive distractions.
5. Choose cool displays over useful information. How the measure is defined, the types of charts used to display information, data filters applied and the timeframe for presentation can all influence the utility of the dashboard. Many organizations spend a great deal of time iterating on data visualizations that provide interesting views of the data, but do not tie those visualizations to the decisions they need to make.
Strategy development and execution is all about making decisions on the future direction of the organization; business intelligence is about providing insight to inform those decisions. If these things are not tightly connected, then dashboards at best become an unnecessary complication and, at worst, a misleading distraction. But there is a relatively simple, five-step process that is both efficient and delivers high-impact results.
1. Start with the business strategy. Whatever the organization’s strategy, start by identifying the specific things the organization will need to achieve in order to execute against it. Both dashboard developers and business users must be prepared to frame their interactions in terms of how the organization will get there.
2. Identify the critical drivers of value. Build a value tree by determining which capabilities you need to have, or the activities you need to perform well, in order to execute effectively. Then determine which of those are most important. This exercise of unbundling the organization’s strategy establishes a direct link to the strategy and prioritizes what leadership needs to monitor.
3. List related questions and decisions. Focusing on the critical drivers, list the most important questions that need to be asked and answered and the key decisions that will need to be made. Taking the time to understand how leaders and business users will actually use the dashboard is critical to getting the focus and design right.
4. Define the measures that matter. Identify the measures that will provide the information needed for each question and decision, and then determine the primary data source and format required. This is the opportunity to identify and address gaps in data availability and quality. Again, everything you do here ties back to the strategy so investments made at this point will be highly targeted and impactful.
5. Develop designs that present information in ways that draw out key insights and address a number of different business scenarios. Review and iterate designs with leaders and users and constantly test for utility. Develop a design that supports decision making.
Applying these five simple steps will give your team the information they need to more effectively monitor and adjust the execution of your strategy, leading to higher growth, profitability and realization of organizational goals.
Contact Donncha Carroll and Sean Williams. Learn More
By Don Ruse
In this new SHRM Executive Network/HR People + Strategy white paper available for download, author and Axiom Partner Don Ruse explores the dynamics facing today’s leaders who must creating lasting change with their organizations.
The pace and scale of change facing many organizations today is daunting, even before you consider that most leaders and managers are much better and more comfortable during “steady state” than during periods of transformation. For leaders, a simple but powerful guiding principle to live by during periods of change is that “it’s not about you, it’s about them”. This is because at its core, leading change is really all about the many conversations that leaders have every day with the people who must do things differently in the future. Conducting the right conversations, at the right time, in a manner that is thoughtful and transparent, is paramount.
In our experience, leaders successful at executing a new strategy or large initiative gear every activity towards 1) aligning everyone towards the new direction; 2) equipping the organization and its people with the required capabilities and skills; and 3) sustaining the change through formal shifts in measurements and rewards, and through leadership that is both supportive and steadfast as the change unfolds. Each of these is absolutely necessary, although insufficient on their own. Each must take place in parallel at all times, albeit each to varying degrees at different stages of the change. Together, they provide the means to manage risk and execute with greater effectiveness and confidence.
The Case for a Better Way of Leading and Managing Change
Research cited in McKinsey Quarterly (November 2016) indicates that only a fraction of strategic plans are effectively executed and that “the reported failure rate of large-scale change programs has hovered around 70 percent over many years.” We believe that most changes in strategic direction fail because leaders fall short in three key areas.
Lack of alignment to the change. Senior management underestimates the time and effort required to achieve clarity about the new future, and to translate that clarity into urgent commitment throughout the organization. Too much emphasis is put on forcing compliance; too little on earning commitment. Too much energy is put into hammering hard on facts and rational arguments to the exclusion of the candid dialogue that can transform fear into heartfelt commitment.
Lack of success in equipping people with competence, and the organization with capabilities. Even seasoned executives are rarely called upon to contribute to a major change initiative. Executing a new strategy calls for significant attention to building the organizational capability and individual competence to lead and manage change. Band-Aid approaches—required reading of an HBR article, a one-day seminar, or a CEO webcast—will not suffice here. Even if clear and committed, the people expected to lead the change cannot succeed if they are depending on an outdated organizational design, and lack sufficient skills and experience to lead and manage change confidently. The resulting uncertainty among key managers drains the energy of those who look to them for leadership.
Lack of focus on sustaining change. You can’t declare victory at the starting line. The temptation for leaders to return to habits that work during stable operation is strong, and doing this too soon will snuff out the fragile early attempts at the new way, and poison any glimmers of ownership among key people. At the same time, as the change moves past the middle stage, lack of toughness in rooting out people and processes that are in the way will destroy momentum.
For example, at one large payments processing organization leaders struggled to take decisive action to address a glaring lack of performance accountability, which was a strong aspect of their culture over many years but a prerequisite to address in order to truly deliver on their new vision and strategy.
Align: Creating Clarity and Commitment
Alignment includes both clarity and commitment. Clarity without commitment gives you informed resistance. Commitment without clarity gives you blind loyalty. The work of alignment decreases across the change, but never ends. Creating alignment requires candid, repeated two-way conversations to translate the strategic plan into action at successively increasing levels of specificity to every person, their unit, and the company as a whole. Keeping these three things in mind will help you stay the course:
Effective communication is not efficient. Count on having to repeat your message several times. Why? At least two reasons. You don’t yet communicate with perfect clarity or in a way your listener can hear. Second, your listener will hear what they want to, even if they listen well.
Be prepared to re-align people weeks and months into the change. When people finally understand what the strategy really means to them, you are going to hear something like “I didn’t know that was what this means to me. I am not on board.”
Be aware that changing habits takes time. Encourage even the smallest signs of people doing things in a new way.
At the early stage of a change initiative, the work of alignment can include any and all of the top team listening to final input from key stakeholders inside and outside the organization, making the few big choices needed at the outset, and holding the first meetings to engage the organization in conversation about the change.
At the middle stage, alignment becomes the work of translating the strategy into increasingly detailed answers to these questions: “What does it mean to me?” and “What does it mean to us?” Here the first instances of “Oh, well, if that’s what this means, then I’m not so sure” begin appearing and must be addressed. And, at this stage, effective change leaders begin to widen the circle of communication to include other groups inside and outside the company.
At the late stage of the change, alignment is a continuous reinforcement of the key aspects of the strategy, thus ensuring new employees consistently hear the right messages. However, the majority of late-stage alignment is the work of aligning customers, suppliers, joint venture partners and other outside groups with the new direction.
Equip: Closing the Gaps Between What We Should Do and What We Can Do Today
The purpose of the second stage—equip—is to close gaps the new strategy has created between the company’s aspirations for tomorrow, and what can be achieved today.
As alignment increases, people accept being part of the required retooling and reengineering of the structures, processes, and policies of the organization. But they also become concerned about their own skill set gaps and their ability to survive, never mind prosper, in the world of the new strategy. They may be excited or concerned about the change in behavior required by the new culture. Whether leaders or individual contributors, they now become more willing to invest time in the learning and organizational re-tooling they and others need.
That said, when it comes to the competence that people need to achieve a new strategy, we have found that the leadership group, however it is defined, must be the first to acquire a toolkit for leading and managing change. In addition, a mindset of candor, transparency, curiosity, patience, passion, empathy, and tough-minded determination is required. After years of trial and error and increasing success, we believe this mindset has three essential components:
- Recognize that the distinction between leading and managing is less about optimizing scarce resources within a known business model (managing), and more about getting people to follow to a place they have never been before (leading).
- Accept that everyone has three choices in the thousands of conversations that lie ahead—to fight, to flee, or to engage. When in doubt, engage.
- Embrace specific skills that are required to stay engaged in conversation with those being led—to keep others from fighting or fleeing, to increase and cement their alignment, and to use the full power of all their people.
Danger: If any of these seem obvious, elementary, or skills relatively senior leaders would have acquired years ago, then prepare to be surprised. Leadership of change fails not because leaders cannot practice advanced and sophisticated analytic and strategic thinking, but because they cannot demonstrate the fundamentals of engaging another person in a way that results in the other person following them with determination to an unfamiliar place.
By ensuring leaders acquire and apply these individual competencies first, while helping others get on board, they show others what it looks like when someone is learning to do something new, and that it’s not just okay to be imperfect, it is expected. If you aren’t making mistakes during a change, you aren’t risking enough.
The remainder of equip is the action required to understand, plan, and implement shifts in two areas: 1) the rest of the company’s talent, and 2) the wiring of the formal and informal organization itself. Many senior HR executives are experienced in driving necessary shifts in the workforce once “strategic” competence has been redefined. They should ensure that the rest of the management team understands that a redefinition can affect every talent process, from recruiting to development.
As to the formal and informal organization, leaders often face and need to resolve issues such as:
Governance and decision rights and the way work is done, particularly across organizational groups and departments.
Redesigning organizations, roles, and rewards so that they’re fit for purpose in the new world.
The division of work across increasingly complex resourcing models, including full-time and part-time employees, individual contractors, and external service providers.
The definition of and following through on the consequences associated with acceptable and unacceptable norms of behavior.
In our clients’ experience, during the early stages of equip the leadership team is comparing the organization and its talent to the strategy, establishing the size and importance of the gaps created by a different strategy, and launching the initiatives required to close the gaps.
In the middle stages, initiatives are underway, and the extra work is beginning to take its toll, as leaders further down in the organization feel the additional load above and beyond their day jobs. In addition, in the middle stage, designs are approved for implementation, and suddenly conversations shift from “I’m on board!” to “Oh, I didn’t know you meant that.”
In the later stages of the implementation of a new strategy, those leading the “equip initiatives” face the fact that many of the original plans for accelerating the development of new competence, and the designs for the new organization that sounded so good at the time, are not fulfilling their promise. A second effort is needed, or people will return to the original ways of getting things done.
Sustain: Making Change Stick
How do successful leaders sustain momentum during times of change? The foundation for sustainability is laid in the early stages, when leaders agree on what success looks like in all areas of the change. This clarity is needed to mark changes in financial, customer, and employee outcomes. It is also needed to see, understand, act on, and learn from both the changes in formal mechanisms such as redesigned processes, and shifts in the stream of daily behavior and decisions that make up the informal organization. No surprise here, formal metrics and the regular forums to consider, interpret, and act on them are needed.
Just as, if not more important, however, are the countless informal moments among people where leaders can—if they are not careful—avoid issues of underperformance, tolerate wasteful practices and structures, or worse, extinguish the fragile beginnings of self-confidence in the new world. Instead, leaders can stop, look a team or a person in the eyes, and have a candid conversation that makes them stand up straighter and smile, change their ways, or—in some cases—start to consider moving on to another place to work.
The essence of these leadership actions in sustaining a change is a difficult but powerful combination of encouraging well-meaning and imperfect efforts by people moving in the new direction, and—especially as everyone enters the later stages of the change—pulling no punches with those who can do what’s needed, but won’t. In both cases, HR can play a critical role in guiding others toward transparency and candor, particularly among managers who have difficultly conducting the tough conversations.
Incidentally, that’s one half of “sustaining” leadership action. The other half is that effective leaders treat processes, structures and policies just as decisively as they do people, based on whether something is helping or hindering the change. Leaving what isn’t working in place—whether a person or a process—poisons progress and demotivates those making good-faith efforts in the new direction.
No two major change efforts are ever exactly alike, even within the same organization. Going in, a leader never fully knows the risks ahead, or how and when priorities will shift over the life of the journey. However, what is certain is that successfully executing new strategic initiatives in any organization demands leaders who are adept at leading and managing change with candor and transparency. In summary, before undertaking major change, the HR leader should raise three fundamental questions:
- How will we create the necessary alignment of our people with our new goals and what it will take to achieve that alignment?
- How will we equip our people with the capabilities to operate in the new way, and how will our leaders learn the skills required to get them there?
- How will we ensure that our peoples’ efforts will be sustained until we attain a more durable state in the new world we want?
Once the leadership team can definitively answer these questions, the chances of success will increase dramatically and the organization will look back on the journey with pride, and will be even more open to further strategic change, knowing next time will be even better.
Contact Don Ruse here. Learn More
With lifelong customers cutting up United Airlines’ affiliation cards, politicians introducing new legislation, and cable news pundits vigorously debating the company missteps in the wake of the recent passenger removal incident, a firestorm of questions have been raised about how a high-profile global company both treats loyal customers and should best respond to a such a reputation-damaging incident.
But there is an additional and perhaps equally important question being given little airtime: what if there was a way to avoid such blunders altogether by creating a culture of employee empowerment uniquely attuned with your customers’ needs? In other words, what if United Airlines had taken a different tack—one of allowing their front-line employees to use their good judgment as opposed to strict adherence to policy? Learn More
Make no mistake, the ambassadors of your brand are everywhere in your company. Consider your last hotel stay. Did the bellman assist with your baggage? How did the front desk handle check-in? Was the concierge correct with the coordinates of your meeting? Did housekeeping respond to your request for a turn down? Was your room service order correct? Each of these individuals is charged with delivering the hotel’s brand, and any of them can influence your stay as well as your opinion of their property.
They are all likely empowered toward the same goal—to make sure their customer-related decisions come from a place of generosity, thoughtfulness and kindness. In other words, treat people “as they would want to be treated.” It seems like common sense, doesn’t it?
It also seems like good advice for beleaguered United Airlines CEO, Oscar Munoz, who should strongly consider the upside (he’s already very familiar with the downside) of empowering his brand ambassadors—all 86,000 employees—to make an immediate shift in this direction while he makes a cultural one within the company.
It wasn’t just the widely-reported passenger incident that has sent United Airlines into this spiral. Recently, there was the soon-to-be-married couple en route to Costa Rica, tossed from their flight because they wanted to sit in (and were willing to pay for) Economy Plus seats. And just a few days ago, a passenger was stung by a scorpion, of all things, lurking in the overhead bin. Flying the friendly skies, are we?
Creating a program or policy—the right kind—that instills a “pay it forward” or “random act of kindness” sense of empowerment in brand ambassadors would go a very long way in putting out the United Airlines fire, which currently shows no signs of slowing with the overbooked flight fiasco that will keep the airline’s general counsel busy, and awake at night, handling the inevitable lawsuit coming their way.
What would such a program mean in practice? Well, for the future newlyweds, why not “comp” them Economy Plus and give them champagne to celebrate their upcoming nuptials? This action would have cost little, provided a memorable experience for passengers and demonstrated a very different kind of reaction and customer value proposition. And, the individual who was stung by the scorpion—instead of initially saying that the injury was not serious and downplaying the incident, why not offer the passenger a note from the captain extending him complimentary drinks and free entertainment?
These examples of United Airlines putting themselves in the shoes of their customers would have resulted in positive experiences rather than reinforcing negative ones. While it may be too early to tell what the long-term fallout will be for United Airlines, taking the high road to positivity in all customer interactions may be the most immediate—and relatively easy to implement—way to turn the fleet around.
Any company that finds itself dealing with a reputation issue that has the potential to eradicate its customer base, torpedo its share price, and cause what might be irreparable harm to its reputation has an opportunity to handle the situation in a way that can effectively mediate the events and avoid further damage to the brand.
Putting yourself in your customers’ shoes is a good place to start.
By Sean Williams
The recent Wells Fargo settlement—to the tune of $185 million—has given business leaders pause to examine the contributing dynamics. A combination of aggressive cross-selling strategy, insufficient employee monitoring, and incentives misaligned with the best interests of customers set the stage for a massive employee fraud in the creation of unauthorized accounts driven by the desire to earn bonus compensation. Learn More
Hardly unique, Wells Fargo is one of many companies placing aggressive goals on customer-facing employees, most in a direct position to inadvertently do harm, and they must carefully evaluate the strategic, legal, and reputational risks.
Clearly, substantial changes are often necessary to remain competitive as employees adjust to new ways of interacting with customers to deliver profitable growth. While post-Wells Fargo activities may include new value statements and requisite hours of training, actual employee behaviors are much more difficult to monitor, and frequently fraught with blind spots.
But how is a leader to know if employees are upholding and reinforcing company policies and standards rather than potentially destroying value by pursuing individual goals at the expense of customers?
One source of safeguarding against these risks is to employ something many companies already have: a voice of customer program.
How could a voice of customer program help a bank address its blind spots in employee behavior? Obviously, customers will not know—at least not immediately—if a bank employee opened an account for them without their permission. But a voice of customer program employing outreach to recently-opened account holders asking for customer feedback on the sales process—a common activity—can illuminate such a disconnect.
But such an approach is not foolproof in that this type of feedback is solicited only from the small number of customers who have opened accounts, and many will routinely decline the interview for reasons that have little to do with unethical bank behaviors (e.g., customers commonly believe there was a mistake). Beyond customer declinations however, it may be likely that either the email address or phone number designated to the new account is bogus.
However, if the question was asked of any customer conducting any transaction on an active account, it would provide a broad data sample that could easily be used to monitor and evaluate employee behavior, notably illuminating any discrepancies between the customer’s assertion that they have not opened an account and bank records indicating otherwise. More importantly, these disconnects will reveal potential problems in branch locations where new goals have been rolled out, strategies implemented, etc.
Such dynamics transcend the financial services industry, certainly, and an effective voice of customer program can be useful for managing risk from employee behaviors in any company. For example, many automobile manufacturers reimburse dealer service departments for the parts sold for repairs, but not for actual car repair. This creates a subtle mismatch between the ideal activities of the service personnel (repairing cars) and the service for which the manufacturer is paying (installation). Such a disconnect creates easy opportunities to “game the system,” which in turn creates clear risk for the manufacturer.
When a customer returns for the same service on the same vehicle, the manufacturer can safely assume that the repair was not correctly performed on the first attempt. But the manufacturer may be unaware if service personnel created duplicate entries for the same repair, if repairs sold were not required, or if the customer had repairs performed elsewhere.
These blind spots can be easily addressed by asking the right questions of customers. For example, inquiring with a customer as to when the last time a specific repair was performed may indicate if service personnel unnecessarily replaced parts not yet past their lifetime expectancy.
In the insurance sector, companies that are increasing pressure on claims can install new processes and due diligence, but the clear potential to harm claimants means that insurance companies should be auditing customers to ensure such processes are being followed. Manufacturers changing warranties and retailers modifying return policies could also better manage risks by more frequently surveying the customer experience.
Of course, collected customer data may never be perfect—and will be effective only insomuch as the customer remembers interactions. For example, in the earlier banking illustration, the customer could incorrectly remember opening an account, when such a transaction in fact occurred, or inaccurately recall the bank, if they do business with more than one.
But this random noise will not change significantly over time or vary much by location, which are exactly the indicators a bank should be seeking. And the voice of customer data can provide vital information exactly where there are few other options for examining employee behavior. To realize monitoring value of voice of client programs, the programs should be integrated into the strategy implementation and risk management processes. Consider the following five steps:
1) Examine the new strategy with the appropriate cross-functional team of leaders from strategy, sales, marketing or human resources. Identify where the new strategy unintentionally incentivizes employee misbehavior toward customers. Eliminate as many of these incentives as possible.
2) Explicitly list any remaining potential avenues for employee misbehavior. The more specific about the different ways this misbehavior could manifest, the better.
3) Work with the data and analytics function to map out which of these manifestations can be identified today, and which could be monitored through existing infrastructure with some additional work. Think through the analytics and reporting that would be necessary to ensure that what can be seen, will be seen. The remaining manifestations of employee misbehavior are the blind spots.
4) Work with the voice of customer program to shed light on the blind spots, by asking the right questions of the right customers at the right time. Make sure that the voice of customer program and the data and analytics functions work together to produce integrated reporting for the leadership on the manifestations of misbehavior, including rates, trends, and locations. Establish baseline values of customer responses before rolling out the new strategy, goals or incentives.
5) Make sure there are no remaining blind spots. If blind spots remain, or new blind spots are identified later, consider adding a customer survey or other data collection mechanism as necessary to address the new blind spots.
This approach helps ensure that problems are identified before they become widespread, which will help put both executives and regulators at ease while minimizing situations where employees may feel encouraged to act against the best interests of the customer, mapping and monitoring such behaviors to course correct when required.
Like the eternal question, “Which came first, the chicken or the egg?” marketers are asking, “Which comes first, the customer value proposition or the employee value proposition?”
By Aneysha Pearce and Aaron Sorensen
By customer value proposition (CVP), we mean a persuasive statement that captures the reasons why someone should buy a particular product or service. The employee value proposition (EVP) constitutes the most compelling reasons an employee would choose to join an organization and choose to stay.
Best-in-class CVPs and EVPs are distinctive and create the “magnetism” to attract the type of people you want associated with your organization. Both are a critical link to the business strategy and key drivers of long-term profitable growth.
GE provides a great example of CVP and EVP alignment. In September 2015, GE launched its “What’s the Matter with Owen?” campaign on late night TV. Andy Goldberg, global creative director at GE, explained to Ad Age: “The goal is to set up the promise of GE being a digital industrial company, bringing this idea of big iron and big data together under one roof.”
The campaign positions GE in competition with the likes of Google, Facebook, and others for millennial tech talent. That’s important, because as explained in GE’s 2016 annual report, they are investing heavily in “disruptive innovation.” Each spot includes the taglines: “GE. The digital company. That’s also an industrial company.”
That alignment between CVP and EVP is critical because GE needs high-demand talent to execute its business strategy.
In addition to alignment, another important characteristic of great CVPs and EVPs is a deep understanding of their audiences. In some instances, potential employees are also potential customers. But for many B2B companies, their audiences are different (millennials building tech solutions purchased by Baby Boomer COOs and plant managers, for example).
The last thing you want to do is create uncomfortable cognitive dissonance in the minds of either customers or potential employees. So how do marketing and HR make sure that the company’s CVP and EVP are ultimately serving the strategy? Here are some ideas to consider:
1. Reputation roundtable — At least once a year, get the leaders of marketing and recruiting, and any creative resources, in the same room to discuss creative strategy and tactical implementation.
2. Message assessment — Are there any inconsistencies in your messaging?
3. Channel alignment — Compare notes on the use of channels, particularly social media, and identify areas of overlap.
4. Audience analysis — What are the personas of your respective audiences? How can value propositions be tailored to appeal to customers and future employees without losing the essence of the brand?
5. CVP/EVP messaging playbook — An internal guide that illustrates how messaging is altered between customers and employees so that relevant differences are made without compromising the important connection between the two audiences.
Marketing and Human Resources/Talent Acquisition are key players at the strategy table and coordination amongst the groups is a must in driving alignment between the CVP and EVP. The reality is that your organization already has a CVP and EVP whether or not you have gone through the effort of documenting it. This is your reputation and employment brand.
However, the likelihood that the CVP is aligned to and enables the strategy and brand is low if you haven’t taken a close look at it in awhile. Further, an EVP usually has a “shelf life” of 5 years, sometimes less, if your talent portfolio is changing. Progressive companies look at the EVP before it becomes stale and ensure it is consistent with the CVP. Many organizations take advantage of a brand refresh to develop or refine the CVP and ensure the EVP is aligned. Learn More
Awash in data, firms struggle to develop and leverage insights—but getting them right can have tremendous upside
By Mark Masson and Sean Williams
Data is everywhere. Insights? Not so much.
Looking for deep intel on customer or client needs? To target new markets? Understand performance? Any firm or company today pursuing profitable growth may ignore, at its own peril, the role of data in this strategy. If business transformation is the key to your growth model for tomorrow, leveraging your existing data for insights into key drivers should be a mandate.
The availability of data is set to increase at lightning pace. The volume of data created annually is expected to reach 44 trillion gigabytes by 2020, an increase of nearly ten times just since 2013. And yet only a fraction of that data is actually helpful—37% of that 44 trillion gigabytes is expected to be useful, and only after it is analyzed (1). Inundated by seemingly useless data, you may be wondering whether investing in your organization’s analytical capabilities was worth it.
And you wouldn’t be alone. The majority of big data and analytics-building efforts fail or are never completed. Just because the capabilities are built doesn’t mean they truly add value. One recent study (2) found that three-quarters of businesses extract little to no advantage from their data, including many that have invested heavily in building analytics capabilities.
The problem for most organizations and leadership teams is that simply having more data—or software or even data analysts—doesn’t directly lead to answers. The good news is that our experience shows that nearly any level of investment in analytics can generate surprisingly large value. Realizing that value often requires understanding what barriers leaders are encountering, and then addressing the (sometimes surprising) root causes.
Assessing Your Unique Challenges
Leaders understandably focus on dealing with the most obvious causes—bad data, bad analytics, or even bad analysts—but while these are the most obvious, they are not necessarily the most likely to be the real problem. You should also make sure the business processes that touch analytics are not getting in the way, that you manage the cultural challenges to acting on analytics, and that you align on what is needed, from the C-suite down to the analytics teams.
To fully realize the value from analytics, leaders must understand and activate all of the elements that support a data-driven firm.
- Alignment : Aligning leadership (Senior Team and key leaders) on the most critical decisions to be made, and analysts on the knowledge and data required to make them; sizing the gaps between the current level of insights and information provided and the strategic needs
- Means : Evaluating the adequacy of means (processes, technology and data-related interactions) that lead to decisions
- People : Assessing the current type and level of analytic and decision-making capability within the firm
- Processes : Measuring whether current business processes enable decision-making from insight or get in the way
- Culture : Highlighting and removing cultural weaknesses around or barriers to data-enabled decision-making
Finding Value in Your Data
Unsurprisingly, we find that each organization has strengths and weaknesses among these elements, but few are capable of objectively identifying them or knowing what levers to pull to change the situation. Successful ones, however, do not become data-driven by throwing more data at the problem. Rather, they work to first understand their gaps related to these elements and find solutions to close them, leveraging the natural strengths of the organization.
Complacency around your data will ultimately impede business transformation. But eliminating company barriers, aligning critical elements and making investments in analytics is an assured route to future growth. Every organization today, regardless of size, has potentially game-changing insights sitting right in its very own data, and the value is significant. Understanding and delivering on client or customer needs you’re missing or that other organizations can’t “see” makes getting this equation right worth full percentage points to your firm’s bottom line, competitive advantage and continued livelihood.
(1) EMC Digital Universe Study, 2014
(2) Seizing the Information Advantage, 2015
Mark Masson advises senior leaders of major law, accounting, and consulting firms. He specializes in firm and client growth strategies and effective execution by aligning and engaging leadership teams, boards, and partnerships on strategic growth priorities. His work blends the nuance and experience of professional service firm leadership with cutting-edge business analytics.
Sean Williams helps clients craft insight-based and data-driven solutions to their business problems, with experience in analytics and predictive modelling in a variety of industries, including financial services, hospitality, and manufacturing. He works with clients to build their analytical capabilities and to ensure they closely support strategy, and to help clients overcome their cultural and organizational barriers to realizing the value of their analytics. Learn More
By Aneysha Pearce
The commonly-held sentiment that the more things change, the more they remain the same, certainly applies to some recent, high-profile and quite surprising leadership missteps we have seen play out publicly with Wells Fargo. The well-documented reputation crisis includes the termination of 5,300 lower-level bank employees who had opened over 2 million customer accounts to meet aggressive cross-sell targets set by Wells Fargo leadership. While such brand-tarnishing stories are not uncommon, it is truly perplexing to see them occur within a company placing high strategic importance on reputational efforts, and one that until recently had been the darling of Wall Street. In today’s social media spinning world, a breach of customer trust of this magnitude is all too easy and can rapidly compromise even the most highly regarded corporate reputations.
Not surprisingly, corporate reputation strength is based on the anchors of trust, admiration, respect, and the good feeling stakeholders have for a company. These drivers don’t change all that much, yet reputational performance does change—and quite dramatically— based on specific events and the relative alignment of the firm’s strategy, organizational model and talent.
The misalignment between management and staff can also be striking and may not be apparent until it is too late. For example, Wells Fargo’s now former CEO, John Stumpf, claimed that the bank’s situation was a result of “wrongful sales practice behavior” and that it “(went) against everything regarding our core principals, our ethics, and our culture.” But one only need to ask Stumpf’s front-line sales associates to hear a different story—one of a sales culture so intense that some workers (even in their San Francisco headquarters and branches) felt pressured into employing deceptive sales practices to make the lofty cross-sell goals. Such an atmosphere, said the associate, “Completely contradicts what (Stumpf) is saying.” The employee described a sales push called “Jump into January,” where associates were expected to sell 20 products a day. “We were all miserable, and it was soul-crushing to walk in every day,” said the associate. It seems obvious that the pressure to achieve such targets created an intense environment.
What can other firms learn from the decline of Wells Fargo’s reputation? A useful way to answer that question holistically is through the lens of Axiom’s “Reputation Management Framework.” Our model begins with the end in mind and is based on years of experience leading this type of work for global clients in highly-regulated industries such as energy, healthcare, financial services and automotive, to name a few.
The model is intuitive, with reputation heavily influenced by the importance of company performance measured against the following dimensions: innovation, products/services, citizenship, governance, workplace, leadership, and financial performance.
Wells Fargo’s decision to put unrealistic pressure on its retail banking team had a cascading effect on the entire organization. To add some dimension to the gravity of the situation, we fielded a study with 500 U.S. general consumers about their perceptions of Wells Fargo’s (and nine other companies’) reputation given the events of late.
From a reputational performance standpoint, Wells Fargo’s current reputation is at the “poor” level with a score of 58 (out of 100). Compared to its retail banking peers, JP Morgan and Bank of America are in the “leading” to “average” range with scores of 76 and 70. respectively. Further, key drivers of Wells Fargo’s reputation from the recent events are putting downward pressure on its overall reputation – with Leadership (49), Products and Services (55), and Corporate Citizenship (52) all either at or well below the “failing” performance threshold.
Recovering from this crisis will require more than a band-aid. It will take a reexamination of the entire organizational model including roles and accountabilities, decision authority, performance measures, work processes and information flows. We often recommend that companies take a step back and analyze their organizational model for reputational vulnerabilities and create an organization design to support behavior that builds reputation, not tears it down.
It will take time for Wells Fargo to unwind the damage done and, most recently, it appears to be taking the right steps to correct its actions—including leadership changes at the top, a new public campaign taking responsibility for wrong-doings, a roadshow to internally communicate the work to be done and, importantly, the realization that it is a long road ahead to rebuild trust with its customers AND employees.
Aneysha Pearce is a Partner at Axiom Consulting Partners, a strategy consulting firm focused on helping clients transform their businesses through a deep and thoughtful understanding of strategy, organization, and talent. Aneysha has over 20 years of experience supporting clients with their growth strategy efforts having partnered with many of the F500 clients in a wide-array of industries including energy, financial services, retail, consumer packaged goods, technology, and healthcare. Aneysha is a frequent media resource, commenting on business, brand, and reputation topics for publications such as Fortune, MediaPost, and 24/7 Wall Street, and has been interviewed by San Francisco KGO Radio. Learn More
The Vizient Research Institute and Axiom Consulting Partners collaborated on a breakthrough research report, the Vizient Chronic Disease Medical Home Playbook. In a guest blog on Vizient’s website, Garrett Sheridan, Axiom’s president, outlines the six foundational elements that are essential in reducing costs and improving patient outcomes for the chronically ill.
Health care spending in the U.S. exceeds $3 trillion per year and 10 percent of the population – the chronically ill – accounts for approximately 60 percent of that cost. Those patients are distinguished by their complex medical conditions that often require costly interventions. As noted in a previous Vizient, more than two-thirds of Medicare beneficiaries have multiple chronic diseases and a staggering 93 percent of total Medicare spending goes toward beneficiaries with multiple chronic conditions.
The complexity facing these patients is overwhelming. Too many care plans, too many uncoordinated appointments, too many prescriptions to manage and no quarterback or advocate to help. Health care organizations have done well at managing diseases, but not so well at managing the complexity of the patient’s life.
Health system leaders I’ve recently spoken with will candidly admit that past disease management approaches, while well intentioned, have fallen short. But we’re seeing the emergence of a different approach, one with the potential to increase the quality of care, engage patients in their own care plan, and minimize costly, preventable emergency room visits and admissions. It’s a multidisciplinary, patient-centered approach for transforming care for the chronically ill.
In a recent collaborative effort with the Vizient Research Institute™, we looked at several organizations that are leading the way in caring for the chronically ill and concluded that six foundational elements are essential in reducing costs and improving patient outcomes. They include:
- Segmented patient population. Organizations that successfully manage the health of populations understand that the strategy is not about managing one population – it is about segmenting the population and understanding that each segment requires different approaches, resources and care models. It is important to identify the drivers of needs, e.g., number of diagnoses, acuity of conditions, demographic data; differences in needs, e.g., payer affiliation, mental health and/or substance abuse issues; and utilization behaviors, e.g., frequency and intensity, primary avenue of utilization.
- Defined clinic infrastructure. It’s unrealistic for many chronically ill patients to comply with their multiple care plans when it’s difficult to find transportation and keep track of multiple appointments in different locations. As a result, proximity and convenience must be considered in any complex care design. However, models for how to best support a particular provider organization will vary and each facility will have to find an approach that’s right for them.
- Team-based care model. A team-based approach to care works best. High-performing teams have clearly defined responsibilities that are understood by both patients and care providers. Clarifying the boundaries between roles eliminates duplicative effort, closes gaps in care and helps patients avoid being overwhelmed.
- Integrated communications matrix. Knowing when, how and with whom information is shared among the care team, patient and health system ensures that all stakeholders are able to make informed decisions. Information silos give way to a fact-based understanding of how to achieve shared goals. A communications matrix that illustrates the interactions — both giving and receiving information — that needs to take place creates a positive patient experience.
- Appropriate workforce structure. Getting the right number and type of team members working together in a complex care design can feel like a juggling act. There are multiple variables, including the fact that chronically ill patients will visit more often and their visits will be more resource-intensive. The composition of the patient population is another important variable. For example, if it has higher-than-average psychosocial needs, the right number of mental health providers must be available.
- Clear systems and processes. Electronic medical records, patient/provider compacts, interdisciplinary patient rounds and educational tools that engage patients all have potential to reduce complexity. Balancing the specific requirements of the care model with institutional infrastructure and cost concerns is an important consideration and a potential implementation challenge.
We are not suggesting that any institution should copy a defined model. Each of these foundational elements is essential, but it’s just as important to remember that one size does not fit all. The key is to start thinking in practical terms about providing your chronically ill patients with access to better coordinated care, fewer missed visits, higher medication adherence and ultimately, better quality of life.
To learn more, click here to read an executive summary of “A Breakthrough Approach to Managing Care for the Chronically Ill Population.”
About the author and Axiom Consulting Partners. Garrett Sheridan is the president of Axiom Consulting Partners, a management consulting firm providing strategy, organization and talent-related services to help transform academic medical centers and other health care institutions.
The groundbreaking work at the Vizient Research Institute drives exceptional member value using a systematic, integrated approach. The investigations quickly uncover practical, tested results that lead to measurable improvement in clinical and economic performance. Learn More
Dave Wedding, Chairman, Partnership Board and Managing Partner, Mid-South Market Territory at Grant Thornton LLP, and Mark Masson, a Principal, Axiom Consulting Partners, co-authored this whitepaper that explains why and how boards and management teams at professional service firms can work better together to sustain momentum and drive profitable growth.
“Too often boards and management teams at firms see each other as hurdles to be cleared. Power politics and a long list of initiatives get in the way and hold down results. Here’s how the board and management team can work together better to sustain growth:
• Determine and then live by who makes what decisions, why and in what time frame.
• Engage the broader partnership.
• Develop a shared view of the most critical strategic priorities for both the board and management.
• Leverage strengths and set clear expectations (of each other).
• Speak and act with one voice.”
Dave and Mark conclude: “Governance takes more than what is on the surface to successfully lead and sustain a firm’s momentum. Even the most gifted leaders often find the challenge of driving change difficult. Tuning the hard code and soft code of governance to get, and keep, the board and management team working together effectively for the partnership pays real business dividends.”
Accounting Today (8/30/16) features a high-level article on governance by Dave and Mark that summarizes many of the points in the whitepaper:
“Nobody likes a back-seat driver, and nobody feels safe when the two people in the front seat are arguing about every element of a road trip. The same is true in a partnership. When management and the board disagree on direction, managing growth or any other key decision, the entire organization is at risk. Partners feel unsafe…This is particularly true in accounting firms and other partnerships. Power struggles abound. Managers and directors sometimes view each other as hurdles to be cleared —and they keep information from each other. Issues of pricing, client acquisition or talent management get ignored, and ultimately, overall growth suffers. Learn More