Steve Downton, Downton Service Management Consultants Ltd, Noventum Group
Businesses may desire to optimise their performance to optimise profits, but when the practicalities of the day to day operation are scrutinised, it becomes clear that the meaning of optimisation should be clarified, in order that a business can achieve it. A number of senior executives were asked to define optimisation during one of the senior executive forums held at the SME this year and it became apparent that there was no one solution or common agreement as to what optimising a business meant.
The dictionary definition of optimise, which is a derivation of the word optimism, states to make the most of, most favourable conditions for growth etc best compromise best or most favourable.
This definition is almost at odds with what many companies have called optimisation and where the challenge for service managers and directors has been how to make the most of what they have, driving up productivity and driving down costs, seeking ever higher customer satisfaction levels etc. However although these have all been laudable goals, in most cases they are flawed because when the environment changes, the targets and goals change and the uncoordinated efforts begin all over again. Optimisation is about achieving a balanced position: accepting a realistic compromise between excessive profit- making and over-delivered service levels. Balance and consistency of approach is valuable in today's changing environment as it allows for a more effective and rapid response to changing requirements and therefore it is important to understand optimisation, what it means for each business and how it can be achieved and measured. The principles of optimisation are therefore about seeing the bigger picture (some might say Strategy) but it is the bigger picture of the operation and it is why the most successful companies today have pulled their Sales, Service and Marketing departments as well as Manufacturing and R&D operations together at key levels in the organisation. All the functions of the business can then be considered in terms of the value they bring to the business and customer, and not by the political power they might wield. The most effective pathway is to use the customer as the point of leverage, to align the business to customer's needs in order to fully satisfy the customers in terms of brand product and service. Automatically this entails consideration for the end to end processes, the integration of systems, and staff working together across functions.
If you are not sure about this, consider the number of companies today that make strong statements about themselves, for example supermarkets selling Fair Trade Products to support third world producers; cosmetic firms avoiding testing on animals; car manufacturers proud of the levels of recycling achieved. Service is the front line and has to be more than just skin deep if the business is to be truly successful - knowing your customers (the concept of customer intimacy) is a fundamental part of customer-aligned optimisation. Working symbiotically to the advantage of both businesses, so that the customer sees a constancy of approach, a continual and consistent reinforcement of the brand, will prove the value of optimising to the customer, which they will reward with loyalty and a willingness to refer on.
Taking a cue from the dictionary definition, the place to start optimising is to make the best of the three aspects of a business: People, Processes and Technology and as these should not exist independently of each other it is important to consider how they should work together, and what degree of compromise is required. Considering people,
processes and technology in isolation fails the principle of working the three together to create an optimised operation.
As the concept of mass marketing has disappeared to be replaced by individual tailor- made solutions, there are very few occasions when one size fits all. Each business should consider the specific balance (the specific compromise) that exists within their operations between people, processes and technology. In many cases businesses have become very good at one aspect to the detriment of the other two. Examples abound where a business has excellent people and depend on them to redeem poor processes or lack of technology. Alternatively businesses may have technology that is first rate but it has made their staff into automatons who act without thinking; or, technology has been applied piece-meal, (a common situation today) and as a result is not properly joined up and only works in certain areas. Many companies exhibit such trends and will claim they are optimising their operation but have never properly stepped back to look at the bigger picture, or even ascertained what they are trying to achieve. By recognising this, a business will optimise the totality of people, processes and technology to the benefit of the whole business rather than in segments to meet an individual target or goal.
One simple example of optimising that often flounders is attempting to improve the customer interface. Many companies interpret the customer interface as a single dimension based around the need for the agent or engineer to provide the customer with a good experience and keep them satisfied. They will use customer satisfaction surveys to measure their customers satisfaction and focus their engineers and agents on delivering good front line service by offering bonuses to staff if they achieve high customer satisfaction (displaying letters and votes of praise and putting in place mechanisms to motivate their staff to provide service excellence and high customer satisfaction).
Such mechanisms for maximising customer satisfaction are all well and good, but in this modern age the customer interface is much more than the customer having a good experience with a call agent or engineer, it demands much more from the business as a whole. Customers interact with all the three aspects (people, processes and technology) of a business and through the internet and the media will have a much deeper understanding of the business. The usual contact for the customer is through an individual engineer or call centre agent - very important to the customer and can be strong influences, but the agent or engineer can become an object of sympathy when it becomes obvious that they are struggling to provide a solution or, that the process they are applying is of no value; or, the technology they are using is limiting their ability to work effectively or efficiently.
These other factors have much more impact than the individual when customer loyalty is under consideration − customers are not restricted to a simple measure of customer satisfaction delivered by the personality of the individual agent or engineer. If the customer interface is far from optimised, the quality of the performance of the engineer or agent will serve to underscore the poor process or technology deficiencies. Not only does a poor process cause problems with the customer interface, it also causes problems for the employee, contributing to a high level of attrition and ultimately the quality of the agents or engineers. Training new staff puts pressure on the performance of the operation; improvement is then short-lived because optimisation begins to accommodate to the lowest common denominator because all the facets have not been involved and any improvements may prove to be unbalanced.
Optimisation across all the facets is the only sensible option and companies unable to sustain long term improvement have usually failed to address such a course. The introduction of a new product can produce a variety of reactions; for example increased sales can result if the product offers new features and functions, but often engineers dread new product introductions if they have to fight manufacturing to get hold of parts or worse have to deal with a crop of early-life failures as the manufacturing processes need refining. A balanced scorecard can highlight areas for concern because it is designed to measure across the environment and will quickly identify when the operation is off- balance. It will prevent the need to ask the engineer to cover for problems and instead enlist their help to solve a problem.
This article started with a comment about aligning the business to the customer, recognising that each customer is different. The balance of people, process and technology will define the culture of a business; different customers will select the company and culture that suits them, and for this very reason, when I benchmark companies, I always warn the management that it is best not to copy others blindly, but instead to see if they can learn from the way other businesses approach the balancing of their operation.
To set out on the path of optimisation, it is necessary to define what the business will look like when all the parts are working together in harmony. This does not indicate a demand for 100 % perfection in one department, but that all departments are up to speed and performing at acceptable levels, with consideration given to the skill sets required by staff and what salaries will be required to attract and retain the appropriate calibre of staff. Understanding fully where you are presently, affords you insights on what the path of change will require.
Optimising processes requires understanding what the relationship with the customer should be; what is expected of the staff and how they work with the process; what level of command and control or self-directed management will be in place. Technology is also a big danger area; it is common to seek a solution by upgrading technology while still not investing in the people and the process.
In summary therefore the first principles of business success: to retain good customers, reduce the acquisition cost of customers, and increase the value added to existing customers requires an optimised operation, bringing the three key areas (people, processes and technology ) across the whole business up to a common level of performance. The right staff must be recruited. They must be capable individuals, given adequate and appropriate training and willing to provide service excellence. At the same time they should be supported by the processes in place and use technology to support the processes and the staff to create the business. Working in harmony, the business understands their customers and their needs, and aligns where possible the business to these needs so that together they create a degree of optimisation which facilitates both businesses, making them both more successful and sustainable.
Downton Consulting has established a reputation for providing effective business advice within the Services Sector specialising in guiding senior management teams and supporting service operations both large and small to manage their customers, improve performance profitability and deliver service
