The key to your organisation’s growth lies in this simple strategy
Stuart Corrigan
Have A Late Running Project Or Product AND Want It Delivered On Time? We Use Systems Thinking And Critical Chain To Provide 94% On-Time Delivery & 4X More Output | Training, Templates, Guides & Tools Installed in 30 days
Three big blue chips have just announced that staff will be expected to be back in offices, and that flexible working will be cut. It’s a clue that CEOs are shifting their focus away from efficiency to a growth mindset. The assumption being that the BEST way to make more money is to make their workforce more productive. Some in the press say it represents a thirty-year shift in thinking.??
Others say it’s business as usual, arguing that efficiency and productivity are really just two sides of the same coin. They’re not.?The first is about?doing the same with?less?and is entirely focused on improving profits and influencing share price as a result of?relentless cutting.?Efficiency logic see’s senior execs obsessing over the number of hours it takes to do a thing, pitted against the standard metrics for the sector.???
Productivity?sounds?similar, the output of a thing vs. the number of hours used in creating that thing.?But productivity is about?doing?more?with the same.
So why the shift??According to research (HBR 2017) through the 1990s and 2000s, leaders that focused on cost cutting performed better than average.?In-fact their earnings growth ran at three times the rate of inflation. This despite little gains in revenue.?But further research from Bain & Co and the Economist, shows that from 2015 earnings began to fall.?And it’s been the same over the past eight years.?Efficiency it seems has had its day.?The new kid in town is top line growth.???
I was ready to have drinks with the research team and give them a big slap on the back for their insights until they took just one little step too far. That in their opinion,?making?your staff more productive is the key to growing. It even says so in their research:
Wow easy, I get everyone to work harder and boom, profits are up.??
Wait a moment, let’s look at what they don’t say.?Here lies the clue to your growth, share price, profitability, and all golden egg laying geese.?They didn’t actually say that making your team more productive results in more growth.?They didn’t suggest a causal relationship.?Nope, it was a correlational one, that productivity is an?outcome?of growth, not the other way round. It’s like saying that the second top holiday destination of CEOs is Ibiza (who knew) which is different to saying, if you go to Ibiza you’ll become a CEO.?
To recap, the?research does say?that THE best companies are more productive than the rest. The best companies?do make more money?than the others.?But not that a productivity focus has caused the results. Those that misunderstand this equation, and get it the wrong way round, tend to make some career limiting errors.???
Mark a contact centre manager (yes, I know, let’s go for the low hanging fruit eh, why not) – believes that ‘If I get more out of my people and make them more productive, I’ll make more money for the company right?’
Thinking that productivity equals more money, he uses accounting and outcome metrics to drive productivity.?The number of calls handled, the time per call, the wrap up time, the unit cost of a transaction.?But as call volumes?and?costs keep rising, he’s tearing his hair out.?
Mark’s error highlights two mistakes, the first we’ve discussed, productivity metrics being used to drive profit.?Mark then exacerbates the problem by turning the metrics into a target for the agent to hit - ‘do 80 today.’
Here's where he went wrong:?
Using productivity as the driver of profits is what got the counterintuitive result, leading to?less?money generated.
We can learn a great deal about those that have gone before us in manufacturing.?The accountants say ‘keep all the machines busy, produce as many things as you can.’?In year one, the money looks good. In the next as the unsold goods get scrapped, the company declines.?The shouts of ‘tons, tons, tons’ in the steel industry helped to produce lots of product that no one wanted.??This focus on productivity is what made British steel go bust in 2018.?Again, productivity metrics used as proxy for customer measures, will do you harm.?
The irony is that whist service organisations CAN learn from a factory and productivity mindset, few do, instead they actually copy the logic, ‘keep ‘em all busy, and we’ll make more money.’?Then they wonder why they become the subject of a newspaper story on their poor service.?Everyone busy, no one helping the customer.?
When I’m presenting to senior leaders and I explain factory logic many will ask ‘why are you using factory analogies, we’re a service business?’?Then when we go and study the work and they see that whilst the productivity numbers are being hit, customers are neglected, they get it. Many service businesses have become sweatshops.?When Mark in the call centre got his staff to switch their focus to helping the customer, failure demand dropped, and as the team did more value work so the business made more money.?
Is there a place for productivity metrics? Yes of course there is, but as I said, as an outcome metric not as a focus to drive activity. It’s right to measure how many calls are offered and taken in a contact centre, in-fact you need them for planning purposes. But you can only influence them properly, without dysfunction, by what you do at the front of house, and how you design work.?Think of it like this. Setting a target to lose weight is futile, who knows how your body will respond, you can’t control that.?You can only influence the outcome by paying attention to what you eat and how you exercise.?
And, unless you’ve just bought a bow and arrow stop using targets in any shape or form.?It takes your team’s focus away from their purpose, which is…‘SOLVE CUSTOMER PROBLEMS.’
And it’s customers to which we turn when we want to grow our business - Remember there are only three ways to increase revenue.??
(Note that ‘customers’ are in?all?of those sentences).?
Try this as your next marketing campaign, ‘hey we’re more productive than the business down the road, want to spend more money with us?’?Didn’t think so.
How to make your business make more money???
We come full circle, what then is the best way to?actually?get, keep and increase the spend of customers???
To find the answer to this we should turn to a more robust piece of research.?This time conducted by the Chief Customer Officer Council. An organisation that advises senior execs on the relationship between customer strategy, business, operational and financial outcomes.
Every year they ask their clients what research they’d like done.?In 2012 the question was ‘what is the most reliable indicator of an organisation’s growth and whether a customer will remain loyal and repurchase?’?If you get this, I mean truly get it, the answer will revolutionise your thinking about how to design and manage your business.
The first thing the research showed was what we shouldn’t do.?More counterintuitive insight.?Customer service is not in-fact an indicator of growth.??Today most interactions with a human occurs when something has gone wrong.??The customer experiences friction in having to put it right, loyalty drops.
What to do instead??
Reduce Customer Effort
Simply this.?Reduce customer effort.?It’s the key to repurchasing, it’s the link to loyalty and the path to growth.
And it’s also good for staff, with increased effort comes more ‘organisational drag’, the ‘lean’ consultants would call it waste.?Meaning that around 20-50% of an employees’ time is spent doing non-value adding activities. Reducing this type of work means less effort for them too.
Reducing customer effort then provides two big benefits:
Designing a lower effort business means more growth, productivity, less cost and increased profits.
Look at that, you can in-fact have it all!
‘Ok I hear you ask, that’s the strategy, but tactically how do I do it, what metrics do I use, and how do I design these amazing new friction free services. I’ll explain it all this week. You should really hit my LinkedIn bell and stay informed of my posts, because no matter how busy and productive you are, this is stuff you don’t want to miss.
Want to have a chat about improving a badly performing service or a late running project book a call here.
Systems Thinking Change Consultant
1 年Customers want us to spend less too.