(Re)Inventing Business Processes

Kongō Gumi was founded in 578 by a family in Japan to build shrines and temples. Handing the business down through family for generations, they maintained a reputation for quality and a loyal customer base until acquisition in 2006.?For more than 1,400 years they had no Marketing, Sales, HR, minimal back-office staff and no internal structure that we would think of a business today, particularly a Japanese one. All we really know was in 2005 their revenue was about $70m US and despite still operating under a parent company, it continues to have almost no online presence. By keeping their business model as simple as their business, they survived from?the era that matches were invented to the internet age to be the longest operating business in history.?

Why have vastly different businesses evolved to use uniform business models today? Marketing & Sales may squabble over who does what to get customers in the door, but everyone generally agrees they don't dabble in the Operations and vice versa. Details are handed to Accounting while completing delivery, and the customer is dropped into the "customer bucket", either to be retained by Service or an Account Manager as a "house account", or slip through a hole in the bottom for Sales & Marketing to collect again.?

In large businesses, these are compartmentalized functions, operating on independent processes and software platforms. Small business owners know they wear many of those hats themselves, but use the same processes, systems and compartmentalization strategies as much larger, much different businesses. Why don't small businesses replicate Kongō Gumi instead of corporations like Panasonic??

Short answer: The different business "silos" developed with independent strategies and objectives, each of which sell themselves on being "The Answer" and creating competition of ideas for business owners to choose from. Long Answer:?

• Sales:?About 5,000 years ago in Mesopotamia, the idea caught on that the trade of products could generate its own profit,?without bringing additional products into the transaction. From here, businesses evolved from production-only models to ones with sales strategies. In the mid 1700s, "selling" was what we'd think of as snake-oil salesmen, but buying a bunch of cheap stuff in one town and selling it in the next became a job. Down the road, the Door-to-Door salesman emerged and in 1886 John H. Patterson, president of National Cash Register (NCR) developed his own method of selling. Patterson is credited as the first person to professionalize sales by targeting influential?people as first sales to encourage future sales from their followers. Sales developed largely independent of production or even the businesses themselves. Sales became a chess match - the thinking game between a salesman and customer that closed the deal for as much profit as possible.?
• Marketing:?Marketing is a similarly?old concept; businesses simply used brands or signatures to distinguish themselves from a competitor, and make that image known and desirable with its quality. In 1620 the first newspaper?advertisement (in Dutch paper?Jansz’ Tydinghen uyt Verscheyde Quartieren) was an ad for the newspaper's own next edition; using marketing to lure an audience with future promise, not just brand the product. By 1786 the first advertising agency was born and by the 1830s we had billboards everywhere and 1902 marked the first official University courses in Marketing. Modern marketing concepts are credited to start in 1967 with?Philip Kotler. Marketing also evolved separately from the businesses they apply to, focused on methods to create belief and stir resonant feelings.?
• Operations:?Operations are much more complex. Essentially the "getting things done" silo, Procurement, Production, Delivery & Service all fit under this broad bucket. In short, loose methods started becoming more standardized with industrialization, and early practices like Ford's assembly line sought efficiency. After WWII, expanded supply chains and logistical experts applied their talents in Operations departments, with the focus of creating measurably perfect systems for consistent quality production and service, free of waste in product or human efficiency. Lean methodology, and even precise improvement programs like Six Sigma use sterile and objective processes for improving business operations.?
• HR:?Missteps in the efficiency and cost reduction efforts led to the Human Relations movement in the 20th century, to better anticipate the psychological effects of Operational objectives had on the people in operations. As labor laws standardized these early practices, HR became the custodian to the legal documents and regulations to keep companies in compliance. During the 1980s layoff trends HR became critical advisors and executors of company needs. Once hiring and staffing became a focus, HR again transitioned to staff morale and retention. While the focus has changed with the environment, HR protects businesses and employees from each other and themselves, often using practices designed without consideration of the business or the people.?

So here's my thoughts...

Each of these silos has developed independently and with different objectives in?mind. While they can be managed into an organization that collaborates, there is no reason to think this is their natural state. This disrupts the customer experience, and in?turn the business.?

• While Marketing creates feelings and belief that Sales converts into dollars, they interact with the same customers. Compartmentalizing them encourages discontinuity between them, decreasing the chances that an initial?belief converts to a sale. The sales process should seamlessly pull customers in with the hook that first lured them. There is no reason efficiency of money and movement models should be exclusively applied to operations either. We often overcomplicate things when we copy others' business models. After all, these practices developed independently, with different approaches and systems to accomplish the same broad goal of being able to sell anything.?
• Operations are often isolated, performing tasks in service of the customer, while wholly disconnected from the customer and their experience.?Production and Delivery are simply the next stage of the customer experience, and should create an intentionally congruent customer experience.?The sale should nurture the customer's belief, not just get money from it, and the production and delivery should convert the belief to reality. When delivery creates a positive reality, a loyal customer is formed from it.?
• Many business underperform in support and account management. Support is often outsourced from the business entirely, or a series of recordings and robots that remind me how important we are while ignoring us. Account managers are often rotating babysitters with a series of "House Accounts" that provide minimal commissions or incentives.?
• Some complications in business are outside our control. Our need for Accounting or HR professionals is a product of the complex regulation in the marketplace, not our businesses. While we need tasks completed, we may need them minimally.?There are likely elements of supply chain or human relationship issues that one of these departments would be really relevant to solving, if not compartmentalized from knowing about them.?
• If an Account Manager became engaged with a customer from the sale and oversaw delivery, how much easier would it be to provide a consistent experience? If delivery reported to Account Management, how would that improve the continuity? As a customer, I'd feel more like a current customer than one taken for granted by being passed off after delivery. Being a "house account" should feel prestigious or rewarding, not stale.?

And finally my conclusion!?

Instead of placing the least amount of attention on support and account management, this should be the priority focus for businesses. Loyal customers are easier and cheaper to keep than create. Following and understanding the customer experience helps businesses see what others do, and take action to make it a more consistently positive experience with increasing rewards for all parties.?

Knowing that we want this increasingly positive experience for our customers, we can design it. Marketing and sales tactics can be adjusted from customer feedback to create an incredibly reliable path from pitch to delivery that escalates interest and perceived value and produces that WOW moment. All aspects of the business can cost less money and energy to produce these results if focused on them more than the inter-department bureaucracies most business process evolved around.?

Delivering a product that consistently fulfills the promise made shows integrity. The greater integrity the business has, the less necessary psychological tactics on customers and employees become. Sincerity becomes the means to increase your customer base and workforce.?

Large organizations try to replicate sincerity with processes ("Thank you for holding, your call is very important to us"). Small businesses often lose their genuineness when they adopt business systems that replicate the concept rather than come from themselves.?

Rethinking small business processes isn't about replicating what successful companies have used, but studying the customer experience with your business and understanding what you need and what you can discard to make the overall experience worth repeating for everyone involved.?

Most businesses are busy doing a lot of unnecessary stuff and yet miss the few things that could change the customer relationship completely. By considering the customer experience in whole, you can put yourself in their shoes. As a customer, improving a business intuitive. We do this mentally in check-out lines or searching for products ("If they'd just do X I'd be happy!"). By using that insight and power to act within the business, we can calibrate our systems and processes to maximize the customer experience that drives future business.?