Executive Decision Making in a Customer Centric Organization, Part 2

Incorporating the balance between profitability, prioritization, investment options and timing—all tied to learning from voice of the customer.

Last month we covered three pitfalls that interfere with fast, effective decision making: lack of a balance between a cost-cutting focus and a focus on revenue growth; lack of a communicated clear competitive strategy supported with customer VOC; and, lack of strong telemetry to understand the market and measure performance to plan in near real time. This month we will look at the remaining pitfalls that will dramatically limit an organization’s ability to stay on the curve relative to basic productivity as well as and to carve out a niche.

Pitfall #4: Failure to educate and begin to virtualize appropriate business processes.
Continuous technology education as noted in the telemetry discussion is now more critical than ever.  Leading companies are investing in new technologies to expedite collection, transmission management and analysis of information and are pulling away from the pack.  It has allowed the competition offshore to accelerate competitiveness by reducing time-to-market.  

There is absolutely no reason we cannot attain parity or better against competition in this dimension, except for lack of visibility and perhaps a bit of intimidation when tackling unfamiliar modes of conducting business.  Almost every business process is becoming virtualized and speeding execution, providing better telemetry and lowering costs.  An intro to this is Young and Jude’s book published by Cisco Press, on “The Case for Virtual Business Processes”.  

Pitfall #5: Lack of innovation.
While VOC will give you the wherewithal to impress the customer with solid understanding of their business needs, the rubber meets the road when you directly contribute to product or process innovation.  A flow of contributions, timed in a way to integrate with the customer’s own development or business cycle, will unequivocally set you apart from the competition.  

Innovation shows you engage to understand the business and technical challenges and invest resources to deliver solutions ahead of the competition.  This investment is a real cost to you, extracted from the profit you receive from your services.  It is one of the best investments you will make once the organization itself is properly aligned.   Ultimately, innovation flows naturally from the type of organization you build.   However, at first it requires serious effort to understand and effect the organizational changes that will then deliver this previously untapped value.  

In the real world, cost remains critically important yet innovation levels the field and will move you to first place when value can be measured as a TCO, contribution of intellectual property to the value stream, time-to-market is reduced or design reliability is improved.  At the end of the day, a supplier with the mindset to out innovate the competition will provide a higher quality product as an output of the operational transformation that will result.   At some point, you will find a customer set that sees you are adding literally millions of dollars in value to their operation and will say “thank you” with their continued business.   

Pitfall #6: Failure to honestly assess the competitive landscape and your team’s strengths and weaknesses.
One of the most important abilities is that of determining and acknowledging one’s strengths and weaknesses.  If you know them, you can exploit them, target the best fit business opportunities, steer clear of where your organization would be challenged, and most importantly you can change to become the business you want to be.

I once worked with a company that spent a significant sum for a study on the primary reasons very large companies had stumbled over time and the long-term effect on those companies.  As I read the report, I thought “we have some issues in at least half of the causal categories.”  On the verge of failure 10 years later, the company was acquired, and what I fondly refer to as “a great social experiment” ended.  Top management read the report yet acknowledged no real problems in any of the categories.  Nonetheless, the reasons for the eventual failure were closely tied to the report, related mostly to ineffective decision making and failure to honestly reflect on let alone act upon appropriate internal and external telemetry.   This anecdote demonstrates that the challenges are common: organizational behavior often follows historic trends; and honest reflection, assessment and preventive actions don’t happen naturally, but are a managed outcome as a result of committed leadership.

It’s even rarer to see this done effectively when things are still going well, but by the time the organization is in trouble it’s often too late to avoid a massive change in competitive position and valuation.  The stock prices/value of high fliers collapse, more than likely never to fully recover, and everyone loses.

Conclusion
Next month we will take a deep dive into points five and six, understanding the importance of innovation, competition and your own organization’s strengths and weaknesses in formulating then executing capably on your strategy.  We will ask some tough questions on what it will take for you to prosper in the coming economy.  

Honest reflection and admission of factors—both internal and external—is often difficult and gut wrenching.  It remains a constant executive responsibility, which now requires a more modern approach given the wealth of information available and tools/processes to manage it, and the rapid compression of cycle times in almost every aspect of the business.  Timely, high quality, decisions will inevitably need to be made that will tweak strategy, management approach, resource deployment and the development process.  These may lead simply to improved profitability and competitiveness, or be as fundamental as turning around or saving the business!

 

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