Witnessing major process failure in action

Lance Gibbs
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We have all heard about how difficult the banking situation is on folks holding a mortgage who maybe at risk of foreclosure. Last night I happened to catch this segment on ABC News: Nightline. The more I watched the more irritated I became, and it didn’t even affect me!  Why? Because it is SO unnecessary. This is the result of process failure, pure and simple and has nothing to do with how complex any given mortgage may or may not be. How do I know this? Because folks couldn’t get to any given department to begin the process of ascertaining complexity! Bank Of America, IndyMAC (now bankrupt), Countrywide, and most others should be embarrassed to no end in their lack of ability to serve their customers. You see, it’s not just mortgages albeit that was the topic of this televised segment, it’s almost any customer interaction anymore that is not a point-of-sale transaction. These companies and most others have spent the lion’s share of their capital in removing friction to capturing revenue, and reduce whatever costs possible to increase the margin. That’s expected by and large, but here’s the rub. They have lost site of the value of a customer and as such have no idea what areas are acceptable to refactor and what areas should be considered competitive, value-added differentiators on the operations side.

value-stream

Simple enough image, companies for the most part do everything from poor to excellent in just getting their good or service out the door. It’s in that other arrow – “information flow” – that a lot of companies out there do a horrendous job. Requests come back into the organization from a customer and depending on their nature it can be a deal-killer for a customer. In today’s world, you need quality in delivery AND in information flow to really be a serious, long-term competitor.  That paradigm is increasing in potency and speed a lot quicker than many organizations are able to determine strategies to deal with it. Ask yourself, will the next generation of customers/buyers be as forgiving as we have been in the past decade? I don’t believe they will be, because as time marches on, these next round of customers will have even more choice in who they do business with.  The implicit bet that these banks mentioned above are making is that their customers have no choices in today’s economic environment.  In the short-term that may be true – but it only takes one experience like this to lose a customer for life.  And it only takes handling this customer process really *well* to win a customer for years to come. Folks, it is about process and even more important than the execution of process is knowing what and which processes matter. Companies have to stop with investing in every link in a chain whereby every link is continuously fed resources (that will not scale, it just burns money) and understand instead where is my WEAKEST link in any given chain; don’t forget the whole point of process improvement. Develop a superior relationship with a customer at the lowest possible cost.  When there are such glaring opportunities to differentiate your business without having to compete on price, one is hard-pressed to find a better investment in terms of ROI.  If you’re not doing process improvement with an eye on the customer then as our new President said, “you are on the wrong side of history”.
  • If I understand you right, Lance, then another way of looking at this problem is to think about the distinction between focusing on delivering a product, and focusing on delivering a service. What these companies seem to have done is to try to optimise around delivering a (one-off) product transaction, rather than seeing what most customers want, which is ongoing delivery of service across multiple transactions and interactions, over a considerable amount of time.
    This is a mistake that many many organisations make, and not only externally; it’s also a problem that internal IT shops often have when dealing with their own “customers”. We’re all in this to deliver service; the question is whether we know it or not.
    Of course the failure to figure out the “big picture” of the service proposition is something that would have come from top-down culture… is it possible to fix the process and service delivery pieces in the middle and lower layers of such an organisation without addressing the kind of culture that will drive this kind of behaviour and narrow targets?

  • If I understand you right, Lance, then another way of looking at this problem is to think about the distinction between focusing on delivering a product, and focusing on delivering a service. What these companies seem to have done is to try to optimise around delivering a (one-off) product transaction, rather than seeing what most customers want, which is ongoing delivery of service across multiple transactions and interactions, over a considerable amount of time.
    This is a mistake that many many organisations make, and not only externally; it’s also a problem that internal IT shops often have when dealing with their own “customers”. We’re all in this to deliver service; the question is whether we know it or not.
    Of course the failure to figure out the “big picture” of the service proposition is something that would have come from top-down culture… is it possible to fix the process and service delivery pieces in the middle and lower layers of such an organisation without addressing the kind of culture that will drive this kind of behaviour and narrow targets?

  • Your absolutely right Neil about culture. Question is, is it possible to fix things at a lower level without changing the culture. In my experience, absolutely, but can those “fixes” be sustained without changing the culture, no. Culture inevitably has to come along, problem is its like evolution…slow, painfully so much of the time. You just have to keep getting wins where you can and hope it comes along at the executive level. Logic makes people think (yes, we should invest in our customer) but emotion makes them act. In my view to get culture change to happen rapidly requires an event, something profound, “shock and awe” type of stuff. Unfortunately, those “events” are few and far between and are rarely positive ones…my two cents.

  • Your absolutely right Neil about culture. Question is, is it possible to fix things at a lower level without changing the culture. In my experience, absolutely, but can those “fixes” be sustained without changing the culture, no. Culture inevitably has to come along, problem is its like evolution…slow, painfully so much of the time. You just have to keep getting wins where you can and hope it comes along at the executive level. Logic makes people think (yes, we should invest in our customer) but emotion makes them act. In my view to get culture change to happen rapidly requires an event, something profound, “shock and awe” type of stuff. Unfortunately, those “events” are few and far between and are rarely positive ones…my two cents.

  • BUT, we can’t give up. We just need to keep spreading the message and delivering the best solutions out there…always hoping the penny will finally drop for many of these companies and groups.

  • BUT, we can’t give up. We just need to keep spreading the message and delivering the best solutions out there…always hoping the penny will finally drop for many of these companies and groups.