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A Framework For Operational Excellence and Customer Obsession

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This is a powerful definition of Operational Excellence, how it relates to Customer Obsession and has a huge impact on revenue, profit and employee engagement.  You can download a PDF version for yourself, free.  Enjoy!

 

A Framework For Operational Excellence and Customer Obsession

Operational Excellence.  It’s a term most of us have heard, maybe even used, but when it comes down to it few people know what it really, truly means.  Operational Excellence certainly sounds like something we should want – after all, everyone would say they want their business or team to operate well, and we want it to be excellent rather than average, right?

We need Operational Excellence

Operational Excellence is important enough for Jeff Bezos (the richest man in the world and the CEO of Amazon.com) to mention repeatedly in his shareholder letters, so there has to be some value in it.  And let me ruin the ending for you here – because when it comes to well defined operational excellence there is massive value indeed.

It’s a strategy that has helped Amazon become the most feared (and revered) business of the century so far – sending whole industries running for cover at the slightest mention of working there.  It’s a strategy that helped Toyota thrive for over 100 years in one of the toughest industries on earth.  It’s a strategy that took McDonald’s from one store to over 36,000 stores worldwide, and it’s a strategy that enabled Uber to grow to more than 2,000,000 drivers worldwide.  Bezos says:

Congratulations and thank you to the now over 560,000 Amazonians who come to work every day with unrelenting customer obsession, ingenuity, and commitment to operational excellence.

 

The thing is, when Jeff Bezos talks about customer obsession, he’s not talking about meeting a customer at a cash register and giving them a smile.  He’s talking about reducing any friction a customer might have in doing business with Amazon.com, and making it ridiculously easy for them to buy (and continue to buy) from them.

Which gives us some good news.  When it comes to Customer Obsession and Operational Excellence, those two things are 100% related.

Continue reading A Framework For Operational Excellence and Customer Obsession →

Leadership Card 33 – Problem Solve for Exponential Growth

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Leadership Card 33 – Problem Solve for Exponential Growth

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Solving The Root Cause of Operational Problems

Wow, that’s a mouthful, isn’t it?  Solving the root cause of operational problems.  What does that even mean?  Well it must mean something, because Jeff Bezos (he’s the CEO of Amazon.com if you haven’t heard of him, and currently the richest man in the world) makes a point of doing it day in and day out in his business, and ensuring his managers do the same.

And it might sound fancy but in fact it’s very simple – find out what is bothering your customers, then don’t just fix it one time, fix the reason behind it.  Here’s an example from the book “One Click: Jeff Bezos and the Rise of Amazon” by Richard Brandt:

“When one elderly woman sent an email to the company saying she loved ordering books from the site but had to wait for her nephew to come over and tear into the difficult-to-open packaging, Bezos had the packaging redesigned to make it easier to open.”

 

He had the packaging redesigned.  He didn’t just apologize.  He didn’t go to her home and open the package one time.  He had the packaging redesigned so it wouldn’t happen again.

Lean Cartoon Next 352 Problems

Companies With the High Velocity Edge

A man by the name of Steven Spear found the same thing, through research in his book “The High Velocity Edge”.  Companies who outperformed others over long periods of time had leaders who:

  1. Designed their work to reveal problems and opportunities
  2. Solved the root cause of those problems
  3. Shared that knowledge throughout the organisation, then;
  4. Developed the problem solving skill in others.

This meets the actions of Jeff Bezos perfectly.  By solving the root cause of problems customers are having, they stop those problems from happening again.  They are saving time, money, and retaining customers.  Then by sharing that knowledge and building the problem solving skill in others, the managers and teams at Amazon.com are building upon previous successes in a way that starts as small improvements and gains, but soon grows to large gains as the improvements compound on each other.

Start and Finish with a Repeatable Process

Problem solving by itself may not give you the results you want.  If you improve something, but don’t lock in those changes, there’s a good chance things will revert to normal after a short period of time.

This is where a standard, repeatable process comes in to play.  By ensuring each product we sell, and each operational process we perform to get there has a clear, repeatable way of doing it, we can use that process to improve.  Something as simple as a checklist, or screenshots, can work wonders with ensuring everyone knows what to do and can do it the same great way every time.

Then when you improve things, you can lock in the changes by updating the process, checklist, screenshots (or any other way you prefer), so the improvement isn’t lost and you can continue to grow over time.

In that way, small incremental improvements will compound on each other over time, leading to large improvements overall.

In that way, solving operational problems is the key to operational excellence.  And by solving problems your customers bring to you (whether through complaints or other feedback) you are unlocking the door to a customer obsession mindset.

Chat soon – David McLachlan

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Leadership Card 32 – Checking In To Increase Engagement (and Customers)

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Leadership Card 32 – Checking In to Increase Engagement (and Customers)

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The Best, Most Loved Leaders Check in Regularly With Their Team

The Gallup business journal recently found that there is a very clear way to increase your team’s engagement in their work.  They found that leaders who check in at least once a week with each individual in their team, while focusing on their strengths, saw up to a 27% increase in engagement.

To put that into perspective, companies in the top quartile of engagement have enjoyed twice the revenue of companies in the bottom quartile of engagement, according to a study by Kenexa.  Other studies by Gallup have shown lower absenteeism (by 41%), improved sales rates, and significantly improved productivity in companies with highly engaged staff.  Improving your engagement by 27% could easily move you into that top quartile where all the magic happens.

Do you want to be a leader that everybody loves?  Check in with people regularly, and focus on their strengths.  Part of this comes down to another key to increasing engagement – in fact some people have called it the main key.  And that is progress.

Employee Engagement cartoon Making Progress

By checking in regularly with your team, and focusing on their strengths, you are facilitating both a sense of progress, and the likelihood of real progress itself.  Teresa Amabile found in her research and writings called “The Progress Principle” that people’s happiness increased when they had a sense of progress.  In fact, there’s a good chance you can relate to this.  How many times have you thought about (or actually gone ahead with) quitting your job or business plan because you weren’t making any progress?

So check in with your team, focus on their strengths, and make sure they are on the right track making progress.

Check In With Your Customers To Significantly Increase Sales

Retaining customers can be one of the hardest things in business, but when you get it right, studies have found very real increases in revenue and profit.  One study by the author of The Ultimate Question 2.0 (Frederick Reichheld) found that retaining an extra 5% of your customers led to an increase in profit of between 25% and 95%.  And if you think about it, it makes sense.  Most of the cost to acquire a customer is spent up front, with advertising, brand awareness, many meetings or phone calls and even steep sales discounts.  But once a customer has formed a habit of doing business with your company, there is a much lower chance they will go searching for something else.

And this is where feedback comes in.

It’s such a simple concept, yet almost no company does it well (outside of many of the best, most profitable companies).  You want to search out customer feedback.  Are you getting complaints?  Great!  At least your customers are telling you.  Don’t hide away from the complaints – they are free feedback that is worth its weight in gold if you know how to fix their problem and improve.

Customer feedback might take the form of a survey, a Facebook or Google review, a complaint (as we noted) or even praise (statistically less likely, but still nice).  And when we get any type of feedback, we want to solve the operational problems that lead to anything negative.

Lean Cartoon Fix Operational Problems

Work taking too long?  Solve the operational problem behind it.  Staff on-site leaving a mess after their work?  Solve the operational problem behind it.  Quality of the product not lasting long enough?  Solve the operational problem behind it.

And – here’s where things come full circle – the best way to solve operational problems is to ensure you have a standard, repeatable process in place and then check in regularly to ensure it is being done.  And if it’s being done, but the results are still bad, then you improve the repeatable process and roll it out again.

Rinse and repeat on your way to exponential growth – just buy me a beer when you pass your first million.

There’s the other side to this tale as well – as your business grows and you rely on repeatable processes more, if you don’t check in to see if those processes are giving you the outcome you want, there is a good chance you’ll run into trouble.  If you don’t check, you can’t adjust, and if you don’t adjust, you may not get the results you want.  Pilots check their course regularly on their way to their destination, and so should you, by checking in with your team, your customers, and making sure they are getting the outcomes they want.

Chat soon – David McLachlan

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