Pivot the Organisation - Design the organisation to serve the customers not the people who work for it!

-An Article published in Leasing World Magazine July 2010 issue aimed at the Asset Finance market but true for many other organisations-

Management through functions and departments is very familiar to those working in banks and asset finance companies. This traditional approach where businesses are structured according to professional skills - financial people working in finance, sales people working in sales and processing staff working in operations - is nothing new,

The traditional functional based business design is efficient in organisations that do not change very much and in businesses with low levels of complexity. The centralisation of skills delivers savings in synergies and resource management. Today businesses that have low levels of change and are simple are rare. There is a clear driver for client focus and an emphasis on local profit and loss where centralisation and standardisation doesn’t deliver differentiation and agility easily.

However in other industries this model is changing. There has been recognition in recent times that the customer and his or her experience is more important than how the organisation is constructed. The underlying question posed is does the division of the business into these skill sets actually deliver performing processes and activities?

In many cases the resounding answer has been no. Why is this case? Many customer-based experiences have activity that crosses functional boundaries and every time there is a border crossing there is an opportunity for miscommunication and delay. The criticism of organisational “silos” is well voiced and having enterprises structured in a way which could be described as being at “right angles” to the way customers experience the organisation doesn’t necessarily facilitate good customer service.

The growing trend seems to be to structure the business in line with how the processes flow with all individuals, with whatever skill family they come from, reporting into someone accountable for the performance of the process as a whole. This end-to-end management structure is gaining popularity and pace.

This starts off with a few core customer processes where experts from all the functions collaborate in a new end-to-end organisational structure. It is soon seen that this works: customer satisfaction rises, complaints fall and more efficient processes deliver better returns. After a while the new way catches on and soon other key activities in the enterprise start to be re-organised in this fashion.

If the end-to-end management takes off the traditional functions eventually get smaller and smaller until they finally disappear. The organisation has by this stage completely pivoted from a functional construction to a construction based on its core services and underlying processes.

In asset finance there has always been the aim to create a healthy tension between the risk management sales and operation functions. The balance between the desire to sell, the drive to follow protocols and the need to reduce risk has always been a continual ebb and flow within finance businesses. If this balance is well managed then the company is successful; if one or more functions are allowed to dominate then the company either fails to achieve market share or conversely develops bad debts, both issues leading to potential failure.

The natural requirement to sustain this functional tension is maybe one of the reasons that functional based organisational design in leasing companies persists. Other industries have tackled similar issues through matrix management or balanced scorecards or indeed a combination of both to generate both customer focus tempered against increased levels of risk.

Einstein said “Insanity is doing the same thing over and over again and expecting different results”; this quote gives encouragement to try out different and new things, or else expect more of the same.

One way of developing a step change would be to try out structuring your organisation around the activities that support your customers rather than around the skills and political preferences of your employees. You may well find a lot of waste and certainly delays in delivering customer value as well as potential improvements in customer focus leading to higher volumes of business. If you structure differently to your competitors then this may well lead to market changing differentiation.

So often restructures start and finish with an organisational chart; they should start with a process and value chain map and people allocated to support the delivery of value. The message of this article is to design your processes with your customers in mind and then design the organisational structure to fit those processes not the other way round, which is the default position for so many enterprises.

Training for Individuals -ADVERT-

Training courses for specialist subjects are difficult to provide to individuals. If the subject matter is widely in demand then one can schedule public courses knowing that of the hundreds that want to do the course a core number will book places for the scheduled dates.

For more specialist courses like for example "Business Architecture" conventional training usually only can be organised for groups of people within businesses. This is how most of the business architecture courses that we have run at Dever Solutions have run historically.

Frequently it is a team which is wanting to build up a business architecture capability and wishes to use the course to facilitate its building process - this has worked well for many of our clients over the last two years or so.

However several times during the year we get individuals wanting to book on to a course but there is never enough who want to do it at the same time! It would be unfair to recover the full costs from an individual to run a 121 course delivered in a conventional way; it is the fixed costs of paying tutors travel and subsistence that makes this difficult.

In order to solve this issue we will be creating a 121 mentoring version of our popular "Business Architecture An Approach For Effective Business Design" course using remote delivery and our e-learning portal.

http://www.deverlearning.co.uk/.

This won't be just slide packs and resourses but scheduled lecturing time with tutors using conference call - audio and visual - and other remote delivery techniques.

This will enable us to price the learning experience at levels affordable to independently financed individuals - contractors and consultants and the like. At the moment the ability to deliver a course to less than 4-5 people on one occasion, particularly away from our home territory, is restricting its access to many.

A Token Post! What is a Token?

A process does nothing until it is triggered. Some therefore refer to a process as a static business item or object.When some event happens the process "fires", the receipt of a letter a timed event or a phone call are examples of triggers.When the event occurs a relay race starts through the process activity boxes - think process map here- and the baton passes through the flow until the process ends.If the process splits into parallel activity the relay baton, otherwise known as the token, duplicates or splits until it merges later, or each part of the split token finds an end point.The token represents the flow of activity through the process identifying the event that started it all off.So, a process is static until triggered and becomes dynamic whilst the token or token parts are still active until the tokens either combine and reach the end or all of the tokens reach the end point in the process.If you want to do process simulation getting your head round this is essential!I am currently designing a new training programme in "Developing Your Business Processes as Business Assets" which will address this issue amongst others.

Visio Helps Me Bill More Days! But is this Good Value for My Clients?

I was asked to do some simple process mapping recently. I asked what tool they wanted me to use and surprise surprise "VISIO 2003" came back as an answer.

I arrived on site and ran some 121 interviews and began to draw.

Several days later on schedule I delivered the results and was then asked to do some customer experience (value chain) work with the process drawings. The re-drawing with all those fiddly links that get messed up on changing things took several days with much angst and frustration; as everyone who has used this generic drawing tool will tell you.

Why do you use Visio? I asked during the assignment wash up meeting.

- Well, its on the standard build and its cheap" was the reply.-

- "We don't want to spend money on more software and anyhow it is too hard getting the purchase request approved by I.T." !

My conclusion was - had they recommended a professional mapping tool I could have done the work in 40% of the time or produced more in the time allocated.

So is saving money on a cheap tool really a saving when a freelancer, charging several hundred pounds a day takes, a week to do what he could do in two days with a professional process tool like IGrafx flowcharter? http://www.igxsolutions.co.uk/

False economy I thinks!!

The addition factor is that Visio drawings are drawings not models and very 2d not being suitable for further use ; but that is another discussion for another day.

Lean Irony

I had a side splitting moment this afternoon after receiving an e mail from a government agency, name withheld, telling us it was cancelling its procurement tender for a lean process review due to the new government cuts.

Why is this so amusing?

Well it all started before Xmas with a request for tender for some lean consulting work; having looked at the paperwork required to tender i.e. health and safety policy equal opportunities and the such; I and my associates decided to give this paper trail a miss.

Five months later we get a mail saying that none of the applying companies understood the requirement due to communication difficulties and they were starting the process all over again! Lean I think not!

The agency didn't understand what lean was, in our view, and when people who did know gave them advice it fell on deaf ears.

Would they indulge in dialogue with suppliers - no they followed their process; surprise surprise they got the wrong things offered to them.

Today the note says the process is now cancelled due to government cuts in consulting contracts. I spluttered all over the laptop screen in mirth.

So we have a Lean initiative procured in a remarkably unlean way and then it gets cut to save waste; but Lean saves waste and reduces costs how ironic is this.

Understanding of lean is not that good in this particular government agency. No wonder this country has financial problems!