EXTERNAL ALIGNMENT FOR BUSINESS SUCCESS

Stage 4 – Customer Focus: Creating Value

Across the years thinkers such as Kano (1984) or Llosa (1997; 1999) provided several principles to companies for understanding and meeting customer expectations. Kano Model on “Must-be's and Delighters” have provided many organizations the tool to understand customer expectations. The “SERVQUAL Model” proposed by Zeithaml, Parasuraman & Berry have provided insights into understanding “customer service”. Customer Orientation, Customer Experience, Customer Delight became key drivers of performance in various organisations.

The frame has surely and steadily moved to arrive at a balance – Delight Customers while Improving Profitability. Only “Lip service” to the aspect of customer focus has proved costly for many companies. The adage “Customer is King” is here to stay.

The other important shifts that occurred during this stage challenged paradigms of product/ service standardization – “You can have any color of car as long as it is black”. Important paradigm shifts included two fundamental changes in the way customers were approached. Firstly, companies began taking into account the “Bottom of the pyramid” (theory proposed by C K Prahlad) by producing low cost transformational mass products such as Tata´s Nano Car. Secondly, the ability to mass customize and create a unique customer experience, like Google does, by personalizing its page, content gained increasing importance.

Will share perspective on another external alignment related to Strategy focus in the upcoming  post 

Stage 3 – Improvement Focus: Keeping the Fire Burning!

Having organized the management, defined tasks and addressed employee issues, companies became eager to optimize operations and reduce rejections. The focus was on ensuring that products/services got delivered without defects while maintaining operational efficiencies. Theories of this stage started evolving in the 1930s and 1940s, however, it was only post World War II that saw a rapid spread in deployment and impact of these theories. Perhaps the most significant of the theories to have influenced the industry originated in this era was “Statistical Quality Control”. The theorists by nature seek method in madness. Thinkers like Walter Shewhart and W Edward Deming (who were Statisticians) tried to explain the nature of organizational processes and how it could be optimized using Statistics as a base. Shewhart was the pioneer in this regard and propagated the concept of “Statistical Process Control” in Bell Labs in the 1930s. Deming furthered the theory and applications through his teachings on “Statistical Quality Control (SQC)”. SQC was one of the key theories in transforming Japan’s fortunes. Deming, whose theories initially did not find many takes in the western world, along with Juran are largely credited with the “Japan Turnaround Story”. Juran was another thinker and academic whose work on “Managing for Quality” helped organizations become better at delivering quality – what Juran described as “fitness for Use”. The application of these theories got organizations to reduce defects, improve efficiencies and improve performance.

The quest for survival gave way to the well renowned “Toyota Production System” developed by Taichi Ohno where the focus was on reducing the various wastes in the organization and to achieve far more with less

And finally the Western World caught on. Michael Harry came up with Six Sigma and Hamel & Champy with Reengineering advocating complete turnaround of organizations for achieving breakthrough results. James Womack, influenced by Toyota established the foundation for “Lean Thinking”. Eli Goldratt with his path breaking book “The Goal” also influenced western thinking and proposed the Theory of Constraints.

While the focus of the theories in this stage was “internal” and on “doing things right”, it became apparent that without understanding whether one was doing the “right thing” success would be limited. Increasingly organizations found that their success was linked to delivering what the customer demanded and being able to manage the competition parallel as they were many good options to choose from. Thus began an outward in focus of external alignment for ensuring business success.

The organizations started moving their focus from internal to external in their transformation journey. Would share views on the 4^th stage related to Customer focus tomorrow 

Stage 2 – People Focus:  Unleashing People Power

The focus on process throughput and task orientation of people did throw up a challenge – unless the employee is motivated to deliver, results often do not happen. A famous theory under this stage was Weber´s Theory of Bureaucracy advocating bureaucracy as a powerful administrative structure. Another influential writing under stage one was Fayol´s 14 principles of management advising the manager on the division of work, organizational structure and motivation of employees with the latter marking the dawn of stage two.

The most significant work during this stage was Mayo´s “Hawthorne effect” in 1930. The finding that research participants tend to act significantly different when knowingly being under observation gave rise to new thoughts on managing people.

Fueled by the human relations movement, other behavioural theories included Theory X (imposing strict supervision on naturally lazy workers) and Y (giving naturally ambitious workers more freedom to perform) developed by Mcgregor in MIT were developed.

Charly Chaplin´s parody “Modern times” aptly showcases this conflict. However, over the years organizations have learned to seamlessly blend the task focus with people orientation and deliver success. Toyota is one such company.

Will share more thoughts on Stage 3 - Improvement focus in the next post 

Tracing history – from the construction company Kongo Gumi founded in 578 AD to companies engaged in the delivery of products/services, the core job has always been to deliver the required product or service. Since we do not live in an ideal world, routine work brings its own challenges. The need for overcoming these challenges has given rise to “Management Theories” that have shaped the way organizations have attempted to excel in their relevant time period.

A systematic evaluation of the management theories seen in the 19^th and 20^th Century and the present day enables us to envision the future direction in the upcoming decades…

Establishing the DNA – The Internal Focus

Stage 1 – Task Focus:  Improving Throughput

In the 19^th century, considerable inefficiencies and lack of skills in large factories created by the industrial revolution (advent of high demand) induced researchers like Taylor to systematically start studying and creating theories for managing for excellence. The task orientation that was needed was brought about during the period (ca. 1890-1930) and was aptly called Scientific Management.

Organizations wanting to ride the demand curve looked for ways and means to increase throughput – not possible with the earlier “master craftsman” philosophy. Industrialists such as Henry Ford establishing the “Assembly Line” and “Mass Production” philosophies leading to high production while compromising on flexibility. The words of Ford pretty much summed up this – “You will get any color of car as long as it is black”.

Will continue our discussions on Stage 2 - People focus in the next post