Stop Ignoring the Customer - Operational Excellence Outside-In vs. Inside-Out By Dr Janne Ohtonen Author and Head of Customer Experience and Engagement Avios.com

Dr Janne Ohtonen

Dr Janne Ohtonen has delivered numerous challenging change programs, many with double-digit performance enhancement. He holds three university degrees and is about to finish a PhD in business process management. Dr Ohtonen has contributed to many scientific research papers including developing organization’s Business Process Management Capabilities and Customer Experience Management. His approaches are acknowledged as thought leadership and used in many businesses today.

Dr Ohtonen believes that the most dramatic changes to an organization's effectiveness and performance come through an alignment of customer experience to business processes, enterprise architecture and innovation. This requires both leadership and commitment. Dr Ohtonen shares his insights in this exclusive PEX Network article, ahead of the OPEX Week: Business Transformation Europe Summit.

I have a simple question with enormous challenges to answer. Maybe you can help me?

I have a simple question with enormous challenges to answer. Maybe you can help me? Before I ask the question, let me give you a bit of a context first. Following the ideology of Peter Drucker (1954), any company exists to create a customer. Yes, it was over 60 years ago when he wrote this, but it still makes sense today. Well, I thought so, but that does not seem to be always the case. Too many business leaders are more than happy to ignore the customer. And to be honest, why wouldn't they as the companies seem to make money regardless? Or do they...

There are various estimates on how many businesses around the world are customer-centric. Also, there is the self-fallacy of claiming to be customer-centric without even understanding what it means. The well-referenced study by Bain&Co (2004) showed that roughly 80% of companies think they are customer-centric and only 8% of their customers agreed. That delivery gap was huge 12 years ago, and though some companies (e.g. Google, Amazon, Ebay, Zappos) are exceptions to that statistic, the general view seems to be that companies are in no better place today. One evidence showing that is the S&P500 list. The average lifespan of a company on that American index list has gone dramatically down in the past decades. It used to be in average 60 years when today it is close to 20. Thus, companies are becoming obsolete for their customers three times faster than they used to.

So, what is the question I need your help with then? It is simply:

"What would make business leaders genuinely care about their customers as business logic is not enough to convince them?"

I have been able to find some bits and pieces to the answer, but not the silver bullet yet. Would you have suggestions on what it could be? Do share your thoughts with the PEX Network by emailing futureofpex@iqpc.com. I have consulted hundreds of companies on customer-centric Operational Excellence around the world. And in most of them, the customer is the subject of things to be done to rather than the most valuable stakeholder in the business. The conversations around Processes, IT, and Enterprise Architecture are much more vivid than the discussions for reasons to have any of the previously mentioned in place for the customer. To my opinion, everything in the organization should be aligned to create sustainable value for the customers in a profitable way; This, and only this will ensure long-term business success for any business, I claim!

Why Operational Excellence simply is not enough then?

Why Operational Excellence simply is not enough then? Once I came across a peculiar situation that proved a point. A car factory was laying off people and doing financially feeble, even though they had world-class Lean Processes and the factory was super-agile. It haunted me. I went even deeper into Operational Excellence, looking for anything that would help that company. I also helped several Pharmaceutical and Telecommunication companies to Lean their operations and to improve Operational Efficiency by 60-80%. And yet, they were losing less money, but not making any more.

Then one day I was walking and thinking about this, and it hit me. “Where is the upstream in these operations?” I was thinking about paper factories who take their freshwater from downstream and return the purified waste water in the upstream. This way if the plant fails to protect the environment, it will suffer first itself. So, what was the upstream for Operational Excellence? And I realized it is The Customer. It does not matter how efficient your Processes and Systems have been if you do not have a business anymore! Any salesperson probably could have told me that long ago. But I wasn’t a sales person and didn’t plan to become one. So, what is an operational approach to customers, way beyond marketing and sales efforts?

It is Lean Customer Experience Management (Lean CEM). If the firm is giving enough value the customers want, it most likely will stay in business. But just producing value isn’t always enough either. The value has to be delivered by the company to the clients in the right way; hence the Customer Experience Management is as important as the relevant value. When these two are working well together, the business will thrive. As a summary, cherish the customers or perish the business!

The value has to be delivered by the company to the clients in the right way; hence the Customer Experience Management is as important as the relevant value

In 2009, I started searching for best operational approaches to Customer Centricity, Customer Experiences, and Value. A year later, I realized there aren’t many great ones available. People were talking about various aspects of it, but no one had made a systematic approach to managing that. That was where I took my first steps towards the Customer Experience Innovation framework presented in my latest book "The 5-Star Customer Experience" which will be available early 2017 and in the OpEx Week Europe 2017 conference. I wanted to do with Customer Experiences, what Lean and Six Sigma did to processes.

I took my first steps towards the Customer Experience Innovation framework presented in my latest book "The 5-Star Customer Experience" which will be available early 2017 and in the OpEx Week Europe 2017 conference

Today, I am responsible for Customer Experience, Value and Engagement for over 8 million customers globally. It would not have been possible without going through the learning curve of using IT as an Enabler, Processes as a Method of Delivery and Customer Value as an Outcome. The biggest (and perhaps only significant) difference between Business Process and Customer Experience Management is that the other one looks inwards (Inside-Out) and the other outwards (Outside-In). These two Process Types need to be aligned and powered by IT and Data. That will ensure huge success for business as long as the Relevancy is high for the customers.

The biggest (and perhaps only significant) difference between Business Process and Customer Experience Management is that the other one looks inwards (Inside-Out) and the other outwards (Outside-In).

Aligning Operational Excellence to Customer Experience Management will show which parts of the Journey are under or over served, where the opportunities for Revenue and Profitability growth are and where the actual cost effectiveness is hidden. In my book, I will discuss how this can be done practically.

As a case example, I was able to generate close to $800k for one of my customers in just four months.

As a case example, I was able to generate close to $800k for one of my customers in just four months (case study video available here http://bit.ly/ceb-800k). This was possible through mapping out the Customer Experience and aligning the Internal Processes to it. Looking at that map, it was evident that there was a long Process which was unnecessary from Customer Value perspective. By removing that Process, the Customer Experience became faster and saved around $70k per month in costs. No one even noticed that this piece of the process had been removed since it did not contribute value. How many redundant processes do you think your organization has from a customer perspective?

By removing that Process, the Customer Experience became faster and saved around $70k per month in costs

Going back to where we started, how can we help business leaders to understand the vast amount of gains to be had from aligning the Customer Experiences and Value to Operational Excellence and looking at the firm from the Outside-In instead of the traditional Inside-Out perspective?

You can read more about this topic from Dr Ohtonen's latest book "The 5-Star Customer Experience", which reveals the Three Secrets to Phenomenal Customer Service. The book will be available early 2017 and in the OPEX Week: Business Transformation Europe Summit 2017 conference.

To learn more about Janne's work in Customer Centric Business Excellence, join him at the OPEX Week: Business Transformation Europe Summit 2017 or visit http://www.linkedin.com/in/janneohtonen. You can also join Janne's wide Twitter network @Ohtonen.

Learn from over 50 OpEx leaders how to create new revenue streams, increase collaboration and drive customer loyalty.

This year's event is being shaped by 50+ industry leading practitioners to ensure that it addresses the most pressing topics in today’s operational environment. As you read the agenda you will agree – its trailblazing case studies and frank discussions that will allow you to go back into the workplace ready to take your OpEx programme to the next level. Look out for our new Technology Excellence sessions in the agenda!

With over 200 business transformation leaders at the event from the UK, Europe and beyond, this is truly an opportunity you cannot miss in order to take a leap into the future with your strategy and execution.

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