One of the sources of uncertainty about the global economy is the unsettled debate among leaders in Western Europe’s Eurozone about the use of monetary policy to solve economic problems. That debate rages in the United States despite rarely seeming to be framed in those terms.
The downturn in 2008 was led by a liquidity crisis, a shortage of cash, that resulted from mythical wealth and cash from over-valued real estate. The real estate bubble resembled a grand Ponzi scheme without a Madoff-like figurehead to blame. The feared second dip is not a result of a crisis of liquidity but of confidence and uncertainty. Bruder (2011), writing about Egypt following their Arab Spring episode, observed that investors do not and will not pour capital into economic environments when the direction of the country is uncertain. In that regard, the current climate in the United States is similar to that of Egypt.
Hough (2011) observed that publicly-traded U.S. companies, excluding financial companies, currently hold 12% of reported assets in cash, the highest reported level since 1954. Business executives are unwilling to release the estimated $1.2-2 trillion in cash on their balance sheets (Foroohar, 2011), and unknown amounts hidden offshore and elsewhere, until people in positions of leadership lead and re-establish certainty and a sense of confidence about fiscal policy, tax policy, spending policy, the deficit and whether to continue deficit-driven budgets, and what to do about companies and countries allegedly to big to fail. Compounding the uncertainty are conflicts and political turmoil seemingly around the globe and the limited recognition that the issue of debt extends beyond nations to states, businesses, and individuals.
The Mid-Markets Channel of a global telecommunications company completed it best revenue year, thanks in part to the implementation of a new strategy, and the executive team wanted to continue the accelerated growth curve.
The increase in revenue for the channel, consisting of 2,000 sales and service representatives, was largely a result of a 53-branch rollout of the channel’s new operating model. The new model helped increase sales and service representative activity by 45% and sales by 32%. Raising the bar again required new tools.
The company had tried, and failed, on three earlier attempts to introduce sales force automation to its 1,200 sales representatives plus sales managers. The company believed that sales force automation would be part of the answer and recognized that the cost, both financially and in terms of credibility, made the stakes high for a fourth attempt. On the heals of a successful 18-month initiative to implement the channel’s new strategy and organization, the executive team recognized that bottom-up behavioral change was essential and engaged the same team of “outsiders” to lead the sales force automation design and implementation effort.
The timing was ideal. Presenting the sales force automation (customer relationship management) initiative as an opportunity to automate the new processes and behaviors of the field sales force and to equip the sales managers to monitor and manage those new processes and behaviors provided a logical basis for the new technology.
The client was, and is, a major global telecommunications company who had recently received a new strategic plan from a major global strategic planning consulting firm.
Internal efforts to implement a new organizational structure and strategy failed. Adoption by dozens of domestic field offices had no traction and did not produce the increased focus on acquisition and retention of customers. The fundamental strategy called for the client to shift from a geographical orientation to a customer-centered focus, resulting in acceleration of new account acquisition (‘new logos’) and retention and growth within established accounts. Improving customer service relied on changing mindsets of the sales organization and the field service team with enhanced alignment of the sales and service elements in each branch.
Simply having a new strategy did not yield increased sales productivity and revenue or service level gains desired by the client and anticipated by the strategy consulting firm.
The consulting team used representative locations to identify existing technology, sales and service processes and organizaation, and management techniques. The team developed consensus on best practice business processes among the representative locations, created and implemented new management techniques and reward andrecognition tools, and developed training materials to support standardized processes and terminology and the new business model.
Across two years following the initiation of the strategic plan implementation, the client reported the following results:
- Initial meetings with prospective new accounts, 36% increase;
The world’s leading hospitality company’s worldwide reservations organization, consistently recognized as “best in class,” had a challenge. Franchisees were beginning to express concerns about growing chargebacks to the properties, as measured by cost per reservation, and sought improved value from the centralized reservation network. Despite this growing concern, the client received consistent recognition as the LOWEST COST, HIGHEST CUSTOMER SATISFACTION provider in its industry.
The client pursued a consulting engagement to avoid a performance crisis within a long-standing commitment to aggressive continuous improvement. The objective was implementation of a strategic transformation to improve selling effectiveness while protecting the client’s world-class status with respect to service and cost. The scope and scale involved four reservation centers across the United States employing 1,600 associates year-round and 2,000 seasonally, handling more than 20 million calls annually – on a combined 24 hour, 7 day per week basis.
The overall objective was to create a model for sustainable continuous improvement across three key areas:
- Sales effectiveness: Significant improvement as measured by the conversion of inbound calls into room reservations and by the revenue generated per reservation.
- Productivity and Performance Variability: Reduce the gap between high performers and low performers and raise overall productivity, as measured by calls handled per associate hour.
- Performance Measurement and Management: Align and integrate essential support processes for planning resources, routing calls, and measuring associate and center performance compared to plan and budget.
Implementation of change is sometimes strategic and sometimes more tactical in nature. Managers in most organizations have a general responsibility to control, and often reduce, costs and improve performance. Understanding the responsibility to do that is more common than managers knowing how to do that.
The first trigger of the need for performance improvement for most managers is a report indicating performance that does not meet expectations, usually the budget. In that regard, many managers use financial reports to manage operations. The problem with financial reporting for operational performance management is that many organizations do not budget at a detailed enough level to be useful for most operational management. As a result, many managers find that costs, either material or personnel, are higher than expected, on a gross or per-unit basis, and must start an examination of the operation to identify the real, root cause of the problem. Many managers have neither the training or experience nor the time to successfully perform such an analysis.
Many organizations collect data and keep it in inaccessible forms, often paper. To successfully identify root causes of problems, or even identify the actual rather than the perceived problem, organizations need ready access to historical operating and financial data. Ideally, organizations will develop and maintain an electronic data warehouse that provides easy access to every piece of data that the organization collects. For too many organizations, nearly 30 years after the introduction of the PC, the only data warehouse they maintain is a decentralized set of filing cabinets.
Almost 30 years since the introduction of the personal computer and the subsequent introduction of a plethora of networked devices, too many managers of private and public, large and small enterprises seem to rely on non-timely, accounting-dominated data, rarely in the form of accessible, actionable information, for management decision making. Why?
One of my first managers, somewhat tongue in cheek, used to tell me that he liked to let small problems become big ones because he liked to solve big problems. That was not Bud’s only philosophical oddity. Many managers, by design or by default, effectively operate like Bud. Sadly, not only is it generally ineffective, it is also stressful and expensive.
In 1985, I created my first management dashboard for a client, the general manager for a textile plant in South Carolina. The dashboard provided him with daily and week-to-date comparisons of actual versus planned performance for each of the plant’s operating and support functions by shift. In 1986, I provided the head of another processing facility in North Carolina with a similar dashboard. Neither of these dashboards were true balanced scorecards, formally introduced to the management vernacular by Frick and Frack in 199x, because in neither case did the view extend beyond the immediate facility to monitor, for example, environmental or customer metrics. In both cases, however, icustomer metrics beyond backlog and on-time delivery measures were beyond the control of the facility because sales and marketing reported to a separate, central location.
A recent Time article tried to make a case for companies essentially firing all their MBAs because MBA graduates in the workforce had taken the collective eyes of business in the West off risk, innovation, operations, and creativity. That may be a valid point. The bigger concern for and threat to a thriving and sustainable economy may be the apparent willingness of U.S. society to accept second place, or lower, and to condone degrees and certificates and diplomas that may increasingly be irrelevant, if not meaningless.
Over the past few generations, people in the United States have grown lazy and self centered. We look for the easy path. We check the box and see if we can stretch the lower bounds of the minimal require,nets and expectations in our academic and non-academic pursuits. As a consequence, degrees and diplomas are more uncertain in their meaning. Prospective employers and academic admissions officers find themselves in positions where they must either do a more thorough job of vetting candidates or risk accepting lower quality, less qualified, perhaps minimally prepared candidates.
It is not the MBAs who are the problem with American business and it not strictly our elected leaders. Rather, it is the lazy attitude of barely acceptable that is so endemic that drags us down. The educational system in the United States simply reflects what society and culture establishes as norms and values. If we want something different for ourselves as a destiny, or a future, we need to adjust our current norms and values so that our path is also different.