The Context
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 Objectives
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.
For most of 2011, national lawmakers in Washington, DC have invested what seems to have been the vast majority of their time, and our attention, on the need to get the debt ceiling raised and the nation’s revenues and expenses aligned. Meanwhile, the economy flounders because business executives in the United States, and increasingly globally, have little or no confidence in the direction or stability of the legal and economic arena. Uncertainty like that makes strategic investing in jobs and in job-creating expansion risky and seemingly unwise. The debt ceiling crisis is a symptom of a much more difficult problem, the mismatch between overspending and too little revenue.
Political rhetoric out of Washington, DC is simply lip service meant to placate the itching ears of the electorate. Politicians have devolved into re-election machines focused on the next election cycle as soon as the last one is over. Most members of the U.S. House and Senate simply have no experience or education that would allow them to create effective policy for most of the topics they must address. So, with no basis for for developing, debating, and implementing effective solutions to the problems the nation needs them to address, elected and appointed decision makers in Washington seem inclined to simply parrot back the words the electorate and self-serving advisors and lobbyists beg them to say.
In the July 18, 2011 issue of Time, Joel Stein reflected on air travel with children and other sometimes-awkward realities. Mr. Stein suggested that airlines offer a section at the rear of coach for passengers traveling with young children. On a flight to Tokyo today, a passenger reminded me of the article; Mr. Stein recognized the realities of air travel for those of us who do not travel with children of our own, but frequently travel with passengers who travel with their children, and the realities of those parents who travel with their children. Sometimes, passengers who travel without their children simply act like children. Sometimes, a reality check is healthy, but we do not always see consensus on what reality is.
Somehow, the debate on whether to raise the debt ceiling in the U.S. and, if so, by how much has devolved into politics. It is no longer about differences between political parties because, and the reality is, consensus within the two dominant parties in Washington, DC is, at best, poorly defined and, more likely, hard to find at all. Pundits want to make the debate a Republican versus Democrat battle, but strong disagreement on a way forward seems just as present with each party as across party lines.
In the June 27, 2011 print U. S. edition of Time, Joe Klein, in the context of suggesting that Republicans are against regulating Wall Street, made the statement in quotes in the title. Did it really?
Wall Street is not a club of innocents. On the other hand, the strongest case that Wall Street caused the current economic downturn is that analysts in Wall Street exercised their contractual right, and their obligation to investors and, probably, the SEC to return mortgages to originating lenders that appeared under-collatealized. That action did squeeze lenders into liquidity crises and cause the houses of cards to collapse. Why is nobody willing to probe beyond Wall Street. Do reporters like Mr. Klein simply stop at the first and easiest answer?
Mr. Klein cites presidential candidate Mitt Romney as suggesting that President Obama caused home values to collapse. Really? What caused home values, or prices, to rise to, unrealistically high levels in some markets, in the first place?
Some time ago, home ownership became part of the so-called American dream. Fulfilling that part of the dream seems to have always been dependent on where one lives in the country. Home prices naturally vary based on supply and demand.
From my previous postings, it may be clear that I have an interest, even a fascination, with the ongoing discussions of job creation by people in positions of leadership about job creation. I posted a question on LinkedIn last week asking how many of our senators and representatives in Washington, DC have a background suggesting experience in creating jobs. I raised the question because evidence indicating such experience seems thin after more than two years of conversation about economic recovery and the need to reduce unemployment through job creation.
Since several people responded that I raised a good question and nobody seemed able to answer the question, I spent part of my 4th of July weekend reviewing the biographies of each member of the U.S. House of Representatives and Senate, as found at house.gov and senate.gov. The chart below shows the combined number from both chambers.
In these charts, I use the term “politician” to mean anybody whose indicated background includes only positions involved in negotiating and defining public policy or having no experience other than in those positions since 1980. I use the term “entrepreneur” to mean experience owning, building, or starting a small business.
