The Magic of High Performance Organisations
Everyone must contribute
The idea of value, ‘bang for your buck,’ is not new. The understanding of value in terms of what is quantifiable, quantitative, and what is perceived, qualitative, is also not new: we value things all the time.
New, is the high performance organisation which expects every department of a company, to be able to understand and efficiently contribute and unite valuable individual elements, to create a product that satisfies a customer’s perception of being precisely the right product for them.
A little history… at the end of the 1980s, many industrials began focusing on cost and quality. By the start of the 90s, drive for leadership and cost reduction programs were en-vogue. And, by the mid 90s, the story was firmly on the road to value management, with changing organisations and new methods. Parallel to the top-down cost and value management, was the bottom-up development of ‘lean’; starting in production and eventually moving into management. At this moment, I have to own up to one thing: my experience developing and employing these principles at Ford during this period was formative… as was my company Escort RS Cosworth.
High value is a series of great ideas in a product, which a customer recognises, desires, is willing and able to purchase and where the customer completes the transaction.
High performance organisations drive the creation of high value products, which should end and begin again with our customers and our employees describing our products in the same language. Our employees should be able to articulate, in technical terms, the aspects of their contribution to products that result in recognisable increased value for the customer.
e.g.
when we say, „we sell the best x”, whether coffee, cars, medicines or systems, then our customers, in their respective segments, should be saying exactly the same thing. Being in-tune with the need and wants, the desires, of our customers, means higher profits, more turnover and fewer losses and failed investments.
This is so critical that we need to repeat it: our internal view of how good our products and services are, must be reflected in the market place.
A high performance organisation demands understanding and execution:
- understanding the information cycle: exposure, interpretation, confirmation and dissemination
- excellence in execution: marketing; technical and financial; and in the sales process
Exposure can be as obvious as customer clinics, where technical people have direct interaction with customers and interpretation can be as complex as mathematicians, engineers, purchasing and marketing coming together for a ‘design of experiments study’ to identify key characteristics of qualitative quality (the technical interpretation of the ‘we really like, but we don’t know why’ comments). Confirmation can be as easy as getting the customer to say ‘wow!’ when shown the new product or as difficult as challenging a design director to pick his or her chosen colour from nine similar colours, when s/he previously said that ‘only cherry red 15023 at €100 oncost will do‘. And, dissemination is not just trickle-down information; it’s the strategy and governance of information flow, responsible actions and reporting, based on this new understanding.
What are the key factors?
Avoid misunderstanding the customers, who themselves are not always cognisant of what drives their desire to purchase. Innovations should be tested in different environments, because we need to challenge how a customer values the previously unknown. Leadership on cost side of the equation is a great goal. However, cost cutting programmes should be opportunities for refocusing investment, while maintaining brand equity.
Face-off-to-customer was traditionally the purview of marketing and sales. It’s essential, to avoid errors in translation, to build joint teams including experts from other departments (engineers, finance and purchasing) and to create frameworks such as customer clinics for direct customer contact.
A high performance organisation must:
- become capable of understanding the customers’ reality
- understand its own and its competitors’ current products through interaction and tear-down of systems and component parts (customers perceive values and characteristics)
- be able to attach financial value to it’s actions, both investment and return on investment
- be able to define quantitative and qualitative quality
This is the realisation of ideas, new to the customer, which are focused on redefining their ideals of what truly is valuable. These can come from marketing focused R&D, ‘innovation management’ in cooperation with product development delivered through sales channels. Key Account Management can play a real role, if managed correctly.
High performance organisations will become caught up in value management, often with an over-weighted cost reduction programme. This unbalance is detriment to ROI, both in the short and long term: the desire to achieve more-for-less can result in loss of sales. There is a tendency to ignore the investment side of the value creation equation. A discretionary budget can act as a correction mechanism or, where value management is more advanced, as a brand/product reinforcement tool.
High performance organisations need:
- intelligent methods in every department to enable all employees to contribute
- joint teams of experts (purchasing, engineering, manufacturing)
- joint goals across departments
- an elimination of avoidance of financial departments by technical departments
- excellence in marketing and sales execution
- design excellence in form and function
Excellence in marketing needs:
- commitment from executive management to long term goals
- continual build of brand capital
- an expanded face-off to customer as well as intradepartmental integration
- a systematic future financial value/feature model and competitor teardown
- a systematic investment in value driven features that customers value
Excellence in sales needs:
- interactions with customers to generate and disseminate critical feedback to the organisation
- communication focused on product feature values, which the customers desire and into whose development and production marketing drove investments
- sales to be the developers and owners of account or territory management living documentation that also identifies holes in current and future product spectra
- a product or service appropriate professional environment at the point of sales
- key account management with the right people, training, reinforcement, skills recognition and deep integration to achieve the ROI you expect