Why Streamlining Value Chains
Makes Customer Service Worse
How to Remove Process Waste
from Service Organisations
Stephen Hay
People and Process Limited
How to Remove Process Waste from Service Organisations
Remember the days...?
Remember the days when you would go into a department store, find the items you wanted to buy,
take them to a salesperson, who would write up a docket, which you would take to a cashier, who
would take the docket, and your money, then send it somewhere to have the change calculated and
returned to you?
And, finally, when you left the store, someone else would check the items you had in your bag
against the docket and the receipt?
Sound vaguely familiar?
Today the same thing happens more often than we would like, but it's all done electronically. Same
poor practices, done faster...
There is hope!
After reading this short paper, you'll know that it's possible to:
●
Increase the bottom line without cost cutting.
●
Improve productivity without redundancies.
●
Improve customer service and staff morale by simply changing the way you look at your
organisation.
Manufacturing or Service?
What makes a service organisation different?
Service organisations differ from manufacturers in one crucial manner, manufacturers transform
raw materials into finished products while service organisations solve client problems.
Manufacturing adds value at every step along the value chain. It is transactional. The product is
handed off from department to department within the organisation before being marketed and
sold to the customer. Porter's Value Chain.
Service is based on solving client problems, satisfying client demand at the point of contact with
the organisation. It is relational. Crucially, the relationship is formed at your client's first point of
contact with your organisation. But her problem is rarely solved there...
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
What is Process Waste?
How do you remove it?
Before removing waste, first determine what the waste is.
Process waste in Manufacturing
Process waste in manufacturing develops from delays caused by batching and queuing, passing
incomplete work along the production line or poor quality assurance.
Waste reduction in manufacturing involves removing transactional delays throughout the value
chain. It is the identification and elimination of non-value-adding activities along the value chain.
The driver for waste reduction in manufacturing organisations is efficiency.
The lean movement has its origins in this world. Six sigma is a means of measuring the results of
the waste removal exercise.
Process waste in Service
Process waste in service organisations is any work done that does not contribute to satisfying client
demand, solving problems.
It can include batching and sorting of requests, answering client's follow-up calls, passing a
demand to another department or performing rework due to incomplete service the first time.
None of these add value from the client's point of view.
Waste reduction in service organisations means removing all processes and procedures that create
work that does not contribute to satisfying client demand at the point of contact with the organisation.
The driver for waste reduction in service organisations is effectiveness, as measured by the client!
What happens if you treat a service organisation as a value chain?
Customer service deteriorates to the point of being unsustainable.
That's all very well to say, but why does it happen?
Relations become Transactions
The core problem is that using value chains in service industries forces a relational activity into a
transactional language. It's certainly possible but less than desirable. You finish by mangling the
language to fit the developing relationship into a transactional vocabulary.
For example, a client demand becomes "raw material" to be "transformed" when it is really just a
question to be answered.
The Silo Structure is Reinforced
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
Secondly, despite the desire to change, the silo-structure of the organisation is reinforced. To
overcome the inefficiencies generated by a reinforced silo-structure, new positions such as "process
navigator" or other coordinator-type roles are introduced. Their purpose is to help the demand
pass through the system with a minimum of disruption. But the reality is that another layer of
management, which adds no real value to the client, is added to an already cumbersome beast.
The Client is Lost in the Search for Efficiency
Finally, the reason your organisation exists is not defined from the client's point of view. It is
defined by the activities performed, not the problems solved. And performance is measured by
activity, not problems solved.
... and Efficiency in Activities creates Ineffectiveness for your Client
Managing by activity encourages efficiency at the activity level. Efficiency at the activity or
departmental level creates inefficiencies at the system level. And that leads to the ineffectiveness
your clients experience, and talk about...
Do you still need Process Mapping in a Service Organisation?
Yes, you do. But it becomes the visual minutes of your change management workshops, rather than
a set of procedures to be followed.
And it has just one purpose, to render visible the inner workings of your organisation. It provides
you the information needed to increase operational efficiency and effectiveness.
Despite the manufacturing origins of process mapping and flowcharting, it is crucial in both the
production and service environments. But for different reasons.
In manufacturing, process mapping helps align the information needed about the developing
product with the physical transformation of the product as it progresses, pushed, along the
production line.
In service organisations, process modelling helps to show what information and expertise is
needed at the point of contact between your client and your organisation. And what expertise
needs to be pulled to the point of contact with the client.
Process mapping is never an end in itself. It is a tool for implementing organisational change.
Nothing more, nothing less.
Even so...
"Process mapping discussions can be very boring."
"When you take process mapping discussions to senior management, it can be very boring.
Stephen's ability to communicate this information in a dynamic and interesting manner
enhanced his ability to get stakeholders involved and excited about the work ahead."
--Taito Tabaleka, Acting CEO
Telecom Fiji Limited
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
Five Steps to Identifying Process Waste in Service Organisations
You know why it is crucial to treat manufacturing and services differently.
Now how do you go about identifying service waste?
Five steps...
These five questions will help you identify, then remove, process waste from your service
organisation. They are deceptively simple...
●
What is the purpose of your organisation from your client's point of view?
●
What types of demand are your clients placing on your organisation? And how often?
●
What is your capability to respond to the types and frequency of demand you have
discovered?
●
What is the flow of the various types of demand? Where does a client request go in its
"voyage to completion"?
●
How much of the process waste in the "demand voyage" is due to system design?
Answering these five questions will put you in a position to:
●
Increase the bottom line without cost cutting. Because every piece of waste work you
eliminate frees up capacity for value work.
●
Improve productivity without redundancies. Because the people who are currently
spending up to 60% of their time doing rework or fielding customer complaints will be free
to perform work that provides real value to your client.
●
Improve customer service and staff morale by simply changing the way you look at your
organisation. If you design a system that encourages productivity, productivity will result.
Just as if you design a system that encourages "non-productive creativity", that's what you'll
get...
It starts with People, let us show you the Process...
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
How People and Process enabled an industry leader to discover a leaner, more
profitable, and more customer-focused organization
The reality of industry deregulation
"Telecom Fiji Limited (TFL) was given the exclusive license to provide telecommunication services to the
nation of Fiji in 1990. Originally the exclusivity was to run through 2014. However, the government has
announced impending deregulation of the industry and in order to prepare for the coming era of
competition, TFL embarked upon a change management process."
"In the face of impending deregulation - without the services of Stephen Hay of People and Process Limited
- Telecom Fiji could have been rendered irrelevant." adds Taito Tabaleka, Acting CEO of TFL.
The threat of increased competition
Tabaleka explained it was because TFL evolved from a government department that it retained many of the
inefficiencies and process duplications common to government operations. With the government
announcing impending deregulation of the industry, TFL needed to streamline their growing organizational
structure in order to better serve and retain customers.
Confronted with growing evidence that competitive forces were becoming better organized, TFL instituted a
company-wide change management process. "Customers were telling us that we needed to change," said
Tabaleka.
"Instead of having one customer-focused face, Telecom Fiji and its subsidiaries had become a three-faced
entity. For the customer, it was very confusing."
A mandate for change
"The customer gave us a clear mandate for change. With the threat of increased competition on the horizon,
Telecom Fiji embarked upon a company-wide change process. Stephen Hay was retained to help us align
customer processes across the three companies."
Each of the three subsidiaries of TFL (Connect, a subsidiary providing Internet services; Xceed Pasifika
Limited, concerned with PBX equipment and customer premises equipment; and TransTel, another whollyowned TFL company) had their own systems and processes. In order to resolve a customer service issue, the
processes often spanned two or more companies and the customer was lost in the process.
"The main challenge for Stephen was to align the interrelated processes across three subsidiaries and align
them with one primary focus: enhanced customer service."
The primacy of communication
"Stephen was able to communicate across company boundaries in such a way that employees felt he had
their interest at heart. He communicated very effectively that he wasn't here to eliminate jobs, but to help
the company function more efficiently for the long term," stated Tabaleka.
"One strategy Stephen used to encourage employee involvement and participation was to hold
management-free brainstorming sessions. Only the staff, the Managing Director, and I were able to attend
these strategy sessions. No other management was admitted. This allowed the people on the ground level to
brainstorm processes and solutions that they had to work with. With this strategy, Stephen immediately
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
eliminated the fear of voicing opinions.
'Let's go and fix this thing'
Tabaleka isn't shy about sharing the results. "This fostered an empowering attitude on the part of
employees. They participated in an extraordinary manner; the level of their involvement in the change
process was accompanied by a remarkable openness to own the problems and the responsibility to identify
the changes needed. The common theme was, 'Let's go and fix this thing."
"They adopted a willingness to fix what was wrong and to persevere in the resulting 'sell to management.'
The level of practical insight that came out of the management-free sessions was such that, had we been left
by ourselves, management would never had seen the situation the same way nor come up with the ideas
and solutions produced by the staff."
Knowledge transfer to the local level
Because further mapping will be required for full implementation across TFL, Stephen trained two
individuals to function as designated knowledge sources locally. These two employees to report directly to
the CEO.
Tabaleka explained when Stephen's eleven month consulting with TFL came to a close, both of the
employees were able to carry on the additional process mapping, bring stakeholders together for
brainstorming sessions, and make formal presentations to management.
"Stephen passed the essential knowledge and vision to these two people in order for Telecom Fiji to continue
the change management process. They possess the necessary knowledge and skills required to see us
through full implementation."
Tabaleka admits change isn't always well-received by management. When suggestions are challenged by
general management, the CEO takes each one through a process called fish-bowling that allows "a process
drone to test in the environment of the change." This enables management to see that traditional 'top down'
process generation isn't always the best solution.
A leaner, more profitable company
Process mapping brings an awareness of organizational redundancies in structure and in process. This is
problematic in that it adds additional personnel and organizational expense.
Before the change processes were implemented, TFL employed 1,500 people. Throughout the process
mapping and change management process, many employees chose to leave in the face of redundancies that
surfaced across the three companies.
Tabaleka adds, "That alone saves the company $6 million in annual operating costs. But the real savings
comes from elimination of redundant procedures. Customer service will be further enhanced and the
processes for solving customer concerns, streamlined. Even in the preliminary stage of our implementation,
we forecast an increase in profits of 18 percent."
Results and outcomes
Perhaps the most meaningful outcomes from Stephen's work with Telecom Fiji were the three most
beneficial as identified by Mr. Tabaleka.
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008
How to Remove Process Waste from Service Organisations
"Firstly, Stephen was able to cut across the various boundaries that exist between divisions and companies looking at the issues instead of the personnel. This enabled us to focus on what the company really wants to
do. It helped many employees to align themselves with the centrality of the customer; the reality that if the
customer walks away, the company becomes irrelevant. The centrality of the customer became very real."
"Secondly, Stephen was very effective in communicating the definitive, detailed reasons behind the changes
suggested. He repeatedly reminded us that there were valid, functional reasons for the changes; that in
order for TFL to survive and position itself for future stability, changes were essential and the need for
implementation was urgent."
"Finally, Stephen helped staff discover their sense of ownership of both the problems inherent in the
organizational structure and their ability to initiate change. They realized that change ultimately enhances
both customer service and corporate health."
A hunger for lasting change
"Stephen has an amazing ability to communicate his hunger for seeing his clients implement the changes he
helps uncover. An important component in bringing lasting change across the many levels of an
organization is identifying the right organization to work with. When we interviewed Stephen, we knew his
character was key to the entire process."
"I also found his project management skills were very sophisticated and they enabled him to manage across
the company's many divisions and corporate boundaries."
"More importantly," says Tabaleka, "he reminded us that TFL would realize the ultimate value from his
service by implementing the changes suggested and becoming the streamlined, efficient organization that
would stand the test of time and competition."
"On a personal level, I have a great deal of respect for the integrity of Stephen's work. It was done with a
sense of urgency balanced with the desire that we would receive genuine value from his services. He is very,
very organized and his approach to helping Telecom Fiji prepare itself for the days ahead was
indispensable."
Case Study conducted by Barry Morris of ProCaseStudies.com
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People and Process Limited
PO Box 30-169 . Wellington . New Zealand
+64 212 538 064 . [email protected]
Copy of 17 April 2008