Ssshhhh : The secret of a winning business strategy is really quite simple...

...spend your time and money on things the market values most and doesn’t already get from your competition.

It’s perhaps a secret that sounds a bit too obvious when you see it written down. But in concept it really can be that straight-forward. The reality of developing your business strategy is all about understanding the needs of your existing and future customers and then aligning everyone in your organisation to satisfy those needs. A strategy is where you spend your money and your time. A winning strategy is spending your money and time on the things that people want and are prepared to pay for. That’s precisely how all great businesses deliver value and achieve results.

So let’s look at how we can develop a working business strategy and the sustainable strategy model that lies beneath. Let’s look at the development of key performance indicators and how they are used to drive project selection. When complete, this model hard-wires the needs of your customers to the individual efforts of everyone in the business.

Getting Started : Gathering the detailed ‘Voice of the Customer’

It is essential to find better and more complete ways of capturing the right data. No single approach will provide all of the answers so the best approach is to apply as many as your time and your budget will allow. Some typical approaches you may consider include:-

1. Customer Complaints Analysis
   Start with what you have. While not the preferred method of gathering growth information on customer needs, documenting why a customer complains about your service can lead to basic improvements in subsequent performance.

2. Focus Groups
   Gathering together a small group of similar customers who provide a broad range of opinions on the supplier performance. While qualitative only, the results can provide useful information and ideas that result in a refined picture of customer segment requirements.

3. Structured Interviews
   More specific in nature, this medium is excellent in obtaining information from internal and external customers, as well as suppliers. Although time consuming this focused approach is probably the best way to close down on some real insights that may have been prompted by the more generic approaches.

4. Institutional Surveys
   Surveys are a comprehensive and data driven information vehicle that can be helpful in determining customer requirements. Open to all who pay, including your competition of course.

5. Customer Observation
   Observing how a customer utilizes your service can provide the information necessary to improve it. The TGIF food chain requires each manager to sit in every seat of their restaurant once a month, in order to obtain customer observation data.

6. Be a Customer
   Being a customer will give first hand information as to how your organization functions when unaware of your presence. For example, at the Westin Hotel chain, managers have the responsibility of spending weekends at the hotel, just as if they were the customer. Many ordinary members of the public are now make significant pocket-money by volunteering via the internet as ‘mystery shoppers’ for the large retail chains.

Which ever approach works for you be sure to gather as much information as possible from every potential avenue. This is the raw material on which your business is based and should not be compromised or trimmed back.

Organisations should be thinking not only in terms of gathering fresh data, commissioning surveys and running focus groups. They should be working more effectively with data they already have. Please don’t forget that most requirements are already know to the people within your sales and marketing teams or can be extracted from your CRM database given the right analytical tools. Before you begin the expense of external data collection ensure a thorough review takes place of all the sources of information you already have.

Translating data into information

Once gathered companies need to find a way of translating what they now have into ways of ensuring a greater share of wallet and gaining increased loyalty. You can only do this if you know the drivers that will have most effect on determining the desired purchase outcome. Starting from the generic and driving to a business output specific is the goal of good translation. Consider an exchange between you and your customer that goes something like this…

I don’t normally choose your company – why not? – because you’re not as good as your competitor – why are they better? – because they provide a better supplier service – why is it better? – when I receive their materials it has all their lab test results clearly stated – why is that better? – because I need to get that to my US customers before they will place an order with me – so having that information as soon as possible is a benefit? – yes, the sooner the better to help them preferentially place orders with me – so if we send the lab results of each shipment directly to your US customers that would be a good thing? – yes, that would be brilliant, would you do that? – sure, give me the details and if they agree we’ll e-mail the data directly to them 24 hours before the materials arrives at your warehouse. Now how else could we help you to increase your US market share?

Driving to a technical or service target such as this is a classic flowdown approach. Keeping the questions open for as long as possible will help to uncover fundamental needs not just stated needs. In this example the fundamental need was to secure more orders from the US, although it began as a stated need for ‘better supplier service’. The specific requirement, or in Six Sigma language, the CTQ (Critical to Quality) characteristic is the requirement to e-mail lab results to the US customers not less than 24 hours before the converter delivery time.

Drilling down on several requirements produces a CTQ Tree to help visualise the flowing down of information from the customer generic to the output specific. Once defined and prioritised the CTQs become the strategic key performance indicators (KPIs) to the entire business. Alignment around a small number of customer critical parameters is the first step of strategy realisation.

Figure 1 : CTQ Flowdown for Supplier to Mobile Phone Handset Manufacturer

Process Analysis

So how do you currently perform versus these CTQs? Do you measure these strategic KPIs already or, more likely will new measures need to be introduced?

Detailed process mapping will create a picture of what currently happens internally and what outputs (process Ys) are generated. Using a simplified QFD (Quality Function Deployment) template the needs of the customer can be compared with the process outputs of your business. The strength (or lack of strength) of the leverage between outputs and needs can be debated and scored in a correlation field. A simple multiplier mechanism that combines the CTQ importance and the leverage of the output on that CTQ is totalised and these totals used to rank the importance of each process output.

In extreme cases you will find CTQ rows that indicate needs to which no current process is currently delivering an output – an obvious gap that requires the building of new capability within the business, the creation of a new process - but at least you now know that.

Figure 2 : Schematic of QFD Chart used to link Customer CTQs to Process Ys

For the highest priority processes - that is, the ones with the greatest leverage on the CTQs - its important to next gather performance data. This data collection and analysis can be time consuming, especially where measurement systems currently don’t exist. That’s why it’s prudent to run the QFD first and get a sense of process priority – you can’t nor should you measure everything. Performance of these process outputs (the things you actually do) can then be objectively critiques versus the CTQs (the things you need to do).

Figure 3 : Once the process outputs have been identified their capability can be analysed versus the CTQ requirements

You may discover all is well and that the processes that have the highest leverage on customer needs are well inside specification and under control. However, you will often find the opposite - that many important processes are failing to meet the required standards. These non-performing processes now become the object of your business strategy. Why? Because these are the processes that will drive the biggest improvements in customer satisfaction and achieving big improvements in customer satisfaction is the fundamental purpose of any worthy business strategy.

Where do you stand versus the competition?

Before we launch into our improvement work, a note of restraint is appropriate. Before you spend time and money improving things for your customers just check how you stand versus your competitors. To be cynical, any improvement will cost you something, and if you are already better than the competition and hold a well protected position, should you really try to make good become great when the best of the rest is only average? Personally, as a customer I’d like fuel to be at least 10% cheaper than its current pump price, and if you survey me I’ll tell you so. But as an oil company you’re not going to do that because neither is anyone else that you compete with. It’s a business-like world after all. In truth, the caution is not to leap to improve a process just because it’s very important to your customers alone. Understand your competitors’ position too.

The ever flexible QFD template contains a series of field for documenting those benchmarks versus the competition. So if you are looking weak versus your competition in an area that has high leverage you really do need to decide whether to improve it or exit the battlefield. The QFD will help to capture this.

Using competitor positioning data can equally help determine where you should excel. Important CTQs that are not well met today are golden areas for future focus and development. Creation of the new process that meet these CTQs may well become the engine of your new strategy.

Project Selection and Multi-Generational Planning

Once completed, this analysis will have identified and prioritised the process outputs that if delivered well will drive maximum customer delight above and beyond that currently achieved by your competition. That’s a pretty good result. It has certainly given you clarity around where to align your business measures, training, people, and communications. It has given you a strategic focus.

To turn that focus into a working business strategy requires pragmatism. Accept that you can’t do everything, at least not straight away. A workable next step is to segment the identified development areas into categories based on business benefit and difficulty to achieve. Using this rough cut clustering of process initiatives you will begin to spread the work across the range that goes from the ‘Very Beneficial and ‘Very Difficult’ to the ‘Somewhat Beneficial and ‘Somewhat Difficult’. You may even identify the magical improvement options that are both very beneficial and not that hard to achieve. Remember the e-mail to the supervisor example.

Fig 4 : Example Multi-Generational Planning Tool

Non-the-less using a criterion based selection matrix is the final practical step before you launch the strategy. It will help you build not a one hit plan, but a sustainable and achievable multi-generational plan, each generation of solutions building on the last and creating a long term improvement programme that meets the needs of your customers.

Finally putting it all together...

Now you have arrived at the position of knowing what processes need to be improved or created to drive maximum customer satisfaction and you also know how difficult that will be and in what sequence you need to deploy them. Congratulations, you are ready to launch your new business strategy.

Only the difficult part left to do, the implementation. But at least you know why you’re doing what you’re doing, and so will your employees. The connection that links the spoken voice of the customer and the prioritised process improvements will be strong and visible. When things change, such as customer needs, you have a strategic business model that allows you to accommodate those changes. And if budgets get tight and you need to cut back on the work then you can make data based decisions on what to let go and demonstrate exactly where that will impact.

As previously said, strategy development can be relatively simple, and a great project selection model is an essential element of all truly successful organisations. Creating a hard wire between customer needs and individual action is the best way to align your organisation and win big. But ssshhhh : it’s a secret remember.

Fig 5 : The Link from VOC through the QFD to the validated Business Strategy

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About the author:

Dr. Paul Donnellan, Celerant Consulting
Process Excellence Commercial Leader

During his 18 years in industry and operational consulting, Paul has led a variety of process transformations and new product introductions. He has been a key player in Celerant’s leadership of transactional Lean Six Sigma for the service industry and has considerable practical experience of delivering results in the telecom, utilities, and financial services sectors. He is a regarded voice of authority for Design for Six Sigma and is a frequent speaker, chairman and author.

Paul is a certified Six Sigma Master Black Belt and a Design for Six Sigma Champion with a BSc (Hons) and PhD in Chemistry from King's College, University of London.