Sunday, August 25, 2013

Lean Processes, Tip #01

Design Around Customer Interactions
Your value chain processes should be designed with the end in mind: attract and delight your customers as fast and as friction-free as possible. They will be more than willing to then pay for whatever they perceive as valuable in your offer.

Think about a high-touch sales process:
1/ establish initial contact (meeting, business cards)
2/ execute sales pitch
3/ follow-up for decision to enter into business together
4/ negotiate contract T's&C's
5/ acquire customer master data to set them up in transactional systems
6/ sign contracts
7/ get order
8/ deliver
9/ wait for the payment term
10/ cash in
11/ if not cashed in, follow-up on overdues through a dunning process

At the opposing end, you have the no-touch sales process (the so-called freemium model), where you first give some of your product's features away for free and then try to upsell your initially acquired customers to your paid product.

Between these two extremes, you can imagine a plethora of accelerated sales processes, by asking some of the following questions:
- can you execute your sales pitch proactively? Create marketing, webinars, YouTube presentations, grow an audience.
- can you make your business case extremely clear in how you deliver value? Your product landing page should be like a Mafia offer: so good they can't refuse!
- can you make your standard T's&C's extremely friendly to your customer? This way you will remove upfront a massive class of typical customer objections.
- can you skip some customer master data on the first sale? Can you collect the non-critical data after the sales closure - I bet you can.
- can you automate your collection? Remember, your objective is to part your customers from their money as fast as possible for you and as fun as possible for them.

Take a look at already existing examples of excellent frictionless customer interaction examples: Amazon Web Shop (and 1-click payment), Mobile Ecosystems (Google Play or Apple App Store). These examples have almost completely turned the classical sales process on its head.

I'm eager to learn from you some other fascinating examples of brilliant processes that simply look at every aspect of enhancing customer interaction.

Tuesday, August 20, 2013

On The REAL Social Web

The social networks of today's internet (the Facebooks, Twitters, G+, LinkedIns - FTGL) have barely scratched the surface of our real-life social web, the one we weave everyday.

I believe that in real-life (IRL) social web has three fundamental components:

IRL - our society's tribes or communities have specific roles, statuses and identities.
FTGL - we know where our acquaintances work, their siblings, we may organize all of them by groups. That's a low-resolution (dyadic, triadic), individual perspective of our social framework.

IRL - our actions are guided by norms, laws, taboos, customs, shared paradigms.
FTGL - you may have community rules and Terms of Use, but they're not modelling social relationships. They're just there for the legal protection of FTGL.

IRL - we give, we take, we negotiate, we barter.
FTGL - Sharing / tweeting / liking / +1'ing are just basic, lifeless, data points, modelling our attention span and browsing patterns for the monetization of the advertising industry. Again, a very low-resolution view on how we act in the social framework.
So what, you say? Entertainment has always been the first monetizable content of any new communication medium. Why should this be different? Well, because you can go much deeper on social modeling, in ways that are incredibly more relevant to our real-life environment - and much more monetizable.

Let's take - doing business. To me, this is the fundamental social behaviour of humanity. After all, business is one of those very few things you can't do alone - you need at least one other person to act as your customer :-) 

So, why is no one modelling the social process of doing business, in all its splendour? It is complex and painful - of course - business entities must be orchestrated internally as well as choreographed externally. But it's doable. The brain and the brawn are there. But there is no compelling vision.

You see BPM (Business Process Management) providers choking on competing methodologies, struggling with emerging standards, crowding the training curriculae, selling overblown tech stacks and expensive consulting timesheets... and then you realize how much of an opportunity has been missed by this industry.

There is a better way.

More to come :-)

Sunday, August 18, 2013

The Process Shall Set You Free

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” 
– W. Edwards Deming

In emerging markets, having clear business processes in a company is seen, more often than not, as a sign that bureacracy and narrow-minded control freaks have kicked in and it's time to leave towards something more fun.

This is mainly due to several objective factors, economic and cultural:

1. emerging markets had cheap, relatively well trained, workforce. So whenever more work had to be done, it was easy to just tap into the cheap labour pool and call it a day. Back in the days, cheap was smart. It still is, in some cases.

2. emerging markets were tough to plan. They were highly volatile and anyway they were growing so fast that your elaborate business plan would have been left in the dust in a few months. I remember that, in one of my positions responsible for the whole Balkans region, we used to call our region "the CNN countries", because at that time there was always something in the international news about them: wars in Bosnia or Serbia, ethnic tensions in FYROM or Albania, an economic meltdown in Bulgaria, a political turmoil in Romania, an army standoff in Moldova. Good luck doing anything else than surviving.

3. the prevalent emerging market business model was: "start doing something, doesn't matter how because you are anyway one of the firsts, grow it fast and sell it to a multinational that wants a quick way into an unknown market without the trouble of setting up shop". There is no room for business processes in such a gold rush.

There are also lots of subjective factors that stem from the negative-bias management style (particularly specific to former Eastern Europe dictatorships), the social pressure to quickly perform and achieve a desired status (which leads to corruption) etc..

They all lead to the same conclusion: educating local businesses about the need for business processes is one tough nut to crack.

Nevertheless, in the following weeks, I'll be trying my teeth at this seemingly monstruous task, but not in the usual "consultant's way", preaching incessantly about optimization and automatization and standardization and return on investment.

Instead, I'll be giving out specific tips & tricks, from my own experience, at the same time putting them into the overall framework of "lean mentality".

Feel free to chip in with your own tips & tricks.... as of next week. :-)

More to come :-)

Thursday, August 1, 2013

On Goals That Matter

Defining your goal is the first significant waste-avoidance measure of any start-up.

Part of my effort to catching up the full chain of thought behind the Lean Start-up philosophy, I am reading just now an older book, "The Goal" by Dr. Eli Goldratt.

The book, written as a novel from a main character's perspective, addresses the problem of defining overarching goals for an enterprise so that they immediately relate to everyone in the organization.

The main character's conclusion is that those goals are (in a manufacturing context, in the book):
- maximization of throughput
- minimization of inventory
- minimization of operating expenses (i.e. overheads)

While I'd argue that an overarching goal would be to maximize shareholder value (or stakeholder value, if you're more into the modern theories), I agree that this set would be a common-sense proxy for shareholder value maximization.

+Ash Maurya (my favourite Lean author) is about to publish a new book called "The Customer Factory" (I am really looking forward to this!) and one of the striking statements there is the following:

"Everyone is in the manufacturing business"

I love this quote - the goal of any value-chain process is to manufacture happy customers:
Customers pay you - they bring revenue.
Satisfied customers pay you more - they bring a healthy margin.
Happy customers pay you most and refer you to others - they are your growth engine.

So how do you translate the three manufacturing goals to a service business in a lean start-up philosophy?

Here's my take:
- minimization of customer friction: make it easy and fluid for your customer to use and get benefits from your service, automate your client workflows - this way you use your servicing capacity faster and increase your throughput;
- minimization of waste: write the minimum amount of code, iterate (instead of plan) your business model scientifically (make intelligent assumptions about what drives your customers happy and validate them through experiments), maintain a minimum batch of work to focus on what matters most to the customers.

More to come :-)