BPO Pricing Simplified

The BPO market can be confusing when it comes to pricing.  As BPO providers mature into core business processes it is becoming even more complex.  It’s starting to look like “anything goes”, but there is some reason to the madness.

There are three basic models for BPO pricing:

1.       INPUT / OUTPUT:  Traditional services based pricing.  Pay for units of input and maximize output (i.e.  hours, FTE’s).

2.       ACTIVITY / VOLUME: Pay per unit of activity within a volume range (i.e. transactions, documents, scans, calls). 

3.       VALUE / BUSINESS OUTCOMES: Pay based on the value a service provides.  Often a hybrid of the activity / volume model and performance measures (i.e. claims processed within 3 hrs, issues resolved in single contact).  It could also be based on a percentage of savings or growth (i.e. increased sales, reduced cost per transaction, reduced aggregate procurement spend).

An entire book can be written on the variations of these models in practice.  That being said, the slate is usually wide open.  BPO vendors often entertain any model they feel comfortable with in terms of risk, quality performance and reasonable profitability.

Here is a simple process to follow when talking to your BPO vendor:

1.       Decide what processes make the most sense to outsource.  These usually bubble up easily based on organizational strategy, pain, cost and capabilities.

2.       Define your strategic goals for the process.  Are you looking for growth, quality improvement, scalability, reduction in cost, innovation or consistency in cost per transaction?

3.       Define who you feel should take ownership and risk for that process.  Not just execution quality but process innovation, design, performance, outcomes, etc.  The more risk you want the BPO vendor to take, the more value you want them to add, the more control they will want over the process.

4.       Now define a proposed pricing model based on the above attributes.

The outcome will best represent your expectations and significantly simplify BPO vendor discussions.    

 

Consider these links:

http://www.outsourcing-law.com/2012/05/four-%E2%80%9Chot%E2%80%9D-deal-structures-and-pricing-models-in-sourcing-of-bpo-and-kpo-services/

http://www.offshoringtimes.com/Pages/2006/BPO_news1255.html

http://www.siliconindia.com/shownews/BPOs_see_better_revenues_through_new_pricing_models-nid-46430-cid-2.html

http://www.internetviz.com/psjblog/2012/07/outcome-based-engagements/

BPO: Going Deep and Wide Requires Commitment

Business Process Outsourcing traditionally has focused on high volume, low value activities.  Labor arbitrage and streamlined processes created price and process efficiencies: 

“The traditional cost centers such as HR, finance and accounting and some low-value, high-volume customer-facing functions have been the most frequently outsourced activities. In such services, reducing cost has been the objective, though the means of achieving that have evolved over time.”

 (http://www.offshoringtimes.com/Pages/2006/BPO_news1255.html)

Many companies have already outsourced cross-functional support processes.  In addition, the cost of global labor is eroding margins for BPO firms. So how are BPO providers responding? 

One method has been moving the focus to core business process outsourcing.  This will deepen the customer relationship and divert discussions from “savings” to “value”.  Value can be anything:  Market agility, scalability, global delivery capability, etc.

I often hear the words: “We want to go deep and wide.”  Yet there is little tolerance for taking on anything but the highest margin work.  In my experience with IBM going “wide” requires investment on both sides.  Customers will want the BPO provider to take over processes that THEY HAVE THE MOST TROUBLE WITH, high margin or not.  If it was easy and cheap for them to manage why would they outsource it?

Is it a matter of BPO firm contract profitability measurement?  Is it a myopic view of relationships?  My experience is customer portfolio measurement provides better outcomes for service companies.  It measures the profitability of the relationship, not individual contracts.  It allows for taking on a broader selection of processes from customers, with different margins, to lock in customer trust and relationships.  It shows the commitment of the BPO vendor to the benefit of the customer.

Don't let past experience inhibit growth!

In recent months I have discovered a disturbing trend.  There is a vicious cycle where economic risk has caused executives to become very conservative.  They are avoiding taking risks to grow their company, blaming their actions on their "experience".

Webster defines experience as:

"a :  direct observation of or participation in events as a basis of knowledge"

OR

"b :  the fact or state of having been affected by or gained knowledge through direct observation or participation"

I contend that experience is not static.  Experience is based on many variables that change over time.  Cultural norms, economic conditions, business practices, technologies available and the legal / regulatory environment are just a few.

Executives count on their experience to drive decisions.  It provides a base of stability to feel empowered, important and valuable.  It is the executive "comfort zone".  Challenging that experience means challenging the very essence of executive value.  Or does it?

It is far easier to say "no, that business is not profitable" than to say "how would you make that profitable under today's environment and would it be sustainable".  Yet how many times in the last ten years have companies redefined ways to drive profit out of their business?  Too many to count.

This is where I see opportunity lost.  Who is going back to re-review industries, processes, growth ideas and business models in light of changed variables?  These ideas are intellectual capital that has already been invested in that could drive growth.

There are numerous examples in history:

The steel manufacturing market was considered "saturated" and having "high barriers to entry".  The Japanese said "what if we use the arc furnace to recycle scrap steel?"  This fundamentally changed the process, profit margins, the supply chain model and removed the barriers to entry.

The beer industry was a highly localized, fragmented industry.  It was when Adolphus Busch in the early 1870's asked "how can we keep beer fresh to transport it long distances".  Pasteurization was applied to the process opening the door to national distributing and national brands.

Buying a software company in its "mature > decline" life cycle was once considered a catastrophic mistake.  Computer Associates thought "this is when the purchase price is lowest; what if I buy them and fund only required maintenance through the end of life".  This increased margins, severely reduced sales expenses (buy existing customer base) and provided instant brand recognition.

An outsourcing example for today:

Healthcare Payers (insurance) have been consolidating for years.  Providers started a few years ago but are in the midst of a long cycle of consolidation.  Labor intensive process like coding, collections, billing and transcription have been outsourced for decades.  Most of this work is done regionally by small businesses.

One might say "But given the labor involved margins are low."  True, if you follow the traditional labor model. 

What if you consider your company a "business process outsourcing" company instead of a "services" company.  Reduce the use of labor through automation (natural language processing) for electronic coding.  Buy the receivables at a discount (very common) and make arbitrage between the buy price and collections.  Integrate with the provider's billing systems to handle bill generation and automate distribution processes. This fundamentally reshapes the profitability of the business.

Now, take the lead from Computer Associates, BUY YOUR CUSTOMERS.  Quickly buy up the local / regional revenue cycle companies.  Eliminate overhead through centralization of administration and processing but keep the local sales rep's for their relationship.  Rapid growth and low cost of sales.  Oh, and a stronger national brand.  Now I'm getting excited!

So now you have a profitable, high volume, national business line.  Economies of scale and automation provide high margins.  A large customer base and geographical presence provide create a strong national brand.  Now cross-sell and upsell those customers and grow to the next level.



"No" is too easy.  Relying too much on experience can be detrimental.  Re-assess opportunities and reshape your experience frequently to grow the business and your career. 




 

Executive Ledership Attributes for Success

Someone recently posed the question:

If someone was to ask you to describe what the primary and secondary skills or leadership attributes that were most important for the success of a Senior Executive (e.g. CEO, CFO, COO, CTO, VP Sales, VP Marketing) working within your firm, organization, or agency, what would they be and why?

I read the question as factors influencing the success of the “executive”, not the “company”.  This is important as there are executives who flourish in poorly run companies.

I would say self and situational awareness are tied for first.  Emotional intelligence and integrity run a close second.  Why not intelligence, industry knowledge or experience?  What about ethics or leadership by example?

History Proves Conventional Wisdom is Suspect

Formal education and Industry Knowledge – The list of successful leaders with no college degree is quite long:

1.       Henry Ford

2.       Andrew Carnegie

3.       David Geffen (Dreamworks)

4.       David Geffen (Carnival Cruise Lines, Miami Heat)

5.       Steve Jobs (Apple)

6.       Haim Saban (Paul Mitchell, Patron’)

7.        John Paul DeJoria (Power Rangers, TV/Media)

8.       David Green (Hobby Lobby)

People like Henry Ford and Andrew Carnegie entered their respective industries with no knowledge whatsoever.   Formal education and specialized skills are in great supply and can be bought.

They quickly became forces to reckon with.  Also, why do some senior executives excel when changing industries?  Although important, these examples suggest education and industry knowledge are not highest on the list.

Experience – Experience can play a role in executive success, but so can having an experienced subordinate.  The value of this experience is largely dependent on when, where and how the experience was acquired.  Each company has unique elements to its culture, management style, processes, etc.  In addition, why do some make successful executives at a young age and most not at all?  Again, although important, experience gets bumped down on the list.

Ethics – Let’s not be naive.  Ethics are dependent on the organizational culture and global geography.     This is important, but subjective.  It will help executives move ahead in some companies, but not all.  It’s sad but true.  It also moves down on the list.

Leadership by example – Great in supporting integrity, it depends heavily on what the “example” is.  If the leader has a misconceived notion of how to behave, poor habits and/or follows a poor strategy they are leading everyone to doom.  Even worse, the leader is brilliant but leads without consideration to the culture and strategy of the organization.  Once again, the pied piper of doom.  Drop this attribute down the list, but not too far. 

 

Leading by Recognition (plan, sense & react) Has Worked for Years

They first key to their success started with self-awareness.  They knew what they wanted, where they excelled and where they were weak.  They used this to identify skilled people they needed to surround themselves with to achieve a goal.  They didn’t have to be all things to the business.

The second key to their success is situational awareness.  They were savvy enough to read market players and define who they should engage on their team to drive success.  They had a sense for when to be passive, aggressive, defensive, etc.  Identifying when a significant event is probable to occur and how to position properly for success is crucial.  The wrong action during a critical time could be devastating.    The right action could be monumental.  This mix of intuition, sensibility and control is hard to master.

The third key, emotional intelligence is closely akin to situational awareness.  Reading key constituents both inside and outside the company is critical.  It is required to determine what actions to take in a given situation.  The same situation may require different actions for different players based on any number of variables.  This mix of listening, reading people’s queues, politics and diplomacy can actually be taught.   Mastering it is another story.

Finally, integrity plays a key role.  By this I do not mean ethics.  Ethics define what’s good or bad based on cultural norms.  I mean it strictly as “being structurally sound”.  Integrity provides a foundation of trust in the leader through:

1.       Sending consistent messages

2.       Meeting commitments to individuals, the business and its customers

3.       Leading by example

4.       Taking responsibility for actions and choices

5.       Reacting consistently to situations over time

6.       Sharing credit for success with those involved

Personal and situational awareness provide the opportunity to excel.  Emotional intelligence opens the door to drive success.  Integrity creates the foundation for long-term success.

Employee Engagement - Making Lasting Change

My experience supports the statistic that 70% (maybe more) of employees are disengaged. The new trend seems to be deployment of “employ engagement” programs.  A program have happily endorsed and engaged in.  Yet the numbers only improved slightly.  Why?  It’s not empirical, but I have a good idea as to why.

As good managers we sent out anonymous surveys, get employee feedback and train managers on engagement techniques.  We execute on the few good ideas we received.  We communicate more and instituted an employee recognition program.  But did we make their lives easier?

People (let’s personalize it, they are human of course) don’t change easily.  It takes something personal, substantial and lasting to create change.  Although somewhat personal, the activities listed above are superficial.  Are employees better enabled to do their job (http://davidlung.blogspot.com/2013/03/what-makes-employees-truly-enabled.html)?  Are they seeing substantial benefits?  Did we:

1.       Less stress?

2.       Less time at work?

3.       Higher pay?

4.       More job satisfaction?

5.       Better promotion potential?

If not, the engagement program will only be seen as superficial. 

The most engaged employees I have managed were those I or my peers have taken a personal interest in.  Asking them about their goals, making reasonable promises, enabling them to their job and being a personal advocate for their success are powerful.   It’s honest, sincere and life changing.  It truly leaves a lasting impression.

For those seeking company-wide change, it’s about changing the culture.  This can take many years based on formal and informal behavior.  The best formula I have seen is simple yet bold:

“Rapid Change = Start at Top + Employee Focused Strategy – Powerful Change Inhibiting Executives”

It will put new life into the employees who felt disenfranchised.  It will startle those managers who felt too comfortable to change.  It will send a clear message to everyone that “this is the way we do business”.  It will create a life changing event for everyone to make the change stick.    

Three Traits of High Performance Sales People

Selling is both an art and a science.  There are thousands of books, training courses, methods and tools on the sales discipline.  So which methods and tools are best?

My experience is all work well in the right context.  So where should salespeople focus their effort to increase performance?  Make it simple, focus on the “high performance traits”.   

High performing, large ticket sales people have three traits in common.  They:

1.       Qualify prospects to focus limited resources

2.       Prepare themselves before interacting to customers

3.       Demonstrate persistence

Qualification

Don’t believe the hype.  In large ticket sales, everyone you meet is not a potential customer. Your grandmother won’t buy your earth mover.  It’s unlikely that your electrician can afford to buy your wire and cable manufacturing company.  Your local dry cleaner is more likely to buy Quickbooks than SAP.    

Salespeople have limited resources (time, budget, emotional capital) to drive revenue.  Even worse, they are given set timeframes in which this revenue must be obtained.  Every minute and dollar counts.  Taking the time qualify potential prospects eliminates significant waste and focuses your effort. 

Another effect it has is preserving your emotional capital.  “Collecting your “no’s” is a phrase I have heard many times over the years.  This phrase describes sales being a numbers game.  If you collect enough “no’s” you will find get your “yes”.  With the right volume of contacts you make your quota. 

This process can be personally taxing, even for the best salespeople.  Often because the best salespeople hate to lose, no matter what they tell you.  Sales is a personal business.  Your energy, or lack thereof, does impact sales.  People like to but from positive, vibrant salespeople.

Qualification slants the numbers to your side.  It decreases the number of “no’s” in the process.  It preserves your emotional capital.  This energy can be refocused where needed to drive sales to closure.        

Preparation

Ready, shoot, aim!  I worked for a Vice President once that wanted to cross sell a software product to an existing customer base.  Great qualification! 

She refused, however, to do any research on the customer before initiating sales calls.  Existing customers!  Invaluable experience existed in the company from people who knew these customers through years of interaction. She chose not to leverage it.

The company relationship was not enough.  Over time her sales waned because she tried force fitting solutions onto customers.  Pushing unqualified solutions she tarnished the company relationship in many accounts.  An equal opportunity offender, she upset customers and peers alike.  In the end she lost her job.       

Preparation is 90% of sales.  Know your product and company well.  Research your prospects in depth before any sales interactions.  Target your proposed solution to specific individuals, to meet targeted needs in their business.  Even if the proposed need doesn’t exist, it shows you took the time to understand their business and your acumen in deriving solutions.  You will get noticed.   

Persistence

Persistence isn’t “stalking” your customer.  Remember the Vice President I mentioned earlier.  She boasted a 98% close rate.  That’s because she considered anyone that said no a prospect yet to be closed! 

The truth is she closed maybe 5% of large ticket open opportunities. She was seen as pushy by customers and peers alike.  Even worse, she lost credibility with senior management as opportunities pushed across many quarters.  They could she her pipeline was not qualified and couldn’t count on her revenue in any forecast.

Persistence is thoroughly following up on qualified leads.  Be responsive to prospect’s requests.  Hit prospects at many levels and talk to many contacts.  Don’t give up on the first no.  If they say no enough, however, stop the madness.  Sometimes no means no and you must qualify them out of the pipeline.  Remember, you have limited resources.  Don’t waste them chasing ghosts!    

Unlucky 8 Sales Myths - Common and Deadly

The following unlucky eight sales myths have plagued me in my 20 year career.  Follow them at your own risk!

 Myth #1:  “A good salesperson can sell anything to anyone.”

This seems to be the first line any salesperson uses in a job interview.  My experience is this is not so.  A car salesman doesn’t fare well selling high dollar software deals.  A “harvesting” oriented salesperson often fails in new logo sales.  Technical salespeople don’t necessarily make good solution sales representatives when business value is the focus.

Business is becoming ever more specialized.  You must be able to prove how your product/service work in the customer’s environment.  High performance sales people know there are three foundational legs to the selling stool:  1) Sales Skills, 2) Industry Skills, 3) Product / Competency Skills.  Only this combination provides the trust and confidence your customer can stand on.    

Myth #2: "The customer is always right!"

“The customer always knows their symptoms” is more accurate.  Some do know have the knowledge of what they need.  Most do not because they are not experts in your field.  They are experts in their own business as they should be.

Ask a lot of questions before offering any product or solution.  Find the root cause of their problems.  This builds trust and confidence in the salesperson and their organization.  They will still be angry if you give them what they ask for and it doesn’t relieve their symptoms.  You are the expert, right?  If not, why are you trying to sell me this stuff?

Myth #3: "Salespeople are born, not trained"

I have to admit some people are gifted with personality traits that make selling easier.  I have seen more salespeople trained in the science than gifted at birth.  This is especially true in industries where business and technical knowledge eclipse “good old boy” tactics.  Customers are more sophisticated and procurement more mature these days.

"Fast talkers" are often mistakenly thought of as natural born salespeople when, in fact, fast talking repels most people. Talking doesn't sell. Asking questions and listening does.

Personable, intelligent people with strong desire have proven quite successful in sales.  Let them leverage their own personality guided by a structured process.  You might be surprised at the results.

Myth #4: “Formal sales processes take away creativity.”

A formal sales process just creates structure, repeatability and the ability to measure results.  It’s the science part of the job.  It neither creates nor eliminates creativity.  Successful sales organizations provide flexibility for Salespeople to add their own personality and creativity to the process.   They must make salespeople comfortable and act naturally to be successful.

Myth #5: “Concentrate on your product or solution.”

Making the customer’s problem the nail for you hammer is no way to sell.  Solutions help accelerate understanding and act as guides.  They are not the end-all be-all, customer value is.

Ask a lot of questions.  Listen.  Create the vision of how you can provide value in meeting their needs.  Sell the vision, not the solution.  It’s easier to understand and ties your solution to emotion.  Selling is personal, therefore, emotion sells.

Myth #6: "Every prospect is a potential customer!"

Sorry, Grandma Kettle is not going to buy your construction crane.  There are realities of economics, international culture, internal politics and sophistication of your buyer that can crush your sale.  That won’t stop the prospect from saying no to meetings. 

Maybe they want to learn more.  Maybe there is one person’s agenda pushing the concept.  Maybe your contact just doesn’t like to say no, it makes them feel bad.  You can waste a tremendous amount of time and money chasing ghosts.

Qualification, preparation and focus.  Every “qualified” prospect is a potential customer.

Myth #7: "Never walk away from the table!"

Don’t walk, run!  Closing a bad sale just creates ugly issues.  There are many kinds of bad sales.  Examples include:

·         Not profitable

·         Lopsided terms for the company or the customer

·         Promises in writing your company can’t keep

·         Unreasonable customer who will suck profitability out of the deal after the through support

If it doesn’t make sense for the company walk away.  Often this forces a customer to rethink their position.  If they really need the solution you are selling, they may change their demands.

Myth #8: "Never take no for an answer!"

Don’t take no for an answer right away.  Maybe not even the second or third time.  If the customer says “no” enough, they mean it.  Don’t chase ghosts that burn valuable time and money.  Preliminary qualification is just that, preliminary.  Quickly learn, adapt and react.   

Remember qualification, preparation and focus.  This is applied throughout the entire sales cycle.

Firm up the foundation to drive sales person performance to the next level.

There are so many techniques to drive sales growth.  Relationship based sales, consultative selling, transaction based sales, solution based selling and many more. I have seen many models in action during my career.  Most all seem to be focused on process and motivation, not a clear foundation for individual success.

I recently looked at some blog posts and found two common examples of what is taught:

Example 1
Step 1: Help your salespeople to understand and motivate themselves better
Step 2: Train on key sales attitudes, skills and techniques
Step 3: Teach personal responsibility
Step 4: Reinforce key behavior
Step 5: Celebrate success

Example 2
Step 1: Have the right people on the bus
Step 2: Define the sales activities that lead to results
Step 3: Manage the activities, not the results
Step 4: Recognize immediately, sales is a contact sport
Step 5: Learn what drives the sales team’s behavior

I think everyone would agree motivation and a common sales process are critical to the growth of any sales organization.  That being said high dollar, high volume sales are personal.  People buy from people they like and trust.  No process or level of motivation changes that.   

Most methods suggest skill training is critical.  Which training drives the best results? Who’s helping individual salespeople learn how to build customer confidence and trust? 

The key to success is focusing on foundational components that drive customer confidence.  Put the salesperson in a formal process for consistency of results.  Let the salesperson apply their unique personality and methods within the process to make it personal!

There are three foundational components that act as “legs to the tool.”  Without all three the stool won’t stand, and the customer will not have confidence to buy.

Leg 1:  Sales Skills

This is where everyone focuses their time.  How many times have you heard “a good salesperson can sell anything to anyone.”  My experience is this is not so.  A car salesman doesn’t fare well selling high dollar software deals.  A “harvesting” oriented salesperson often fails in new logo sales.  Each can be successful in more than one category, but the skill is not universal.

There is so much literature on this topic it seems silly to repeat everything here.  My point - this is not enough to drive high performance.

Leg 2: Industry Skills

Remember we are talking about large ticket, high volume sales.  You must have some knowledge of the industry you are selling to.  Why?  Without this you cannot clearly articulate the value of what you are selling in terms the customer understands. 

Confidence is built through your ability to show the customer you know their position, how they feel, what they need.   Showing them you know exactly how to solve problems in their world is crucial.  You are giving them the talk track they can take to procurement, the CFO or whoever they need to make the sale happen.  Otherwise you are just a pushy salesperson.

In addition, don’t you like to hang out with people that have common interests?  Sales are personal.  If they feel a common connection with you the odds of success go way up.

Leg 3: Product / Competency Skills

I’ve known salespeople over the years that say they are “relationship” people and don’t have to know the product well to make the sale.  They are just selling the salesman.  They leverage the skills of other salespeople to do their work.  Sorry, but it’s the truth.

The best salespeople I’ve known are always curious. They are always asking questions and studying up on wares they sell.  They don’t have to be dead experts, but do want to bridge the gap between the product/service and how it will be applied to drive customer value.

The more credible the salesperson, the fewer follow up meeting are required to educate the customer on the value of what is being sold.  Fewer meetings mean a shorter the sales cycle.  A shorter sales cycle means lower a cost of sales.  I love where this is going!

Focus on the individual.  Give the salespeople a foundation from which to grow their ability.  Don’t just give them a “training quota” and expect them to know what to do.  When in doubt, they will go to another “art of the close” seminar. 

What makes employees truly enabled?

It's all too common as a manager to say "rest assured, you are enabled to do the job".  But do we really know what we are committing to?  Do we go beyond the motivational hype to make the promise real?  Enablement takes initiative on the part of the company, manager and employee.

The Company
First, the company must have a clear, formal job description.  It must be easy to understand, clearly communicated and reviewed annually with the employee.

Secondly, the proper metrics must be in place to incent the employee.  These must be tied directly to the expectations communicated to drive the right behavior.  They should also be measured as least bi-annually and results communicated back to the employee.  Misalignment means the employee has been positioned for failure since they will act to maximize the performance measures in their own best interest.

The Manager
Managers must provide clear direction that is consistent with the job description.  This doesn't mean be a tyrannical micro-manager.  If they should lead, tell them so.  If they must be self directed, tell them so.  If they have only one task and shouldn't deviate, tell them so. 

Be prepared for your part of the deal.  Yes there is work in it for the manager.  Remove the impediments your employee needs to be successful.  Manage upwards for the budget, resources and commitment your employee needs to get the job done. 

If you task an employee with an activity (job, project, etc.) where you are not willing to spend this relationship capital, ask yourself if the activity is necessary.  If not eliminate the activity, re-deploy the employee or assign a different activity. 

Empowering employees is giving them the benefit of trust in advance of performance.  High performing employees understand, respect and earn this trust in arrears.  If your employee doesn't act accordingly then take back some empowerment until they earn it.

The Employee
As an employee you must understand, respect and earn empowerment.  Challenge your manager to work for you when it is needed.  Don't ask for their help unless it's truly required.  Relationship capital with your manager is based on your ability to perform, not theirs.  If they do everything then why did they hire you? 


Empowerment most often falls down when managers are not willing to do their part to move obstacles for their employee.  Politics, promotions, fear of "rocking the boat" and other personal issues get in the way of taking care of the business.

 If you task an employee with an activity (job, project, etc.) where you are not willing to spend this relationship capital, ask yourself if the activity is necessary.  If not eliminate the activity, re-deploy the employee or assign a different activity. 

If nothing else, don't tell the employee they are enabled when they really aren't.  You are positioning an employee to fail.  This will only end in resentment, turnover, doubt in your sincerity and/or doubt in your ability to manage.

Process Strategy 2.0 - Valuable But Not So New

http://blogs.hbr.org/cs/2012/12/in_my_last_post_i_1.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29

This recent HBR blog post suggests that:

"Process Strategy 1.0" = Lean, Six Sigma, and Business Reengineering

"Process Strategy 2.0" =
1. To streamline customer experiences in end-to-end processes, Process Strategy 2.0 will require aligned goals and supporting systems to manage work between partners.
2. To manage the rising tide of knowledge work performed by a younger generation of employees, Process Strategy 2.0 will depend heavily on social collaboration tools.
3. To speed operations and improvement, Process Strategy 2.0 will make greater use of quick experiments and more agile management processes.

Although the value of the concepts are right on, this is not new in concept.  More than a decade ago CISCO pioneerd these very same concepts in defining a "virtual" organization.  Like 3M, they fostered an environment of "innovation without punishment".  To be agile they quickly moved on new concepts and adjusted on-the-fly to make them work.  This included collaboration tools and integration of systems and processes both their business and their BPO partners' businesses.  All acted in concert to create one customer experience.  Customers often didn't know when they were interacting with CISCO or a BPO partner, the way it should be.  See the following link:

http://www.sba.oakland.edu/Faculty/LAUER/downloads/MIS625/Readings/Cisco%20case.pdf

To qoute Led Zepplin "Her style is new but the pay's the same as it was so long ago..."

The tools are better, but not the primary inhibitor to innovation.  Management must create a culture for innovation that promotes change and tolerates failure.  3M is a prime example:

http://www.businessweek.com/stories/2006-05-09/3ms-seven-pillars-of-innovation

Innovation or invention?

Innovation and invention are not synonymous.  Too many smart people spend their time trying to invent “new” concepts.  Value is most frequently driven by improvement, new application and integration of existing products and services.  Better, cheaper and faster sells. 

Consider the following motto: “shamelessly steal success from others where you can, invent where you have to”.  It works.  The concepts of “best practices”, “fast follower strategy”, “competitive market and functional analysis” or “synergistic acquisition” are all based on this concept.

The bottom line is to enable your peers to be innovative.  Convince them to share their ideas no matter how small they think they are.  You might be surprised at the results.

You can find a great article on the difference here:

http://www.pbs.org/idealab/2012/03/the-difference-between-invention-and-innovation086.html