Make the most of Pit Stops with the 3Rs

Make the most of Pit Stops with the 3Rs

The global disruption caused by COVID-19 has found a lot of businesses rethinking their business models and given them a pause. The disruption can be turned into a Pit Stop - an opportunity to relook, replan and refresh businesses akin to the motorsports racing team using their pit stops during a competition. I will look at the Pit Stop topic with some of the typical questions along with my take on it - What, Why, How, When and Who should do a pit stop?

What is a Pit Stop?

In Motorsports "a stop at a pit for servicing and refuelling, especially during a race."

A Pit Stop is time and space to relook, replan and refresh the purpose, goals, business model and priorities for your business leading to a re-invigoration of all the stakeholders.

Taking the analogy of personal finance, pit stop is akin to re-balancing your investment portfolio to keep your risk in line with your risk profile. In investment parlance, it is about building a sustainable investment portfolio. Similarly, Pit Stops are about actions or activities to build a sustainable business.

Why a Pit Stop?

Although most businesses set aside time to do a strategic planning (offsite, meetings etc) exercise every year followed/supported by planning and budgeting cycles, these are often done while running the existing business model. Hence, these planning exercises are mostly about incremental growth and extending the status quo.

The pit stop are essential because they help organisations in:

• building a sustainable business in line with your business' purpose
• Re-energizing the business with new ideas and reiterate the purpose

How do you do a Pit Stop? The 3 Rs Approach

There could be several frameworks and approaches based on organisational maturity and current state of the business or industry. A generic approach is what I term the 3 Rs (not related to the 3Rs of education introduced in the 1800s) for organisational renewal, which is a step-by-step sequential approach which builds upon each other and is a continuous cycle.

Step 1: Relook

This is the Analysis phase of the Pit Stop. Thinking back to our analogy of motor sports, relook is based on data generated during the race (with the best race teams, combining this with past race data, competitor behaviour and additional vehicle/driver/environmental insights).

In the case of organisations, it is about reviewing the financial data along with insights and progress on Customer NPS, Employee engagement scores, contribution to society, environment (UNSDGs are a good list of goals lot of good organisations are supporting) and wider stakeholders. These insights need to cascade down the organisations to get everything thinking and contributing to the next step.

Some of the best pivots in the tech industry have come from a fresh look at the business model, customer behaviours and other insights from the previous business model - example mentioned in the Business Insider article include Youtube pivoting from a dating site to its widely successful model today; Instagram from a foursquare-like app to photosharing; Twitter from podcast sharing to microblogging.

Step 2: Replan

This is the Strategy and Planning part of the Pit Stop. Although the business may already have a hypothesis/idea on how to improve and build a sustainable future, the entire workforce taking the time to relook and replan can bring about surprising insights. The replan can be undertaken either with a cascaded down approach or ideas from individual employees or teams being collated up by a central team or a combination of the two.

As mentioned by Daniel Pink in Drive, autonomy, mastery and purpose are essential to motivating individuals. The Autonomy and engagement in involving employees across the organisation can be critical to the success of any organisational renewal (more on purpose in the next step).

I love this story of HUL transformation under Nitin Paranjpe and great use of the A>>R (Ambition greater than Resources) to revitalise the business and refresh the workforce on a new ambition and purpose. The pit stop due to the 2007-2008 financial crisis was the backdrop against which this transformation was run.

Step 3: Refresh

This is the execution phase of the Pit Stop. From the motorsport analogy, this is when the vehicle heads back into the track taking the relook insights, replanned and refreshed to making an impact in the race.

Put Purpose at the Core of your Strategy - this article in the Sep-Oct 2019 issue of Harvard Business Review highlighted that the organisations making purpose the core of their strategy (as opposed to a CSR led paying lip service to it) drove sustainable profitable growth while remaining relevant and building deeper ties with their stakeholders. The article also highlights the role purpose plays in redefining the playing field and reshaping the value proposition.

In my opinion, Purpose should be the lynchpin of any organisational refresh. It is easy to forget purpose as the focus shifts to quarter end closes, regulatory/industry changes and crises but it is key to building loyalty with customers, employees, partners and the wider ecosystem.

Unlike motor sport, in the organisation context - the refresh can be executed on a small subsidiary/region/function, lessons learnt, cross corrections made and rolled out in other parts of the organisation on a phased or big bang approach.

A number of examples of successful strategy refresh is shared in this HBR article. The one which I would like to highlight is the transformation of Danish Oil & Natural Gas into Ørsted -  In ten years, it has transformed from the most fossil fuel intensive utilities in Europe to the most sustainable energy company in the world. A great story about using Purpose to drive your corporate strategy.

When should you take a Pit Stop?

Annually (along with your planning and budgeting cycles) but you may need more frequent considering the pace of change of business. Also, events like COVID which brings a stop to BAU (business as usual) provides a breathing space for forward thinking businesses to take a pit stop.

Who should run Pit Stops?

Like the planning and budgeting cycles which businesses have got used it, Pit Stops are something business can run at the Corporate level, business unit level. It is also a good opportunity for teams and individuals to do Pit Stops of their own - with relook/replan/refresh of purpose, goals and impact (along with alignment with the overall company purpose). Teams with a mission are more collaborative, more engaged and key to a sustainable profitable future.

Conclusion

Although business disruptions and uncertainties caused by pandemics and other crises are a good opportunity for organisations to take a Pit Stop to rethink the business, organisations should regularly relook their business models and insights from current business to replan and refresh (if needed). Using insights from multiple stakeholder perspectives to relook, collaborating organisation wide for ideas for replan and putting Purpose at the core of your strategy to refresh are essential to getting the most out of your Pit Stops.

Acknowledgements

A few months back, I attended a LBS webinar by Prof Andrew Scott (Do check the Pandemic webinar series by London Business School - Thanks Stuart for sharing this), where the impact of Corona Virus on the global economy was discussed. Prof Scott mentioned using the COVID enforced break for businesses as an opportunity for doing a pit stop. This got me thinking and hence this article. Also, Thanks to Imran & Akhilesh for reviewing and providing feedback on this.

This was originally published on LinkedIn

4 steps for addressing Personalisation challenges in Customer Experience

"For the lover, a beautiful woman is an object of desire;
 for the hermit, a distraction; 
 for the wolf, a good meal" -Canonical buddhist verse quoted

I love the quote above which, in the context of customer experience, highlights both the importance of getting personalisation right and dangers of generalisation.

My definition of Personalisation is 'truly' understanding your customer and adjusting/changing your service/content/interactions with the customer's context and needs in mind. This is not an easy task especially in a consumer facing situation - this is borne out by the high failure rates of the proliferation of startups in the online space (Check out this article on reasons for the failure).

Why is Personalisation Important?

There are a number of reasons for getting personalisation right related to customer loyalty which can be summed up as follows:

• Build a deeper emotional connect with customer The key ingredient for building loyalty and trust with your customer is by having an emotional connect - the feelings your every interaction with the customer (be it in an online context or in person or any other channel) will drive the customer lifetime value.
• Drive Top line Growth According to a July 2018 Mckinsey article Personalization at scale can drive between 5 and 15 percent revenue growth for companies in the retail, travel, entertainment, telecom, and financial-services sectors.
• Develop a Strategic Advantage Emotional connect with your customers → better understanding of customers → insights on the direction your product/service → Strategic Advantage. 

Types of Personalisation

So what're the different levels of personalisation any organisation can offer, irrespective of whether you're a B2B (business to business) or a B2C (business to consumer) organisation? Although there are other tiers you can define based on industry and maturity of your customer data/understanding, I like to think of it in the following terms (obviously technology, organisational maturity and data play a huge role in progressing from one level to the next):

• Basic This is the basic level where some generic aspect of a customer is used to differ the experience e.g. a country/region specific page is displayed for a user based on his/her location
• Demographic or Interaction based Here some of the basic data the customer has shared or product he/she is looking at is used to tailor the customer experience (again it is basic level - age, gender etc.) - this is also where online data based insights like 'people who bought this, also looked at' etc come into play
• Self-service Personalisation In addition to the previous two level, here the customer is given an opportunity to control his/her experience by tailoring (e.g. how the page components are displayed in a news website or nickname used in Online shopping etc.)
• Deep Personalisation Combining all the power of the previous 3 levels, deep personalisation uses all the statistics from customer's interaction with your organisation across channels to deliver a tailored and continuously evolving experience. This is a Big-Data enabled personalisation.

A word of caution here is that it may not be necessary to aim to move to deep personalisation for all industries or all organisations. The regulatory environment, product/service features, channel of interaction and company value proposition may necessitate just the basic personalisation in some cases.

4 Step Personalisation Transformation 

Getting personalisation right is not easy, takes time and is a continuous process. I believe the following four steps, from my experience of working with customers and learning from the experts in the field, will help organisations make the journey to optimal personalisation with their customers. 

Step 1: Make customers an ally in your transformation

Customer trust is a linchpin of any successful customer experience transformation. It is important to get existing customer excited and bought into any customer experience transformation you have planned - you need honest feedback and desire to make things better for both themselves and others. Open, honest relationship along with a superior product or service is key. A structured program to recruit pilot customers who are representative of your wider customer base is necessary if you're trying to experiment different personalisation approaches.

Step 2: Become a Customer Data Focused Organisation

All organisation collect a lot of data but most lack focus in their collection and usage of data. In the journey to being an organisation further along the personalisation maturity, the data strategy needs to have 

Step 3: Connect all your sales, service, marketing and other channels

Once you've nailed your data strategy with a customer experience improvement focus, the biggest impact on your overall customer experience is by being consistent across every interaction point. This should be right from the first marketing message to sale to customer onboarding to ongoing service to even an exit scenario. With the right data strategy coupled with building and providing a holistic picture of your customer at all touch points, consistency across all interactions is possible. Consistency also means that the ability to use data from previous interactions (both positive and negative) becomes extremely important - for instance, your call centre agents having access to the same customer data as someone in a retail center (This has been the promise of omni-channel software).

Step 4: Tweak your customer experiences, continuously

With Steps 1-3 accomplished, the next step is about agility in your customer interaction channels. The ability to do A/B testing on your changes to understand customer responses is critical as well.Your personalisation approaches should be able to change based on changing customer habits, better technology availability and individual customer's preferences. It is also about realising that, like any other transformation initiative, there is no 'end-state' in a personalisation transformation journey. Personalisation is a continuous improvement initiative which needs to be constantly adjusted for it to remain relevant for your customers.

 Although I have used these steps in the context of personalisation transformation, it is generic enough to be applied to other areas of customer/employee experience transformations as well.

Strategic Priorities - shifting the role of Back Office Functions

Back office can be an enabler of innovation and strategy and be more than a cost of doing business

In large and established businesses with global operations, back office functions like Finance (including Risk & Compliance), Procurement, Supply Chain, HR and IT traditionally have the tag of being a cost center and typically considered in strategic discussions only in the context of Cost Reductions or Cost Transformations agenda. This has meant that they play second fiddle to the customer facing or revenue generating business units thereby putting the back office functions in the unenviable role of playing catch up with other strategic priorities.


While this may be the case, I believe the top priorities/challenges any organisation face needs a greater level of partnership with the back office functions. Let's try and understand this by getting further into the business priorities.

What are the Business Priorities?

In trying to understand the top priorities of any organisation, I looked at it from two broad perspectives:

A) Board Priorities

Without going into too much details, I found this summation of board responsibilities from Stanford Corporate governance Research Institute's Quick Guide on Board Duties & Liabilities quoted below very good:


"The board of directors has a dual mandate: –
Advisory: consult with management regarding strategic and operational direction of the company.
Oversight: monitor company performance and reduce agency costs
"

With the above context, I came across research done of over 5000 board members by Harvard Business School's Boris Groysberg & Yo-Jud Cheng on the biggest challenges facing companies (HBR article on conclusions from the study ).


Based on the survey results, the top challenge for most of the boards is Attracting and Retaining top talent. Although everyone (not just leaders) in the organisation is responsible for attracting and retaining talent - the key processes, talent framework, benefits and overall employee experience is owned and delivered by HR supported by Finance (compensation, bank payments etc) and Procurement (employee experience of the workplace equipment, services, accessories etc.) (please note that all of these are back office functions).


As with the top challenge, most of the other challenges (like Regulatory environment, competitive risks, innovation etc) listed in the survey results need the back office functions to play a pivotal role while keeping in mind the strategic and operational direction of the company.

Hence it is fair to say Back office functions are key to addressing the Board Priorities and Challenges.

B) CEO Priorities

In the fourth quarter of 2018, Gartner conducted its annual CEO survey of over 473 CEOs and senior executives to identify their business priorities. Out of the 11 Business Priorities looked at, Top priority identified was Growth followed by IT related. One obvious immediate thought is - Does this mean there is an inherent conflict in the priorities of the board and the CEO ? Without delving deeply into this, I feel it wouldn't be when corporate governance works well and the board does justice to its role. (Some of the recent issues at WeWork, Uber etc were down to boards being subservient to the CEO's agenda rather than partnering with them for the long term).


As is evident from the Figure 1 in the Gartner press release, the greatest focus is on Growth (driven by access to new markets or as highlighted by Gartner "diversification.. by the application of digital business to offer new products and revenue-producing channels"). The digital business driving cost reductions and growth is the reason for IT Related to be in the 2nd spot on priorities. If digital business is the key driver of growth, it does need Back office functions to come together to build/partner for the digital platform (Build and connect the platform - IT; Identify right partners - Procurement; Up skill and acquire right skills - HR; Identify margin drivers and manage risk - Finance/Risk). Even for cases where the driver of growth is new markets, some or all of the back office functions have a key role to play. Here is my summary of the top priorities from the two studies along with the role back office plays.

Hence, Similar to the Board priorities, it is evident that most of the 11 CEO priorities need ownership and/or active partnership of the back office functions.

The Shift Needed - Playing Catch up to Playing as One Team

Forward thinking organisations are already ensuring that Back office functions have a key role to play in not just executing but defining strategic initiatives - moving them from a catch-up role. Startups, smaller companies and leading companies may not experience the challenges highlighted above since they already have a more strategic approach to back office functions. Also some of the digital companies do have IT, procurement and other back office functions as a key differentiator and hence core to their strategy.


Some of the key roles played by the back office functions in digital business are included below:

• Finance - Strategic role in new business models e.g. how do we price the new digital models while considering the risk to existing margins and business.
• Procurement - Agility in bringing new suppliers, temporary workers/skills in to build capability to deliver digital channels/products/services
• HR - Hiring the right talent, making the culture more nimble to address competition from digital natives
• Supply Chain - Agility in responding to customer demand with ecosystem play
• IT - Build and support digital platform to enable a digital business

In addition, some of the internal functions can be an enabler and test bed for new business models and/or new ways of working especially with newer technology use cases with blockchain, AI, chatbots etc. A great example of this is the growth of Amazon Web Services (AWS) moving from being the cost center (IT function) for the Amazon group to being the top contributor to Amazon's operating income (as per Amazon's 3rd quarter results).


In conclusion, CEOs and Boards have to consider their back office functions as partners to help the shift in their models and to stay relevant. This does require maturity, realisation of the competitive challenges and a reconsideration of the negative connotations associated with being a cost center.

5 tips to avoid being a 'puddle'

“This is rather as if you imagine a puddle waking up one morning and thinking, 'This is an interesting world I find myself in — an interesting hole I find myself in — fits me rather neatly, doesn't it? In fact it fits me staggeringly well, must have been made to have me in it!' This is such a powerful idea that as the sun rises in the sky and the air heats

up and as, gradually, the puddle gets smaller and smaller, frantically hanging on to the notion that everything's going to be alright, because this world was meant to have him in it, was built to have him in it; so the moment he disappears catches him rather by surprise. I think this may be something we need to be on the watch out for.”

― Douglas Adams, The Salmon of Doubt

I came across the quote above from Douglas Adams (from his book The Salmon of Doubt ) during a TEDXLondonSalon talk from Robbie Stamp last year. This got me thinking about the implication of this quote to the world of business today with the disruptions created by digital technologies. 

Are there organisation equivalent of the puddle described by Douglas Adams?

Of course, organisations (in turn, the individuals who are part of it) can find themselves in a similar situation as the puddle described, if they don't embrace digital and use the opportunity to rethink their businesses. In the context of large global organisations, it is very easy to get into several mini puddles within the larger puddle. Without a sense of urgency, established organisation can end up in a situation described as Day 2 by Jeff Bezos in his 2016 annual letter to amazon shareholders. This is also supported by several studies like this from innosight 'The 33-year average tenure of companies on the S&P 500 in 1965 narrowed to 20 years in 1990 and is forecast to shrink to 14 years by 2026'.

How do we avoid the 'puddle' situation?

As a consultant who has worked across industries and organisations with varying levels of maturity, I have come to realise that what can distinguish the truly sustainable organisations from the rest are the following pillars of their culture:

1. Promotion of a Beginner's Mindset Beginner's mindset has been central pillars in a variety of fields including Zen Budhism (I love the quote "In the beginner's mind there are many possibilities, in the expert's mind there are few." from the book Zen Mind), Design Thinking, Entrepreneurship, Philosophy etc. This focus on learning/fresh perspective on things encourages organisational curiosity and motivation helping avoid the puddle situation.
2. Active Questioning of Status Quo - This is related to the beginner's mindset but the important difference is the organisational culture of courage to question and challenge status quo. Much has been written about Status Quo trap in business decision making and risk it brings to the future of business. HBR Article from 2006 on hidden traps in decision making makes some great recommendations on addressing these and other biases which stop businesses from making choices which keep them in the puddle. Most important of these is to be aware of these biases and force yourself to make a choice rather than just stick to the status quo.
3. Thinking Long Term - It is easy to focus on the short term financials and the associated stock market rewards while not realising that your puddle/market share is getting smaller while new puddles/competitors are springing all around you. The letter from the Google founders (makes for fascinating reading) at their IPO in 2004 has the quote "If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take those opportunities', the continued success and growth of Google is a testament to the efficacy of long term thinking.
4. Better Collaboration - The ability to quickly form a team with diverse skill sets and execute on a shared goal is key to successfully competing in the digital economy. One global consumer product major I worked with was taking more than a year to introduce new products to market (time from the initial idea to product on the shelves) and wanted to speed up the process. We discovered that better collaboration between teams spread out across the world was the key to faster and successful product launches. The importance of collaboration in organisational success is borne out in numerous research articles with tips on how to improve it as well. Digital Technologies can help bridge the collaboration gaps in organisation but wouldn't work without an associated culture change.
5. Encouragement of Sharing/Learning from Failures - Most organisations I have come across are very good in celebrating and rewarding success but tend to sweep failures under the carpet. I see failures and negatives as an opportunity for improvement and maybe even course correction. Again, a critical element of the truly sustainable organisation is the desire to learn from failure and to constantly experiment on new ideas. Remember, James Dyson built 5127 failed prototypes before he succeeded with his blockbuster vacuum.

I hope these tips play a part in helping organisations avoid the trap of getting too comfortable in their puddles and prevent their Kodak moment.

This article is also published at my SAP Blog and LinkedIn

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Asset or Service Provider - What are YOU as an employee?

Our Employees are our biggest asset is a common refrain from most senior business leaders. As someone who has spent a lot of time with annual reports and financial statements, I have often wondered at the lack of insight on employee profile, development in them. 

This made me look up the history of financial accounting and statutory reporting and came across the book by J R Edwards

It was interesting to read about the stages of accounting development, my quick summary below from the book:

• Pre-Capitalist period (4000 BC - 1000 AD) - for record keeping of extensive trade to track goods & exchanges
• Commercial Capitalism (1000 AD - 1760 AD) - investment of money in stock-in-trade and proceeds used to buy more stocks. Double entry bookkeeping was the key innovation
• Industrial Capitalism (1760 - 1830) - innovation in machine use, factory system, abundance of labour and new energy sources. Accounting used as a mean of control - performance and resource allocation decisions.
• Financial Capitalism (1830 - till date) - Financing of public utilities, shift of London Stock Exchange from govt to company securities. Accounting challenges of capex vs opex, fixed asset valuation, periodic profit calculation and appropriate form of reporting for absentee owners. With this also came considerable legal regulations, companies acts and accounting and audit obligations on directors. 

I understand the accounting reason of employees not figuring in balance sheets or other statutory statements since employees are not assets owned by the organisation. 

As J R Edwards points out the emphasis of financial accounting has moved from record keeping to financial reporting and is still based on past and not ideal for investment decisions. Although organisations these days address this with their detailed annual reports with emphasis on market potential, key strategies, risks and plans; the employee skills aspect is still missing and is big gap in the knowledge led digital economy. 

Human Capital - Key to company Future 

Some of the question with regard to the above which I think about are:

1. How can any valuation of an organisation be complete without considering how its talent is growing and how satisfied the employees are?
2. How can we evaluate an organisation's future vision without knowing if its employees are ready to embrace it?
3. How can we believe an organisation's claim to building the future of an industry without knowing if it has the right talent, skills and training for this future?
4. How can we evaluate an organisations culture and the readiness for change when competing with disruptive startups?
5. How can we know if the employees are the drivers of the future (as in they buy-in to this future) or if it driven by select few in the exec board?
6. How can we know if an organisation has adequate succession planning and second level leadership to execute on the future vision?

Plus many more with regards to the role of its employees. One of the fundamental questions is Are your employees merely performing certain tasks (like your service providers) or they really assets which are helping you build the future?

I think one of the ways to assess this is for forward thinking boards to report on their human capital (something like the sustainability reporting or CSR reporting), without compromising on employee privacy and concerns of losing talent to competitions. 

A non-financial reporting which address the talent pool will make it much more easier for investors to evaluate their investments decisions with having a much better picture of what the future looks like for the companies they're interested in. I am sure this will require a lot of work for the companies involved but this exercise will be useful for their long term future and employee engagement in this age of digital disruption.

This was originally posted in my SAP Blog