Can Lean help Connect Customers?

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Next week’s Business901 podcast guest is Ken Rolfes of KDR Associates. Ken has spent more than 30 years in public and private companies that design, manufacture, and market technically based products for the medical device, industrial product and computer industries. He has extensive Lean enterprise experience in general management, new product development, cost management systems, turnarounds, acquisitions and divestitures, and various financial transactions including IPO, private equity and venture capital financing.

We spent some time discussing Lean 3P, but when I asked this question, you can only imagine where the conversation went. Joe Dager: “One of the things that you specialize in is Customer Centricity. In connecting companies closer to their customers, how does Lean help that?”

Ken RolfesKen Rolfes: Let’s take a step back and talk about how companies connect with their customers. I don’t know what your experience has been, but mine has been as I got into this consulting world if you will and got into visiting companies, people really don’t understand what their real mission is as a company. Connect with their customers. I call it; refer to it as line of sight.

Think about it this way. Can you look at your customer throughout your entire business? Can you see? Can the people in your organization see what they’re doing for their customer? You might say; “Why is that important?” Jim Womack wrote his book on Lean thinking. He came up with these five principles. The number one principle was the principle of value. The customer really defines the value.

If that’s case, isn’t it important for people to know what the customers value? I thought I was just going into companies that were unique if you will in that they weren’t very well organized, and they didn’t really see.

The Gallup Business Journal last year, and I don’t remember what month it was, had an article on some survey that they did. They went into companies and asked questions of executives, the management, and employees. And one of them that kind of stood out, it says; “I know what my company stands for and what makes our brands different for our customers.” Interestingly enough, only 60% of the senior executives strongly agreed that they knew that answer. It went down to somewhere about less than a third of the employees could answer that question.

I know this is kind of a long answer to this thing but the key here is, unless you can create clarity in your organization as to why you’re there and what are you doing for your customer it’s really hard to do Lean throughout your organization.

Consequently what Lean has been focused on primarily is in the operational and what we call the fulfillment value stream in the organizations. When we get to the demand generation or the sales side or product development, Lean has a tough time. You go to AME’s conferences there are few sales people, and there’s getting to be a few more product development but pretty heavily focused on the fulfillment side.

The metrics that you have in the fulfillment side is fairly simple. They’re process metrics. Quality, delivery, cost, and safety are the ones that you generally measure. Now get outside of the fulfillment side and the value definition becomes a little bit more complex. Now quality becomes more than just adherence to a spec. Cost becomes more than just price. Delivery is more than just being on time.

Working with and using Lean tools on the demand generation side such as a value stream map of your demand generation process can be a pretty eye opening type of thing. I’m working in the B to B range that’s the realm that I’m working with I’m not really working with the B to C. What I’m looking at here is how the companies work together.

An example, a retail services company that I work with was struggling because basically the way the retail services were looked at by the customer base. The customer world was simply just how many bodies, what’s the rate per hour that you’re going to charge me to do this job. I said, well let’s go look at what are the goals that the customer is really trying to solve. What’s the problem the customer is trying to solve? When we look at that in that way it changes your whole dynamics.

If you take your value stream map and you map the process. What you find is most of what you’re doing today is more transactional. Companies don’t have a whole lot of control over the process. In other words, a customer decides to send a request for a quote in and a company looks at it and says, “Oh is this something I do? Oh, okay. All right, here’s a quote.” You negotiate it a little bit. The customer selects a vendor, issues a contract. Okay, “what percentage of business are we getting?” So, they manage the implementation. It’s all highly contractual, or transactional.

In each of the cases that we’re working with is, in the B to B realm what is the ultimately customer, what are the goals that the customer is looking to achieve? We create a discussion around shared goals and creating solutions. Such that now you’ve got instead of your sales guy dropping off a line card and saying, “Hey, if you need any of this give me a call.” Now we’re really talking about how do we manage the mutual cost of doing business together?

At the end of the day, you need the same fundamental metrics resolved that you have to have; the quality in the broad sense of the term in how they work together. The cost has to become the total cost of doing business together. The delivery has to be exactly when it’s needed for your customer to be able to satisfy their customer. Consequently, Lean tools apply so radically and can be so engaging between you and your customer.

Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.

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