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Measures That Matter

Failure demand metrics upset traditional management thinking about critical data

Tripp Babbitt
Tue, 07/31/2012 - 12:13
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Body

Too many service organizations use measures that disconnect them from customers. The result is predictable: higher costs and worse service.

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In service organizations, the systemic relationship between purpose, measures, and method is often clouded. These measures have nothing to do with what matters to customers, but they drive all the ingenuity of the manager and worker. They typically have to do with activity and financial targets but do little to serve the customer.

When organizations understand their real purpose (serving customers), they will be handed a whole new set of measures that can be used to understand and improve performance. Any service organization can achieve cost reductions and business improvement by studying demand in customer terms.

 …

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Comments

Submitted by Dave Gentile on Tue, 08/07/2012 - 05:14

Good points all

but I didn't see any examples of customer-facing issues that might address the question:  why does the call center exist?

Find out why customers call, then remove the need for them to call.

Make the organization transparent - summarize the top call drivers on the company website with a description, with real-time status, of the closed-loop corrective action being taken by the company.  Post the name of the executive champion.

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Submitted by imtiaz.ali on Wed, 08/08/2012 - 22:38

My experience

The article is absolutely correct. However, the concept that has been put forward is " Internal measurements of the the organisation are immaterial to the customer" is not new at all. It has been in very active discussion for 10 yrs, at least in the Indian financial and Telecom sector.

Where we keep hitting the wall while trying to improve the customer experience is:

You cannot make one person responsible individually for the customer experience. Even if you do that, he would have a team under him or her, who would have to provide answers.

The moment there is a set of people, they want their responsibilities defined.

The moment you define the responsibilities, you create compartments in the organisation.

Once you have that, more often that not, you would have a situation where most people would achieve their defined parameters but the customer would not be satisfied.

I would say that to an extent, it is the weakness of the person heading the function also but afterall, its every man for himself, even in the best of organisations.

 

 

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Submitted by Ian Hendra on Sun, 08/12/2012 - 15:08

Service performance measures

Good article that missed the point, unfortunately!  And heaven forbid that Legend of the Obvious, John Seddon, ever came up with anything original.

The point is this.....if you ask a line manager or supervisor what they need so they feel that "today" will go well they always give variations on this theme.  In no particular ranking, they want enough capable staff, the facilities and equipment working properly and reliable supplies of material and information.  If you ask the same question further up the food chain you get the irrelevant claptrap that Mr Babbitt so eloquently describes.

The difference is that the first set of indicators are leading, they are Key Performance Indicators KPIs); ie indicators that tell you how well the system is likely to perform in the immediate future and beyond once you get good at it.  The second set are lagging; they are historical by nature. Some call them Key Result Areas (KRAs), although the use of the word Key is a joke because they appear long after the horse has bolted.  I once suggested to a disgruntled boss un-impressed with last month's billing that he might be able to improve things by taking to the bank a pile of photocopied $10 bills.  On the other hand, I told him, the reason billing was low last month was that I had spent my time selling heaps of work and the next three months looked awesome provided he let me use the resources!  Being locked into conventional lagging indicator mode, he simply didn't get the point. 

So what is the point here?  In order to manage a system you need (process) performance measures; if you're not measuring it, you're not managing it.  What You  Measure Is What You Get (WYMIWYG), but be careful because You Only Get What You Measure (YOGWYM).  And to be complete, a system of measures needs to be contiguous: that means that each lagging measure (KRA) needs to be a reciprocal of a a leading measure (KPI).  Why, because the only puropse for KRA's is to validate the KPIs; ie How well did we predict last month's performance?

Dr Deming summed it all up by referring to the folly of steering a car by relying on the rear view mirror. 

The use of the term KPI to describe measures that are really KRAs is the common felony here.

Hope this helps...

Cheers

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